District Court New South Wales Medium Neutral Citation: Vietell Pty Limited (trading as Charles & Stuart) v Mitchell Brian Hesford [2014] NSWDC 213 Hearing dates: 22 May 2014; 7 October 2014 Decision date: 10 October 2014 Before: Cogswell SC DCJ Decision: (1)Verdict and judgment for the plaintiff in the sum of $17,313.21. (2)The defendant to pay the plaintiff's costs. Catchwords: CIVIL LAW - liability to repay compensation out of damages awarded - whether classified as a "worker" for the purposes of the Workers' Compensation Act 1987, s 151Z(1)(b) - definition of "worker" as provided by the Workplace Injury Management and Wokplace Compensation Act 1998 - whether relationship between plaintiff employer company and working person amounts to a relationship of employment - whether working person working for commercial or domestic purpose - employment of real and commercial concern - employment reasonable in all the circumstances Legislation Cited: Workers' Compensation Act 1987, s 151Z(1)(b) Workplace Injury Management and Workers Compensation Act 1998, s 4 Cases Cited: Articulate Restorations and Development Pty Ltd v Crawford (1994) 57 IR 371 Hollis v Vabu Pty Ltd (2001) 207 CLR 21 Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 Category: Principal judgment Parties: Vietell Pty Limited (trading as Charles & Stuart) (plaintiff) Mitchell Brian Hesford (defendant) Representation: Mr P Rickard (plaintiff) Mr G Young (defendant) Stiles Lawyers Pty Limited (plaintiff) Moray & Agnew Lawyers (defendant) File Number(s): 2013/00078208 Judgment Introduction 1A woman was injured in a car accident on her way home from work. The accident was the other driver's fault. She received workers' compensation, but also sued the other driver and received damages. The law does not allow her to keep both. It provides that she is liable to repay the compensation out of the damages. 2The company the woman worked for has sued the driver of the other car to recover the compensation it paid. But the driver says he is not liable to pay out the compensation. He claims that the company she worked for did not have to pay the workers' compensation to the woman in the first place, because she was not a worker. 3So in this case, the issue is whether the woman could be classified in her job as a "worker" for the purposes of the New South Wales law on workers' compensation. Parties and Representation 4The woman's name is Martonia Pimenta. She was not a party in the case, but was called as a witness. The plaintiff in the case, which is the company claiming she was its employee, is Vietell Pty Ltd. The defendant in the case, the other driver, is Mitchell Hesford. 5I had the benefit of competent counsel representing each party, Mr P Rickard for the plaintiff, and Mr G Young for the defendant. Background Summary 6Ms Pimenta worked in a family household. They were the Verons, who were a family of five, Mr and Mrs Veron and three children. Ms Pimenta's duties included cleaning and washing as well as cooking and looking after the children and getting them to and from school. She worked eight hours a day, four days a week. When Ms Pimenta started work in the Veron household in 2005, Mrs Veron was seriously ill with degenerative diseases. She was in a wheelchair. Ms Pimenta's duties included care services for Mrs Veron. 7What causes the problem in this case is that Ms Pimenta was not employed in her job by either Mr or Mrs Veron. Ms Pimenta was paid for doing her job in the Veron household by Mr Veron's own employer, a real estate agency trading as Charles & Stuart, which is the business name of the plaintiff Vietell Pty Ltd. 8The driver, Mr Hesford, argues that when I examine the relationship between Ms Pimenta and the real estate agency, it does not amount to a relationship of employment. It would follow that Ms Pimenta cannot therefore be a worker in employment and covered by the law of workers' compensation. The Law 9The plaintiff's cause of action is provided by s 151Z(1)(b) of the Workers' Compensation Act 1987. That section relevantly provides as follows - "(1) 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: ... (b) if the worker recovers firstly compensation and secondly those damages, the worker is liable to repay out of those damages the amount of compensation which a person has paid in respect of the worker's injury under this Act, and the worker is not entitled to any further compensation". The reference to "compensation is payable under this Act" is to s 9 of the same Act, which relevantly provides that a "worker who has received an injury... shall receive compensation from the worker's employer in accordance with this Act." The expression "worker" is defined in another Act, the Workplace Injury Management and Workers Compensation Act 1998. But it applies to the Workers Compensation Act. Section 4 of the Workplace Injury Management and Workers Compensation Act says that "'worker' means a person who has entered into or works under a contract of service...with an employer." As Mr Young correctly pointed out in argument, the legislation goes no further to explain how to identify a contract of service between a worker and an employer. 10Whether or not a relationship between two people can be described as employment is a question which has arisen and been addressed in the courts over many years. See the observations of Kirby J - when his Honour was President of the Court of Appeal - in Articulate Restorations and Development Pty Ltd v Crawford (1994) 57 IR 371 at 375 - 376. The legislation reasonably expects readers to resort to that case law. I say "reasonably" because although the question can be difficult to answer in particular cases, there is plenty of guidance about how to approach the question. The High Court of Australia has provided such guidance, and Mr Young and Mr Rickard addressed many of their submissions around two High Court cases. 