Wilms v Workers' Compensation Regulator
[2015] QIRC 21
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- Unreported Judgment
- Wilms v Workers' Compensation Regulator[2015] QIRC 21
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Wilms v Workers' Compensation Regulator[2015] QIRC 21
Wilms v Workers' Compensation Regulator[2015] QIRC 21
QUEENSLAND INDUSTRIAL RELATIONS COMMISSION
CITATION: | Wilms v Workers' Compensation Regulator [2015] QIRC 021 |
PARTIES: | Wilms, Ivan (Appellant) v Simon Blackwood (Workers' Compensation Regulator) (Respondent) |
CASE NO: | WC/2014/147 |
PROCEEDING: | Appeal against a decision of Simon Blackwood (Workers' Compensation Regulator) |
DELIVERED ON: | 4 February 2015 |
HEARING DATE: | 21-22 August 2014 |
MEMBER: | Deputy President Kaufman |
ORDERS: |
|
CATCHWORDS: | WORKERS' COMPENSATION – APPEAL AGAINST DECISION – whether employment relationship existed – contract formation – worker – employer |
CASES: | Workers' Compensation and Rehabilitation Act 2003, s 11, s 30. Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Australia) Pty Ltd (1988) 5 BPR 11. N. Seddon, R. Bigwood, M. Ellinghaus, Cheshire and Fifoot Law of Contract (LexisNexis Butterworths, 10th ed, 2012). |
APPEARANCES: | Mr A.F. Messina, of Counsel, instructed by Warlow Scott Lawyers, for the Appellant. Mr A.B. Johnson, of Counsel, directly instructed by Simon Blackwood (Workers' Compensation Regulator), the Respondent. |
Reasons for Decision
Background
- [1]The Workers' Compensation and Rehabilitation Act 2003 (as it was at 6 December 2013, being the relevant time for the purposes of this appeal) essentially establishes a workers' compensation scheme for Queensland to provide benefits for workers who sustain injury in their employment.[1] The main provisions of the scheme, relevant to these reasons, provide for compensation and regulation of access to damages as well as employers' liability for compensation in respect of injuries sustained by workers in their employment, and for employers' obligations to be covered against liability for compensation and damages either under a WorkCover insurance policy or under licence as a self insurer.[2]
- [2]Section 108(1) of the Act creates an entitlement to compensation for an injury (as defined in s 32), sustained by a worker (as defined in s 11 and sch 2).
- [3]The question to be answered in this matter may be simply put; was Shawn Jarvis a worker and was the appellant, Ivan Wilms, an employer in respect of Mr Jarvis within the meaning of those expressions in the Act, when Mr Jarvis sustained an injury? If he was a worker, it is not contested, and I accept, that he suffered an injury within the meaning of that word in s 32 of the Act and if Mr Wilms was an employer the appeal must fail.
- [4]The Workers' Compensation Regulator held that Mr Jarvis was a worker and that Mr Wilms was his employer at the relevant time, 6 December 2013, with the consequence that Mr Wilms is legally liable for compensation in respect of the injury sustained by Mr Jarvis.[3] He was also required to be insured in respect of his legal liability for compensation and damages in respect of the injury.[4] Failure to so insure constitutes a contravention of s 48 of the Act and potentially exposes Mr Wilms to a penalty.[5] Mr Wilms was not insured.
- [5]As will be developed later in these reasons, it can be seen that "worker" and "employer" are inextricably linked in the Act.
- [6]Mr Wilms has appealed the decision of the regulator, contending that on 6 December 2013, when Mr Jarvis's injury was sustained he was not an employer within the meaning of that expression in s 30 of the Act.
- [7]Mr Wilms bears the onus of proving, on the balance of probabilities, that the requisite relationship did not exist.
The Legislation
- [8]Section 30 provided:
"30 Who is an employer
- (1)An employer is a person who engages a worker to perform work.
- (2)Also, schedule 3 sets out who is an employer in particular circumstances.
- (3)To remove doubt, 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.
(4) In this section—
contract includes agreement and arrangement.
person includes—
(a) a government entity; and
(b) the legal personal representative of a deceased individual."
(my underlining)
- [9]I observe that, although sub-section 4 purports to define "contract" for the purposes of s 30, there is no reference to that word in the operative part of the section. Perhaps it extends to the use of the word in schedule 3.
