Which case won?

The case for the carpenter
  • The principal contractor oversaw the construction of the build and in doing so decided what work was to be done and in what order. Therefore, the principal contractor should be held liable.
  • The principal contractor approved payment by the owners of the invoices of all persons who worked on the site.
  • The licensed builder was acting on behalf of the principal contractor when he engaged my services.
  • The licensed builder who introduced me to the job was not my supervisor; he was just another carpenter on site.
  • There were four builders on site, and we were all instructed by the principal contractor.
  • The fact that I didn’t meet the principal contractor’s representative until the day of the accident is irrelevant.
  • I primarily used my own tools, but tools were also supplied by the principal contractor.
  • It was the principal contractor which provided the scaffolding on site, not the owners of the property nor the licensed builder.
The case for the principal contractor
  • We build “zero energy” homes. This type of build is not common in Australia, so we provide the contractors with guidance to allow them to be able to complete their work.
  • We have a management contract with the owners. We oversee the management of the site and are paid a management fee. The owners are liable for contractors on site.
  • Under no circumstances do we pay any contractors working on site. This is clearly set out in our management contract. We merely check the invoices on behalf of the owners.
  • We do not let people on site unless they have their own insurances. They have all got to be insured. We knew that the licensed builder who brought the carpenter to the site has workers compensation insurance.
  • We have not received an invoice for any wages from the carpenter. If a contractor like the licensed builder has his own employees, then he is responsible for their payment.
  • The licensed builder needed more tradesmen on site, so he brought in the carpenter.

So, which case won?

Cast your judgment below to find out
Case A Case B

Case A won. You were right!

How people voted
case a61%
case b39%

Expert commentary on the court's decision

“Given the dispute in this matter, it is necessary to determine whether the carpenter is either a worker or deemed worker, or whether he carried out the work at the building site as an independent contractor.”
Personal Injury Commission finds in favour of carpenter

In the matter of Nilon v Workers Compensation Nominal Insurer (iCare) & Ors [2022] NSWPIC 667, the Personal Injury Commission agreed with the carpenter, Mr Robert Nilon, in finding that the principal contractor, Berens Construction Pty Ltd, was liable to pay him workers compensation as a deemed worker.

Irreconcilable inconsistency in construction company’s position

The commission examined the legal relationship between Mr Nilon and Berens Construction. It found the difficulty with Berens’ position was that on one hand it defined itself as the head contractor on the worksite, while on the other hand it purported to abrogate all responsibility for anyone working on that site.

Berens Construction had a provision in its contract with the property owners which stated that it had no liability for payments due to contractors, subcontractors, tradespeople, suppliers, service providers or government authorities and there would be no contractual relationship between these and any contractor on the project.

However, aspects of Berens’ evidence revealed that it had the control of the day-to-day operation of the work site. This included solicitation of suppliers and contractors, conducting meetings with prospective contractors, evaluating quotes and general monitoring of the project on a daily basis.

Who formed the contract with the carpenter?

The commission cited the case R v Fostar; ex parte Commonwealth Life (Amalgamated Assurances) Ltd (1952) 85 CLR 138 in making the following observations.

If a company assumes the detailed direction and control of its agents in the daily performance of their work and those agents tacitly accept a position of subordination to authority as to the manner in which they carry out their duties, a course of action designed to prevent the relationship receiving the legal complexion which it deserves would be and indeed should be ineffectual.

The commission determined that a contract was formed between Mr Nilon and Berens Construction, not between Mr Nilon and the property owners or between Mr Nilon and the licensed builder.

This finding was based on Berens Construction having care and control of the work site, approving and/or retailing the work carried out by contractors and approving their invoices for payment by the property owners.

Nature of contract between carpenter and principal contractor

The commission considered the nature of the contract between Mr Nilon and Berens Construction. While the commission took into consideration some of the surrounding circumstances, it gave primacy to the nature of the contract in question and the work carried out on the job site.

A “worker” is loosely defined by the Workplace Injury Management and Workers Compensation Act 1998 (“the Act”) as a person who entered into work under the contract of service or a training contract with an employer, whether the contract is express or implied, and whether the contract is oral or in writing.

However, it was necessary to determine whether Mr Nilon was either a worker or deemed worker, or whether he carried out the work as an independent contractor.

In this instance, the relationship favoured a construction that Mr Nilon was a contractor, rather than a worker on site. Notwithstanding the payment of an hourly rate, Mr Nilon had to pay his own tax and superannuation, provided his own tools, and did not hold himself as representing Berens Construction.

The totality of the evidence did not support an employment relationship between Mr Nilon and Berens Construction.

Carpenter’s classification as a deemed worker

While Mr Nilon was considered a contractor, he was still classified as a “deemed worker” by the commission under the Act, which states that “where a contract is made with a contractor, who neither sublets the contract nor employs any worker, the contractor is taken to be a worker employed by the person who made the contract with the contractor”.

The commission found the work performed by Mr Nilon was not incidental to a trade or business regularly carried on by him. Irrespective that he had an ABN, Mr Nilon invoiced Berens Construction in his own name and not that of his business.

As Mr Nilon satisfied the requirements of a deemed worker, he was successful in his claim for compensation against Berens Construction.

While orders were made against Berens Construction, the company was not insured for workers compensation in NSW. Consequently, the NSW workers compensation nominal insurer, iCare, was deemed liable to pay Mr Nilon weekly compensation, starting from the date of his injury.

Berens Construction was in turn liable to reimburse iCare for any compensation it paid to Mr Nilon.

For Queensland companies employing people in NSW the message is clear. You must have workers compensation insurance in NSW if you have workers on a site in New South Wales.

[Editor’s note, February 2023: this case is currently on appeal.]

NOTICE: This article is accurate as at the time of publication and does not constitute legal advice. Please see our legal notices page for more information. Information related to coronavirus can be outdated very quickly.

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