Con­tro­ver­sial com­care case draws a line for work­ers’ com­pen­sa­tion claims

In Brief

In a deci­sion which has divid­ed legal opin­ion, the High Court has made a rul­ing as to what is meant by the expres­sion ​“in the course of employ­ment”. The High Court con­sid­ered this expres­sion in the case of Com­care v PVYW [2013] HCA 41 in the con­text of a work­ers’ com­pen­sa­tion claim brought by an employ­ee who was injured dur­ing sex in a motel room. The High Court by a major­i­ty, upheld an appeal by Com­care and deter­mined that no com­pen­sa­tion was payable.

The Facts

In 2007 a Com­mon­wealth Gov­ern­ment employ­ee was required for work pur­pos­es, to trav­el to a coun­try town and spend the night in accom­mo­da­tion cho­sen and paid for by her employ­er. Dur­ing the stay the employ­ee arranged to meet a male friend who lived in the area for a meal. After enjoy­ing din­ner togeth­er the employ­ee and her friend returned to the motel. Whilst at the motel the cou­ple engaged in sex­u­al inter­course. In the process, a glass fit­ting was pulled from its mount which struck the employ­ee who suf­fered facial and psy­cho­log­i­cal injuries.

The employ­ee claimed com­pen­sa­tion for her injuries under sec­tion 14 of the Safe­ty, Reha­bil­i­ta­tion and Com­pen­sa­tion Act 1988 (Cth). The sec­tion pro­vides that Com­care is liable to pay com­pen­sa­tion in respect of an ​“injury” suf­fered by an employ­ee, phys­i­cal or men­tal, aris­ing out of, or in the course of employ­ment. The claim essen­tial­ly con­cerned the sec­ond limb of this test (as it was not sug­gest­ed that the inci­dent arose ​“out of” the employment).

It was argued by the employ­ee that because she was at a par­tic­u­lar place, at the insti­ga­tion of her employ­er, her injuries were suf­fered in the course of employ­ment and com­pen­sa­tion was there­fore avail­able, absent any mis­con­duct on her part.

The claim for com­pen­sa­tion was ini­tial­ly accept­ed by Com­care, how­ev­er on fur­ther inves­ti­ga­tion Com­care revoked its ear­li­er deci­sion and denied com­pen­sa­tion for the injuries suf­fered on the basis that the injuries suf­fered were in the course of a pri­vate activ­i­ty and not in the course of employment.

The Admin­is­tra­tive Appeals Tribunal

The Admin­is­tra­tive Appeals Tri­bunal (AAT) affirmed the deci­sion of Com­care on the basis that the employ­ee had failed to demon­strate the rel­e­vant con­nec­tion between her injuries and employ­ment. The AAT held that the activ­i­ty was not an ordi­nary inci­dent of an overnight stay such as, show­er­ing sleep­ing or eat­ing. Rather the employ­ee was engaged in a recre­ation­al activ­i­ty which her employ­er had not induced or encour­aged. Accord­ing­ly, the injuries suf­fered took place dur­ing the employ­ee’s leisure time which were of a pri­vate nature, and had not arisen in the course of her employment.

Appeal to the Fed­er­al Court

The pri­ma­ry judge, Nicholas J reject­ed the find­ing of the AAT and held that the AAT had erred in hold­ing it was nec­es­sary for the employ­ee to show that the activ­i­ty which led to her injuries had been induced or encour­aged by her employ­er, in order to suc­ceed in her claim.

An ade­quate con­nec­tion exist­ed between her employ­ment and her injuries, because the employ­ee’s injuries were suf­fered whilst she was at a par­tic­u­lar place, at the encour­age­ment of her employ­er, dur­ing an inter­val or inter­lude in an over­all peri­od of work (con­sis­tent with the prin­ci­ples in Hatz­i­mano­lis v ANI Cor­po­ra­tion Ltd (1992) 173 CLR 473) (Hatz­i­mano­lis). Com­care appealed to the Full Fed­er­al Court.

Appeal to the Full Fed­er­al Court

On appeal, the Full Fed­er­al Court con­sid­ered the appli­ca­tion of the High Court author­i­ty in Hatz­i­mano­lis. The High Court in Hatz­i­mano­lis had for­mu­lat­ed an organ­is­ing prin­ci­ple to assist in deter­min­ing lia­bil­i­ty with respect to claims made under work­ers com­pen­sa­tion leg­is­la­tion. As not­ed above the leg­is­la­tion com­pen­sat­ed for injury aris­ing ​“out of or in the course of employ­ment”. The test rel­e­vant­ly dealt with where an injury was sus­tained in an inter­val in an over­all peri­od of work.

