New South Wales Court of Appeal CITATION : J R & E G Richards Pty Ltd (t/as J Richards & Sons v Thomsett & Ors [1999] NSWCA 279 FILE NUMBER(S) : CA 40494/98 HEARING DATE(S) : 6 July 1999 JUDGMENT DATE : 30 July 1999 J R & E G Richards Pty Ltd (T/as J Richards & Sons) - Appellant PARTIES : Graeme Stanley Thomsett - First Respondent WorkCover Authority of NSW - Fourth Respondent JUDGMENT OF : Beazley JA at 1; Giles JA at 2; Davies AJA at 34 LOWER COURT JURISDICTION : Compensation Court LOWER COURT FILE NUMBER(S) : CC 31073/95 LOWER COURT JUDICIAL OFFICER : Maguire CCJ L King SC - Appellant COUNSEL : B J Gross QC - First Respondent S Crawshaw SC & J M Harris - Fourth Respondent Rankin & Nathan, Newcastle - Appellant SOLICITORS : Reid & Reid, Cardiff - First Respondent WorkCover Authority of NSW - Fourth Respondent CATCHWORDS : WORKERS COMPENSATION - appeal from Commissioner to judge of Compensation Court - finding of work being executed (s 20 of Act) - error of law - primary facts required different finding (Hope v Bathurst City Council (1980) 144 CLR 1) - finding of who employed worker - error of law - not obliged to find as did - judge correct to hold Commissioner erred in law - judge then found who employed worker - appeal to judge was only on point of law - finding not only possible result - should have remitted for further hearing. DECISION : Appeal upheld in part; orders of the Compensation Court other than the orders allowing the appeal to that court and setting aside the Commissioner's orders be set aside, and the matter be remitted to the Compensation Court to be dealt with according to law. No order as to the costs of the appeal and the costs of the proceedings below should be as ordered by the Compensation Court upon its dealing with the matter on remission. THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40494/98 CC 31073/95 BEAZLEY JA GILES JA DAVIES AJA Friday 30 July 1999 J R & E G RICHARDS PTY LTD (t/as J Richards & Sons) v THOMSETT & ORS JUDGMENT 1 BEAZLEY JA: I agree with Giles JA. 2 GILES JA: A company variously identified in the judgments below by the names J R & E G Richards Pty Ltd, Richards Engineering Pty Ltd and G R Richards Waste Disposal Pty Ltd ("Richards") conducted the Muswellbrook Waste Depot ("the tip") under contract with Muswellbrook Shire Council. Richards engaged Mr Kevin Cutjar as manager of the tip, paying him $700 per week and permitting him to scavenge recyclable material from the tip and dispose of it for his own profit in return for keeping the tip open and functioning every day of the year except Good Friday and Christmas Day. Richards also employed gate keepers at the tip, including a Mr Robert Rayfield, who collected the money paid by persons dumping rubbish at the tip. 3 Richards provided trucks within the tip into which rubbish could be dumped. The trucks were driven when full to the tip face, in an abandoned coal mine, by Mr Cutjar or by casual workers whom he engaged. Richards provided earthmoving equipment at the tip face to level and cover the rubbish, and Mr Cutjar or the casual workers operated that equipment. The casual workers were paid by Mr Cutjar, without reimbursement from Richards. 4 The casual workers included Mr Graeme Thomsett, engaged by Mr Cutjar from time to time to drive the trucks down to the tip face and operate the earthmoving equipment, to keep the public area of the tip tidy, and also to help deal with the recyclable materials (glass, plastic, cardboard), for example by breaking up glass in 44 gallon drums. Mr Cutjar telephoned Mr Thomsett when needed, picked him up and drove him to and from the tip, and paid him a cash amount for the day or part day. 5 From time to time Mr Cutjar sold his accumulation of recyclable materials to Mr Robert Rumble. There was at the tip an accumulation of plastic and cardboard materials which had been sold or was to be sold to Mr Rumble. Mr Rumble wanted to use the press at the tip to bale these materials. He and Mr Cutjar spoke about getting someone to help to clean up around the press and then use it to bale the materials. Mr Cutjar telephoned Mr Thomsett. 