Eligibility for Compensation – Is It Tightening?

1. As long ago as 1888, in Walsh v Whitely (1888) 21 QBD 371 at 374, there was recognition that in connection with how the eligibility of entitlement to workers compensation is to be approached there are two schools of thought.

2. To quote Lord Esher “The view of one school has been that, in order to prevent injustice to masters, the construction of [workers compensation legislation] should be narrowed …and construed as strictly as possible. The view of the other school is that masters and workmen are not really on an equal footing; that, if there is danger in employment, it does not exist with regard to the master, but only in the case of the workmen; and the workman is not on an equal footing, because he must run the risk or give up his employment.” According to this school a liberal approach to the construction of the legislation that favoured the workman was called for. Lord Esher declared himself to belong to the second school.

3. By and large in Australia the second school held sway and over the years there was an ever widening approach to the construction of workers compensation legislation.

4. As Sir Frederick Jordan, the former Chief Justice of New South Wales, observed in Salisbury v Australian Iron and Steel Ltd: “The tendency of recent authorities has been to uphold the claims of workers to the furthest limits that the language of the Acts will permit.” (1943) 44 SR (NSW) 157.

5. The purpose of this paper is to demonstrate just how far that widening approach went and to suggest that through legislation and a more conservative approach by the High Court that tendency may now be in reverse.

6. A good example of the widening of approach can be seen in comparing the outcome of two cases concerning sporting injuries sustained at work that found their way to the High Court, thirty years apart.

7. The first was Whittingham v Commissioner of Railways (WA) [1931] HCA 49; (1931) 46 CLR 22 (10 December 1931)

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8. During his lunch break at the Midland Junction Workshops, Mr Whittington went for a stroll in the yard nearby where it was customary for some of his fellow employees to occupy part of the luncheon interval in playing cricket. Unfortunately for Mr Whittingham he was the victim of an errant shot. He was struck in the face by a cricket ball and lost the sight of his eye.

9. In applying the test as to the sufficiency of the connection between the injury and employment, the High Court held that the connection comprised of no more than the fact that Mr Whittingham on his employer's premises, and he was in that particular part of them because he had the time available to take a stroll in the open air. Having found that his presence there contributed nothing towards and was in no way involved in the performance of his duties, the claim failed.

10. Thirty years later, Chief Justice Dixon, who wrote the leading judgment in the Whittingham, came to a very different conclusion in Commonwealth v Oliver [1962] HCA 38; (1962) 107 CLR 353 (1 August 1962).

11. Mr Oliver worked for the Commonwealth Government Aircraft Factory at Avalon. He injured himself when playing what might be described as a back yard game of cricket on the concrete apron in front of a hanger. The cricket game was a regular affair. Chief Justice Dixon spoke of the progressive enlargement of the conditions which, under the Workers' Compensation legislation injuries were compensable.

12. He said that looking back, thirty years on, Mr Whittingham ’s presence in the yard near the cricket players would be seen as more naturally within the scope of the employment and more regularly and commonly accepted as a concomitant or incident of his employment. Hence he found for Mr Oliver.

13. Justice Menzies said that Oliver had to be decided not against the background of a particular decision given thirty years ago, but upon its own facts. He said that against the background of what seemed to me to be a widely-accepted and sensible present-day practice of employers encouraging workers to spend intervals between working hours at the employers’ premises pursuing in recreational activities, in playing

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cricket as he did, Mr Oliver was engaged upon an activity incidental to his employment.

14. The two decisions can be rationalised on the basis that in the 1930’s being injured as a result of a lunchtime game of cricket was not considered to be an incident of employment. By the 1960’s it was. The words of the legislation had not changed, but judicial attitudes had, reflecting societal change.

15. The impact of changing social and industrial conditions and the related extension on the concept of “in the course of the employment” can be seen in cases such as Wolmar v Travelodge Australia Ltd (1975) 26 FLR 249.

16. Ms Wolmar was employed by the Travelodge as a housemaid. She had been invited by her manager to attend a staff Christmas party to be held at the Travelodge after hours. Whilst at the party Ms Wolmar twisted her ankle, fell over and broke her leg. In upholding her claim Justice Connor said that the average office worker in Australia in the 1970’s would regard attendance at the annual Christmas party as part of the job.

