Workers' Compensation - appeal - soldiers on Army exercise - whether workers in course of employment at time of accident - whether Army had expressly or impliedly induced or encouraged soldiers to spend leave at a particular place or in a particular way - meaning of "induced or encouraged" - gross misconduct

Safety Rehabilitation and Compensation Act 1988 (Cth) ss 4(1), 5(2), 14(1), (3),(13)

Hatzimanolis v ANI Corporation Ltd [1992] HCA 21; (1992) 173 CLR 473 Cons

Whittingham v Commissioner of Railways (WA) [1931] HCA 49; (1931) 46 CLR 22 Refd

Henderson v Commissioner of Railways (WA) [1937] HCA 67; (1937) 58 CLR 281 Refd

Inverall Shire Council v Lewis (1992) 8 NSWCCR 562 Refd

Comcare v McCallum [1994] FCA 975; (1994) 49 FCR 199 Cons

The Commonwealth v Oliver [1962] HCA 38; (1962) 107 CLR 353 Refd

Danvers v Commissioner for Railways (NSW) [1969] HCA 64; (1969) 122 CLR 529 Refd

McCurry v Lamb (1992) 8 NSWCCR 556 Refd

Tiver Constructions Pty Ltd v Clair [1992] NTSC 86; (1992) 110 FLR 239 Cons

(On appeal from the General Administrative Division of the Administrative

Appeals Tribunal constituted by Deputy President B.M. Forrest, Mr I.L.G. Campbell Member and D.M. Sutherland Members)

Counsel for the applicant: Mr G. Gibson QC and

Mr J. McGill

Solicitors for the applicant: Australian Government

Solicitor

Counsel for the respondent Mather: Mr R. Tracey QC and

Mr J. Nolan

Solicitors for the respondent Mather: Tuszynski Hamilton Linacre

Sacks

Counsel for the respondent Mitchell: Mr D. Campbell

Solicitors for the respondent Mitchell: Mark Orchard and Associates

THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. The appellant pay the costs of and incidental to the appeal,

including reserved costs if any, to be taxed.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

KIEFEL J The applicant appeals from the decisions of the Administrative Appeals Tribunal of 20 July 1994 setting aside the decisions under review and holding that the Commonwealth was liable to pay compensation under the Safety Rehabilitation and Compensation Act 1988 to Sergeant Mather and to the dependants of Corporal Mitchell. The question of law with which the appeals are concerned is as to the application of the principles expressed in Hatzimanolis v. ANI Corporation Ltd [1992] HCA 21; (1992) 173 CLR 473 in determining whether death or injury has occurred "in the course of employment".

2. The parties had placed before the Tribunal a statement of agreed facts and in so far as any facts recited by it went beyond that statement, no issue was taken on the appeals as to their correctness.

3. Both servicemen had been corporals in the Australian regular army stationed at Puckapunyal, Victoria. In February 1992 the 26th Transport Squadron, to which they were attached, travelled to Darwin to take part in "Exercise Kangaroo 1992", a large scale military training exercise with simulated war conditions. The area of the exercise extended over an area bounded by Darwin in the north, Katherine in the South, Arnhem Land in the East and Kununurra in the West. The squadron's camp, where the soldiers were required to remain except for periods of leave (as authorised) or when their duties required them to go elsewhere (which required a specific order) was at the Darwin Showgrounds, about 10 km from Darwin.

4. The two servicemen were granted "authorised local leave" from 0800 to 2400 hrs on 29 March 1992. They were next to report for duty at 0800 on 30 March 1992. Local leave was permitted to give troops time away from the camp for recreational purposes and it was regarded as conducive to good morale. The exercise took place over a three month period and there was no other form of leave available during the exercise apart from this local leave. It was regarded as important if soldiers were to maintain a freshness of approach to their duties. The taking of it was encouraged. A soldier on local leave was spoken of as being "off duty". The company roll book had the two men entered as "in the field". Leave was a matter left to the discretion of the unit commanders, subject to the requirement that units be sufficiently manned and that it not be granted if a man was required for duty. There was no "right" to local leave and soldiers on leave could be recalled to duty if required.