The High Court in Hatz­i­mano­lis held:

“.…an inter­val or inter­lude with­in an over­all peri­od or episode or work occurs with­in the course of employ­ment if, express­ly or implied­ly, the employ­er has induced or encour­aged the employ­ee to spend that inter­val or inter­lude at a par­tic­u­lar place or in a par­tic­u­lar way. Fur­ther­more, an injury sus­tained in such an inter­val will be with­in the course of employ­ment if it occurred at that place or while the employ­ee was engaged in that activ­i­ty unless the employ­ee was guilty of gross mis­con­duct tak­ing him or her out­side the course of employment”. 

The Full Fed­er­al Court not­ed that the test in Hatz­i­mano­lis pro­vid­ed two alter­na­tive ways in which an injury in an inter­val in an over­all peri­od of work would be com­pens­able (unless gross mis­con­duct by the employ­ee was involved):

• If the employ­ee had been induced or encour­aged by their employ­er to spend the inter­val at a par­tic­u­lar place; or
• If the employ­ee had been induced or encour­aged by their employ­er to spend the inter­val in a par­tic­u­lar way.

In this case it was ade­quate to ground the com­pen­sa­tion claim that the employ­ee had been at a place her employ­er had encour­aged her to stay when she sus­tained an injury.

Appeal to the High Court

The major­i­ty judg­ment of the High Court com­pris­ing French CJ, Hayne , Cren­nan and Kiefel JJ agreed that the prin­ci­ple in Hatz­i­mano­liswas applic­a­ble how­ev­er reject­ed the full Fed­er­al Court’s formulation.

The major­i­ty held that the prin­ci­ple was not to be applied lit­er­al­ly ignor­ing the terms of the Safe­ty, Reha­bil­i­ta­tion and Com­pen­sa­tion Act which seeks to lim­it an employ­er’s lia­bil­i­ty for com­pen­sa­tion. The High Court held that if the appli­ca­tion of Hatz­i­mano­lis by the low­er courts was cor­rect then the deci­sion would need to be recon­sid­ered. It would need to be recon­sid­ered because this par­tic­u­lar appli­ca­tion would result in an undue exten­sion of employ­er’s lia­bil­i­ty to pay com­pen­sa­tion for any injury suf­fered by an employ­ee at any place away from their usu­al place of work. At the end of the day the major­i­ty con­sid­ered that the appli­ca­tion of Hatz­i­mano­lis by the low­er courts was incorrect.

The major­i­ty held that in apply­ing what was said in Hatz­i­mano­lis, the enquiries to be sat­is­fied, to meet the test were:

1. Was the employ­ee engaged in the ​“course of employ­ment” (which requires a fac­tu­al find­ing that the employ­ee suf­fered injury but not engaged in actu­al work)?
2. How was the injury bought about? This is the key ques­tion. Was it refer­able to an activ­i­ty or to being at a place?
3. Where an activ­i­ty was engaged in at the time of injury, the rel­e­vant ques­tion then is whether the employ­er induced or encour­aged that activity?
4. If the injury occurred at or by ref­er­ence to a par­tic­u­lar place, the rel­e­vant ques­tion then is whether the employ­er induced or encour­aged the employ­ee to be there?
5. If the answer to the rel­e­vant ques­tion is YES then the injury will have occurred ​“in the course of employ­ment”.

The major­i­ty stat­ed that where an activ­i­ty was engaged in at the time of injury, the rel­e­vant ques­tion is whether the employ­er induced or encour­aged that activ­i­ty, not whether the employ­er encour­aged the employ­ee to be at a place. An employ­er’s induce­ment to be at a place was not rel­e­vant in such a scenario.

The major­i­ty not­ed that an injury asso­ci­at­ed with a place may involve some­thing occur­ring to the premis­es or some defect in the premis­es. For exam­ple if the light fit­ting in the motel under con­sid­er­a­tion, had been inse­cure­ly fas­tened and fell upon the employ­ee, the injury suf­fered would have arisen by ref­er­ence to the motel. The employ­er would be respon­si­ble for the injury in those cir­cum­stances because the employ­er had put the employ­ee in a posi­tion where injury occurred because of some­thing to do with the place.