17. It can be seen that the shift in widening the scope of employment compared to the 1930’s was profound.

18. Perhaps the high water mark in extending liability was the decision of the High Court in Hatzimanolis v ANI Corporation Ltd [1992] HCA 21; (1992) 173 CLR 473; (1992).

19. In July 1988, Mr Hatzimanolis was doing casual work for A.N.I. Corporation Ltd. at Wollongong. He learnt that that company was quoting for electrical work at the Mt Whaleback Mine at Mt Newman in Western Australia and he applied for a job there. He succeeded. Before leaving Wollongong, Mr Pope, a supervisor employed by A.N.I., briefed the successful applicants on the nature of their employment at Mt Newman. He told them that the contract was for three months, that they would be required to work about ten hours each day for six days each week, that tools would be supplied for them, that A.N.I. would pay board and living expenses, and that A.N.I. would hire two vehicles to provide transport for the group. Mr Pope informed the group that there

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was a possibility that they might have to work on Sunday. He also told them that, if they got the chance, they could visit the areas around Mt Newman and the Pilbara region of Western Australia.

20. Mr Hatzimanolis sustained injury on the third Sunday after his arrival at Mt Newman. He was not required to work on that Sunday and he had not been required to work on the first two Sundays after his arrival. On the first Sunday, Mr Pope made the two Toyota vehicles available for the use of the A.N.I. employees. They went on a sightseeing tour around the Newman area. On the second Sunday, they walked to the Newman Show, which was being held on that day, but they were driven back in the Toyotas. During the following week, Mr Pope suggested that, as the employees would not be working on the Sunday, they might like to take a trip to Wittenoom Gorge which was about 400 kilometres away. All but one of the employees decided to go. On the Sunday after this conversation, Mr Pope and the other members of the group set out on the journey in the two Toyota vehicles. They took with them food provided by the mess at the request of Mr Pope. On the return journey, Mr Hatzimanolis was seriously injured when one of the vehicles overturned.

21. In upholding his claim for compensation the High Court held that absent gross misconduct on the part of the employee, an injury occurring during an interval or interlude in employment will invariably result in a finding that the injury occurred in the course of employment’’ It then said that “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.”

22. This case was interpreted in other cases as meaning that where an employee was required to go to a remote location and live for a limited time in accommodation provided by his or her employer, an injury

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sustained by that employee at that location, whether actually working or not, would typically be seen as having occurred in the course of employment. Thompson v Workcover Corporation/Vero Workers Compensation (River Transport Pty Ltd) [2004] SAWCT 90 at para 17.

23. The generous approach to what is meant by incidents of the employment sometimes produced surprising outcomes.

24. In Workers Rehabilitation and Compensation Corporation v.  Rubbert (1991) 160 L.S.J.S. 257) the worker, a nurse’s aide in a nursing home, was accused of mistreating one of her patients. She was disciplined by being transferred from permanent night shift to day shift. She regarded the action as unjust and protested to her superiors in a heated fashion. Thereafter, she suffered depression and was consequently incapacitated for a short period. She claimed compensation. The issue became whether the condition arose out of employment. Chief Justice King in upholding her claim said:-

“It may seem strange that an illness which is a perhaps unreasonable reaction to a proper disciplinary measure can be the subject of compensation, but I see no escape from the view that the counselling session and change of roster were incidents of the employment. There is a clear causal connection between those incidents and the worker's depressive illness. That illness therefore arose out of employment.”

25. Other members of that Full Court were even more robust in their comments.

26. Justice Millhouse wrote:

“I must say though that I regret the result. It seems absurd that a woman, upset by a merited reprimand, can get worker's compensation. However, that result is irresistible as a matter of statutory interpretation.”

27. Justice Debelle said:

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“It strikes one as curious at least that an illness which is perhaps an unreasonable reaction to a proper disciplinary measure can entitle a worker to compensation.”

28. Doubtless Lord Esher’s second school approach informed the Full Court in deciding in Workers Rehabilitation and Compensation Corporation v. Battaglia  (1994) 177 L.S.J.S. 386, that if pain or apprehended pain caused a worker to desist from sexual intercourse that was enough to justify an award for the loss of capacity to engage in sexual intercourse, even though the body parts normally associated with that activity were in perfect working order.

