New South Wales Supreme Court CITATION : Joanna's Productions P/L v GIO Workers Compensation [2005] NSWSC 1314 HEARING DATE(S) : 5 December 2005 JUDGMENT DATE : 16 December 2005 JURISDICTION : Common Law Division JUDGMENT OF : Associate Justice Harrison DECISION : (1) The appeal is dismissed; (2) The orders of his Honour Magistrate Lulham dated 8 July 2005 are affirmed; (3) The summons filed 28 July 2005 is dismissed; (4) The plaintiff is to pay the defendant's costs as agreed or assessed. CATCHWORDS : Appeal Local Court Magistrate's decision - identity of employer LEGISLATION CITED : Local Courts Act 1982 (NSW) - s 73 Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 Azzopardi v Tasman UEB Industries LTD (1985) 4 NSWLR 139 Carr v Neill [1999] NSWSC 1263 Devries v Australian National Railways Commission (1993) 177 CLR 472 CASES CITED : R L & D Investments Pty Ltd v Bisby [2002] 37 MVR 479; [2002] NSWSC 1082 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) (1999) 160 CLR 588 Swain v Waverley Municipal Council [2005] HCA 4 The Australian Gas Light Co v Valuer General (1940) SR (NSW) 126 Joanna's Productions Pty Limited (Plaintiff) PARTIES : GIO Workers Compensation (NSW) Limited (Defendant) FILE NUMBER(S) : SC 13336/2005 Mr R J A Sergi (Plaintiff) COUNSEL : Mrs E M Frizell (Defendant) Mr P Macken, Leigh Virtue & Associates (Plaintiff) SOLICITORS : Ms L Dorman, Turks Legal (Defendant) LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 93874/04 LOWER COURT JUDICIAL OFFICER : His Honour Magistrate Lulham IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ASSOCIATE JUSTICE HARRISON FRIDAY, 16 DECEMBER 2005 13336/2005 - JOANNA'S PRODUCTIONS PTY LIMITED v GIO WORKERS COMPENSATION (NSW) LIMITED JUDGMENT (Appeal Local Court Magistrate's decision - unpaid insurance premiums) 1 HER HONOUR: By summons filed 28 July 2005 the plaintiff seeks firstly, an order that the orders of the Local Court dated 8 July 2005 be set aside; secondly an order that there be verdict and judgment for the plaintiff; thirdly, an order that the defendant pay the plaintiff's costs of the proceedings; and fourthly, an order that the defendant pay the plaintiff's costs of the proceedings in the Local Court. The plaintiff is Joanna's Productions Pty Limited (ACN 078 728 506) (Joanna's Productions). The defendant is GIO Workers Compensation (NSW) Limited (ACN 054 523 698) (GIO). 2 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 73 of the Local Courts Act 1982 (NSW) (the Act) 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; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156; Carr v Neill [1999] NSWSC 1263 and R L & D Investments Pty Ltd v Bisby [2002] 37 MVR 479; [2002] NSWSC 1082. It cannot be said that the judicial officer 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. 3 Recently, in Swain v Waverley Municipal Council [2005] HCA 4, the Chief Justice at [2] reiterated that in the common law system of civil justice, the issues between the parties are determined by the trial process. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal. 4 Section 75 of the Act provides that the Court may determine an appeal by either (a) by varying the terms of the judgment or order or (b) setting the judgment or order aside or (c) by setting the judgment or order aside and remitting the matter for determination in accordance with the Court's directions or (d) by dismissing the appeal. Grounds of appeal 5 Joanna's Productions appeals from the whole of the decision of his Honour Magistrate Lulham made on 8 July 2005 on the grounds firstly, that the Magistrate erred in finding that Joanna's Productions, as the insured, and GIO, as the insurer, were parties to a policy of workers compensation insurance for the period claimed by the GIO; secondly, the Magistrate erred in finding that Joanna's was obliged to make certain payments to the GIO in respect of a policy of workers compensation insurance as alleged by the GIO; thirdly, that the Magistrate erred in law in relying on evidence that was not admissible. 6 GIO submitted, firstly, that the Magistrate found that "Joanna's Productions" was a party to the insurance policy based upon evidence clearly set out in his Honour's judgment which amply supported his Honour's findings; secondly that his Honour's rulings as to the admissibility of evidence were not erroneous; and thirdly that in the event this court finds that his Honour erred in admitting certain evidence, it does not necessarily follow, without more, that his Honour's ultimate decision cannot be sustained and that there should be judgment for Joanna's Productions. 7 Joanna's Restaurant Pty Limited was incorporated on 29 May 1997. On 30 July 2001 it changed its name to Joanna's Productions Pty Limited. Local Court proceedings 8 In the Local Court GIO sued Joanna's Productions for workers compensation insurance premiums in the sum of $18,578.01 inclusive of interest. The Magistrate ordered that Joanna's Productions pay to the GIO the sum of $18,873.79. 