Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Workers Compensation Nominal Insurer v Adnan Al Othmani [2012] NSWCA 45
• Hearing dates: 17 November 2011
• Decision date: 22 March 2012
• Before: Bathurst CJ at [1]; McColl JA at [99]; Handley AJA at [100]

Decision

1. 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 - Workers' Compensation Commission - Arbitrator's decision - Review of decision by Presidential member - Nature of review - Whether Presidential member bound to apply the principle in Fox v Percy.; WORKERS COMPENSATION - Workers' Compensation Commission - Arbitrator's decision - Review of decision by Presidential member - Whether breach of procedural fairness by Presidential member.; WORKERS COMPENSATION - Workers' Compensation Commission - Arbitrator's decision - Review of decision by Presidential member - Error of law - Whether error of law material to decision of Presidential member.; WORKERS COMPENSATION - Whether 'worker' within definition in Workplace Injury Management and Workers Compensation Act.
• Legislation Cited: Compensation Court Act 1984 s 36; Residential Tenancies Act 1987 s 26; Supreme Court Act 1970 s 75A; Workers Compensation Act 1987 ss 11A, 154A; Workplace Injury Management and Workers Compensation Act 1998 ss 4, 294, 352, 353, 354, 355, Sch 1
• Cases Cited: Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167; Akora Holdings Pty Limited v Ljubicic [2008] NSWCA 339; Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172; Amaca Pty Limited v Doughan [2011] NSWCA 169; Australian Gas Light Co Limited v Samuels (1993) 9 NSWCCR 616; Boston Clothing Co Pty Ltd v Margaronis (1992) 27 NSWLR 580; Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153; Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245; Cockatoo Dockyard Pty Limited v Atamian (1995) 12 NSWCCR 114; Cook v Midpart Pty Ltd [2008] NSWCA 151; (2008) 6 DDCR 316; Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472; Duinker v St Vincent de Paul Society Aged and Special Services Ltd (Lewisham Nursing Home) [2008] NSWCA 127; (2008) 6 DDCR 266; Escobar v Spindaleri (1986) 7 NSWLR 51; Fox v Percy [2003] HCA 22; (2007) 214 CLR 118; House v The King [1936] HCA 40, 55 CLR 499; In Re B [2009] AC 11; Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; (2010) 241 CLR 390; Litynski v Albion Steel Pty Limited (1994) 10 NSWCCR 287; Malec v JC Hutton Pty Ltd [1990] HCA 20, 169 CLR 638; New South Wales Police Force v Winter [2011] NSWCA 330; Ormwave Pty Limited v Smith [2007] NSWCA 210; (2007) 5 DDCR 180; Sapina v Coles Myer Ltd [2009] NSWCA 71; (2009) 7 DDCR 54; Seltsam v Ghaleb [2005] NSWCA 208; (2005) 3 DDCR 1; Siddik v WorkCover Authority of NSW [2008] NSWCA 116; (2008) 6 DDCR 228; State Transit Authority v Chemler [2007] NSWCA 249; (2007) 5 DDCR 286; Tan v National Australian Bank Ltd [2008] NSWCA 198; (2008) 6 DDCR 363; Tasty Chicks Pty Limited v Chief Commissioner of State Revenue [2011] HCA 41; (2011) 85 ALJR 1183; Warren v Coombes [1979] HCA 9; 142 CLR 531; Watson v Hanimex Colour Services Pty Ltd (1992) 8 NSWCCR 190; Wigan v Evans (1973) 47 ALJR 586
• Category: Principal judgment
• Parties: Workers' Compensation Nominal Insurer (Appellant); Adnan Al Othmani (First Respondent); Raymond Tannous Massoud (Second Respondent); Antoine Massoud (Third Respondent)
• Representation: Counsel; SG Campbell SC and P R Stockley (Workers' Compensation Nominal Insurer); JP Gormly SC (Adnan Al Othmani); Solicitors; DLA Phillips Fox (Workers' Compensation Nominal Insurer); Koutzoumis Lawers (Adnan Al Othmani)
• File Number(s): 2011/4833-002

Decision under appeal

• Citation: Al Othmani v Massoud and Anor [2010] NSWWCCPTD 129
• Before: Acting Deputy President Lorna McFee
• File Number(s): A1-007269/2009

Judgment

1 BATHURST CJ: This is an appeal from a decision of a Presidential member of the Workers Compensation Commission ("the Presidential member") pursuant to s 353 of the Workplace Injury Management and Workers Compensation Act 1998 ("the 1998 Act").

2 The proceedings the subject of the appeal arose out of injuries suffered by the first respondent, Mr Al Othmani, on 24 June 2006. On that day, whilst cleaning the roof of a pergola at premises 5 Theo Street, Liverpool ("the premises)" of which he was a tenant, Mr Al Othmani fell off the roof of the pergola and suffered severe back injuries, resulting in paraplegia.

3 Mr Al Othmani claimed he suffered the injury whilst carrying out the work as an employee of the second and third respondents (Mr and Mrs Massoud). He claimed he was a worker either within the general definition of that term contained in s 4 of the 1998 Act or within the extended definition contained in cl 2(1) of Sch 1 of the 1998 Act. The detailed facts giving rise to that claim were set out in the determination of the arbitrator and in that of the Presidential member, to which I refer below.

4 The second and third respondents were not insured for workers' compensation liability and the appellant in those circumstances is the Workers Compensation Nominal Insurer, established by s 154A of the Workers Compensation Act 1987.

5 Mr Al Othmani's claim was heard by an arbitrator on 11 December 2009. The only issue before the arbitrator was the question of whether Mr Al Othmani was a worker within the definition of that term in the 1998 Act or within the extended definition in Sch 1 of the Act.

6 On 3 March 2010 the arbitrator issued a certificate of determination under s 294 of the 1998 Act rejecting Mr Al Othmani's claim and entering an award in favour of Mr and Mrs Massoud and the present appellant. By consent, the arbitrator also amended the appellant's name to "Uninsured Liability Scheme - Agent for the NSW Workcover Scheme". However, for the sake of consistency, the appellant will continue to be referred to as the Workers Compensation National Insurer herein.

7 Mr Al Othmani appealed against the decision of the arbitrator to the Commission constituted by a Presidential member pursuant to s 352 of the 1998 Act. The Presidential member reversed the decision of the arbitrator and found that Mr Al Othmani was a worker as defined in cl 2 of Sch 1 of the 1998 Act, deemed to be employed by Mr and Mrs Massoud. The Presidential member also remitted the matter to a different arbitrator for determination of all outstanding issues. It is from these orders that the present appeal is brought.

8 The issues raised on the appeal necessitate consideration of the reasoning of both the arbitrator and the Presidential member.

The decision of the arbitrator

9 The arbitrator recorded that in an undated statement Mr Al Othmani said that had he found out that a property at 5 Theo Street, Liverpool, owned by Mr and Mrs Massoud was available for rent, and that he went to speak to the second respondent ("Mr Massoud") about the house. He stated that he was shown a lease and the front page of the lease was filled out by Mr Massoud and given to him. He stated that he reached an agreement with Mr Massoud and that, having paid rent on the property, he moved in with his wife and child.

10 Mr Al Othmani in his statement said that on moving in he found a number of defects in the premises. He said that about three or four days before the accident he spoke to Mr Massoud about a leak coming down from the chimney and claimed in his statement that "Raymond Massoud told me that if I fixed the taps and the leaking roof and cleaned the pergola and cleaned the house he would pay me $1,000". Mr Al Othmani stated that on 24 June 2006 Mr Massoud brought a ladder to the house. He stated that his friend Mr George Hajjar was assisting him and that he and Mr Hajjar intended to clean the leaves and debris off the pergola and to fix the leak on the roof.

11 Mr Al Othmani said that Mr Hajjar ascended the ladder, cleaned the area around the base of the chimney so he could apply silicone to seal it and then came down the ladder. He said he then went up the ladder and commenced to clean the leaves and debris off the pergola and that as he was doing this, he stepped backwards and fell through the Perspex sheeting, as a result of which he sustained his injuries.

12 The arbitrator referred to a number of other statements made by Mr Al Othmani, which contained a somewhat different version of events. The arbitrator also referred to Mr Al Othmani's oral evidence before her, in which Mr Al Othmani claimed Mr Massoud had told him "to fix it and I will give you $1,000". In the course of giving his evidence Mr Al Othmani was asked what was to be fixed and replied "The roof, the telephone, cleaning out the house and a couple of things like the laundry". He stated that Mr Massoud had said "Finalise these things and I will give you $1,000" and that he had replied, "That's no problem I will do it".

13 The arbitrator permitted limited cross-examination and recorded that in cross-examination Mr Al Othmani agreed he had no experience in fixing roofs and at the relevant time had no idea what was involved in fixing the roof. She also recorded that Mr Al Othmani stated he had told Mr Massoud about the phone point, the cleaning, taps, pergola and had told Mr Massoud that the house was full of trouble but they did not discover it until they had lived there. Mr Al Othmani agreed that his friend, Mr Hajjar, had fixed the taps and that he had paid for the materials used to fix them. She also recorded that Mr Al Othmani denied paying anyone to do the work that he had discussed doing with Mr Massoud on the day of the accident.

14 Mr Massoud gave evidence before the arbitrator. He stated that the previous tenants had not complained about leaves in the gutter or in the rear awning and that he had not carried out any work in that area. Mr Massoud claimed that on the day of the accident Mr Al Othmani turned up at his house and asked about borrowing a stepladder because he wanted to clean the roof. Mr Massoud's evidence was that he told Mr Al Othmani that it was not his job to go up on the roof and he was not to go up there. Mr Massoud claimed that Mr Al Othmani said, "If you won't let me, how about I ask my friend who is experienced", referring to Mr Hajjar. Mr Massoud claimed he replied "If you get George, I will get the stepladder from next door".

15 Mr Massoud's evidence was that Mr Al Othmani then left and returned after 30 or 40 minutes stating that Mr George Hajjar was there. Mr Massoud stated he then went and got the stepladder. He said that about twenty minutes later Mr Hajjar came to tell him that Mr Al Othmani had fallen. Mr Massoud stated that while waiting for the ambulance, Mr Hajjar told him that Mr Al Othmani had contacted him to look for a leak in the chimney. Mr Massoud's evidence was that this was the first he had heard of any such leak. He denied offering Mr Al Othmani $1,000 to clean up the house.

16 In cross-examination before the arbitrator, Mr Massoud agreed that Mr Al Othmani had made a number of complaints about the property including that he had "whinged about water coming from the chimney". Mr Massoud, however, said that happened on the Saturday of the accident and he denied that Mr Al Othmani complained about it before that date.

17 Ultimately, the arbitrator rejected Mr Al Othmani's version of events. Her conclusions were as follows:

"[52]I have considered the evidence given by the Applicant and Mr Massoud carefully. It is fair to say that each of them displayed a number of inconsistencies between their various statements and also their oral evidence. Both the Applicant and Mr Massoud had something to gain or to lose from the decision in this matter.

...