29. That case led to some remarkable claims of sexual appetite. In Workcover Corporation v Brian Currer [1995] SAWCAT 105, Mr Curran in claiming compensation on the basis that pain and apprehended pain diminished his desire for sex, claimed that before he was injured he had sex with his wife “five, six, seven times a week. Probably five, six, seven times a night.” He remarked that on one occasion “it was fourteen times and then [he] was told to go away.”

30. The original assessment of 60 % loss was reduced on appeal to 35%.

31. Perhaps unsurprisingly the appeal court found that the Review Officer had failed to scrutinise the worker’s evidence.

It said:

“This type of case under the Third Schedule is of singular difficulty in that the capacity to cross-examine and to use what is called the sword of truth in the adversarial system is so often blunted because of the very nature of the complaints, both unwitnessed and unwitnessable. Hence the ability of a party to resist or test those complaints suffers a singular disability in the forensic sense. This is reinforced by the fact that sexual activity is so idiosyncratic, and affected by such a multitude of factors that the terms normal and usual hardly have a meaning. I say this to emphasise how important it is to carefully scrutinise all of the evidence and see that if it is congruent it has and internal consistency.”

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32. These two cases can probably be marked as the line in the sand moment in this State and a belief that the Courts had pushed the boundaries of eligibility too far.

33. In 1992 the Parliament introduced legislation that imposed special requirements to establish liability in respect of psychiatric injuries by requiring proof that employment was a substantial cause and that the injury did not result wholly or predominantly from specified disqualifying actions that included being disciplined.

34. In 1995 it introduced legislation that closed down claims for awards of compensation for the loss of capacity to engage in sexual intercourse.

35. Whilst those amendments addressed particular cases, there was a more general amendment enacted in 1994 that restricted access to compensation by legislatively narrowing the concept of in the course of employment.

36. One area was in connection with a worker’s participation in a social or sporting activity. The amendment declared that an injury does not arise from employment if it arises out of, or in the course of, the worker’s involvement in a social or sporting activity, except where the activity forms part of the worker’s employment or is undertaken at the direction or request of the employer.

37. This amendment led to results that a generation before would have been unthinkable, as demonstrated by General Motors-Holden's Automotive Ltd v Busby (1996) 68 SASR 1.

38. Mr Busby worked for Holdens. During his luncheon break on 19 September 1994, he played table tennis on table within an area that Holdens had established for the benefit it employees. It was in Holden’s interests to have its employees stay at its premises during the lunch break rather than be tempted to frequent nearby hotels. Whilst playing table tennis Mr Busby struck himself in the eye with his table tennis bat and ruptured a blood vessel. It was plainly not a part of his duties to play table tennis, but he was permitted by his employer to play table tennis during the authorized lunch break and to play table tennis at the place where he was playing when he suffered his injury. He claimed

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compensation from Holdens pursuant to the Act. Holdens rejected the claim on the basis that Mr Busby was disqualified from any entitlement to compensation by virtue of new amendment.

39. In upholding the rejection of his claim a majority of the Full Court noted that the earlier Act deemed a worker to be in employment in much wider circumstances than the present legislation. They held that the plain words of the amendment disqualified any worker who suffers a disability whilst involved in a social or sporting activity, except in the circumstances provided for in the exception in s 30(4) itself, and those circumstances are where the activity forms part of the worker's employment or is undertaken at the direction or request of the employer. It limited these to cases such as were a person who was employed as a tennis coach and injured himself or herself during the course of coaching or where the employer directs workers to undergo social or sporting activities and during those social or sporting activities the worker suffers a disability. As this was not such a case, Mr Busby lost.

40. Another area was in connection with journey accidents. The amendment imposed a requirement that for an injury sustained in a journey to be compensable, the journey had to be on undertaken as part of a worker’s duties of employment or there had to be was a real and substantial connection between the employment and the accident.

41. Again the amendment led to outcomes that would have been regarded as unthinkable under previous legislation. Take the case of TransAdelaide v Karanicos [1996] SASC 5536 (3 April 1996).

