FEDERAL COURT OF AUSTRALIA Comcare v PVYW [2012] FCAFC 181 Citation: Comcare v PVYW [2012] FCAFC 181 Appeal from: PVYW v Comcare (No 2) [2012] FCA 395 Parties: COMCARE v PVYW File number: NSD 656 of 2012 Judges: KEANE CJ, BUCHANAN AND BROMBERG JJ Date of judgment: 13 December 2012 Catchwords: WORKERS' COMPENSATION – application of the principles established in Hatzimanolis v ANI Corporation Limited – whether injuries were sustained in the course of employment – employee injured during an overnight stay in a motel room booked by her employer – injuries were sustained in an interval or interlude within an overall period or episode of work – whether it is sufficient that the injuries were sustained by the employee at a place the employer induced or encouraged her to be Legislation: Administrative Appeals Tribunal Act 1975 (Cth) Safety, Rehabilitation and Compensation Act 1988 (Cth) Cases cited: Comcare v Mather (1995) 56 FCR 456 Comcare v McCallum (1994) 49 FCR 199 The Commonwealth v Oliver (1962) 107 CLR 353 Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 Dew v Maher (1996) 14 NSWCCR 56; [1996] NSWCA 154 Hatzimanolis v ANI Corporation Limited (1992) 173 CLR 473 Inverell Shire Council v Lewis (1992) 8 NSWCCR 562 State of New South Wales v Lepore (2003) 212 CLR 511 Workcover Authority of New South Wales v Walling (1998) 16 NSWCCR 527; [1998] NSWSC 315 Workcover Authority of New South Wales v Walsh [2004] NSWCA 186 Date of hearing: 28 November 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 57 Counsel for the Appellant: Mr T Howe QC with Mr A Berger Solicitor for the Appellant: Sparke Helmore Lawyers Counsel for the Respondent: Mr L T Grey with Mr J P Mrsic Solicitor for the Respondent: Pappas, J. – Attorney IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 656 of 2012 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: COMCARE Appellant AND: PVYW Respondent JUDGES: KEANE CJ, BUCHANAN AND BROMBERG JJ DATE OF ORDER: 13 DECEMBER 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal is dismissed with costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 656 of 2012 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: COMCARE Appellant AND: PVYW Respondent JUDGES: KEANE CJ, BUCHANAN AND BROMBERG JJ DATE: 13 DECEMBER 2012 PLACE: SYDNEY REASONS FOR JUDGMENT THE COURT: 1 The phrase "arising out of, or in the course of, employment" is well-known in workers' compensation jurisprudence. It states a traditional criterion for liability to pay compensation for an injury to an employee. In Hatzimanolis v ANI Corporation Limited (1992) 173 CLR 473 ("Hatzimanolis") the High Court explicitly reformulated and restated "the principles which determine whether an injury occurring between periods of actual work is within the course of the employment so that their application will accord with the current conception of the course of employment as demonstrated by the recent cases" (at 482). 2 A number of cases in this Court and elsewhere have considered the test which was stated in Hatzimanolis. Some of them will be referred to later. The present case is also one in which the application of that test is required. The Administrative Appeals Tribunal ("the AAT") took one view of the correct application of the test to the facts of the present case and the primary judge from whose judgment the present appeal is brought took a different view. The AAT ruled that the respondent was not entitled to compensation for an injury she had suffered. The primary judge ruled that she was. 3 In November 2007 the respondent, then employed in a Commonwealth government agency, was required by her employer to travel to a country town in New South Wales to observe a budgeting process and meet local staff of the agency. She stayed at a motel booked by her employer. She arranged to meet a male friend who lived in the area one evening. After dining together that evening they went to her motel room where they had sex. The respondent was injured whilst engaging in sexual intercourse when a glass light fitting above the bed was pulled from its mount and fell on her, causing injuries to her nose and mouth. She also suffered a psychological injury as a result. 4 The respondent made a claim for compensation under s 14 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) ("the SRC Act"), which provides: (1) Subject to this Part, Comcare is liable to pay compensation in accordance with this Act in respect of an injury suffered by an employee if the injury results in death, incapacity for work, or impairment. (2) Compensation is not payable in respect of an injury that is intentionally self-inflicted. (3) Compensation is not payable in respect of an injury that is caused by the serious and wilful misconduct of the employee but is not intentionally self-inflicted, unless the injury results in death, or serious and permanent impairment. 5 Section 5A of the SRC Act defines injury, relevantly, as follows: (1) In this Act: injury means: (a) a disease suffered by an employee; or (b) an injury (other than a disease) suffered by an employee, that is a physical or mental injury arising out of, or in the course of, the employee's employment; … (Emphasis added.) 6 The respondent's claim for compensation for both physical and psychological injuries was initially accepted by Comcare, but following further investigation that acceptance was revoked on 21 January 2010. The respondent sought review by the Administrative Appeals Tribunal ("the AAT") of Comcare's decision to revoke. The AAT affirmed Comcare's decision, finding that the injury suffered by the respondent was not suffered by her in the course of her employment. The AAT said (at [50]-[51]): 50 … The employer had not expressly or impliedly induced or encouraged the applicant's sexual conduct that evening. Nor did the employer know or could reasonably expect that such an activity was contemplated by her. The activity was not an ordinary incident of an overnight stay like showering, sleeping, eating, or returning to the place of residence from a social occasion elsewhere in the vicinity. Rather she was involved in a recreational activity which her employer had not induced, encouraged or countenanced. 51 Accordingly, the applicant's injuries were unrelated to her employment, took place during her leisure time, and were of a private nature. As a consequence, her activity did not take place during an interval or interlude and did not arise during the course of her employment. The Tribunal affirms the decision under review. 