6 There was a conflict in the evidence as to what was said, and as to whether Mr Rumble also spoke to Mr Thomsett. The evidence of Mr Thomsett was preferred to that of Messrs Cutjar, Rayfield and Rumble (whose evidence was itself conflicting). It was found that the only telephone conversation was between Mr Cutjar and Mr Thomsett. Mr Cutjar asked Mr Thomsett if he would like to do a day's work; he said that Mr Rumble was "going to start up doing the recycling with the cardboard press at the back of the shed" and that "Mr Rumble would be paying you if you work for him"; there was reference to whether Mr Thomsett could handle a cardboard press; Mr Thomsett said he was willing; and the arrangement was made for Mr Cutjar to pick him up the next day. 7 Mr Cutjar, Mr Rumble and Mr Thomsett were all at the tip on the next day. They looked at the press and talked about the cleaning up necessary before it could be used, in which cleaning up Mr Cutjar was to help. But they did not start on that work. Mr Cutjar had to do something else first, and went off to do it. Mr Rumble was unhappy at the delay, but also went off to do something else. While they were away Mr Thomsett began to drive the trucks to the tip face. 8 There was again a conflict in the evidence as to how Mr Thomsett came to drive the trucks to the tip face. The evidence of Mr Thomsett, with which that of Mr Rumble was consistent, was preferred to that of Messrs Cutjar and Rayfield. It was found that Mr Thomsett did not volunteer to drive the trucks to the tip face, but was asked by Mr Cutjar to drive them to the tip face and unload them while he (Mr Cutjar) was away, in order to save time, with a view to starting the work involving the press on Mr Cutjar's return. 9 Mr Thomsett drove one truck to the tip face without incident. When he was driving the second truck to the tip face he lost control, due to both brakes and gears being defective, and had to jump from the truck. He was injured. 10 Mr Thomsett brought proceedings in the Compensation Court claiming his medical expenses, then approximately $13,500, pursuant to s 60 of the Workers Compensation Act 1987 ("the Act"). The respondents to his application were Richards, Mr Cutjar, Mr Rumble, and WorkCover Authority of New South Wales ("the Authority"). 11 The application was heard by Commissioner Turner . The Commissioner ordered that Mr Cutjar pay Mr Thomsett's medical expenses and that the Authority meet the payments. 12 The concluding paragraphs of the Commissioner's reasons read - "My primary view is that the applicant was in the employ of Mr Cutjar at all relevant times on the morning of 2 March 1995 and drove the trucks at his direction giving rise to the applicant suffering injury. But were I to so find I consider that I would be seen to have erred at law. So in the ultimate I find that the applicant was in the employ of Mr Rumble at all relevant times on 2 March 1995 and that the applicant suffered injury on that morning in the circumstances relied upon. Having so determined, the provisions of section 20 prevail in that because Mr Rumble was uninsured at the relevant date Mr Cutjar, as principal is liable to compensate the applicant in accordance with my orders." 13 Section 20 of the Act to which the Commissioner referred so far as presently material read - "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 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. (2) If compensation is claimed from or proceedings are taken against the principal in respect of any such injury, then, in the application of this Act, reference to the principal shall be substituted for reference to the employer, except that the amount of compensation shall be calculated with reference to the earnings of the worker under the employer by whom the worker is immediately employed. …" 14 It seems that the Commissioner made his order by the steps - (a) In the course of or for the purposes of his trade or business Mr Cutjar contracted with Mr Rumble for the execution by or under Mr Rumble of work undertaken by Mr Cutjar; (b) Mr Rumble employed Mr Thomsett in the execution of the work; (c) Mr Rumble was uninsured; (d) Therefore Mr Cutjar was liable to pay compensation as if he had employed Mr Thomsett; (e) Mr Cutjar was also uninsured; and (f) Therefore the Authority was obliged to meet the payments. 15 The Authority appealed to a judge of the Compensation Court. Procedural complications in the appeal were overcome by agreement that it should be treated as an appeal on point of law only. The ground of appeal may have been inappropriately limited, but it seems that no issue was taken as to its scope. Maguire CCJ allowed the appeal, set aside the Commissioner's orders, and ordered that Richards pay the medical expenses. 16 His Honour identified what he thought were two errors of law made by the Commissioner, and I will later set out the relevant part of his reasons. In the course of doing so, he said that he considered that it was not open to the Commissioner to find that Mr Rumble had employed Mr Thomsett, and that if the Commissioner had not made the errors "he would have been forced as a matter of law to find Richards liable to pay compensation to Thomsett as if Thomsett had been immediately employed by Richards and in the application of section 20". 