FEDERAL COURT OF AUSTRALIA Coward v Military Compensation and Rehabilitation Service [2006] FCA 840 ADMINISTRATIVE LAW – compensation claim by veteran – whether Tribunal applied incorrect definition of employment – whether Tribunal erred by rejecting time-based probabilistic analysis of cause of infection Held: (1) The definition of 'employment' under the Compensation (Commonwealth Government Employees) Act 1971 (Cth) should include consideration of activities arising from the circumstances in which the employment is undertaken. (2) It is not appropriate to adopt a time-based probabilistic analysis where an applicant is unable to identify any activity, at least in a general sense, which has caused or contributed to the disease or injury. Compensation (Commonwealth Government Employees) Act 1971 (Cth) ss 7, 27, 29 Safety, Rehabilitation and Compensation Act 1988 (Cth) s 124 Veterans' Entitlements Act 1986 (Cth) s 68 Comcare v Mather and Anor (1995) 37 ALD 463 referred to Commonwealth of Australia v Carter (1965) 7 FLR 223 referred to Commonwealth v Oliver (1962) 107 CLR 353 referred to Commonwealth v Wright (1956) 96 CLR 536 referred to Favelle Mort Ltd v Murray (1976) 133 CLR 580 referred to Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 referred to Henderson v The Commissioner of Railways (Western Australia) (1937) 58 CLR 281 referred to Humphrey Earl Ltd v Speechley (1951) 84 CLR 126 referred to Military Compensation and Rehabilitation Commission v Wall [2004] FCA 1711 followed Military Rehabilitation & Compensation Commission v Wall [2005] FCAFC 127 followed Re Tully and Comcare (unreported, Administrative Appeals Tribunal, 4 October 1996) referred to Roncevich v Repatriation Commission [2005] HCA 40 followed Treloar v Australian Telecommunications Commission (1990) 26 FCR 316 referred to ROBIN COWARD v MILITARY COMPENSATION AND REHABILITATION SERVICE NSD 2273 of 2005 COWDROY J 3 JULY 2006 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 2273 OF 2005 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: ROBIN COWARD Applicant AND: MILITARY COMPENSATION AND REHABILITATION SERVICE Respondent JUDGE: COWDROY J DATE OF ORDER: 3 JULY 2006 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The application is dismissed, except in relation to ground 4.1 of the notice of appeal, which relates to the applicant's injury to his sacro-iliac joint. 2. The orders of the Tribunal be vacated and the following substituted: 'The determination dated 23 February 2004 be varied by deleting from the second paragraph thereof the words "is not liable to pay compensation on and from 31 October 1972" and substituting the words "has no liability to make payments of compensation in respect of incapacity in respect of the period 31 October 1972 to 20 October 2005"; the decision under review is otherwise affirmed.' 1. The applicant pay the respondent's costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 2273 OF 2005 BETWEEN: ROBIN COWARD Applicant AND: MILITARY COMPENSATION AND REHABILITATION SERVICE Respondent JUDGE: COWDROY J DATE: 3 JULY 2006 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an appeal from the Administrative Appeals Tribunal in respect of a claim of compensation under the Safety, Rehabilitation and Compensation Act 1988 (Cth) ('the SRC Act'). The applicant is a former member of the defence forces who claimed compensation from the respondent on the grounds that his medical condition of reactive arthritis and osteoarthritis of the right knee was caused by, or contributed to by, his military service. The Tribunal affirmed the decision of the respondent that it was not liable to pay compensation because the applicant had not proved that his medical condition was caused by his military service: see the Tribunal's judgment ([2005]AATA 1045). The applicant appeals that decision. 2 Two issues are raised in this appeal. The first issue has been resolved by agreement between the parties and relates to whether the respondent was liable for sprain of the applicant's left sacroiliac joint in the period 13 September 1972 until 31 October 1972. The respondent acknowledges that it is liable for such injury. The respondent has undertaken to the Court that any future claim made by the applicant in respect of that previously accepted condition will be entertained by the respondent and determined on its merits. 3 The second issue is whether the applicant's employment contributed to his reactive arthritis. legislation 4 The applicant's claimed injury was suffered before the commencement of the SRC Act. By s 124 of the SRC Act, the applicant is entitled to compensation under the SRC Act if compensation would have been payable under the legislation existing at the time of the applicant's injury, namely the Compensation (Commonwealth Government Employees) Act 1971 (Cth)('the 1971 Act'). 5 Section 27 of the 1971 Act made the Commonwealth liable to pay compensation in respect of a personal injury 'arising out of or in the course of the employment' of a Commonwealth employee. By s 29, where the employment is a 'contributing factor'to the contraction or aggravation of a disease, the disease was deemed to be a personal injury for the purposes of s 27 the 1971 Act. By s 7, a member of the Defence Force is deemed to be employed by the Commonwealth and his employment is 'deemed to be constituted by his performance of his duties as such a member … of the Defence Force'. 6 Accordingly, by s 29 of the 1971 Act, the applicant must demonstrate that his employment in the Defence Force contributed to the contraction or aggravation of his arthritis in order to succeed in his claim. BACKGROUND 7 The medical experts agreed, and the Tribunal accepted, that the applicant suffered from reactive arthritis which had first appeared in September 1972. Reactive arthritis is a medical condition which is triggered by a prior enteric or urogenital infection. The infection may be subclinical, that is, an individual may be unaware of the infection. The period between the contraction of the infection and the onset of arthritic symptoms was a matter of dispute between the medical experts, but the Tribunal accepted that the infection must have occurred at least some days and up to four months before symptoms of arthritis first appeared. 