Shannon Coleman v Total Care Industries Limited and Pwt Asia/Pacific Pty Ltd T/S As Warrens Engineering [1995] ACTSC 61 (27 June 1995)

SUPREME COURT OF THE ACT

SHANNON COLEMAN v. TOTAL CARE INDUSTRIES LIMITED AND PWT ASIA/PACIFIC PTY LTD
T/S AS WARRENS ENGINEERING
No. SC47 of 1995
Number of pages - 5

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
MASTER A HOGAN

CATCHWORDS

Negligence - Employer's duty of care - Accident in the workplace - identification of employer at material time - determination by Master pursuant to O.42 r.11.

Health Services (Consequential Provisions) Act 1990 Commonwealth Employees' Rehabilitation and Compensation Act 1988 Corporations Law ss.182, 183.

HEARING

CANBERRA, 7 and 11 April 1995
27:6:1995

Counsel for the Plaintiff: Mr R. Crowe

Instructing Solicitors: Pappas, J. - Attorney

Counsel for the Defendant: Mr R. Bayliss

Instructing Solicitors: ACT Government Solicitor

ORDER

THE COURT ORDERS THAT:
1. The plaintiff was not employed by the first defendant.

DECISION

MASTER A HOGAN In this action, which was commenced by Writ of Summons on 19 January 1995, the plaintiff sues the first defendant alleging that at the material time it employed him as a trades assistant, and failed to take reasonable care for his safety. It is also alleged that the second defendant installed and maintained an incinerator at the first defendant's premises, and it also failed to take reasonable care for the plaintiff's safety.

2. As a result, on 2 December 1991, when the plaintiff was sanding back part of the incinerator, he came in contact with some exposed electrical wiring, so that he fell off the ladder on which he was standing, and was injured.

3. On 7 April 1995 an order was made by consent, pursuant to O.42 r.11, that the question of "whether or not the plaintiff was employed by the first defendant" be referred to the Master for determination.

4. This is the hearing and determination of that question. I read the question to include by implication the words "on 2 December 1991." The date is critical.

5. On 24 April 1987 the plaintiff began working at the Mitchell Linen Services with the ACT Hospital Services Division.

6. On 27 July 1990 he signed a document headed, "Conversion to Public Service Act Employment - Appointment Election." It was addressed to the Director, Personnel Services, Hospital Services Division, ACT Department of Health.

7. It read, "In accordance with your offer of appointment dated 20 July 1990 I elect - to be appointed to the Australian Public Service in the Department of the Office of the ACT Public Service."

8. During 1991 there were discussions at the workplace about a proposal to "corporatise" the Linen Service, and the plaintiff and other workers were informed that it was proposed that the undertaking would be called "Totalcare Industries". They were told that there would be no material change to the terms or conditions of their employment.

9. Some months before December 1991 the organisation began to operate under the name "Totalcare Industries".

10. At the end of the 1992 financial year the plaintiff received his 1992 Group Certificate for that year. It showed the name of his employer as "Totalcare Industries", and the period of employment as being "From 1/7/91 to 30/6/92". A similar certificate was issued the following year.

11. A search at the Registrar General's Office shows that on 24 September 1991 the Australian Capital Territory applied for registration of the business name "Totalcare Industries" and that name was registered on 25 September 1991.

12. On 28 November 1991 the Territory advised the cessation of the business name, and it was deregistered on 28 November 1991.

13. An unlisted public company limited by shares was incorporated and registered in the Australian Capital Territory on 28 November 1991, with the name "Totalcare Industries Limited", and ACN 054 435 746.

14. These minor technicalities of existence or non-existence did not trouble the administrators of the enterprise, however.

15. Part of the evidence is a letter from Mr Spottiswood, "Executive Officer, Totalcare Industries" to Mark Treverrow, "Personnel Officer, Totalcare Industries" relating to the method of payment of salary to the plaintiff. It is dated 10 July 1991, and is on letterhead headed "Totalcare Industries". The footer on the letterhead read "Totalcare Industries Ltd ACN 054 435 746.", which is, to say the least, prescient.

16. On 31 July 1991 the plaintiff signed an employment declaration for income tax purposes. His employer's contact person entered the name of the employer on that form as "Totalcare Industries". That also appeared to assume that all things would happen that were meant to happen, even if a little later than in due course.

