Qantas Airways Limited v Watson (No 2)

WORKERS COMPENSATION COMMISSION
APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR FOLLOWING REMITTER FROM THE COURT OF APPEAL
CITATION:		Qantas Airways Limited v Watson (No. 2) [2010] NSWWCCPD 38
APPELLANT:		Qantas Airways Limited
RESPONDENT:		Peter Michael Watson
INSURER:		Self insurer
FILE NUMBER:		A1-7586/07
ARBITRATOR:	Mr J Wynyard
DATE OF ARBITRATOR’S DECISION:		5 February 2008
DATE OF FIRST APPEAL DECISION:		26 June 2008
DATE OF COURT OF APPEAL DECISION:		8 October 2009
DATE OF SECOND APPEAL DECISION:		14 April 2010
SUBJECT MATTER OF DECISION:		Sections 4, 9A and 11 of the Workers Compensation Act 1987; arising out of or in the course of employment; whether employment a substantial contributing factor to injury received while pilot on slip time in Los Angeles; ordinary recess
PRESIDENTIAL MEMBER:		Deputy President Bill Roche
HEARING:		6 April 2010
REPRESENTATION:		Appellant:	Mr J Catsanos, instructed by HWL Ebsworth Lawyers
Respondent:	Mr L King SC & Mr G Niven, instructed by White Barnes
ORDERS MADE ON APPEAL:		The Arbitrator’s determination of 5 February 2008 is revoked and the following orders made: “1. Award for the respondent. 2. No order as to costs.”
Each party is to pay his or its own costs of the appeal.

BACKGROUND

The respondent worker, Mr Watson, was a long haul airline pilot with the appellant employer, Qantas Airways Limited (‘Qantas’). At about 7.00 am on Saturday 26 February 2005, he arrived in Los Angeles as a crewmember on Qantas flight 93 from Melbourne. A ‘crew bus’ transported him and other crewmembers to the ‘crew hotel’ at Pasadena. He was not scheduled to leave Los Angeles until 11.55 pm on Sunday 27 February 2005. His time between flights is referred to as ‘slip time’ or as a ‘layover’.

After checking into the hotel and informing technical crewmembers that he would be visiting friends that evening, he proceeded to his room, where he showered and went to bed. Later that day, he drove about one hour and twenty minutes to the home of a friend with whom he shared an interest in horses. After having dinner with his friend, Mr Watson commenced to drive to his hotel when an intoxicated driver collided with his vehicle, causing him serious injuries. As a result of his injuries, Mr Watson is no longer licensed to fly.

Qantas has always disputed Mr Watson’s claim for compensation, on the grounds that his injuries did not arise out of or in the course of his employment, and that his employment was not a substantial contributing factor to his injuries.

In an Application to Resolve a Dispute (‘the Application’) registered in the Commission on 8 October 2007, Mr Watson claimed weekly compensation from 27 February 2005 to date and continuing, together with hospital and medical expenses as a result of injuries received by him in the motor vehicle accident on 26 February 2005. The Application described the injury as having occurred as follows:

“During the course and performance of his duties and whilst in a slip port, the applicant was involved in a motor vehicle accident.”

In a Reply filed on 26 October 2007, Qantas disputed liability on the grounds set out in paragraph [3] above.

The Commission listed the matter for conciliation and arbitration on 15 January 2008, when Mr Niven, barrister, appeared for the worker and Mr Catsanos, barrister, appeared for Qantas. The parties agreed that the issues in dispute remained as stated above and made lengthy submissions to the Arbitrator on that basis. Neither party made any application to call oral evidence.

In a reserved decision delivered on 5 February 2008, the Arbitrator made an award in favour of Mr Watson in the following terms:

“The determination of the Commission in this matter is as follows:

1. Award in favour of the Applicant

2. Liberty to apply

3. Respondent to pay the Applicant’s costs.”

In an appeal filed on 4 March 2008, Qantas sought leave to challenge the Arbitrator’s determination. In a decision delivered by Deputy President Byron on 26 June 2008, the Commission revoked the Arbitrator’s decision and made an award for the appellant employer (Qantas Airways Limited v Watson [2009] NSWWCCPD 65).