17 Again the decision involved the application of s 20 of the Act. His Honour's reasoning must have been by the steps - (a) In the course of or for the purposes of its trade or business Richards contracted with Mr Cutjar for the execution by or under Mr Cutjar of work undertaken by Richards; (b) Mr Cutjar employed Mr Thomsett in the execution of the work; (c) Mr Cutjar was uninsured; (d) Therefore Richards was liable to pay compensation as if it had employed Mr Thomsett. 18 Richards appealed to this Court. Pursuant to s 32 of the Compensation Court Act, its appeal was limited to error in point of law. 19 Richards' written submissions noted that a number of grounds of appeal had been raised but that they all concerned "related factual matters, namely the identity of Mr Thomsett's employer". It was said that the submissions would therefore be put "in a rolled up fashion", and that "the question or questions for this Court is or are whether Maguire CCJ was correct in saying that Commissioner Turner erred in point of law". The submissions were then to the effect that the two errors identified by his Honour were not errors of law. 20 I set out the relevant part of his Honour's reasons, in which will be found extracts from the Commissioner's reasons additional to the concluding paragraphs earlier cited. " THE COMMISSIONER'S JUDGMENT Armed with the agreed primary facts and with the further primary facts as found by him, the Commissioner proceeded to determine the ultimate issue before him. His reasoning occupies some 18 pages of the transcript. In my judgment, the Commissioner first misdirected himself in the following passage: 'Mr Cutjar induced the applicant to be at the site for purposes other than those of the first respondent's business. It was for the purposes of or in connection with Mr Cutjar salvage rights business in terms of recyclable materials that the applicant was on site on that day. It was not in other words, as an employee or agent of the first respondent that Mr Cutjar invited the applicant's attendance on that day, but in relation to the proposed business venture between he [sic] Mr Cutjar and Mr Rumble, or did Mr Cutjar set out to subcontract with Mr Rumble for the pressing of the cardboard with each of them sharing any resultant profit. Either way, I have no doubt that Mr Cutjar was acting in his own right and financial interest in making the overtures to Mr Rumble in the first place and in turn, offering the applicant a day's work. That the engagement of the applicant by Mr Cutjar the day before the accident was for the mutual benefit of Mr Cutjar and Mr Rumble in return for Mr Cutjar's ultimate plan to use the press to bale and recycle cardboard and perhaps recycle plastic bottles with the assistance of Mr Rumble. For his part, the applicant was happy to take the offer of work, even if it was ultimately for one day only. Thus I am satisfied that by his attendance on site on the day of the accident he had in good faith accepted such employment offer and entertained no doubt that at the end of the day, he would be paid cash in hand for his services by Mr Rumble according to Mr Cutjar's advice to him the previous day.' The first paragraph in the passage he has quoted seems to me to misunderstand the nature of the relationship between Richards and Mr Cutjar. It was the business of Richards to dispose of the Shire's waste material. Whether this was done by tipping into the disused pit on the one hand, or by recycling on the other, seems to me to be immaterial. Richards' contract with the Shire has but the one function. Cutjar's duty is to manage Richard's performance of that contract. If along the way he derives some income from the sale of recycled material, he is nevertheless still managing Richards' contract. To see him as wearing two hats is to misunderstand his position vis-a-vis Richards. The Commissioner then examined certain decided cases and proceeds: 'I find that all such elements are met in the instant case and a contract of service was in place on the accident date. It is clear that the applicant met with his injuries whilst on the premises of the first respondent, driving one of the first respondent's truck [sic] in connection with the first respondent's trade or business. But I am of the firm view that the applicant was not a worker in the employ of the first respondent on the day of the accident. Even though the applicant had been asked/directed by the [sic] Mr Cutjar to drive the trucks on