17. In the fullness of time, things did happen. Two deeds were drawn up. The first bore date 24 December 1991. It was made between the Australian Capital Territory, ("the Territory"), and Totalcare Industries Limited ("the Company"). It recited that the Territory had provided certain services at the Health Services Supply Centre under the name "Totalcare Industries", and that it had incorporated the company on 28 November 1991 for the objects of providing those services with effect from 1 January 1992.

18. By the deed the Territory agreed to grant a 99 year lease to the Company of the premises at Mitchell, and assigned to it, with effect from 1 January 1992, the assets referred to in the deed.

19. The second deed bore date 31 December 1991, and was made between the Territory, the Board of Health and the Company. The recitals included that the Board had provided to the Territory the services of certain persons employed by the Board at the Health Services Supply Centre, and that the parties wished to enter into an agreement under which the services of persons employed by the Board at 31 December 1991 should be provided to the Company on and from 1 January 1992.

20. The deed then effected an agreement whereby the services of the persons named in the schedule should be provided by the Board and accepted by the Company with effect from 1 January 1992. The terms and conditions of employment of the staff should continue to be those applicable to persons employed under s.16 of the Health Services (Consequential Provisions) Act 1990. I do not think that the other provisions are material.

21. The name of the plaintiff appears in the schedule, his position number being 1338, his classification GS03, and his status permanent.

22. Meanwhile, however, on 2 December 1991, the plaintiff had suffered injury at work. On 12 December 1991 he made a claim on Comcare for time off work, which was accepted by Comcare on 13 January 1992. In his claim form he had certified that he elected to claim benefits under the Commonwealth Employees' Rehabilitation and Compensation Act 1988.

23. The Company was incorporated on 28 November 1991. It could not have been the plaintiff's employer before that date. There is no evidence of any acts taking place between that date and the date of the accident, 2 December 1992, which would have the effect that the plaintiff transferred from employment as a public servant to employment by the Company.

24. Counsel for the plaintiff submitted that there was a ratification of a pre-incorporation contract, within the meaning of s.183 of the Corporations Law.

25. The operative subsection is subs.183(2), which reads:
"Where:

(a) a non-existent company purports to enter into a contract; and
(b) the company is formed within a reasonable time after the
contract is purported to be entered into;
the company may, within a reasonable time after it is formed, ratify
the contract."

26. Subject to the two requirements for reasonable time, there are two elements to the operation of that subsection. One is the purporting to enter into the contract, the other is the ratification of it.

27. The first of those two elements is defined in para.183(1)(a), as follows:

"In this section:
(a) a reference to a non-existent company purporting to enter into
a contract is a reference to:
(i) a person executing a contract in the name of a company,
where no such
company exists; or
(ii) a person purporting to enter into a contract as agent or
trustee for a proposed company."

28. There is no suggestion in this case that any formal contract was executed, whether in the name of the company or otherwise, so as to create the relationship of employer and employee between the plaintiff and the defendant.

29. But neither is there, to my understanding, any evidence that any person purported to enter into any such contract as agent or trustee for the proposed company.

30. It would be impossible to read that understanding into the plaintiff's evidence about the information sessions and discussions that he referred to in evidence.

31. The first element needed for operation of the section is therefore absent.

32. By subs.183(13) a contract may be ratified by a company in the same manner as a contract may be made by a company under s.182.

33. By subs.182(1),

"So far as concerns the formalities of making, varying or
discharging a contract, a person acting under the express or implied
authority of a company may make, vary or discharge a contract in the
name of, or on behalf of, the company in the same manner as if that
contract were made, varied or discharged by a natural person."

34. There is no evidence in this case that any person purported to ratify any contract of employment between the company and the defendant. The issuing of the group certificates did not amount to such a purported ratification. For one thing, they did not purport to be issued by the Company, but in the pre-existing but since deregistered business name.

35. In addition, so far as there is evidence of things done by servants of the company, I do not think that the evidence supports a finding that any of those persons were acting under the express or implied authority of the company which extended to making such a ratification.

36. I therefore answer the question, "No".

37. I will hear the parties on costs, and on directions for the further conduct of the action.