7 This reasoning depended upon the AAT's interpretation of the principles stated by the High Court in Hatzimanolis, which will be discussed shortly. Those principles concern, amongst other things, the way an interval or interlude between periods or episodes of actual work should be characterised where an employee is sent by his or her employer to work away from home. It was not disputed that the respondent had been induced by her employer to stay at the motel where she was injured. The effect of the finding by the AAT, however, was to require a "nexus" with both an employer-endorsed place and an employer-endorsed activity in order for an injury to occur in the course of employment. The critical question in the present case is whether the respondent was required to satisfy both these elements before she was entitled to compensation for the injuries she had suffered. 8 The AAT found (at [35]): 35 … it is insufficient for the employee simply to be at a particular location during an interval or interlude in an overall period or episode of work for liability for injury to arise. The activities engaged in during that interval which led to the employee's injury must be expressly or impliedly induced or encouraged by the employer. Although the connection need not be a close one, a nexus is essential before liability will be incurred. 9 The respondent brought an appeal against the decision of the AAT to this Court under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth). The trial judge, from whose judgment the present appeal is brought, upheld the appeal and made a declaration that the injuries suffered by the respondent were suffered in the course of her employment. 10 We will return in greater detail to the reasoning which was employed by the primary judge. For present purposes it is sufficient to indicate that the primary judge held: first, that in the circumstances of the present case it was sufficient to sustain the respondent's claim for compensation that she was injured at a place designated by her employer as accommodation she should use; and secondly, that "the Tribunal erred in holding (at para [35]) that for the applicant to succeed, it was necessary for her to show that the particular activity which led to her injury was one that had been expressly or impliedly induced or encouraged by her employer". 11 Before further attention is given to the resolution of these two differing approaches on the facts of the present case, it is necessary to say something about the principles stated in Hatzimanolis and the way in which those principles have been applied in this Court and elsewhere since they were established. 12 Hatzimanolis involved consideration of an injury to an employee who, while working in Wollongong, applied for a job at Mt Newman in Western Australia. At Mt Newman employees were provided with rent-free accommodation in a camp and provided with access to various facilities (which are identified in the report of the High Court judgment at 477). The employee was injured on the third Sunday after his arrival at Mt Newman. He was injured whilst travelling on a trip to Wittenoom Gorge, a round trip of about 800 kilometres. The High Court found that the employee's presence on the trip, and in the vehicle which overturned causing his injuries, was a response to an invitation by his supervisor which was authorised by the employer, as was the use of the employer's vehicles for the purpose of the trip. Those findings excluded an argument that the employee, and those organising the trip, were acting in a private capacity. 13 The issue which the High Court set out to resolve in Hatzimanolis concerned the development of differing approaches to the question of whether an injury to an employee occurred in the course of employment. The High Court pointed out (at 478) that: "the course of employment is not identical with the period of employment of a worker or with the work which that person performs". Reference was made to the decision of the High Court in The Commonwealth v Oliver (1962) 107 CLR 353 ("Oliver"). In that case a claim for compensation was upheld where a worker had been injured while playing cricket on a concrete apron in front of a hangar where he worked. The course of the employment was held to extend over the half hour during which employees, without leaving the premises, took lunch and also played cricket. The High Court then said in Hatzimanolis (at 480): Since Oliver, appellate courts have upheld many awards of compensation in favour of workers in cases where injury has occurred away from the place of work, outside of or between working hours, and while the worker was engaged in an activity which is ordinarily performed for private necessity, convenience or enjoyment. 14 The High Court then referred to Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 ("Danvers"). The High Court recorded (at 480): In Danvers v. Commissioner for Railways (N.S.W.), for example, a railway worker died when a van, provided by his employer for his accommodation, caught fire during the night. The van was moved from work site to work site. On the day of his death, the worker had finished work at about 4 p.m. and had no further duties to perform until the following morning. 15 An argument which was rejected in Danvers was that the employee was outside the course of his employment on that particular occasion. The contention was that it was unnecessary for the worker to have used the van in the course of his employment on the particular occasion because he was not, on that occasion, in a remote area but at a country town in which other accommodation was readily available. Barwick CJ, in Danvers (at 537), rejected the proposition that it was appropriate to assess: … whether living in the van was in the course of the employment, simply by considering the situation of the deceased at Coolac even if there were accommodation there of a kind that the deceased in his circumstances might reasonably be expected to use. It is necessary, in my opinion, to judge that matter in relation to his employment in general, requiring him, as it did, to work at places remote from all accommodation. If it were in the course of his employment to reside in the van when he was working at a place on the railway line where as a practical matter there was no accommodation available to him, then, in my opinion, it could also be in the course of the employment to reside in the van when working as he was on this occasion proximately to a centre of population. 