42. Ms Karanicos sustained a compensable injury in the course of her employment with TransAdelaide. During the course of a journey by bus from her place of employment to attend a medical appointment with a doctor she sustained a further injury. It was common ground that she was consulting the doctor in connection with the earlier compensable injury.

43. In allowing an appeal against a decision that accepted the claim as compensable, Chief Justice Doyle said:

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“As a matter of ordinary language it seems to me that a journey undertaken to obtain treatment for a compensable disability or to obtain a certificate in connection with such a disability would not be regarded as a carrying out of duties of employment. These days everyone understands the intimate connection between worker's compensation and employment, and it is stating the obvious to say that the disability in connection with which the journey was made had arisen in the course of or out of the worker's employment. But to my mind one would not ordinarily say, despite that, that the journey was undertaken in the course of carrying out duties of employment. It was unrelated to the performance of those tasks which the worker, a cleaner, was employed to do. I can see no direct or incidental relationship between the journey and that work.”

44. The contrast between this result and the outcome in the Hatzimanolis case is stark.

45. The tightening of eligibility has not just been legislative.

46. In recent years the High Court has shown a surprising willingness to entertain applications for special leave on workers compensation matters that have generally resulted in successful appeals and a more conservative approach in terms of assessing compensability.

47. In October 2013, in Comcare v PVYW  [2013] HCA 41; (2013) 250 CLR 246, the High Court, by a 4:2 majority, allowed an appeal by the Federal Government’s workplace insurer, Comcare, denying a Commonwealth government employee , known by the gender neutral identifier ‘PVYW’ but widely known as being a woman, workers compensation under the Commonwealth Safety, Rehabilitation and Compensation Act 1988.

48. In November 2007, PVYW had been sent to visit a regional coastal urban office, and was required to stay overnight at a motel booked and paid by for the employer. While staying overnight at the motel, PVYW was struck in the face by a glass light fitting on the bed when it was pulled off the wall of the motel, quite possibly in a moment of exuberance, during sexual intercourse with a local acquaintance.

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49. Following the incident, PVYW claimed compensation for physical and subsequent psychological injuries under the Safety, Rehabilitation and Compensation Act. Comcare originally accepted the claim and for two years PVYW was compensated for the injuries that had been sustained. It was the decision of the workplace insurer to revoke PVYW’s claim in 2010 that set in motion a series of cases through the Australian court hierarchy that split evenly in favour of, and against, PVYW.

50. In overturning the judgments of the Federal Court and Full Court of the Federal Court, the majority of the High Court held that the injury suffered by PVYW was not suffered ‘in the course of’ employment. The majority reached this conclusion because in its view the injury was not caused through an activity encouraged or induced by the employer, or was not considered ‘referable’ to a hotel stay.

51. The case might simply reflect a conservative view that if the expansion of workers compensation coverage had got to the point that it covered injuries sustained during casual sex on an overnight stay, it had gone too far.

52. But if that is right, it leads to some startling anomalies.

53. Presumably when PVYW drove the two to three hours to the motel in Nowra that had been booked by her employer she was acting as a worker and protected by the Act.

54. Presumably that was also so, when she entered onto the motel grounds, and was reading agenda documents and resting in her motel room before her meeting.

55. Moreover, it begs the question as to whether the result would have been different if PVYW was having sex with her husband instead of a casual acquaintance, although the distinction seems tenuous.

56. The decision might be seen as an aberration, although the more recent decision in Military Rehabilitation and Compensation Commission v May [2016] HCA 19 suggests that something else might be going on.

57. Mr May was born in 1975 and is aged 36. He enlisted in the Royal Australian Air Force in 1998 and was discharged on 30 July 2004 at the

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rank of Officer Cadet. On 29 November 2002, he lodged a claim for rehabilitation and compensation in respect of “low immunity, fatigue, illnesses, dizziness” which he claimed was caused by vaccinations received in the course of his employment in the RAAF.

58. On 11 March 2003, Mr May’s claim was rejected on the basis that specialists who had examined him had been unable to diagnose any specific condition or determine a cause for his symptoms.