5. There were no restrictions as to where the soldiers could go whilst on local leave except that they remain within the boundaries of the exercise and not attend two hotels declared "off limits". The hotels attended by them were not in this category. Transport was provided to two points, places of entertainment in Darwin, the casino and a hotel, and it was anticipated that most would take their leave in Darwin and its environs. Those soldiers travelling elsewhere would necessarily have to make their own arrangements to ensure their return to the camp in time.

6. Corporal Mather (as he then was) took the transport provided by the Army to a shopping centre and from there proceeded to the Berrimah Hotel, which is about 1 km from the showgrounds. He there met with Warrant Officer Fuge and Corporal Mitchell. Corporal Mitchell had spent the morning at the Darwin Rifle Club. The three had lunch and in the mid-afternoon took a taxi to the Humpty Doo Hotel. All of these locations were within the limits of the exercise boundary. Later in the evening, when they were unable to procure a taxi to return to the camp they set off on foot along the Arnhem Highway with Fuge ahead. At about 1940 hours Mitchell and Mather were struck by a car driven by a civilian and Mitchell was killed. Mather suffered serious injury. The driver of the vehicle was found to have a blood alcohol level of .156 percent, Mitchell a level of .231 percent and Mather .061 percent. The legal limit in the Northern Territory is .08 percent. It was unclear where the two soldiers were on the highway in the time leading up to the occurrence of the accident.

7. The definition of "employee" in the Safety Rehabilitation and Compensation Act extends to members of the Defence Force (s.5(2)). Sub-sections 14(1) and (3) of the Act provide:

"(1) Subject to this Part, Comcare is liable to pay

compensation in accordance with this Act in respect of

an injury suffered by an employee if the injury

results in death, incapacity for work, or impairment.

...

(3) Compensation is not payable in respect of an injury

that is caused by the serious and wilful misconduct of

the employee but is not intentionally self-inflicted,

unless the injury results in death, or serious and

permanent impairment."

"Injury" and "place of work" are defined by s.4(1) in these terms:

"4.(1) In this Act, unless the contrary intention

appears:

"Injury" means:

...

(b) An injury ... suffered by an employee,

being a physical or mental injury arising out

of, or in the course of, the employee's

employment.

...

"Place of Work", in relation to an employee,

includes any place at which the employee is

required to attend for the purpose of carrying

out the duties of his or her employment."

and, in relation to the question of serious and wilful misconduct, s.4(13) provides:

"For the purposes of this Act, an employee who is under the

influence of alcohol or a drug (other than a drug prescribed

for the employee by a legally qualified medical practitioner

or dentist and used by the employee in accordance with that

prescription) shall be taken to be guilty of serious and

wilful misconduct."

8. The Tribunal, firstly, determined that "Exercise Kangaroo 1992" was to be viewed as one overall period or "episode of work", and not as discrete periods of service, within the meaning of Hatzimanolis' case to which I shall shortly refer. Such a view cannot, in the circumstances surrounding the exercise, be doubted (see Hatzimanolis 483) and the applicant did not contend otherwise. The injury to the two soldiers, causing death in the case of Corporal Mitchell, occurred in an interval within that overall period of work (Hatzimanolis 484).

9. The issue identified by the Tribunal for determination then was, as Hatzimanolis' case would seem to require, whether the Army had "expressly or impliedly ... induced or encouraged the employee to spend that interval or interlude at a particular place or in a particular way". It found that there was no express encouragement for the two servicemen to attend a hotel or bar. In reviewing the facts relevant to the question the Tribunal considered that the soldiers were at the hotel on a social occasion and in the exercise of their choice as to how to spend their leave. The Tribunal concluded however that the circumstances did suggest:

"an express or implied encouragement and inducement by the

Army to take local leave outside of the confines of the camp

pursuing recreational activities, and that it was reasonably

incidental to this that the soldiers would attend a place

such as the Humpty Doo Hotel and make their own way back to

camp after the outing."

10. And it later appears in its Reasons that the Tribunal considered that the grant by the Army of local leave outside of the camp amounted to the provision of leave "in a particular way", within the meaning of Hatzimanolis' case. The factors identified as most relevant to that determination were that the Army made available transport to facilitate local leave, to and from licensed premises, and that the location of the camp and the nature and length of the exercise required, if local leave was to be beneficial, that it be taken away from the camp. These factors were considered to be analogous to those pertaining in Hatzimanolis' case. Further it was considered to be of "some significance" that local leave was not a matter of right. When authorised it was however, as the Tribunal earlier refers, positively encouraged.