16 Those observations were provided in further elucidation of a "general consideration" offered by Barwick CJ (earlier at 537) in these terms: What may be in the course of the employment is referable to the general nature 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. 17 We will return to the significance of that observation, in the context set by Hatzimanolis, shortly. 18 Returning, however, to Hatzimanolis, the next thing to observe is that after its reference to Oliver, Danvers and other cases, the High Court went on (at 482) to say: … the rational development of this area of law requires a reformulation of the principles which determine whether an injury occurring between periods of actual work is within the course of the employment so that their application will accord with the current conception of the course of employment as demonstrated by the recent cases, particularly the decisions of this Court in Oliver and Danvers. 19 Then the High Court observed that most of the cases where an injury sustained in an interval between periods of actual work was compensated were ones in which: … the employer has authorized, encouraged or permitted the employee to spend his time during that interval at a particular place or in a particular way. 20 Then the High Court said that a test which held that an employee was within the course of employment whenever authorised, encouraged or permitted to spend time during an interval between periods of actual work at a particular place or in a particular way would be an unacceptable extension because it would not only cover cases of "lunchtime" injury as in Oliver, and the case of the railway worker as in Danvers, but also many cases where injuries occurred between daily periods of work. The High Court explained that the distinction between what should be regarded as in the course of employment or outside the employment did not lie so much in an employer's attitude to the way in which the interval between periods of actual work was spent, but in the characterisation of the period or periods of work themselves. Thus: Where an employee performs his or her work at a permanent location or in a permanent locality, there is usually little difficulty in identifying the period between the daily starting and finishing points as a discrete working period. A tea break or lunch break within such a period occurs as an interlude or interval within an overall work period. Something done during such a break is more readily seen as done in the course of employment than something that is done after a daily period of work has been completed and the employee has returned to his or her home. On the other hand, there are cases where an employee is required to embark upon some undertaking for the purpose of his or her work in circumstances where, notwithstanding that it extends over a number of daily periods of actual work, the whole period of the undertaking constitutes an overall period or episode of work. 21 It is important to emphasise, at this point, that what the High Court was at pains to identify were periods (intervals or interludes) in which compensable injury might occur which were to be regarded as ones falling within an overall period or episode of work so as to be "in the course of employment". That was the governing criterion for entitlement with which the High Court was concerned in its reformulation of principle in Hatzimanolis. The High Court went on: Where, for example, as in Danvers, an employee is required to go to a remote place and live in accommodation provided by his or her employer for the limited time until a particular undertaking is completed, the correct conclusion is likely to be that the time spent in 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. 22 These illustrations, with particular reference to Danvers and Oliver, reinforce the central theme that the governing enquiry was to decide whether an injury occurred in an interval during "one overall period or episode of work rather than a series of discrete periods or episodes of work". In that context an interval or interlude would normally be seen as included within the course of employment if an employee had been encouraged to spend the interval or interlude at a particular place or in a particular way. But it is important not to equate the particular interval or interlude with the overall period or episode of work. The point being made was that intervals or interludes between actual work in an overall period of work are more likely to be within the course of employment than intervals or interludes between ordinary daily periods of work at a permanent location. The intervals and interludes were not collapsed into the overall period of work. 23 Then the High Court said, in the critical passage (at 484): 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". 24 A few points should be made about this passage. First, the High Court was still concentrating upon when an interval or interlude should be regarded as occurring within an overall period of work, and thus in the course of employment, so that an injury occurring during the interval or interlude would be compensable. Secondly, there were two ways in which such a conclusion might be reached – encouragement or inducement to spend that time (the interval or interlude between actual periods of work in an overall episode of work) at a particular place, or encouragement or inducement to spend it in a particular way. In either case an injury sustained in the interval between actual periods of work would be within the course of employment unless the employee acted in a way (amounting to gross misconduct) taking him or her outside the course of employment. Thirdly, the statement made in the final sentence, upon which the AAT placed particular reliance and referred to as a "rider", was a statement referring to and quoting the words of Barwick CJ in Danvers at 537. That statement was included to emphasise that an injury did not become non-compensable without reference to the overall circumstances of the employment. The reference by the High Court was to statements of expansion, not confinement. 