Military Rehabilitation and Compensation Commission v Dalgrin
[2022] FCA 83
•10 February 2022
FEDERAL COURT OF AUSTRALIA
Military Rehabilitation and Compensation Commission v Dalgrin [2022] FCA 83
Appeal from: Dalgrin v Military Rehabilitation and Compensation Commission (Veterans' entitlements) [2020] AATA 5475 File number: NTD 21 of 2020 Judgment of: CHARLESWORTH J Date of judgment: 10 February 2022 Catchwords: WORKERS’ COMPENSATION – claim for compensation for injuries said to have arisen “in the course of employment” within the meaning of s 5A and s 14 of the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1998 (Cth) – appeal from decision of the Administrative Appeals Tribunal allowing the claim – employee of the Defence Force injured whilst competing in a triathlon – employee not on duty at time of injury – employee not performing a duty incidental to employment at time of injury – consideration of activity test discussed in Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 and Comcare v PVYW (2013) 250 CLR 246 – Tribunal concluding the employer induced or encouraged the activity engaged in by the employee when the injury occurred – whether the Tribunal misapplied the statutory test and so committed an error of law – whether the criterion of inducement or encouragement, properly understood, was capable of being satisfied on the evidence to which the Tribunal referred – appeal allowed Legislation: Administrative Appeals Tribunal Act 1975 (Cth) ss 43, 44
Military Rehabilitation and Compensation Act 2004 (Cth) s 5
Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1998 (Cth) ss 4AA, 5A, 6, 14
Safety, Rehabilitation and Compensation Act 1988 (Cth) ss 6, 14
Workers Compensation Act 1987 (NSW) ss 4, 9
Cases cited: Comcare v PVYW (2013) 250 CLR 246
Commonwealth v Oliver (1962) 107 CLR 353
Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529
Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473
John Holland Group Pty Ltd v Robertson (2010) 185 FCR 566
Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611
Norbis v Norbis (1986) 161 CLR 513
Stirling v Minister for Finance (2017) 159 ALD 29
Turner-Dauncy v Military Rehabilitation and Compensation Commission (Compensation) [2016] AATA 551
Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480
Division: General Division Registry: Northern Territory National Practice Area: Administrative and Constitutional Law and Human Rights Number of paragraphs: 82 Date of hearing: 25 May 2020 Counsel for the Applicant: Mr P Nolan Solicitor for the Applicant: Sparke Helmore Counsel for the Respondent: Mr P Boulot with Mr M Jensen Solicitor for the Respondent: IAMCU Legal Pty Ltd ORDERS
NTD 21 of 2020 BETWEEN: MILITARY REHABILITATION AND COMPENSATION COMMISSION
Applicant
AND: RICKY TERRENCE DALGRIN
Respondent
ORDER MADE BY:
CHARLESWORTH J
DATE OF ORDER:
10 FEBRUARY 2022
THE COURT ORDERS THAT:
1.The appeal is allowed.
2.The decision of the Administrative Appeals Tribunal made on 19 October 2020 be set aside.
3.The respondent’s application for review of the applicant’s decisions made on 28 August 2017 be remitted to the Administrative Appeals Tribunal for determination in accordance with the law.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
CHARLESWORTH J
In March 1990 Ricky Terrence Dalgrin came off his push bike at speed, plunged head first into the road and suffered fractures to his left collar bone (clavicle) and right forearm (ulna). He was competing in a triathlon at the time.
In 2017, Mr Dalgrin made a claim for compensation in respect of the fractures under the Safety, Rehabilitation and Compensation (Defence-related Claims) Act 1998 (Cth) (DRCA), asserting that the injuries were sustained in the course of his employment with the Department of Defence. The Military, Rehabilitation and Compensation Commission denied the claim. In separate decisions relating to each injury, the decisions to deny the claim were affirmed on internal review. Mr Dalgrin sought review of those two decisions before the Administrative Appeals Tribunal. The Tribunal set aside each decision. It concluded that each injury “arose out of, or in the course of, [Mr Dalgrin’s] Defence service” and remitted the matter to the Commission “for all necessary action”.
The Commission appeals from the Tribunal’s decision on four questions of law, identified at [43] and [47] – [49] below.
For the reasons that follow, I am satisfied that the Tribunal committed some of the errors alleged by the Commission.
The appeal will be allowed.
BACKGROUND FACTS
Mr Dalgrin had two periods of service in the Australian Army, the first and relevant period between 1981 and 1998. In 1995 he was awarded a Soldier’s Medallion for exemplary service.
At the time of the injuries Mr Dalgrin was a 26 year old Reservist posted to the Medical Corp. He had aspirations to be selected for employment in the Permanent Forces as a soldier in the Special Air Service Regiment (SASR). Recruitment to the SASR was a multi-stage process. It depended upon him first being accepted to participate in a course referred to as the Special Air Service Regiment Selection Course (SASR Course). On 1 August 1990 (more than four months after he sustained the injuries), Mr Dalgrin was nominated for a Selection Board Interview. He participated in the interview later that month with a view to being selected to attend the SASR Course.
On 16 October 1990 Mr Dalgrin was notified that he had been selected to undertake the SASR Course to be conducted in the following year. The letter confirming his selection into the SASR Course was relevantly expressed as follows:
1.I am writing to confirm your selection to attend The Special Air Service Regiment Selection Course in 1991 and to supply you with some necessary pre-course administration details. This information is contained in the enclosed Joining Instruction.
…
3.Let me emphasize the need for you to prepare yourself adequately for the Course, mentally as well as physically. I suggest that you follow the physical programme that was supplied during the Selection Board interview, because it is known to work - and work well. Revision of all your basic military skills is also worthwhile.