Mr Watson appealed that determination and, on 8 October 2009, the Court of Appeal allowed the appeal and set aside the Deputy President’s decision, and remitted the matter to the Commission for rehearing (Watson v Qantas Airways Limited [2009] NSWCA 322 (‘Watson’)). The Court determined that the Deputy President erred in law in failing to direct himself in accordance with the reformulated test in Hatzimanolis v ANI Corporation Limited [1992] HCA 21; (1992) 173 CLR 473 (‘Hatzimanolis’) and therefore effectively asked himself the wrong question.

The Court remitted the matter to the Commission for rehearing. Since then, it has been the subject of two teleconferences, further submissions from both sides, an application to amend the Application to Resolve a Dispute to rely on the recess provision in section 11 of the Workers Compensation Act 1987 (‘the 1987 Act’), applications to rely on additional evidence, and an oral hearing on 6 April 2010, when Mr King SC with Mr Niven appeared for Mr Watson and Mr Catsanos appeared for Qantas.

PRELIMINARY MATTERS

After a teleconference on 4 November 2009, I issued a direction setting a timetable for further submissions and, if appropriate, any applications to rely on additional or fresh evidence. Mr Watson filed submissions on 16 December 2009 in which he sought to rely on additional witness statements (in the form of affidavits) from two 747 pilots employed by Qantas, and to allege that, in the alternative to the current claim, he received a personal injury while on a recess within the meaning of section 11 of the 1987 Act. Qantas filed submissions in reply on 9 February 2010 in which it objected to the admission of the additional evidence and to the proposed amendment. If the additional statements were to be admitted, it sought to cross-examine the witnesses.

Additional evidence and cross-examination

‘Fresh evidence’ on appeal is governed by section 352(6) of the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’), which provides as follows:

“(6)Evidence that is fresh evidence or evidence in addition to or in substitution for the evidence received in relation to the decision appealed against may not be given on an appeal to the Commission except with the leave of the Commission.”

Mr Watson sought to rely on additional evidence on appeal in the form of a sworn but undated statement from Andrew Percival and a sworn statement dated 9 December 2009 from Keith Marriott, both Boeing 747 captains with Qantas.

Qantas opposed the admission of this additional evidence on appeal and noted that Mr Watson offered no explanation as to why the evidence was not adduced at the arbitration. The stated purpose of the evidence was to “reinforce and confirm the evidence already before the Commission”. Qantas argued that this was a simple forensic evidentiary matter that was appropriate to Mr Watson’s assessment of how the case should have been run at first instance. It was not, it was submitted, a legitimate basis for introducing further evidence on appeal under section 352 of the 1998 Act, let alone a second appeal under that section.

The Court of Appeal considered the introduction of fresh evidence or additional evidence on appeal in Haider v JP Morgan Holdings Aust Ltd t/as JP Morgan Operations Australia Ltd [2007] NSWCA 158; (2007) 4 DDCR 634 (‘Haider’) where Basten JA referred to Akins v National Australia Bank (1994) 34 NSWLR 155 (‘Akins’) and other authorities. In Akins, Clarke JA (Sheller JA and Powell JA agreeing) stated at 160 that three conditions need to be met before ‘fresh evidence’ can be admitted:

“These are: (1) It must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; (2) The evidence must be such that there must be a high degree of probability that there would be a different verdict;
(3) The evidence must be credible.”

However, in Nowlan v Marson Transport Pty Ltd [2001] NSWCA 346; (2001) 53 NSWLR 116 Heydon JA (as his Honour then was) stated at [15]:

“Even if the three tests stated in Akins case are applicable and are not satisfied, a question remains: is it just to admit the further evidence in this case?”