- [10]As the verb "engage" is not defined in the Act it is instructive to turn to the dictionary. The Macquarie Dictionary, 5th edition, relevantly defines it as, "...to secure for aid, employment, use, etc.; hire: to engage a worker."
- [11]The Australian Concise Oxford Dictionary relevantly defines "engage" as "…to employ or hire (a person)."
- [12]The Oxford English Dictionary relevantly defines "engage" as to "hire, secure the services of (a servant, workman, agent, etc). Also refl. of a servant, etc.: to enter into an agreement for service.
- [13]Schedule 3 relevantly provided:
"Schedule 3 Who is an employer in particular circumstances
1 A person who lends or lets on hire the services of a worker who is party to a contract (regardless of whether the contract is a contract of service) with that person continues to be the worker’s employer while the worker’s services are lent or let on hire.
…
6 A person is the employer of a contractor (other than a contractor mentioned in schedule 2, part 2, section 4), and any worker employed by the contractor, if—
(a) the person makes a contract with the contractor for the performance of work that is not incident to a trade or business regularly carried on by the contractor, individually or by means of a partnership; and
(b) the contractor—
(i) does not sublet the contract; or
(ii) does not employ a worker; or
(iii) if the contractor employs a worker, performs part of the work under the contract personally.
..." (my underlining)
- [14]The definition of "employer" in s 30 necessitates an examination of who is a worker.
- [15]Section 11 defined a worker thus:
11 Who is a worker
(1) A worker is a person who—
- (a)works under a contract; and
(b) in relation to the work, is an employee for the purpose of assessment for PAYG withholding under the Taxation Administration Act 1953 (Cwlth), schedule 1, part 2-5.
(2) Also, schedule 2, part 1 sets out who is a worker in particular circumstances.
(3) However, schedule 2, part 2 sets out who is not a worker in particular circumstances.
(4) Only an individual can be a worker for this Act. (my underlining)
- [16]Schedule 2 provided:
"Part 1 Persons who are workers
1 A person who works a farm as a sharefarmer is a worker if—
…
2 A salesperson, canvasser, collector or other person (salesperson) paid entirely or partly by commission is a worker, if …
3 A contractor, other than a contractor mentioned in part 2, section 4 of this schedule, is a worker if—
(a) the contractor makes a contract with someone else for the performance of work that is not incident to a trade or business regularly carried on by the contractor, individually or by way of a partnership; and
(b) the contractor—
(i) does not sublet the contract; or
(ii) does not employ a worker; or
(iii) if the contractor employs a worker, performs part of the work personally.
4 A person who is party to a contract of service with another person who lends or lets on hire the person’s services to someone else is a worker.
5 A person who is party to a contract of service with a labour hire agency or a group training organisation that arranges for the person to do work for someone else under an arrangement made between the agency or organisation and the other person is a worker.
6 A person who is party to a contract of service with a holding company whose services are let on hire by the holding company to another person is a worker."
(my underlining)
Consideration
- [17]Only clause 3 of part 1 uses the noun "contractor". Accordingly it seems to me that it must have a meaning different to "person" or "salesperson" as used in the remainder of the part. It is defined in the dictionary of the Act:
"contractor means a person who has contracted with someone else for the performance of work or provision of a service." (my underlining)
- [18]Part 2 deals with persons who are not workers, but is not relevant for present purposes.
- [19]Thus, under clause 3, it would appear that Mr Jarvis was a worker if
(a) the contractor (Mr Jarvis) makes a contract with someone else (Mr Wilms) for the performance of work that is not incident to a trade or business regularly carried on by the contractor (Mr Jarvis), individually or by way of a partnership; and
(b) the contractor (Mr Jarvis)—
(i) does not sublet the contract; or
(ii) does not employ a worker; or
(iii) if the contractor (Mr Jarvis) employs a worker, performs part of the work personally.
- [20]Although the language of the Act is far from clear, what does appear to be apparent is that an employee, as that word is generally understood, is a worker for the purposes of the Act, as is a contractor who performs work or provides services, if that person has entered into a contract with a person for whom he performs the work or provides the services, or by whom he is lent or hired out to perform the work or provide the services.
- [21]At the heart of the definition of "worker", no matter which section or schedule is relied upon, is the notion that the person is a party to a contract, either as an employee or as a contractor. This is so, whether it be for the purposes of section 11, section 30, schedule 2 or schedule 3 of the Act.
