Pioneer Studios Pty Ltd v Hills

Court of Appeal (NSW)|2015-06-22|Before: McColl JA, Basten JA, Simpson JA, Coll JA

Solicitors: Bartier Perry (Appellant) Carroll & O'Dea (Respondent) File Number(s): 2014/219474 Decision under appeal Court or tribunal: Workers Compensation Commission Citation: Hills v Pioneer Studios Pty Ltd (No 2) [2014] NSWWCCPD 42 Date of Decision: 10 July 2014 Before: Deputy President O'Grady File Number(s): A1-6838/10

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Statutory scheme for worker's compensation

A worker's entitlement to compensation depends upon having received an injury. [5] The term "injury" is defined, relevantly, to mean "personal injury arising out of or in the course of employment". [6]
When this matter was first considered in the Commission, the focus was upon the first limb of the definition, namely whether the injury "arose out of" the respondent's employment: on the rehearing, the focus changed to the second limb, namely whether the injury arose "in the course of" her employment.
Conventionally, the first limb has been understood to involve a causal link between the injury and the employment, while the second limb involves a temporal connection. [7] However, a temporal connection is not sufficient because there is a further precondition imposed by s 9A of the Workers Compensation Act, namely that the employment concerned was a "substantial contributing factor" to the injury. [8] The effect of s 9A when introduced in 1996, was to prevent liability for compensation arising, for example, where a worker suffered a cerebral aneurism at work as a result of a congenital susceptibility in which his employment played no part. [9] In Badawi I suggested that, assuming no pre-existing condition and absent the involvement of any third party, if the injury arises from the very activity which the worker was authorised, encouraged or permitted by the employer to undertake (and thus within the course of employment) the only conclusion reasonably open would be that the employment substantially contributed to the injury. [10] However, it will be necessary to return to the question of causal connection because it was that connection which was found not to have been properly upheld on the first Deputy President's findings. In Badawi it was held that that limb provided a test which was not more demanding than the test contained in s 9A. [11] In these circumstances, it is necessary to have regard to the reasons why the earlier decision of the Commission (Deputy President Roche) was set aside.

The first judgment in this Court

In the 2012 judgment, Allsop P dealt with the matter primarily on the basis that there had been no finding that the injury arose in the course of the respondent's employment. [12] He then said it was "not apparent how the Deputy President could draw any conclusion about the injury arising out of employment or employment being a substantial contributing factor without considering the kinds of matters to which Mason P referred in Mercer." [13] In Mercer, Mason P had identified the relevant matters as "what (if anything) the worker was in fact doing that caused or contributed to the 'injury', as defined in s 4". [14] As Allsop P continued in the 2012 judgment: "This would require focus upon what was the employment, not what Ms Hills thought was the employment."
Allsop P then considered the possibility that the Deputy President had in fact concluded that the injury occurred in the course of the respondent's employment, a conclusion which he noted had been reached without reference to the principles in Hatzimanolis v ANI Corporation Ltd. [15] (It will be necessary to refer further to the principles established in that case shortly.) The President continued: [16] "Further, that conclusion has been reached significantly by reference to Ms Hills' understanding of what happened, rather than by reference to the facts of what the employer actually did on and in respect of the evening in question by reference to the employment relationship."

High Court authority

Before turning to the second decision in the Commission, it is convenient to refer to High Court authority preceding the first decision (and in particular Hatzimanolis) and to a subsequent decision, Comcare v PVYW. [17]
These two cases had one important feature in common: both were concerned with injuries which occurred to a worker who was not actually engaged at the time of the injury in the essential activities of his and her employment, but was away from home as a result of that employment. In Hatzimanolis, the worker was working in a remote area (at Mount Newman in Western Australia), not far from a tourist attraction at Wittenoom Gorge. On his day off, the worker suffered an injury when the vehicle in which he was travelling to visit the Gorge overturned. In PVYW, the worker was a Commonwealth public sector employee, who had travelled to a country town for her employment and was required to stay overnight in a motel. During the evening, whilst having intercourse with an acquaintance, a light fitting was dislodged from above the bed falling on her face and injuring her. Mr Hatzimanolis was successful in his claim; PVYW was not.
In the second decision of the Commission, the Deputy President noted an important distinction between those cases and the present. He stated: [18] "It is important to note that the High Court in both Hatzimanolis and PVYW were concerned with injury occurring during an interval or interlude in an overall period of work. The present facts concern an injury received at the respondent's premises during an interval between [discrete] periods of work. Notwithstanding that factual distinction, the injury in the present matter may be found to have occurred in the course of employment if it can be established on the evidence that [the employer] expressly or impliedly induced or encouraged Ms Hills to spend that interval at a particular place, or in a particular way."
For reasons which will be explained below, that misconceives the legal test: not every activity which an employer may encourage, or even induce, an employee to undertake will result in the employee acting in the course of his or her employment by acceding to such encouragement or inducement. As noted in both Hatzimanolis [19] and in PVYW, [20] were an employer to encourage a worker to see a doctor after working hours, an injury which occurred whilst the worker was visiting the doctor would not be an injury in the course of employment. Such examples could readily be multiplied. The point was encapsulated in Hatzimanolis in the following proposition: [21] "Where … 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 the 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."
While the Deputy President expressly acknowledged the point of distinction, if it appears that he applied the reasoning in PVYW (and thus Hatzimanolis), without proper regard to that distinction, that would constitute an erroneous decision in point of law.
There is, however, a second way in which the Deputy President appears to have erred, which requires reference to the factual findings and which is, thus, better dealt with first. This error involved a repetition of the error identified in the first decision, namely identification of the scope of employment primarily by reference to the worker's understanding of what was required of her. That was found in the first decision of this Court to involve an erroneous decision in point of law.
It is necessary to consider both these matters (although one error would be sufficient to set aside the decision) because the combination will be relevant to the orders which this Court should make.