As Basten JA observed in Haider, the power to admit evidence that is in addition to, or substitution for, the evidence received at the arbitration hearing, pursuant to section 352(6) of the 1998 Act, must be exercised having regard to the Commission’s statutory duty to “act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms” (section 354(3) of the 1998 Act). Basten JA added (at [45]):

“Assuming for present purposes that the evidence was material and probative, the statutory obligations and powers imposed and conferred on the tribunal suggest that the material should have been considered in order to address the substantial merits of the case.”

Though it is unsatisfactory that the evidence Mr Watson now seeks to tender was not tendered at the arbitration, the additional evidence is material and probative to the issues I have to determine. There is no prejudice to Qantas if the evidence is admitted and, as the evidence reinforces and is relevant to the issues in dispute, it is in the interests of justice that it be admitted. That is the view I formed after considering Qantas’s objections in its written submissions filed on 9 February 2010 and I remained of that view after reconsidering the matter at the oral hearing on 6 April 2010.

Qantas sought to cross-examine Mr Percival and Mr Marriott, but advanced no cogent reason as to why that was necessary. As there were no credit issues involved in this case and as cross-examination is only permitted in the Commission by leave, I refused that application at the teleconference on 22 February 2010. At the oral hearing on 6 April 2010, Qantas advanced no persuasive reason that would justify a change in that ruling.

Qantas sought to tender, as additional evidence on review, a statement dated 19 March 2010 from Mark Wagener, principal adviser – flight crew operations with Qantas. He is responsible for providing management, advice and a range of regulatory and award interpretations to flight operations management and fleet captains. This statement sets out relevant information about required rest periods for flight crew and Qantas’s ‘slip policy’ when crewmembers are off duty during layovers. On the basis that the statements from Captains Percival and Mariott were admitted, Mr King did not object to the admission of Mr Wagener’s statement. Though this evidence should also have been filed at the original arbitration, it is relevant to the issues in dispute and it is in the interests of justice that it be admitted on review. Mr King did not seek to cross-examine Mr Wagener.

Parties are again reminded that arbitrations are not a trial run where they can await the result before seeking to properly prepare their respective cases. All relevant evidence should be tendered at the arbitration. Deputy President Byron commented on the lack of evidence in the present matter and drew information about the usual practice during layovers from the cases cited to him rather than from the evidence. That was a most unsatisfactory situation that should not have occurred.

Amendment

In his submissions filed on 16 December 2009, Mr Watson sought leave to amend to rely on section 11 of the 1987 Act. He argued that the amendment should be allowed because, if an amendment would have been permitted before Deputy President Byron, there was no reason why it should not be permitted now. He further submitted that it was “virtually inconceivable” that the evidence would have been different and what was involved in a layover had been exhaustively established.

In its submissions filed on 9 February 2010, Qantas opposed Mr Watson’s application to amend to rely on section 11 on the grounds that:

(a)a review is a statutory power and the Commission has no inherent power in that process;

(b)an appeal under section 352 is “to be by way of review of the decision appealed against”. Section 11 was never an issue between the parties at the arbitration and it is now impermissible to amend “the fabric of the first instance decision to make it part of the appeal process” (Qantas’s submissions 9 February 2010, paragraph six);

(c)section 352 does not contemplate an amendment, as opposed to the introduction of further evidence, which is covered by section 352(6);

(d)in the alternative, fresh issues should be raised on appeal only in exceptional circumstances (Metwally (No 2) v University of Wollongong [1985] HCA 28; (1985) 59 ALJR 481 at [24] and Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1);

(e)the failure to previously plead section 11 remains unexplained;

(f)the worker’s submission that the evidence would not have been otherwise was presumptuous;

(g)the worker’s submission that the crew hotel was the “place of employment” is a factual conclusion for which there was no evidentiary consideration at first instance. Alternative interpretations of “place of employment” may be open depending on the facts;

(h)there was no evidentiary consideration given to the temporal requirements of the absence occurring on that day;

(i)abnormal risk of injury was a matter Qantas was entitled to explore at the arbitration had the point been raised, and

(j)in a jurisdiction where Qantas has no realistic cost remedy, it is inappropriate that it now faces the expense of re-litigating the worker’s claim on a footing different to that originally presented.