- [22]Accordingly in the circumstances of this case, it is necessary to ascertain whether any contract existed between Mr Wilms and Mr Jarvis.
- [23]The evidence is somewhat sketchy and the versions of the events given by the two men markedly differ. It is necessary to set out the salient points from each account of the events.
Mr Wilms' evidence
- [24]Mr Wilms is a carpenter and has been since 2004. He holds a contractor’s licence, which allows him to contract as a carpenter.
- [25]Shawn Michael Jarvis is a friend of his whom he met in 2011 on a job they were both working on for a builder. Mr Jarvis is also a carpenter as well as being a builder and a concreter, an OH&S officer, a trainer and assessor. Mr Wilms said that he also thought that Mr Jarvis held an open builder's licence as well.[6]
- [26]Prior to working on the site in Bowen, the subject of these proceedings, the two men had been looking for work. In mid-October 2013 they were driving around together looking at potential work opportunities when they saw a building site and decided that they would telephone the number displayed on the billboard. Mr Jarvis made the call and obtained an email address. They decided to each send an email enquiring as to the possibility of gaining work at the site. The project was a 21 unit housing development by a company apparently called Bloomers.
- [27]Mr Wilms followed up and sent an email asking for work as a carpenter. He also thought that Mr Jarvis had done likewise, but that was not the case. Following the sending of the email, Mr Wilms received a text message on his telephone from a Mr Tye Alroe, whose company held the head contract for the construction of the development.
- [28]Mr Alroe wanted to know whether Mr Wilms was interested in contracting for the framing and "fix-out" for the project. This would have essentially involved all the carpentry work for the 21 town houses. Various email exchanges followed with Mr Alroe sending details of the work and the price that was to be paid for each town house. Mr Wilms and Mr Jarvis analyzed the offer and concluded that the price was too low and that they would lose some $2,500 on each town house.
- [29]Eventually, at 3:59 pm on 13 October 2013, Mr Wilms texted Mr Alroe with a counter proposal: "Mate if need guys we would consider to do hourly rates of $45 per hour per guy."[7] Mr Alroe replied two days later: "Might need a couple of guys starting Monday on Hrly reckon u could hook it up! ..." On 7 November Mr Alroe texted Mr Jarvis: "Hey mate I have fix outs and soffits at Brisbane rd r u interested?"[8]
- [30]After a few phone calls Mr Alroe offered to pay hourly rates. This work was not fix-outs and soffits, but was rectification work to be paid at an hourly rate. Mr Wilms contacted Mr Jarvis and explained the job to him, "I said to Shawn it’s – you know, like, you’ve got to do a subbie pack to Tye and, you know, you just – we just both do our own thing."[9] Apparently a "subbie pack" is the bundle of documents contractors complete when they take on a job. It comprises details of the contractor, ABN, bank account, the licences, insurances and other matters relevant to the contractor.
- [31]On 12 November Mr Alroe sent Mr Wilms the telephone number of "Dave" the site supervisor, and asked him to provide Dave with "the details".[10]
- [32]Mr Wilms subsequently completed a subbie pack for himself, which he had received by email from Alroe Constructions, but apparently Mr Jarvis had neither sought nor completed one.
- [33]The pro-forma page, on Alroe Constructions letterhead, for Mr Wilms' bank details included the following:
"I agree that I will be paid $45 ** p/h x per man
Signed: (Illegible)
Employer:
*Pay rate to be inserted by Employer and Initialled by both Subcontractor & Employer.
** Out of this Hourly Pay Rate, I will pay my own Insurances & Leave. If I am a company it is our responsibility to pay our own Superannuation and I have filled out and signed the attached Superannuation Statement form.
Stated:
Ivan Wilms _______________________
Subcontractor/Employee Name Alroe Constructions/Witness
Signed:
(Illegible) ________________________
Subcontractor/Employee Alroe Constructions/Witness"[11]
(The bold numbers and words represent text which was inserted by hand in the Exhibit)
- [34]Whilst the subbie pack had a "sub-contractor check off list" as its covering page which provided for the provision of a copy of a "Currency for Workcover policy", this was only required "for our subcontractors who employ staff to work on our sites". Unsurprisingly, given that Mr Wilms had not taken out a Workcover policy, no such certificate was attached.