Erroneous approach to fact finding

Although Pioneer Studios was a reasonably small organisation with some 20 employees at the time of the accident, there were two persons with authority in respect of the respondent's work. The sole director of the company was Richard Ludbrook, who gave permission for a former employee, Alistair Buchanan, who was about to leave, to have a party at the studios which was to be both a farewell for him and a birthday party for him and two of his friends, all three having birthdays in March.
The Deputy President accepted that the original intention had been to have the birthday party in the premises and Mr Buchanan had approached Mr Ludbrook with a request to use the premises. According to the account given by Mr Buchanan, which the Deputy President accepted, "Richard agreed and suggested that I have the party as a farewell as well." [22] The Deputy President continued: "That being the case it is reasonable to infer that Mr Ludbrook intended that staff members would attend the party to farewell Mr Buchanan. In such circumstances, in my view, it is not surprising that, as I have found, Mr Ludbrook had inquired of Ms Hills as to whether she was going to attend the party."
The reference to Mr Ludbrook's intention is somewhat unclear. Mr Ludbrook (who was not cross-examined) gave unequivocal and consistent evidence in two statements that the company "had no involvement in the organisation or control over what was happening at the party"; that the party was by invitation only; that he himself attended because he was invited, and that Mr Buchanan had arranged for security at the door and for catering and cleaning. [23] He also said that no member of staff was directed to attend, a statement confirmed by another staff member, Samantha Hawken, who was also unchallenged. [24] It might have been more accurate to say that Mr Ludbrook "expected" that staff would attend, but nothing turns on that.
The person from whom the respondent took instructions was Jennifer Martel, whose job she was to take over. Ms Martel gave a detailed statement of the events of the evening. She lived on the premises. At about 2am she said that Mr Ludbrook had requested her to move people out, a request which led her to ask people to move back into the studio. She helped the respondent find her bag, which she had mislaid. [25]
Ms Martel made a further statement on 7 April 2006 confirming Mr Ludbrook's statement that the party was by invitation only; that it was a combined birthday party for three people and also a farewell party for Mr Buchanan; that staff were not directed to go to the party by the company and that attendance was purely voluntary.
The Deputy President set out part of Ms Martel's cross-examination. The relevant passage was as follows: [26] "Q. Now isn't it the situation that you did urge Kathryn Hills to go to the party? A. In order to meet the other employees, yeah. I said it would be, you know, a nice idea. Q. Yeah and you thought it important yourself that she should meet the employees because it's important to have a good, happy working team, is that right? A. I guess so. It was more because, you know, you don't see - in that situation you didn't see everyone, you know, everyday kind of thing and it was a nice opportunity for her to meet a few people she might not have met. Q. Yes and you told her there'd be clients and photographers at the party didn't you? A. No. No because I didn't know who was invited so I wouldn't have known if there was photographers. I don't know though, it's a long time ago. … I mean obviously photographers would have been there because they were friends with Alistair but - … Q. In any event you considered the photographers were likely to be at the party? A. Yeah I guess so. Q. Yeah and by photographers you meant photographers who Pioneer hire equipment to? A. Yeah I guess so. Q. Right and you told her that you wanted her to meet those people? A. No I didn't tell her I wanted her to. Q. But you told her you wanted her to go to the party and you told her that those people would be there? A. I didn't necessarily want her to go to the party, I just said to her, there's a party, there'll be people there from work, you know, it might be a nice idea for you to meet them. Q. Yeah but also you told her that there'd be photographers there didn't you? A. I don't remember saying the exact words but maybe I did say that. I mean it was a - you know, I'm sure there was photographers going to be there. Q. Yeah and including photographers who would be the sort of persons who'd hire equipment from Pioneer? A. Well that's probably how they met Alistair who was having the party, yeah. Q. And her job - that is Kathryn's job - was basically to, in effect, do business with photographers who hired photographic equipment wasn't it? A. Yeah, at work, yeah, not at parties."
Ms Hills gave evidence to somewhat different effect and it was a matter for the Commission to determine what was said by whom and in what circumstances. It is necessary to refer to some of the evidence recounted by the Deputy President. Nevertheless, unless aspects of the evidence given above by Mr Ludbrook were expressly rejected, it would not be reasonably open to the fact finder to conclude that attendance at the party was an activity undertaken by the respondent in the course of her employment. No different conclusion could follow from the evidence of Ms Martel.
The critical passage in the respondent's evidence, being a statement of 18 May 2006, relied on by the Deputy President may be set out in full: [27] "Some time in the week before Saturday 13 March 2004 (when the party was held), either Richard Ludbrook or Jennifer Martel said to me at work words to the effect of 'we are going to have a farewell party here for Alistair (Buchanan) on Saturday night. Alistair's leaving to become a freelance photographer. It would be good if you came to the party. Most of the people from here will be there. We are having a party in one of our studios here. There will be a lot of our clients and photographers who we hire equipment to who are going to be at the party. This will be a good chance for you to be able to meet a lot of the clients that we do business with and to get to know them better'. After being told this by either Richard or Jennifer Martel, I spoke to both of them and also other people at Pioneer Studios about the party, and in every conversation I had those persons said to me words to the effect of 'are you coming to our party for Alistair on Saturday night' and I would say 'yes' or words to that effect. In conversations which I had with Jennifer and anyone else at the company, I felt that it was important for me to be at the party to meet the clients face to face and get on good terms with them. I thought this was very important for me to do, so that I could impress my superiors at work and have a good relationship with the people that I would be hiring equipment to. I always thought that the party on the Saturday night was a work function and the first I heard that the party was also for two of Alistair's flatmates was when I saw it in some of the Police statements which were recently sent to me. I did not get a written invite and I did not, so far as I recall, get told about the party by email. I was definitely told verbally about the party on a number of occasions in the week before the Saturday night, and in all these conversations I understood that it was a work function in which we were farewelling Alistair, who was leaving the company in order to become a freelance photographer." [Emphasis added.]
The critical passage in the respondent's evidence was the first paragraph set out above. There was a response to her statement by Mr Ludbrook in a statement dated 15 June 2006. [28] "9 I don't recall discussing Alistair's party with [Ms Hills] and advising her that it was in her best interests to go. That is not something I would have done as it was not a work function and I had no idea who was going to be there in any event. Alistair and his friends were responsible for who was invited and as far as I know the party was by invitation only. … 12 We do have parties and functions for our clients however this was not a work function. I do not recall any clients being there on the night. The mix was a lot of people I did not know, some I knew as Alistair's friends, and my own employees. 13 This was not a party which was organized for our clients. This was a party which our company had no involvement in organizing."
The Deputy President resolved the difference in the evidence as to what was said between Mr Ludbrook and the respondent in the following terms: [29] "74 I have reached the view that, whilst the evidence of Ms Hills fails to establish on the balance of probabilities that Mr Ludbrook had spoken to Ms Hills in the terms first described in her evidence, I consider that the probability is that Mr Ludbrook had enquired of her as to whether she was going to attend the farewell party, and I so find. … 84 I have reached the view that Mr Ludbrook's enquiry of Ms Hills concerning her attendance at the party for Mr Buchanan constituted an inducement of or encouragement to her to in fact attend. Mr Ludbrook conducted a relatively small business which, on his evidence, employed 20 employees. It might be inferred that, at any farewell occasion in which the company participated, Mr Ludbrook would reasonably anticipate that members of staff would attend. … 85 [Pioneer] in its submissions on this appeal has placed great emphasis upon the circumstance that the party was not organised, financed or controlled by [Pioneer], nor, it was argued, did [Pioneer] invite attendees. Subject to one matter, [Pioneer] is correct in so arguing. The aspect of the submission I do not accept is the suggestion that Mr Ludbrook did not invite the guests. Whilst the evidence establishes that the invitors were Mr Buchanan and his two friends, it is Ms Hills' unchallenged evidence that she had not been invited by Mr Buchanan, but attended by reason, in part, of Mr Ludbrook's enquiry as to whether she was going to attend. Such inquiry, I find, whilst it did not constitute a formal invitation, was alone sufficient to induce or encourage Ms Hills' attendance."
No doubt an enquiry as to whether an employee intends to attend a party may be treated as encouragement, or even an inducement, whether or not it is so intended. However, it is not conduct of a kind which would be sufficient to turn a party into part of the employee's employment. Further, the fact that Mr Ludbrook anticipated that members of staff would attend did not mean that the party was thereby rendered part of the employment of each employee. That finding was not reasonably open on the evidence given by Mr Ludbrook, including the lack of involvement of Pioneer Studios accepted by the Deputy President in the last passage set out above. The matter was not taken further by the evidence of Ms Martel of which the Deputy President said: [30] "The evidence which I have accepted is that Ms Martel spoke to Ms Hills about attendance at a 'farewell party here for Alistair on Saturday night'. Having regard to her role as supervisor and the fact that the party was described by her in terms similar to those used by Mr Ludbrook, that is, as a 'farewell', I conclude that Ms Martel was acting within her actual or implied authority granted by Mr Ludbrook in so inducing or encouraging Ms Hills' attendance."
Other evidence given by the respondent, and set out by the Deputy President, [31] included statements to the effect that "I felt that it was important for me to be at the party to meet the clients face to face and get on good terms with them"; "I thought this was very important for me to do, so that I could impress my superiors at work"; "I always thought that the party on the Saturday night was a work function"; "in all these conversations I understood that it was a work function in which we were farewelling Alistair." (The same words have been italicized as in the full passage at [26] above.)
Although the Deputy President said that Ms Hills' understanding of the discussions "is not determinative of the issue as to whether, in attending the party, she was in the course of her employment", [32] the fact that she was found to have been "induced or encouraged" by the inquiry made by Mr Ludbrook and the discussion with Ms Martel was critical. The Deputy President stated: [33] "Where an injury occurs in the course of employment, it will almost invariably be found to have arisen out of that employment. It is my view that such is the case in the present circumstances. Ms Hills' presence at the party came about by reason of the matters discussed above and concerned her participation in a farewell of a fellow worker. Her unchallenged evidence was that she knew nothing concerning any other purpose for the holding of the party other than that farewell. The evidence suggests no reason other than employment related reasons for her presence upon the premises at the time of injury. In such circumstances the employment, in my opinion, caused or to some material extent contributed to the subject injury."
The first and last sentences set out above deal with the causal connection between the injury and the employment on the assumption that the injury occurred in the course of employment. The passage in between appears to reflect a finding that the party formed part of the course of employment and for the reason that the respondent believed it to be such. The fact that she did not know of the original reason (as found by the Deputy President) for Mr Buchanan to organise the party does not mean that her belief became the objective reason for the party. It merely means she was ignorant of the true facts.
Unfortunately, this reliance on the subjective belief of the respondent was the reasoning rejected in the first judgment of this Court. Further, it appears that the Deputy President has taken the elements of inducement and encouragement from the reasoning in Hatzimanolis, without regard to the different circumstances and without regard to the purpose for which that language was adopted, and applied it as a freestanding test of how an activity may fall within the course of employment. The fact that the respondent was encouraged, or even induced, to attend the party was not sufficient to render it part of her employment.