Qantas added that, if the Commission was minded to allow the amendment, the matter should be listed for directions as to whether, and to what extent, further evidence is adduced by it.

After considering the parties’ detailed written submissions on this issue, I listed the matter for teleconference on 22 February 2010, when I ruled, without giving reasons, that Mr Watson could amend to rely on section 11, but on condition that Qantas be given the opportunity to meet that amendment with further evidence. Qantas then filed Mr Wagener’s statement.

In further submissions filed on 24 March 2010, Qantas objected to the amendment made on 22 February 2010 on the ground that it had been made “without further discussion, submission or reasons”. Mr Catsanos maintained that objection at the oral hearing on 6 April 2010 but made no further submissions.

Mr King submitted that the power on review includes the power to amend. He referred to Cabal and another v United Mexican States and others (No 2) (2000) 172 ALR 743; [2000] FCA 445. That case concerned a review under section 21 of the Extradition Act 1988 of a magistrate’s decision determining that the applicants were eligible for surrender to Mexico and ordering their detention to await surrender. French J (as his Honour then was) held that a party on review is not limited to the points of law argued before the magistrate except to the extent that any new point of law would necessitate:

(a)reliance upon material not before the magistrate, and

(b)reliance upon material tendered to the magistrate for a purpose other than that for which it was tendered where it was tendered for a particular purpose.

Having reconsidered the parties’ submissions on this issue, I confirmed my original ruling allowing the amendment. My reasons are as follows:

(a)though it was given the opportunity to do so, Qantas has tendered no additional evidence on the recess issue;

(b)the evidence on the recess issue is substantially the same as the evidence before the Arbitrator. It requires no additional evidence;

(c)the Presidential member hearing a review has a wide discretion as to how a review will be conducted (Sapina v Coles Myer Limited [2009] NSWCA 71; (2009) 7 DDCR 54; State Transit Authority of NSW v Fritzi Chemler [2007] NSWCA 249; (2007) 5 DDCR 286);

(d)the Commission has a statutory obligation to act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms (section 354(3) of the 1998 Act), and

(e)the amendment involves no prejudice to Qantas and allows the matter to be determined according to its substantial merits. It is therefore appropriate that it be allowed.

THE EVIDENCE

Mr Watson

Mr Watson’s evidence is set out in documents headed “slip port activity by Peter Watson on 26^th February 2005”, “slip port activity and contact policy” and “life changes due to motor vehicle accident”. Mr Watson appears to have prepared and signed these documents on or about 7 September 2007. They appear to have been prepared without the benefit of legal advice and therefore lack the precision that one would expect in a case of this kind.

Mr Watson stated that it was a legal requirement that technical crewmembers on a flight do whatever they could to present themselves for duty in a well-rested physical state with a clear head, and that they maintained that state while in various slip ports. Over his 20 years working as a long haul pilot for Qantas, Mr Watson developed a strategy to offset the accumulation of chronic fatigue that “back of the clock, transmeridian, long haul, duties produced”. Whilst a lot of crewmembers met at 6.00 pm and proceeded to the nearest bar that provided discounts for airline crews and then to a restaurant with similar arrangements, followed by a nightclub, Mr Watson’s first priority was “fresh air, fresh surrounds and to meet new people”. As a result, he always tried to leave the area of the crew hotel.

Qantas was well aware that the activity of hiring a car and leaving the vicinity of the crew hotel was one practised by a large number of crewmembers, including senior management, technical and cabin crew. Crewmembers and their families would visit such places as Disneyland, go skiing at Big Bear, visit the Warbirds Museum in Chino, or spend a night at Las Vegas, and the company never discouraged that practice. Budget car rentals at Long Beach and Pasadena gave Qantas crewmembers a $20.00 a day hire rate.

Mr Watson attempted to stay out of bars to prolong his health and fitness to be able to carry out his duties to the best of his ability, and at the same time make contact with the local population, “which in turn spread the word about Qantas”.