[59]The inconsistencies between the different statements and the oral evidence of the Applicant are a matter of some concern and indicate that his evidence should be treated with caution. The account given in the WorkCover statement suggests that the Applicant was offered $1,000 by Mr Massoud to fix leaking taps and problems three to four days before the accident and before any discussion of a leak in the roof. Statement 1 suggests that 3 or 4 days before the accident the Applicant spoke to Mr Massoud about the leak in the chimney and Mr Massoud told him that if he fixed the taps and the chimney and cleaned the pergola he would pay him $1,000. Statement 2 suggests that although the Applicant was told to fix the leak and clean the pergola three or four days before the accident, the offer of $1,000 to clean the pergola and fix the leak was only made on the day of the accident, that is, 24 June 2004. The WorkCover Statement does not refer to any agreement to clean the pergola roof. Two of the statements, Statement 1 and the WorkCover Statement, suggest that the work the Applicant was to perform for reward included fixing leaking taps yet the Applicant in cross-examination agreed that the taps had been fixed before he had the problems with the chimney and the offer of payment for certain work was made. In response to questioning by Mr Doak, the Applicant agreed that he had then had a conversation with Mr Massoud about the leak in the roof and getting that fixed and at that time Mr Massoud offered to pay him to do certain work. Finally, there are differences as to when the offer of payment was made; the WorkCover Statement and statement 1 suggest that the offer of payment was made three or four days before the accident whereas statement 2 suggests that the offer was made on the day of the accident. In his oral evidence the Applicant agreed that the conversation about being paid to fix the leak in the roof, cleaning the pergola and do other work happened a 'day earlier' and was confirmed on the day of the accident. These inconsistencies concerning when the agreement was made and for what services, are not, in my view, insignificant given the issues to be determined in this case.

[60]There are some minor inconsistencies between the evidence of the Applicant and that of Mr Hajjar. Mr Hajjar stated that on 24 June 2006 he recalled the Applicant rang him in the morning and told him there was a leak in the chimney. Mr Hajjar said that he would come over and arrived there about 11am. In the WorkCover Statement the Applicant stated that: 'George Hajjar came to 5 Theo Street on that day during the morning. I first went to his home and woke him up, then he came to 5 Theo Street.'

[61]Further, Mr Hajjar stated that he accessed the roof and went to check the leak. He then took off the old silicone and then went down from the roof and told the Applicant that he had to wait for the mould to dry. Mr Hajjar stated that the Applicant then took a broom and made his way to the rear of the house and climbed up on the extension ladder and walked on the flat section of the roof and started to clean leaves from the roof area. While consistent with the Applicant's account of events in Statement 1 and the WorkCover Statement, it is not consistent with the events as described in Statement 2. In that Statement, the Applicant said that after Mr Massoud left, 'George and I got up on the roof. George went to fix the leak.'

[62]Mr Hajjar stated that the Applicant contacted him about fixing the leak in the chimney. He said that the Applicant did not say anything about clearing leaves from the roof. However, the Applicant (in Statement 1) after recounting that Mr Massoud had brought a ladder to the house on Saturday 24 June 2006, wrote: 'George Hajjar was assisting me on this day and we intended to clean the leaves and debris off the pergola and to fix the leak in the roof.' The inference to be drawn from the Applicant's statement was that he had discussed the work to be done including cleaning the pergola with Mr Hajjar before his accident. There is some inconsistency in my view between these statements as to what work the Applicant had discussed with Mr Hajjar."

18 In relation to the evidence of Mr Massoud the arbitrator made the following comments:

"[71]The inconsistencies of Mr Massoud's insistence that premises were in good condition despite concessions about problems with taps, electricity supply and spiders were not significant in my view. Such terms as 'good condition' are subjective. The Applicant in examination in chief described inspecting the house and found it to be clean and said 'it looked OK to live in.'

[72]I accept that there were some minor inconsistencies in Mr Massoud's evidence but these were in the main in respect of matters that are not critical in the determination of the issues in this case. Mr Massoud was consistent in his denial that he had offered to pay the Applicant $1,000 to fix the leak in the roof, clean the pergola and carry out other work around the property.

[73]The Applicant identified some inconsistencies between Mr Massoud's evidence and that of Mr Hajjar. The inconsistencies related to the type of ladder used and whether it was extendable or not, and Mr Massoud's belief that there was nothing wrong with the chimney or the roof.

[74]In relation to the ladder, I do not regard this as a significant issue. While Mr Hajjar in his statement for the WorkCover investigator described the ladder as a 'long ladder which was extendable' and Mr Massoud described it in his WorkCover statement as an aluminium ladder not extendable, I do not think the discrepancy is important.

[75]In relation to the question of whether the chimney was leaking, Mr Massoud did say that he believed that the Applicant was lying as he saw no water leaking. However, Mr Massoud in his oral evidence also said that he did not go on to the roof or look at the roof or chimney himself and he agreed to lend his ladder to enable Mr Hajjar to access the roof and fix the roof. It is reasonable to infer from that evidence that although Mr Massoud had some doubts about whether the chimney was leaking, he agreed to let Mr Hajjar go onto the roof to repair any leak.

[76]I accept that Mr Hajjar stated that: 'you could not see the fibreglass because there were a lot of leaves. From on top of the roof the whole roof looked the same. It was covered in leaves.' I also accept that the Applicant said that the awning was dirty and covered in leaves and when it rained all the dirt had come down onto the ground. However, there is a distinction, in my view, between a dirty roof covered in leaves and a problem with a roof. Mr Massoud was cross-examined about the leaves on the pergola and said that he did not go up on the roof and could not see if there were leaves there. He agreed that you could not see too much sun through the fibreglass and commented that there were too many trees around the house. In my view, there is no real inconsistency between Mr Massoud's evidence about the condition of the roof and that of the Applicant and Mr Hajjar.

[77]The inconsistencies identified by the Applicant between Mr Massoud's evidence and that of the Applicant and Mr Hajjar were, in the main, of minor or collateral importance.

[78]In considering the evidence in this matter and whether I should prefer the evidence of the Applicant to that of Mr Massoud, the proposed payment of $1,000 for work is significant in my view. It is common ground between the parties that the Applicant was paying Mr Massoud $150 per week in rent. A payment of $1,000 represented more than six weeks rent for the property. The work identified by the Applicant to be performed in exchange for that sum appeared to have involved a relatively minor repair to the chimney, cleaning and tidying up the garden. I accept the Respondent's submission that it is inherently improbable that Mr Massoud would have offered such a large sum of money to the Applicant in circumstances where he did not know the nature and extent of the problem. Further, I consider that given the inspection before the Applicant signed the tenancy agreement that much of this work was arguably work that the Respondent would not have been obliged to carry out for the Applicant or pay the Applicant to do so."

19 The arbitrator's ultimate conclusion was expressed as follows:

"[80]On balance, after considering the degree of inconsistency in the Applicant's evidence concerning the details of the alleged contract and after taking into account the inherent improbability that Mr Massoud would offer the Applicant $1,000 to do the 'certain' work, I prefer the evidence of Mr Massoud to that of the Applicant on the question of whether Mr Massoud offered the Applicant $1,000 to perform work at 5 Theo Street, including cleaning the pergola. In relation to the alleged offer and acceptance between Mr Massoud and the Applicant in the days before the accident on 24 June 2006 and on the day of the accident, the Applicant's evidence is not very convincing. Where there was direct conflict of evidence, I prefer the evidence of Mr Massoud, as the Applicant's responses were sometimes unconvincing or contradictory, especially in regard to making of the alleged offer of employment. I found Mr Massoud's evidence to be more plausible and internally consistent than the evidence of the Applicant."

The judgment of the Presidential member

20 The hearing before the Presidential member was conducted on the basis of the evidence that had been before the arbitrator. The only additional evidence was evidence from the solicitor for Mr Al Othmani and for the appellant in these proceedings that Mr Massoud was not able to be located.

21 The Presidential member rejected the proposition that she could only intervene if error in the decision of the arbitrator was demonstrated. She noted that it was acknowledged by the parties that the relevant issue was whether the appellant was a deemed worker under cl 2 of Sch 1 of the 1998 Act. She stated (at [60]-[61]) that the arbitrator had "correctly identified the necessary inquiry as to the existence of a contract by reference to an objective assessment of the state of affairs between the parties", and that the arbitrator had noted that it was "not necessary to identify a precise offer, or precise acceptance, nor a precise time at which an offer or acceptance could be identified". She referred to the analysis of the arbitrator and reached the following conclusion:

"[70]In my opinion, the Arbitrator, when considering whether the appellant and Mr Massoud intended to enter into a legal relationship, applied a subjective text and did not objectively determine the matter by reference to all the circumstances. She found no agreement to pay $1,000 and considered the matter no further.

...

[74]The Arbitrator applied the wrong test in seeking to determine whether there existed a contract, and whether the parties intended to enter a legally binding agreement, by confining her consideration to the conflict in evidence regarding the $1,000 payment and Mr Massoud's knowledge of the work to be performed. She applied a subjective test, and that error affects not only that question of intention, but also the implicit finding that there was no mutual or contractual consensus. She failed to objectively assess the statements and oral testimony of the parties in the context of their relationship and their conduct."

22 At that point of her judgment she reached the following conclusion:

"[75]As a consequence, I find that her decision is wrong and will consider the evidence and decide what is the true and correct decision shortly."

23 The Presidential member then criticised the arbitrator for confining her assessment of the evidence to the question of whether there was an offer to pay $1,000 for certain work. She made the following comments:

"[79]However, as I have found, having rejected the appellant's assertion that there was an offer to pay $1,000, the Arbitrator was obliged to then consider and engage in an objective assessment of whether or not a contract existed, by analysing the conduct of the parties in all the circumstances. Her failure to weigh and consider this evidence, and make findings on this issue, which she had identified at the outset at [44] to [45], necessarily involved a decision by her that this matter did not need to be addressed and, in that sense, her reasons are inadequate.

...

[82]Having found against the appellant on the offer to pay $1,000, this was not the end of the matter. The conduct of the parties, and the sequence of events in the context of their relationship, required analysis in order to determine the contract issue."

24 The Presidential member then reviewed the credit findings made by the arbitrator. She stated (at [86]) that those findings did not prevent her from drawing her own inferences and conclusions from the evidence, subject to the principles stated in Fox v Percy [2003] HCA 22; (2007) 214 CLR 118. She stated that whilst the arbitrator's credibility assessment was "reasonably open because of her confined approach" (presumably focusing on what she referred to in par [79] of her reasons), the arbitrator failed to conduct an objective assessment of the evidence and, accordingly, her credit findings could be reviewed.

25 The Presidential member then conducted her own review of the evidence. She accepted a submission by senior counsel for Mr Al Othmani that although his unsigned and undated statements were admitted into evidence by consent, they were not adopted by him and that this evidence should have been treated with caution: see [90]-[95] of her reasons.

26 She then referred to two findings of the arbitrator which she said were inconsistent with the evidence:

"[96]As to the Arbitrator's finding that Mr Massoud did not go up on the roof, I disagree with Mr Dodd's contention that the erroneous finding is of no consequence. The Arbitrator's specific finding [at 78] was that Mr Massoud 'did not know the nature and extent of the problem', when it is apparent that he conducted his own inspection of the roof and had knowledge of its state.