11In Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16, Mason J (as his Honour then was) said the following at 24 - "A prominent factor in determining the nature of the relationship between a person who engages another to perform work and the person so engaged is the degree of control which the former can exercise over the latter. It has been held, however, that the importance of control lies not so much in its actual exercise, although clearly that is relevant, as in the right of the employer to exercise it...." I have omitted references to authority. Further on his Honour said as follows - "But the existence of control, whilst significant, is not the sole criterion by which to gauge whether a relationship is one of employment. The approach of this Court has been to regard it merely as one of a number of indicia which must be considered in the determination of that question....Other relevant matters include, but are not limited to, the mode of remuneration, the provision and maintenance of equipment, the obligation to work, the hours of work and the provision for holidays, the deduction of income tax and the delegation of work by the putative employee." Brennan J (as his Honour then was) was in "general agreement" with Mason J and Deane J appears to agree with Mason J's reasoning. 12In Hollis v Vabu Pty Ltd (2001) 207 CLR 21 the High Court in a joint judgment of Gleeson CJ, Gaudron, Gummow, Kirby and Hayne JJ referred to Mason J's judgment in Stevens and said at 41([45]) - in the context of vicarious liability - that guidance on the question is provided by various matters which "include, but are not confined to, what is now considered 'control'". Resolution of the Question 13As the controversy in this case emerged through cross-examination and addresses, it has become apparent that it is different to the usual issue in such cases. What I have described as "the usual issue" is this: whether the relationship between the worker and the person he or she works for can be described as one of employee and employer or independent contractors. What seems to concern the defendant in this case is why Ms Pimenta is employed by the plaintiff real estate agency and not by Mr Veron himself. 14I will return to that question, but first let me say that I have no difficulty in concluding that Ms Pimenta was an employee of the plaintiff. She had fixed hours and days of work. Her superannuation and tax were paid by the plaintiff. She had annual leave and a loading. It was she who was expected to do the work, and she had no opportunity or right to delegate the work. She had sick leave. Her annual leave was usually taken at the convenience of the family. She was listed in the financial documents and workers' compensation documents of the plaintiff as an employee, which amounted to public assertions of her status as an employee. She had specific duties to do which did not really require specialised skill or knowledge. The plaintiff exercised a right to terminate her services. Her services were of benefit to the plaintiff by relieving Mr Veron, who was the principal of the plaintiff's business. 15Mr Young questioned Mr Sarlas, the qualified accountant who is the financial controller of the plaintiff, on book entries in respect of Ms Pimenta. Nothing emerged that affected Ms Pimenta's status as an employee of the plaintiff. Nor were there any inappropriate entries, I might add. Mr Sarlas struck me as a careful and competent financial controller who was well acquainted with the subject matter. 16Most of Mr Young's complaints on behalf of his client went to issues such as the employment dealings of Mr or Mrs Veron with Ms Pimenta, how many children were at home and needed attention after Mrs Veron died, and where Ms Pimenta worked. But the plaintiff is a corporation, and the services it employed Ms Pimenta for were personal and domestic. Of course it was necessary for the plaintiff to act through the most convenient individual: Mr Veron at work and Mrs Veron at home. There was still a school-aged son at home when Mrs Veron died and when Ms Pimenta had her accident. 17Returning to the nature of the controversy in this case, Mr Young squarely articulated this issue in his address when he described the hiring of Ms Pimenta by the plaintiff as a fringe benefit for Mr Veron and his family. He went on to argue that it was, on paper, a fiction which worked in favour of Mr Veron. He argued that Ms Pimenta worked for Mr Veron personally and not to benefit the company, and that there was no real relationship between Ms Pimenta and the plaintiff. It really was a benefit for Mr Veron personally. 18What is obvious to me is this. Mr Veron was the principal of the business owned by the plaintiff. He was also the licence holder for the real estate agency. He was also its highest-paid employee. He was therefore a very significant human resource so far as the plaintiff was concerned. Any interference with his working capacity would clearly compromise the plaintiff's business. It matters not that he was not a director. His role in the business did not depend on that. On the other hand, Mr Veron was obviously facing a personal crisis in his domestic life. His wife was seriously ill and they had three children at home, one quite young. The potential for Mr Veron to be distracted from his work and therefore compromise the plaintiff's business was obvious. 19In my opinion, the decision by the plaintiff to employ Ms Pimenta to do what she did in Mr Veron's home in those circumstances was perfectly reasonable and made commercial sense. 20Although that need may have abated by the time that Mrs Veron died and Ms Pimenta had her accident, it was still there. Mr Veron had a family at home, including a young boy. It was a matter for the plaintiff to decide when it no longer needed to employ Ms Pimenta. That occasion had not arisen at the time of her accident. 21In my opinion, there was no impropriety. The need was real and commercial, and a concern to the plaintiff's business. Just because most other people would employ their housekeeper personally does not mean that had to happen in this case. As Mr Rickard said in his closing submissions, "just because it was convenient does not mean that it was illegal." Conclusion 22Accordingly, I am of the opinion that the plaintiff has made out its case as pleaded in the statement of claim, and I would enter a verdict and judgment for the plaintiff. Orders 23The formal orders are these. Verdict and judgment for the plaintiff in the sum of $17,313.21. The defendant is to pay the plaintiff's costs. ********** 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. Decision last updated: 10 December 2014