11. The applicant submits the Tribunal fell into error in that it failed to have regard to the requirement stated in Hatzimanolis' case, that the employer's encouragement or inducement must relate to a particular activity ("in a particular way"). The alternative, encouragement to spend the period of time in question "at a particular place" is likewise not here shown, it is submitted. The soldiers were instructed to remain generally within the boundaries of the exercise area. The Army is not to be taken as having encouraged them to attend at the hotels in question or the area leading to and from the Humpty Doo Hotel, merely because it permitted them to do so.

12. It is further suggested that the reference in the Reasons to the soldiers' attendance at the Humpty Doo Hotel as being "reasonably incidental" to the taking of local leave away from the camp introduces a consideration extraneous to the test formulated in Hatzimanolis and amounts to an unwarranted extension of the guidelines there formulated.

13. In Hatzimanolis (478, 480) the majority, in their joint judgment, considered that what had been absent from earlier cases dealing with questions as to whether injury arose out of or in the course of employment, and what was now necessary, was some "organizing principle". An earlier approach, which considered whether an employer was then undertaking something "incidental to service" (Whittingham v. Commissioner of Railways (WA) [1931] HCA 49; (1931) 46 CLR 22, 29) was considered by their Honours (478) to state a conclusion and not the method by which it was reached. There would then be substance in the applicant's submissions that the use of such a "test" would now seem to lack the approval of the High Court, if that is in fact the course the Tribunal has followed.

14. The other main approach, which enquired whether the employee was doing something required, expected or authorized "in order to carry out" his actual duties (Henderson v. Commissioner of Railways (WA) [1937] HCA 67; (1937) 58 CLR 281) was considered by their Honours to require a strained interpretation of those words and in some cases resulted in a finding which appeared fictitious (479-482).

15. The principles established in Hatzimanolis, to guide Courts to a conclusion whether an injury was occasioned in the course of employment, are in the nature of two enquiries, one concerned with characterising the periods of work to determine whether the time when the injury was sustained is to be viewed as an interval occurring in an overall episode or between separate periods of work, and then determining whether the employee's position or undertaking at the time of injury was something induced or encouraged by the employer. It may be thought that both enquiries are concerned to establish the connection or sufficiency of connection between the injury and the employment, which, as their Honours had previously noted (478) Dixon J in Whittingham thought might be answered by reference to incidence to service. Their Honours in Hatzimanolis concluded (484):

"... Accordingly, it should now be accepted that an interval

or interlude within an overall period or episode of work

occurs within the course of employment if, expressly or

impliedly, the employer had 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..."

In the sentence which immediately follows their Honours make clear however that these questions are not to be determined narrowly, by reference only to the particular circumstances of the particular occasion out of which the injury arose, but by having regard to the general nature, terms and circumstances of the employment. This is not without significance in the present case.

16. In arriving at the above statement of principles their Honours reviewed the cases and, amongst the more recent, had found that a "striking feature" of those holding that an injury occurring in an interval between periods of actual work was within the course of employment was that the employer had "authorised, encouraged or permitted" the employee to spend the time during that interval at a particular place or in a particular way. A test dependent entirely upon an employer's encouragement to undertake an activity was not however considered satisfactory, since it would extend to cases clearly outside even modern views of the course of employment. Their Honours then suggested that the answer was to be found, not so much in the employer's attitude to the way the interval was spent "but in the characterisation of the period or periods of work of those employees" (483), which indeed the examples referred to had highlighted, and went on:

"... For the purposes of workers' compensation law, an

injury is more readily seen as occurring in the course of

employment when it has been sustained in an interval or

interlude occurring within an overall period or episode of

work than when it has been sustained in the interval between

two discrete periods of work ...."

17. After describing the more usual situation of employment in a permanent location, with prescribed daily starting and finishing times, their Honours referred to the distinction which arose when injury occurred in a tea break (an interval in overall daily work period) and injury occurring after the conclusion of the day's work and prior to commencement the following day. Turning to different circumstances of employment, such as arose in that case (as they do here):

"... On the other hand, there are cases where an employee is

required to embark upon some undertaking for the purpose of

his or her work in circumstances where, notwithstanding that

it extends over a number of daily periods of actual work,

the whole period of the undertaking constitutes an overall

period or episode of work. Where, for example, as in

Danvers, an employee is required to go to a remote place and

live in accommodation provided by his or her employer for

the limited time until a particular undertaking is

completed, the correct conclusion is likely to be that the

time spent in a new locality constitutes one overall period

or episode of work rather than a series of discrete periods

or episodes of work. An injury occurring during the

interval between periods of actual work in such a case is

more readily perceived as being within the current

conception of the course of employment than an injury

occurring after ordinary working hours to an employee who

performs his or her work at a permanent location or in a

permanent locality."

