In the following alert, Senior Associate Aaron Clark and Associate Claire Bruggemann discuss the recent decision of Pioneer Studios Pty Ltd v Hills [2015] NSWCA 222 in which a worker who was injured at a party at the employer’s premises was unsuccessful in her workers’ compensation claim against her employer.

Facts

On 13 March 2004, Kathryn Hills (the Respondent) attended a party at her employer’s premises.  At approximately 3.30am on Sunday, 14 March 2004, she sustained significant injuries to her head and shoulder when she fell over a balustrade of a staircase and landed on the level below.

The Respondent argued that her injury arose out of or in the course of her employment (section 4 of the Workers’ Compensation Act 1987 (NSW)) and relied on the following facts:

  • the director of the company gave permission for a former employee to have a party at the studios of the employer. This was to be both a farewell for him and a birthday party for he and two other friends, all of whom had birthdays in March;
  • she attended the party as a work function;
  • she was told about the party by another employee where it was indicated to her that the party would be a good chance for her to meet clients and to get to know them better; and
  • she came to the view that it was important for her to attend the party to meet clients face-to-face and establish good relationships with them.

Pioneer Studios Pty Ltd (the Appellant) argued that:

  • it had no involvement in the organisation or control over what happened at the party;
  • the party was by invitation only;
  • the director of the company attended because he was invited.  He had no knowledge of who would be present at the party;
  • attendance at the party was purely voluntary;
  • the host of the party arranged for security at the door, catering and cleaning; and
  • no member of staff was directed to attend the party.

Litigation Chronology

The Respondent initially made a claim for compensation in August 2010, and filed an application to resolve a dispute in the Workers Compensation Commission.On 13 January 2011, the Commission rejected her claim.

The Respondent appealed this decision and on 1 June 2011, Deputy President Roche gave judgement in her favour and ordered that the Appellant pay compensation.[1]

The Appellant appealed to the New South Wales Court of Appeal.The appeal was heard on 26 September 2012 by Allsop P, Basten and Hoeben JJA, who set aside the decision of Deputy President Roche and remitted the matter to the Workers Compensation Commission for consideration according to law.[2]

On 24 October 2012, the Respondent applied to the High Court for special leave to appeal the decision of the Court of Appeal, but the leave was refused.[3]

On 10 July 2014, Deputy President O’Grady held that the Respondent’s injury arose out of or in the course of her employment.[4]

The Appellant sought an appeal of this decision.

Judgement

In the matter’s sixth hearing, the New South Wales Court of Appeal upheld the appeal by a two-to-one majority and set aside the orders made by Deputy President O’Grady.

Court of Appeal Justices Ruth McColl and John Basten found the fact the Respondent was encouraged, or even induced, to attend the party was not sufficient to render it part of her employment.They held further, the fact the director of the company anticipated that members of staff would attend the party did not mean that it was thereby part of their employment.They concluded that finding was not open on the evidence.

They stated that Deputy President O’Grady adopted an incorrect approach to the legal standard or criterion to be applied when determining whether an action was within the course of employment.Justice Basten noted the test:

depends on an objective characterisation of the employer’s requirements and expectations, though with no precise limitation to the contract of employment.  It is not sufficient that this particular employee held a particular view which, on the evidence, was not shared either by the director of the company, by her immediate supervisor, nor by the only other employee who provided a statement”.

Justice Basten remarked that:

it appears that the Deputy President has taken the elements of inducement and encouragement from the reasoning in Hatzimanolis v ANI Corporation Ltd [1992] HCA 21, without regard to the different circumstances and without regard to the purpose for which that language was adopted, and applied it as a freestanding test of how an activity may fall within the course of employment”.

Furthermore, Justices Basten and McColl found that:

not every activity which an employer may encourage, or even induce, an employee to undertake will result in the employee acting in the course of his or her employment by acceding to such encouragement or inducement”.

In his dissenting judgement, Justice Simpson found no error of law had been established and the assessment that the Respondent’s employment was a substantive contributing factor to her injury was a finding of fact, unreviewable by the Court of Appeal.

Take away points

  • The test adopted by the High Court in Hatzimanolis and revised in Comcare v PVYW [2013] HCA 41 is that injuries sustained during an interval or interlude during an overall period of work are seen to have occurred in the course of employment only where the factual circumstances giving rise to the injury are supported by an inducement or encouragement by the employer.
  • Not every activity an employer encourages or induces an employee to undertake will result in the employee acting in the course of his or her employment.  An example noted by the High Court is that if an employer was to encourage a worker to see a doctor after working hours, an injury which occurred whilst the worker was visiting the doctor would not be an injury in the course of employment.
  • In recent times, this particular issue has been the subject of a number of hearings before the Queensland Industrial Relations Commission as to whether compensation is payable under the Workers’ Compensation and Rehabiltitation Act 2003. Each jurisdiction has subtle changes in the wording of legislation and as such, it is always important that employers seek advice on the unique circumstances of each case to determine whether review or appeal prospects are viable.