4.Good luck with your preparations and we look forward to seeing you on the Selection Course in 1991.
The SASR Course was conducted over 18 days in February 1991.
In June 2016 Mr Dalgrin completed a report of the injuries and the circumstances in which they occurred. He described the circumstances of the injuries as “head first at 50km per hour into the road push bike accident – whilst training for SAS”.
In February 2017 Mr Dalgrin completed a claim for compensation in respect of the injuries. The claim form asked what task was being performed when he sustained the injuries. He responded “Training for SASR selection course 40km bike ride, 1km swim & 10km run.” The claim form asked what aspects of his employment he thought contributed to his disease or illness. He responded “It’s a requirement of the SASR Selection Course to be A plus level of fitness.”
The reasons for the delay in making the claim for compensation is not relevant to this appeal.
The Commission denied the claim, relevantly on the basis that Mr Dalgrin had not suffered an “injury” as defined in s 5A of the DRCA, because the fractures had not arisen out of or in the course of his employment.
THE DRCA
It is common ground that Mr Dalgrin’s entitlement to compensation in respect of the fractures he suffered in 1990 is governed by the DRCA: see DRCA, s 4AA. The liability of the Commonwealth to pay compensation is provided for in s 14(1). It relevantly provides:
(1)Subject to this Part, the Commonwealth 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.
Section 5A(b) relevantly defines the word “injury” to mean:
(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; …
Section 6 of the DRCA contains a non-exhaustive list of circumstances in which an injury to an employee shall be treated as having arisen out of, or in the course of, an employee’s employment. They include injuries sustained while the employee was “temporarily absent from that place of work during an ordinary recess in that employment” and injuries sustained “while the employee was temporarily absent from the employee’s place of work undertaking an activity associated with the employee’s employment or at the direction or request of the Commonwealth”: DRCA, s 6(1)(b) and (c) respectively.
Section 5(1) of the DRCA defines the word “employee” to mean “a member of the Defence Force”. Section 5(2) provides:
(2)For the purposes of this Act, a person who is a member of the Defence Force is taken to be employed by the Commonwealth, and the person’s employment is taken to be constituted by the person’s performance of duties as such a member of the Defence Force.
“Defence Force” has the meaning given in s 5 of the Military Rehabilitation and Compensation Act 2004 (Cth), being:
(a) the Permanent Forces; and
(b) the Reserves.
The principle in Hatzimanolis
Argument on this appeal proceeded from the premise that the Commonwealth’s liability to compensate Mr Dalgrin for the fractures turned on the application of the so-called “activity test” stated by the High Court in Hatzimanolis v ANI Corporation Ltd (1992) 173 CLR 473 and explained in Comcare v PVYW (2013) 250 CLR 246.
Hatzimanolis concerned the definition of the word “injury” in s 4 of the Workers Compensation Act 1987 (NSW). Section 9 imposed liability on an employer for an employee’s injury. Section 4 defined “injury” to mean “personal injury arising out of or in the course of employment”.
The appellant in Hatzimanolis had been employed to work in a remote area of Western Australia on a project expected to last three months. His employer provided him with accommodation and board including recreational facilities. On a day off from work, the appellant was injured on a sight-seeing journey that had been organised by his employer. The Compensation Court of New South Wales allowed the claim. The New South Wales Court of Appeal reversed that decision.
The High Court overturned the Court of Appeal’s decision and restored the award. The plurality (Mason CJ, Deane, Dawson and McHugh JJ) reviewed the authorities in the search for an organising principle to determine what might be encompassed by the phrase “arising … in the course of employment” particularly in cases where injury occurs during an interval or interlude between periods of actual work. Their Honours said (at 484):
… 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. … 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. …
The principle explained the outcomes in earlier cases such as Danvers v Commissioner for Railways (NSW) (1969) 122 CLR 529 (at 537) (concerning a worker who died when the van provided by his employer to accommodate him between periods of work caught on fire) and Commonwealth v Oliver (1962) 107 CLR 353 (concerning a worker injured while playing cricket in a lunch break in circumstances were employees were expected to remain on the employer’s premises). But it was not without its limits.
As to temporal considerations, the plurality said that (at 483) “an injury is more readily seen as occurring in the course of employment when it has been sustained in an interval or interlude occurring within an overall period or episode of work than when it has been sustained in the interval between two discrete periods of work”. The plurality emphasised (at 482 – 483) that liability will not attach to all injuries sustained during an after-hours activity, notwithstanding that the activity was one that had been encouraged by the employer. Their Honours continued (at 482 – 483):
A striking feature of the recent cases which have held that an injury occurring in an interval between periods of actual work was within the course of employment is that in almost all of them 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. However, it would be an unacceptable extension of the course of employment to hold that an employee was within the course of employment whenever the employer had authorized, encouraged or permitted the employee to spend the time during an interval between periods of actual work at a particular place or in a particular way. That formulation would cover not only the case of the ‘lunchtime’ injury, as in Oliver, and in the case of the railway worker, as in Danvers, but also many cases involving injuries occurring during intervals between daily periods of work which could not fairly be regarded as within the course of employment. Thus, an employee who is encouraged by his or her employer to see a doctor after working hours is not ordinarily within the course of employment if injured while visiting the doctor, although the case would come within such formulation. The course of employment is ordinarily perceived as commencing when the employee starts work in accordance with his or her ordinary or overtime hours of work and as ending when the employee completes his or her ordinary or overtime hours of work.
It was emphasised (at 484) that 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” (citing Danvers).
