Galibal Pty Ltd v Higgins

[1999] HCATrans 226

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S159 of 1998

B e t w e e n -

GALIBAL PTY LIMITED t/as HOTEL NIKKO DARLING HARBOUR

Applicant

and

MICHAEL ANDREW HIGGINS

Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 6 AUGUST 1999, AT 12.14 PM

Copyright in the High Court of Australia

MR T.E.F. HUGHES, QC:   May it please the Court, I appear with my learned friend, MR J.W. CATSANOS, for the applicant, the respondent employer.  (instructed by HIH Workers’ Compensation (NSW) Pty Ltd)

MR J.L. GLISSAN, QC:   If the Court please, I appear with my learned friend, MR R.L. GOODRIDGE, for the applicant below.  (instructed by Stacks – The Law Firm)

GLEESON CJ:   Yes, Mr Hughes.

MR HUGHES:   Your Honours, this case which involves an accident that occurred in quite bizarre circumstances, as your Honours will have observed from reading the judgments, involves a question of the relationship between section 9 of the Workers’ Compensation Act 1987 and section 14(2) of that Act.

GLEESON CJ:   This case seems to demonstrate that the longest way round might be the quickest way home.

MR HUGHES:   Yes, indeed.  Your Honour, the respondent worker, the respondent here, did what turned out to be a free fall down a vertical laundry chute from the fifth floor to the mezzanine floor of the hotel.  The point is a short one.  I would endeavour to describe it - your Honours will have read the papers and I do not propose to go to the details of the accident.  Your Honours will see from pages 12 and 13 of the application book that there are set out the relevant statutory provisions.  Section 9(1) says:

A worker who has received an injury…..shall receive compensation from the worker’s employer in accordance with this Act.

“Injury” is defined in section 4 as an “injury arising out of or in the course of” the employment.  Section 14(2) says:

If it is proved that an injury to a worker is solely attributable to the serious and wilful misconduct of the worker, compensation is not payable in respect of that injury, unless the injury results in death or serious and permanent disablement.

GLEESON CJ:   Mr Hughes, am I right in thinking that behind your argument is the proposition that but for that section, this injury would not have been in the course of his employment?

MR HUGHES:   Exactly.

GLEESON CJ:   Why is that?

MR HUGHES:   That is because the case law that has developed so as to provide what this Court described in the case of Hatzimanolis v ANI Corporation, in the course of case law developed a flexible but workable test for determining whether an injury arises in the course of the employment.  The test has been expressed as this, that the injury must be shown to have been in the course of the worker doing something that he was authorised, required, expected, encouraged or allowed to do.  So that that takes in interval cases, cases of injuries occurring in intervals between work where the workers are playing a game on the employer’s premises or even away from the employer’s premises.

GLEESON CJ:   But this worker was on the way to change out of his working clothes, was he not?

MR HUGHES:   Yes, he was but the findings of fact in the compensation court based upon admissions made by the worker in evidence were that what he did was in no way related to his employment and was in effect outside the sphere of his employment and was a lark, as he described it.  The position as it is left by the majority judgment can be described in this way.  Mr Justice Priestley who delivered the leading judgment for the majority in effect attempted to rewrite section 14(2) in a passage which commences at page 32 of the application book starting at line 31.  The way his Honour rewrote the section is set out at the top of page 33.

When one looks at his Honour’s attempt to rewrite section 14(2), it will be seen on analysis that his Honour has, in relation to cases falling within section 14(2), effectively written out of the statutory provisions any requirement that the injury must be shown to have been in the course of employment.  We say that there are of course cases, or can be cases, in which an injury in the course of the employment can be solely due to serious and wilful misconduct and that it is not legitimate to write out the requirement of an injury being in the course of the employment in the way that his Honour did.

GUMMOW J:   But his Honour focused, did he not, on the history of the decisions dealing with the effect of serious and wilful misconduct and said that these being the decisions, what was section 14(2) designed to do, and this is what it was designed to do?  It was for the benefit but with a qualification.

