State of Connection Refined

A case summary of Ethnic Interpreters v Saeed Sabri-Matanagh [2015] WASCA 186

This was an appeal against an award made in favour of the claimant (respondent) Mr Sabri-Matanagh, an interpreter who had been injured as a result of an assault on 22 October 2011 during the course of his employment on Christmas Island.

The appellant (employer) had disputed that compensation was payable under the Workers’ Compensation and Injury Management Act 1981 (WA)(CI) (WCIM Act) on the basis that the employment was not connected to the Territory (Christmas Island).

On 3 October 2013, the appellant had brought an application in the District Court of WA  under s23C of the WCIM Act seeking an order that the claimant’s employment was connected with New South Wales.  Chief Judge Martino in the District Court decided that the employment was connected with Christmas Island, (which pursuant to the Christmas Island Act 1958 (Cth)(CI Act), meant with WA) and dismissed the application.

His Honour determined that in applying s20 of the WCIM Act, it was not possible on the evidence to identify the “state of connection” on the basis of where the claimant usually worked or was usually based for the purpose of his employment.   He therefore concluded that the employment would be connected with the Territory  unless the appellant’s “principal place of business in Australia” was located in another State or Territory and there was no place outside of Australia where the claimant would be entitled to receive compensation (s20(6)).

In the claimant’s notice of contention in the appeal, issue was taken with the judge’s finding that it was not possible to identify the State in which the claimant usually worked.  The Court of Appeal, however, considered there to be no merit in the argument.  The appeal was therefore determined on the basis of the single issue of “principal place of business in Australia”.

His Honour was unable on the evidence before him to conclude that there was any place (State of Territory) where the employer conducted most or the chief part of its business. He therefore was not able to decide the application by reference to s20(4)(c), and given that there was no suggestion that the claimant was entitled to claim compensation outside of Australia, relied on s20(6) in finding that the State of connection was the Christmas Island (WA).

Several grounds of appeal of appeal were expressed, focussing on the interpretation of “principal place of business in Australia”.

The Court’s preferred interpretation was one “which looks to the place from where business activities are principally managed or controlled – the ‘head office’”.  This was noted to be in contrast to an interpretation that looked to the place where the business was actually being conducted.  In reaching this conclusion the Court noted that the fact that the WCIM Act provides for a single State of connection suggests that the relevant place should be readily and objectively identifiable and further that “there was no evident statutory purpose to be advanced by defining the principal place of business by reference to the State or Territory in which most of the employer’s business activities are conducted”.

In the course of the decision, the Court of Appeal noted the construction of “principal place of business in Australia” by Commissioner Herron in Tamboritha Consultants Pty Ltd v Knight [2008] WADC 78 and commented that it was evidently made “by reference to the place in which the business activities occurred rather than the place from which they were managed or controlled”.   In the opinion of the Court, the “preferred view” however, was the latter.

Considering the trends in employment towards international mobility and minimal border limits, it is not at all unusual to find that courts can often struggle to make a finding on State of connection based on where the claimant usually works or is usually based.  This decision simplifies the “principal place of business” test, which should be seen as helpful to employers and underwriters looking for a greater measure of certainty in the consequences of their insurance arrangements.

It remains to be seen of course, whether the current test will be proof against all permutations of commercial arrangements.  It is possible, for example, to imagine a commercial operation where the most senior management are located in a different state or country from the operational centre of activities, where there may also be remnant managerial capability.  But it is not the law’s place to deal with the “known unknowns”, as the evolution of case law continually shows us.

For more information on this update or any insurance matter please contact partner Vidal Hockless on (08) 9321 3755.

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