that day and Mr Cutjar was under one hat a servant of the first respondent, I see no contractual connection between the applicant and the first respondent on that day, because clearly, invitation for the applicant to be on the tip site that day had nothing to do with the trade or business of the first respondent, it was just coincidental that on the day of the accident, Mr Cutjar asked the applicant to undertake the extraneous job of moving the trucks, which was certainly a job the applicant was familiar with, having done this task on numerous occasions in the past.' This passage does no more than repeat the error into which the Commissioner fell in the first passage noted. Later: 'On my view of the instant circumstances, the applicant entered into a contract of service with Mr Cutjar/Mr Rumble on the day in question, not with the first respondent. Thus, Mr Cutjar and/or Mr Rumble is deemed to continue to be the employer of the applicant whilst the applicant was driving the first respondent's trucks.' This passage seems to me to be correct. The Commissioner is finding that there is a contract between Mr Thomsett on the one hand and either Mr Cutjar or Mr Rumble on the other hand. In a further passage the Commissioner makes it plain that he is still labouring under the burden of his first mistake. 'Under Mr Cutjar's other hat, he was self-employed having sole rights to the disposal of the recyclable material including the aforementioned cardboard. It was Mr Cutjar in his own right and not as an employee/agent of the first respondent whom he (sic) made the approach to both Mr Rumble and the applicant gained their attendance at the tip in the morning of the accident.' The Commissioner eventually reaches his ultimate conclusion in the following passage: 'My primary view is that the applicant was in the employ of Mr Cutjar at all relevant times on the morning of 2 March 1995 and drove the trucks at his direction giving rise to the applicant suffering injury. But were I to so find, I consider that I would be seen to have erred in law. So, in the ultimate, I find that the applicant was in the employ of Mr Rumble at all relevant times on 2 March 1995 and that the applicant suffered injury on that morning in the circumstances relied upon. Having so determined, the provisions of section 20 prevail in that because Mr Rumble was uninsured at the relevant date, Mr Cutjar as principal, is liable to compensate the applicant in accordance with my orders.' The strength of reasoning in this passage is not immediately apparent. Indeed, it is not apparent at all. CONCLUSION MR CUTJAR The only 'relevant time' is the time spent by Mr Thomsett driving Mr Cutjar's truck to the point where he felt compelled to jump for his life. Whatever relationship was about to begin later in the morning between Mr Thomsett and Mr Rumble, it was open to the Commissioner to find that at the 'relevant time', Mr Thomsett was employed by Mr Cutjar. That conclusion would be available by reference to Mr Cutjar's request to Mr Thomsett (as the Commissioner so found), and by reference to the established but intermittent contractual relationship which had been in place from time to time in the then recent past months. It was clearly open to the Commissioner to infer a contract arising on the morning of 2 March 1995. Had he done so, he would not have erred at law. This was his second error. MR RUMBLE It seems to me that it was not open to the Commissioner to find that Mr Thomsett was in the employ of Mr Rumble 'at all relevant times'. The arrangements made over the telephone on the preceding day and Mr Thomsett's presence gave rise to a situation where a contract was about to come into being if these people had all decided to get on with it. But they did not get on with it. They did not even begin to get on with it. SECTION 20 The Commissioner was alive to the operation of section 20. It seems to me that if he had made neither of the first two mistakes which I have set out, he would have been forced as a matter of law to find Richards liable to pay compensation to Thomsett as if Thomsett had been immediately employed by Richards and in the application of section 20." 