Dickinson v Chapman (NSWCA 2022)

LINK TO DECISION

Key Takeaways

The law regarding employment gets more complex each year, but one thing that should never be overlooked is the need to properly document the hiring of new employees by providing a clearly written contract setting out the employee’s and employer’s obligations. No longer should any employee be engaged simply on the basis of a handshake; or a one page document with little more than the names of the employer and employee, the job role, and weekly or hourly pay rates.

Workers Compensation law has long recognised that special provisions should apply to workers who are not assured of an enforceable work arrangement because of poor, or no, documentation.

The Workplace Injury Management and Workers Compensation Act 1998 (the Workplace Injury Act) contains a definition of a worker as follows: worker means: a person who has entered into or works under a contract of service or a training contract with an employer (whether by way of manual labour, clerical work or otherwise, and whether the contract is expressed or implied, and whether the contract is oral or in writing).

The Workplace Injury Act also contains in Schedule 1 of the Act, provisions regarding workers who may not fit within the definition a worker; but who are to be treated as deemed workers and entitled to compensation for any work injury that might be sustained. In clause (2) of the Schedule: other contractors may also be covered: Where a contract to perform any work exceeding $10 in value … 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 (i.e. a principal) who made the contract with the contractor.

The status of a person as a worker or deemed worker is not always clear-cut; with even judges having differing opinions. The issue was recently considered by the NSWCA case of Dickinson v Chapman (NSWCA 2022).

Brief Facts

Ms Patrick owned and operated a heavy freight haulage business on two premises in Sydney; her son, Mr Dickinson, was an employee of the business. Mr Chapman approached Ms Patrick offering his services to do manual labour jobs around the work premises from time to time. There was no written contract, nor any document stating specifically what wages would be paid for the work done. Mr Chapman would simply turn up at one or other of Ms Patrick’s premises to perform whatever work might be available at that time. On one such occasion on 1 September 2014, Mr Chapman’s left forearm was trapped in the closing jaws of a front-end loader. The loader was operated by Mr Dickinson. Mr Chapman’s injuries were, as might be expected, quite serious.

Judgment

Mr Chapman brought proceedings in the NSWDC seeking common law damages for personal injury caused by the negligence of Mr Dickinson. Ms Patrick as owner of the business was vicariously liable for the actions of her employee/son. The insurer for the defendants disputed the damages claim because if the plaintiff, Mr Chapman, were a worker or deemed worker, he could not pursue the court action unless he first complied with the pre-litigation procedures under the Workplace Injury Act.

The NSWDC held that Mr Chapman was not a worker nor a deemed worker.

The defendant’s insurer appealed that decision to the NSWCA.

Appeal to the NSWCA

The defendant’s insurer lodged an appeal in the NSWCA which overturned the lower court’s decision.

The NSWCA after considering the facts and legal principles, held that the plaintiff was a worker because he was a person who worked under a contract of service and was a deemed worker because he had performed work exceeding $10 in value pursuant to a contract. Accordingly, the NSWCA found that the plaintiff’s entitlement to recover damages was subject to the Workers Compensation legislation and that he had not complied with the mandatory pre litigation procedures under that legislation to pursue a claim for damages.

The NSWCA noted:

‘The term contract is central to the identification of the relevant relationship between the parties. Relying upon general law principles, the parties created the relevant issue as whether they had exhibited an intention to create a contractual relationship. … The law accepts the conduct of one party as sufficient to involve the voluntary assumption of an obligation which it will enforce. A course of conduct may give rise to an obligation, as much as may an express statement of intention to act in a particular way.

There was no dispute that Ms Patrick had paid Mr Chapman for any work that he had done, and that appeared to have been an accepted arrangement. Ms Patrick did not retain formal employment records for the work performed by Mr Dickinson. The plaintiff himself had done so. He kept entries in a notebook which recorded days and times worked, and the amounts paid. The clear inference from this material was that both Ms Patrick and the plaintiff were operating on the basis of an arrangement that the plaintiff was paid $30 per hour for work done at the yard, from which the haulage operation was conducted. The plaintiff kept precise times to calculate the hours he worked and provided a record of those times to Ms Patrick who paid him accordingly. The parties clearly treated it as a payment at a going rate for unskilled manual labour provided by the plaintiff.

In these circumstances, the proper conclusion is that the plaintiff was either a person who worked under a contract of service (as defined in s 4 of the Workplace Injury Act) or a person who performed work exceeding $10 in value pursuant to a contract (within the deemed is one agreement suited to entitlement to recover damages was therefore subject to the requirements of the Workers Compensation legislation. In circumstances where it was agreed that there had been no compliance with that legislation, the proceedings in the District Court ought properly to have been dismissed.’

Implications

The parties’ time in the court system, and the substantial costs incurred, could have been avoided if the defendant had insisted on an express written agreement as to what work the plaintiff was expected to do and what he would be paid. That would then have made it clear that he was employed and there would not have been any need to ask a court to define the arrangement.

To minimise any issues that might arise in work situations, having a template form of contract on hand for new employees makes a lot of sense.