MR HUGHES:   Yes, but if one analyses what his Honour has done, your Honours will see that the requirement of “course of the employment” has been written out.  Could I put to your Honours what we submit is the substantial effect of what his Honour Mr Justice Priestley did at pages 32 and 33.  The effect is this:  to prescribe that if at his or her place of work a worker suffers serious and permanent disablement solely as the result of serious and wilful misconduct, that worker will be entitled to compensation under the Act even though the event causing that disablement is not an injury arising out of or, more particularly, in the course of that worker’s employment, as that expression has been interpreted in the case law.

One of the most recent expositions in this Court of the meaning of the statutory expression “in the course of the employment” is in Hatzimanolis v ANI Corporation 173 CLR 473, which is on our list. In the joint judgment at page 484 there is a significant passage, in my submission. This was an interval in employment case, but that does not affect what the majority said.

GUMMOW J:   This was in the course of a car trip, was it not?

MR HUGHES:   An expedition in the Northern Territory organised by the employer at a weekend.

GUMMOW J:   Yes.

MR HUGHES:   What their Honours said starts about ten lines down:

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.

So that the judgment recognises that gross, or in other words serious, and wilful misconduct can take a worker outside the statutory definition of “injury”.

GUMMOW J:   But this was an injury at the workplace, was it not, in this case?

MR HUGHES:   Yes.

GUMMOW J:   It was not one of those diversions.

MR HUGHES:   No, I appreciate that, but the importance of what I have read is that, although it applies specifically to an interval or expedition type of case, their Honours recognised very expressly that “gross misconduct” alias “serious and wilful misconduct”, one would venture to say, can take an event causing disablement outside the course of the employment.  That is the principle that, with respect, the judgments of the majority in this case failed to recognise.

GUMMOW J:   But the High Court in the Western Australian case – or the events happened over there – did not have section 14(2), did it?

MR HUGHES:   But 14(2) applied in ANI Corporation because it was a New South Wales injury.

GUMMOW J:   It was a New South Wales Act.

MR HUGHES:   Yes, a New South Wales Act.

GLEESON CJ:   Mr Hughes, I may have misunderstood something that I read in the materials, but is section 14(2) still in force?

MR HUGHES:   Yes, your Honour.

GLEESON CJ:   I thought that it was submitted to us that there is a new section 9A that produces the consequence that this case is of no importance except to the particular parties.

MR HUGHES:   Your Honour, that is the submission that is made.  In our submission, that has to be made good.  My learned friend has flagged the point in his outline and ‑ ‑ ‑

GLEESON CJ:   Where do we see that section 9A?

MR HUGHES:   I take it my learned friend is going to – I have a copy of it.  Section 9A which was enacted in ‑ ‑ ‑

GLEESON CJ:   The one that begins, “No compensation is payable”?

MR HUGHES:   Yes, your Honour:

under this Act in respect of an injury unless the employment concerned was a substantial contributing factor to the injury.

That of course has not excluded the concept of “in the course of employment” from section 9 and it has not repealed section 14(2).  This rather relatively new provision has not been the subject of any judicial interpretation, I am told, except in the Compensation Court of New South Wales.  Your Honours will see that a number of factors can be taken into account.  I will not read them all.

GLEESON CJ:   Was this intended to cover journey cases, for example?

MR HUGHES:   Journeys are a separate little code, your Honour.  Journeys are covered by a “serious and wilful misconduct” qualification.  Journeys are excluded from section 9A by subsection (4):

This section does not apply in respect of an injury to which ‑ ‑ ‑

GLEESON CJ:   I will not take your time further.  Mr Glissan can explain it.

MR HUGHES:   I would prefer to deal with that in reply if that is convenient.

GLEESON CJ:   Yes.

MR HUGHES:   We say that it necessarily follows from Mr Justice Priestley’s judgment at pages 32 and 33 that his Honour has, in relation to cases covered by section 14(2) abolished, the application of the flexible principle applied by the case law as recently as Hatzimanolis to the determination of the question ‑ ‑ ‑

GUMMOW J:   Yes, but there is no reference in that case to 14(2), is there?

MR HUGHES:   No, there is not but their Honours talk about serious misconduct.