For many years, Mr Watson and his wife had been involved in owning and riding horses, and he actively sought out people in that industry. To that end, he made contact with the Tavaglione family through a horse industry magazine advertisement. They were horse enthusiasts who lived about a one hour twenty minute drive from Los Angeles. Over time, he developed a friendship with the Tavagliones, and he and his wife became regular visitors to their house. The Tavagliones also visited the Watsons in Australia. A member of the Tavaglione family was a travel agent, who regularly sought Mr Watson’s advice on planning trips for her clients to Australia and, as a result, they flew Qantas.

The “main benefit” for Mr Watson from his contact with the Tavaglione family was that it provided a “fresh environment” that allowed him to clear his head and reinvigorate in preparation for his next flying sector. Though there were no horses involved, he followed a similar procedure in London, Singapore and other slip ports where he had friends or associates. The habit became expensive at times because of car hire, fuel costs and train fares. He spent his crew meal allowances while dining with his friends and “spreading the word about Australia and Australians and of course Qantas”.

It was accepted practice by Qantas technical crew that any crewmember intending to leave the general area of the crew hotel told another crewmember (usually the captain) where he or she was going and, if possible, left a contact number. The company could call a crewmember to operate in lieu of another member who was ill or involved in an accident. On the day of Mr Watson’s accident, he advised the operating captain that he would be visiting friends, but would be returning to the crew hotel the same evening. After arrival in a slip port and a “minimum rest period”, crewmembers were on 24-hour call in any slip port.

At 7.00 am on 26 February 2005, Mr Watson arrived in Los Angeles on a flight from Melbourne. After checking into the crew hotel, he showered and went to bed. At about 4.00 pm, a Budget employee picked him up and drove him to the Budget depot, where he selected a car. He then drove 15 minutes through Pasadena to a supermarket, where he purchased an iced coffee and a pre-packed sandwich. He then drove via freeway 91 to Riverside, where he turned right into Adams Street, and then drove about another 10 minutes to the Tavaglione’s front gate, arriving about dusk. His “total drive time” was about one hour twenty minutes. Though the traffic was “fairly busy”, it flowed well. The weather was good.

Upon arriving at his friends’ property just on dusk, he looked at a new horse they had recently purchased and watched television with them. He accepted an invitation to stay for dinner, but declined to stay overnight, leaving to drive back to the crew hotel at about 9.00 pm. Whilst returning to the hotel, an intoxicated driver came through a red light at the on/off ramp for freeway 91 and Adams Street Riverside (about 10 minutes drive from the Tavaglione residence), and collided heavily with the left hand side of Mr Watson’s vehicle. At the time of the accident, Mr Watson would still have been about a one-hour and ten minute drive from the hotel. The weather was clear and the area was well-illuminated and there was very little traffic around. As a result of injuries sustained in the accident, Mr Watson was conveyed to hospital, where he underwent extensive treatment and rehabilitation. He has not been able to return to flying.

Mr Watson’s view of his activities on the evening of 26 February 2005 are summarised at page five of his first statement where he stated:

“In hindsight I maintain that these outings were an essential part of my post flight rehabilitation and went a long way to offset fatigue and boredom. The additional benefit was that a lot of people got to learn about Australia, Australians and Qantas and I became better educated about the country in which I was slipping and its people and what it had to offer to prospective visitors.”

He added in his second statement:

“I was in Los Angeles because I was doing my job for this company and I suffered a serious injury while I was there. If I had not made myself available and signed on the day before, this would not have happened. I was not Bullriding or Skydiving but merely doing what we all do in slip ports; which is to live. The company is aware of this activity and they do not expect us to hide in our hotel rooms, but go out and about and do appropriate activities. I was not in Los Angeles for any reason other than for my employment, and obviously would not have been there, and the accident would not have happened, if I was not employed by Qantas to be there.”