The Commonwealth’s liability in Hatzimanolis was founded on the circumstance that the appellant was required to work at the remote location, that the period in which he was stationed there “constituted an overall period or episode of work” and that the injury was referrable to an activity that had been encouraged and organised by the employer. The plurality accepted the employer’s contention that it did not follow that the appellant was in the course of his employment “during the whole of the time” that was spent at the remote area. The plurality said that “… 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 [the employer] had not expressly or impliedly induced or encouraged him to engage in that activity during that interval.” (at 485).
In PVYW an employee of a Commonwealth agency was required to travel to a country town for work purposes. She stayed overnight in motel accommodation arranged by her employer. Whilst in the motel room she sustained an injury during sexual intercourse with an acquaintance when a light fitting above the bed was pulled away by one of them and struck her in the face. She made a claim for compensation under s 14 of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (SRCA) on the basis that the injury arose out of or in the course of her employment. A decision by the Tribunal to reject her claim was set aside by this Court and the judgment at first instance was upheld by the Full Court. Comcare (in the equivalent position of the Commission) appealed to the High Court with special leave.
Insofar as they provide for the imposition of liability, the provisions of the SRCA considered in PVYW were cast in relevantly identical terms to those in the DRCA as they presently apply to defence-related claims. They included s 6(1)(c)(i) which expressly referred to the circumstance of an employee being temporarily absent from the employee’s place of work and undertaking an activity “associated with the employee’s employment”.
The employee argued that it was sufficient to satisfy the principle in Hatzimanolis to show that the injury was sustained at a place where she was situated at the instigation of her employer. She argued that it was irrelevant that the specific activity in which she had been engaged at the time she sustained the injury had not been induced or encouraged by the employer.
The majority (French CJ, Hayne, Crennan and Kiefel JJ) emphasised the necessity to identify how the injury was brought about. Their Honours said:
35Because the employer’s inducement or encouragement of an employee, to be present at a particular place or to engage in a particular activity, is effectively the source of the employer’s liability, the circumstances of the injury must correspond with what the employer induced or encouraged the employee to do. It is to be inferred from the factual conditions stated in Hatzimanolis that for an injury to be in the course of employment, the employee must be doing the very thing that the employer encouraged the employee to do, when the injury occurs.
…
38The starting point in applying what was said in Hatzimanolis, in order to determine whether an injury was suffered in the course of employment, is the factual finding that an employee suffered injury, but not whilst engaged in actual work. The next inquiry is what the employee was doing when injured. For the principle in Hatzimanolis to apply, the employee must have been either engaged in an activity or present at a place when the injury occurred. The essential inquiry is then: how was the injury brought about? In some cases, the injury will have occurred at and by reference to the place. More commonly, it will have occurred while the employee was engaged in an activity. It is only if and when one of those circumstances is present that the question arising from the Hatzimanolis principle becomes relevant. When an activity was engaged in at the time of injury, the question is: did the employer induce or encourage the employee to engage in that activity? When injury occurs at and by reference to a place, the question is: did the employer induce or encourage the employee to be there? If the answer to the relevant question is affirmative, then the injury will have occurred in the course of employment.
The application of the principle to the facts in PVYW, the majority said, ought to result in the rejection of their employee’s claim (at [45]):
An injury occurring to an employee by reference to or associated with a place where the employee is present may involve something occurring to the premises or some defect in the premises. For example, if the light fitting in this case had been insecurely fastened into place and simply fell on the respondent, the injury suffered by her would have arisen by reference to the motel. The employer would be responsible for the injury because the employer had put the respondent in a position where injury occurred because of something to do with the place. Liability in those circumstances is justifiable. Liability for everything that occurs whilst the employee is present at that place is not.
All members of the Court in PVYW explained the principle in Hatzimanolis as one that focussed on the temporal meaning of the statutory phrase “course of employment”. The facts in both Hatzimanolis and PVYW involved employees required to reside away from home for work purposes, such that the period between daily periods of work may more readily be seen as an interval or interlude within an overall episode of work. The various judgments in PVYW largely concerned the content of the principle stated in Hatzimanolis rather than its reformulation. It was in that respect that the judgment of the majority and the judgments of the minority differed (Bell J and Gageler J writing separate dissenting judgments).
The majority said:
32An employer’s inducement or encouragement may create an interval according to Hatzimanolis, but it is not itself a sufficient condition for liability. Further factual conditions necessary for the application of that principle are stated in the passage, following the word ‘Furthermore’. There, it is said that an injury sustained in such an interval will be in the course of employment if it occurred at that place or while the employee was engaged in that activity. It will be so considered unless the employee has been guilty of gross misconduct.
33To these conditions it is added, in similar words to those used in Danvers, that it will always be necessary to have regard to the ‘general nature, terms and circumstances of the employment’ in determining the overall question, whether the injury occurred in the course of employment. Attention is not to be focused just upon the occasion giving rise to the injury.
34It is important to identify how Hatzimanolis sought to define the circumstances for, and the extent of, an employer’s liability for compensation. Hatzimanolis sought to provide a legal justification for an injury, which occurred between periods of actual work, being regarded as occurring in the course of the employee’s employment. It did so by characterising the interval by reference to the employer’s inducement or encouragement. The employer’s liability in such circumstances depends upon what the employer induced or encouraged the employee to do. Hatzimanolis did not seek to extend the employer’s liability beyond that.
