DEW T/as AG AND PG DEW v MAHER SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL HANDLEY, COLE JJA and COHEN AJA 29 November 1996, 29 November 1996 [1996] NSWCA 154 GROSS misconduct in the course of employment — Hatzimanolis vy ANI Corporation Ltd (1992) 173 CLR 473 discussed. Cole JA On this appeal, which encompasses both fact and law, the appellant employer has raised three matters. The first is whether Manser CCJ erred in finding that the respondent worker suffered injury in the course of his employment whilst engaged in an activity incidental to his employment. The second is whether his Honour erred in applying principles enunciated in Hatzimanolis v ANI Corporation Ltd! to the circumstances of this case and incorrectly applied Van Haeften v Caltex Oil (Australia) Pty Ltd2. The third issue is whether the trial judge erred in finding that the respondent was not guilty of gross misconduct. It is necessary to enunciate the facts, many of which were undisputed. In so doing I will indicate my view of contested facts. The respondent worker was injured on 4 January 1993. He was then 28 years old. He suffered injuries when a bomb exploded in the cabin of a utility in which he was travelling. The bomb was undoubtedly made by the driver, Mr Fenwick. The extent of participation of the respondent in the making of the bomb is disputed. The circumstances leading to the explosion were as follows. As a youth the respondent had some experience of rural life and working on a farm. After matriculating in 1981 he studied at the University of Newcastle gaining the degree of Bachelor of Science in 1988. He majored in biology and geology but after 1988 did not ever work as a geologist. He returned to his home district of Tamworth in late 1991 or 1992 where he registered as unemployed having commenced a horticulture course at the Tamworth TAFE college. He was obliged to do practical work as part of that course. He gained employment pursuant to a jobstart contract between the appellant employers and the Commonwealth. That agreement set forth the nature of his duties which were described as "caring for cattle and sheep, fencing, ground maintenance, irrigation, tractor work and planting of trees". The appellants run three substantial properties. The property on which the worker worked was Longford Station which was approximately 40 minutes away from Tamworth or Kootingal where the worker's family lived. The worker lived in a flat over the shearing shed, at least during the working week, thus avoiding that travel. Manser CCJ accepted the uncontradicted evidence of the worker that he had been offered the flat by Mrs Dew, one of the appellants. It was common ground that in addition to living in the flat during the week, the worker often stayed there at weekends. 1. (1992) 173 CLR 473. 2. (unreported), Court of Appeal, 4 September 1995. 2 UNREPORTED JUDGMENTS Mr Fenwick, the driver of the vehicle when the bomb exploded, was the stock manager of the appellant's properties. He lived on a second property owned by them known as McClintock, some 10 to 15 kilometres distant from Longford Station. He was provided by his employers with the vehicle in which the worker was travelling when injured. The worker regarded Mr Fenwick, not just as stock manager but as station manager with authority in the absence of the appellants. Fenwick was also a professional pig shooter who was permitted by the appellants to chase and kill pigs and retain the proceeds of carcases sold. The killing of pigs was of benefit to the appellants' property and was encouraged by the appellants because of that. Fenwick was also a licensed explosives operative having completed a course at the appellant's expense in that respect, thereafter taking over from Mr Dew responsibility for the use of explosives on the property. Explosives were used principally for destruction of rabbit burrows. Whilst the eradication of rabbits and pigs was for the benefit of the appellants and their property, and they encouraged Fenwick in the performance of those operations, they also knew and approved of other employees assisting Fenwick in such endeavours. When Fenwick went pig shooting accompanied by other employees they were not paid for that time, it no doubt being regarded as sport notwithstanding its benefits to the property. The respondent had been pig shooting with Fenwick on a number of occasions. On two occasions prior to 4 January 1993, Mr Fenwick had demonstrated using explosives, with various degrees of success, to the worker, including the making of a home made bomb which was handed to the worker to throw into a dam. There was no evidence to suggest that the worker participated in the making of that bomb. On 4 January 1993 the worker was engaged all day on irrigation work. The appellants' son, Timothy Dew aged 21 and a university student had with him two house guests, Jane and Samantha, also students. It was proposed that Timothy, Jane and Samantha would accompany Fenwick on a pig chase that night. Timothy sought his father's permission and Mr Dew senior gave it. Having finished the irrigation work at the end of the day, the worker went to his flat where he was joined by Fenwick. They filled cartridges with the intention of engaging in clay pigeon shooting. They then drove to Fenwick's house on McClintock where they were shortly later joined by two other employees and a friend. Those three did not go on the subsequent pig chase. Later Timothy, Jane and Samantha