- [35]When asked in his examination-in-chief why he had inserted the "x per man" given that he had stated that he only submitted the subbie pack on his own behalf, Mr Wilms said:
"And what does 45 per hour per man mean?‑‑‑Basically, it means, you know, like if I get Tye another person, he’s entitled to get $45 an hour off Tye as well.
So is this document to cover to Tye or was he meant to do his own document?‑‑‑He – he was meant to do his own. Yes."[12]
- [36]He said that he'd written in the "per man" to confirm his arrangement with Mr Alroe, that if he sourced other labour for the job it would be at the same rate of $45 per hour that he was charging.[13]
- [37]I observe that this seems to be consistent with the tenor of the text message referred to in paragraph 29 of these reasons.
- [38]According to Mr Wilms the arrangement between himself and Mr Jarvis was that they were to use one vehicle between them, alternating between his and Mr Jarvis' vehicle every second week. They were to share the load and the cost of fuel. They were also to share their tools, taking whichever tools were best for the task at hand.
- [39]They ended up using Mr Wilms' vehicle for the duration of the job because there was something wrong with Mr Jarvis' vehicle, however they shared the cost of fuel with each paying on alternate occasions.[14]
- [40]The two men worked on the rectification work from approximately 12 November until 4 December 2013.[15]
- [41]Mr Wilms' evidence about the manner of his remuneration is interesting. He rendered an account on each Friday and was to be paid on the following Monday.[16] His agreement with Mr Alroe was that he would render the account to cover only his own work, not that of Mr Jarvis.[17] However, his three invoices for the period 12 November to 4 December 2013 stated that they were for the supply of tools and labour, as per the job card, for two men at the rate of $45 per hour. The invoice for the third week that the men worked was not in evidence. The last was for part of the fourth week.
- [42]Mr Wilms' explanation for this was that on each Friday Mr Jarvis told him that he had not organised his own affairs, that his computer was not working and he was not in a position to submit his own invoice to Mr Alroe, and implored Mr Wilms to render an invoice covering the two of them. Mr Wilms resisted, commenting that he could not do that because he was not covered by Workcover.[18] Mr Jarvis sought to assure Mr Wilms by telling him that he had all the necessary licences and insurance covers.[19]
- [43]Mr Wilms acceded to Mr Jarvis' request and remitted Mr Jarvis' portion to him. In turn Mr Jarvis rendered an invoice to Mr Wilms. This was done in order that Mr Wilms would not be liable to pay tax on the monies that he had received on behalf of Mr Jarvis. The job cards, which Mr Jarvis completed, were in the names of Mr Wilms and Mr Jarvis and showed the hours worked as being worked by two men.[20]
- [44]At about 3pm on 4 December 2013, Alroe Constructions' supervisor, Dave, phoned Mr Wilms and asked that they fix-out two townhouses; units three and four.[21] This work was to be on a set contract price for each unit. The work was to commence the following day because the work was necessary in order that tilers could begin their work. Mr Wilms contacted Mr Jarvis and they decided that they would each take a contract for one unit. However, they worked together on each unit.
- [45]On 6 December Mr Jarvis sustained a serious injury to his hand whilst operating an angle grinder. He made a claim for worker's compensation, which is the subject of this appeal.
- [46]Mr Wilms submitted a purchase order for the fix out of the two units for the price of $2432.00. The purchase order was a hand modified version of the document that he and Mr Jarvis had initially rejected for the fix out of five units. On 7 January 2014 Mr Wilms rendered an invoice to Alroe Constructions for that work.
- [47]Mr Wilms completed the work on the unit for which Mr Jarvis had contracted. He said that Mr Jarvis' work was substandard and it required him to spend a considerable time to rectify that work. Although he asked Mr Jarvis to submit an invoice in respect of the unit for which he had agreed to contract. Mr Jarvis told him that, given that he had not done much work prior to his injury, he could not be bothered to render an account. Mr Wilms did not remit any of the monies that he had received for this work to Mr Jarvis.
Mr Jarvis' evidence
- [48]Mr Jarvis' evidence was almost completely at odds with that of Mr Wilms.
