Auckland Rugby Football Union v Accident Compensation Corporation

IN THE DISTRICT COURT HELD AT AUCKLAND Decision No. 34/2003 IN THE MATTER of the Accident Insurance Act 1998 AND IN THE MATTER of an appeal pursuant to Section 152 of the Act BETWEEN AUCKLAND RUGBY FOOTBALL UNION INC. (AI 240/02) Appellant AND - ACCIDENT COMPENSATION CORPORATION Respondent HEARD at Auckland on 17 December 2002 APPEARANCES Mr M Casey, counsel for appellant Mr D Tui, counsel for respondent RESERVED JUDGMENT OF JUDGE M J BEATTIE [1] The issue in this appeal relates to the respondent’s decision of 28 September 2001, whereby it determined the appellant’s Premium Classification Unit (PCU) as being classification unit 93180 - Sports and Services to Sports - Rugby, in accordance with the provisions of section 281D of the Act and Regulation 5 of the Accident Insurance (Employer Premiums) Regulations 2000 and 2001. [2] The substantive issue in this appeal relates to the competing contentions of the appellant and respondent as to the correct PCU of the appellant in accordance with the Act and Regulations. The respondent contends that the correct classification is that contained in the Schedule to the Regulations as being PCU 93180 Sports and Services to Sports – Rugby, whereas the appellant contends that the correct classification unit as contained in the regs is 93125 Services to Sports – Administration only. 240 02 (jed) 2 [3] It is to be noted that there is a significant disparity between the premium rates per $100.00 of earnings for those respective classification units, the former having a rate of $7.92 in the year 2000 and $6.26 in 2001 whereas the latter was $0.80 and $0.60 respectively. It is not unnatural that that premium disparity is the motivation for the appellant’s appeal in this matter. [4] A review decision upholding the respondent’s decision was given on 20 May 2002. At the review hearing a considerable amount of evidence was presented by the appellant as to its activities and that evidence has constituted the evidence for the hearing of this appeal. [5] The main evidence relating to the nature and scope of the appellant’s activities are contained in the affidavit of its Finance Manager, Warrick John Nansett. At the hearing of the appeal, counsel for the respondent indicated that the respondent had no issue with the facts as they had been presented by the appellant at the review hearing and therefore it does not require this Court to come to any finding of facts, but rather to set out what I consider to be the facts relevant to the issue in this appeal. The Relevant Facts • The ARFU is an incorporated society formed in 1884 to administer Rugby in the Auckland region. • The function of the ARFU is to administer the game of rugby in the Auckland region. This is contained in its Constitution and Rules. • The objects as stated in the Constitution are to foster and control the game of amateur rugby football within its boundaries as defined by the New Zealand Rugby Football Union. • Affiliated to the ARFU are 19 clubs. • The ARFU is responsible for, and governs, about 17,300 registered players. Of this figure 9,700 players represent clubs within the region and the balance being primary and secondary school players. • All but 17 of those 17,300 players are amateurs. • The ARFU employs 20 staff. • In the period in issue the ARFU staff also included its NPC Coach, Mr W Pivac, and Team Manager. 240 02 (jed) 3 • The 17 professional players registered with the ARFU are not employed by the ARFU, they are independent contractors. These players are contracted for the purposes of representing the ARFU in the NPC. • The ARFU enters a team in the NPC in accordance with the requirements of the NZRFU. • A great ideal of the ARFU’s activity is concerned with the administration of amateur club and junior rugby in Auckland. Matters included in that administration are : (a)The scheduling of games; (b)The development of skills programmes; (c)Ground allocation and maintenance; (d)Maintenance of player discipline; (e)The organisation and training of match officials; (f) Coaching development; (g)Selecting representative teams; (h)Liasing with other domestic and foreign rugby football unions; • The ARFU administers 11 representative teams, these teams foster rugby for they are the teams to which players may aspire; • The ARFU also operates an Academy. The members of the Academy are selected yearly and are given individual programmes to develop their rugby skills and to enhance their education and vocational development; • The ARFU also administers a charitable trust (the Seagull Trust) which was formed for the benefit of affiliated clubs, rugby referees association, secondary schools and primary schools rugby; • The ARFU does not administer the Blues. The Super 12 competition is organised at national level by the NZRFU; • The interest of the ARFU in the Blues is limited to that of a beneficiary of the discretionary trading trust that administers the Franchise agreement; • The ARFU does not provide a coaching service but amongst its employees are rugby development managers who are allocated 240 02 (jed) 4 specific areas of responsibility such as schools rugby, Polynesian Rugby, Referees, Women’s Rugby and Coaches. Relevant Statutory Provisions Accident Insurance Act 1998 “[281B. Employers to pay premiums – (1) On and from 1 July 2000, every employer must pay, in accordance with this Act and regulations made under this Act, premiums to fund the Employers’ Account. [281C. Rates of premiums – (1) Premiums are to be paid under section 281B at a rate or rates prescribed from time to time in regulations made under this Act, and must be related in whole or in part to the amount of earnings paid, estimated to be paid, or deemed to have been paid by the employer to the employer’s employees