Acehigh Pty Ltd v Q-COMP [2008] ICQ 41 (2008) 189 QGIG 775

[Extract from Queensland Government Industrial Gazette, dated 21 November, 2008, Vol. 189, No. 15, pages 775-779] INDUSTRIAL COURT OF QUEENSLAND Workers' Compensation and Rehabilitation Act 2003 - s. 561(1) - appeal against decision of industrial magistrate Acehigh Pty Ltd AND Q-COMP (C/2008/36) PRESIDENT HALL 10 November 2008 DECISION In February 2007, WorkCover Queensland exercised the authority vested in it by s. 56 of the Workers' Compensation and Rehabilitation Act 2003 (the Act) to re-assess the premium for Acehigh Pty Ltd's Policy of Accident Insurance for the period 1 July 2003 to 30 June 2004, and issued a re-assessment premium notice for the period. Whereas the original assessment for the 2003/2004 financial year had been issued on the basis of Acehigh Pty Ltd being the employer of only one worker (to whom total wages of $55,000 had been paid), the re-assessment was based on the hypothesis that 23 named individuals who had performed work for Acehigh Pty Ltd over the period (and whose wages totalled $523,797.10) were also workers employed by Acehigh Pty Ltd. Acehigh Pty Ltd sought a Statutory Review. Q-COMP confirmed the decision of WorkCover. There was an appeal to the Industrial Magistrate's Court at Townsville. On 4 July 2008, the Acting Industrial Magistrate into whose hands the matter had fallen dismissed the appeal. Acehigh Pty Ltd now appeals to this Court. As in the proceedings before the Acting Industrial Magistrate, the issues are whether the named individuals were "workers" and whether Acehigh Pty Ltd was their "employer". It is common ground that the Court is concerned with the Act in the form which it took over the premium period, and that the relevant version of the Act is captured by the document commonly referred to as Reprint No. 1. When one goes to Reprint No. 1, one finds that the starting point is s. 11 which provided: "11. Who is a 'worker' (1) A 'worker' is an individual who works under a contract of service. (2) Also, a person mentioned in schedule 2, part 1 is a 'worker', (3) However, a person mentioned in schedule 2, part 2 is not a 'worker'.". The Review Decision reversed WorkCover's conclusion that the requisite degree of control existed in the relationship between Acehigh Pty Ltd and the 23 named individuals to warrant characterisation of the contract as a "contract of service" for the purpose of s. 11(1). That matter was not further agitated before the Acting Industrial Magistrate. All attention focused on s. 11(2) and Schedule 2, Part 1 which provided: "PART 1 - PERSONS WHO ARE WORKERS 1. A person who works under a contract, or at piecework rates, for labour only or substantially for labour only. 2. A person who works for another person under a contract (regardless of whether the contract is a contract of service) is a worker unless - (a) the person performing the work - (i) is paid to achieve a specified result or outcome; and (ii) has to supply the plant and equipment or tools of trade needed to perform the work; and (iii) is, or would be, liable for the cost of rectifying any defect in the work performed; or (b) a personal services business determination is in effect for the person performing the work under the Income Tax Assessment Act 1997 (Cwlth), section 87-60.". It is common ground that there was not in effect a "personal services determination" for the purposes of s. 2(b). The Review Decision reversed WorkCover's conclusion that the 23 individuals were not paid to achieve a specified result or outcome but, confirmed WorkCover's conclusions that s. 2(a)(ii) and (iii) were satisfied and WorkCover's decision that the 23 individuals were not workers by operation of s. 2. That issue was not re-opened before the Acting Industrial Magistrate. The issue pursued before the Acting Industrial Magistrate was whether, as each of WorkCover and the Review Officer had concluded, s. 1 operated to deem the 23 individuals to be "workers" for the purposes of the Act. The Acting Industrial Magistrate answered the question in the affirmative. In my view Her Honour was correct. This Court has been required to address the difficulties posed by s. 1 of Schedule 2, Part 1 on other occasions, see WorkCover Queensland v J.M. Kelly (Project Builders) Pty Ltd (2003) 173 QGIG 589 and Brett Holt Plumbing Pty Ltd -- 1 of 5 -- 2 v Q-COMP Review Unit (2005) 178 QGIG 255. The difficulties arise from the use of antipathetic adjectives, viz., "substantially" and "only". The effect of the decisions of this Court is that one should focus upon the remuneration paid rather than upon the nature of the contract, should adopt a robust approach and should inquire whether in reality or "to all intents and purposes" the remuneration is for "manual labour". That is what the Acting Industrial Magistrate did. Her Honour's "Reasons for Decision" include the passage: "The test to be applied in this matter is that stated by His Honour President Hall in the matter of Brett Holt Plumbing Pty Ltd v. Q-Comp Review Unit. 