[97]A further erroneous finding is disclosed at [59], where the Arbitrator found that the 'WorkCover statement does not refer to any agreement to clean the pergola roof', whereas the appellant's WorkCover statement records:

'[T]he awning was very dirty and had lots of leaves on it. Because of the rain the day before all the dirt had come onto the ground. I told Raymond Massoud it was very dirty and he told me to clean it and he would give me the money.'"

27 The Presidential member then conducted an analysis of the evidence and reached the following conclusions:

"[100]When considering all the circumstances, I do not accept that $1,000 is an improbable amount. The house was not properly habitable. The appellant's complaints were constant. Mr. Massoud had already incurred the cost of an electrician. The appellant had paid for Telstra and for taps and had performed repair work with Mr Hajjar's assistance, which work was inevitably the responsibility of Mr Massoud as owner. The most plausible explanation for the appellant's conduct is his expectation to be paid.

[101]Mr Massoud knew that Mr Hajjar was a good tradesman. He knew that he would otherwise incur the cost of a tradesman on each occasion of a complaint. He had been told by the appellant the cost of the taps and the repair cost, according to the appellant's WorkCover statement. It is unlikely that he did not offer to pay the appellant.

[102]Mr Massoud inspected the roof himself. He knew the potential cost of a tradesman. He provided a ladder to the appellant to perform work on the roof. His inspection, at the very least, would have revealed the leaves and debris, if not the requisite chimney repair.

...

[104]Contrary to the Arbitrator's finding at [59], that cross-examination established that the offer to pay $1,000 was made after the taps were fixed, I find that the appellant's oral evidence is consistent with the premise contained in the WorkCover statement and Statement 1 that, as a consequence of an earlier conversation, the appellant expected to be paid $1,000 if he did all the work, including the tap repair, cleaning the house, laundry, yard and pergola, and the chimney leak repair, which offer was confirmed on the day of the accident.

[105]Mr Massoud's denial of those matters is a probable consequence of his uninsured status.

[106]In any event, a contractual arrangement can be inferred from the conduct of the parties, there being no need to isolate offer, acceptance and consideration.

[107]Whatever Mr Massoud intended regarding payment, he conducted himself so that another (the appellant) may reasonably infer the existence of an agreement to be paid for services performed and to be performed. The conduct shows a tacit understanding or agreement.

...

[120]On my review of the evidence and authorities, I have come to the conclusion that it is more probable than not that Mr Massoud offered to pay the appellant $1,000 to fix all the defects, having already incurred $500 for an electrician, and bearing in mind the adverse consequences for him, the potential cost of a plumber, roofer, cleaner and gardener, and possible loss of a tenancy.

[121]Alternatively, whatever he intended, Mr Massoud behaved in such a manner that it is to be reasonably inferred that there was an agreement that the appellant would carry out the work and be paid, which agreement is the most probable explanation for the appellant performing the work, prior to, and on the accident day.

[122]The work exceeded $10 in value and was not incidental to a trade carried on by the appellant. Notwithstanding the fact that Mr Hajjar provided some assistance, the appellant neither sublet nor employed workers in the performance of the contract. Accordingly, the provision of cl 2 Sch 1 of the 1998 Act is established."

28 The approach of the Presidential member was unusual. Having rejected the need to find error in the decision of the arbitrator, she then proceeded to do so, particularly in her finding that the arbitrator did not objectively assess whether or not a contract between Mr Massoud and Mr Al Othmani came into existence. Further, the Presidential member seemed to conclude that the arbitrator's credit findings could be reviewed because of what she said was the confined approach taken by the arbitrator to the question of contract. It is difficult to see why that had any material bearing on assessing who is to be believed between Mr Al Othmani and Mr Massoud where their evidence conflicted with each other.

29 Notwithstanding these matters, the Presidential member did proceed to conduct her own assessment of the evidence in reaching her conclusions.

The grounds of appeal

30 The appellant raises the following grounds of appeal:

"1.In circumstances where the parties conducted the appeal before the Acting Deputy President as though it were an appeal by way of rehearing, it was an error for the Acting Deputy President to fail to apply the principle established in Devries v. Australian National Railways Commission (1993) 177 CLR 472.

2.The Acting Deputy President erred in deciding the case on the basis of a ground which had been expressly abandoned by the appellant below, namely, that the contract for the performance of work was premised upon a promise by the second respondents to pay the first respondent the sum of $1,000, without notice to the parties and without providing them with the opportunity of addressing the point.

3.In making her critical finding at page 31[120] of her decision, the Acting Deputy President misdirected herself in law by failing to apply the statutory test, namely, was the agreement a contract for the performance of work exceeding $10 in value.

4.Further, in the alternative, the Acting Deputy President's conclusion that the contract was for the second respondents to pay the first respondent $1,000 to fix all the defects was necessarily not a contract for the performance of any work within the meaning of Schedule 1 Clause 2 Workplace Injury Management and Workers Compensation Act 1998.

5.The Acting Deputy President erred in point of law at [74], [79] and [88] by misconstruing the decision under review in that she mistakenly concluded:

a)that the Arbitrator had applied a subjective rather than objective test in determining whether the respondents had entered into a contract other than the residential lease;

b)that it was an error for the Arbitrator to have failed to decide the case by reference to the question whether a contract for the performance of work should be inferred otherwise than according to classical offer and acceptance theory when such a case had never been propounded by the first respondent and such a case was not open on the evidence."

The relevant legislation

31 It is convenient before coming to the grounds of appeal to set out the legislative framework which underpins the dispute in the present case.

32 As I indicated earlier (par [3]) the respondent contended that he was a worker either within the general definition in s 4 of the 1998 Act or the extended definition contained in cl 2(1) of Sch 1 of the 1998 Act. The definition of "worker" in s 4 of the Act is 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)."

Whilst cl 2 of Sch 1 so far as relevant provides as follows:

"2(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."

33 Ultimately Mr Al Othmani founded his claim on the basis that he was a person who fell within cl 2(1) of Sch 1 of the 1998 Act.

34 The procedure to be adopted by the Commission in resolving claims is set out in s 354 of the Act. That section, so far as relevant, provides as follows:

"354Procedure before Commission

(1)Proceedings in any matter before the Commission are to be conducted with as little formality and technicality as the proper consideration of the matter permits.

(2)The Commission is not bound by the rules of evidence but may inform itself on any matter in such manner as the Commission thinks appropriate and as the proper consideration of the matter before the Commission permits.

(3)The Commission is to act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.

(4)Proceedings need not be conducted by formal hearing and may be conducted by way of a conference between the parties, including a conference at which the parties (or some of them) participate by telephone, closed-circuit television or other means.

(5)Subject to any general directions of the President, the Commission may hold a conference with all relevant parties in attendance and with relevant experts in attendance, or a separate conference in private with any of them.

(6)If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.

(7)An assessment or determination is to be made by the Commission having regard to such information as is conveniently available to the Commission, even if one or more of the parties to the assessment or determination proceedings does not co-operate or ceases to co-operate."

35 Section 355 of the 1998 Act provides that where the Commission is constituted by an arbitrator an award is not to be made without first using the "arbitrator's best endeavours to bring the parties to the dispute to a settlement acceptable to all of them".

36 Section 352 deals with appeals against the decisions of the Commission constituted by an arbitrator. That section, as it stood at the time of the appeal from the arbitrator to the Presidential member in this case, provided as follows:

"352Appeal against decision of Commission constituted by Arbitrator

(1)A party to a dispute in connection with a claim for compensation may, with leave of the Commission constituted by a Presidential member, appeal to the Commission as so constituted against a decision in respect of the dispute by the Commission constituted by an Arbitrator.

(1A)An appeal is to be made by application to the Registrar. The appeal is not to proceed unless the Registrar is satisfied that the requirements of this section and any applicable Rules and regulations as to the making of the appeal have been complied with.

(2)The Commission is not to grant leave to appeal unless the amount of compensation at issue on the appeal is both:

(a)at least $5,000 (or such other amount as may be prescribed by the regulations), and

(b)at least 20% of the amount awarded in the decision appealed against.

(3)If the Commission refuses to grant leave to appeal, the Commission must state reasons for the refusal in writing to the parties.

(4)An appeal can only be made within 28 days after the making of the decision appealed against.

(5)An appeal under this section is to be by way of review of the decision appealed against.

(6)Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against may not be given on an appeal to the Commission except with the leave of the Commission.

(7)On appeal, the decision may be confirmed or may be revoked and a new decision made in its place. Alternatively, the matter may be remitted back to the Arbitrator concerned, or to another Arbitrator, for determination in accordance with any decision or directions of the Commission."

37 It should be noted that subsequently s 352 has been amended, in particular by the repeal of s 352(5) as it then stood, and the substitution of a new subs (5) in the following terms:

"(5)An appeal under this section is limited to a determination of whether the decision appealed against was or was not affected by any error of fact, law or discretion, and to the correction of any such error. The appeal is not a review or new hearing."

38 Section 353 of the 1998 Act deals with appeals from a Presidential member to this Court. So far as relevant it provides as follows:

"(1)If a party to any proceedings before the Commission constituted by a Presidential member is aggrieved by a decision of the Presidential member in point of law, the party may appeal to the Court of Appeal.

(2)The Court of Appeal may, on the hearing of any appeal under this section, remit the matter to the Commission constituted by a Presidential member for determination by the Commission in accordance with any decision of the Court and may make such other order in relation to the appeal as the Court thinks fit.

...

(5)In this section decision includes an award, interim award, order determination, ruling, opinion and direction."

39 The expression in s 353(1) "aggrieved by a decision of a Presidential member in point of law" is one of a number of expressions used in statutes which seek to limit appeals to this Court to questions of law. It is difficult, if not impossible, to determine any legislative intention in the use of such variety of expressions, either from the words themselves or the context in which they appear. Nevertheless, it is necessary to construe the language of the statute in each case: Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; (2010) 241 CLR 390 at pars [24], [89]. In the present case it is necessary for the appellant to be aggrieved by a decision of the Presidential member. Having regard to the definition of "decision" in s 353(5), the right of appeal extends to a question of law affecting an award, interim award, order, determination, ruling, opinion and direction.

The parties' submissions on Ground 1

40 In submissions, the appellant accepted that s 352(5), as it stood at the time of the appeal from the arbitrator to the Presidential member, encompassed a reconsideration beyond the correction of error. However, it submitted that in the present case the parties were content to approach the review process as though it was an appeal by way of rehearing and governed by the same principles. In those circumstances the appellant submitted that the Presidential member was bound to apply the principles of restraint expressed in cases such as Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472 at 479, to the effect that if the trial judge's finding depends to any substantial degree upon the credibility of the witness, the finding must stand unless it can be shown that the trial judge has "failed to use or has palpably misused his advantage" or has "acted on evidence which was inconsistent with facts incontrovertibly established by the evidence or which was glaringly improbable".