The legal test

The "camp" cases, where the worker is required to find accommodation away from home whilst on the job and such accommodation is provided by the employer, engage the principle in Hatzimanolis, [34] pursuant to which compensation is payable where the worker "sustained injury during an interval occurring within an overall period or episode of work and while engaged, with his employer's encouragement, in an activity which his employer had organized." Another case of that kind was Danvers v Commissioner for Railways (NSW) [35] a case upholding a claim by an employee of the Commissioner who died in a fire in a railway van being used by him as an abode whilst working for the Commissioner. As noted by Barwick CJ: [36] "The course of an employment, to use the language of Dixon J. in Henderson v. Commissioner of Railways (W.A.), [37] includes the doing of 'whatever is incidental to the performance of the work' and will include what he 'is reasonably required, expected or authorized to do in order to carry out his actual duties'. Thus it may include being at a place at which the workman's presence 'is so consequential upon or incidental or ancillary to the employment that in being there he is doing something in virtue, or in pursuance, of his employment'. In applying such a statement to the facts and circumstances of a particular case, its elements, in my opinion, should be applied liberally and practically."
There is an important limitation on the scope of that principle and an important distinction between the camp cases and cases where the worker is engaged for regular hours and goes home after work. In Hatzimanolis, in referring to a number of recent cases, including Danvers, the joint reasons stated: [38] "However, it would be an unacceptable extension of the course of employment to hold that an employee was within the course of employment whenever the employer had authorized, encouraged or permitted the employee to spend the time during an interval between periods of actual work at a particular place or in a particular way. That formulation would cover not only the case of the 'lunchtime' injury … and the case of the railway worker, as in Danvers, but also many cases involving injuries occurring during intervals between daily periods of work which could not fairly be regarded as within the course of employment. Thus, an employee who is encouraged by his or her employer to see a doctor after working hours is not ordinarily within the course of employment if injured while visiting the doctor, although the case would come within such a formulation. The course of employment is ordinarily perceived as commencing when the employee starts work in accordance with his or her ordinary or overtime hours of work and as ending when the employee completes his or her ordinary or overtime hours of work. The distinction between an injury sustained by a railway worker as in Danvers and a non-compensable injury sustained by an ordinary employee after the day's work has ceased lies not so much in the employer's attitude to the way the interval between the periods of actual work was spent but in the characterization of the period or periods of work of those employees. 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."
This language was repeated in PVYW. [39] The language in the passage cited from Dixon J in Henderson, and repeated without disagreement in subsequent cases, is inconsistent with the proposition that the course of employment is to be determined by the employee's view of the conduct of the employer. Rather, it depends on an objective characterisation of the employer's requirements and expectations, though with no precise limitation to the contract of employment. It is not sufficient that this particular employee held a particular view which, on the evidence, was not shared either by the director of the company, by her immediate supervisor, nor by the only other employee who provided a statement. The contrary view adopted by the Deputy President revealed an incorrect approach to the legal standard or criterion to be applied.

Orders

It follows that the decision of the Deputy President allowing the respondent to recover compensation cannot stand. However, there is a separate question as to what consequential orders should follow. The notice of appeal sought orders, in the alternative, that the appeal to the Deputy President be dismissed or that the matter be remitted to the Commission for reconsideration according to law.
In written submissions, the appellant contended that this Court should resolve the matter unless the respondent could demonstrate that on a further remitter the evidence would be "relevantly improved".
That is not a possibility which is readily to be countenanced in a matter which has reached its sixth hearing and where the facts occurred more than a decade ago. Further, the Court is entitled to infer from the fact that neither party sought to adduce further evidence on the second hearing before a presidential member that either has further material available to it which would strengthen its case. Such a consideration militates strongly against a further remitter.
The reasoning set out above demonstrates that, applying the correct standard or criterion, properly understood, it was not reasonably open to the Deputy President, on the evidence available to him, to uphold the appeal. Accordingly, the appeal should have been dismissed: the decision reached by the senior arbitrator (who heard the oral evidence) should have been upheld.
The Court should make the following orders: (1) Allow the appeal and set aside the orders made by the Deputy President on 10 July 2014. (2) In their place: (a) dismiss the appeal from the decision of the senior arbitrator of 13 January 2011; (b) order that the appellant worker pay the costs of the respondent employer of that appeal; (3) Order that the respondent pay the appellant's costs in this Court. (4) Grant the respondent a certificate under the Suitors' Fund Act 1951 (NSW).
SIMPSON JA: In the early hours of 14 March 2004 the respondent, Ms Kathryn Hills, was seriously injured when she fell over the balustrade of a staircase at her place of work, in the closing stages of a party she had attended, which had commenced the previous evening. Ms Hills brought proceedings against her employer, Pioneer Studios Pty Ltd, under the Workers Compensation Act 1987 (NSW) ("the WCA"). A chronology of the litigation that ensued appears below. Ultimately, on 10 July 2014, a Deputy President of the Workers Compensation Commission upheld Ms Hills' claim, and ordered that Pioneer pay Ms Hills compensation under the WCA: Hills v Pioneer Studios Pty Ltd (No 2) [2014] NSWWCCPD 42. This appeal, under s 353 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) ("the WIM Act"), is brought against that decision. Before coming to the litigation history, the circumstances of Ms Hills' injury, and the grounds of appeal, it is convenient to set out the relevant legislation.