25 In the present appeal, a good deal of emphasis has been given to an observation made by the High Court in Hatzimanolis at 485 to which we shall refer again later. The High Court there recorded a concession that the worker in that case would have been in the course of his employment "while working at the mine, travelling to and from the mine, eating and sleeping and even enjoying recreational activity at the camp". Nevertheless, it was submitted that it did not follow that the worker was in the course of his employment during the whole of the time spent in the Mt Newman area. The High Court responded: This contention is correct because the appellant would not necessarily be in the course of his employment while engaged in an activity during an interval or interlude in his overall period or episode of work if A.N.I. had not expressly or impliedly induced or encouraged him to engage in that activity during that interval. 26 There is nothing about this statement that qualifies the earlier statements at 484 to which we have referred, or the foundation for them. The statement does nothing more than reinforce what is apparent from the analysis which had already been undertaken. Nothing in that analysis suggested that the worker in that case would be regarded as in the course of his employment for the whole of the time he spent in the Mt Newman area. He was not at the camp provided by the employer when he was injured. It was therefore necessary to consider whether he was engaged in an activity which had been expressly or impliedly induced or encouraged by his employer. The High Court then went on to refer to factual circumstances to which we referred earlier, namely that the worker was on the trip to Wittenoom Gorge at the invitation of a supervisor authorised by the employer to organise the trip and for which the employer had made vehicles available. It is evident that the High Court was there addressing the second possible foundation for a finding that the worker was in the course of his employment when injured. The conclusion was, on the facts of the case, that he was. 27 We will refer shortly to other cases which have considered the application of the principles announced in Hatzimanolis to particular facts, but first it is desirable to say something about the approach taken by the primary judge. 28 The chain of reasoning about the application of the principles in Hatzimanolis to the facts of the present case may be seen sufficiently from the following passages: 43 In the present case, it is not necessary to explore the outer limits of the organising principles developed in Hatzimanolis. I say this because I consider that, on the agreed facts, the applicant suffered her injuries in the course of her employment. 44 While it was to be inferred that the applicant was encouraged to use the motel room for obvious purposes, including relaxing, sleeping, bathing, eating and dressing, it was accepted by the applicant that her employer did not encourage her to engage in sexual activity while in the motel room. Of course, the fact that the applicant's employer did not encourage her to engage in sexual activity does not mean that it disapproved of her doing so. 45 There was nothing before the Tribunal to indicate whether the applicant's employer approved or disapproved of employees entertaining other people in their motel rooms with whom they might engage in lawful sexual activity during an overnight stay arranged by the employer. The agreed facts said only that the applicant did not advise her employer how she intended to spend her time while at the motel or who, if anyone, she would be associating with while there. 46 Nor was there anything before the Tribunal to suggest that the applicant's sexual activity on the evening in question was in any respect incompatible with the nature or terms of her employment or that the applicant knew, or ought to have known, that it might somehow prevent her from performing her actual work as and when she was required to perform it. In this regard, I think it is fair to say that the Tribunal's reliance upon what it referred to as the "rider" in Hatzimanolis did not really lead anywhere in the circumstances of this case. 47 The Tribunal's reasoning recognised that if the applicant's conduct did not result in an interruption of the interval or interlude, then it necessarily followed that the applicant suffered her injuries in the course of her employment. It is therefore desirable to examine more closely the reasons why the Tribunal considered that the interval or interlude was interrupted. 48 First, as I have mentioned, the Tribunal considered (at para [51]) that the applicant was engaged in a private activity and that, "once an employee embarks upon a private activity, the interval is interrupted." The administrative decision referred to by the Tribunal in support of that proposition (Re Crook v Comcare [2001] AATA 352) was not one involving an interval or interlude in an overall period or episode of work. Nor did the Tribunal in that matter apply or endorse the general proposition attributed to it by the Tribunal in this case. 49 In considering the correctness of the proposition that an interval or interlude is interrupted when an employee embarks upon "a private activity" a question arises as to what that expression actually means. If it means no more than an activity "unrelated to employment" then it merely states a conclusion which can only be arrived at upon a consideration of all relevant factors. But if it was intended by the Tribunal to mean an activity usually undertaken in private then it does not provide any assistance in determining whether an interval or interlude in an overall period or episode of work involving an overnight stay at a motel has been interrupted. Many of the activities which an employee might be expected to engage in during such a stay are engaged in private: see, for example, Comcare v McCallum (1994) 49 FCR 199 (where an employee who slipped while showering in her hotel room was found to have been injured in the course of her employment). 