21 The first error his Honour identified was in step (a) in the progression earlier described. For the application of s 20 of the Act, the principal had to contract with the contractor for the execution by or under the contractor of work undertaken by the principal. The Commissioner had asked himself whether Mr Cutjar as contractor was executing or having executed work undertaken by Richards, and had said that he was not because he was acting in his own interests in fulfilment of his scavenging and recycling rights: hence Richards could not be liable, via the uninsured Mr Cutjar, to pay compensation to Mr Thomsett. On that basis, it did not matter in relation to Richards' liability to pay compensation whether Mr Cutjar employed Mr Thomsett or Mr Rumble employed Mr Thomsett, although that could matter for other purposes. In his Honour's opinion, the Commissioner was in error because Mr Cutjar was executing or having executed work undertaken by Richards in that he was disposing of the rubbish, even if he was disposing of it by recycling as distinct from by consignment to landfill. 22 Richards submitted that there was no error of law because the Commissioner had made a finding of fact of which there was evidence: he had found what were the respective businesses of Richards and Mr Cutjar. I do not agree. The question was whether the work in the execution of which Mr Thomsett was employed was part of work undertaken by Richards. It clearly was, whether the focus be (as I would favour) on the particular task of driving the trucks to the tip face or (as the Commissioner and his Honour approached it) on the more general exercise of disposing of the recyclable materials. The Commissioner erred in law because Mr Cutjar's acting in his own interests in fulfilment of his scavenging and recycling rights did not negate an affirmative answer to the question; he misapprehended the scope of the statutory notion of execution of work undertaken by Richards. Put another way, on the primary facts as found by the Commissioner the question had to be answered in the affirmative: Hope v Bathurst City Council (1980) 144 CLR 1. 23 The second error his Honour identified was in step (b) in the progression earlier described. Section 20 required that there be a worker employed in the execution of the work undertaken by the principal. The Commissioner considered that one or other of Mr Cutjar or Mr Rumble employed Mr Thomsett, said that his "primary view" was that Mr Cutjar relevantly employed Mr Thomsett, but in a passage which warranted his Honour's comment about strength of reasoning held that Mr Rumble relevantly employed Mr Thomsett. Given the Commissioner's step (a), this did not matter in relation to Richards' liability to pay compensation, but it mattered in the reasoning of the Commissioner thereafter even though both Mr Cutjar and Mr Rumble were uninsured and the Authority was in double jeopardy. In his Honour's opinion the Commissioner was in error because the Commissioner would not have erred in law if he had held that Mr Cutjar employed Mr Thomsett: it was (at the least) open to him to come to that conclusion. 24 Richards submitted that there was no error of law because, while it was open to the Commissioner to hold that Mr Cutjar employed Mr Thomsett, it was also open to him to hold that Mr Rumble employed Mr Thomsett. It was, Richards said, a question of fact, and the Commissioner's finding of fact could not be interfered with in an appeal on point of law only. In my view, this misconceived the error identified by his Honour. The error was in saying, for a reason or reasons which were not explained, that it would be an error of law to hold that Mr Cutjar employed Mr Thomsett. It was an error of law for the Commissioner to act upon a misapprehended error of law. 25 In my opinion, his Honour was correct in his identification of the Commissioner's errors of law. The answer to the question or questions posed in the appellant's written submissions was therefore that Maguire CCJ was correct in saying that Commissioner Turner erred in point of law. 26 If there were no more, the appeal to this Court would fail because the asserted errors in point of law on his Honour's part have been rejected. However, there was more, and it must be addressed. 27 Having upheld the appeal from the Commissioner as an appeal on point of law only, his Honour did not return the matter to the Commissioner, or to another Commissioner, for reconsideration. He decided for himself that, on the application of s 20 of the Act and by the steps earlier described, Richards was liable to pay compensation to Mr Thomsett. Step (a), and that, if employed by Mr Cutjar, Mr Thomsett was employed in the execution of the work undertaken by Richards, either flowed from his Honour's correction of the first error he identified or were common ground. That Mr Cutjar was uninsured was also common ground. But to hold that Mr Cutjar employed Mr Thomsett went further than identification of the second error of law in the Commissioner's misapprehension that he would err in law if he so held. Consistently with correction of that error, it could still have been held that Mr Rumble employed Mr Thomsett, not because to hold otherwise would be erroneous but because on the facts it was so even if the services of Mr Thomsett were temporarily lent to Mr Cutjar; or, at least in logic, it could have been held that Richards employed Mr Thomsett. Should his Honour have gone further, holding positively that it was not open to find that Mr Rumble employed Mr Thomsett, and inferentially that Mr Cutjar employed Mr Thomsett? 