GUMMOW J:   Yes, I know they do but we have to construe the section.  In this field there is an awful lot of activity putting gloss on statutory words and cases and then it becomes some sort of doctrine set in stone.  People look at this cases rather than read the statute.  I am not suggesting you are doing that, but it does happen.

MR HUGHES:   I am trying to concentrate on the statutory words.  By parity of reasoning, “serious and wilful misconduct” would fall within the general ambit of the concept, “gross misconduct”.  The consequence propounded by Mr Justice Priestley is, as we venture to suggest, to write out

of the Act in cases falling within section 14(2) the requirement that the injury should arise out of or in the course of the employment.  That is a pretty revolutionary proposition.  The application of Mr Justice Priestley’s restatement of the meaning of section 14(2) would negate what this Court described in Hatzimanolis as a flexible organising principle established by a long line of cases for determining whether an injury is compensable under the Act as one that arose in the course of the employment.  It really is a revolutionary change.  Of course, the opposing ‑ ‑ ‑

GUMMOW J:   Some revolutions can be good things.

MR HUGHES:   Not this one.  I respectfully agree with your Honour.

GUMMOW J:   Hedley Byrne v Heller was a revolution.

MR HUGHES:   Yes, but this would be one of the bad revolutions, your Honour.  As we say, the majority judgment in the Court of Appeal really ignores or disregards what this Court in the joint judgment said at page 484 in terms of principle in Hatzimanolis.  It is a short point.  It is, in our respectful submission, an important point in which there has been a division in the court below and it is of general importance in the administration of this legislation.  For those reasons, we submit that special leave ought to be granted.

GLEESON CJ:   Thank you, Mr Hughes.  Yes, Mr Glissan.

MR GLISSAN:   If your Honours please.  The one thing we would submit that we agree with in the dissenting judgment of his Honour Mr Justice Powell in the court below is where he says at the bottom of page 70 of the application book and the top of page 71:

nothing which the High Court said in Hatzimanolis v ANI Corporation ((1992) 173 CLR 437) bears on the question with which the Court is now concerned to deal.

GLEESON CJ:   Did you say that was the one thing you agree with?

MR GLISSAN:   In his judgment, I think, your Honour, yes.  There is an exhaustive analysis in his Honour’s judgment of the cases on section 9 and on section 4 where what Mr Justice Priestley described as the judicial gloss on the statutory ‑ ‑ ‑

GUMMOW J:   When did 14(2) come into the Act?  Does Justice Powell indicate that in his historical account?

MR GLISSAN:   In 1987 with the passage of the new Act, I think, your Honour, but Mr Justice Powell goes through and draws the conclusion that there was an earlier ‑ ‑ ‑

GUMMOW J:   When did that commence?

MR GLISSAN:   Before I come to that – I do not have that immediately to hand – can I say this to your Honour.  It is made clear in Mr Justice Powell’s judgment that historically ‑ ‑ ‑

GUMMOW J:   Because I am not at all convinced 14(2) was in force when the High Court case about which everyone speaks was decided with reference to the facts and the time of those facts.

MR GLISSAN:   That may be, but there was a previous provision in broadly the same terms in section 7A.  So that, while I would like to take the benefit of that, if that be the case historically, I am not sure that it really advances the respondent’s position here because of that transitional provision which seems to have flowed through from the 1926 Act all the way through.  So that the situation was that there were similar provisions in place.  We say, your Honours, putting the respondent’s position as simply as it is possible to do, that there is nothing revolutionary about the judgment of the majority in this case at all, that what it does is sensibly apply the existing law to the statute and reach a position, a position which was previously reached in the Northern Territory case that is referred to of Tiver where section 14(2), properly construed, is given work to do.  That is to say that there is a broad statutory scheme made out.

There are circumstances within which, on the ordinary application of the law by the application of what is referred to as the judicial gloss, an incident that would ordinarily be regarded as arising out of or in the course of the employment is said to be taken out of that course because of gross misconduct.  The Parliament, aware of that because that judicial gloss certainly antedates section 14(2) and the earlier sections, has expressly legislated to provide that in circumstances where the injury is sufficiently severe and the injury is solely attributable to the serious and wilful misconduct of the worker, that judicial gloss is not to apply.  So that it is not taken out of the ambit of the Act but his entitlement to compensation is preserved.