(footnote omitted)
Bell J explained the temporal focus in Hatzimanolis in this way (at [83]);
The analysis proceeded upon the view that an injury is more readily seen as occurring in the course of employment when it is sustained in an interval occurring within an overall period or episode of work than when it is sustained in an interval between two discrete periods of work. A daily period of work ordinarily ends when the employee completes his or her ordinary or overtime hours for the day. The lunch break is an interval in a daily period of work which may be within the course of employment, as was the case in Oliver. In the case of an employee who is required to work at a location that is distant from the permanent workplace, the time spent at the distant locality is likely to constitute one overall period of work. Intervals between periods of actual work, including overnight, may be within the course of employment, as was the case in Danvers. The principle formulated in Hatzimanolis applies to the identification of the intervals, whether in a daily period of work or in an overall period of work, that are within the course of the employee’s employment.
The temporal meaning of the expression “in the course of employment” was emphasised by Gageler J (at [115]). His Honour said a faithful application of the principle in Hatzimanolis should have resulted in the dismissal of Comcare’s appeal in PVYW. His Honour said that to found the Commonwealth’s liability it was sufficient that the employee was at the place where the injury occurred at her employer’s instigation, lest the interval or interlude between periods of actual work be sliced and diced according to the minutiae of activities done by the employee whilst at that place.
In John Holland Group Pty Ltd v Robertson (2010) 185 FCR 566, Dowsett J described s 6 of the SRCA as suggesting that “an injury for which compensation is payable must arise out of, or in the course of the employee’s employment, meaning performance of his or her duties” (at [68], Spender J agreeing at [2]). His Honour said that it must be possible to identify the scope of such employment to determine claims founded on the circumstances described in s 6, and that the SRCA was “very much concerned with conditions in which employees work and their terms of engagement, rather than how they may be classified” (at [73]).
In the present case, there is no direct reliance on any one of the circumstances referred to in s 6 of the DRCA. As the outcomes in Hatzimanolis, Oliver and Danvers show, an injury may arise out of or in the course of employment even if it is sustained whilst undertaking an activity other than the performance of the employee’s contractual duties. The text of s 6(c)(i) of the SRCA (and its equivalent in the DRCA) suggests that it captures a wider array of circumstances than one reading of the judgment in John Holland might suggest. The Commission properly acknowledges that the liability of the Commonwealth may attach to injuries sustained during activities other than the actual performance of duties. Liability requires first an examination of the circumstances in which the injury occurred and, where the injury is found to have been referrable to an activity, the relevant inquiry is whether the employer induced or encouraged that activity.
As explained below, in undertaking the factual enquiry referred to in Hatzimanolis and PVYW, it will be necessary to proceed on a correct understanding of the scope and nature of Mr Dalgrin’s employment at the time that his injuries occurred. That is particularly so in a case (such as the present) where the inducement or encouragement to engage in an activity is said to be given impliedly, and where the finding of implied inducement and encouragement is one reached by a process of inferential reasoning.
THE TRIBUNAL’S DECISION
The Tribunal accepted that Mr Dalgrin had suffered the fractures in March 1990 and noted that at that time Mr Dalgrin was “serving in the Army Reserve”. Read in context, that finding is one that Mr Dalgrin was an employee within that part of the Department of Defence at the time that the injuries occurred. The Tribunal did not make an express finding that Mr Dalgrin was actually undertaking a period of service or actually performing duties as a Reservist at the time that the injuries were sustained. Mr Dalgrin had made no such claim.
In determining whether the injuries arose out of or in the course of Mr Dalgrin’s employment, the Tribunal explained why it did not consider medical opinions expressed by medical officers on the question in 1990 to be particularly informative. There is no challenge to that aspect of the Tribunal’s reasoning.
The Tribunal said that it placed weight on Mr Dalgrin’s “contemporaneous joining instructions for SASR Selection Course dated 22 October 1990”, extracting that part of the letter of instruction that referred to the importance of physical preparation for the course and that suggested he follow the physical programme supplied during the Selection Board Interview (at [19]). The Tribunal expressly (and correctly) recognised that the Selection Board Interview took place in August 1990, after the injuries were sustained. From there, the Tribunal reasoned:
20.The Respondent’s cross-examination of the Applicant was to the effect that he injured his left clavicle and right ulna before attending the Selection Board interview, and indeed before he was successfully nominated for that Selection Board interview by his Adjutant on 1 August 1990. The Tribunal accepts this chronology, but also notes the Applicant’s evidence under cross-examination as follows:
I appreciate probably not being given total approval to go and to be a top fit soldier in the Australian Army but it shows in the efforts that the end effort of where I’ve achieved and what I have got to, but that’s the initiative and that’s all those core strengths that’s you know, is required of a soldier, you know, we don’t stand there and wait to, you know, go to attention, there’s normally a precautionary and then the executive that’s given out, so the precautionary is recruiting, ‘We’re looking for the top soldiers. If you want to get there you might as well start training now’. That’s how they recruit, right? Once you get the joining instructions you’re halfway there.
21.The Tribunal notes that the vernacular ‘precautionary’ and ‘executive’ used by the Applicant are an analogy to drill commands, both usually given on the pace of the left foot. The precautionary is a warning of an order to follow, whilst the executive is the order itself. The Tribunal accepts the Applicant’s evidence that the receipt of joining instructions, or panelling for a Selection Board interview, are analogous to an ‘executive’ drill order. The Army expects a ‘top fit soldier’, or a soldier who is later recognised for ‘Exemplary Service’, as the Applicant was, to prepare themselves for their tasks ahead. This is consistent with the SASR Selection Course joining instructions, which ‘… emphasize the need for you to prepare yourself adequately for the Course, mentally as well as physically.’ Accordingly, the Tribunal is satisfied that the Applicant’s left clavicle fracture and right ulna fracture in March 1990 were caused whilst he was training for the forthcoming stages of SASR selection.