41 During the hearing of the appeal senior counsel accepted that the Presidential member had acknowledged that it was relevant to consider that the arbitrator had the benefit of hearing and seeing the witnesses. However, he submitted that in fact the Presidential member did not take this into account and that it was necessary for her to do so having regard to the manner in which the appeal before her was conducted. He submitted that in those circumstances her conclusion (at par [86]) that the arbitrator's findings, although entitled to respect, did not prevent her from drawing her own inferences and conclusions from the evidence, was erroneous at least so far as it related to the question of whether there was an agreement to pay $1,000 in consideration for the work done.

42 Senior counsel for the appellant acknowledged that only limited cross-examination was allowed by the arbitrator and that Mr Al Othmani was not cross-examined on the inconsistencies in his various statements. However, he pointed out that those statements went into evidence as part of the application made by Mr Al-Othmani and that it was directly put to the respondent that $1,000 was never offered.

43 Senior counsel for the appellant accepted that if the Presidential member was not bound to exercise the restraint in reversing the arbitrator's findings referred to in Devries supra, the Presidential member would have been able to find that a contract existed, which she did.

44 The respondent submitted that the Presidential member had found errors in the arbitrator's assessment of credit. He submitted that on a review of the nature of that envisaged under s 352 as it then stood, the Presidential member was not bound by principles such as Devries supra and Fox v Percy supra in respect to the arbitrator's factual findings.

45 Orally, senior counsel for the respondent submitted that the Presidential member had considered the arbitrator's credit findings as part of her overall assessment, and that was all she was required to do.

46 As an alternative, senior counsel for the respondent sought to advance the proposition that even if there was no agreement by Mr Massoud to pay Mr Al Othmani $1,000 for repair work "the overwhelming conclusion that one would come to was that it must have been done pursuant to some form of agreement". This was apparently based upon the proposition that Mr Massoud as landlord was liable to do the work. In that context the respondent relied upon what was said by this Court in Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 and Ormwave Pty Limited v Smith [2007] NSWCA 210; (2007) 5 DDCR 180, that the inability to establish the individual components of offer, acceptance and consideration does not mean there is not a contract, if one can infer from the relations and actions between the party that there in fact was. However, senior counsel for the respondent was unable to point to any consideration moving from Mr or Mrs Massoud to the respondent for him agreeing to carry out the work.

Consideration

47 In considering this issue it is necessary to have regard to the nature of an appeal from an arbitrator to a Presidential member under s 352 of the Act as it then stood. The nature of the review under s 352(5) was described by Allsop P and Hoeben J in Sapina v Coles Myer Ltd [2009] NSWCA 71; (2009) 7 DDCR 54 in the following terms (at [56]-[58]):

"[56]The Chief Justice in Chemler at [30] used the expression 'true and correct view'. In the context of merits review of administrative decisions the phrase 'preferable or correct decision' has developed a currency and lineage: Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577; 46 FLR 409 at 589; 419. Given the Chief Justice's reference to 'merits review' at [28], we would not take his language at [30] as intended to be other than synonymous with the 'preferable or correct decision' as a long-used and well-understood description of the task of a body undertaking merits review: Aronson, Dyer and Groves Judicial Review of Administrative Action, 3rd Ed (2004) at 158; and Denn v Midland Brick Co Pty Ltd (1985) 157 CLR 398 at 419. We will use the form of words used by the Chief Justice in this sense.

[57]Whilst the new regime of dealing with workers' compensation claims must be examined in its own statutory context, it is important to appreciate that the legislature has used a phrase that had in the prior regime, a tolerably settled meaning. Section 36 of the Compensation Court Act used the phrase 'review the decision'. Subsections s 352 (1) and (5) of the WIM Act make clear that the 'appeal' is to be by way of review of the decision. The notion of 'review of a decision' had been clearly held in the context of the former legislation and the WIM Act to be wider than an appeal strictly so-called and encompassing a reconsideration beyond correction of error. The decision under appeal is not to be ignored, but the task of the Presidential member is, as Spigelman CJ said in Chemler, 'to decide whether the original decision is wrong [that is to] decide what is the true and correct view.' This requires the Presidential member to decide for himself or herself these matters. That does not mean that there must be a de novo hearing in each case. Cases such as Watson, Boston Clothing, Litynski and AGL v Samuels made plain that this was not so under s 36 and the terms of ss 3, 352 (7) and 354 make clear that no such broad ranging factual enquiry afresh is necessarily required. The terms of the WIM Act, ss 3 and 354 and the width of the powers in s 352 (7) make clear that the Presidential member has a wide choice available as to how he or she undertakes the task of deciding for himself or herself what is the true and correct decision. As Allsop P said in Cook v Midpart, error (or lack of it) by the Arbitrator will or may be relevant to the task of the Presidential member, but it does not define the task. There is, however, an important difference in the nature of the tasks of (a) coming to the view that an Arbitrator's view was reasonable and (b) deciding for oneself that the view of the Arbitrator is the true and correct one. In a field where evaluation of injury and evidence of incapacity can lead to different views, both or all which could be reasonably held, it is important that the parties have available to them the skill and judgment of the Presidential member reaching his or her own view on the questions involved in the decision.

[58]Just as error of the Arbitrator may be relevant, so might be the advantages of the Arbitrator in seeing witnesses. Nothing we have said, and none of the cases to which we have referred, necessarily requires the Presidential member to rehear the case or to recall all the witnesses. The approach of the Presidential member as to how he or she goes about reaching his or her own decision will be a matter for him or her within the confines and freedoms of s 354."

48 It is apparent in the present case that it would have been within the power of the Presidential member to rehear the proceedings in their entirety and form her own views as to the correct decision. Had she done so, whilst the arbitrator's view and the credit of the witnesses would still be a matter for consideration, the rationale which underpinned what was said by the High Court in cases such as Devries supra and Abalos v Australian Postal Commission [1990] HCA 47; (1990) 171 CLR 167, namely, that the trial judge has the advantage of the appellate court in seeing and hearing the witnesses, would not apply. In those circumstances, it does not seem to me that the restraint required by those cases on appellate courts conducting rehearings in the sense provided for in provisions such as s 75A of the Supreme Court Act 1970 would apply.

49 A more difficult question is whether a Presidential member is obliged to exercise the same restraint in dealing with credit findings as is imposed on an appellate court conducting a rehearing, such that a failure to do so will constitute an error of law, in circumstances such as the present where the member conducts his or her review on the papers, including the transcript of the hearing before the arbitrator.

50 In my opinion, this question should be answered in the negative. This is for a number of reasons. First, cases such as Devries and Abalos were decided in the context of appeal by way of rehearing where it was necessary for the appellate court to find that the orders the subject of the appeal were subject to some legal, factual or discretionary error (see Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 at [23]), whereas a review under s 352 does not involve the identification of error but rather the formation of a view as to the preferable or correct decision. Although the views of the arbitrator to the extent they are based on credit should be given weight, the Presidential member should not be constrained from reaching what he or she regards as the correct decision by a principle of restraint limiting his or her ability to reach different findings to the arbitrator where the latter's findings were based wholly or partly on credit.

51 The second reason derives from the nature of the procedure provided for in the 1998 Act for the determination of compensation claims. I have set out the relevant provisions above. The requirements in s 354 of the Act that the proceedings be conducted with as little formality as possible (s 354(1)), the fact that the Commission is not bound by the rules of evidence (s 354(2)) and is to act without regard to technicalities and legal forms (s 354(3)), coupled with the width of the review power in s 352, tells, in my opinion, against any review being constrained in the manner contended by the appellant. The principles of restraint laid down in Devries, Abalos and similar cases have been applied to appeals from trials where the procedure does not involve the same degree of informality and where, generally speaking, the basis on which an appellate court can consider the decision at first instance and interfere with it is considerably more limited than in the present case.

52 That is not to say that there would not be an error of law if there was no evidence to support the decision of the Presidential member or, perhaps, if the conclusion of the Presidential member was one which no reasonable person could reach. However, no submissions to that effect were made in the present case.

53 Third, although the point has not been finally decided, the preponderance of authority in this Court would tend to suggest that the principles laid down in Devries and related cases do not apply to such review. I have already referred to Sapina v Coles Myer Ltd, supra. In State Transit Authority v Chemler [2007] NSWCA 249; (2007) 5 DDCR 286, Spigelman CJ, with whom the other members of the Court agreed, made the following comments (citations omitted):

"[22]The scope of an internal merits review by a Presidential member is an important safeguard for the proper operation of the legislative scheme. Arbitrators' decisions, particularly on issues of credit, are entitled to respect. That does not, however, mean that such a merits review process should operate on the basis of some kind of presumption that the first instance decision-maker should redetermine the matter.

...

[28]The concept of a review on the merits is wider than the concept of an appeal in a judicial context. There is a well established line of authority on the use of the terminology of 'review' instead of 'appeal' with respect to the workers compensation system in this State which establishes the breadth of a review on the merits.

[29]That line of authority is also inconsistent with the kind of restriction on the powers of a Presidential member for which the Appellant contends.

[30]A Presidential member exercising a power to review a decision must decide whether the original decision is wrong or, as it is often put in the context of administrative appeals on merits, must decide what is the true and correct view. If s/he does so decide then s/he should substitute his or her own views, unless it is an appropriate case to remit. The power to remit is not constrained in the manner for which the Appellant contends."

54 In Duinker v St Vincent de Paul Society Aged and Special Services Ltd (Lewisham Nursing Home) [2008] NSWCA 127; (2008) 6 DDCR 266, Hodgson JA, with whom Beazley JA and McColl JA agreed, considered the question without finally deciding it. In the course of his judgment his Honour, after referring to Chemler supra, made the following remarks (at [31]-[33]):

"[31]These passages in Chemler raise but do not clearly resolve two questions relevant to the present case:

(1)Does the Presidential member have to identify an error before intervening?

(2)Is the Presidential member bound to apply the Abalos principle?

[32]As regards the first question, it is generally the case that an appeal court, dealing with an appeal from a first instance judge, will not intervene on a question of fact unless it is affirmatively satisfied that the decision of the first instance judge is wrong. This is particularly significant in relation to matters on which minds may reasonably differ, such as an assessment of what reasonable care requires. In relation to such matters, an appeal court recognises that minds may reasonably differ, and even if its own view, if it were approaching the matter de novo, would be different from that of the primary judge, it will not substitute its own view unless it is satisfied that the primary judge's view is wrong, in the sense of being one not reasonably available or vitiated by some error. A question whether this approach applies in the case of a review under s 353 of the WIM Act could be significant, particularly in relation to a question whether a worker's employment was a 'substantial contributing factor' to an injury, within s 9A of the Workers Compensation Act 1987. The discussion by Basten JA at par [63]-[66] in Chemler suggests that this approach would not apply, so that it would be open to a Presidential member carrying out a review under s 353 of the WIM Act to substitute his or her own preferred view on such a question, even if he or she was not affirmatively satisfied that the Arbitrator's view was wrong. Paragraph [29] in the judgment of Spigelman CJ in Chemler also tends to support that view.

[33]As regards the second question, it is clear that the Presidential member conducting such a review must apply substantive rules of law and must accord procedural fairness; but it is doubtful whether s 354 is consistent with an obligation on a Presidential member, as a matter of law, to apply the principle of Abalos. Again, the discussion in Chemler seems to suggest that it is not."