GUMMOW J:   But suppose there was serious and wilful misconduct of the worker which otherwise answered the description that that misconduct was in the course of employment.  Where does Justice Priestley’s judgment leave that as a significant or insignificant or determinative or non‑determinative matter?

MR GLISSAN:   It leaves that in the way the statute does, I think would be the answer.

GUMMOW J:   In other words, compensation is payable?

MR GLISSAN:   Compensation is payable.  That is what the statute expressly provides in 14(2).  His Honour the Chief Justice raised one matter with my learned friend ‑ ‑ ‑

GUMMOW J:   No, I said serious and wilful misconduct but not such that you could say the injury is solely attributable to it.

MR GLISSAN:   Then in that case the ordinary judicial gloss would apply, one would conclude, and the worker would on that interpretation not be entitled on Mr Justice Priestley’s judgment.  But those are not the facts here because the common ground, the agreed facts, both from the findings of the trial judge and from the court below, were that both of the elements of section 14(2) were agreed by the parties to be the case.  That is to say there was a sufficiently serious injury and the injury was solely caused by the serious and wilful misconduct of the worker.  So that that point does not arise for determination on the facts of this case.

GUMMOW J:   On the construction of Justice Powell, how does 14(2) work then on those facts you have just ‑ ‑ ‑

MR GLISSAN:   Perhaps I can take your Honour to that passage that Mr Hughes took the Court to in the judgment.

GUMMOW J:   What work does Mr Justice Powell give to 14(2) - - -

MR GLISSAN:   I am sorry, Mr Justice Powell does not explain that 14(2) has any work to do, your Honour.  Indeed, one of the criticisms that we would make if we were called upon to make any of his Honour’s judgment is that it jumps from an analysis of the factual material and a statement of what his Honour describes as the historical position which he says is unchanged by the passage of 14(2) at the bottom of page 70 of the book:

In the circumstances ‑ ‑ ‑

GUMMOW J:   But 14(2) was passed to do something.

MR GLISSAN:   Yes, but Mr Justice Powell does not identify it.  He simply says, “I’ve undertaken an analysis.  I don’t believe the principles have changed.  In the circumstances the findings made by the trial judge were fatal to the appellant’s claim”.

GUMMOW J:   Where does his Honour say that?

MR GLISSAN:   Page 71.  He says:

1.  the passages from his Honour’s Judgment which are set out on p 8 of Priestley JA’s Judgment make it clear that his Honour found – in my view rightly – that the injury which was sustained by the Appellant did not arise out of, or in the course of…..that being so, the fact that the injury resulted in the Appellant’s serious and permanent disablement was irrelevant –

That ignores section 14(2) –

2.  even if, despite what his Honour found in the passage…..could, in some way, be said that the only reason why his Honour found that the injury did not arise…..was that, at the relevant time, the Appellant was acting contrary…..that fact would not avail the Appellant, since his Honour held – again, in my view, rightly – that the Appellant’s actions were not done for the purposes of, and in connection –

That was raised by your Honour the Chief Justice with my friend, I think.

GLEESON CJ:   In relation to the pre‑existing law about the relationship between “course of employment” and “misconduct” ‑ ‑ ‑

MR GLISSAN:   Absent 14(2).

GLEESON CJ:   Absent 14(2).  Would there be circumstances in which, although an injury to a worker was solely attributable to the serious and wilful misconduct of the worker, it was in the course of the employment?

MR GLISSAN:   The cases would suggest not.  If your Honour looks at the analysis of the cases that was undertaken in the judgment of Mr Justice Priestley, they range from things as insignificant historically as technically disobeying a direction of the employer or some statutory regulation as disentitling to compensation under that gross misconduct head through to things that amount to what would today be regarded as serious and wilful misconduct.