Relevant legislation

Workers Compensation Act: "4 Definition of 'injury' In this Act: injury: (a) means personal injury arising out of or in the course of employment, (b) … (c) …" (It may here be interpolated that the relevant paragraph of the s 4 definition of "injury" has two parts: an injury "arising out of" (that is, caused by) the employment; and an injury sustained "in the course of" (that is, temporally connected with) the employment.) "9 Liability of employers for injuries received by workers - general (1) A worker who has received an injury (and, in the case of the death of the worker, his or her dependants) shall receive compensation from the worker's employer in accordance with this Act. (2) Compensation is payable whether the injury was received by the worker at or away from the worker's place of employment. 9A No compensation payable unless employment substantial contributing factor to injury (1) No compensation is payable under this Act in respect of an injury (other than a disease injury) unless the employment concerned was a substantial contributing factor to the injury. Note. In the case of a disease injury, the worker's employment must be the main contributing factor. See section 4. (2) The following are examples of matters to be taken into account for the purposes of determining whether a worker's employment was a substantial contributing factor to an injury (but this subsection does not limit the kinds of matters that can be taken into account for the purposes of such a determination): (a) the time and place of the injury, (b) the nature of the work performed and the particular tasks of that work, (c) the duration of the employment, (d) the probability that the injury or a similar injury would have happened anyway, at about the same time or at the same stage of the worker's life, if he or she had not been at work or had not worked in that employment, (e) the worker's state of health before the injury and the existence of any hereditary risks, (f) the worker's lifestyle and his or her activities outside the workplace. (3) A worker's employment is not to be regarded as a substantial contributing factor to a worker's injury merely because of either or both of the following: (a) the injury arose out of or in the course of, or arose both out of and in the course of, the worker's employment, (b) the worker's incapacity for work, loss as referred to in Division 4 of Part 3, need for medical or related treatment, hospital treatment, ambulance service or workplace rehabilitation service as referred to in Division 3 of Part 3, or the worker's death, resulted from the injury. (4) …"
Workplace Injury Management and Workers Compensation Act 1998: "288 Referral of disputes to Commission (1) Any party to a dispute about a claim may refer the dispute to the Registrar for determination by the Commission. However, if the dispute is about lump sum compensation, only the claimant can refer the dispute. Note. A medical dispute concerning the claim can also be referred for assessment under Part 7 (Medical assessment). (2) … 352 Appeal against decision of Commission constituted by Arbitrator (1) A party to a dispute in connection with a claim for compensation may appeal to the Commission constituted by a Presidential member against a decision in respect of the dispute by the Commission constituted by an Arbitrator. (2) … (3) … (3A) … (4) … (5) An appeal under this section is limited to a determination of whether the decision appealed against was or was not affected by any error of fact, law or discretion, and to the correction of any such error. The appeal is not a review or new hearing. (5A) … (6) Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against may not be given on an appeal to the Commission except with the leave of the Commission. The Commission is not to grant leave unless satisfied that the evidence concerned was not available to the party, and could not reasonably have been obtained by the party, before the proceedings concerned or that failure to grant leave would cause substantial injustice in the case. (7) On appeal, the decision may be confirmed or may be revoked and a new decision made in its place. Alternatively, the matter may be remitted back to the Arbitrator concerned, or to another Arbitrator, for determination in accordance with any decision or directions of the Commission. (7A) … (8) … 353 Appeal against decision of Commission constituted by Presidential member (1) If a party to any proceedings before the Commission constituted by a Presidential member is aggrieved by a decision of the Presidential member in point of law, the party may appeal to the Court of Appeal. (2) The Court of Appeal may, on the hearing of any appeal under this section, remit the matter to the Commission constituted by a Presidential member for determination by the Commission in accordance with any decision of the Court and may make such other order in relation to the appeal as the Court thinks fit. (3) … (4) … (5) …"

Litigation chronology

On 23 August 2010, pursuant to s 288(1) of the WIM Act, Ms Hills filed an application to resolve a dispute. She sought an award of compensation that included weekly payments of wages, and medical expenses. The application was referred to an arbitrator, Ms Deborah Moore. Ms Hills alleged that the injury arose out of (that is, was caused by) her employment. She did not then allege that she suffered the injury in the course of her employment.
On 13 January 2011 Ms Moore made an award in favour of Pioneer. She was not satisfied that Ms Hills had established that her injury "could be regarded as having arisen out of [her] employment".
On 10 February 2011, pursuant to s 352 of the WIM Act, Ms Hills filed an appeal against the award of the arbitrator; that appeal was heard by Deputy President Roche on 19 May 2011. On 1 June 2011 Deputy President Roche gave judgment: Hills v Pioneer Studios Pty Ltd [2011] NSWWCCPD 30. He revoked the award made by Ms Moore, and ordered that Pioneer pay compensation to Ms Hills. He found (at [145]) that Ms Hills' injury arose out of her employment (WCA, s 4), and that her employment was a substantial contributing factor to the injury (s 9A).
On 27 June 2011 and 30 August 2011 respectively, Pioneer filed notices of intention to appeal and of appeal to this Court against the decision of Deputy President Roche.
The appeal was heard on 26 September 2012. On the same day, the Court delivered judgment: Pioneer Studios Pty Ltd v Hills [2012] NSWCA 324 ("Pioneer No 1") (Allsop P, Basten and Hoeben JJA). The decision of Deputy President Roche was set aside and the matter remitted to the Workers Compensation Commission for consideration according to law.
On 24 October 2012 Ms Hills applied to the High Court of Australia for special leave to appeal against the decision. On 2 April 2014 the High Court dismissed that application: Hills v Pioneer Studios Pty Ltd [2014] HCASL 75.
On 20 June 2014, pursuant to the orders of this Court remitting the matter to the Workers Compensation Commission, the appeal from the decision of Arbitrator Moore came before Deputy President O'Grady for hearing. Ms Hills was granted leave to expand her claim so as to allege, in addition to her claim that the injury arose out of her employment, that she suffered the injury in the course of her employment. On 10 July 2014 Deputy President O'Grady gave judgment. He also revoked the award of Ms Moore and ordered Pioneer to pay compensation to Ms Hills. He found (at [89]) that Ms Hills suffered the injury in the course of her employment, (at [90]) that the injury arose out of Ms Hills' employment, and (at [92]) that the employment was a substantial contributing cause to the injury.
On 24 July 2014 and 8 October 2014 respectively, Pioneer filed notices of intention to appeal and of appeal to this Court against the decision of Deputy President O'Grady.

This is the determination of that appeal.