50 Secondly, while it was common ground that the employer had not expressly or impliedly induced or encouraged the applicant's sexual activity during the evening in question, it does not follow that the interval or interlude was interrupted during the period in which it took place. The underlying question which the Tribunal was required to determine (assisted by the organising principles developed in Hatzimanolis) was whether there was a sufficient connection or nexus between the injuries suffered by the applicant and her employment. The relevant connection or nexus to employment was present in this case by virtue of the fact that the applicant's injuries were suffered while she was in the motel room in which her employer had encouraged her to stay. 51 Thirdly, the Tribunal found that the employer did not know or reasonably expect that the employee would engage in sexual activity at the motel and that, unlike showering, sleeping and eating, sexual activity was not an ordinary incident of an overnight stay in a motel room during a business trip. Again, I do not see why the fact that the applicant was, during the time that she was in her motel room, engaged in sexual activity that her employer might not have expected her to engage in should be seen as interrupting the interval or interlude. The relevant connection or nexus to employment continued while the applicant was in the motel room in which her employer had induced or encouraged her to stay. 52 I return now to the questions of law said to arise in the appeal. While the applicant has raised a number of questions which I have previously set out, I think the question of law that arises may be expressed much more simply than it has been. The essential question is whether it was open to the Tribunal to hold that the applicant was not in the course of her employment at the time she suffered her injuries. 53 What is of critical importance under the organising principles developed in Hatzimanolis is the temporal relationship between the applicant's employment and the injuries suffered by her. Here the temporal relationship between the applicant's injuries and her employment is that they were suffered by her while she was at a particular place where her employer induced or encouraged her to be during an interval or interlude between an overall period or episode of work. 54 The joint judgment in Hatzimanolis implies, when read in the context of the specific provisions of the Act, that absent serious and wilful misconduct or an intentionally self-inflicted injury, an employee who is at a particular place at which he or she is induced or encouraged to be by his or her employer during an interval or interlude in an overall period or episode of work will ordinarily be in the course of employment. While it is true that in determining whether an injury occurred in the course of employment, regard must always be had to the general nature, terms and circumstances of the applicant's employment, there was nothing of that description in the present case which could justify a finding that the interval or interlude was interrupted by the applicant's lawful sexual activity. 55 In my opinion the Tribunal erred in holding (at para [35]) that for the applicant to succeed, it was necessary for her to show that the particular activity which led to her injury was one that had been expressly or impliedly induced or encouraged by her employer. If the applicant had been injured while playing a game of cards in her motel room she would be entitled to compensation even though it could not be said that her employer induced or encouraged her to engage in such an activity. In the absence of any misconduct, or an intentionally self-inflicted injury, the fact that the applicant was engaged in sexual activity rather than some other lawful recreational activity while in her motel room does not lead to any different result. 56 There will be an order that the Tribunal's decision be set aside. I shall also make a declaration that the injuries suffered by the applicant on 26 November 2007 were suffered by her in the course of her employment. The respondent must pay the applicant's costs of the appeal and her costs of the proceedings before the Tribunal. (Emphasis added.) 29 His Honour thus approached the matter as follows: - prima facie the interval or interlude during which the employee was injured was in the course of employment because she was where she was at the direction of her employer (at [50], [53]-[54]); - activity which is unexpected, or not anticipated, by an employer does not cease to be in the course of employment for that reason alone if it occurs at a place where an employee is expected to be (at [51]); - it was not necessary for the employee to show that the particular activity in which she was engaged had been expressly or implicitly induced or encouraged by her employer (at [55]); - in the absence of misconduct or an intentionally self-inflicted injury (the statutory test under s 14 of the SRC Act), lawful sexual activity did not interrupt the overall course of the employment otherwise subsisting in the interval or interlude between actual work (at [54]-[55]). 30 This course of reasoning led his Honour to conclude that it was not open to the AAT as a matter of law, applying the principles in Hatzimanolis to the facts, to hold that the respondent was not in the course of her employment when she suffered her injuries (at [52], [56]). 31 It may be apparent from what we have already said about Hatzimanolis that there does not appear to be any error in the way in which the primary judge approached the application of the principles stated in that case. However, it is desirable to make some attempt to review the way in which the principles in Hatzimanolis have been applied in other cases before confirming that view. 32 Later in the year in which Hatzimanolis was decided, the New South Wales Court of Appeal considered the application of the principles stated in it to a case coming before it in Inverell Shire Council v Lewis (1992) 8 NSWCCR 562 ("Lewis"). An employee employed by Inverell Shire Council was residing temporarily in a caravan park. The temporary accommodation was arranged by the employer while the employee attended a training course. One evening the employee was engaged in various social activities with other residents of the caravan park. Alcohol was consumed. The employee and others went to the caravan of a Miss Davis in the early hours of the morning for coffee. Miss Davis' brother approached the caravan and demanded they leave. A rifle was fired and the employee was injured and became totally incapacitated. Handley JA (with whom Clarke JA generally agreed) referred to Hatzimanolis and then said (at 566): The employer had induced or encouraged the worker to reside in the caravan park during his course and the injury occurred in that place. Although the employer did not induce or encourage the worker to visit Miss Davis' caravan that evening to have a cup of coffee in the company of others, I can see no basis for limiting the principle in this way. and (at 567): In this case the worker was injured while he was at "the particular place" where his employer had encouraged him to stay, and while he was doing something that was reasonably incidental to his temporary residence there. Accordingly in my opinion Manser CCJ did not err in law in finding that the worker's injuries arose in the course of his employment. 