GLEESON CJ:   The reason I ask the question is that section 14(2) produces the consequence that in certain circumstances, namely, death or serious and permanent disablement, compensation is payable even though the injury is solely attributable to the serious and wilful misconduct of the worker.

MR GLISSAN:   We would say, your Honour, that that is clearly explicable in this way, that the legislature is intending to give effect to a statutory change to the underlying common law position that was produced by the judicial gloss on the concept of “arising out of or in the course of employment”, that judicial gloss being that a person is taken out of the course of employment if the injury was produced as a result of gross misconduct.

GUMMOW J:   Even if the injury resulted in death?

MR GLISSAN:   Even if the injury resulted in serious injury or impairment.  There are a number of death cases in the historical analysis that is undertaken by both Mr Justice Priestley and Mr Justice Powell.

GLEESON CJ:   Is this a convenient time to adjourn, Mr Glissan?

MR GLISSAN:   Certainly, your Honour.

GLEESON CJ:   Then we will adjourn until 2.15.

AT 12.42 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.17 PM:

GLEESON CJ:   Yes, Mr Glissan.

MR GLISSAN:   I think I have to tell Justice Gummow that the date on which section 14 commenced, I am instructed, was 1 July 1987 when it came in as part of the new Act, so the scheme had replaced the 1926 Act.

GUMMOW J:   Thank you.

MR GLISSAN:   Your Honours, I want to say something briefly about section 9A to the extent that that has been raised.  It is referred to in the judgment of Mr Justice Priestley at the bottom of page 23 of the application book where he refers to the fact that the legislature in 1996:

reducing the scope of “arising out of or in the course of the employment” was introduced:  see s 9A of the Act…..commencing on 12 January 1997).

That was after this incident and it is relevant in the sense that it limits the validity of any grant of special leave in relation to any Act predating section 9A’s introduction because of the profound effect section 9A makes, because now no longer must an applicant satisfy the common law test of the incident arising out of or being in the course of the employment, but must also satisfy the additional statutory element that the employment must be a substantial contributing factor.

GUMMOW J:   But 9A only applies to injuries occurring after 12 January 1997.

MR GLISSAN:   Yes, but in the overall scheme of the Workers Compensation Commission, your Honour, there are very few pieces of litigation that would still be on foot.

GLEESON CJ:   How would that apply to the present case?  If section 9A applied to the present case, what - - -?

MR GLISSAN:   If section 9A applied to the present case, one could not say it was determinative of it – or I would not be prepared to say that – but it certainly would make it more difficult for the applicant because one would be driven back to the issue that Mr Justice Priestley dealt with at the end of his judgment where he criticised the findings of the trial judge at page 36 where he said:

“the most likely scenario” was that he was on his way to the mezzanine for the purpose of doing the things necessary to be done before he could knock off from work.

That would make it in the course of the employment, we would say, as his Honour does there, for the purposes of section 9 but it would be a moot point and certainly arguable as a question of fact at some, one would think, extreme length as to whether or not electing to go back to the point at which you knocked off using a laundry chute rather than the stairs or the lift made the employment a material contributing factor.

GLEESON CJ:   Some imaginative counsel would probably want to argue that the laundry chute was an allurement.

MR GLISSAN:   Your Honour, it certainly was to the applicant in this case, but whether or not that would bring him within section 9A is, we say, the reason that section 9A is important in considering whether as a discretionary matter special leave should be granted if the Court was minded otherwise to grant special leave.  For that reason, it ought not.  If your Honours please.

GLEESON CJ:   Mr Hughes, how does section 14(2) relate to the common law position?

MR HUGHES:   It does not at all, your Honour.  My learned friend, with very great respect, is in error in propounding the proposition that there is a common law situation underlying the statute.  My learned friend referred more than once to what he described as a “judicial gloss” on section 9 or the definitional provision, section 4.  There is no judicial gloss.  Your Honours will see that in Hatzimanolis – and I will not weary your Honours by reading it – the Court referred to a course of decisions of the highest authority in this Court.

GLEESON CJ:   So it is just the statutory language.