After Qantas denied his claim, Mr Watson wrote on 9 July 2005 to Vanessa Webber, manager, people relations flight operations with Qantas. Mr Watson said, among other things:

“At the beginning of April I submitted a claim for Workers Compensation and by the 27^th May Qantas had decided that my case was not compensable. The main reason given seemed to be that there was no connection between the accident and my employment. So my question is ‘what was I doing in L.A. at the time if not at the behest of QANTAS and therefore in the course of my employment.’ We live in a company sponsored hotel, given company funds to eat and remain on 24 hour call to respond at short notice to crew changes when things happen like my accident as an example. If this is not a ‘substantial causal connection’ I would like to know what is.”

Captain Percival

Captain Percival’s evidence is that long haul pilots are exposed to multiple time zone changes and subsequent circadian rhythm disruption. It is vital to maintain a level of physical fitness to counteract the inevitable decline in fitness due to the nature of the work. Captain Percival prefers a brisk power walk and, for relaxation while “on a slip”, will often go fishing. On his last trip to Los Angeles, he visited a number of fishing tackle and boat stores and, as a result, was away from the crew hotel for the best part of a day. In the past, he has also hired a vehicle and gone sightseeing with other crewmembers, as well as visited friends. When away from the crew hotel, he always left his contact number. He had never been disciplined or told it was not permissible to engage in social activities whilst “on a slip”. Remuneration in a slip port constituted a component of his employment contract.

Captain Marriott

Captain Marriott’s evidence is that he would regularly engage in physical exercise, either running or swimming, after arriving in a new city. He gave examples of having visited his aunt on a recent trip to London and having visited his girlfriend’s family one hour out of Jahore Bahru in Malaysia. He described these activities as typical of the activities he has always engaged in during slip time since he started work with Qantas. He has never been disciplined or told that it was not permissible to engage in such activities.

Mr Wagener

Mr Wagener’s evidence may be summarised as follows:

(a)he was familiar with the legal and procedural requirements of Qantas’s operations in Australia and overseas;

(b)it was and is a legal requirement the flight crew take a mandatory period known as ‘Minimum Off Duty Period Enroute [sic]’ (slip time) after a flight duty period away from their base station;

(c)in general terms, flight crew were expected to remain in slipping ports during the period of their slip. Should any crewmember wish to leave normal accommodation to visit or stay with friends, they were to ensure that the captain was advised and kept fully informed of the member’s movements so he or she could be contacted;

(d)Mr Watson was to have 39 hours 25 minutes slip time in Los Angeles, leaving at 11.55 pm on Sunday 27 February 2005 (Los Angeles time);

(e)the minimum industrial requirement for slip time on Mr Watson’s “flight schedule” was 18 hours 50 minutes, which could have been reduced to 12 hours in exceptional circumstances;

(f)the procedure on arrival at the gate at the destination airport was for the flight crew to complete their flight duties on the flight deck and then hand responsibility for the aircraft to a ground engineer, before proceeding to customs and immigration;

(g)once customs were cleared, the crew boarded a bus to travel to accommodation in Pasadena;

(h)what flight crew choose to do during slip time was “entirely a matter for them”. Apart from providing contact details to their captain, the only obligation on flight crew is that they present themselves for duty at the end of slip time in a fit and ready state for their expected duty, drug and alcohol free;

(i)the discounted car rental rates were “industry rates” provided by the car hire company, which he assumed were intended to give rise to goodwill. It was not something organised by Qantas;

(j)Qantas did not require Mr Watson to return to the hotel when he did and he could have stayed overnight with friends, provided he had informed the captain that he was doing so;

(k)there was no obligation on Qantas staff to follow any particular health and fitness regime or to promote Australia or Qantas while overseas, and

(l)the onus of ensuring fitness rested with the crewmembers.