CONCLUSION
22.The respondent has relied upon two cases. The second of these relates to a surfing sporting injury and its context is far removed from that of a soldier training for SASR selection, minimising its assistance. Nevertheless, that case relies upon Comcare v PVYW [2013] 250 CLR 246 at [36] which posits the central question to this case: ‘When an activity was engaged in at the time of injury, the question is: did the employer induce or encourage the employee to engage in that activity?’ On balance, and considering the findings already made regarding the expectations of a solider training for SASR selection who is later recognised for ‘Exemplary Service’, the Tribunal is satisfied that the answer in this case is ‘yes’.
(footnotes omitted)
ISSUES ARISING ON THE APPEAL
An appeal lies to this Court from a decision of the Tribunal on a question of law: Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act), s 44. The Commission alleges four such errors on the part of the Tribunal.
The third alleged error is that the Tribunal failed to fulfil an obligation under s 43(2B) of the AAT Act to include in its written reasons its findings on material questions of fact and a reference to the evidence or other material upon which those findings were based. It is well established that a failure to comply with a statutory obligation to provide reasons may amount to an error of law: Stirling v Minister for Finance (2017) 159 ALD 29 (at [15]) citing Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480 (French CJ, Crennan, Bell, Gageler and Keane JJ).
This allegation may be shortly disposed of.
The Tribunal reasoned (correctly) from the basis that Mr Dalgrin was engaged in an activity at the time of his injuries. It identified as the central question: whether Mr Dalgrin’s employer induced or encouraged him to engage in that activity. It answered that question in the affirmative. It stated that it based that conclusion on the findings it had made about the “expectations of a soldier training for SASR selection who is later recognised for ‘Exemplary Service’”, which must be understood as a reference to the evidence of Mr Dalgrin extracted at [20] of its reasons and its acceptance of that evidence to the extent identified at [21] of its reasons. The Tribunal’s reasons fairly disclose the evidence upon which its conclusion on the central question was based. There is no error of law in the nature of a failure to comply with s 43(2B) of the AAT Act. Whether the reasons disclose error is a different question.
The remaining questions of law concern the Tribunal’s application of the principles in Hatzimanolis and PVYW and an attack on its fact-finding process.
Question 1 summarises the facts as found by the Tribunal and alleges that it “misconstrued those facts as being injuries ‘arising out of, or in the course of, the employee’s employment’ in circumstances where”:
(a)the Respondent was not performing actual Defence service at the time the injuries were sustained;
(b)there was no evidence about whether the injuries were sustained during an interval between periods of employment, an overall period of employment or whether it was outside any period of employment;
(c)there was no evidence that Defence induced or encouraged the Respondent to be at the particular place where the injuries were sustained; and
(d)there was no evidence that Defence induced or encouraged the Respondent to perform the activity of riding 50km per hour on a road on a push bike.
To my mind, Question 2 articulates a similar complaint, in a different way:
The Tribunal’s conclusion that the injuries sustained by the Applicant arose out of, or were in the course of, his Defence service was not open on the evidence, in that:
(a)there were no findings made about the when and where the Respondent was riding the push bike, whether he was riding the push bike in the performance of a particular organised activity, and how he came to fall off the push bike;
(b)there was no evidence or findings about whether the injuries were sustained during an interval between periods of employment, an overall period of employment or whether it was outside any period of employment;
(c)there was no evidence that Defence induced or encouraged the Respondent to be at the particular place where the injuries were sustained;
(d)there was no evidence that Defence induced or encouraged the Respondent to perform the activity of riding 50km per hour on a road on a push bike;
(e)the only evidence before the Tribunal that related to a finding that Defence ‘expects a ‘top fit solider’’ was a joining instructions [sic] for SASR Selection Course document dated 22 October 1990 ( Joining Instructions), which post-dated the injuries; and
(f)the Joining Instructions referred to a need for the person to ‘prepare yourself for the Course, mentally as well as physically’ and suggested that ‘you follow the physical programme that was supplied during the Selection Board Interview’. There is no evidence that Defence induced or encouraged the Respondent to perform the activity that caused his injuries, or that the activity was part of the suggested physical programme; and
(g)there was no evidence about what specific physical activities were required to achieve [sic] on the SASR selection course, and what level of fitness was required.
Question 4 alleges that the Tribunal failed to identify the scope of Mr Dalgrin’s employment in the Reserves and that it “erroneously considered whether the Applicant’s injuries arose out of Defence service generally, as opposed to his service as a reservist.”
Considered together, these questions allege that the Tribunal misunderstood or misapplied the so-called “activity test”, including by arriving at a conclusion that was not open on the material before it. To the extent that it is alleged that the Tribunal misapplied the statutory criteria, such an error may constitute an error of law: PVYW, Gageler J (at [142] – [143]). In determining whether an error of that kind has been committed, the Court is to have regard to the nature of the enquiry undertaken by the decision-maker. As Gageler J explained in PVYW, the statutory expression “in the course of … the employee’s employment” is a statutory standard or criterion, and the application of that standard or criterion to the facts involves the making of an evaluative judgment (at [138]). The principle in Hatzimanolis was developed to guide the performance of that evaluative task, in the same manner that principles may be developed to guide the exercise of a statutory discretion. Citing Norbis v Norbis (1986) 161 CLR 513 (at 537), Gageler J emphasised that whilst such rules or principles do not themselves have the force of law (at [139]):
‘[t]here may well be situations in which an appellate court will be justified in setting aside a discretionary order if the primary judge, without sufficient grounds, has failed to apply a guideline in a particular case’ and ‘[w]here there is nothing to mark the instant case as different from the generality of cases, the failure will suggest that the discretion has not been soundly exercised’.