55 It should be noted that in Tan v National Australian Bank Ltd [2008] NSWCA 198; (2008) 6 DDCR 363, Basten JA, with whom Bell JA agreed, expressly left open the question posed in the present case. His Honour made the following comments:

"[12]The fact that the term 'appeal' may refer to a hearing de novo, the fact that the appeal is described as one 'by way of review', together with the largely unlimited discretion conferred on the Deputy President as to the manner in which the appeal will be conducted and the broad powers, including the power to make a 'new decision' in place of that subject to appeal, all tend to confirm that the Deputy President may conduct a fresh hearing and is not constrained to intervene only if satisfied that the decision of the arbitrator was affected by identifiable error. There is no need to consider the constraints on the Deputy President which may arise from the circumstance that the arbitrator made findings based on credit in respect of oral testimony, where witnesses were not recalled on appeal."

56 His Honour, however, did not suggest that what was said by Hodgson JA in Duinker supra was incorrect.

57 As such, in my opinion, the Presidential member was not constrained as a matter of law in reaching her conclusion by cases such as Devries and Abalos. The Presidential member recognised that the arbitrator's findings were entitled to respect (see par [86]). However, she was entitled to conduct her own review and reach her own conclusions. It follows that the first ground of appeal is not made out.

58 I have had the privilege of reading, in draft form, the judgment of Handley AJA. In reaching a contrary conclusion on this ground, his Honour placed particular reliance on four cases decided under the predecessor legislation, the Compensation Court Act 1984; Watson v Hanimex Colour Services Pty Ltd (1992) 8 NSWCCR 190; Boston Clothing Co Pty Ltd v Margaronis (1992) 27 NSWLR 580; Australian Gas Light Co Limited v Samuels (1993) 9 NSWCCR 616 and Litynski v Albion Steel Pty Limited (1994) 10 NSWCCR 287. None of these cases was the subject of argument at the hearing of the appeal.

59 Although as Handley AJA with respect correctly points out, these cases can give real guidelines as to the meaning of a review under s 352, they must be treated with caution: Tan v National Australian Bank supra at [6] per Basten JA; New South Wales Police Force v Winter [2011] NSWCA 330 at [20] per Campbell JA, Giles JA and Handley AJA agreeing. The scope of the review must be derived from the context in which it appears: Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245 at 261.

60 In this regard, although s 36(1) of the Compensation Court Act 1984 provided for a review, that Act did not contain a procedural section such as s 354 to which I have referred above. As I indicated (par [51]) that degree of informality and the other features of s 354 tend against the principles such as those contained in Abalos, Devries, and Fox v Percy binding the Presidential member on a review. At the very least they differentiate a review under s 352 as it stood at the relevant time from a review under s 36 of the Compensation Court Act 1984.

61 As Handley AJA has pointed out, Watson was a decision in which a decision of a judge declining to overturn a decision of a Commissioner based on a credit finding was upheld. The relevant passage of the judgment of Kirby P is set out in the judgment of Handley AJA. The passage cited, whilst stating that it would be virtually impossible for the judge to substitute his opinion for that of the Commissioner, does not state it would be an error of law to do so.

62 Nor, in my opinion, does Boston Clothing Co supra stand for that proposition. Indeed, the dicta of Kirby P (with whom Waddell AJA and Samuels AJA agreed) if anything is to the contrary. In the course of his judgment the President made the following remarks:

" The effect of the 'subtle influences of demeanour'?

That led the employer to its alternative argument. This was that, even though not expressed (as in Watson) the commissioner was necessarily affected in this case by his impression of the worker so that this Court ought to acknowledge (as Burke CCJ failed to do) the 'dominant position' of the commissioner. For reasons analogous to those given in Jones v Hyde, Abalos, Dawson and like cases it ought to restore the commissioner's decision.

Care must be observed against elevating the 'dominant position' theory, and the opinion about the 'subtle influences of demeanour' at trial, so that they neuter the facility of appeal or review as Parliament has provided in this Court. In virtually every case a worker gives evidence in his or her case in the Compensation Court, whether before a commissioner or a judge. Therefore, in virtually every case, the primary decision-maker will have an opportunity of observing the worker, and perhaps (as here) no other witness. If it could then be said that, because an impression could include an unexpressed impression of truthfulness or the subtle impact of demeanour upon the decision-maker's conclusion so as to put him or her in the 'dominant position' of effectively deciding conclusively the worker's claim, this would nullify the provision of 'review' as s 36 of the Compensation Court Act provided and 'appeal' to this Court as s 32 of that Act allows. Because Parliament afforded the facility of 'review' (and 'appeal') and because it is a beneficial facility for the correction of mistakes and the great injustice which they can cause, such a reading of the section, in the context of the operation of the Compensation Court, would nullify the provision made by Parliament. This is plainly not what Parliament intended. Accordingly, a narrower approach to the so-called 'dominant' position of the primary decision-maker must be adopted and one compatible with the facility of review (and appeal) provided by law." (at 587-588)

63 Litynski supra does not take the matter further. That case involved the consideration of the validity of a Compensation Court rule requiring leave on a review to adduce evidence not adduced before the Commissioner.

64 In Australian Gaslight Company supra Meagher and Handley JJA took the view that the Abalos principle applied to a review by a judge of a Commissioner's decision, at least when it was done on the papers. The effect of that judgment was summarised by McColl JA in Siddik v WorkCover Authority of NSW [2008] NSWCA 116; (2008) 6 DDCR 228 in the following terms (at [76], Mason P agreeing):

"[76]In Australian Gas Light Company v Samuels (1993) 9 NSWCCR 616 (at 622) Kirby P held that Watson was authority for the proposition that on a s 36 review 'a reviewing judge would be entitled to substitute his opinion for the Commissioner's, even if the latter was said to be based on a question as to credibility, if displaced by incontrovertible evidence indicating that the Commissioner was mistaken'. He emphasised the 'special' nature of such a review as a 'special procedure, established within a specialised tribunal, to recognise the particular skills which judges of that tribunal enjoy and refine by years of considering very large numbers of like claims, many of them in large part (as here) determined on paper without oral evidence'. In that light he reiterated the view he had expressed in Boston Clothing that it was inappropriate to apply to a review all of the principles applied by the courts to appeals by way of rehearing. Meagher JA accepted (at 625) that Watson was authority for the proposition that the reviewing judge had wider powers than would be involved in a mere appeal, but not so wide as to treat the primary decision as if it did not exist. It is clear his Honour was of the view that the reviewing judge had to give weight to the Commissioner's credit finding. Handley JA (at 630) was of also of that view, concluding that the reviewing judge had misdirected himself as to the nature of the review function that he had been asked by the parties to undertake. His Honour appears to have treated the review as, in a sense, an appeal of a rehearing nature, holding that it was not open to the reviewing judge to disregard the credit based findings of the Commissioner on the critical issues in the absence of the worker demonstrating that the Commissioner's decision was inconsistent with established facts or glaringly improbable."

65 In this regard it must be noted that the review in the present case is not an appeal in the nature of a rehearing.

66 Perhaps the decision which provides the greatest support for the view that the Abalos principle applies is that of this Court in Cockatoo Dockyard Pty Limited v Atamian (1995) 12 NSWCCR 114. In that case Clarke JA made the following remarks:

"Where, however, no fresh evidence is led and the review is conducted on the record I see no basis upon which a judge could interfere with a credit finding unless it had been demonstrated that the commissioner failed to use, or misused, the position of advantage. In other words a review on the record is, in my opinion, subject to the same limitations as are imposed on a court of appeal by decisions of the nature of Devries. Otherwise there would be a failure to recognise the advantaged position of the Commissioner who saw and heard the witness." (at 127)

Handley JA agreed adding the following comments:

"I agree with Clarke JA that on a review conducted on the written record the judge is bound by credibility based findings of fact made by the commissioner unless the applicant brings the case within the limited exceptions referred to in Abalos v Australian Postal Commission (1990) 171 CLR 167 and Devries v Australian National Railways (1993) 177 CLR 472." (at 134-135)

Meagher JA reached the same conclusion.

67 If the nature of the review was the same as that prescribed by the Compensation Court Act 1984, it would follow that the Presidential member erred in reversing the credit finding of the arbitrator. However, the difference in procedure and the other matters to which I have referred above lead, in my opinion, to a contrary conclusion. I would adopt, with respect, the reasoning of Hodgson JA in Duinker supra to the following effect:

"[22]Mr Web QC for the appellant submitted that the Presidential member was bound to apply the principle in Abalos, and that failure to do so would be an error of law.

[23]He submitted that the cases of Watson v Hanimex Colour Services Pty Ltd (1992) 8 NSWCCR 190 and Boston Clothing Co Pty Ltd v Margaronis (1992) 27 NSWLR 580, although decided under earlier workers compensation legislation, supported the applicability of Abalos. Mr Webb also referred to the case of W148/00A v Minister for Immigration and Multicultural Affairs (2001) 185 ALR 703 at [64]: although in relation to that case, it should be noted that it dealt with s 476 of the Migration Act 1958 (Cth), under which there were limited grounds that could be relied on in an application for review.

[24]Mr Campbell SC for the respondent submitted that Watson and Boston did not support the application of Abalos; and that the case of State Transit Authority (NSW) v Chemler (2007) 5 DDCR 286 was against it.

[25]I accept that the nature of a review under the previous legislation was considered in some detail in Watson and in Boston; but in my opinion neither case is clear authority one way or the other on the application of the Abalos principle.

[26]In Watson at 195-206, Kirby P (with whom Handley JA and Hope AJA generally agreed) discussed the nature of a review; and he concluded (at 205) that such a review was 'something wider than the narrow form of a reconsideration on appeal, strictly so called', but that there was 'the need, on the part of the aggrieved party, to provide some proper basis for disturbing the decision of the challenge'. The discussion that followed that statement suggests an assumption that the Abalos principle applied, but did not clearly assert this.

[27]In Boston, the assumption that the Abalos principle applied is perhaps clearer (at 588-589), because the appeal was dismissed on the basis that the judge of the Compensation Court had applied that principle and had not erred in doing so. However, again there is no clear statement that the principle applied.

[28]The present scheme is different from the previous scheme, among other things in that the review is not by a judge but by a tribunal whose operations are governed by s 354 of the WIM Act, which dispenses with formality and with the rules of evidence."

68 This reasoning led his Honour to the conclusion to which I have referred to in par [54]. As I indicated, Beazley and McColl JJA agreed with his Honour.

69 Although the Court in Duinker was not taken to all the authorities to which I have referred above, the tentative views of the Court in that case are consistent with the view to which I have come for the reasons I have stated.

70 It is correct that in some circumstances a decision by a Presidential member ignoring a credit finding by an arbitrator could constitute an error of law, as being one which no reasonable Presidential member could reach. However, as I have indicated previously, that proposition was not put in the present case.