- [49]He agreed that he had certain qualifications; a certificate III in carpentry, a certificate III in concreting and an advanced diploma of building construction management, a diploma in project management, a diploma in OH&S, a certificate IV in OH&S, a certificate IV trainer and assessor and various mining competencies. In 2012 and 2013 he had worked in the mines as a foreman on a fly in fly out basis. He agreed that he had met Mr Wilms when they were both working on a construction job.
- [50]In 2013, the mining industry being in decline, he commenced advanced studies in building construction management and project management.
- [51]His version of how he came to take the townhouse job differed remarkably from that of Mr Wilms. Mr Jarvis said that Mr Wilms called him up while he was at home and just said something to the effect of, "Do you want to come work on a job up in Bowen, just got a job up there on these townhouses?"[22] As he was fairly advanced in his studies and wanted to earn some extra money he agreed.
- [52]When asked how the job was described to him Mr Jarvis said that Mr Wilms told him he's got a job up in Bowen, "…it's just hourly rate and you know, whatever the job's worth, eight a day, like – yeah."[23] The job got organised and Mr Wilms started picking him up in the mornings and driving up there. Mr Wilms would speak to him about what time he would pick him up and what time they would finish each day.
- [53]Mr Jarvis denied that there was any arrangement whereby they would take it in turns to use their vehicles to get to the site, that they would share in the cost of petrol or that they would each take those of their own tools that were best suited to the job. He denied that his car was not serviceable.[24]
- [54]When asked how he was to be remunerated he said: "There was just … typical type - sort of, you know, weekly hours arrangement, you know? Invoice at the end of the week."[25] He agreed that he provided invoices to Mr Wilms in respect of the hours that he had worked, calculated at $45 per hour.
- [55]I observe that given that Mr Jarvis considered the arrangement to be that he would render an invoice at the end of the week suggests that he did not consider his arrangement with Mr Wilms was that of employer and employee.
- [56]Mr Jarvis did not accept Mr Wilms' version of how they found the job and the arrangements that were to be entered into. He denied that it was intended that he would render his own invoices to Alroe or that the discussions that he and Mr Wilms had about rendering invoices on Fridays had ever occurred. He agreed that Mr Wilms transferred his pay to his account by way of internet transfer and that he rendered invoices to Mr Wilms.
- [57]Mr Jarvis denied that the arrangement between the two men changed on 4 December when they began to perform the soffit and fix out work on units 3 and 4, asserting that Mr Wilms continued to tell him what to do on a daily basis. He asserted that Mr Wilms had told him that he had Workcover insurance.[26] This last statement is inherently unlikely.
- [58]Mr Jarvis said that while he was in hospital, a couple of days after the accident Mr Wilms visited him and asked him to sign some papers to demonstrate that he did not work for Mr Wilms, rather that he was an independent contractor. He declined to sign the papers.[27] In cross examination he rejected the suggestion that Mr Wilms' brought around Mr Jarvis' job order papers for the unit that he said Mr Jarvis had agreed to be responsible for in relation to the fix out work, but that Mr Jarvis said he couldn't be bothered dealing with them.
- [59]Mr Jarvis said that he had never met Tye Alroe nor spoken to him on the phone. This is at odds with Mr Wilms' evidence to the effect that Mr Jarvis had telephoned Mr Alroe on a couple of occasions to chase their pay. Mr Alroe, who also gave evidence, said that he had never dealt with Mr Jarvis.[28]
- [60]In cross-examination, when it was put to Mr Jarvis that he was doing the work for Alroe Constructions and not working for Mr Wilms, he said that he worked for Mr Wilms on an hourly rate and affirmed that he had had no contact with Mr Alroe, although he had had some dealings with Dave, the Alroe Constructions site supervisor, who generally gave Mr Wilms instructions about what needed to be done on any given day. Mr Wilms would then tell Mr Jarvis what was required of them.
- [61]As is apparent from the above narrative, the versions of the events of the two protagonists are markedly different. In my view neither was a particularly reliable witness. Mr Wilms embellished his evidence to try to demonstrate that the agreement between them was quite specific, that each was to contract separately with Alroe Constructions and that he kept emphasizing that to Mr Jarvis each time he rendered a bill for the two of them. Mr Jarvis, who as an undischarged bankrupt, was unable to accept work as a sub-contractor, was at pains to deny any such intention. However, his positive evidence goes little further than that he was told of a job by Mr Wilms, the pay rate was to be $45 per hour and Mr Wilms facilitated the two men securing and performing the work also that Mr Wilms invoiced Alroe for the work performed by Mr Jarvis and paid this into Mr Jarvis' bank account.
