New South Wales Supreme Court CITATION : HVTC P/L v Maddison [2003] NSWSC 1037 HEARING DATE(S) : 30 July 2003 JUDGMENT DATE : 12 November 2003 JURISDICTION: Common Law JUDGMENT OF : Master Harrison DECISION : (1) The appeal is dismissed; (2) The decision of Magistrate Elliot dated 16 December 2002 is affirmed; (3) The amended summons filed 24 Januay 2003 is dismissed; (4) The plaintiff is to pay the defendant's costs as agreed or assessed. CATCHWORDS : Appeal decision of Local Court Magistrate - s 151Z Workers Compensation, indemnity LEGISLATION CITED : Local Courts (Civil Claims) Act 1970 (NSW) - ss 39A & 69 Workers Compensation Act 1987 - 151Z Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 CASES CITED : Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Devries v Australian National Railways Commission (1993) 177 CLR 472 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588 Hunter Valley Training Company Pty Limited PARTIES : (Plaintiff) Kevin Maddison t/as Premier Windows FILE NUMBER(S) : SC 10045/2003 Mr M J Jenkins (Plaintiff) COUNSEL : Ms Teresa Anderson (Defendant) Mr Jeffrey Thomas, Rankin & Nathan (Plaintiff) SOLICITORS : Mr Adam Mooney, Turnbull Hill Lawyers (Defendant) LOWER COURT Local Court JURISDICTION : LOWER COURT 561/02 FILE NUMBER(S) : LOWER COURT Mr C Elliot LCM JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION MASTER HARRISON WEDNESDAY, 12 NOVEMBER 2003 10045/2003 - HUNTER VALLEY TRAINING COMPANY PTY LIMITED v KEVIN MADDISON t/as PREMIER WINDOWS JUDGMENT (Appeal decision Local Court Magistrate - s 151Z Workers Compensation, indemnity) 1 MASTER: By amended summons filed 24 January 2003, the plaintiff seeks firstly, an order that the judgment of Mr C Elliot LCM dated 16 December 2002 be set aside; secondly, a declaration that the Magistrate erred in law in not finding that the worker was employed by the plaintiff; thirdly, a declaration that the Magistrate erred in law in not answering "No" to the question "Was the plaintiff required pursuant to their agreement to maintain appropriate workers compensation insurance as to protect the defendant from liability in that regard?"; and fourthly, an order that the matter be remitted to the Local Court to be dealt with according to law. The plaintiff relied on two affidavits of Jeffrey Neil Thomas sworn 8 January 2003 and 29 April 2003. This matter was referred by the list Judge to a Master for hearing. 2 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 69(2) of the Local Courts (Civil Claims) Act 1970 (NSW) permits a party who is dissatisfied with a judgment as being erroneous in point of law to appeal to this Court. The onus lies on the plaintiff to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered, inter alia, in Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 and Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156. It cannot be said that the Magistrate acted on evidence inconsistent with facts incontrovertibly established by the evidence - see Devries v Australian National Railways Commission (1993) 177 CLR 472 per Brennan, Gaudron and McHugh JJ at 479 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 ALR 588. Grounds of appeal 3 The proceedings were commenced in the Local Court at Newcastle (No 969/00) and heard in the Local Court at Toronto (No 561/02). The Magistrate handed down a written judgment on 16 December 2002. The plaintiff alleges that the Magistrate erred in law in holding that there was nothing about the written agreement dated 3 June 1996 between the plaintiff, the defendant and the worker, which identified the worker as an employee of the plaintiff but as an employee of the defendant where (a) there was no sufficient evidence upon which the Magistrate could have made that holding; (b) all the evidence pointed to the plaintiff being the worker's employer and the defendant being the hirer from the plaintiff of the worker's service; and (c) the Magistrate erred in law in holding that the plaintiff was required pursuant to the agreement between the plaintiff, the defendant and the worker to maintain appropriate workers compensation insurance so as to protect the defendant from liability under that insurance. 4 The plaintiff in these proceedings Hunter Valley Training Company Pty Limited (HVTC) was the plaintiff/cross defendant in the lower court proceedings. The defendant in these proceedings Kevin Maddison t/as Premier Windows was the defendant/cross claimant in the lower court proceedings. 5 The worker, Mr Falconer, suffered a severe laceration injury to his right thumb on 5 July 1996 during the course of undertaking work at the premises of Kevin Maddison t/as Premier Windows. Mr Falconer was directed by the defendant to use the bench saw supplied by it in manufacturing the windows. The saw had a guard or cover which was not in place when the plaintiff cut his right thumb. The plaintiff made workers compensation payments to, for or for the benefit of the worker in relation to the laceration injury to his right thumb. The total amount paid by way of workers compensation was the sum of $14,548. 6 In the Local Court the plaintiff sought recovery pursuant to s 151Z of the Workers Compensation Act 1987 (the Act) from the defendant of the sum of $14,548 together with interest from the date of payment to the date of judgment pursuant to s 39A of the Local Courts (Civil Claims) Act together with costs. The Magistrate entered a verdict in favour of the defendant with the plaintiff to pay the defendant's costs as agreed or assessed. At the hearing in the Local Court, the plaintiff withdrew its earlier admission that it was the employer of the worker (J p 2). The legislative provisions 7 Section 9 of the Act provides: "Liability of employers for injuries received by workers - general (1) a worker who has received an injury (and, in the case of the death of the worker, his or her dependants) shall receive compensation from the worker's employer in accordance with this Act. (2) Compensation is payable whether the injury was received by the worker at or away from the worker's place of employment. 8 Relevantly, s 151Z(1)(d) of the Act provides: "If the injury for which compensation is payable under this Act was caused under circumstances creating a liability in some person other than the worker's employer to pay damages in respect of the injury, the following provisions have effect: (d) if the worker has recovered compensation under this Act, the person by whom the compensation was paid is entitled to be indemnified by the person so liable to pay those damages (being an indemnity limited to the amount of those damages)." 9 Section 151Z(1)(d) comes into play where an injury for which compensation is payable was caused under circumstances creating a liability in some person other than the worker's employer to claim damages in respect of the injury. 