Scerri v Cahill & Anor S106/1995 [1996] HCATrans 291 (5 August 1996)

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S106 of 1995

B e t w e e n -

JOHN ANTHONY SCERRI

Applicant

and

RODNEY VINCENT CAHILL

First Respondent

WORKCOVER AUTHORITY OF NSW

Second Respondent

Application for special leave to appeal

BRENNAN CJ

GAUDRON J

GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 5 AUGUST 1996, AT 12.14 PM

Copyright in the High Court of Australia

MR D. KNAGGS, solicitor: I appear for the applicant, your Honours.

MR C.M. SIMPSON: If the Court pleases, for the respondent. (instructed by Strain Kernan Cameron)

BRENNAN CJ: The Deputy Registrar has been informed by Gillis Delaney Brown, solicitors for the second respondent in this matter, that the second respondent does not wish to be represented at the hearing of the application for special leave to appeal and will submit to any order of the Court save as to costs.

MR KNAGGS: Thank you, your Honour.

BRENNAN CJ: Yes, Mr Knaggs, what is the special leave point in this case?

MR KNAGGS: Your Honours, the main special leave point, in my submission, goes to what I have not so described in the summary of argument but which I would now like to describe as the perversity of the finding by the Court of Appeal who considered the facts as well as the law on this appeal in this workers' compensation matter in finding that the respondent was a deemed worker under the New South Wales Workers Compensation Act.

Your Honours, the submission was made to the Court of Appeal and to the courts below - the courts below being a commissioner of the Compensation Court and also a judge on review who was Judge Burke - that the income tax return of the respondent shows, I think, in my submission - I can say categorically that it was the tax return of someone carrying on business. Your Honours, the matter was in fact - - -

GAUDRON J: Really what you were faced with in that situation was a case where you were asking the court to draw inferences from the tax return.

MR KNAGGS: Yes, your Honour.

GAUDRON J: That is as high as you can put it. It did not show categorically. You were asking that the inference be drawn.

MR KNAGGS: Yes, your Honour. It was a tax return that within its four corners could only be a tax return of someone carrying on a business unless there was some reason why the tax return could be discounted for some monumental error, I suppose, is my submission. It does not purport to be anything but the tax return of someone carrying on a business. It is on the business form. It refers to "proprietor" and "proprietor's" - - -

GUMMOW J: Justice Bainton dealt with this in some detail at page 38 and following as to whether or not this inference should be drawn. Why should we then get involved in reagitating that question?

MR KNAGGS: Your Honours, the reason is that the Court of Appeal and the court below in its two occasions when it dealt with the matter completely ignored the submission that it was the tax return of someone carrying on business. The best way I could demonstrate it, if your Honours would allow me to do so, is to show your Honours very shortly the transcript from what was put to the Court of Appeal which I have before me. Would your Honours allow me to hand up a copy of that because - - -

BRENNAN CJ: You can hand it up, Mr Knaggs, but really the problem is that you are asking us to review a finding of fact made by the Full Court.

MR KNAGGS: Yes, your Honour.

BRENNAN CJ: And that, simply, is not a case which ever commands a grant of special leave. There has to be some question of law or general public importance or some other special factor which justifies a grant of special leave to this Court. You get one appeal as of right but to come here you have to have something special about the case which is of general importance.

MR KNAGGS: Yes, your Honours.

BRENNAN CJ: A sense of outrage is not a question of general public importance.

MR KNAGGS: No, your Honours, although at the same time your Honours do have a corrective role if the outrage is, in your Honours' minds, sufficient.

BRENNAN CJ: Yes. There is a visitational role to perform if it is seen that courts are continuing to go onto wrong tracks. This is a case where, in the particular circumstances of this case, the inference was not drawn from the material which was relied on.

MR KNAGGS: No, your Honours.

BRENNAN CJ: That really does not seem to me to get past the gate.

MR KNAGGS: Your Honours, may I hand the transcript before the Court of Appeal on 18 July 1995 to your Honours, and I have handed a copy earlier to my friend. At page 4 of the transcript the submission was made to the Court of Appeal that the tax return:

could only be prepared by a man carrying on a business because he annexed a profit and loss statement -

and then the page reference is given. Then on page 6, at the very top, line 1:

The other crucial page on the tax return is that it annexes a balance sheet.....In the balance sheet proprietors funds are shown. It is our submission you can only be a proprietor of a business -

sorry, that should read, "In our submission you must be a proprietor of a business" -

if you show on your balance sheet proprietors funds. It cannot mean proprietor of anything else.