18. A test which is concerned only with whether the injury or death occurred in an interval in a whole period or episode of work, as here, where the employees are in a relatively remote location, and in circumstances which require their almost continuous presence was also considered, by itself insufficient, although as Toohey J remarked in a separate judgment, an employer is more likely to be held to have "required, expected or authorized a worker to do something relevant to the carrying out of his or her duties ..." in such a case. One can comprehend why standing alone that enquiry would be insufficient, for whilst conclusions as to periods of work and intervals within them may be seen as arising from and connected with the terms and conditions of the employment, the activity in the interval may be too remote from it, for example in Hatzimanolis' case if the employee had determined, without reference to or any form of encouragement by the employer, to fly to some other distant location, beyond areas which might be reached by vehicle, and then undertake mountain climbing or parachuting and was then injured.

19. That the formulation of principles required both a consideration of how the interval was placed in the scheme of the work involved in the employment and what the employer had said, done or encouraged concerning the activity or location of the employee within that interval is clear from the passage I have set out above and from the application of it to the facts of that case. Their Honours (485) accepted the contention that it did not follow that because the appellant was in a remote location, and was housed and fed there, that he was in the course of his employment during the whole time. He was however in the course of his employment when injured as A.N.I. had "expressly or impliedly induced or encouraged him to engage in that activity during that interval" (485) the activity being an excursion to the Wittenoom Gorge on his work-free day, organised by the supervisor, with the employer providing the vehicles and the food.

20. If, as the applicant contends, Hatzimanolis requires that the employee must be directed to an identified place or that authority be given for an identified activity, then there would not here be a case for compensation under the Act. But nothing in the review of the cases from which the statement of principles is extracted, nor in the expression of the principles, leads me to that conclusion.

21. The place at which or the activity undertaken at the time of injury was not said in Hatzimanolis to have been previously expressed or identified by the employer. It happened that such an inference could be drawn there. An injury will, within the statement of principles, have occurred at a "particular" place if it can be found to fall within the ambit of the employer's encouragement or inducement which may, in its terms, leave some matters to the decision of the employee. The statement of principles, read with the preceding analysis of case law, discloses an attempt to provide a satisfactory connection between injury and employment by a temporal connection (and as to which see Inverell Shire Council v. Lewis (1992) 8 NSWCCR 562) which is strengthened by connection via the employer, the "nexus" of which Lockhart J spoke in Comcare v. McCallum [1994] FCA 975; (1994) 49 FCR 199, 204. In that case the employer had been required to stay overnight at a country town. Whilst the town was specified, the place at which she might choose to stay was not. The employee slipped in the shower at that hotel and was injured. The Full Court upheld the decision of the Tribunal that compensation was payable. In the judgment of Lockhart J, with whom the other members of the Court agreed, the fact that the hotel was of the employee's choosing did not prevent the relevant nexus being present. Her employment required her to stay at a hotel of her choice, thereby constituting the spending of an interval at a "particular place or in a particular way" within the meaning of Hatzimanolis. His Honour did observe (204) that injury occurring whilst she had chosen to attend a cinema or club that evening may not have the necessary connection with her employment. That may be so, it seems to me, because the activity may fall outside the ambit of what was involved in the employer's requirement for an overnight stay.