Factual background

Pioneer conducts a business of providing studio space and renting photographic equipment. Its primary operation is in the fashion industry. Its sole director and manager is Mr Richard Ludbrook. Pioneer occupies premises in a building at Broadway, Ultimo. It employs about 20 people. In early March 2004 Ms Hills began employment with Pioneer. Her position was "Manager of the Equipment Rental Department".
Ms Hills was appointed to replace the departing manager, Ms Jennifer Martel, who was proposing to travel overseas. Mr Ludbrook assigned to Ms Martel the task of training Ms Hills for the position.
Ms Hills' duties included liaising with clients and renting equipment and studio space to them. Her hours of work were 10.00am to 7.00pm Monday to Friday. She was not expected to work overtime.
One of Pioneer's employees was a Mr Alistair Buchanan, who was also shortly to leave the company. Mr Buchanan and two friends all had birthdays in March. They planned a joint celebration of their birthdays, and approached Mr Ludbrook with a view to having the celebrations in Pioneer's premises. Mr Ludbrook agreed, and proposed that the party also serve a function as a farewell for Mr Buchanan. He made a condition of his consent to the use of the premises that Mr Buchanan and his friends employ a security guard on the night.
Mr Buchanan organised the party. He (and his friends) issued the invitations; those invited included employees of Pioneer, customers/clients of Pioneer, and friends of the co-hosts.
Pioneer and Mr Ludbrook had no other involvement in the preparation for the party. In particular, Mr Ludbrook issued no invitations; provided no refreshments; and was not aware of the guest list.
Ms Hills arrived at the party at about 10.00pm on the Saturday evening. At about 2.00am the following morning, Mr Ludbrook directed that the party come to an end and asked Ms Martel to tell the guests to leave. Ms Hills' accident occurred at about 2.30am that morning.
At a late stage, Ms Hills thought that she had lost her camera and asked Mr Buchanan to help her find it. In order to do so, Mr Buchanan and Ms Hills were walking to an equipment room on another level of the premises. Ms Hills was walking down the stairs when she fell over the balustrade and suffered the serious injuries mentioned above.
The above account is largely uncontroversial. However, there was other evidence which was not uncontroversial. The evidence relevant to the appeal was contained in a number of statements. Two were statements of Ms Hills, two were of Mr Ludbrook, and three of Ms Martel. There were also statements of Mr Buchanan, of his two co-hosts of the party, and of other employees. In the proceedings before Arbitrator Moore, oral evidence was given only by Ms Hills and Ms Martel. No additional evidence was taken in the proceedings before either Deputy President Roche or Deputy President O'Grady.
Ms Hills' claim (as put to Deputy President O'Grady) was, in essence, that she attended the party as a work function, and that, accordingly, her injury either arose out of her employment, or in the course of her employment. In order to sustain the former, she adduced (before Arbitrator Moore) some evidence of the circumstances in which she attended. She said that, on the commencement of her employment, Mr Ludbrook had told her that Ms Martel would tell her what was required of her in the job. She said that, some time in the week before the party, either Mr Ludbrook or Ms Martel told her that the party was planned, and said: "It would be good if you came to the party. Most of the people from here will be there. We are having the party in one of our studios here. There will be a lot of our clients and photographers who we hire equipment to who are going to be at the party. This will be a good chance for you to be able to meet a lot of the clients that we do business with and get to know them better."
She said that, subsequently, other employees of Pioneer, and Mr Ludbrook and Ms Martel, asked her if she was planning to attend the party. She said that she came to the view that it was important for her to attend so as to meet clients face to face and establish good relationships with them. She always thought of the party as a work function.
Mr Ludbrook's evidence was that the company had no involvement in the organisation of the party or control over how it was to be conducted. He attended because he was invited to do so. No employees, including Ms Hills, were directed to attend the function. Attendance was purely voluntary and by invitation. He had no recollection of telling Ms Hills that it would be in her best interests to attend. He said that he would not have done that as the party was not a work function and, in any event, he had no idea who was going to be present. Mr Buchanan and his friends were responsible for the invitations. All invitations and arrangements were made by Mr Buchanan and his friends. He said that Pioneer did on occasions have work functions and parties for clients but this was not such a function. He did not recall any clients being present. The attendees included a number of people he did not know, others he knew as Mr Buchanan's friends, and Pioneer employees.
Ms Martel gave a similar account. She did not recall any conversation with Ms Hills prior to the party in which she indicated to her that it would be in her best interests to attend. She did not recall telling Ms Hills that a lot of clients would be there. She said it was not her position to invite people, and only attended herself because she was invited. In cross-examination, Ms Martel accepted that she might have told Ms Hills that photographers would be present, including photographers who were clients of Pioneer.

The appeal to Deputy President O'Grady

An appeal under s 352 of the WIM Act: "… is limited to a determination of whether the decision appealed against was or was not affected by any error of fact, law or discretion, and to the correction of any such error." (sub-s (5)) The sub-section goes on to state that the appeal is not a review or a new hearing. However, fresh or additional evidence may be given if the Commission grants leave. Leave is not to be granted unless the Commission is satisfied that the evidence concerned was not available to the party and could not reasonably have been obtained by the party before the proceedings under appeal, or that failure to grant leave would cause substantial injustice in the case (sub-s (6)).
Deputy President O'Grady gave leave to Ms Hills to amend her claim, to include, in addition to the claim that the injury arose out of her employment, a claim that it arose in the course of her employment. No additional evidence was called or given.

"in the course of employment"

The parties approached the appeal, both in the Workers Compensation Commission and in this Court, on the basis that the relevant law concerning whether injury is suffered in the course of employment is stated in two decisions of the High Court (Hatzimanolis v ANI Corporation Ltd [1992] HCA 21; 173 CLR 473 and Comcare v PVYW [2013] HCA 41; 250 CLR 246).
One feature that distinguishes those cases from Ms Hills' case is that in each of those cases, the employee was deployed to work away from home, involving overnight stays, in accommodation provided by the employer. That is not this case. It is not a distinguishing feature that renders the decisions irrelevant; far from it. However, the consequence is that the principles stated, while relevant, may not always be directly in point.
In Hatzimanolis, the employee was required to work in a remote area of Western Australia and remain there for a period of three months. Although the work hours were onerous (10 hours per day, six days and sometimes seven days per week) employees were encouraged to take advantage, in their limited spare time, of sightseeing opportunities. Mr Hatzimanolis lived with other employees in rent free accommodation in a camp provided by the employer. On a Sunday when the employees were not required to work, the employer made available two vehicles to take them on a sightseeing tour. Mr Hatzimanolis was seriously injured when the vehicle in which he was travelling overturned.
The question at issue in the High Court was whether, in those circumstances, Mr Hatzimanolis suffered his injury in the course of his employment. Plainly, he was not, at the time, actually performing the duties for which he was employed. The High Court held, nevertheless, that Mr Hatzimanolis was in the course of his employment when he was injured.
The majority judgment was that of Mason CJ, Deane, Dawson and McHugh JJ. Their Honours surveyed previous decisions involving injuries to employees that occurred during "an interval or interlude" between periods of actual work and noted that, in almost all previous cases, the employer had "authorised, encouraged or permitted the employee to spend his time during that interval at a particular place or in a particular way". They then identified two separate categories of cases. One category involves injuries sustained in an interval or interlude "occurring within an overall period or episode of work". Mr Hatzimanolis' injury fell into that category - the overall period of work was the three months that he was required to spend in Western Australia in the remote location. However, their Honours also acknowledged that an injury occurring during a tea break or lunch break in more conventional work circumstances might also qualify as an injury occurring in an interval or interlude during an overall period of work.
The second category recognised in the joint judgment involved injuries sustained "in the interval between two discrete periods of work". Their Honours appear to have had in mind injuries suffered after work hours, and away from the workplace. Nevertheless, if the injury is suffered in circumstances in which the employee has induced or encouraged the employee to spend time at a particular place, or to engage in a particular activity, it may be held to have been suffered in the course of the employment.
In Hatzimanolis, the High Court said (at 479): "… 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." and (at 484): "Moreover, Oliver [Commonwealth v Oliver [1962] HCA 38; 107 CLR 353] and the cases which follow it show that an interval or interlude in an overall period or episode of work will ordinarily be seen as being part of the course of employment if the employer, expressly or impliedly, has induced or encouraged the employee to spend the interval or interlude at a particular place or in a particular way. Indeed, the modern cases show that, absent gross misconduct on the part of the employee, an injury occurring during such an interval or interlude will invariably result in a finding that the injury occurred in the course of employment. 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 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. In determining whether the injury occurred in the course of employment, regard must always be had to the general nature, terms and circumstances of the employment 'and not merely to the circumstances of the particular occasion out of which the injury to the employee has arisen'." (internal citation omitted)
In PVYW, the employee, who was employed by a Commonwealth agency, was required to visit a regional office of the agency for work purposes; she stayed overnight in a motel booked for her by her employer. She suffered injury during the night, in the course of a sexual encounter (which was unrelated to her employment).
The majority (French CJ, Hayne, Crennan and Kiefel JJ) of the High Court held that the injury was not suffered in the course of employment. They held that, in considering whether an employer is liable for an injury suffered by an employee during an interval or interlude between periods of employment, a court must have regard, not only to any inducement or encouragement offered to the employee to be at the place, or to engage in the activity, in which the injury was sustained, but also to the "general nature, terms and circumstances of the employment". I extract some relevant paragraphs from their judgment: "28 In the ordinary situation, where work is performed at a permanent place of work, an injury occurring after the working day would not normally be regarded as occurring in the course of employment. An injury occurring between two discrete periods of actual work is less likely to be seen as in the course of employment. On the other hand, an injury occurring in a lunch break might be understood as occurring in an interval in an overall period of work. … 32 An employer's inducement or encouragement may create an interval according to Hatzimanolis, but it is not itself a sufficient condition for liability. Further factual conditions necessary for the application of that principle are stated in the passage [in Hatzimanolis, from which their Honours had quoted], following the word 'Furthermore'. There, it is said that an injury sustained in such an interval will be in the course of employment if it occurred at that place or while the employee was engaged in that activity. It will be so considered unless the employee has been guilty of gross misconduct. 33 To these conditions it is added, in similar words to those used in Danvers [Danvers v Commissioner for Railways [1969] HCA 64; 122 CLR 529 at 537], that it will always be necessary to have regard to the 'general nature, terms and circumstances of the employment' in determining the overall question, whether the injury occurred in the course of employment. Attention is not to be focused just upon the occasion giving rise to the injury. 34 It is important to identify how Hatzimanolis sought to define the circumstances for, and the extent of, an employer's liability for compensation. Hatzimanolis sought to provide a legal justification for an injury, which occurred between periods of actual work, being regarded as occurring in the course of the employee's employment. It did so by characterising the interval by reference to the employer's inducement or encouragement. The employer's liability in such circumstances depends upon what the employer induced or encouraged the employee to do. Hatzimanolis did not seek to extend the employer's liability beyond that. 35 Because the employer's inducement or encouragement of an employee, to be present at a particular place or to engage in a particular activity, is effectively the source of the employer's liability, the circumstances of the injury must correspond with what the employer induced or encouraged the employee to do. It is to be inferred from the factual conditions stated in Hatzimanolis that for an injury to be in the course of employment, the employee must be doing the very thing that the employer encouraged the employee to do, when the injury occurs. 36 Moreover, it is an unstated but obvious purpose of Hatzimanolis to create a connection between the injury, the circumstances in which it occurred and the employment itself. It achieves that connection by the fact of the employer's inducement or encouragement. Thus, where the circumstances of the injury involve the employee engaging in an activity, the question will be whether the employer induced or encouraged the employee to do so. … 38 … For the principle in Hatzimanolis to apply, the employee must have been either engaged in an activity or present at a place when the injury occurred. The essential enquiry is then: how was the injury brought about? In some cases, the injury will have occurred at and by reference to the place. More commonly, it will have occurred while the employee was engaged in an activity. It is only if and when one of those circumstances is present that the question arising from the Hatzimanolis principle becomes relevant. When an activity was engaged in at the time of injury, the question is: did the employer induce or encourage the employee to engage in that activity? When injury occurs at and by reference to a place, the question is: did the employer induce or encourage the employee to be there? If the answer to the relevant question is affirmative, then the injury will have occurred in the course of employment. … Conclusion 61 It may be accepted that the purpose and the effect of the principle stated in Hatzimanolis was to create an interval between periods of actual work, to better explain the connection that an injury suffered by an employee in certain circumstances has to the employment. It did so by reference to the fact that the employer induced or encouraged the employee to do something or be somewhere in particular and the fact that the employee did so and was injured. The two circumstances identified by Hatzimanolis were where an injury was suffered by an employee whilst engaged in an activity in which the employer had induced or encouraged the employee to engage; or where an injury was suffered at and by reference to a place where the employer had induced or encouraged the employee to be. An injury sustained in these circumstances may be regarded as sustained in the course of the employee's employment. Properly understood, whilst the inducement or encouragement by the employer may give rise to liability to compensation, it also operates as a limit on liability for injury sustained in an overall period of work." (italics added)
Although PVYW was, like Hatzimanolis, a case involving "an overall period of work" in the sense that the employee was continuously absent from her usual place of work and residence, the passages I have extracted can be applied to injuries suffered during an interval or interlude between discrete periods of work. The question is what the employer induced or encouraged the employee to do. That question is not looked at in isolation; it is also necessary to have regard to "the general nature, terms and circumstances of the employment" (see the last sentence of [33] in PVYW).