arrived and after light stopped the clay pigeon shooting there was discussion about the pig chase. Fenwick, Timothy and the two girls went to Fenwick's house. The worker remained outside. The four who went in to the house went through it to a shed behind the house where Fenwick kept his ammunition. He said "Would you like to see something bigger than bullets?". After an affirmative response Fenwick produced detonators and sticks of powergel. He proposed that it be taken on the pig chasing expedition. The worker became aware of this when the other four emerged from the house carrying the powergel, detonators and some fuse wire. In separate vehicles Timothy and the girls, and Fenwick and the worker, drove back to Longford where they went to the worker's flat, there having a little bourbon, coke-a-cola and marijuana. Before leaving on the pig chase the girls expressed concern regarding the presence of explosives, as did Timothy Dew. It was said by Fenwick that it was being taken along "for a bit of fun". Fenwick said: "We are just going to have a bit of fun and like, stick a detonator up a rabbit's arse and light it and let it go." URJ DEW T/as AG AND PG DEW v MAHER (Cole JA) 3 The worker joined in this reassurance given to Timothy and the girls saying that "the only thing that could go wrong is if the detonator got stuck in the car door and the door got closed then it might go off', and further "we're just going to have a bit if fun". There was no evidence that the worker knew what Fenwick intended to do with the explosives before they left Longford. Fenwick got into the driver's seat of the utility with the worker in the passenger's seat. Timothy and the two girls got onto the rear tray. They drove across Longford's paddock in search of pigs. They went through at least two gates. At the gates the worker got out of the cabin opened the gates and closed them after the vehicle went through. On one such occasion the worker asked for and received from Timothy in the back of the utility crimping pliers which had been given to him by Fenwick at McClintock. We did so at the request of Fenwick. Those pliers were necessary to crimp the fuse to the detonator. The worker subsequently gave those crimping pliers to Fenwick. The worker, at Fenwick's request, gave him a knife which he carried. That knife was later found in the cabin of the utility with traces of powergel adhering to the blade. Also in the cabin were three and three quarter sticks of powergel. At some time whilst stopped or travelling across the paddocks, a bomb was made in the cabin of the utility. Subsequently, as the vehicle was driving away from a gate, with Timothy and the two girls facing backwards, Timothy smelt a fuse burning in the rear of the utility. This was also smelt by the two girls, one of whom saw sparks on the driver's side of the vehicle. The worker gave evidence that he saw Fenwick sitting in the driver's seat, holding an explosive with a fuse on it which had been lit. The worker said to Fenwick as he watched the fuse burn in Fenwick's right hand: "let it burn a little longer". The worker wanted the fuse to be shorter, or burn longer, so that the device would go off close to those in the rear of the vehicle, it apparently being intended to give the three persons in the back of the vehicle a scare. The device exploded causing serious injuries to Fenwick and the worker. Manser CCJ found that Fenwick had constructed the bomb on his own. His Honour said: "The whole exercise appeared to me, to be one in which Fenwick was gripped by a high sense of drama. He had created the atmosphere by asking the girls whether they wanted to see *something bigger than bullets". He had taken with him the explosives, over the objections of the girls and the specific protests of Timothy Dew. He had constructed the bomb on his own. He had cut only a small length of fuse so that it would be liable to go off fairly soon after it was thrown, and he had involved the applicant, most probably willingly, in an enterprise which can only have had the effect of satisfying Fenwick's sense of fun." Shortly before, Manser CCJ wrote: "Mr Maher says that he did not participate in the construction of the bomb, although it is clear that he was an assistant, at least to some extent, in that he procured from Timothy Dew, the crimping pliers which were necessary to close the end of the detonator around the fuse wire so that it was secure, and his knife which he had obtained from his flat, was used to cut the powergel." The appellant contends that the correct finding is the latter which I have quoted, namely, that the worker was the assistant of Mr Fenwick in making the bomb. Properly read I do not think the two passages are in conflict. Critically the bomb was made by Mr Fenwick with the worker passing to him tools necessary for that task. 4 UNREPORTED JUDGMENTS Manser CCJ also found that the worker was the "follower" rather than an "nstigator" of the whole episode. That is challenged on appeal it being contended that both should each be regarded as willing instigators and participants. It was contended that in light of the worker's years, his educational qualifications, his friendship with Fenwick, his endeavouring to quieten the disquiet of Timothy and the girls regarding taking explosives on the pig chase, and in particular his assistance in providing tools necessary to make the bomb and his request to let the fuse burn longer, that those factors indicate that it