71 The ultimate conclusion of the Presidential member was that it was more probable than not that Mr Massoud offered the respondent $1,000 to fix all defects. In these circumstances, it is strictly unnecessary to deal with the alternate contract proposed by senior counsel for the respondent (see par [46] above). However, it seems to me that in the absence of any identifiable consideration, there is no basis in law for finding the contract contended for. Whilst it is true that contractual relationships can be inferred from the conduct of the parties and that the classical offer and acceptance analysis is neither always sufficient nor necessary to decide whether a contract exists (see Brambles Holdings Ltd v Bathurst City Council supra at [71]-[82]; Ormwave Pty Limited v Smith supra at [69]-[73]), it is still necessary to find consideration. In the present case, if there was no agreement by Mr Massoud to pay the $1,000, there was no consideration and thus no contract.

The parties' submissions on Ground 2

72 The appellant submitted that what it described as the $1,000 case had been abandoned on appeal. It claimed in those circumstances that deciding the case on a point not raised by either of the parties or by the Commission for consideration involved a denial of procedural fairness. It submitted that such a denial of procedural fairness engaged s 353 of the Act.

73 In his written submissions, the first respondent pointed to the fact that, on appeal before the Presidential member, his counsel had expressly indicated that the point was not abandoned. He pointed to the fact that both counsel had addressed the credit issue and the $1,000 case.

74 Orally, senior counsel for the appellant pointed to the Presidential member's summary (at par [98]) of the argument of counsel for Mr Al Othmani and pointed to the fact that there was no mention of an agreement to pay $1,000. He submitted that that demonstrated that the contract whereby Mr Massoud agreed to pay Mr Al Othmani $1,000 to fix the defects was not in issue.

Consideration

75 A decision or award based on a point not raised by the parties or by the Commission would constitute a denial of procedural fairness and be susceptible to challenge under s 353: Seltsam v Ghaleb [2005] NSWCA 208; (2005) 3 DDCR 1 at [159]; Escobar v Spindaleri (1986) 7 NSWLR 51 at 60-61; Amaca Pty Limited v Doughan [2011] NSWCA 169 at [33].

76 However, in the present case it does not seem to me that the argument based on the alleged contract to pay $1,000 was in fact abandoned. At the outset of the hearing before the Presidential member it was made clear by senior counsel for Mr Al Othmani that the contract said to be able to be implied from the conduct of the parties (see par [46] above) was an alternative to the contract to do the work for $1,000. The following submissions were made by senior counsel for Mr Al Othmani:

"What we say putting it globally, is that it's true that the applicant ran his case on a promise of a thousand dollars but even if that were not held to have occurred the only, we would submit - and I'll show you this in detail - the only reasonable inference that could have been drawn as to why the work was carried out was because there was a contractual arrangement of some kind between the parties which could have been or which is to be inferred, we say, from the conduct of the parties. The step that was required after the thousand dollars failed was to say well the consideration wasn't a thousand dollars but was there another basis for asserting that there was a contract?"

77 That submission seems to me to make it clear that the case based on the $1,000 contract was not abandoned, although primary reliance was placed on the fallback position. So much was acknowledged by counsel for the appellant before the Presidential member. Further, each party made submissions on the respective version of events provided by Mr Massoud and Mr Al Othmani.

78 In these circumstances, it seems to me that there was no denial of procedural fairness and ground 2 of the grounds of appeal has therefore not been made out.

Grounds 3 and 4

79 These grounds assert that the Presidential member misdirected herself in law in her findings in [120]-[123] of her judgment. The submission put shortly was that the contractual arrangement found by the Presidential member did not lead to the conclusion that Mr Al Othmani was a worker within the meaning of cl 2 of Sch 1 of the 1998 Act.

80 This was said to be the case for two reasons. First, the question for determination by Sch 1 cl 2 was whether there was a contract to perform any work exceeding $10 in value made with Mr Al Othmani, who neither sublet the contract nor employed any worker, not whether there was a promise to pay $1000 where it was the common expectation of the parties that the work would be performed by Mr Hajjar without recompense. Secondly, and related to that issue, was the submission that the Presidential member ignored the relationship of landlord and tenant between Mr and Mrs Massoud and Mr Al Othmani and failed to consider whether the work was done pursuant to Mr Al Othmani's obligations as tenant and particularly his obligation under s 26 of the Residential Tenancies Act 1987 to keep the premises in a reasonable state of cleanliness.

Consideration

81 I have set out cl 2 of Sch 1 of the 1998 Act above (par [32]). It seems to me that the contractual relationship found to exist by the Presidential member leads to the conclusion that Mr Al Othmani fell within the definition of "worker" in cl 2 of Sch 1.

82 Accepting the factual conclusion of the Presidential member, namely that there was an agreement to pay $1,000 for fixing all defects, it can readily be inferred that the work had a value in excess of $10. It was not work incidental to a trade or business carried out by Mr Al Othmani. Further, Mr Al Othmani did not sublet the contract or employ a worker. There was no contract of employment between Mr Hajjar and Mr Al Othmani nor was there any evidence that the contract was sublet to Mr Hajjar. The expression "sublet" in my opinion, involves some form of subcontracting. It does not include voluntary assistance in performing a task.

83 It was also contended that the Presidential member did not take into account the obligations of Mr Al Othmani as tenant. The proposition which was put was that because Mr Al Othmani was bound to carry out the work pursuant to his obligations as tenant of the property, there was no consideration for the promise and therefore no binding contract. Whilst it may be correct that some of the work may have been the responsibility of the tenant by reason of s 26 of the Residential Tenancies Act, this is not the case in respect of all of the existing defects; for example, the leaking roof. It follows that the contract was supported by consideration from Mr Al Othmani: see Wigan v Evans (1973) 47 ALJR 586 per Mason J at 594, Walsh J agreeing.

84 It follows that grounds 3 and 4 are not made out.

Ground 5

85 The appellant submitted that the Presidential member erred in point of law in her reasons in par [74] of her judgment, where she observed that the arbitrator had applied the wrong test in seeking to determine whether a contract existed.

86 The appellant submitted that the misconstruction of the decision of the arbitrator was an error "affecting the integrity of the legal process". Relying on cases which emphasised the need for judicial officers to give adequate reasoning, the appellant submitted that the misconstruction of the arbitrator's reasons was a step taken in arriving at her ultimate result. In those circumstances, the arbitrator erred in point of law and the appellant was entitled to succeed on this ground.

87 So far as ground 5(b) was concerned, the appellant submitted that the Presidential member fell into error in finding that the arbitrator should have considered a contract other than the one which was in fact argued before her, namely to fix the defects in return for the sum of $1,000. It contended that the arbitrator could not err in failing to consider something which was not the subject of evidence or submissions before her. However, the appellant accepted that ultimately the Presidential member did not base her conclusion on that ground.

88 The first respondent's submissions were with respect not entirely clear. However, so far as ground 5(a) is concerned he seemed to submit that the Presidential member did not misinterpret the arbitrator, but rather found that despite her awareness of the need to apply an objective test in determining whether a contract existed, she (the arbitrator) did not do so. He submitted that the authorities relied upon by the appellant in this context did not support the conclusion that the Presidential member erred in law, but submitted that even if there was an error of law, in order to be the subject of an appeal, it must have been an error made by the Presidential member "in the presentation of her reasons after review has occurred". Presumably this submission was intended to put the proposition that the error of law must be one which in some way affected her review. Finally, the first respondent emphasised that there was no need for the Presidential member to identify error on the part of the arbitrator having regard to the nature of the review prescribed by s 352.

Consideration

89 None of the cases cited by the parties deal directly with the question of whether misconstruing the decision of an arbitrator or a particular part of his or her reasoning would constitute an error in point of law. However, it is not necessary for present purposes to consider the question at that level of generality. The question in the present case is whether the Presidential member erred in law in concluding that the arbitrator applied the wrong legal test to determine whether a contract between the first respondent and Mr Massoud came into existence. That, of its very nature, involves a question of law.

90 There also seems to be little doubt that the Presidential member was incorrect in stating at pars [74] and [75] of her judgment (see pars [21] and [22] above) that the arbitrator applied a subjective test in declining to find the contract contended for by the first respondent. The arbitrator made it quite clear that she understood the question involved an objective assessment of the relationship between the parties (see par [48] of her reasons). To make that assessment it was necessary for her to determine whether, on the facts, an agreement existed. That is what she did. There was no legal error in her approach.

91 Further, the Presidential member also erred in law to the extent that she concluded that the arbitrator erred in failing to consider the alternative contract propounded on the appeal. There was no error of law involved in the arbitrator failing to consider a contract which neither of the parties contended before her had come into existence, and which the Presidential member herself did not find existed.

92 The critical question, however, is whether the errors infected the Presidential member's ultimate conclusion; that is whether they were operative errors in the sense discussed by Basten JA in Akora Holdings Pty Limited v Ljubicic [2008] NSWCA 339.

93 In the present case there was no requirement on the Presidential member to find error. Although in par [75] of her judgment she does seem to indicate that she conducted her review as a consequence of her finding that the arbitrator erred in law, she was in fact required by s 352 to carry out such a review and to reach what she regarded as the preferable and correct decision: see Sapina v Coles Myer Ltd supra at [56]. That is what she did, and her subsequent review and conclusions were not dependent on her identification of error by the arbitrator. The position is therefore as described by Basten JA in Akora Holdings Pty Limited v Ljubicic supra at [17]:

"To the extent that the Deputy President purported to identify legal error on the part of the arbitrator, that conclusion may itself be said to reveal legal error on the part of the Deputy President. However, read in context, it was not a material or operative error. If that conclusion were removed from the Deputy President's reasons, it is sufficiently clear that he would still have set aside the decision of the arbitrator for the reasons articulated at [34]-[35]."

Hodgson JA and Campbell JA agreed.

94 In Cook v Midpart Pty Ltd [2008] NSWCA 151; (2008) 6 DDCR 316 the Deputy President incorrectly considered that it was necessary for an appellant on a review under s 352 of the Act to demonstrate error. Notwithstanding that, he conducted his own review. An appeal from his decision was dismissed. In dismissing the appeal Allsop P, with whom Ipp and Bell JJA agreed, made the following comments (at [58]-[59]):

"[58]As I have said earlier, the Presidential member expressed his task in [27] of his reasons as only the correction of error. This view appears to have been, at least partly, shared by the drafter of Midpart's grounds of appeal. Indeed those grounds were expressed as 'errors of law'.

[59]Notwithstanding this expression of approach, in relation to the issue of the substantiality of the contribution of employment at Midpart to the aggravation or exacerbation of Mr Cook's disease (that is, to the second injury), the Presidential member did review the matter for himself by examining the facts. He reached the conclusion for himself that the evidence did not support a conclusion of substantial contribution. That was an approach more in accordance with that suggested in Duinker than with the expression of his task in [27]."

See also Sapina v Coles Myer Ltd supra at [61].

95 In the present case the Presidential member conducted her own review and reached the conclusion to which I have referred above. That conclusion did not depend in any way on the error in the arbitrator's reasons which she wrongly identified. In these circumstances ground 5(a) of the grounds of appeal is not made out.

96 Similar considerations apply to ground 5(b). The Presidential member's ultimate conclusion was that the contract rejected by the arbitrator, namely an agreement by Mr Massoud to pay the first respondent $1,000 to fix all defects, was made out (see par [120] of her judgment). Whether the alternative referred to in par [121] of her judgment could be made out as a matter of law does not affect that conclusion.