Pioneer Studios Pty Ltd v Hills [2012] NSWCA 324

As mentioned above, Pioneer successfully appealed against the decision of Deputy President Roche. (In considering the outcome of that appeal, it is necessary to bear in mind that Ms Hills' case has changed somewhat: she initially presented a case that her injury was caused by her employment. That is not her principal present position, which is that the injury occurred in the course of her employment.)
Both Allsop P and Basten JA found error in the approach taken in the Workers Compensation Commission by Deputy President Roche in taking into account Ms Hills' perception or understanding of what was required of her by the terms of her employment; that, Basten JA said, was to be determined on an objective assessment of the conduct of persons in authority with the employer.
This, it seems to me, from a reading of the judgments, was the principal error identified in those judgments, and continues to be applicable.
However, Basten JA, in the context of considering the causal connection between the employment and the injury, also referred to Roncevich v Repatriation Commission [2005] HCA 40; 222 CLR 115, a case in which the High Court found that the necessary causal connection between an injury suffered by an inebriated soldier and his defence service (employment) was capable of being satisfied by "a requirement … and an expectation" that the soldier participate in functions that involved the (sometimes excessive) consumption of alcohol.
He considered that "[n]o lesser connection" should be accepted for the purposes of deciding whether the employment was a substantial contributing factor to the injury under s 9A of the WCA.

Section 9A WCA: "substantial contributing factor"

For the purposes of deciding whether, within the meaning of s 9A of the WCA, the employment was a "substantial contributing factor", "substantial" means "in a manner that is real or of substance"; the matters specified in s 9A(2) are, where relevant, to be taken into account; and s 9A(2)(b) directs attention to the nature of the work performed, the particular tasks of that work, and not to what the employee was doing at the time of the injury: Badawi v Nexon Asia Pacific Pty Ltd t/as Commander Australia Pty Ltd [2009] NSWCA 324; 75 NSWLR 503.
The cases discussed above adequately state the principles of law necessary for the disposition of this appeal. Three issues arose for determination by Deputy President O'Grady: (i) Did Ms Hills' injury arise in the course of her employment? (ii) Did Ms Hills' injury arise out of her employment? (if either of (i) or (ii) were found in favour of Ms Hills): (iii) Was the employment a substantial contributing factor to the injury?