10 Section 3 of the Act defines "worker" as any person who has entered into or works under a contract of service or apprenticeship with an employer, whether by way of manual labour, clerical work or otherwise, and whether the contract is expressed or implied, or is oral. [There are exceptions to the definition of workers contained in s 3 but these do not apply here]. Section 3 also defines employer to include any body of person, corporate or unincorporated, the legal personal representative of a deceased person, a government employer and a former employer. 11 On 3 June 1996, the plaintiff, defendant and worker entered into a written agreement. In the agreement, Kevin Maddison t/as Premier Windows is described as the host employer, the worker Mr Falconer was described as a GEP (Group Employment Program) participant, the Hunter Valley Training Company as the "organization". The Magistrate examined the provisions of the contract and stated that there was nothing in the agreement that identified the worker as an employee of the plaintiff but rather the plaintiff's document identified the defendant as the host employer. Clause 3 of the agreement provided that the defendant was responsible for the wages and award entitlements applicable to the worker. Clause 10 of the agreement provided that while the plaintiff described itself as a "training company", it provided no training nor supervision of work carried out by the worker, and that "provision of a safe place of work, safe systems of work, safe plant, tools and equipment and adequate training and supervision at all times remain the responsibility of the host employer". Clause 10 also stipulated that the Hunter Valley Training Company will however remain responsible for liability to make workers compensation payments under the Act. Further, under clauses 14 and 15 of the agreement, the defendant is simply described as "the employer". 12 The Magistrate identified the issues to be addressed in his judgment as being: "1. Was the worker employed by the plaintiff or the defendant? and 2. Was the plaintiff required pursuant to their agreement to maintain appropriate worker's compensation insurance as to protect the defendant from liability in that regard?" 13 The plaintiff submitted that the Magistrate posed the wrong question for determination because firstly, the relevant question concerned only the position as between the worker and the plaintiff. It did not concern the defendant at all. However, s 151Z does not come into play if in fact it was the worker's employer who created the liability to pay damages in respect of the injury. Thus it is necessary to determine the identity of the worker's employer. 14 According to the plaintiff, the second error is that the Magistrate ought to have found that Mr Falconer was a worker of the plaintiff within the meaning of s 3 of the Act. According to the plaintiff the reasoning for this being so, is as follows. The worker contracted with the plaintiff as a participant in the GEP and the defendant agreed to provide work to the worker. The worker entered into a contract of service with the plaintiff for the worker to then perform work. The services of the worker were let by the plaintiff under the agreement and pursuant to the GEP to the defendant. It was not possible for the worker to be engaged at the workplace of the defendant in isolation from his involvement in the GEP and in isolation from contracting with the plaintiff and thereby registering with the plaintiff to be a participant in the program. It was necessary for the worker to enter into a contract with the plaintiff for services in order for the labour of the worker to be then let to and placed with the defendant in accordance with the terms of the agreement. The labour provided by the worker for the benefit of the defendant was in result necessarily a consequence of the contract between the worker and the plaintiff. The defendant submitted that there was no probative evidence upon which the Magistrate could have found that the plaintiff was the employer of the worker. 15 The Magistrate's reasoning is as follows: "When I look to the agreement in the totality of those circumstances, I am satisfied it is not an agreement as to establish the worker as an employee of the plaintiff, but, rather as an employee of the defendant, and the Plaintiff as an employment agency for the placement of job applicant. … The Plaintiff's letter of 5 June 1996, especially "Expenses related to Superannuation and Worker's Compensation are included in the oncost", satisfies me there was an express agreement as pleaded in the cross-claim and it was implicit that the Plaintiff would take out and maintain appropriate levels of Workers Compensation Insurance as to indemnify the Defendant in respect of claim made under that insurance." The answers to the issues raised are: 1. No. The worker was employed by the defendant. 2. Yes. Therefore there will be a verdict for the Defendant on the Claim. For the purposes of this exercise, the cross-claim is merged in the notice of grounds of defence. The Plaintiff is to pay the defendant's costs to be agreed or assessed." 16 A "worker" is a person who has entered into or works under a contract of service or apprenticeship with an employer. It was open to the Magistrate, by reference to the contract, to find that the worker was employed by the defendant. Section 151Z does not come into play because it was the employer who created the liability not "some other person". 17 Finally, the defendant submitted that the worker had been employed by the plaintiff as well as by the defendant, the defendant was entitled to succeed in its cross claim. In this regard, the question of whether the worker was employed by the plaintiff or the defendant (or both) was rendered immaterial by the provisions of clause 10 of the agreement signed on 3 June 1996. Likewise it was open to the Magistrate to find that the plaintiff was responsible to make the workers compensation payments. 18 There has been no error of law. The appeal is dismissed. The decision of Magistrate Elliot dated 16 December 2002 is affirmed. The amended summons filed 24 January 2003 is dismissed. 19 Costs are discretionary. Normally costs follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed. 20 The Court orders: (1) The appeal is dismissed. (2) The decision of Magistrate Elliot dated 16 December 2002 is affirmed. (3) The amended summons filed 24 January 2003 is dismissed. (4) The plaintiff is to pay the defendant's costs as agreed or assessed. ********** Last Modified: 11/13/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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