SUBMISSIONS
As I have already observed, argument on this appeal proceeded from the premise that the outcome of Mr Dalgrin’s claim turned on the application of the principle in Hatzimanolis, specifically the “activity test”. Neither party suggested the test did not apply, nor did the parties seek to propound any evolution of the principles discussed earlier in these reasons.
The Commission submitted that the Tribunal’s conclusion of inducement or encouragement was not capable of being supported by the letter of instruction to which it referred, because the instruction post-dated the injuries by some six months. It submitted that at the time of the injuries, Mr Dalgrin had not been nominated to participate in the Selection Board Interview, nor had he been chosen to undertake the SASR Course, nor had he completed other prerequisites to commence the course. The Commission submitted that at the time that Mr Dalgrin sustained the injuries he was “a member of the Reserves, not a member of the Defence Force generally” (original emphasis) and that the question of whether the injuries arose out of or in the course of employment ought to have been assessed by reference to the scope of his employment as a Reservist. The Commission submitted that any “encouragement” by the Defence Force to train for possible selection in the Permanent Forces as a member of the SASR at some point in the future “was not given through the scope of his actual employment at the time”.
The Commission further submitted that the activity test discussed in Hatzimanolis and PVYW required the Tribunal to ask itself whether the Defence Force had induced or encouraged Mr Dalgrin to engage “in the specific training activity that injured him, that is, the triathlon”. The Commission submitted that by basing its conclusion on a finding of encouragement to be a “top fit solider” the Tribunal ignored the command in PVYW to identify whether the employee was doing “the very thing that the employer encouraged the employee to do, when the injury occurs” (original emphasis). The Commission referred to an earlier decision of the Tribunal in Turner-Dauncy v Military Rehabilitation and Compensation Commission (Compensation) [2016] AATA 551 in which the Tribunal (differently constituted) found that liability under the SRCA did not attach to injuries sustained by an employee whilst surfing in circumstances where employees had been encouraged to adopt a healthy lifestyle by participating in physical activity to address a drinking culture in the workplace.
The Commission submitted that the only evidence referred to by the Tribunal in support of its finding that the “Army expects a top fit solider” was the joining instructions letter of October 1990. It submitted that the Tribunal’s finding was that Mr Dalgrin was training for SASR selection and not to be a “top fit solder” generally. It submitted that there was no evidence of the content of the physical program referred to in the joining instructions and no evidence that Mr Dalgrin was induced or encouraged to perform the very activity that injured him “namely riding 50km per hour on a road on a push bike” in March 1990 in any event.
For Mr Dalgrin it was submitted that there was no error on the part of the Tribunal in identifying his employer as the Defence Force. It was submitted that the test in Hatzimanolis should apply in the same way to a Reservist as it would to any member of the Permanent Forces. It was submitted that the Tribunal was plainly aware of the chronology of events, including the circumstance that the letter of instructions was received after the injuries occurred and before Mr Dalgin’s participation in the Selection Board Interview.
Mr Dalgrin further submitted that the letter impliedly encouraged the activity that caused the injury. He contended that successful selection to and subsequent attendance at the SASR Course was dependent upon preparation and that the high threshold for participation in the SASR Course, and possible recruitment into the SASR meant that a triathlon was a suitable choice for preparatory physical activity.
Mr Dalgrin contended that the Tribunal’s conclusion was open to it to make on the basis of his oral evidence together with the letter of instruction, and that its conclusion did not involve the drawing of illogical or irrational connections. As to whether it was open to the Tribunal to make the factual findings that it did (question 4), Mr Dalgrin identified the test as that discussed by Crennan and Bell JJ in Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611 (at [135]):
On the probative evidence before the Tribunal, a logical or rational decision maker could have come to the same conclusion as the Tribunal. Whilst there may be varieties of illogicality and irrationality, a decision will not be illogical or irrational if there is room for a logical or rational person to reach the same decision on the material before the decision maker. A decision might be said to be illogical or irrational if only one conclusion is open on the evidence, and the decision maker does not come to that conclusion, or if the decision to which the decision maker came was simply not open on the evidence or if there is no logical connection between the evidence and the inferences or conclusions drawn. …
The Commission did not argue against the application of that principle as governing the outcome of question 2 to the extent that it asserts that the findings were not capable of being based on the evidence.
CONSIDERATION
The starting point is that Mr Dalgrin suffered the fractures at a time when he was not on duty or engaged in actual work as a Reservist. It has not been suggested that the injuries were suffered during a short interval in daily work such as a lunch break (as in Oliver) or in an interval between daily periods of work whilst stationed at a remote location (as in Hatzimanolis and Danvers). The reasons of the Tribunal do not contain any consideration of the hours of work (if any) Mr Dalgrin actually undertook as a Reservist in March 1990. The reasons of the Tribunal appear to proceed from the assumption that the injuries occurred between periods of work, but the length of the interval is not the subject of any finding. For the purposes of what follows I will assume (without finding) that the injuries occurred on a day falling between two discrete periods of work undertaken by Mr Dalgrin in his capacity as a Reservist, as the Tribunal appears to have done. In accordance with Hatzimanolis, that temporal consideration renders it less likely that the injuries will be seen as occurring in the course of employment.
Again, as emphasised in Hatzimanolis, regard must be had to the general nature, terms and circumstances of Mr Dalgrin’s employment and not merely to the circumstances of the particular occasion out of which his injuries arose.