28 Richards' grounds of appeal in the notice of appeal filed in this Court included that his Honour erred in law in holding that Mr Cutjar employed Mr Thomsett. The orders sought included in the alternative that the order of Maguire CCJ be set aside or that the matter be remitted to be determined in accordance with law. Richards' oral submissions included a submission to the effect that fixing upon the employer, once the Commissioner's holding was struck down, was something which his Honour should not have taken up. The submission was put at two levels. First, it was said that fixing upon the employer was a question of fact outside the appeal to his Honour on point of law only. Secondly, it was said that his Honour was himself wrong in point of law in holding, in substance, that the only possible employer was Mr Cutjar. 29 Mr Thomsett did not object to this enlargement of Richards' submissions. He expressed concern that he might "fall between both stools", meaning in the outcome of the appeal have neither an order against the Authority nor an order against Richards, and sought to meet that concern by submitting that, given his Honour's step (a), it did not matter whether Mr Cutjar employed Mr Thomsett or Mr Rumble employed Mr Thomsett. It was enough, it was said, that Mr Thomsett was doing work undertaken by Richards. 30 Mr Thomsett relied on Marshall v Andrews (1995) 12 NSWCCR 153. It was there held by majority (Kirby ACJ and Handley JA, Rolfe AJA dissenting) that in the application of s 20 the worker did not have to be employed by the contractor, but could be employed by another person who was in turn employed by the contractor. This was thought to follow principally from the words "by or under the contract" (emphasis added), the reference to employment "in the execution of the work" rather than "by the contractor in the execution of the work", and a perceived purpose of providing access to an insured principal. But the decision does not apply here, if Mr Rumble employed Mr Thomsett, because that employment was not in a chain of persons and, so far as Mr Rumble was concerned, was not employment in the execution of the work undertaken by Richards. Moir v Schrader (1937) 56 CLR 310 and WorkCover Authority of New South Wales v Dependable Taxi Trucks & Couriers (Sydney) Pty Ltd (1994) 10 NSWCCR 310 to which Mr Thomsett also referred do not assist his argument. 31 The Authority did not object to the enlargement of Richards' submissions either, and put a further submission that employment by Mr Rumble could be put aside because the question was one of employment at the time Mr Thomsett was driving the trucks - that, it was said, was nothing to do with Mr Rumble, and so the result had to be that Mr Cutjar employed Mr Thomsett. 32 Once the Commissioner's holding was struck down, it was necessary to determine whether Mr Cutjar employed Mr Thomsett, specifically in relation to the driving of the trucks, as part of the reasoning to Richards' liability to pay compensation. I do not think it could be said that the only possible result was an affirmative answer. With respect to his Honour, when the appeal to the Compensation Court was in point of law only, after setting aside the Commissioner's orders he should have remitted the matter to a Commissioner or otherwise dealt with it so as to bring about a further hearing. That is what should now be done by this Court. 33 Richards Iost the major issues in the appeal, but succeeded in obtaining the remission. Mr Thomsett and the Authority had the reverse fortunes. I propose that the appeal be upheld in part, the orders of the Compensation Court other than the orders allowing the appeal to that court and setting aside the Commissioner's orders be set aside, and the matter be remitted to the Compensation Court to be dealt with according to law. There should be no order as to the costs of the appeal, and the costs of the proceedings below should be as ordered by the Compensation Court upon its dealing with the matter on remission. 34 DAVIES AJA: I agree with Giles JA. ______________ DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.