The judgment of Deputy President O'Grady

Deputy President O'Grady began by setting out the background of the proceedings, and identifying the issues in dispute. He referred at considerable length to the evidence, and extracted significant portions of the various statements (especially those of Ms Hills, Ms Martel and Mr Ludbrook), as well as the oral evidence. He summarised the arguments put to Arbitrator Moore, and her decision. Under the heading "Disposition of the Appeal" he quoted at length from PVYW. At [70], he expressly recognised that the High Court had distinguished between an injury suffered during an interval in "an overall period of work", and an injury suffered in an interval between "discrete periods of work".
He directed himself in accordance with the observations made in Hatzimanolis at 482 and 483: "However, it would be an unacceptable extension of the course of employment to hold that an employee was within the course of employment whenever the employer had authorized, encouraged or permitted the employee to spend the time during an interval between periods of actual work at a particular place or in a particular way. That formulation would cover not only the case of the 'lunchtime' injury, as in Oliver, and the case of the railway worker, as in Danvers, but also many cases involving injuries occurring during intervals between daily periods of work which could not fairly be regarded as within the course of employment. Thus, an employee who is encouraged by his or her employer to see a doctor after working hours is not ordinarily within the course of employment if injured while visiting a doctor, although the case would come within such a formulation."
He proceeded to make relevant findings of fact. He found that Ms Hills had failed to establish on the balance of probabilities that Mr Ludbrook had spoken to her in the terms initially described by her, but accepted that he had enquired of her as to whether she was going to attend the party ([74]). He found that Mr Ludbrook had made the suggestion that the proposed party be treated, as well as a birthday party, as a farewell party, and that Mr Ludbrook intended that staff members would attend. He accepted that Mr Ludbrook had enquired of Ms Hills as to whether she was going to attend ([76]). He accepted that Ms Martel had urged Ms Hills to attend, and that she had told Ms Hills that it would provide an occasion for her to meet fellow employees ([77]).
At [81] he said: "Ms Hills' evidence is that the conversations she had with her superiors had led her to believe that it was 'important for [her] to be at the party to meet the clients face to face and get on good terms with them'. Ms Hills' understanding of the discussions, which on this review I accept, is not determinative of the issue as to whether, in attending the party, she was in the course of her employment." He then quoted directly from the judgment of Basten JA in Pioneer No 1 that the course of employment is determined by the employer.
He held that Mr Ludbrook's enquiry of Ms Hills concerning her attendance at the party constituted an inducement or encouragement to her to attend. He explained this by saying that Mr Ludbrook conducted a relatively small business and that it might be inferred that, at any farewell occasion in which the company participated, Mr Ludbrook would reasonably anticipate that members of staff would attend, and that, in fact, many employees did attend ([84]-[86]).
He accepted that Ms Martel was acting within her actual or implied authority in inducing or encouraging Ms Hills' attendance ([87]). He then summarised his conclusions in the following way: "88 The relevant circumstances of Ms Hills' injury were that: (a) it occurred during an interval between periods of employment; (b) the respondent, through Mr Ludbrook and Ms Martel, had encouraged or induced Ms Hills to be present during that interval at a particular place, namely the business premises [of Pioneer]; (c) a purpose of Ms Hills' presence was employment related, being a farewell party for a fellow employee; (d) the 'factual association or connection' with Ms Hills' employment, which matter is considered in PVYW … concerned the respondent's inducement or encouragement to be at that place, and (e) the injury was received at the place (the business premises) and by reference to that place (Ms Hills fell on the stairs)."
He therefore concluded that Ms Hills' injury: "… was suffered at and by reference to a place where [the respondent] had induced or encouraged [Ms Hills] to be ..." and, therefore, was received in the course of employment ([89]).
He found, also, that the injury arose out of the employment, as to which he said: "90 Where an injury occurs in the course of employment, it will almost invariably be found to have arisen out of that employment. It is my view that such is the case in the present circumstances … The evidence suggests no reason other than employment related reasons for her presence upon the premises at the time of the injury. In such circumstances the employment, in my opinion, caused or to some material extent contributed to the subject injury … I find that the subject injury, being causally related to her employment, arose out of that employment within the meaning of s 4 of the 1987 Act."
Having found that the injury was causally related to the employment, he turned his attention to s 9A of the WCA, and reminded himself that, in the context of s 9A, employment is not the fact of employment, but what the worker does in the employment: see Mercer v Australia & New Zealand Banking Group Ltd [2009] NSWCA 138; 48 NSWLR 740. He found that the "causal linkage" was "real and of substance". In reaching this conclusion he expressly drew on and adopted the reasoning on the same issue of Deputy President Roche.
Of the examples of relevant matters set out in s 9A(2), Deputy President Roche (and, by adoption, Deputy President O'Grady) considered it relevant that the injury had been sustained at Pioneer's premises; that the nature of Ms Hills' work was such as to make it important for her to know and mix with Pioneer's client photographers; and that the relative recency of Ms Hills' employment created an added incentive for her to "join in with the team" and "make a good impression". He found, accordingly, that Ms Hills' employment was a substantial contributing factor of the injury.

The appeal to this Court

An appeal lies to this Court from a decision of the Deputy President of the Workers Compensation Commission "in point of law".
The grounds of appeal as pleaded were extensive, but may be condensed to concern the following issues: as to the conclusion that the injury arose in the course of Ms Hills' employment:

whether the Deputy President erred in law by misdirecting himself as to, or failing to take into account, the "terms, conditions and incidents" of Ms Hills' employment;
whether there was evidence to support the conclusion that Ms Martel had authority (ostensible or otherwise) "to fix and extend" Ms Hills' working hours to include the party;
whether there was evidence that Pioneer (through Mr Ludbrook or anybody else) had communicated to Ms Hills that attendance at the party was an incident of her employment;
whether the Deputy President had erroneously taken into account Ms Hills' perception of what was involved in her employment; and as to the conclusion that the injury arose out of Ms Hills' employment:
whether the conclusion "that a finding that an injury occurs in the course of employment will almost invariably, and apparently of itself, support a finding that the injury arose out of the employment" was erroneous in law; as to the finding under s 9A of the WCA:
whether the Deputy President correctly directed himself as to the construction and application of s 9A; and
whether there was evidence capable of satisfying the "elements" of s 9A.

In oral argument, essentially four points were made. These were: (i) that, in considering whether the injury was sustained in the course of employment, Deputy President O'Grady focussed on encouragement or inducement having been given to Ms Hills to attend the party, at the expense of any examination of the "general nature, circumstances and incidents" of the employment; (ii) that the finding that the injury arose out of the employment erroneously depended upon the finding that it had been suffered in the course of the employment; (iii) that the finding, pursuant to s 9A of the WCA, that the employment "was a substantial contributing factor to the injury" was erroneous; (iv) that the Deputy President erroneously took into account Ms Hills' perception of what her employment required of her.

(i) did Deputy President O'Grady err in point of law in failing to address the issue of "encouragement or inducement" in the context of "the general nature, terms and conditions" of Ms Hills' employment?

This complaint relies upon [33] of PVYW, in which it was emphasised that inducement or encouragement alone may be insufficient to establish liability, and that the general nature, terms and circumstances of the employment also have a role to play.
On initial assessment, the complaint appears to have some force. There is little, if anything, in that part of the Deputy President's judgment that deals with whether the injury was suffered in the course of employment that indicates that he has directed his attention to this consideration.
Resort to the proceedings before Deputy President O'Grady shows that the initial impression is misleading. As pointed out in the written submissions on behalf of Pioneer, there was little in the evidence that identified the nature and terms of Ms Hills' employment. That may have been because, at the time the evidence was being prepared and presented to Arbitrator Moore, Ms Hills concentrated on asserting that her injury was caused by her employment, to which inducement or encouragement may have less, or little (if any), relevance.
Such evidence as there was was contained in the statements of Ms Hills, Ms Martel and Mr Ludbrook. Ms Martel's evidence was simply that Ms Hills had been employed to replace her in her position. She said that Pioneer had a number of studios which they hired out to photographers, as well as lighting and cameras. She said that she was in charge of the equipment room where lighting and cameras were hired. She effectively repeated this in her second statement. Ms Hills' evidence was to the same effect. Mr Ludbrook said that Ms Hills duties "were to liaise with clients and renting equipment to them".
The absence of evidence on this subject was attributable to both parties. Evidence of the terms and conditions of Ms Hills' employment became relevant when leave was granted to her to assert injury occurring in the course of her employment. Neither party appears to have adverted to what is now asserted to be the need for evidence of this kind to be adduced.
Although written submissions were provided by both parties to Deputy President O'Grady, there is nothing in the submissions either of Ms Hills or of Pioneer that drew attention to the need to examine the question of encouragement or inducement in the light of the general nature of Ms Hills' employment. Examination of the transcript of the appeal before Deputy President O'Grady reveals that no such issue was raised in that proceeding. The Deputy President was not invited to consider whether Ms Hills had been encouraged or induced to attend the party in the light of the general terms of her employment.
Definition of the issues in adversarial litigation is the role of the parties: Dhanhoa v The Queen [2003] HCA 40; 217 CLR 1.
In this case, no issue concerning the terms and conditions of Ms Hills' employment was raised in the proceeding before the Deputy President. It is not in error in point of law for a decision maker to fail to address an issue that is not presented for determination.
Accordingly, I would reject those grounds of appeal that assert an omission to address the general nature, terms and conditions of Ms Hills' employment.

(ii) did Deputy President O'Grady erroneously base his finding that Ms Hills' injury arose out of her employment on his earlier finding that it arose in the course of her employment?