- [62]Although Mr Wilms' version of events at first blush appears to fly in the face of the documentary evidence, on balance, I am inclined to accept his version over that of Mr Jarvis. Mr Jarvis, it is clear, as an undischarged bankrupt, was not able to work as a contractor. Mr Alroe did not employ his tradesmen. His only employee was his supervisor, Dave. In order that Mr Jarvis could gain the work it was necessary for him to mislead Mr Alroe. Had he asked Mr Alroe to employ him, it is doubtful that he would have been successful as Mr Alroe, I infer, had not set up his business on such a basis.
- [63]Further had Mr Wilms employed Mr Jarvis it would have likely resulted in Mr Jarvis earning considerably less than $45 per hour given that PAYG tax would have been deducted from his pay and that Mr Wilms would have been obliged to make compulsory superannuation payments as well as take out workers' compensation insurance.
- [64]As I said at the outset, in order that Mr Jarvis may be found to be a worker for the purposes of the Act, it is necessary that he work under a contract. In the circumstances of this case it is necessary that the contract be with Mr Wilms, as it is he whom the regulator has held responsible for the payment of compensation to Mr Jarvis. I am not concerned with whether there may have been any contractual relationship between Mr Jarvis and anybody else.
Was there a contract between Mr Wilms and Mr Jarvis?
- [65]It is necessary to go back to the basics of the law of contract. Cheshire & Fifoot's – Law of Contract (10th Australian Edition) deals with the making of a contract.[29]
"1.16 Making a contract. The major elements of formation of a contract are usually identified as following:
- agreement (offer and acceptance);
- consideration;
- intention to create legal relations; and
- certainty of terms.
Offer, acceptance and giving consideration together constitute a process that, to make a contract requires:
- at least two parties;
- a promise or undertaking by at least one of them; and
- an exchange between them, either promise-for-promise (bilateral contract) or promise-for-act (unilateral contract).
Exchange. There can be no offer, acceptance or consideration unless the parties' agreement effects an exchange. According to a classic formula, 'the relation of a quid pro quo must subsist between' the promises of each party (in a bilateral contract) or the promise of one and the act of the other (in a unilateral contract). In short, the party seeking to enforce a contractual undertaking must show that she or he paid a specified 'legal price' (gave requested consideration) in return for that undertaking.
Offer. To show that a party made an offer it is necessary to identify an express or implied promise by that party to perform a specified act in exchange for another party's:
- specified counter-promise; or
- specified act.
Acceptance of an offer occurs when an offeree makes the specified counter-promise (bilateral contract) or performs the specified act (unilateral contract) in response to the offer.
Consideration. In a bilateral contract, each promise is the consideration for the other promise. In a unilateral contract, the promise is the consideration for the requested act, and the requested act is consideration in the legal sense ('good consideration') unless it has some value, at least according to the idiosyncratic rules of the law on this topic. If a promise or act has no value in the eye of the law, it is not good consideration, even it is the promise or act specified by the other party as consideration. A promisor who requires a counter-promise or act of no value from the promise is making a conditional gift, not a contract.
Intention to create legal relations need not be present subjectively. In the law of contracts, intention or intentional states are usually established objectively, that is, a party will be held to that intention which would be reasonably inferred in the circumstances.
Certainty and completeness is required, but only in relation to essential terms. The court has wide powers to imply terms and to fix meanings.
Privity of contract. A contract can be enforced only by the parties against each other. A contract between A and B cannot be enforced by X, even if X is intended to gain a benefit from its performance. Conversely, a contract between A and B cannot be enforced against X, even if it purports to make X liable. This is the doctrine of 'privity of contract', that is, the doctrine that a party must be 'privy' to a contract in order to enforce it or be liable under it.
1.17 No offer or acceptance without exchange. There can be neither an offer nor an acceptance unless the parties intend to effect and exchange. A promise qualifies as an offer only if it proposes an exchange. A promise or performance qualifies as an acceptance only if it is given in response to that proposal: if given coincidentally, or inadvertently, it cannot be an acceptance. (Nor can it be good consideration.)
