Djuric v Kia Ceilings Pty Ltd [2011] NSWCA 34 (3 March 2011)

Last Updated: 25 May 2011

Court of Appeal New South Wales

Case Title:	Djuric v Kia Ceilings Pty Ltd
Medium Neutral Citation:	[2011] NSWCA 34
Hearing Date(s):	03/03/2011
Decision Date:	03 March 2011
Jurisdiction:
Before:	McColl JA, Handley AJA, Sackville AJA
Decision:	Appeal dismissed with costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords:	WORKERS COMPENSATION – independent contractor – whether regularly carrying on trade or business in own name – no question of principle APPEAL – question of law – whether primary facts necessarily within statutory provision – no question of principle
Legislation Cited:	Workplace Injury Management and Workers Compensation Act 1998
Cases Cited:	Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139 Humberstone v Northern Timber Mills [1949] HCA 49, 79 CLR 389
Texts Cited:
Category:	Principal judgment
Parties:	Mile Djuric - Appellant Kia Ceilings Pty Ltd - Respondent
Representation
- Counsel:	Counsel: D E Baran – Appellant P A Rickard – Respondent
- Solicitors:	Solicitors: NSW Compensation Lawyers - Appellant Goldbergs – Respondent
File number(s):	2010/66912
Decision Under Appeal
- Court / Tribunal:
- Before:
- Date of Decision:
- Citation:
- Court File Number(s)
Publication Restriction:

Judgment

1. HANDLEY AJA: This is an appeal pursuant to s 353 of the Workplace Injury Management and Workers Compensation Act 1998 (the Act) by the compensation applicant from the decision of Acting Deputy President Candy, (the Presidential member) of the Workers Compensation Commission, who dismissed his appeal from the decision of the arbitrator, Ms Rimmer. The appeal to this Court is limited to questions of law.
   
2. The appellant sought compensation for a back injury due to the nature and conditions of his work as a gyprocker between 26 April and 9 July 2007 while working for the respondent.
   
3. The issue on the appeal is whether he was a deemed worker under s 5 and cl 2(1) of Schedule 1 of the Act. Clause 2(1) as amended with effect from 1 January 2006 provides:
   

"(1) Where a contract:

(a) to perform any work exceeding $10 in value (not being work incidental to a trade or business regularly carried on by the contractor in the contractor's own name, or under a business or firm name), or
(b) Repealed

is made with the contractor, who neither sublets the contract nor employs any worker, the contractor is, for the purposes of this Act, taken to be a worker employed by the person who made the contract with the contractor."

4. There was no dispute that under the general law the appellant was an independent contractor. The issue at all stages has been whether he was covered by cl 2(1).
   
5. It was common ground that he had made a contract with the respondent to perform work exceeding $10 in value, that he did not carry on business under a business or firm name and that he had not sublet the contract or employed any worker for its performance.
   
6. The appeal turns on whether the contract work for the respondent was "work incidental to a trade or business regularly carried on" by the appellant in his own name.
   
7. The meaning and application of these words in the comparable provision in the Victorian Act was explained by Sir Owen Dixon in Humberstone v Northern Timber Mills [1949] HCA 49, 79 CLR 389, 401-2:
   

"... the purpose of the exception or exclusion ... was to confine the benefit of the conclusive presumption which it establishes to persons who do not conduct an independent trade or business, who are not holding themselves out to the public under their own or a firm or business name as carrying on such a trade or business and who do not in the course of that trade or business, as an incident of its exercise, undertake the work by entering into the contract. The provision will thus cover men who work for the principal but have no independent business or trade and men who, though carrying on an independent trade or business undertake a contract outside the scope or course of that trade or business. The word 'trade' is capable of including any handicraft and in that sense it may seem to lack the element of systematic practice or holding out which the idea of openly conducting a distinct or independent trade or business and seeking custom implies. But a consideration of the policy of the provision as well of its text appears to me to show that the distinction it seeks to draw is between on the one hand an independent contractor whose relation with the principal is special or particular either because it is outside the course of the general business of the contractor or the general practice of his trade or because he has no such general business or is not a general practitioner of his trade, and on the other hand an independent contractor who performs work successively or perhaps, concurrently for his customers or others in the course of a definite trade or business carried on systematically or who holds himself out as ready to do so ... The suggestion which this language conveys of the existence of a business or the practice of a trade is much strengthened ... by the words 'carried on', ... and 'in his own name or under a firm or business name.' These all indicate a business or trade conceived as independently existing or exercised by a person holding himself out to the public under a name or style."