22. In my view "encouragement" is not to be taken as of narrow meaning and limited to some positive action and in specific terms which might lead the employee to undertake a particular activity or attend at a particular place. The two particular cases which their Honours in Hatzimanolis were concerned with in this context, The Commonwealth v. Oliver [1962] HCA 38; (1962) 107 CLR 353 and Danvers v. Commissioner for Railways (NSW) [1969] HCA 64; (1969) 122 CLR 529 involved, respectively, an expectation of presence coupled with a recognised practice and making available facilities for an employee's use. The facts in Hatzimanolis did not require the Court to discuss in greater detail what was encompassed by the phrase "induced or encouraged". To be said to have, expressly or impliedly, induced or encouraged an undertaking or presence at some location could refer to, by way of example only, requirements, suggestions, recognition of practices, fostering of participation, or providing assistance and may include the exercise of discretion or choice on the part of the employee. Further attempt at definition would be fruitless. In each case, the question will be whether the attendance at the place at which or the undertaking in which the employee is involved when injured in an interval falls within the ambit of statements, acts or conduct made by the employer and what may be said to logically arise from them. And in each case, importantly, they must be viewed in the background of the particular employment and the circumstances in which the employer is then placed.

23. The applicant submitted that a conclusion that the soldiers here were at the relevant time in the course of their employment would mean that, absent serious or wilful misconduct, any injury suffered by a soldier anywhere in the exercise boundaries whilst on leave would be compensable. That may be if the matter were to be determined by reference only to a consideration of the work involved in the exercise and a finding that it occurred in an interval, but that is not the case. The terms of the inducement or encouragement here were such as to leave to the soldiers some choice as to location and activity to be undertaken during the interval in question. Attendance at locations outside the boundaries or even beyond points which could be conveniently accessed by available transport in the short period allowed and undertaking activities which could not be regarded as social or recreational pursuits may not fall within the compass of the matters in which the Army might expect or foresee the soldiers participation. Drinking and socialising at hotels and returning to camp from not-distant points do not however fall into this category. The soldiers' participation in them and which placed them on the highway at the relevant time was encouraged by the Army by the grant of local leave which, of its nature and having regard to the conditions of the exercise, implied these undertakings. The encouragement could fall into either category in Hatzimanolis, that the soldiers spend the interval in a place of their choice or in a way chosen by them, the latter being the finding of the Tribunal.

24. The reference by the Tribunal to the soldiers' earlier attendance at the hotel as being "reasonably incidental" to the taking of local leave does not suggest either a return to the "test" (or conclusion) which the High Court has sought to replace nor does it introduce an additional consideration. I understand it to convey merely the Tribunal's view that attendance at any hotel in the area (not being one of the two prohibited) was within the contemplation of the Army as a potential, if not likely, activity during leave: in that sense it is relevant to the question of the Army's encouragement of such activities, in a similar way to the manner in which the NSW Court of Appeal approached the question in Inverall Shire Council v. Lewis (566) and McCurry v. Lamb (1992) 8 NSWCCR 556, 559.

25. The final submission for the applicant was that, whatever view one took of these questions, the Tribunal ought to have determined on the evidence whether the soldiers were guilty of gross misconduct, such as to disentitle them or their dependants from compensation because they were under the influence of alcohol. The question more clearly may be said to arise with respect to Corporal Mitchell. Reliance was placed on that part of the statement of principle in Hatzimanolis that an injury which qualifies under it will be one sustained in the course of employment "...unless the employee was guilty of gross misconduct taking him or her outside the course of employment" and to the fact that the legislation with which their Honours was concerned contained a provision (s.14(2)) identical with s.14(3) of the Act here applicable.

26. In Hatzimanolis (484) the Court obviously considered it necessary, having just referred to the undertaking of an activity, to observe that gross misconduct would however disentitle an employee, since the legal conclusion would be that he or she must be taken as acting outside the course of employment. The Court was not confronted by a situation which had regard to a statutory exemption such as s.14(3). The observations of the Court of Appeal of the Northern Territory in Tiver Constructions Pty Ltd v. Clair [1992] NTSC 86; (1992) 110 FLR 239 at 246-248 are apposite and in particular the conclusion that the Court in Hatzimanolis is not to be taken as laying down a "universal proposition of law that whenever gross misconduct occurs during an interval between episodes of work, the employee must be outside the course of the employment." Here, clearly, the statute permits recovery of compensation even in cases of serious misconduct where death or serious impairment results. Compensation is payable to the dependants of Corporal Mitchell notwithstanding that he was almost certainly under the influence of alcohol. If Sergeant Mathers was (and this does not seem to me to be concluded by the level of alcohol found to be present in his blood) the Tribunal nevertheless found he had suffered serious impairment and this was not challenged.

27. The appeal will be dismissed and the decision of the Tribunal in each application for review, that compensation is in each case payable, is confirmed.