And then his Honour Acting Justice Bainton, said:

That has to do with software.

Now, your Honours, one of my grounds of appeal is that inasmuch as the onus was on the respondent to show that he was not carrying on a business then, in my submission, it is not open to the court to surmise that a software production might have been the reason the tax return has emerged in the form it is in when no evidence has been given by the respondent in that respect.

Then, your Honours, if I can go shortly to the very centre of page 7, at line 28:

if there was a mistake by his accountant or by anybody else.....the fact remains that by completing the tax return he was (a) carrying on a business and (b) holding himself out as someone with an independent business.

And then, your Honours, the three judges, in particular, his Honour the Acting Chief Justice at the time, Justice Kirby, at page 13 point 28 then put it to the respondent's counsel that - if I can take up his paragraph halfway through. The respondent:

understood what he was doing was carrying on a business, and then you add to that the number of people, the Webbs, the Gleesons, Marcus, Haggerty, that he was doing so -

ie, carrying on a business with -

it is a question of looking at it in its totality.

And then just to wind that up, your Honours, at page 14 point 55, Acting Judge of Appeal Bainton puts to counsel for the respondent:

So he must have been carrying on business on his own account. People don't normally voluntarily submit to prescribed payments being deducted for the payment of the work they do.

Now, your Honours, no explanation was given by counsel in that regard. Then on page 14A point 40, his Honour said:

As I said a while ago this does not go into the tax return.

What he is referring to there, your Honours, is that part of the exhibits which were before the Court of Appeal and which are in the supplemental application book included at - if your Honours would allow me to refer to the supplemental application book at page 55, a schedule of prescribed payments and, at page 54, an assessment issued by the tax return to Mr Cahill. What his Honour Acting Justice Bainton was referring to was that if you go outside the tax return and look at the notice of amended assessment on page 54, the whole of the taxable income is comprised of prescribed payment scheme deductions. His Honour says, at page 14A, line 40, of the transcript I just handed up:

As I said a while ago -

he is addressing counsel for the respondent -

this does not go into the tax return. This is a credit, given that somebody else has taken it out of money otherwise owed to the tax payer and sent to the Commissioner.

Now, the point I make to your Honours is that the justices recognised that the tax return was something at which they wanted to look hard as having a bearing on the case. Then, when the judgment was handed down, no reference whatsoever was made to the submission that the tax return included a heading "Proprietor's funds," and included a balance sheet and a profit and loss statement, et cetera. What in fact did emerge from the judgment which was delivered by his Honour Acting Justice Bainton was, in virtually 50 per cent of the judgment, that what the court was looking at was the prescribed payments scheme. Now, his Honour's treatment of that - - -

BRENNAN CJ: Mr Knaggs, you are still a long way from that gate.

MR KNAGGS: Yes, your Honours.

BRENNAN CJ: You are not really going to get any closer by taking us through other pieces of the argument to show us that the inference should have been drawn that was not drawn.

MR KNAGGS: Well, your Honours, the court clearly was looking at the prescribed payments scheme far more, in fact, than the tax return. The fact that all payments for the year to the respondent were under the prescribed payments scheme in weighing up whether he was carrying on a business or not, there is absolutely no doubt, in my submission, the court saw that as critical. However, the court came to the conclusion not that the respondent was not being paid under the prescribed payments scheme, but at page 41 of the application book, at line 17:

for all that appears the deductor of those payments (and his advisers) may have found the legislation as difficult to follow as I find it and have simply deducted amounts in accordance with Division 3A from all his payments to individuals -

And he then goes on in line 20:

I am not, in those circumstances, prepared to draw inferences adverse to Cahill simply from the fact that the entire amount of his income in those six months appears to have been subjected to the prescribed payment scheme.

But, your Honours, where, in my submission, his Honour fell into grave error at that point is that even if whoever made the payments to Cahill did not know what a prescribed payments scheme was, in his tax return prepared by his accountant he shows all his income as business income and all of it as coming to him under those very same prescribed payments that were part of the schedule.