It is common ground that at the time of the injuries, Mr Dalgrin was a Rerservist. He was not a member of the Permanent Forces. He was not a member of the SASR, nor had he been selected to participate in the SASR Course, nor had he been nominated to participate in the Selection Board Interview with a view to being selected to undertake the SASR Course.
Whether Mr Dalgrin was employed as a Reservist or as a member of the Permanent Forces, the identity of his employer was the same. The Tribunal correctly identified the employer as the Defence Force. However, to say that is not to equate the general nature, terms and circumstances of his employment with that of a member of the Permanent Forces or, more specifically, as a solder recruited to the SASR or a participant in the SASR Course. The circumstance that Mr Dalgrin had aspirations to gain employment within the Permanent Forces as a member of the SASR does not alter the nature terms and circumstances of his employment as a Reservist at the time that the injuries occurred, whatever they might be. The Commonwealth’s liability under s 14 of the DRCA must be assessed in the context of Mr Dalgrin’s employment in 1990, not by reference to any alternate employment he desired to secure with the same employer at a later time.
The next critical observation is that the injuries were occasioned by Mr Dalgrin coming off his push bike during a competitive triathlon. He estimates the speed of travel at the time to be 50km per hour. Whilst his claim form stated that the injury occurred whilst “training for SASR selection course”, the undisputed facts are that Mr Dalgrin had not at that time been selected to participate in the SASR Course, which was not due to commence until February 1991. The “training” was not training provided by the employer. On any view of the evidence, it was physical activity undertaken by Mr Dalgrin to improve his fitness in order to increase his chances of selection into the SASR Course.
The Tribunal was plainly aware that the letter of instruction received by Mr Dalgrin in October 1990 post-dated the injuries by nearly six months. I accept the Commission’s submission that it was not open to the Tribunal to find that Mr Dalgrin had been directly and expressly induced or encouraged by that letter to do the very thing that resulted in his injuries in March 1990. However, in my view the Tribunal did not purport to make any such finding. With respect, its reasoning was more generalised than that.
The instruction letter was directed to employees who had at that time been selected in October 1990 to participate in the SASR Course due to commence in the following February. It was not directed to persons employed as Reservists in March 1990. It nonetheless supported Mr Dalgin’s subjective understanding in March 1990 that rigorous physical training would be required in order to successfully complete the SASR Course, should he be selected to participate in it.
The Tribunal relied on Mr Dalgrin’s evidence that the core strengths of a soldier included preparedness and initiative. His words “precautionary” and “executive” were understood by the Tribunal to be analogous to drill commands. There is no challenge to the Tribunal’s interpretation of Mr Dalgrin’s language in that respect and it should be accepted as correct in military parlance. The Tribunal’s reasoning was based on the characteristic or “core strength” of preparedness and initiative expected of soldiers in the Defence Force generally, which was said to be “consistent” with the letter of instruction later issued to Mr Dalgrin. The legal difficulty lies in the application of s 14 of the DRCA to the facts thus far described.
The Tribunal’s conclusion that “the Army expects a ‘top fit solder’” must be understood in the syntax of [21] of its reasons read as a whole. The Tribunal there attributes to the employer an “expectation” that soldiers employed in the Army have the characteristic of preparedness (which may be taken to include physical preparedness) “for the tasks ahead”.
The Tribunal may also be understood as referring to the personal characteristic of initiative and preparedness more generally, which Mr Dalgrin had demonstrated by “training for the forthcoming stages of SASR selection”. It was that conclusion that formed the basis for the finding that the employer had induced or encouraged the activity engaged in at the time that the injuries occurred. Read fairly and as a whole, the Tribunal’s reasons include a finding that the Defence Force expected soldiers in the Army to exhibit personal qualities of initiative and preparedness, both in respect of specific upcoming tasks, and more generally. In my view, the finding that a general “expectation” existed was capable of being drawn on the material to which the Tribunal referred, having regard to the generally understood purposes of an Army, which are not necessary to articulate here.
I have nonetheless concluded that the facts as found by the Tribunal were not capable of supporting a conclusion that Mr Dalgrin’s employer induced or encouraged the particular activity that brought about his injuries or, for that matter, any like activity.
The Tribunal’s finding that there was an expectation of preparedness “for the tasks ahead” is expressed in the abstract without reference to the facts concerning Mr Dalgrin’s employment as they existed at the time that the injuries occurred. There was no evidence that at the time of the injuries Mr Dalgrin was preparing to perform any task referrable to or incidental to his employment as a Reservist. His tasks as a Reservist are not the subject of any findings. To the extent that his employer expected him to remain in a state of preparedness for a “task ahead”, the evidence upon which the Tribunal relied did not support a finding that the expectation was conveyed in a way that amounted to inducement or encouragement directed towards Reservists, to maintain a state of extreme physical fitness sufficient to meet the demands of the SASR Course.
Nor do I consider it to have been open to the Tribunal to have based its finding of inducement or encouragement on a more general expectation (attributed to the employer) that soldiers in the Army demonstrate the personal characteristics of initiative. Even if the attribution of that general expectation to the employer was available on the evidence, of itself it is not sufficient to demonstrate that Mr Dalgrin was thereby encouraged or induced by the employer to participate in the activity that occasioned his injuries. An employer’s expectation that an employee possess desirable personal characteristics cannot, without more, constitute inducement or encouragement to undertake activities outside of working hours to develop or demonstrate those characteristics. It does not constitute inducement or encouragement to undertake any activity of the employee’s choosing so as to bring the engagement in the activity within the course of employment in a temporal sense or in any other sense.