9 At paragraph 3 of the statement of claim the GIO pleaded that: "The plaintiff was the insurer and the defendant, the insured, under a policy of workers compensation insurance within the meaning of the Workers Compensation Act 1987 (as amended) (the "Act"). The policy relates to the following periods of insurance: Period of Insurance (a) 7 March 1998 to 7 March 1999; (b) 7 March 1999 to 7 March 2000; (c) 7 March 2000 to 7 March 2001; (d) and 7 March 2001 to 7 March 2002." 10 Demands were made for payment of the premiums and the defendant failed to pay the amounts sought. Joanna's Productions did not put any evidence before the Magistrate. 11 Joanna's Productions submitted that it could not be made a party to the workers compensation policy of insurance No WCZZ6612 by GIO unilaterally ipso facto and without notice to Joanna's Productions (see para [24] written submissions). The Magistrate recorded Joanna's Production's defence slightly differently by stating that it claimed that firstly, it was not the insured; and secondly, that it was not the employer of the various employees. 12 Joanna's Productions further submitted that the Magistrate erred when he made a number of rulings on the admissibility of evidence in regard to the affidavit of Alice Nasr of 16 June 2005, specifically: in allowing into evidence paragraphs 4 (relevance and hearsay), 5, 6, 7, 9, 10, 11, 13, 14 and 20 (inadmissible form), sentences two and three of paragraph 16 (relevance), and annexures "A" (relevance), "B" (relevance, hearsay, inadmissible as a business record, opinion, reporter unavailable for cross-examination), "D" (as offshoot of "B" inadmissible for same reasons) and "E" (relevance), and that the Magistrate erred in relying on annexure "B" as the basis for the finding that Joanna's Productions was the insured under a policy of workers compensation insurance for the period claimed by GIO. The Magistrate's reasons 13 On 7 March 1995 the original workers compensation proposal was completed. The Magistrate referred to this document and made findings that the employer was shown as Joanne M Kelly, the form indicated a trade name of Joanna's Restaurant and that the trade name was registered. According to the Magistrate, on the basis of that application, a policy was issued in the name of Joanne M. Kelly trading as Joanna's Restaurant." 14 Each year the GIO forwarded a Workers Compensation Renewal application. Each year Ms Kelly submitted that the renewal form and furnished a declaration. On 11 April 1997 she declared that she was a sole proprietor and that "Joanna's Restaurant" was the employer. Ms Kelly stipulated that the business was a licensed restaurant providing food and drinks, service and dance entertainment. The restaurant was also described as a "Gentleman's Club". On 11 March 1998 on the renewal form, Ms Kelly declared that she was the director of Joanna's Restaurant and Joanna's Restaurant was the employer. 15 The Magistrate continued: "In October 2003 the plaintiff arranged for an audit to be conducted of the wage records of the entity Joanne M Kelly trading as Joanna's Restaurant. The auditor's report was tendered as annexure B to Alice Nasr's affidavit. In my view it was clearly tenderable as a business record pursuant to s 69 of the Evidence Act and I am satisfied of the authority of Ringrow Pty Ltd v BP Australia Limited (2003) FCA 933, that I can use the statements made therein to draw reasonable inferences from the document. The report indicates that the auditor was given full access by the company staff to the records and the auditor was able to inspect the computer wage records from 1998 to 2001, for group certificate listings, profit and loss accounts for the same years, PAYG summaries, contractors listings and depreciation lists. The report indicated that whilst the insured took out cover in her own name, wages information and contractors were recorded through a company called Joanna's Restaurant Pty Limited. It further indicated that Ms Kelly had sold the business assets including the trading name in July 2001 and retained the company shell and changed the name to Joanna's Productions Pty Limited. Tendered as exhibit 4 was a company search which confirms that the original name of the company, Joanna's Productions Pty Limited was Joanna's Restaurant Pty Limited and it was changed from that name on 29 July 2001. The report indicated that all books of account were maintained in the name of Joanna's Restaurant Pty Limited and not as Joanne M Kelly in which the policy is issued. The company search indicates that from 29 May 1997 to date the sole director and secretary of the company was Joanne M Marie Kelly. The compelling evidence in this matter is the verification of wages paid by an employer, which were tendered as part of exhibit 2. They show that on 11 May, I