In practice, this requirement poses a problem only where a unilateral contract is in issue. Where a bilateral contract is alleged, the necessary reciprocity of the promise and counter-promise will usually be self-evident. But where a unilateral contract is alleged, that is, where the contract is said to consist of an exchange of a promise for an actual performance, the presence of the element of exchange may need to be positivity established.
The promise will be an offer in such cases if it can be shown that it was held out to the offeree as a 'quid pro quo' for acting in the specified manner.
The specified act amounts to acceptance only if it is given in response to the offer if the act specified by the offer is performance in ignorance of it, or without advertence to it, it cannot constitute acceptance." (Footnotes omitted).
- [66]It seems to me, that in the circumstances of this case, none of the necessary elements for the formation of a contract was present.
- [67]In Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Australia) Pty Ltd[30] McHugh, JA, in relation to an alleged commercial contract of some complexity, where the parties had differing versions of their contractual relationship, said:
"It is often difficult to fit a commercial arrangement into the common lawyers' analysis of a contractual arrangement. Commercial discussions are often too unrefined to fit easily into the slots of "offer", "acceptance", "consideration" and "intention to create a legal relationship" which are the benchmarks of the contract of classical theory. In classical theory, the typical contract is a bilateral one and consists of an exchange of promises by means of an offer and its acceptance together with an intention to create a binding legal relationship. cf Atiyah, "Contracts, Promises and the Law of Obligations" 94 Law Quarterly Review at 194. A bilateral contract of this type exists independently of and indeed precedes what the parties do. Consequently, it is an error "to suppose that merely because something has been done then there is therefore some contract in existence which has thereby been executed": Howard, "Contract, Reliance and Business Transactions" [1987] Journal of Business Law at 127. Nevertheless, a contract may be inferred from the acts and conduct of parties as well as or in the absence of their words: Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (Court of Appeal) (11/11/88) . The question in this class of case is whether the conduct of the parties viewed in the light of the surrounding circumstances shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract: cf Baltimore and Ohio RR Co v US 261 US 592 (1923); Fincke v US 675 F2d 289 (1982). Care must also be taken not to infer anterior promises from conduct which represents no more than an adjustment of their relationship in the light of changing circumstances.
Research in the United States and Great Britain suggests that probably the majority of people in ongoing business relationships regulate their relationships in accordance with what they consider is fair and reasonable or commercially necessary at particular points of time rather than by reference to a priori rights and duties arising under a contract: Beale and Dugdale, "Contracts Between Businessmen" [1975] British Journal of Law and Society at 45; Lewis, "Contracts Between Businessmen" [1982] Journal of Law and Society at 153. This is the case even where their relationship is governed by a written contract. There is no reason to suppose that the position is any different in Australia. For this reason "action and conduct before the inception of a controversy is of much greater weight than what they said or did after a dispute arose": Fincke v US at 295.
Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties' subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed."
- [68]Similarly to the situation in Intergrated Computer Services, here it is difficult, if not impossible, to fit the loose arrangement between Mr Wilms and Mr Jarvis into the common lawyer's analysis of a contractual relationship. There was no agreement (offer and acceptance). On Mr Jarvis's version, he was told by Mr Wilms of the job at Bowen and the rate of pay, and off they went. On Mr Wilms' version they mutually decided to each work as contractors to Alroe Constructions. Mr Wilms did not offer Mr Jarvis a job in the contractual sense, he merely told him that there was one available. The only circumstance that could be construed as an offer was the implicit facilitation of an introduction to the job. Mr Jarvis did not accept anything from Mr Wilms, other than perhaps taking up the opportunity to travel to the site with Mr Wilms. This does not seem to me to be a case where the parties have drifted into a contractual relationship, there being no time when it could be said that an offer had been accepted.[31] Unlike the situation in Intergrated Computer Services, no contract can be inferred from the acts and conduct of the parties, either before they commenced the work or during its course.
- [69]No consideration flowed between the parties. Mr Wilms, although he paid the agreed amount into Mr Jarvis' bank account, was merely a conduit for the payment of that amount by Alroe Constructions, for whom the work was performed by Mr Jarvis. The corollary is that Mr Jarvis did not perform any work for Mr Wilms. It is significant that Mr Wilms merely passed on the agreed $45 per hour that each of them was to receive to Mr Jarvis. Mr Jarvis got nothing from Mr Wilms and Mr Wilms got nothing from Mr Jarvis.