8 The applicant's medical record does not indicate that the applicant suffered any illnesses which could have triggered the reactive arthritis in the four months leading to the onset of his reactive arthritis. Accordingly the Tribunal was satisfied that the illness leading to the reactive arthritis passed unnoticed by the applicant. 9 The applicant served in the Army Corps of Engineers as a driver between April 1971 and April 1974. For most of the four months prior to the onset of his reactive arthritis, the applicant was residing at Lavarack Barracks near Townsville. On completion of his normal daily duties he would return to barracks, although on some weekends he left the barracks to visit the local town. The Tribunal found that there was no evidence that he was required to be at barracks when he was not fulfilling his duties. 10 During the four months prior to the onset of arthritic symptoms, the applicant also spent a period of seven days on exercise in the area, and two weeks confined to barracks for disciplinary reasons. 11 The Tribunal found that the applicant's condition 'occurred during the course of his employment, that is a temporal connection exists'. However the Tribunal found that on the balance of probabilities the applicant's employment had not contributed to his reactive arthritis. 12 In making this finding, the Tribunal rejected the applicant's submission that his employment included all time which he spent at the barracks. The Tribunal found that his employment did not include periods when he was rostered off-duty and not undertaking authorised or expected activities, and did not include periods of local leave. The Tribunal also rejected the submission that a time-based probabilistic analysis could be used to determine whether the applicant had contracted the infection in the course of his employment. SUBMISSIONS 13 The applicant essentially makes two submissions in support of his application. First, the applicant submits that the Tribunal erred in its interpretation of 'employment' for the purposes of the 1971 Act. Second, the applicant says that the Tribunal erred by rejecting a probabilistic approach to the question of whether the applicant's employment contributed to his reactive arthritis. 14 In respect of its first submission, the applicant says that the Tribunal used the term 'defence service' to describe the applicant's employment. The applicant submits that the Tribunal did not identify what it understood the term 'defence service' to include. The applicant says that the term 'defence service' is used in the Veterans' Entitlements Act 1986 (Cth) ('Veterans' Entitlements Act') rather than in the 1971 Act, and that a test of 'defence service' was the incorrect test. 15 The applicant further submits that the Tribunal did not apply the correct interpretation of 'performance of duties' as referred to in s 7 of the 1971 Act. The applicant states that the correct test was that enunciated by the High Court in Roncevich v Repatriation Commission [2005] HCA 40 at [23] (set out at [24] below). 16 The applicant submits that the Tribunal should properly have considered that living in barracks was itself an authorised or expected activity, despite the fact that the applicant was not required to live there. The applicant submits that performance of duties as service personnel includes a wider range of matters than for civilian employment, and extends to ancillary duties or matters incidental to the employment: see Military Rehabilitation & Compensation Commission v Wall [2005]FCAFC 127 at [20]–[29]; Commonwealth of Australia v Carter (1965) 7 FLR 223 at 227; Commonwealth v Wright (1956) 96 CLR 536 per Dixon CJ at 546; McTiernan J at 547-8; Webb J at 550-1. 17 In relation to its second submission, the applicant says that the Tribunal should have considered the cause as a question of exposure: see Favelle Mort Ltd v Murray (1976) 133 CLR 580 at 584, 601; Re Tully and Comcare (unreported, Administrative Appeals Tribunal, 4 October 1996). Interpretation OF EMPLOYMENT 18 The first issue to determine in these proceedings is whether the Tribunal correctly described the scope of the applicant's employment for the purposes of the 1971 Act. 19 In respect of that issue, the Tribunal's findings were as follows: 'For the period prior to his confinement to barracks his defence service would include those periods when he was rostered for duty and any work reasonably required, expected or authorised to do to carry out his actual duties. It does not include periods where is rostered off duty and not undertaking authorised or expected activities. It does not include periods of local leave.' 20 I do not consider that the use of the term 'defence service' by the Tribunal is itself indicative of an error of law. 