for that period. [281D. Classification of industries or risks – (1) Employers must be classified into industry or risk classes defined in regulations made under this Act for the purposes of setting premiums payable under section 281B. (2) A premium must be determined for each industry or risk class defined under subsection (1). (3) Subject to this Act, the manager must decide which classification of industry or risk is appropriate in relation to any employer by whom a premium is payable”. Accident Insurance (Employer Premiums) Regulations 2001 “(2) In these regulations, “activity” – (a) means a business, industry, profession, trade, or undertaking of an employer, a self-employed person, or a private domestic worker; and (b) includes ancillary or subservient functions relating to the activity, such as administration, management, marketing and distribution, technical support, maintenance, and product development; 5. Classification of employees – (1) Employees must be classified in the classification unit set out in Schedule 1 that most accurately describes their employer’s activity”. As previously noted, the two PCU’s set out in the Schedule to the regs with which this appeal is concerned are: 93180 – Sports and Services to Sports – Rugby 93125 – Services to Sports – Administration only. 240 02 (jed) 5 [6] In his submissions in support of the appeal, Mr Casey, counsel for the appellant, made the following points: • The evidence shows that the ARFU is engaged, as an activity, only in the administration of rugby. The administration of rugby is its sole activity. • The coaching of rugby by an employee Mr Pivac is not relevant to that determination, but in any event is an ancillary or subservient function. • The ARFU employs no persons who participate in rugby. • The Guide published by the Corporation has no standing and is no more than a statement of the Corporation’s opinion as to appropriate classifications. • Regulation 5 demands that employees be classified in the unit that most accurately describes their employer’s activity. Focus on the activities of an employee is not a proper application of reg 5. [7] Mr Tui, counsel for the respondent, made the following points in support of the respondent’s position: • It is the activity of the employer which is important for determining its classification unit. • In determining the most accurate classification unit for an employer’s activity, the Corporation may have regard to the ANZSIC classifications (Australian & New Zealand Standard Industrial Classification – New Zealand version 1996). • Classification unit 93180 applies to employers involved in rugby and in services to rugby. Service is defined in the OED as meaning the action of serving, helping or benefiting; conduct tending to the welfare or advantage of another. Accordingly employers in the business of rugby or serving rugby fall within this classification. • The appellant’s constitution and literature all pertain to the sport of rugby and the goals and structure of the appellant are designed for the benefit of rugby in the Auckland region. 240 02 (jed) 6 • The appellant’s primary activity is service to rugby in the Auckland region. • To confine PCU 93180 to players of rugby is an unreasonably narrow construction of that classification. To do so would make the words “services to rugby” redundant. • The dictionary meaning of administration includes service. If a broad interpretation were to be taken of administration the words ‘services to sports’ found in 93180 would have no meaning. In order to give effect to both classification units it is necessary to take a narrow interpretation of “administration”. • The Corporation’s guidelines support this construction where sports administration is identified where no participants are employed. This is consistent with ANZSIC Sports Administration Service and is treated separately from core sporting services such as clubs and coaching. • The appellant is involved in the business of servicing rugby well beyond its mere administration. The position of Mr Pivac as coach demonstrates the appellant’s activity is not confined to mere administration. Mr Pivac is employed as a rugby coach not an administrator. • While some of the appellant’s staff are office workers, the appellant’s activity is servicing rugby. DECISION [8] This appeal requires the Court, as the appellate authority, to make a determination as to which premium classification unit most accurately describes the ARFU’s activity. It cannot be emphasised too much that it is the employer’s activity which establishes the basis or criteria for determining the correct classification unit. The activities of individual employees play no part in that criteria. This is emphasised by the definition of activity in the regulations. [9] From the facts as they have been presented to the Court, I find that the undertaking or activity of the appellant is the administration and control of the game of rugby within its boundaries. It is to be remembered that the players are affiliated to the 19 clubs within the 240 02 (jed) 7 region or with primary or secondary schools within the region. The players of rugby are attached to those bodies and it is those bodies over which the appellant has responsibility and control but that control I find is only of an administrative nature such as the scheduling of games, allocation of grounds and maintenance thereof, the organisation and training of match officials, coaching development, selecting representative teams and liasing with other domestic and foreign rugby football unions. [10] It is accepted that the appellant does not employ any participants in rugby, that is rugby players, but it does employ one coach namely, the coach of its NPC team. The NPC team can be taken as being at the pinnacle of the playing hierarchy and as such