- [70]On a proper analysis of the facts, the situation was that Mr Jarvis performed the work for Alroe Constructions from whom he received his remuneration via Mr Wilms. Although Mr Alroe might not have met Mr Jarvis, he certainly knew that Mr Wilms and another man were working on the site at $45 per hour each. I need not decide what the relationship, if any, was between Alroe Constructions and Mr Jarvis.
- [71]There was no intention by either Mr Wilms or Mr Jarvis to create legal relations one with the other. Having regard to the facts, it would be fanciful to suggest that Mr Jarvis would have felt that he could sue Mr Wilms for breach of contract had Alroe Constructions defaulted in paying Mr Wilms.
- [72]There was no certainty as to the terms of any contract that might be said to have existed between the two men.
- [73]Much of the evidence went to the issue of whether Mr Jarvis was an employee of Mr Wilms. I accept that, in order that there be an employment relationship, there must exist a contract. The facts and circumstances surrounding the relationship that would point to the existence of employment are also relevant to ascertaining whether there existed a contract.
- [74]I was taken to indicia of an employment relationship such as the supply by Mr Wilms of most of the tools, the use of Mr Wilms' vehicle to transport the men to the site, the setting of starting and finishing times by Mr Wilms and the directions conveyed by Mr Wilms to Mr Jarvis as to the performance of the work. In my view, to the extent that those factors existed, they are not sufficient to establish the relationship of employer and employee. I accept Mr Wilms' evidence that the tools that were used were those of whichever of them were best suited to the work at hand. Given that they travelled in Mr Wilms' vehicle it is likely that more of his tools were used. That Mr Wilms' vehicle was the only one in which they travelled to the site is far from conclusive – it was not said to have been provided to Mr Jarvis as some sort of condition of employment. As to the starting and finishing times and the directions given by Mr Wilms, these appear to me to be no more than matters of convenience. There is no evidence that would support a finding that Mr Wilms could control Mr Jarvis in relation to any aspect of their relationship. The rendering of an invoice by Mr Jarvis to Mr Wilms each week points against the existence of an employment relationship.
- [75]The evidence does not support a finding that a contract had come into existence between Mr Wilms and Mr Jarvis. It points to the contrary. In my opinion, Mr Wilms acted simply as a facilitator or conduit for Mr Jarvis to undertake some paid work.
- [76]I am satisfied, on the balance of probabilities, that there was no contractual relationship between Mr Wilms and Mr Jarvis. Accordingly, Mr Wilms was not an employer and Mr Jarvis was not a worker for the purposes of the Act.
- [77]It follows that the appeal must be allowed and an order made that Mr Jarvis' claim be rejected. I will also order that the respondent pay Mr Wilms' costs.
Footnotes
[1] Workers' Compensation and Rehabilitation Act 2003, s 5(1).
[2] Workers' Compensation and Rehabilitation Act 2003, s 5(2).
[3] Workers' Compensation and Rehabilitation Act 2003, s 46.
[4] Workers' Compensation and Rehabilitation Act 2003, s 48.
[5] Workers' Compensation and Rehabilitation Act 2003, s 51.
[6] T1-17/15.
[7] Exhibit A1, p3.
[8] Ibid.
[9] T1-24/4.
[10] Ibid.
[11] Exhibit A2, p.3.
[12] T1-25/4.
[13] T1-66/3.
[14] T1-29/42.
[15] T1-33/20.
[16] T1-33/30.
[17] T1-34/3.
[18] T1-36/3.
[19] T1-38/11.
[20] Exhibits R1, R2.
[21] T1-44/6.
[22] T1-96/4.
[23] T1-96/35.
[24] T1-97/35 - 97/43.
[25] T1-98/38.
[26] T1-100/22.
[27] T1-103/35.
[28] T1-84/15, T1-87/1.
[29] N. Seddon, R. Bigwood, M. Ellinghaus, Cheshire and Fifoot Law of Contract (LexisNexis Butterworths, 10th ed, 2012) 10-12.
[30] (1988) 5 BPR 11,110.
[31] N. Seddon, R. Bigwood, M. Ellinghaus, Cheshire and Fifoot Law of Contract (LexisNexis Butterworths, 10th ed, 2012) 10-12, 94-98.