8. This statement of principle by Sir Owen Dixon has been treated in subsequent cases in this Court and its predecessor as a correct statement of the law notwithstanding the different emphasis in the judgment of Latham CJ. The Presidential member said:
   

[81] "I conclude that the appellant who bears the onus has failed to prove that he was not carrying on a trade or business regularly in his own name at the time he was injured ...

[95] "... the appellant's trade or business may be described as gyprocking and the work in the performance of which he was injured was gyprocking. Accordingly it is not 'outside the scope or course of that trade or business' ... At the same time the work the appellant was performing for Kia was not the trade or business but was part of or incidental to that trade or business."

9. The Presidential member's findings appear in paras [74], [75] and [80] of his reasons.
   
10. The notice of appeal to this Court challenged the decision of the Presidential member on four grounds; failure to determine the grounds of appeal and give adequate reasons (ground 1); failure to hold that the appellant was not bound by the conduct of his case before the arbitrator (ground 3); and taking into account the appellant's tax returns for periods outside the "the date of injury" (ground 4). The second ground alleged that the facts found by the Presidential member were necessarily within cl 2(1) and his decision to the contrary was therefore vitiated by legal error. Although the first, third and fourth grounds were ultimately not pressed I shall give brief reasons for rejecting them.
    
11. The grounds of appeal from the arbitrator alleged error in general terms by failing to find that the applicant was within cl 2(1) (ground 1), and failure to give adequate reasons (ground 2). Counsel for the applicant submitted to the arbitrator that since the 2006 amendment to clause 2(1):
    

"It was only necessary to prove that the [applicant] did not sublet the contract or employ any worker to bring himself within the deeming provisions of the clause."

12. The arbitrator noted concessions by the applicant's counsel that he was not a deemed worker under cl 2(1) before the 2006 amendment and that when injured he was performing work incidental to his trade and business. She rejected the applicant's submission about the effect of the 2006 amendment to cl 2(1) and without giving further reasons found that he was performing work incidental to a trade or business regularly carried on by him and was not a deemed worker.
    
13. The Presidential member said:
    

[34] "... the Arbitrator did not give any reasons for that finding, no doubt relying on what she considered was a concession made by counsel ..."

14. On the appeal to the Presidential member counsel for the appellant, who had not appeared below, withdrew those concessions and presented new arguments within the two grounds of appeal. The Presidential member gave brief reasons for rejecting the second ground of appeal. He said [62]:
    

"I must confess to having the utmost difficulty in seeing how this ground of appeal can be sustained. No authority was cited to me as to why the Arbitrator was under an obligation to give reasons for making a finding which was inevitable once the legal argument advanced by the appellant was rejected. This ground of appeal must, in my view, be rejected."

15. In my judgment there was no error in his approach. The obligation to give reasons is related to and dependent upon the submissions presented to the judicial officer for decision. In particular it's an obligation to give reasons for rejecting the submissions on behalf of the losing party. There was no need to give reasons for accepting concessions by counsel or to give reasons for rejecting submissions that were never put. The appellant's challenge to this part of the Presidential member's decision fails."
    
16. The Presidential member considered and dealt with all the appellant's submissions notwithstanding the concessions below. He held that new arguments could be entertained on an appeal if the other party was not prejudiced. The respondent was not prejudiced because the facts had been in issue until the hearing before the arbitrator and it had lodged all the evidence on which it intended to rely.
    
17. The first ground of appeal to this Court, that the Presidential member failed to determine the grounds of appeal before him or give adequate reasons, is entirely without substance and must fail.
    
18. The third ground, that the Presidential member failed to hold that the appellant was not bound by the conduct of his counsel before the arbitrator, is simply misconceived. The Presidential member held that the appellant was not bound by the conduct of his case before the arbitrator and considered on their merits the new arguments advanced by his counsel.
    
19. The fourth ground alleged error by taking into account the appellant's tax returns and the expenses claimed as deductions for periods "outside the date of injury". The copy tax returns and assessments were part of the appellant's evidence before the arbitrator. The returns covered the years 2004 to 2007 inclusive and the assessments the years 2004 to 2006 inclusive.
    
20. A party who tenders evidence on the basis that it is relevant may be mistaken but his submission to that effect lacks immediate appeal. In any event that submission about the tax returns and assessments is without substance.
    
21. A critical issue in the case was whether the contract work performed by the appellant was "incidental to a trade or business regularly carried on by [him]".
    
22. The appellant worked for the respondent under a contract for gyprock work at Bathurst Hospital from 26 April to 9 July 2007. He had previously worked for it from 26 March until 4 October 2006. He then worked for Simco Ceilings from 16 November 2006 to 24 April 2007. He had previously worked as a subcontractor for various companies between 7 March 2003 and 25 March 2006.
    