'Having regard to the nature and purpose of the statutory benefits scheme, the scheme at s. 12 and Schedule 2 and the deficiencies in the language of Schedule 2, Part 1, s. 1, it seems to me that the second limb of the section is about the remuneration paid under a contract, not the nature of the contract, and is satisfied where in reality or "to all intents and purposes" the remuneration is in return for manual labour.'. The Respondent, Q-Comp, in reviewing WorkCover's decision was in agreeance with the decision-maker's finding that: 'the supply of glue, fastenings and plaster were incidental supplies and that the independent contractors were engaged substantially for their labour only.'. The evidence adduced in this matter relates mainly to a number of invoices which were issued to Acehigh Pty Ltd by the various contractors. On no invoice that I viewed were any of the materials supplied by the contractors itemised. I note there is no obligation for the contractors or for Acehigh Pty Ltd to provide or require this information on their respective invoicing and payment systems. Essentially the Appellant argues that the details on the invoices are insufficient to conclude that the contractors worked for substantially labour only. In [sic] note in particular, on this point, page 13 of the Appellant's written submissions where it is stated: 'It is impossible to conclude that the "substantially for labour only" test is satisfied under circumstances in which, as is the case here, a component as essential to the completion of the plastering job as, for example, the plaster itself (as opposed to the plasterboard) is supplied by the named contractors.'. I note, and I do not think it is a point of contention, that all materials supplied by the contractors are essential to the completion of the plastering job. But, with respect, and as was rightly pointed out by Counsel for the Respondent, that is not the test. The test is to consider what the remuneration was for. In my opinion it was open to Q-Comp to make the decision it did. When one views the invoices and considers what the contractors were actually paid for it would seem clear to me that the work involved in fixing and plastering the plasterboard sheeting was 'to all intents and purposes' what the contractors invoiced Acehigh Pty Ltd for. It would therefore follow that I am in agreeance with the Q-Comp decision that the contractors worked under a contract for substantially labour only. It would also therefore follow that I am satisfied that the contractors were 'workers' within the definition in Part 1, Section 1 of the Act.". [Footnotes omitted.] On the Appeal to this Court, Senior Counsel for Acehigh Pty Ltd presses the proposition that one cannot conclude that the "substantially for labour only" test is satisfied where a component as essential to the completion of the plastering job as the plaster itself (as opposed to the plasterboard) was supplied by the 23 named individuals. With respect, when one puts aside issues about the nature of the contract and focuses on "what the remuneration was for" it seems to me that one can conclude that "to all intents and purposes" the remuneration was "for labour only". Each tradesman was asked to come and put up the plasterboard. On a robust approach, one may reach that conclusion and conclude also that the materials supplied, important though they may have been, were but incidentals though the invoices do not tease out the components of the total sum. The difficulty created by the invoices is that they confirm the Review Officer's opinion that the 23 named individuals were paid to achieve a result or outcome. A convenient starting point is s. 30 of the Act which provided: "30 Who is an 'employer' (1) An 'employer' is a person who employs a worker and includes - (a) a government entity that employs a worker; and (b) a deceased employer's legal personal representative. (2) Also, a person mentioned in schedule 3, part 1 is an 'employer'. -- 2 of 5 -- 3 (3) However, a person mentioned in schedule 3, part 2 is not an 'employer'. (4) A reference to an employer of a worker who sustains an injury is a reference to the employer out of whose employment, or in the course of whose employment, the injury arose.". From that point one goes to Schedule 3, Part 2 which provided: "SCHEDULE 3 WHO IS AN EMPLOYER ... PART 2 - PERSONS WHO ARE NOT EMPLOYERS 1. A person is not the employer of a person who works for the person under a contract (regardless of whether the contract is a contract of service) if - (a) the person performing the work - (i) is paid to achieve a specified result or outcome; and (ii) has to supply the plant and equipment or tools of trade needed to perform the work; and (iii) is, or would be, liable