33 It is evident from other parts of the judgment that Handley JA thought that the reformulation by the High Court in Hatzimanolis had involved a significant extension of previous principles. Nevertheless, and properly, those new principles were applied. It is clear that they were applied in a way which would support the claim for compensation in the present case. 34 On the same day, the New South Wales Court of Appeal decided McCurry v Lamb (1992) 8 NSWCCR 556 ("McCurry"). An employed shearer was shot and badly injured while asleep in the jackaroos' cottage which was about 400 yards from the shearers' quarters, but in the same camp, on the property where he was working. The employee had formed a sexual relationship with a female rouseabout. On the night in question he was sleeping with her in the same bed. The employer knew the employee had previously slept in the jackaroos' cottage, had not objected and had taken no steps to prevent it. Another shearer, disaffected by the relationship, entered the cottage and shot the employee and others. Two died and the employee was rendered a paraplegic. Handley JA (with whom Clarke JA generally agreed) said at 559: This appeal and the appeal in Inverell Shire Council v. Lewis (1992) 8 NSWCCR 562 were argued the same day before this Court. In my opinion, for the reasons given in Inverell Shire Council v. Lewis (also delivered today), the worker sustained his injuries "at a particular place", namely the camp, where the employer had induced or encouraged him to stay, and while he was doing something that was reasonably incidental to his temporary residence there, namely sleeping. No question of gross misconduct arises and the fact that the worker's injuries were caused by the deliberate and criminal conduct of a fellow employee does not affect his right to compensation. Accordingly the worker received his injuries in the course of his employment. 35 Again Handley JA made clear his view that the High Court had significantly expanded the scope of the term "in the course of employment" but again, with respect, properly applied the principles as the High Court had stated them. The result was that it was sufficient that the employee in question was at a place where the employer had induced or encouraged him to stay and engaged in an incidental activity, namely sleeping. 36 In Comcare v McCallum (1994) 49 FCR 199 ("McCallum"), a Full Court of this Court also considered an injury suffered by an employee on a trip away from home. The position appears sufficiently clearly from the judgment of Lockhart J (with whom Hill and Whitlam JJ agreed) (at 203-4): In my opinion, the Tribunal correctly concluded that the respondent sustained her injuries in the course of her employment. The respondent was in Young overnight on 20 July 1992 because she was required to be there by her employer for the purposes of her employment. She had to travel from Orange to Young on 20 July and stay overnight there to commence duties at the visiting service in Young at 9 am on 21 July. She was required to book her own accommodation, which she did at the Empire Hotel in Young. She stayed overnight in a hotel whilst on her employers' business. An overnight stay obviously involved the respondent taking a bath or having a shower; she chose the latter. It was then that she sustained her injuries. The respondent's departure from Orange to Young, staying overnight on 20 July 1992 at the Empire Hotel at Young, was part of the overall period or episode of work which she was required to perform by the Department. Her injury was sustained during an interval or interlude in this overall period or episode of work. In my opinion, this must be seen as part of the course of her employment, because the Department induced or encouraged her to spend the interval or interlude at an hotel of her choice, thus constituting the spending of an interval or interlude at a particular place or in a particular way within the meaning of that expression in the reasons for judgment of the High Court in Hatzimanolis at 484. The fact that the respondent was not required to stay at a specific place of accommodation by the Department whilst in Young does not diminish this conclusion. If she had been required to stay at the Empire Hotel, there would be an even plainer case of an injury sustained during an interval or interlude in an overall period or episode; but the relevant nexus with the course of her employment is plain enough on the facts of this case. It seems to me to be artificial to fragment the respondent's employment at Young into periods of time when she would be physically present at the visiting service and times when she would be travelling to and from her hotel and the visiting service having morning or afternoon tea or a lunch break, staying in the hotel and showering there. The old cases are replete with the making of fine distinctions about such matters as this; but the High Court has established the present law authoritatively in Hatzimanolis. The only sensible and realistic conclusion to draw on the facts of this case is that the injury was sustained by the respondent in an interval or interlude during an overall period or episode of work which was part of the course of her employment. It does not follow that the place where injuries were sustained by the respondent and the circumstances in which they were sustained are irrelevant to the conclusion whether they occurred during the course of her employment. The fact that she was required to stay overnight somewhere in Young and fell whilst in the shower in the hotel where she chose to stay (and for which she was provided with a travel allowance) is what provides the relevant nexus between her injuries and the course of her employment. If, for example, the respondent had chosen to spend the night of 20 July at a cinema or club, and sustained injuries there a question would arise whether they were sustained during a relevant interval or interlude which would be seen as part of the course of her employment, even in the overall period or episode of her work whilst in Young. She may (I do not say would) then be engaged in an activity at a particular place or in a particular way which did not have the relevant nexus with the course of her employment. That is a question to be decided in another case. 37 McCallum is therefore another case where being in necessary overnight accommodation pursuant to a requirement to go to a particular town sufficed to provide the relevant nexus between injuries and the course of employment. Although Lockhart J referred to the fact that the employee was doing something perfectly ordinary, and normally to be expected (taking a shower or having a bath), that is not the circumstance which rendered the interval one which was to be seen as occurring during the course of employment as the first paragraph extracted above shows. 