23. The appellant's earnings as a contractor during the period from 7 March 2003 until he ceased work in July 2007, the expenses claimed as taxation deductions and his taxation assessments were clearly relevant in determining whether he carried on a trade or business and whether the contract work was incidental to that trade or business. The appellant's assertion in these returns that he was carrying on a business is particularly relevant. Its relevance could not be restricted to the date when the appellant sustained his injury. A business is an activity carried on over time which involves repetition and continuity.
    
24. In Fairway Estates Pty Ltd v FCT [1970] HCA 29, 123 CLR 153, 163-4 Barwick CJ said:
    

"... it has been usually said that to carry on the activity as a business, repetition and continuity is necessary,"

25. In Hope v Council of the City of Bathurst [1980] HCA 16, 144 CLR 1, 8-9 Mason J, who delivered the principal judgment said:
    

"It is the words 'carrying on' which imply the repetition of acts ... and activities which possess something of a permanent character ... I accept, then, that 'business' ... has the ordinary or popular meaning which it would be given ... It denotes ... activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis."

26. Given the judicially recognised meaning of "carry on business" and related expressions the appellant's contention that the tax returns and assessments from earlier periods were an irrelevant consideration is unsustainable. The documents were highly relevant and the fourth ground must be rejected.
    
27. The second ground asserted an error of law of the kind identified by Glass JA in Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139 at 156:
    

"An ultimate finding of fact even in the absence of a misdirection may reveal error of law if the primary facts found are necessarily within or outside a statutory description and a contrary decision has been made."

28. The Presidential member set out the facts considered relevant in determining whether the appellant at the relevant time was carrying on a trade or business regularly in his own name and whether the work being done for the respondent was incidental to that trade or business.
    
29. The matter was dealt with at length in [74]-[75] and [80] of the Presidential member's reasons. These were as follows:
    

[74] "... the appellant did not advertise but relied upon his being known to be available as a gyprocker by other Serbian-speaking contractors. He was limited in this way because he did not speak English ... It is also clear that from the time he commenced gyprocking work he invoiced those persons for whom he was working on a weekly or fortnightly basis and, having an ABN, charged GST in respect of his work. It is also clear that the appellant had substantial business deductions for all of the years in which he worked, in some years representing more than half of his gross earnings. ... It appears from the tax returns that the worker has never been in receipt of wages as an employee and all his earnings had been received for subcontract work. Doing the best I can, the appellant's work history appears to be as follows:

2001 to 2005 DDB Pty Limited

Dec 2005 to Feb 2006 Cobra Gyprock Pty Ltd

Mar 2006 to Oct 2006 Kia Ceilings Pty Ltd

Nov 2006 to Apr 2007 Simco Ceilings

Apr 2007 to Jul 2007 Kia Ceilings Pty Ltd

The first period ... was interrupted by ill health for almost two years and it is unclear on the appellant's own statements that he worked exclusively for DBB until 2005.

[75] While many of the matters relied on by the appellant appear to suggest that he was employed under a contract of service, this is not the position taken by the appellant. Nor is there ... any suggestion that the appellant's status as a subcontractor was merely a sham. He derived considerable financial advantage from it by way of being able to make deductions from his income for taxation purposes. There are some factors ... which point to the appellant regularly carrying on a trade or business while others point in the other direction. The matters which indicate that he was not are the provision of accommodation ... at Bathurst ... use of Kia's tools, the fixed rate of payment and the provision of clothing. I do not regard the other matters relied on by the appellant as being inconsistent with his carrying on a trade or business on his own account ...

[80] For Kia it was submitted that the appellant had contracted successively for a number of principals, he was able to and did re-negotiate the basis of his payment by Kia and the extent of business deductions indicate that a business was being carried on. I regard these matters as persuasive. I note that the appellant said that he could have taken on a worker to assist him but did not do so. He also indicated that he was free to work such hours as he chose and worked longer on occasions than others at the work site ..."

30. Clearly there was evidence pointing both ways but in such a situation the decision is one of fact for the tribunal of fact and an error of law is only disclosed in an extreme case of the kind identified by Glass JA.
    
31. This is not a case of that kind. There were many facts which supported the Presidential member's conclusion. These included the admissions in his tax returns, the fact that he had an ABN number, rendered invoices to the companies that employed him on a weekly or fortnightly basis, and was paid at piece work rates.
    
32. In my judgment the Presidential member's decision revealed no error of law of the kind identified by Glass JA and I would propose that the appeal be dismissed with costs.
    
33. MCCOLL JA: I agree with Justice Handley's reasons and with the orders his Honour proposes.
    
34. SACKVILLE JA: I also agree.
    
35. MCCOLL JA: The orders of the court therefore are as Justice Handley proposed.
    

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