Australia: Status quo for deemed worker provision and findings of fact

Legal Directions - April 2011
Last Updated: 13 April 2011
Article by Peter McCarthy

Djuric v Kia Ceilings Pty Limited [2011] NSWCA 34


In this case, the NSW Court of Appeal considered whether an independent contractor was a deemed worker, which depended on whether he was carrying on a trade or business in his own name. The Court also discussed the difficulties facing a party who seeks to establish an error of law based on primary findings of fact.


Mr Djuric sought compensation for an alleged back injury due to the nature and conditions of his work as a gyprocker with Kia Ceilings Pty Limited ('Kia') between 26 April and 9 July 2007.


In order to recover compensation, Mr Djuric had to establish that he was a deemed worker as defined in clause 2(1) of schedule 1 of the Workplace Injury Management & Workers Compensation Act 1998 ('the Act').

There was no real dispute Mr Djuric was an independent contractor, however, the appeal turned on whether or not the contract work he entered into with Kia was incidental to a trade or business regularly carried on by him in his own name. If it was, he was not entitled to compensation.

Clause 2(1) of schedule 1 of the Act was amended with effect from 1 January 2006 to exclude reference to 'outworkers' although a new clause 1A was included which deals specifically with outworkers.

A good deal of argument in the Workers Compensation Commission ('WCC') was devoted to the significance of the reference to outworkers being excluded.

The Arbitrator, the Presidential Member of the WCC, to whom Mr Djuiric appealed and ultimately the Court of Appeal, held these amendments were not intended to significantly alter the prior provision.


Both Arbitrator Rimmer at first instance and Acting Deputy President Candy on appeal, found that the work the independent contractor was performing for Kia was in fact incidental to a trade or business regularly carried on by him in his own name or under a business or firm name.

It is well established law that to carry on the activity of a business, repetition and continuity is necessary (see Barwick CJ in Fairway Estates v FCT [1970] HCA 29). In this regard Mr Djuric's overall earnings as a contractor, the expenses claimed as taxation deductions and his taxation assessments were all relevant in determining whether he carried on a trade or business (and whether the contract work for Kia was incidental to that trade or business).

Presidential Member Candy also noted in the WCC that Mr Djuric had worked for a number of other organisations leading up to the work undertaken with Kia.

The Presidential Member noted there were competing indicia on the question of whether or not the independent contractor was regularly carrying on a trade or business incidental to the work performed with Kia. Factors which indicated he was not doing so were the provision of some accommodation at Bathurst by Kia, the use of their tools, the fixed rate of payment and the provision of clothing. As against these, however, numerous contracts had successfully been undertaken by Mr Djuric for a number of other principals, he was able to re-negotiate the basis of his remuneration by Kia and his tax returns revealed extensive business deductions, all indicating that a business was in fact being carried on.

Mr Djuric considered that he could have taken on a worker to assist him perform the work for Kia but he chose not to do so and he felt he was free to work such hours as he chose.

After considering the evidence, the Court of Appeal confirmed that the determination made by the WCC that the independent contractor was on balance undertaking work for Kia incidental to a trade or business regularly carried on by him in his own name was one of fact. It was emphasised that an error of law would only be disclosed in an extreme case which this matter was not. (see Azzopardi v Tasman UEB (1985) 4 NSWLR 139).

Additional matters relied upon by the Court of Appeal as supporting the conclusion were the fact that Mr Djuric had an ABN number, rendered invoices to the various companies that employed him on a weekly or fortnightly basis and was paid at piece work rates. The independent contractor's appeal was therefore dismissed with costs.


This decision does not change the law regarding deemed workers pursuant to schedule 1 of the Act, nor does it alter the position regarding errors of law being found on appeal where the overturning of prior findings of fact is required.

It does, however, highlight some of the relevant indicia to be taken into account in matters of this nature. It also confirms the established position that only perverse or extreme findings of fact by the jurisdiction below will be regarded as errors of law which would warrant interference by the Court of Appeal.

For practical purposes, it further highlights the front end nature of the workers compensation system generally and the importance of having all relevant evidence and material available at the outset, wherever reasonably possible.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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