The activity test in Hatzimanolis and PVYW is not concerned with ideals or expectations expressed in the abstract. It is formulated to ensure that there is an association between the particular activity bringing about the injury and the particular employment sufficient to warrant the imposition of liability on the employer for the injury. In cases in which the activity test applies, the relevant association is found in the employer’s conduct of inducing or encouraging the relevant activity. Where the inducement or encouragement is said to have been given impliedly, it becomes all the more important to examine the underlying facts from which the implication might reasonably be drawn. In such cases the nature and scope of the employment must be considered. In the present case, the scope of Mr Dalgrin’s employment as a Reservist and the inducement and encouragement directed to him in that capacity is critical to the outcome. It simply was not explored.
The evidence before the Tribunal did not demonstrate that Mr Dalgrin was training to be a “top fit soldier” for purposes of his employment as a Reservist. Rather, he was preparing to be a “top fit soldier” so that he could secure employment of a different kind, by competitive selection over other aspirants into the SASR Course. Whilst that is an admirable personal quality, the limited evidence to which the Tribunal referred was not capable of supporting a finding that his employer either expressly or impliedly induced him to participate in competitive triathlons or like activities, at least at any time prior to the issue of the letter of instruction in October 1990. Whether an injury occasioned during a triathlon after that time would have attracted liability is unnecessary to decide.
I am satisfied that the statutory criterion in s 14 of the DRCA was either misunderstood or misapplied by the Tribunal, particularly by its failure to focus on the “employee’s employment”. In my view the Tribunal’s factual search for the requisite inducement or encouragement was undertaken not by reference to Mr Dalgrin’s actual employment, but by his aspiration to secure alternative employment. The error alleged in question 4 is established to that extent.
In addition, the Tribunal erred in equating general expectations about desirable qualities of an employee within the Defence Force with inducement and encouragement to undertake an activity, leaving the finding of inducement and encouragement without evidentiary support. The allegation of error in question 2 is made good to that extent.
As discussed earlier in these reasons, the test propounded in Hatzimanolis is not to be understood as a replacement for the statutory language. Before concluding, it is appropriate to return to the DRCA and to explain the outcome of this appeal by reference to the statutory text.
The expression “in the course of employment” imposes a temporal condition. The principle in Hatzimanolis guides the evaluative assessment as to whether an injury occurring at a time between periods of actual work may nonetheless fulfil the temporal condition. That is why the High Court in Hatzimanolis was first concerned to identify whether the employee’s injury occurred in an interval or interlude in an overall episode of work: the authorities discussed concerned lunch breaks, overnight stays and remote postings at the employer’s insistence. The activity test was formulated within that factual context. Nothing said in the majority judgment in PVYW abandoned the need for an initial temporal analysis as to when the injury occurred relative to the employee’s working hours. On the facts of all of the decided cases, the injury was temporarily proximate to periods of work, the finding of proximity in some cases being informed by considerations of place.
To my mind, to allow Mr Dalgrin’s claim on the limited facts found by the Tribunal would be to extend the ambit of the Commonwealth’s statutory liability to circumstances that are too far removed from the temporal meaning of the expression “course of employment” in the DRCA. In the “activity” cases discussed in Hatzimanolis and PVYW, it was the employer’s conduct of inducing or encouraging the employee to engage in an activity during the relevant interval or interlude that permitted a finding that the injury occurred at a time that may be regarded as falling within the statutory expression. The test of inducement and encouragement is concerned with actual conduct of the employer having an actual effect on the employee, thus giving rise to a sufficient connection between the employment and the activity that occasions the injury. It is the connection between the employer’s conduct and the activity that provides a principled basis for the imposition of liability within the confines of the statute.
I have no difficulty with the general proposition that liability may be attracted in relation to an injury suffered by an employee between periods of work whilst he or she is engaged in a specific activity that falls within a broader class of activity that the employer has been induced or encouraged him or her to undertake between periods of work.
However, in the present case it was not shown that the general expectations identified by the Tribunal amounted to inducement or encouragement directed to Mr Dalgrin to engage in any activity between his ordinary periods of work as a Reservist at all. On the primary facts, Mr Dalgrin did not compete in the triathlon to meet any actual or perceived expectation that he maintain a level of fitness commensurate with the duties of his employment as a Reservist (about which the Tribunal made no finding). Rather, as mentioned above, his engagement in the activity was explained by his desire to develop in himself the qualities that he correctly believed would make him an attractive candidate for selection as a soldier in the Permanent Forces as a member of the SASR. In effect, Mr Dalgrin’s evidence was that he anticipated what the expectations of him would be should he secure a different role with the same employer. Factually, that does not amount to inducement or encouragement by the employer to engage in a competitive triathlon between periods of work in March 1990. In those circumstances, the evidence was not capable of demonstrating the necessary connection between the employer’s conduct and the activity so as to satisfy the statutory condition that the injuries arose “in the course of employment”, properly construed.
REMEDY
The appeal will be allowed.
In the course of argument, Mr Dalgrin referred to portions of his evidence not referred to in the Tribunal’s reasons. The topics included his motivations for taking up cycling and his desire not to embarrass his existing unit by turning up unfit for the SASR Course. That evidence is not referred to in the Tribunal’s reasons and so cannot preclude the conclusion that the Tribunal erred in law in reasoning in the fashion that it did. The Commission has not submitted that the only possible outcome of the Tribunal’s review was the affirmation of the decision to refuse the compensation claim and it has not sought an order compelling the Tribunal to arrive at that result. Accordingly, the appropriate order is that the matter be remitted to the Tribunal for reconsideration according to law.
I certify that the preceding eighty-two (82) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Charlesworth. Associate:
Dated: 10 February 2022
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