think it is 1998, the declaration was signed by Joanne Kelly as a director of Joanna's Restaurant. Joanna's Restaurant is shown as the employer. There is no evidence before the Court of any entity known as Joanna's Restaurant at that time. The only evidence is that the entity then in existence was Joanna's Restaurant Pty Limited, and that the sole director of that company was Joanne M Kelly. There was absolutely no evidence that in signing the form in that way, Mrs Kelly was seeking to obtain some advantage, or could obtain some advantage. It seems apparent to me that the likely explanation is a lack of understanding on the part of Mrs Kelly of the difference between the trade name Joanna's Restaurant, which was unregistered, and a company, Joanna's Restaurant Pty Limited. The subsequent wage verification documents were signed in the same way, Joanne Kelly on behalf of Joanna's Restaurant. I'm satisfied that the employer was Joanna's Restaurant Pty Limited. I make that finding based on the clear inferences to be drawn from the auditor's report, and from the documents signed by Mrs Kelly herself. I am satisfied that the correct name for the policy for the employer was in the name of Joanna's Restaurant Pty Limited as the employer. Joanna's Restaurant Pty Limited, in my view was liable for the premium on the workers compensation policy. It was the employer. I note from the affidavit of Alice Nasr, that the application to the authority under s 170 of the Workers Compensation Act would appear to have been made in the name of Joanna's Productions Pty Ltd. In my view it was put strongly to Ms Nasr that in fact, the plaintiff had not endorsed the policy to reflect the company name as per the audit report. I am satisfied that exhibit 5 clearly indicates that such notation was made, and was dated 13 August '04. In my view it's not necessary for the purposes perhaps of this judgment, but in my view, if any of the employees of Joanna's Restaurant made a claim under the Workers Compensation Act, it would clearly need to be, on the clear evidence available to this Court against then Joanna's Restaurant Pty Limited it was therefore as the employer, as clearly the company was. It was of the employer to protect the employer." 16 The Magistrate considered "compelling" the verification of wages signed by Joanne Kelly as a director of Joanna's Restaurant as the employer. His Honour noted that there was no evidence put before the court of any entity known as Joanna's Restaurant existing at the relevant time. His Honour then made his finding that the employer was in fact Joanna's Restaurant Pty Ltd based on "the clear inferences to be drawn from the auditor's report, and from the documents signed by Mrs Kelly herself". 17 The Magistrate was entitled to find from the evidence before him that Joanna's Restaurant was in fact Joanna's Restaurant Pty Limited and it was a party to the insurance policy. In relation to the calculation of unpaid premiums, the subject of this dispute, the solicitors in correspondence with WorkCover claimed that they were acting for Joanna's Productions Pty Limited. The result of this correspondence was that WorkCover directed that GIO make a credit adjustment in favour of Joanna's Productions Pty Limited in the sum of $18,061.71. 18 As another ground of appeal Joanna's Restaurant submitted that certain documents and statements were not admissible as evidence. This evidence included most paragraphs of the affidavit of Ms Alice Nasr, a copy of the original workers compensation proposal form and the accountant's report. It was submitted that they were not admissible on the bases outlined earlier in this judgment. 19 Even if an erroneous reception of evidence does involve error of law, the decision will not be set aside on that account unless substantial wrong of miscarriage of justice is thereby occasioned, so that wrongly admitted evidence which does not influence a decision provides no ground of appeal – see Azzopardi at 153. Some of this evidence which Joanna's Productions disputes such as the original policy and the wage records were relevant to the issues in dispute. Even if there was some evidence wrongly admitted there was other evidence, such as the wage records, from which the Magistrate could reach the conclusion that Joanna's Restaurant Pty Limited was the employer and a party to the insurance policy. There is no error of law. 20 The appeal is dismissed. The orders of his Honour Magistrate Lulham dated 8 July 2005 are affirmed. The summons filed 28 July 2005 is dismissed. 21 Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed. The Court orders: (1) The appeal is dismissed. (2) The orders of his Honour Magistrate Lulham dated 8 July 2005 are affirmed. (3) The summons filed 28 July 2005 is dismissed. (4) The plaintiff is to pay the defendant's costs as agreed or assessed. ********** 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.