97 In those circumstances it is unnecessary to consider the extent of the Court's powers under s 75A of the Supreme Court Act 1970 in light of what was said in the High Court in Kostas v HIA Insurance Services Pty Ltd supra at [27] and Tasty Chicks Pty Limited v Chief Commissioner of State Revenue [2011] HCA 41; (2011) 85 ALJR 1183 at [15]-[18].

98 It follows, in my opinion, that the appeal should be dismissed with costs.

99 McCOLL JA: I agree with Bathurst CJ's reasons and the orders his Honour proposes.

100 HANDLEY AJA: This an appeal under s 353 of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act) from the decision of Acting Deputy President McPhee who allowed an appeal by the present respondent (the applicant below) from the decision of an Arbitrator who made an award for the respondents below.

101 I have had the benefit of reading the reasons for judgment of Bathurst CJ in draft form. He has set out the facts, the history of the litigation, the legislative framework and the submissions of the parties. There is no need for me to repeat much of this material. I respectfully agree with his reasons for rejecting grounds 2-5 in the notice of appeal. However, as I have the misfortune to differ from his conclusions on ground 1, I must set out my reasons for coming to that conclusion.

102 The Acting Deputy President exercised the jurisdiction conferred by s 352(5) to determine an appeal "by way of review of the decision appealed against". This was conducted "on the papers" without fresh or additional evidence adduced under the power conferred by s 352(6).

103 In a series of cases starting with State Transit Authority v Chemler [2007] NSWCA 249, 5 DDCR 286, and culminating in Sapina v Coles Myer Ltd [2009] NSWCA 71, 7 DDCR 54 this Court has held that the decision being reviewed under s 352(5) may be set aside without the Presidential member having to identify error below.

104 The duty and function of the Presidential member, in the words of Spigelman CJ in Chemler at [30], is to "decide what is the true and correct view". See also Sapina (above) at [56] per Allsop P and Hoeben J. The Presidential member is not constrained by the restrictions on appellate intervention in appeals from discretionary decisions: House v The King [1936] HCA 40, 55 CLR 499, or in appeals from fact finding based on inferences from proved or admitted facts: Warren v Coombes [1979] HCA 9, 142 CLR 531.

105 There is also no need for the Presidential member to identify error below before receiving fresh or additional evidence, or deciding on the enlarged material what is the true and correct view.

106 What is not yet clear, on the authorities on s 352, is whether, and to what extent, the Presidential member is constrained by the Arbitrator's credibility findings where further evidence has not been adduced and the principles in Fox v Percy [2003] HCA 22, 214 CLR 118 do not authorise intervention.

107 As Allsop P and Hoeben J said, with the concurrence of Beazley JA, in Sapina (above) at [50] the Court has treated its decisions on the power of review in the Compensation Court Act 1984 as giving "real guidance as to the meaning of review" in s 352.

108 In Watson v Hanimex Colour Services Pty Ltd (1991) 8 NSWCCR 190, the first of those decisions, the Commissioner, who heard the case at first instance, did not believe the worker (ibid p 193) and made an award for the respondent.

109 The worker sought review by a judge of the Compensation Court but did not give evidence in the review, which was heard on the papers. Kirby P, with the concurrence of myself and Hope AJA, said at pp 207-8:

"The appellant urged that it remained his Honour's duty to weigh up all the evidence and to ask himself, at the end of such 'review', whether, contrary to the decision of the Commissioner, the preponderance of evidence favoured [reversal] ... The difficulty with this submission was that [the Judge] still had before him the record of the Commissioner's conclusion on the credit-worthiness of the appellant. That impression was undoubtedly part of the material upon which his Honour was asked to conduct his 'review'. It was highly relevant ... There was certainly no incontrovertible evidence which ... would have permitted [the Judge] to set aside, on the 'review' the adverse finding of the Commissioner on the credit of the appellant based on the impression which the appellant made on the Commissioner as a witness ... Unless displaced by some incontrovertible evidence which showed that it was wholly mistaken (or some conflicting evidence which persuaded the Judge to a different conclusion) it made virtually impossible the attempt on the 'review' to get his Honour to substitute his opinion for that reached by the Commissioner, with the advantage which the latter had of seeing the appellant."

110 In Boston Clothing Co Pty Ltd v Margaronis (1992) 27 NSWLR 580 this Court dismissed an appeal from the decision of a judge of the Compensation Court who had reversed the decision of a Commissioner on the facts. Kirby P, with the concurrence of Waddell and Samuels AJJA said at pp 584-5:

"However, between Watson and the present case there is a world of difference. In Watson, the commissioner had expressly rejected the evidence of the worker holding that the worker was not to be believed. This opinion was directly attributed to the impression, or lack of it, which the worker had made on the commissioner as a witness ... The worker had not been called before the Judge conducting the review to give oral testimony ... In such circumstances the 'review' had to be conducted by the judge with the disadvantage that he did not see the worker give evidence and thus could not displace the dominant position enjoyed by the commissioner in reaching the conclusion expressed by him ... In the present case, there is no similar express rejection of the evidence of the worker based upon the clear impression which she made as a witness ... [The judge] concluded that there was no substantial dispute about the basic facts of the case. The real dispute ... concerned the resolution of the conflicting medical opinions. As none of the medical witnesses have been called to give evidence orally [the judge] concluded that he was in as good a position as the commissioner to evaluate and decide upon their opinions."

111 He added at pp 588-9:

"The absence of reference to the worker's credibility is unremarkable because there was no attack on the worker's evidence ... [T]his was a case confined to conflicting medical opinions ... The approach which his Honour took was not forbidden by any advantage which the commissioner had from seeing the worker give her evidence."

112 These decisions were followed in Australian Gaslight Co v Samuels (1993) 9 NSWCCR 616 by Meagher JA and myself, and in Litynski v Albion Steel Pty Ltd (1994) 10 NSWCCR 287 by Gleeson CJ and myself.

113 In Australian Gaslight Co v Samuels (above) the Compensation Court Judge had reversed the Commissioner's credit-based findings adverse to the worker without seeing him in the witness box, but after viewing films which the Commissioner had found were totally inconsistent with his oral evidence and the histories given to doctors.

114 Meagher JA at p 625 noted the wide powers available to the Judge on review, but added "not so wide as to treat the primary decision as if it did not exist".

115 He continued at p 625-6:

"... the ... Judge ... failed to understand the nature of the task on which he embarked ... posing the wrong question for himself ... [H]e did not seem to realise [that] that finding [on credit] could only be overturned for good reason - and good reason there was none."

116 I said at pp 630-631:

"In my opinion his Honour misdirected himself as to the nature of the review function that he had been asked ... to undertake. Given the manner in which the worker conducted the review proceedings it was, in my view, simply not open to the Judge to disregard the credit-based findings of the Commissioner on the critical issues ... while the Judge did review the video films, he did not have the benefit of comparing the worker's movements and posture in Court with those shown in the films. Moreover he did not see the worker cross-examined about his movements and posture as demonstrated in the films. The Judge did not, and in my opinion could not, find that the Commissioner had failed to use or had palpably misused the advantage he had of seeing the worker give evidence ... the respondent ... failed to establish that the Commissioner's decision was inconsistent with established fact or glaringly improbable ... Reversal on the written record and the films was not open."

117 As Allsop P and Hoeben J said in Sapina (above) at [57]:

"... it is important to appreciate that the legislature has used a phrase that had, in the prior regime, a tolerably settled meaning".

118 They reviewed the decisions of this Court on s 352 and concluded [57]:

"In a field where evaluation of injury and evidence of incapacity can lead to different views, both or all of which could be reasonably held, it is important that the parties have available to them the skill and judgment of the Presidential member reaching his or her own view on the question ... Just as error of the Arbitrator may be relevant, so might be the advantages of the Arbitrator in seeing witnesses."

119 Sapina was a Warren v Coombes case under s 11A of the Workers Compensation Act 1987 where the Commission had to determine whether the employer's performance appraisal of the worker was reasonable and as such the sole or predominant cause of her psychological injury (ibid [13], [14], [16], [65]). The Fox v Percy question did not arise.

120 There is a world of difference between determining what is "the true and correct view" where no serious question of credibility arises, and determining that where material evidence has been disbelieved.

121 There will be cases in the latter category where the credit based findings of the Arbitrator can be set aside under the Fox v Percy principles or outflanked by evidence given in the review.

122 The Presidential member did not undertake the former task, and the respondent did not attempt the latter. Mr Gormly SC, who appeared for the respondent tenant, did not attempt to support her decision under the Fox v Percy principles.

123 We were not referred to any case where this Court has decided that the Fox v Percy principles did not bind a Presidential member who has not seen and heard any of the witnesses. There is some inconclusive dicta in cases where "the true and correct view" was open to the Presidential member on the proved or admitted facts.

124 In my opinion the decisions of this Court between 1991 and 1994 on the comparable provision in the Compensation Court Act establish that credibility findings by the decision maker, who heard and saw the relevant witnesses, are binding on the reviewing tribunal without that advantage, unless they can be set aside or outflanked.

125 In Watson (above) Kirby P said at p 205:

"... the Judge of the Compensation Court will not start with a blank page but with a formal decision of a person who ... is 'taken to be the Court' ..."

126 Invoking the review procedure does not automatically displace the credibility findings of the primary decision maker. They remain valid and "part of the material" on which the review must be conducted, unless the Presidential member can properly set them aside.

127 The Arbitrator rejected the tenant's case because she preferred [80] the evidence of the landlord. She relied on inconsistencies in the tenant's evidence and the inherent improbability of the landlord offering to pay $1000 for work where much of that work had already been done. She said that the tenant's evidence about the contract "is not very convincing". She preferred the landlord's evidence which was "more plausible and internally consistent", as the tenant's responses were "sometimes unconvincing or contradictory".

128 The Arbitrator did more than reject the tenant's evidence about the contract. She preferred the evidence of the landlord that no such contract had been made. The effect of such findings is not in doubt. In Malec v JC Hutton Pty Ltd [1990] HCA 20, 169 CLR 638 Deane, Gaudron and McHugh JJ said at 642-3:

A Common Law Court determines on the balance of probabilities whether an event has occurred. If the probability of the event having occurred is greater than it not having occurred, the occurrence ... is treated as certain; if the probability of it having occurred is less than it not having occurred, it is treated as not having occurred."

129 Lord Hoffmann made the same point in In Re B [2009] AC 11, 17:

"The law operates a binary system in which the only values are zero and one. The fact either happened or it did not ... If the party who bears the burden of proof fails to discharge it, a value of zero is returned and the fact is treated as not having happened. If he does discharge it, a value of one is returned and the fact is treated as having happened."

130 Thus the Presidential member conducting the review "on the papers" was bound to treat the conversations with the landlord described in the tenant's evidence as if they never occurred, unless she could properly set aside the Arbitrator's findings.

131 The principles which justify this in an appeal or review conducted on the papers are those in the Fox v Percy line of cases.

132 If the primary decision maker, who saw and heard the witnesses, disbelieves crucial evidence called by the party with the onus of proof, and accepts evidence to the contrary, an appellate tribunal which does not have that advantage, cannot find that the opposite result is "the true and correct view" unless those findings were wrong.