The complaint here made was that the finding that the injury arose out of Ms Hills' employment depended entirely upon the anterior finding that it arose in the course of her employment. The complaint arose out of the opening sentence of [90] of the judgment, in which Deputy President O'Grady said: "90 Where an injury occurs in the course of employment, it will almost invariably be found to have arisen out of that employment. It is my view that such is the case in the present circumstances".
The first sentence is no more than a factual observation. Whether it is correct or not does not matter. It did not form the basis for the finding concerning the injury having arisen out of employment. In the remainder of the paragraph, Deputy President O'Grady gave detailed reasons for that conclusion. The conclusion was one of fact, not subject to appeal to this Court.
I would reject this ground of appeal.

(iii) the authority of Ms Martel to direct Ms Hills

The ground of appeal, which is one of a number of sub-paragraphs in Ground 1, is as follows: "There was no evidence to support the conclusion that Ms Martel had authority, ostensible or otherwise, to fix and extend [Ms Hills'] working hours to include the party at which [Ms Hills] injured."
The first submission put on behalf of Pioneer concerning these grounds was that, if "the evidence and application of legal principle did not allow a finding of relevant inducement linked to actual incidents of employment, the finding of any sort of authority is irrelevant". This appears to make these grounds contingent upon an anterior error in the finding that the injury occurred in the course of employment, a contention that I have rejected. The submission went on that, even if that were not correct, the evidence of Ms Martel made it clear that she did not regard herself as having any authority to induce Ms Hills' attendance at the party, and that the finding must have been based "squarely" upon Ms Hills' subjective evidence of her view of Ms Martel's standing.
This latter proposition appears to draw upon the conclusion in Pioneer No 1, that the scope of employment is not to be determined by the employee's subjective perception. The issue is, of course, different; if Mr Ludbrook and/or Ms Martel conducted themselves in such a way as to create the impression in Ms Hills that Ms Martel had authority to direct her, then Ms Hills' subjective appreciation is relevant.
As with the previous issue, the evidence is limited, but, to the extent that there is evidence, it supports the conclusion of the Deputy President. There was no challenge to Ms Hills' evidence that Ms Martel was assigned, by Mr Ludbrook, to induct her into the workplace, and teach her what was required of her.
This was, in my opinion, a finding of fact that was open on the evidence. No error in point of law is disclosed. I would reject this ground of appeal.

(iv) Ms Hills' personal view of her scope of her employment

Pioneer No 1 is authority for the proposition that it is the employer who defines the terms of employment, and that that question is not determined by the employee's subjective views. It would, therefore, be erroneous in point of law for the Deputy President to determine Ms Hills' terms and conditions of employment by reference to her subjective perception. In my opinion, he did not do so.
During the course of argument, he said: "The difficulty I see and it's my difficulty I hasten to say, is that we have the evidence of the worker's impression that she was encouraged to attend. We have the Court of Appeal saying that may be of some evidentiary value in terms of assessing the role of the employer. It certainly is the employer itself that determines the nature and scope of the employment and I'm paraphrasing …" He went on to refer to the evidence, such as it was, relevant to this issue.
In the judgment, he referred to Ms Hills' evidence that the conversations she had had "led her to believe" that it was important for her to attend; he went on immediately to quote from the decision of Basten JA, in which the relevance of her subjective belief was held to be immaterial. It is quite clear that he appreciated that Ms Hills' subjective belief, or impression, of what was expected of her, played no role in determining whether Ms Hills' injury was suffered in the course of her employment.
It is true, as Basten JA has pointed out, that the Deputy President extracted passages from Ms Hills' statements that contain assertions by her as to the reason she attended the party; these include statements of her belief, feeling or perception that attendance was required or expected of her. But these extracts occur in the part of the judgment in which the Deputy President was recording the factual and evidentiary background. They play no role in that part of the judgment that is devoted to the process of reasoning by which the Deputy President reached his final conclusion.
In my opinion, the grounds that seek to rely on the claim that error in point of law is disclosed by reliance on Ms Hills' subjective perception of her employment fail.

(v) was there error in point of law in concluding that the employment was a substantial contributing factor to the injury?

The complaint made in respect of the assessment under s 9A of the WCA that Ms Hills' employment was a substantial contributing factor to her injury depended upon what was said by Basten JA in Pioneer No 1. Having referred to Roncevich, in which it was held that an injury suffered by a solider as a result of intoxication in circumstances in which there was a requirement and expectation that he would attend functions and consume alcohol was "capable of being seen to have arisen out of, or of having been attributable to" the soldier's defence service (at [24]), Basten JA said that "[n]o lesser connection" should be accepted for the purpose of assessing a substantial contributing factor under s 9A.
I do not read Roncevich as defining the circumstance in which a causal connection may be established, or as laying down a test, or a minimum standard for, a finding of a causal connection.
In Badawi, a five judge Bench of this Court accepted as correct and uncontroversial that: "48 … (5) Although the strength of the linkage between the employment and injury is the question in issue, the determination is an evaluative one, leaving a broad area for the personal judgment of the trial judge … (6) Being an evaluative matter involving questions of impression and degree, a finding as to relative contributing factors is a finding of fact …" Similar observations were made at [85] and [114].
As mentioned above, Deputy President O'Grady substantially adopted the earlier reasoning of Deputy President Roche in this respect, reasoning with which he expressly agreed.
Deputy President Roche referred to the various considerations set out in sub-s (2) of the s 9A and made relevant findings of fact.
In my opinion the matters raised under these grounds do not establish error in point of law. The assessment that Ms Hills' employment was a substantive contributing factor to her injury was a finding of fact, unreviewable in this Court.
I would reject these grounds.
It follows that I would dismiss the appeal.

Endnotes

Pioneer Studios Pty Limited v Hills [2012] NSWCA 324 (Allsop P, Basten and Hoeben JJA).
The application was dismissed with costs on 2 April 2014: [2014] HCASL 75.
Hills v Pioneer Studios Pty Limited (No 2) [2014] NSWWCCPD 42 (Deputy President Kevin O'Grady) ("Hills (No 2)").
Section 352(5).
Workers' Compensation Act 1987 (NSW), s 9.
Workers' Compensation Act, s 4(a).
Badawi v Nexon Asia Pacific Pty Ltd [2009] NSWCA 324; 75 NSWLR 503 at [112].
Workers' Compensation Act s 9A(1).
Zickar v MGH Plastic Industries Pty Ltd (1996) 187 CLR 310.
Badawi at [121]; cf the disagreement expressed by Handley AJA at [153].
Badawi at [83] (Allsop P, Beazley and McColl JJA).
Judgment (2012) at [29] (Hoeben JA and I agreeing).
Ibid, referring to Mercer v ANZ Banking Group Ltd [2000] NSWCA 138; 48 NSWLR 740 at [13].
Mercer at [13].
(1992) 173 CLR 473; [1992] HCA 21.
Judgment (2012) at [32].
(2013) 250 CLR 246; [2013] HCA 41.
Hills (No 2) at [70].
At 483.
At [48].
Hatzimanolis at 483.
Hills (No 2) at [75] and [76].
Statement, 7 April 2006, pars 20-23.
Statement, 15 June 2006, pars 9 and 10.
Police statement, 16 March 2004, par 8.
Hills (No 2) at [35].
Hills (No 2) at [21].
But referred to by the Deputy President as being dated 15 December 2006: at [23].
Hills (No 2) at [74].
Hills (No 2) at [87].
Hills (No 2) at [21].
Hills (No 2) at [81].
Hills (No 2) at [90].
Hatzimanolis at 476.
(1969) 122 CLR 529.
Danvers at 536.
(1937) 58 CLR 281 at 293, 294.
Hatzimanolis at 482-483.
PVYW at [28]-[29]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 August 2015

Suitors' Fund Act 1951(NSW)

Workers' Compensation Act 1987(NSW)

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