for the cost of rectifying any defect in the work performed: or (b) a personal services business determination is an effect for the person performing the work under the Income Tax Assessment Act 1997 (Cwlth), section 87-60.". If s. 1(a) of Schedule 3, Part 2 is given a literal construction, the inevitable consequence of the operation of s. 1(a) of Schedule 3, Part 2 upon the findings of the Review Officer which were not reopened below, is that Acehigh Pty Ltd is not, for the purposes of the Act, an employer of any of the 23 named individuals. At paragraph [22] of the Appellant's written outline of argument, Senior Counsel for the Appellant submits: "[22] At p.5 of his reasons, the learned Acting Industrial Magistrate accurately articulated the appellant's contentions so far as concerned the scope and effect of Schedule 3 Part 2 where he said: It was argued ... that Section 1, Part 2 of Schedule 3, read literally and given its plain meaning, combined with the Review Officer's decision, would lead to a conclusion that Acehigh Pty Ltd are [sic] not the employers of the contractors and therefore not liable to the amended premium.". In my view the contention jumps the style. I quite accept that s. 1(a) of Schedule 3, Part 2, if read literally and given its plain meaning, operates upon the Review Officer's decision to produce a conclusion that Acehigh Pty Ltd was not the employer of any of the 23 named individuals. However, I also accept that s. 1 of Schedule 2, Part 1, if read literally and given its plain meaning, operates upon the facts as found by the Acting Industrial Magistrate (which findings are confirmed by this Court) to produce a conclusion that each of the 23 named individuals is a "worker". The proposition that a person who performs work for another is a "worker", whilst the person for whom work is performed is not an "employer", is a proposition with a ring of novelty about it. Particularly is that so where the proposition is developed about a relationship subject to the Act. One might reasonably enquire rhetorically whether the "worker" is to be entitled to all of the statutory benefits under the Act whilst no one is to be required to pay premiums to finance the provision of the benefits. The outcome produced by literal construction of the Act is simply anomalous. I accept the submission of Senior Counsel for the Appellant that at the end of the day, any conflict between the proposition that the individuals were "workers" and the proposition that Acehigh Pty Ltd was not the employer of any one of them, may be overcome by falling back upon the established tenet of statutory interpretation which holds that, where it is not possible to reconcile two provisions within an Act, the latter provision prevails over the earlier: Wood v Riley (1867) LR 3 CP 26; Mount Isa Mines Limited v FCT (1976) 10 ALR 629 at 639; Ross v R (1979) 25 ALR 137 at 145 and Lyons v Registrar of Trademarks (1983) 50 ALR 496 at 508. However, it seems to me that before taking the singular step of rendering nugatory s. 1, Schedule 2, Part 1 of the Act, the Court should go to the legislative history and any extrinsic materials to which the Acts Interpretation Act 1954 authorises reference. The ultimate objective is to give preference to the interpretation which will best achieve the purpose of the Act, compare Acts Interpretation Act 1954, s. 14A. -- 3 of 5 -- 4 By s. 14B of the Acts Interpretation Act 1954 reference to extrinsic materials is permitted, where there is ambiguity and where the ordinary meaning of legislation would lean to an unreasonable result. It seems to me that the perplexing conundrum thrown up by the literal construction of the Act does constitute ambiguity. It seems to me also that a construction, which might potentially lead to the creation of unfunded liabilities, is a construction which would lead to an "unreasonable" result. As mentioned above, it is common ground that the relevant form of the Act is accurately captured by Reprint No. 1. Reprint No. 1 produces the Act in its unamended form. It precedes the amendment affected by the Workers' Compensation and Rehabilitation and Other Acts Amendment Act 2004 and for that reason, I put aside the Explanatory Notes to the Workers' Compensation and Rehabilitation and Other Acts Amendment Bill 2004 relied upon by the Respondent. The Explanatory Notes to the Act are, in themselves, unhelpful. There is a reason for that. The precursor to the Act was the WorkCover Queensland Act 1996. That Act was substantially amended by the Workplace Health and Safety and Other Acts Amendment Act 2003. The amendments were to take effect on 1 July 2003. In fact, before the amendments took effect on 1 July 2003, the WorkCover Queensland Act 1996 was superseded by the Workers' Compensation and Rehabilitation Act 2003 (the Act) which, in all material respects, itself commenced on 1 July 2003. In defining "worker" and "employer" and enhancing the definition of "worker" and "employer" at the Schedules, the Act adopted the changes which would otherwise have been made by the Workplace Health and Safety and Other Acts Amendment Act 2003. As a matter of first impression I should have thought that reference might be had to the Explanatory Notes to the Workers' Compensation and Rehabilitation Bill 2003. I quite accept that the Explanatory Notes or Memorandum relating to an earlier (abandoned) Act does not appear in the list of extrinsic materials at s. 14B(3) of the Acts Interpretation Act 1954. However, the prefatory words to s. 14B(3) are: "extrinsic material means relevant material not forming part of the Act concerned, including, for example...". Given that "for example" gives emphasis to what is in any event an "inclusionary" definition, and given that it is arguable that even prior to the enactment of s. 14B of the Acts Interpretation Act 1954, regard might have been had to the earlier Act and its Explanatory Notes (compare Pearce and Geddes, Statutory Interpretation on Australia, 5th Ed, at paragraphs [3.28] and [3.29], it seems to me to be appropriate to have regard to the Explanatory Note to Schedule 3 of the Workers' Compensation and Rehabilitation Bill 2003 which importantly records: "SCHEDULE 3 PERSONS WHO ARE EMPLOYERS This schedule replaces Schedule 2A of the WorkCover Queensland Act 1996 specifying who is an employer of a worker, eg. Labour hire agencies and holding companies are specified as employers of those workers who they arrange to do work for someone else. This clause incorporates changes made to schedule 2A of the WorkCover Queensland Act 1996 by the Workplace Health and Safety Amendment Act 2003 inserting a new part 2 (persons who are not employer) which specifies that a person is not an employer of a person who works for the person (regardless of whether the contract is a contract of service) if the person performing the work can satisfy all three elements of the results test, or it can be shown that a personal services business determination is in effect for the person under the Income Tax Assessment Act 1997 (Cwlth).". There is nothing in the text of the Workplace Health and Safety and Other Acts Amendment Act 2003, to suggest that the Legislature was about the significant and dramatic task of accepting responsibility for unfunded liabilities. I doubt that the Act is taxing legislation. In any event the example to s. 14A of the Acts Interpretation Act 1954 is germane. The scheme developed by the Legislature seems to have been to deny that a person for whom work is performed by another is an employer, where the person performing the work is paid to achieve a specified result or outcome and has to supply the plant and equipment or tools of trade needed to perform the work and is, or would be, liable for the cost of rectifying any defect in the work performed. Having denied that such a person is an "employer", the measure also denies that the person performing the work is a "worker". I accept that when one goes to the Explanatory Notes there are passages which taken literally and out of context, suggest that the purpose of the measure was to deny that certain persons were employers and, as a complimentary proposition, deny that those performing the work for the "non- employers" were "workers". Although the Minister's Second Reading Speech is unhelpful, the Minister's Reply at Weekly Hansard, 30 April 2003 at pp. 1460-1463, contains language to the same effect. However, all that was said was said in the context of adoption of the so-called "results test" to determine who was an employer and who was an employee. Neither the Explanatory Notes nor the Minister's Reply touch upon the impact (if any) which s. 1 of Schedule 3, Part 2 was to have upon the situation in which persons were characterised as "workers" independently of the "results test". Indeed, one who sourced information only in the Explanatory Note and in the Minister's Reply would have been unaware that there was such an issue to be dealt with. In my view, there is nothing to suggest that the amendments were directed at that issue. It seems to me that s. 1 of Schedule 3, Part 2 and s. 2 of Schedule 2, Part 1 are -- 4 of 5 -- 5 complimentary, but that s. 1 of Schedule 3, Part 2 has no role to play where a person is otherwise a "worker" for the purposes of the Act. It follows that I agree with the decision of the Acting Industrial Magistrate. I dismiss the Appeal. I reserve all questions as to costs. If need be, submissions about costs will be taken in writing. Dated 10 November 2008. D.R. HALL, President. Released: 10 November 2008 Appearances: Mr M. Grant-Taylor SC, instructed by Connolly Suthers Lawyers, for the Appellant. Mr P. Rashleigh, directly instructed for the Respondent. Government Printer, Queensland The State of Queensland 2008. -- 5 of 5 --