The minor­i­ty judg­ments of Bell J and Gagel­er J upheld the Fed­er­al and Full Fed­er­al Court’s posi­tion and dis­missed the appeal in two very pow­er­ful dis­sent­ing judg­ments. They reaf­firmed that the test in Hatz­i­mano­lis was that there two inde­pen­dent and alter­na­tive ways in which an injury in an over­all peri­od of work would be com­pens­able (unless gross mis­con­duct by the employ­ee was involved) as observed by the Fed­er­al Court and Full Fed­er­al Court (see above). They were crit­i­cal of the argu­ments advanced by Comcare.

Bell J observed at para­graph 96:

​“Com­care dis­avows that the ​“cir­cum­stances of injury inquiry” is an inquiry respect­ing a causal rela­tion. How­ev­er, it does not embrace the Tri­bunal’s analy­sis of an inter­rup­tion of the tem­po­ral rela­tion. Com­care acknowl­edges that, at least for some pur­pos­es, the respon­dent was with­in the course of her employ­ment at the motel notwith­stand­ing that she hap­pened to be hav­ing sex­u­al inter­course. The analy­sis is one which pos­tu­lates that a per­son may be in the course of employ­ment for one pur­pose and not in the course of employ­ment for anoth­er pur­pose. The dis­tinc­tion is between pur­pos­es with­in the ambit of the employ­er’s encour­age­ment to be at the place and those that are not. On this analy­sis, if the light fit­ting had fall­en of its own motion while the respon­dent was hav­ing sex­u­al inter­course, any result­ing injury would be com­pens­able. In such an event, the cir­cum­stance of the injury – that it was occa­sioned by a defect in the premis­es – would be with­in the ambit of the employ­er’s encour­age­ment to stay at the motel. It would be an injury aris­ing in the course of the respon­den­t’s employ­ment. How­ev­er, if the cir­cum­stances of the injury were occa­sioned by a law­ful pur­suit not with­in the ambit of the employ­er’s encour­age­ment to stay at the motel, it would not be com­pens­able. The respon­dent would not have been in the course of employment.”

Gagel­er J stat­ed at para­graph 152:

​“The cen­tral sub­mis­sion of Com­care in the appeal – that an injury that an employ­ee sus­tains at a place an employ­er has induced or encour­aged the employ­ee to be dur­ing an inter­val or inter­lude in an over­all peri­od or episode of work is not com­pens­able ​“unless the injury came about through the very use of the ​‘place’ at the ​‘time’ and for the work-relat­ed pur­pose that the employ­er encour­aged or required the employ­ee to be there” – is to be reject­ed. Not only is a test for com­pen­sa­tion stat­ed in those terms incon­sis­tent with the Hatz­i­mano­lis prin­ci­ples; it is a return to the out­mod­ed, arti­fi­cial and intru­sive form of analy­sis that the Hatz­i­mano­lis prin­ci­ples were for­mu­lat­ed to overcome”.

Points to take away

Under the major­i­ty of the High Court’s deci­sion in Com­care, points which emerge include the following:

• An employ­ee who is induced or encour­aged by their employ­er to be at a cer­tain place dur­ing an inter­val with­in an over­all peri­od or episode of work and is injured there (and has not engaged in mis­con­duct), is not auto­mat­i­cal­ly enti­tled to suc­ceed in a claim for work­ers compensation;
• It is nec­es­sary to con­sid­er whether the injury results from an activ­i­ty engaged in by the employ­ee or from the fact of being at the place;
• Where an activ­i­ty of the employ­ee was engaged in at the time of injury (which is linked to the injury), lia­bil­i­ty will be found where the employ­er induced or encour­aged that activity;
• Sex­u­al inter­course is not an activ­i­ty that in the nor­mal course an employ­er could be said to induce or encour­age an employ­ee to engage in;
• Activ­i­ties engaged in by an employ­ee at the time of injury which an employ­er may be said to have induced or encour­aged, will need to be assessed on a case by case basis. Arguably activ­i­ties such as hav­ing a show­er or a meal or sleep­ing would fit into this category;
• Where the injury results from the fact of being at a place, lia­bil­i­ty will be found where the employ­er induced or encour­aged the employ­ee to be at that place.

Employ­ers should take rea­son­able care in the selec­tion of places they direct their employ­ees to attend, such as motels. If they organ­ise or encour­age employ­ees to engage in recre­ation­al activ­i­ties dur­ing an inter­val with­in an over­all peri­od or episode of work, they should take rea­son­able care to pro­tect against acci­dents. An employ­ee who is injured in such an activ­i­ty is like­ly to be held to have been injured in the course of employ­ment and to have a valid work­ers com­pen­sa­tion claim.