133 It can only determine that those findings were wrong if intervention is justified on the Fox v Percy principles.

134 Properly understood, those principles define the only circumstances in which a Presidential member can justly decide on the papers that different findings are "the true and correct view".

135 The Presidential member directed herself [53]: "My task is to decide what is the true and correct decision. Identification of error is not a precondition to intervention". In my opinion in its application to credibility findings this was a material misdirection, and an error of law.

136 The Presidential member said [64] that the Arbitrator preferred the evidence of the landlord "because he denied consistently ... any offer to pay $1000 to the [tenant]." This was an error because the Arbitrator gave a number of reasons for that finding.

137 The Presidential member said [67] that the Arbitrator accepted, by inference, that the landlord did not intend to enter into a legal relationship with the tenant about payment for the work. She continued [68]: "Implicitly [the Arbitrator] accepted that work was performed ... by the [tenant] and that he expected payment ... and, it may be inferred, he believed he had entered into a legal relationship".

138 The Arbitrator found that some work was done, but she did not find, implicitly or otherwise, that he expected payment and believed he had entered into a legal relationship.

139 The rejection of the tenant's evidence about the promise to pay $1000, and acceptance of the landlord's, meant that payment was never discussed. The Arbitrator cannot be understood as making implicit findings that the tenant expected payment and believed there was a contract.

140 Having found that the conversations about payment did not occur the Arbitrator did not have to consider whether the landlord intended to enter into a legal relationship and she did not do so.

141 Thus the Presidential member misread the Arbitrator's reasons which, properly understood, did not support her conclusions in [38] above. This was another error of law.

142 The misreading continued in para [69] where the Presidential member said:

"From this conflict ([38] above) between intention and expectation, [the Arbitrator's] implicit conclusion was that there was no mutual arrangement to perform work for payment and, it may be inferred, no mutual intention to enter a legally binding relationship."

143 There were no such "implicit conclusion[s]". The Arbitrator simply found that the conversations relied on to establish a contract had not occurred.

144 In [70] the Presidential member said:

"... the Arbitrator, when considering whether the [respondent] and [the owner] intended to enter into a legal relationship, applied a subjective test and did not objectively determine the matter by reference to all the circumstances. She found no agreement to pay $1000 and considered the matter no further."

145 The Arbitrator did not apply a subjective test. She directed herself that the test was objective [48] and it was not necessary to identify a precise offer and acceptance, or a precise time of formation. Having found there was no agreement to pay $1000 there was no reason for her to go further.

146 The Arbitrator did not as the Presidential member held [74] "confine" her consideration to the conflict of evidence regarding the $1000 payment. The Arbitrator described the work as "relatively minor repairs, cleaning and tidying," and considered the probabilities, including the fact that the landlord "did not know the nature and extent of the problem". This was a subjective matter, but the tenant's evidence did not include a description of work worth $1000 and that was objective.

147 The Presidential member's statement [74] that the Arbitrator "failed to objectively assess the statements and oral testimony ... in the context of their relationship and their conduct" was a misreading of [78] and [80] in the Arbitrator's reasons. The latter relied on her assessment of their relationship and "their conduct" when deciding to reject the evidence of the tenant and accept that given by the landlord.

148 Contrary to what the Presidential member said [45], the Arbitrator's reference [79] to the landlord's belief that the tenant was not capable of carrying out repair and maintenance work did not involve the application of "a subjective test".

149 The Arbitrator was dealing with objective matters, the cutting of a tree branch earlier in the week, and the presence of Mr Hajjar on the Saturday morning, and the consistency of the landlord's evidence.

150 I have characterised the misreading of the Arbitrator's reasons as an error of law. Although I am not aware of any authority for this proposition, the Chief Justice considers that it is correct [89] and I respectfully agree. The misreading of the reasons of a higher court is undoubtedly an error of law, and the same principle must apply to a misreading of the reasons of the Court or tribunal below.

151 Although the Presidential member directed herself that it was not necessary to find error, she found [75] that the decision of the Arbitrator was wrong. In Sapina Allsop P and Hoeben J said ([19] above) that "error of the Arbitrator may be relevant." However in this case the Arbitrator's decision involved no "error" and the Presidential member erred in law in concluding otherwise ([37]-[51] above).

152 The Presidential member then said that the Arbitrator's reasons were inadequate and this was a further error [79]-[82]. She found [79] that "having rejected the [tenant's] evidence that there was an offer to pay $1000" the Arbitrator was "obliged to then ... engage in an objective assessment of whether are not the contract existed by analysing the conduct of the parties." She said the Arbitrator, without giving reasons, failed to do this and this involved error.

153 The Presidential member said [80] that the Arbitrator did not determine whether a contract existed "on an objective assessment of the state of affairs between the parties" and this was [81] "a failure to exercise her jurisdiction" and an error of law.

154 She then said [82] that having found that there was no offer to pay $1000 "that was not the end of the matter. The conduct of the parties, and the sequence of events in the context of their relationship required analysis."

155 The Chief Justice has found [46], [71], [91] that, if the evidence about the promise to pay $1000 for work is rejected, an objection assessment of the conduct of the parties cannot support a contract, and I respectfully agree.

156 In any event the Arbitrator relied on the conduct of the parties, the sequence of events, and the relationship of the parties, as she found them to be. To hold otherwise was to misread the Arbitrator's reasons, and this was an error of law.

157 The Presidential member then considered the Arbitrator's credit findings. She directed herself, correctly, [86] that they were "entitled to respect" but did not prevent her "drawing my own inferences and conclusions from the evidence, subject to the principles ... in Fox v Percy".

158 She found that the Arbitrator's credibility assessment "was reasonably open to her because of her confined approach" but the Arbitrator "failed to conduct an objective assessment of the evidence and, accordingly, the credit findings can be reviewed. " The Arbitrator's approach was not "confined", and her credit findings could not be displaced on the Fox v Percy principles by an objective assessment of the evidence.

159 In any event once the tenant's evidence was rejected and the landlord's accepted, as the Chief Justice finds [46], [71], [91], there was nothing left which could support a contract.

160 The Presidential member recorded Mr Gormly's submission [89], [92] that appellate intervention was justified because the rejection of the tenant's evidence was based, in part, on a comparison of his 3 statements and the 2 which were unsigned and undated "have not been adopted by the [tenant]".

161 The Presidential member said [94]-[95]:

"[94]The contention is that the Arbitrator ought not have engaged in the exercise of comparing the evidence as if it were of equal probative weight and, in the event that the contents of unsigned statements were not put to the [tenant] that evidence had little or no value.

[95]I accept that proposition, and propose to reach my own conclusions on the evidence."

162 The Presidential member's finding that the unsigned and undated statements had not been adopted was contrary to the only evidence. They (CAB 195, 233) were attached to the tenant's Application dated the 14 September 2009 which initiated the proceedings in the Commission (red 2, 9T, 9U, 13N, black 156P, 156S, 195, 233). No further adoption was necessary.

163 At the commencement of the hearing of the Arbitrator stated (black 1):

"Now, as arbitrator of this matter, I will rely on the evidence, which includes written material filed and served by the parties. This material includes, from the applicant, all documents attached to the application to resolve dispute registered 10 September 2009 ... Does any party have any objection to any of this material being relied on as evidence in this matter"?

164 There was no objection from counsel for either party.

165 The finding that these statements had not been adopted, contrary to the only evidence, involved legal error.

166 The Presidential member identified an error of fact in the Arbitrator's reasons [78] where she accepted a submission that of the tenant's evidence that the landlord had offered him $1000 for certain work was "inherently improbable ... in circumstances where he did not know the nature and extent of the problem".

167 The Presidential member said [96] that "it is apparent that [the landlord] conducted his own inspection of the roof and had knowledge of its state". The landlord did say in cross-examination (CAB 28C) "when he asked me on Saturday I went up to the roof. I see the - around the pipe. I wasn't see nothing."

168 The tenant gave several differing accounts of when the $1000 offer was made which the Arbitrator summarised [59]. He said in his WorkCover Statement (CAB 162) that the landlord made this offer 3 to 4 days before the accident without any mention of a leak in the roof. He said the offer was repeated the day before the accident after the tenant had shown the landlord the leaking roof (CAB 163) and repeated again on the day of the accident (CAB 163).

169 Statement 1 (CAB 234) asserted a conversation 3 to 4 days before the accident in which the tenant told the landlord about the leak and the latter told him that if he fixed the chimney and cleaned the pergola he would pay him $1000. It did not mention any later offer of payment.

170 Statement 2 (CAB 196) asserted that 3 to 4 days before the accident the tenant was told to clean the pergola and fix the leak, but the only offer mentioned was on the day of the accident. The tenant did not say whether this was after the landlord had inspected the roof.

171 The Arbitrator's statement was correct in relation to the WorkCover Statement and Statement 1, but incorrect in relation to Statement 2. Her reasons should be understood as an accurate reference to what the tenant said in two of the statements and not as an inaccurate reference to what was said in the third. The error, if any, was immaterial and did not entitle the Presidential member to set aside the credit findings.

172 The Presidential member correctly identified [97] an error of fact in the Arbitrator's reasons [59] where the latter said "the WorkCover Statement does not refer to any agreement to clean the pergola roof". There was no reference in the statement to cleaning the pergola roof when the offer of $1000 was first made 3 or 4 days before the accident (CAB 162). It is not clear from the statement whether the pergola roof was mentioned on the Thursday or Friday before the accident when the leaking roof was mentioned (CAB 163J), or only on "the morning" ie of the accident (CAB 163T) when the tenant said he was told " to clean it and he would give me the money" (CAB 163R). At CAB 164R the tenant simply said the landlord "told me I could clean the awning". Thus in one place the WorkCover Statement did refer to an agreement, on the day of the accident or shortly before, for the tenant to clean the pergola roof and receive payment although there is no reference to such an agreement elsewhere in that statement.

173 The Presidential member undertook an extensive review of the evidence on the written record [98]-[112], [120]-[122] before concluding that the tenant was a deemed worker within cl 2 Sch 1 of the 1998 Act. This was only open if she was entitled to reverse the credit-findings of the Arbitrator.

174 The only error of the Arbitrator correctly identified by the Presidential member was that referred to in [172] above. The Arbitrator relied on a number of matters in the written evidence as well as her impression of the witnesses when rejecting the tenant's evidence about the contract. Her findings on credit were not otherwise contrary to established facts, or glaring improbable.

175 The one error correctly identified by the Presidential member was not capable in law of establishing that the Arbitrator had "failed to use or palpably misused the advantages she had of seeing and hearing the witnesses": Abalos v Australian Postal Commission [1990] HCA 47, 171 CLR 167, 179 per McHugh J.

176 In my opinion therefore the Presidential member erred in law in disregarding the Arbitrator's credit-findings which remained binding on her. Given those findings there was no evidence of a contract for the performance of work and the finding that there was such a contract, unsupported by evidence, was vitiated by legal error.

177 There is no need to consider whether any or all of the other errors of law by the Presidential member, without more, would have supported reversal of her decision.

178 In my opinion the appeal should be allowed and the decision of the Arbitrator restored.

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Decision last updated: 22 March 2012