was inappropriate to describe him as a "follower" rather than an instigator. I do not think that is so. Manser CCJ in part based his finding upon his observations of the worker in the witness box as a "quiet and passive person". Although he did not see Fenwick in the witness box he noted that Fenwick was in the position of a supervisor, certainly superior in position and knowledge to the worker in relation to farm and explosives matters, being a person who was entrusted with explosives by his employer, and being a person who had resisted the protests of the owner's son regarding taking explosives on the trip. I see no reason to disturb Manser CCJ's finding. The challenged finding ultimately led Manser CCJ to hold that Maher the worker was not guilty of gross misconduct. His Honour said: "Maher, on all the evidence, knew nothing about explosives. Fenwick knew all about them. Although Maher could have uttered the words, what does it matter. Fenwick had already done what he had done. He was the expert. He knew presumably how much powergel to put around the detonator. He knew how much fuse was necessary to produce an almost immediate explosive effect. Maher's actions, one can see with the knowledge of hindsight were stupid in the sense that he took along a knife that was used by Fenwick to cut up the powergel. On the other hand it can equally be said that Timothy Dew was stupid to have carried the crimping piers with him on the trip, or indeed, to have gone on the trip at all given that the girls protested about it, he had protested about it, and he knew that at some stage some explosives were going to be used. Consequently, it seems to me that Mr Maher is guilty of no more than being overborne by the dominant Fenwick and being stupid in being a participant in the escapade that Fenwick was engaged on." Ihave come to the view that the finding that the worker was not guilty of gross misconduct can not be sustained. In my judgment that is so notwithstanding that he was not the prime instigator or manufacturer of the bomb. I have reached that view because it is clear that he was aware that explosives were being taken on the pig chase. He knew there were detonators also being taken because he spoke of them. He must have seen in the cabin of the utility the powergel, the detonators and the fuse. He asked for, received, and passed over to Fenwick the crimping pliers. It must have been obvious that they were to be used to make an explosive device. He provided his knife obviously for the purpose of cutting the powergel which was in the cabin with him. Any doubt that he knew that a bomb was being made, and that it was to be thrown nearby to frighten those on the tray behind, is removed by his admission that he said to Fenwick, in relation the lit fuse: "let it burn a little longer". There was evidence that the worker later said to him "we lit the fuse". He was a significant participant in the manufacture of the bomb, and a knowing participant in the venture of ensuring that it would explode shortly after being thrown out of the utility. URJ DEW T/as AG AND PG DEW v MAHER (Cole JA) 5 In my judgment even if he be a quiet and passive person, and even if he was carried along to some extent by a more forceful personality, that does not negate his active participation in the venture of making the bomb and intending to use it to frighten those behind. In Hatzimanolis the majority said: "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 or work occurs within the course 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." It has been held in Dever Constructions Pty Ltd v Clare? that the High Court is not to be taken as laying down "a universal proposition of law that whenever gross misconduct occurs during an interlude between episodes of work, the employee must be outside the course of the employment".4 That may be so because the majority in Hatzimanolis concluded their remarks on this topic by stating: "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.""' To that may be added the circumstances attending the gross misconduct. Here, in my view, the gross misconduct was in using the employer's explosives for a purpose entirely foreign to his employment. That acts to remove him from that employment. It is not entirely clear whether the expression "gross misconduct" where used by the majority in the High Court in Hatzimanolis v ANI Corporation Ltd5 is intended to relate to gross misconduct only in the employment situation as I think is the case, or gross misconduct whilst in the course of employment but encompassing a social situation. In either circumstance it seems to me the worker was guilty of gross misconduct. He must have been aware that the explosives were to be used for destruction of rabbit burrows. Participating in their use for an extraneous purpose was gross misconduct in the employment situation. Participating in the use explosives to make a bomb to frighten people was, in my view, gross misconduct in both the employment and a social situation. It follows, in my view, that the appeal succeeds. In those circumstances I shall briefly state my views regarding the other two matters argued. I am of the view that, subject to the consequence of gross misconduct, the worker was injured in the course of his employment. The group was going out to shoot pigs. That was an activity which was "authorised, encouraged or permitted" by the employer, and indeed was for his benefit. It was an activity which 3. (1992) 110 FLR 239 at 246-248. 