BRENNAN CJ: Well, we understand the argument, Mr Knaggs. Have you got anything else to add that will help in any way to identify this as an important question?

MR KNAGGS: Your Honours, only this; that it is not so very long that the Court of Appeal has had the opportunity to look into New South Wales cases, both on the facts and the law. If, in my submission, this Court does not make a firm ruling that - far more than in the courts below the Court of Appeal in the hierarchy, the Court, if it is going to look at facts, has to look at facts in the light of submissions made, providing their Honours' submissions, and apparently forceful submissions, and not simply fail to advert to them altogether.

It goes more than that, your Honours. His Honour Justice Bainton, with whom the other judges agreed, was clearly wrong not to say the critical point is not whether whoever paid him made a mistake, but that he put it in his tax return. As your Honour Justice Brennan acknowledges, you do have that overriding supervisory directive role and, with great respect, if your Honours were to put yourselves in the shoes of someone in Court having made that submission, having heard the Court of Appeal, be evidently extremely impressed with it and then fail to deal with it at all, calls for a corrective move by your Honours in granting the application to appeal.

Your Honours, lest I leave anything else out from that point, before I come to the other point of intervention, one of the cases cited by my then opponent was the case of Articulate Restorations, handed down on 6 December 1994, unreported by the Court of Appeal. In the judgment of Justice Mahoney, after saying that the legislation had often been described as beneficial legislation, he said:

it is nonetheless proper to bear in mind the consequences which may flow from an award to an injured person. It has long since been the purpose of such legislation to ensure that payments to injured persons are effectively borne by the industry as a whole.....If in a particular case the person who must bear the burden of an award made to an injured person is not insured -

as was this case -

the consequences for him may be catastrophic.

He is pointing out the necessity, your Honours -if I may say what seems to be obvious - to be even-handed in looking at the question of whether or not someone is carrying on a business, especially bearing in mind that the whole onus is on the respondent worker - the applicant worker below - to show that he is not carrying on a business.

Your Honours, with respect, after all, the respondent worker, as in my submission could have been done in this case, can always call anybody with whom he says his relationship was that of employer and employee; not just leave it to the other side to somehow try and mount arguments on his tax return. Why I say that the tax return goes further than being simply one indicium in what the Court has to look at, the tax return could have been explained by the respondent. He did not seek to do so and, in my submission, being a document you do not sign lightly, you sign under grave penalties, the Court of Appeal was right to put it to the respondent's counsel that it was a very important point at which they should look. Your Honours, just before I leave that and get onto the point about intervention, the Court of Appeal also failed to take note of an admission by the respondent when asked, "Do you believe you were carrying on a business in 1994?" he said, "In some respects, yes."

Your Honours, on this point of intervention, the statement of the argument sets out what the ground is in that respect. But if I could just add to that, the fact that mention was made by his Honour Justice Bainton that no objection was made to the intervention by the judge. The reality is -if I can use that hard-worn phrase - that in fact objection was made to the whole of all reopening, including that by the judge in the compensation court.

What is put to your Honours is that although it is very much a matter of authority and covered by authority that a judge should not make numerous interventions, I submit that it is a novel point in the sense that there is no clear-cut authority as to whether a judge who completely takes over and asks every single question on what is merely a threshold point is intervening in a way in which the other side - that is, the party against whom those questions go - is being prejudiced, and that, in the first place, bias is shown by the judge in the questions that he asked in this case and, secondly, that he has not merely allowed a reopening - not merely recalled a witness on a point on which no evidence had been given whatsoever, but he actually led that witness, because he apparently had it in his mind that the witness maybe should have been asked some questions by his counsel that he was not asked. He led that witness to say, "I did not - - -

BRENNAN CJ: Time is up, Mr Knaggs. We need not trouble you, Mr Simpson.

This case raises no question of importance which justifies a grant of special leave to appeal. Accordingly, special leave is refused.

MR SIMPSON: We ask for costs, if your Honour pleases.

BRENNAN CJ: Do you have anything to say about that, Mr Knaggs?

MR KNAGGS: Your Honours, in my submission, notwithstanding no ground has been found for granting leave, it was, in fact, a judgment of such perversity in the way it was dealt with that costs should not be ordered against the applicant, with respect.

BRENNAN CJ: Special leave will be refused with costs.

AT 12.35 PM THE MATTER WAS CONCLUDED