59. Mr May appealed to the AAT.

60. The Tribunal found that there was a temporal relationship between the vaccinations and Mr May’s complaints of swelling of the tongue, dizziness, nausea and diarrhoea. It found that there was no medical explanation for his symptoms nor was there any objective evidence connecting those conditions with the vaccinations. It found that there was no biological mechanism consistent with a vaccine generating an immune response. The Tribunal concluded that Mr May had failed to establish his case.

61. Mr May appealed to the Federal Court. At first instance the appeal was dismissed. He then appealed to the Full Court of the Federal Court and a bench of five heard the appeal.

62. It allowed the appeal. The Full Court concluded that the inquiry posed by the statutory definition of injury was simply whether the person has experienced a physiological change or disturbance of the normal physiological state (physical or mental) that can be said to be an alteration from the functioning of a healthy body or mind.

63. The Full Court concluded that there was no debate that Mr May was required to undergo the vaccinations as part of his employment with the RAAF and that he did so; that physical effects arose during performance of his duties; and that the Tribunal only needed to be satisfied that Mr May suffered an injury during the "protected period of work hours".

64. The High Court unanimously reversed the result. It said that the Act under consideration recognises that an employee may genuinely complain of being unwell, but, in the context of the "injury (other than a disease)" limb of the definition of "injury", unless that employee can

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satisfy the tribunal of fact that he or she has suffered an "injury" (in the primary sense of the word) compensability will not be established. That in turn requires proof of the nature and incidents of the physiological or psychiatric change.

65. The grant of leave to appeal the decision of the Full Federal Court in Comcare v Martin (Comcare v Martin [2016] HCATrans 116 (16 May 2016)) also raises an eyebrow.

66. The usual response to a leave application on a point of construction involving workers compensation legislation is something along the lines of what Justice Keane recently said in refusing special leave in Mericka v Employers Mutual/Workcover Corporation & Anor [2015] HCATrans 64 (13 March 2015)).:

“..the point you are proposing that the Court take up involves the construction of the verba ipsissima of the South Australian statute?

67. Yet in Martin, the application for leave met with virtually no resistance.

68. Ms Martin, worked at the Australian Broadcasting Corporation from January 2010 through to March 2012. Initially, she worked under the direct supervision of the Station Manager, Mr Bruce Mellett. She was then based in Renmark, South Australia. From August 2011 she worked under the supervision of Ms Carol Raabus. In 2012 the position of “cross media reporter” under Ms Raabus became available. Ms Martin applied. She was interviewed by a selection panel, comprised of Mr Mellett, Ms Raabus and the Regional Content Director, Mr Jonathon Wright . Ms Martin was unsuccessful and was notified that she would return to her previous position under Mr Mellett. On receiving the news, Ms Martin apparently “broke down” and was subsequently diagnosed with an “adjustment disorder”. She claimed compensation pursuant to the Safety, Rehabilitation and Compensation Act 1988 and ultimately succeeded in the Federal Court.

69. The High Court has granted leave to appeal against, firstly the finding that the cause of Ms Martin’s psychological injury was not administrative action and second whether that action was reasonable action taken in a reasonable manner.

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70. The appeal has been argued and judgment has been reserved. My reading of the transcript of argument suggests a likely outcome consistent with Lord Esher’s first school of thought.

71. Meanwhile the South Australian Parliament has been busy tightening the screws from a legislative perspective even further.

72. Through section 7 of the Return to Work Act 2014, it has changed the criteria for eligibility for compensation.

73. For injuries, other that psychiatric injuries, the injury must arise out of or in the course of employment and the employment must be a significant contributing cause of the injury.

74. For psychiatric injuries, the injury must arise out of or in the course of employment and the employment must be the significant contributing cause of the injury.

75. “A significant” clearly means more than the traditional test of “material contribution”

76. The use of the definite article “the” in the case of psychiatric injuries means that the new threshold in the case of these injuries has substantially changed and will be much harder to meet.

77. Cases testing the extent to which these new criteria have changed the scope of cover are winding their way through the Tribunal.

78. Whilst it is too early to tell how far the new tests have limited the scope of cover, what is clear is that Sir Frederick Jordan’s statement about the tendency to uphold the claims of workers to the furthest limits no longer applies.

Judge Brian Gilchrist