38 In Comcare v Mather (1995) 56 FCR 456 ("Mather") Kiefel J also gave attention to the principles stated in Hatzimanolis. In that case two soldiers were camped at the Darwin Showgrounds during a large scale military training exercise. They were on authorised local leave from 8 am to midnight on a particular day and went to the Humpty Doo Hotel which was within the boundaries of the exercise. They were struck by a car while walking back to camp from the hotel. One was injured and the other killed. The case really turned on what was involved in the notion of "encouragement" which might lead to an employee being at a particular place or engaging in a particular activity. However, it is clear that Kiefel J bore the distinction between those two possibilities (as referred to in Hatzimanolis) clearly in mind (see for example at 462F-462G, 463D). Her Honour referred explicitly (at 463) to "either category in Hatzimanolis, that the soldiers spend the interval in a place of their choice or in a way chosen by them". The finding which her Honour made was that the soldiers had been encouraged by the grant of local leave to participate in drinking and socialising at hotels and to return to camp from not too distant points. Accordingly, by reference to both where they were (walking back to camp from the hotel) and their choice of activity (having been drinking at the hotel) the soldiers were injured and killed in the course of employment. 39 In Workcover Authority of New South Wales v Walling (1998) 16 NSWCCR 527; [1998] NSWSC 315 ("Walling") the New South Wales Court of Appeal dealt with an injury sustained by an employee close to a cottage leased by his employer in which he was accommodated. His work for the employer was connected with drilling rigs in the coal mining industry which were kept on a farm property. The cottage was on the property and was leased by the employer. The remainder of the property was leased to a local farmer. About midday, after the employee had performed some maintenance work on a rig, he received a visit from a female friend. He offered to take her for a ride on his trail bike. The bike stalled when his female friend mounted. The employee then took the bike for a ride alone to warm it up on a portion of the property leased to the farmer, immediately adjacent to the cottage. He rode up a fairly steep embankment, showing off, and was thrown from the bike, suffering an injury which caused a permanent impairment of his back. In the end, a finding that compensation was payable was sustained on the basis that the trial judge had made an unchallenged finding that the employee was both at his place of temporary residence and his place of work when the injury occurred and no challenge was made to a further finding that by reason of proximity to both his place of temporary residence and his place of work he could not be considered to be temporarily absent from either at that time. In those circumstances the Court of Appeal did not offer a definite view about the correctness of the trial judge's approach to Hatzimanolis, which was to treat an interlude spent at a place of temporary residence as in the course of employment, without the necessity for examination of the particular activity. 40 None of these cases depended, in our view, upon the necessity to show that the employer had encouraged the employee to engage in a particular activity at a particular place. It was sufficient to show, as it had been in Danvers, that an injury occurred at a place constituting a temporary residence or otherwise arose from the employer's requirements or encouragement. 41 Nevertheless, the submissions of the appellant, and the approach taken by the AAT in the present case, involve the proposition that in order to satisfy the tests in Hatzimanolis an injured employee who claims to have been injured during an interval or interlude between periods of actual work must show both that the injury occurred at a place he or she was induced or encouraged by the employer to be and that the activity from which the injury arose was induced or encouraged by the employer, or was implicitly accepted. Demonstration of those two (or combined) conditions are necessary, on this thesis, to show that the injury occurred "in the course of employment". 42 It is true that approaching the matter this way would accommodate most of the factual circumstances in the cases to which we have referred (except Walling) when allowance is made for the assumption that an employer would anticipate, accept and implicitly authorise activities like eating, sleeping and showering. However, the thesis must overcome other obstacles. 43 First, it would require treating the conditions stated in Hatzimanolis ("at a particular place or in a particular way") as though they were conjunctive rather than disjunctive. Secondly, it would require us to treat the detailed analysis of earlier cases in Hatzimanolis, and the examples given by Oliver and Danvers, as dealing with a single issue with only one (albeit composite) dimension, rather than the two separately identifiable aspects which appear on the face of the discussion. Thirdly, it would require a different treatment from the treatment of liability for injury from an employee's unauthorised acts during periods of actual work, where strict tests apply before an employee will be treated as acting outside the course of employment. 44 It must, in our respectful view, be steadfastly borne in mind that the objective of the High Court in Hatzimanolis was to state the circumstances in which injuries to employees, which did not occur during periods of actual work, would nevertheless be treated as arising in the course of employment. Satisfaction of that condition signifies that the injury will be compensable even if it arises from unauthorised conduct, provided it is not conduct taking it outside the course of employment. In Hatzimanolis, as we have said, the High Court emphasised that for conduct to have that consequence it must be "gross misconduct". 