is seen as the flagship of the union and the team to which players would aspire to be selected for, be they junior players looking into their rugby playing futures or young men at the age when that goal might be able to be achieved in the present or near future. [11] I accept the statement of Mr Nansett that the participation in the NPC serves the function of fostering rugby in the Auckland region. Having said that it must be remembered that the players who ultimately are selected for that team are not employed by the ARFU. The evidence advised that they were independent contractors and no doubt as such they would have their own particular classification for the purposes of employer or self-employed premiums under the Act. [12] The PCU asserted by the respondent, namely Sports and Services to Sports – Rugby must be looked at in the context of the wording of regulation 5 and be intended to describe the activity of the employer, that is the employer’s activity is that of sports, particularly rugby, meaning that it engages in or employs people who engage in the sport of rugby or that it provides a service to the sport of rugby. [13] It is accepted that the appellant does not employ rugby players or coaches save for its NPC coach and therefore it is in a different situation to that which might be the case with the NZ Warriors Rugby League organisation. There is a PCU 93181 – Sports and Services to Sports – Rugby League. Clearly the activity of the employer is the sport of rugby league and the administration thereof is an ancillary feature only. The distinction is quite marked and illustrates the differences between the respective activities of the ARFU and the Warriors. 240 02 (jed) 8 [14] In classification unit 93125 it must mean that the administration is the service to the sport which is the activity. The administration is the service, and as Mr Casey submitted, such a service to sport is different from say a ski tow operator who similarly provides a service to sport. [15] If one has regard to the ANZSIC classifications, the principal classification is Sport and a sub-class of that is Sports and Services to Sports (not elsewhere classified). It then states: “This sub-class consists of units mainly engaged in providing sporting services not elsewhere classified. This sub-class also includes units of sporting clubs predominantly engaged in sporting activities or in providing services to sporting activities”. It then goes on to give examples of primary activities of this sub-class, they being riding school operation, sports club or association, sports catering service, ski tow operation, sports administration service. [16] The important point to note is that an activity of this sub-class, namely “sports administration service”, has been given a separate PCU under the regulations. It has not been regarded as being in the Services to Sports not elsewhere classified where the primary activities are those others specified in that sub-class. [17] On the evidence I am satisfied that the appellant’s sole activity is the administration of rugby and that is the only service that it is providing and that the fact that it employs an NPC coach is simply an ancillary or subservient function relating to its activity of the administration of rugby. As I have noted, the establishment and maintenance of an NPC team is the flagship of rugby within the union and is the mast head by which the appellant seeks to foster and promote the game of rugby within its area. The appellant is not providing a sports coaching service and it is not the employer of rugby players. [18] There are a number of PCUs, namely 17, in the Schedule which go under the description of Sports and Services to Sports. That description is in accord with the ANZSIC sub-classification previously noted and then there are 17 designated sports such as rugby, rugby league, netball, soccer etc. Clearly whilst the plural is used in the description of each PCU, it is really only intended to be singular and apply to the particular sport that is stated and in the case of 93180 that sport is rugby. 240 02 (jed) 9 [19] I find it is clear from the different classifications in the Schedule that “administration” is regarded as a different type of service to a sport, than other services, and it is only the activities of an employer who provided a service other than administration who would come within 93180 and be an employer providing a service to a particular sport if the playing of the sport itself was not the primary activity. Looking at the issue from another perspective, the only PCUs which have a premium rate approaching rugby and league are those of Forestry and Logging, each with $5.67. Such employees in those two activities would seem to be in a risk class far greater than the employees of the ARFU. This clearly indicates that the employer activity must be associated with participation in the sport to justify such a premium rate on the employees earnings. [20] From every perspective I find that the correct PCU for this appellant is that of 93125 Services to Sports – Administration only, its activity being administration of rugby in the Auckland area for the benefit of the players who are affiliated to it through various clubs and schools. With the focus being on the activity of the employer as is required by reg 5, the activity or the business of the appellant is clearly the administration of the game of rugby only. [21] For the foregoing reasons therefore, I find that the respondent was wrong to classify the appellant under PCU 93180 and that decision is hereby quashed and the classification of the appellant as being PCU 93125 is hereby substituted. [22] The appellant is entitled to costs which I fix at $2,000.00 DATED at AUCKLAND this 12th day ofMarch 2003 M J Beattie District Court Judge 240 02 (jed)