MR HUGHES:   Just the statutory language.  The Court construed the statutory language and said it is a flexible definition, it meets changing conditions, but the core element is incidentality, if I can use a funny noun.  It is wrong, with respect, for my learned friend to say that Mr Justice Powell in his dissenting judgment did not face up to the problem posed by the relationship between section 14(2) and section 9.  If one goes to the judgment of his Honour at page 71 of the application book, one sees that at line 15 his Honour said:

It seems to me, with respect, that the findings made by Moran CCJ were fatal to the Appellant’s claim for two reasons:

1.  the passages from his Honour’s Judgment which are set out on p 8 of Priestley JA’s Judgment make it clear that his Honour found – in my view rightly – that the injury which was sustained by the Appellant did not arise out of, or in the course of, the Appellant’s employment and, that being so, the fact that the injury resulted in the Appellant’s serious and permanent disablement was irrelevant ‑ ‑ ‑

GLEESON CJ:   But was the reason why the injury did not arise in the course of his employment that the injury was solely attributable to the serious and wilful misconduct of the worker?  Was it something close to that?

MR HUGHES:   There was an element of that, but essentially it did not arise out of or in the course of the employment because the worker was on a frolic of his own, as the judge found at first instance, unrelated to the employment.  That was a finding of fact that was open on the evidence.  So that what his Honour Mr Justice Powell did was to stress that the gateway to section 14(2) is through section 9, which means that before that gateway is opened, it has to be shown that the injury arose in the course of the employment.

GUMMOW J:   But does his Honour indicate, the gateway being open, what work 14(2) does?

MR HUGHES:   Yes.  Implicitly his Honour said there are cases in which, despite serious and permanent disablement ensuing and despite the injury being solely due to serious and wilful misconduct, it nevertheless could arise in the course of the employment.  There are cases like that - Murray v Moppett which I did for the worker 42 years ago, a cattle drover, out in winter, he knows that there is a hut where there is liquor stored.  He breaks away, gets a bottle of rum, goes back to the campsite, anaesthetises or stupefies himself with liquor and wakes up the next morning with a leg that is burnt up to the knee.  That occurred in the course of the employment – compensable.  So there are cases in which the conjunction of events attracts the operation of section 9 but comes or does not come within section 14(2).

GLEESON CJ:   What do you say in summary form was the point of departure between Justice Priestley and Justice Powell?

MR HUGHES:   The point of departure, your Honour, was this.  Mr Justice Priestley reworded section 14(2) so as to exclude in effect the impact of the long course of judicial decision establishing what constituted something arising in the course of the employment.

GLEESON CJ:   What do you think was the difference between their two approaches?  Looking at what Mr Justice Powell says on page 71, a possible point of view is that he differed from Mr Justice Priestley not so much as a matter of construction of section 14 but as a matter of the application of the facts of the case to section 14.

MR HUGHES:   With respect, no.  His Honour respected the finding at first instance that this injury did not arise in the course of the employment.  That was his starting point and then he said, “Can section 14(2) apply to an injury that didn’t arise in the course of the employment?”.  His Honour said no.  Mr Justice Priestley said yes because Mr Justice Priestley reworded the section at pages 32 and 33.  That is the essential difference.  I see I have worked through my time, your Honours.

GLEESON CJ:   Never mind.  Thank you, Mr Hughes.

MR HUGHES:   I should have said something about 9A, if I may have the Court’s indulgence.

GLEESON CJ:   Yes.

MR HUGHES:   It is far too early to say what the impact of 9A may be on these myriad problems.  There has been no appellate decision on it.  Section 9A respects, if I may say so, the definition of “injury” because before section 9A can apply, the injury has to be something that arises in the course of the employment.

GLEESON CJ:   Yes, that would not seem to be a satisfactory basis on which to decide this.

The Court is of the view that notwithstanding the difference of judicial opinion in the courts below, there are insufficient prospects of success of an appeal in order to warrant the grant of special leave.  The application is refused.  Can you resist costs, Mr Hughes?

MR HUGHES:   No, your Honour.

GLEESON CJ:   The applicant must pay the costs of the respondent.

AT 2.27 PM THE MATTER WAS CONCLUDED