45 It appears to us that the burden of the analysis in Hatzimanolis is that, provided one of the qualifying conditions is met, it falls to an employer to show that an employee's conduct is such as to take it outside the course of employment for the reason that it should be regarded nevertheless as gross misconduct. In cases to which a statutory regime applies there may, of course, be different or additional tests which arise for consideration. Some of these may be less strict. It should be understood that our discussion of these issues arises in the context set by the judgment in Hatzimanolis itself. In the present case for example, entitlement is governed ultimately by s 14 of the SRC Act. 46 Another example of a case where a statutory provision operated to modify the application of the "gross misconduct" test was Workcover Authority of New South Wales v Walsh [2004] NSWCA 186 where s 14(2) of the Workers Compensation Act 1987 (NSW) was found to "neutralise" gross misconduct and preserve a claim for compensation for the benefit of the dependents of a deceased employee. 47 By contrast, an example of a case where the test of "gross misconduct" was applied as contemplated in Hatzimanolis is Dew v Maher (1996) 14 NSWCCR 56; [1996] NSWCA 154. In that case explosives were used to play a prank. Use of the explosives had been "authorised, encouraged or permitted" by the employer, but their use for an intended prank was found to be gross misconduct even though the activity itself was otherwise found to be in the course of employment. The employee was therefore disentitled to compensation. 48 We have given close consideration to the suggested tension between the finding in Hatzimanolis (at 484-5) that: the whole period during which the appellant was engaged in working at Mt. Newman constituted an overall period or episode of work and the endorsement by the High Court (at 485) of the proposition that it did not follow from the fact that the employee was (as conceded) in the course of employment while working, travelling to work, eating and sleeping, or enjoying recreation at the camp: that the appellant was in the course of his employment "during the whole of the time" that he spent in the Mt. Newman area. (Emphasis in original.) 49 The High Court said of this contention: This contention is correct because the appellant would not necessarily be in the course of his employment while engaged in an activity during an interval or interlude in his overall period or episode of work if A.N.I. had not expressly or impliedly induced or encouraged him to engage in that activity during that interval. 50 We think that pronouncement does not have the effect, for which the appellant contends, of super-imposing an activity test on a place test. It merely recognises that the "place" element was not satisfied by reference to the whole Mt Newman region, or anything done within it, anymore than it was satisfied by the employee's presence in Western Australia rather than New South Wales. Although the whole period working at Mt Newman was an overall period or episode of work, it was still necessary, in order to satisfy one of the further conditions required to make a particular injury one which occurred in the course of employment, to show that the particular interval or interlude between actual periods of work met one of the qualifying conditions. That test would have been satisfied while the employee was in camp, whatever his activities, provided they did not amount to gross misconduct. The test was actually satisfied in Hatzimanolis by participation in activities authorised or encouraged by the employer. 51 Far from illustrating the application of a combined test, the passage relied upon points to the contrary conclusion. In our view there is no combined or two-stage test arising from Hatzimanolis. There is a single test which may be satisfied in either one of two ways, as the primary judge correctly appreciated. 52 We would add the following observations about the suggestion in the present case that any sort of encouragement or endorsement of the respondent's actions was necessary before compensation was payable. 53 First, Hatzimanolis is direct authority against that proposition. Just as the appellant in Hatzimanolis would have been in the course of his employment while he was at the employer's camp, unless he committed gross misconduct, so the respondent in the present case was entitled to compensation unless she was guilty of a level of misconduct disentitling her to compensation. In the present case, the test to be ultimately applied was "serious and wilful misconduct" (s 14 of the SRC Act). 54 Secondly, the views of the respondent's employer about the respondent's (lawful) activities were irrelevant, whether or not those views (if sought) may have reflected disapproval or indifference. In a different context, involving questions of vicarious liability, but concerned with the same legal concept, Gleeson CJ said in State of New South Wales v Lepore (2003) 212 CLR 511 (at [40]-[41]): 40 An employer is vicariously liable for a tort committed by an employee in the course of his or her employment. The limiting or controlling concept, course of employment, is sometimes referred to as scope of employment. Its aspects are functional, as well as geographical and temporal. Not everything that an employee does at work, or during working hours, is sufficiently connected with the duties and responsibilities of the employee to be regarded as within the scope of the employment. And the fact that wrongdoing occurs away from the workplace, or outside normal working hours, is not conclusive against liability. 41 The antithesis of conduct in the course of employment is sometimes expressed by saying that the employee was "on a frolic of his own". 55 It is quite clear from his Honour's remarks (and the discussion which followed) that the concept of "a frolic of his own" is one which applies to wrongful acts. That was not the case here and the notion has no application to the present case. No approval, express or implied, of the respondent's conduct was required in the present case. The views of the employer were irrelevant. 56 In all the circumstances we think the primary judge was correct to conclude that the AAT applied the wrong legal test. We see no room, on the undisputed facts of the case, for any suggestion that the result in the AAT denying compensation could be sustained once the legal error was corrected. Accordingly we think the primary judge was correct to make a declaration that the respondent was entitled to compensation. 57 The appeal is dismissed with costs. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Keane and Justices Buchanan and Bromberg. Associate: Dated: 13 December 2012