4. See also Compare v Mather (1995) 56 FCR 456 at 464. 5. (1992) 173 CLR 473. 6 UNREPORTED JUDGMENTS normally, as here, occurred between intervals of employment because it had, in part, a recreational quality notwithstanding its advantage to the employer. In the case of an employee living on a farm, it may be possible to determine daily work periods in particular circumstances such that it could properly be said that the period between, such as over night, constitutes a distinct time period, when the worker was not engaged in his employment. Each factual circumstance would need to be considered with regard to the location of the farm, the contract of employment so far as time periods are concerned and the specificity with which an employee by agreement with his employer ceases work. In weighing whether injury occurred in a period when the employee was or was not engaged in the course of his employment, the very fact that he lived on the farm needs to be considered. If the employee has been encouraged by the employer to live on the farm that may be a factor indicating the inappropriateness or difficulty in defining periods of employment. However, even if such periods are able properly to be defined so as to determine periods of employment less than the actual duration of his stay on the farm, if during the interval between such periods the employee is engaged on a task which is of benefit to the employer, even though it involves an element of recreation, it seems to me to accord with the restatement of the nature of the expression "course of employment" in the law of worker's compensation enunciated by the High Court in Hatzimanolis to hold that that activity is within the course of employment. That seems to me to follow from the passage in majority judgment reading: "Moreover, Oliver and the cases which follow it show that an interval or interlude in an overall period or episode of work will ordinarily be seen as being part of the course of employment if the employer, expressly or impliedly, has induced or encouraged the employee to spend the interval or interlude at a particular place or in a particular way."6 Here the evidence was that Mrs Dew invited the worker to live on the property, and the appellant authorised, encouraged or permitted the worker to engage with others in the task of eradication of feral animals for the benefit of the employer. It follows, in my view, that it can properly be said that the injury was suffered in the course of his employment whilst engaged in an activity incidental to it, subject of course to the misconduct point. I understand my view to accord not only with the view of the majority in Hatzimanolis, but also with the decision of this Court in Van Haeften v Caltex Oil (Australia) Pty Ltd7. For these reasons I do not think that Manser CCJ erred in his application of either of those decisions. It was contended that the principles restated in Hatzimanolis apply only in relation to remote places of employment where the employer requires the employee to reside on site. I do not think that is so. The principles are of general application producing differing factual results depending upon the application of particular factual situations. The High Court made clear it was addressing generally the concepts of the duration of periods of employment and their relationship to injury suffered between or within such periods.' I would propose that the appeal be upheld, that the award dated 13 December 1995 be set aside and in lieu thereof there be an award for the respondent in the proceedings below. 6. (1992) 173 CLR 473 at 484. 7. (unreported), Court of Appeal, 4 September 1995S. 8. (1992) 173 CLR 473 at 482. URJ DEW T/as AG AND PG DEW v MAHER (Cohen AJA) 7 Handley JA I agree with the judgment of Cole JA that has just been delivered. I would merely add his Honour's conclusion that the worker was guilty of gross misconduct in this case is in my view reinforced by the obvious risks to life, limb and property involved in the irresponsible use of explosives by the two employees concerned. Cohen AJA As a result of folly that took place on the night in question which caused serious and permanent injuries to the appellant there cannot be anything but sympathy to a young person who has to live the rest of his life with those injuries. This Court has decided, within the principles of law relating to the Workers Compensation Act it should be said their employers or insurers are liable to compensate the appellant for those injuries. I consider for the reasons already given that the facts of this case show that the appellant was an active participant in the activity which led to the explosion and that participation is at its highest shown in the evidence that the appellant saw the device with the fuse lit and suggested it should burn a little longer, thus increasing the risk both to himself and to others. I regard these facts as indicating that the activities were not incidental to his employment and also for the reasons already given amount to gross misconduct within the terms of any such employment. I agree with the reasons given by Cole JA and with the orders he proposes. Handley JA: I make the orders as proposed by Cole JA. Orders accordingly. Counsel for the appellant: CE O'Connor QC/RA Stanton Solicitors for the appellant: Leigh Virtue and Associates Counsel for the respondent: BMJ Toomey QC/RH Wood Solicitors for the respondent: McMahon and Broadhurst