'Defence service' was used interchangeably with the term 'employment' throughout the Tribunal's judgment. I am satisfied that the Tribunal used the words 'defence service' merely as a description of the nature of the applicant's employment, and not with any intention to invoke a defined term with a specific legal meaning by reference to the Veterans' Entitlement Act. 21 Further, 'defence service' is defined in s 68 of the Veterans' Entitlement Act as 'continuous full-time service rendered as a member of the Defence Force'. The definition specifies certain dates which delimit the definition of 'defence service'. There is nothing in the definition, however, which circumscribes the activities which are to be understood as constituting 'service rendered as a member of the Defence Force'. I do not consider there is any significant difference between 'service rendered as a member of the Defence Force' and 'performance of duties … as … a member of the Defence Force', which is the definition of employment contained in the 1971 Act. Accordingly, I consider that the concept of 'defence service' as contained in the Veterans' Entitlements Act is analogous to the concept of 'employment' contained in the 1971 Act. 22 The courts have recognised that employment can extend beyond the mere fulfilment of daily duties: see Favelle Mort Ltd v Murray; Henderson v The Commissioner of Railways (Western Australia) (1937) 58 CLR 281; Commonwealth v Oliver(1962) 107 CLR 353; Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473; Humphrey Earl Ltd v Speechley (1951) 84 CLR 126. Particularly with respect to employment in the armed forces, the courts have recognised that employment entails more than simply those duties which are the subject of commands and orders, and includes matters ancillary or incidental to those duties: see Comcare v Mather and Anor (1995) 37 ALD 463; Roncevich; Commonwealth of Australia v Carter. 23 However, diseases may be contracted by an employee during the period of his service in a temporal sense which are not contributed to by employment. To establish an entitlement to compensation under the SRC Act there must be a causal connection between the employment and the disease or injury sustained by the employee: see Re Tully and Comcare; Military Rehabilitation & Compensation Commission v Wall; Roncevich; Treloar v Australian Telecommunications Commission (1990) 26 FCR 316 at 323. 24 The High Court in Roncevich considered the question of the activities which constituted employment in the defence force. In Roncevich the applicant had become intoxicated whilst at a military function and had subsequently fallen and injured himself. There was evidence that attendance at the function had been expected but not compulsory. In deciding that the injury arose from the applicant's employment, McHugh, Gummow, Callinan and Heydon JJ said at [23]: '… whether an event arises in the course of an activity, or as here, out of "an activity", depends upon such matters as the nature of the person's employment, the circumstances in which it is undertaken, and what, in consequence, the person is required or expected to do to carry out the actual duties.' [original emphasis] 25 In Military Rehabilitation and Compensation Commission v Wall, a recent decision of the Full Court of the Federal Court of Australia, the question to be determined was whether the respondent's employment in the armed forces contributed to the development of his smoking habit (which in turn contributed to his medical condition). The majority upheld the decision of the Tribunal, adopting the reasoning of Hely J at first instance. The finding of the Tribunal was based upon a factual finding that the respondent had commenced smoking in part because of the circumstances of his employment. Hely J rejected the submission that there was a necessary distinction between incidents of life in the military and the performance of duties as a member of the Defence Force: see the judgment of Hely J in Military Compensation and Rehabilitation Commission v Wall [2004] FCA 1711 at [47]-[48]. 26 A definition of employment which rests solely on a temporal distinction between periods on-duty and periods off-duty is likely to be inconsistent with the authorities outlined above. As was the case in Roncevich, there may be periods when a person is officially off-duty and yet is engaged in activities which, as a matter of practicality, form part of their employment. In Wall the Court also accepted that employment in the military may contribute to an injury if it places a person in circumstances which lead to an injury, even where the injurious activity is not specifically required or expected by the employment. I note that in the passage of Roncevich quoted above, the High Court referred to the need to take into consideration the circumstances in which employment is undertaken. This is consistent with previous authority to the effect that matters ancillary or incidental to employment form part of employment: see [22] above. 27 Following the above authorities, I consider that the appropriate approach is to consider the nature of the activity being undertaken at the time the injury is received or the disease is contracted, and the circumstances in which that activity is being undertaken. If the activity is the cause of the injury or disease, and that activity is something which is required or expected as part of the person's duties, then clearly the employment contributes to the injury or disease: see Roncevich. 28 However, even where the specific activity which leads to injury or disease is not itself required or expected as part of the person's duties, where the injury or disease flows from the circumstances in which that activity is undertaken, and those circumstances result from the employment, it may be concluded that the injury or disease was contributed to by the employment: for example, where an injury results from drinking contaminated water from a tap at barracks. Similarly, when the activity is undertaken solely or party because of the circumstances of the employment (as was the case in Wall), the employment may be found to have contributed to the injury or disease. 29 As the Full Court noted in Wall, causation is a question of fact, and it may be difficult to establish that an injurious activity was engaged in as a result of the circumstances in which a person was placed by their employment: see Wall at [35]. In summary, I consider that an injury or disease may be contributed to by a person's employment if caused by an activity which forms part of that employment or if caused by the circumstances in which the employment is undertaken. 30 Living at barracks is, in my opinion, one of the circumstances of employment in the military, even where soldiers are not required to live there. Barracks are specifically designed to provide accommodation for soldiers. This is not to say that any activity undertaken at barracks which caused an injury would necessarily have been contributed to by employment. However, I consider that an injury or disease which arose as a consequence of living at barracks would be an injury which arises out of employment in the military. 31 The Tribunal's findings with respect to the limits of the applicant's employment were set out relatively briefly although it is clear that the Tribunal had considered the decision of Roncevich when making its findings. The Tribunal adopted the correct approach, except for one aspect. It appears to me that in defining the scope of employment to be applied, the Tribunal may have excluded from its consideration the circumstances in which the employment was undertaken as a contributing factor to the development of injury or disease. However, for the reasons which follow, I do not consider that it was material in this case. 32 The principle that emerges from the above analysis is that in order to demonstrate that employment has contributed to an injury or disease, an applicant must be able to indicate, at least in a general sense, some activity which gave rise to the injury or disease. However in the present case, the applicant has been unable to identify the activity or circumstance which was the cause or likely cause of the infection which led to his reactive arthritis. The medical evidence demonstrates that there are two broad types of infection which might cause reactive arthritis: a gastro-enteric infection or a sexually transmitted disease. Which one of these in fact caused the arthritis is a material factor in determining whether it was more likely that the applicant contracted the infection as a result of his employment or as a result of an extraneous cause. 33 Whilst it is true that his infection may have been contributed to his employment, the Tribunal had no evidence to support the applicant's claim that this was the case. The fact that the applicant spent more time in employment than not in the four months leading up to the arthritis does not establish that the employment contributed to the infection. Whether it was more likely for the applicant to have contracted the infection while working depends entirely on the source of the infection. In the absence of any evidence relating to this issue, the Tribunal was right to reject the time-based probabilistic analysis urged by the applicant. 34 This finding does not mean that a person claiming compensation would always need to demonstrate the exact event which caused an illness to occur, or be able to show with certainty which activity was the cause. If, for example, the applicant in this case had demonstrated that an epidemic of gastro-enteric infections had been experienced at the barracks during the four-month period preceding the onset of his symptoms, the Tribunal may have been able to conclude that it was most likely to have been a gastro-enteric infection contracted in the course of employment which was the cause of his reactive arthritis. However, there is no evidence in the present case which allows the Tribunal to determine that the infection was most likely to have arisen from the applicant's employment. 35 I agree with the Tribunal's finding that the applicant's claim is speculative. There is simply no factual evidence enabling the Court to find that the employment by the respondent contributed to the applicant's disease. The fact that the respondent cannot disprove that the infection was contracted as a result of employment is not a reason to accept that the infection was contracted during employment. Accordingly, I consider the appeal must fail. COSTS 36 The delegate of the respondent who originally made the decision in this matter determined that the applicant had suffered a sprain of his left sacro-iliac joint in September 2004, but that the Commonwealth was not liable to pay compensation on and from 31 October 1972 as the condition had resolved within a month. The parties agreed before the Tribunal that this finding should be overturned, and an alternative finding should be made that liability was accepted, but that the applicant suffered no ongoing incapacity from his injury, as the delegate did not have the power to make an original decision in such terms. 37 In affirming the decision under review, the Tribunal failed to overturn the finding of the delegate as sought by both parties, presumably by oversight. The applicant therefore sought an order in this Court overturning that part of the Tribunal's decision which affirmed the delegate's finding with respect to that injury. The respondent has consented to this course before this Court. 38 The applicant says that until receipt of the respondent's submissions in this application, he was not aware that the respondent consented to the applicant's order in respect of the sacro-iliac joint. The applicant therefore claims costs of preparing its case concerning this issue in this Court. 39 I am not satisfied that the applicant should be entitled to its costs on this issue. The applicant was aware that the respondent had not objected to this course before the Tribunal, and therefore was likely to agree to the order sought. Although it may have been helpful for the respondent to have contacted the applicant at an earlier stage, in the absence of such contact the applicant could have sought clarification of the respondent's position before any costs were incurred. There is no evidence that the applicant sought clarification from the respondent at any time before the hearing. 40 Accordingly, I consider the usual order for costs should apply. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy. Associate: Dated: 3 July 2006 Counsel for the Applicant: M Vincent Solicitor for the Applicant: Legal Aid New South Wales Counsel for the Respondent: B Kelly Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 28 April 2006 Date of Judgment: 3 July 2006