THE ARBITRATOR’S DECISION

After reviewing the evidence and authorities and noting that the worker’s injury arose out of a motor vehicle accident caused by an intoxicated driver in Los Angeles after a visit to friends that had no connection with the worker’s duties as a long haul pilot, the Arbitrator concluded (at [58]):

“58. However, in the light of the above authorities I am also satisfied that the Applicant would not have been where he was, nor acting as he did, but for his employment. The following factors are equally substantial in contributing to the injuries sustained:
·The Applicant was in Los Angeles as a requirement of his employment
·The Applicant was required by his employment to be on call for the duration of the time he was there
·The Applicant was required to notify his crew if he were leaving the environs of his crew hotel and leave details of his whereabouts
·It was common policy for employees to pursue their own interests while on a ‘layover’ whether in Los Angeles or elsewhere
·Qantas crew were given reduced rates from car hire companies, hotels and bars, indicating a system which encouraged employees to use their ‘slip’ time for their own purposes.”

For these reasons, the Arbitrator found that Mr Watson’s injuries arose out of his employment and that, consonant with the decision in Mercer v ANZ Banking Group [2000] NSWCA 138; (2000) 48 NSWLR 740 (‘Mercer’), his employment was a substantial contributing factor to the injury.

If he were in error in that finding, and it was found that the “injuries arose in the course of employment”, the Arbitrator was nonetheless satisfied that employment was a substantial contributing factor to the injuries because it was the worker’s employment that was responsible for him being in Los Angeles at all. The Arbitrator added (at [60]):

“But for that employment, he would never have been in Los Angeles and thus never suffered his motor vehicle accident.”

The Arbitrator added at [61] that he declined to follow the decision of Bishop J in Farrelly v Qantas Airways Limited (2001) 22 NSWCCR 331 (‘Farrelly’). He concluded:

“The ‘causality’, … requires a determination as to whether the employment added a factor of substance among other non-related factors. If the injuries, regardless of the fact that they occurred in circumstances unrelated to employment, would not have occurred but for the requirement dictated by the Respondent that the Applicant be in that city at that time, then it is difficult not to find that requirement to be a factor of substance.”

THE DEPUTY PRESIDENT’S DECISION

The Deputy President observed (at [77]) that, at the time of the accident, Mr Watson was not undertaking any activity that he was reasonably required or authorised to do in order to carry out his duties (Humphrey Earl Limited v Speechley [1951] HCA 75; 84 CLR 126 (‘Speechley’)). Nor could it be said that Mr Watson was at a particular place or doing something at the direction of Qantas (Hatzimanolis) and it was of no particular interest or benefit to Qantas that he was engaged in a wholly private, social activity (Dew t/as AG & PG DEW v Maher (1996) 14 NSWCCR 56), above and beyond his responsibility to be prepared and available to take his next assignment as a Qantas pilot. Part of that responsibility was to ensure that he was rested and fit for work. At best, Qantas may be said to have acquiesced in Mr Watson’s social activity in his own time.

The fact that Qantas allowed latitude and flexibility to its long haul employees, enabling them to undertake a wide range of activities, did not necessarily mean all activities on which they embarked were within the course of employment (WorkCover Authority (NSW) v Billpat Holdings Pty Ltd & Others (1995) 11 NSWCCR 565 (‘Billpat’)).

The Deputy President therefore concluded that, on the evidence, Mr Watson’s social activity was entirely unrelated to his employment and that he utilised his own leisure time in Los Angeles to do something of a private nature. Therefore, Mr Watson’s social activity was not reasonably incidental to his employment. He simply took advantage of the fact that his employment took him to Los Angeles, enabling him to visit his friends.

The Deputy President concluded that Mr Watson was not in the course of his employment for the whole time he was in Los Angeles and Qantas could not be said to have expressly or impliedly induced or encouraged him to embark upon “this particular, wholly social activity at that time”.

The injury was sustained as a result of a motor vehicle accident that occurred while Mr Watson “was engaged in/returning from, an unrelated social activity, which he undertook in an interlude of personal leisure time”. Therefore, there was no causal link to his employment (Tarry v Warringah Shire Council [1974] 48 WCR 1; Nunan v Cockatoo Docks & Engineering Co Ltd (1941) 41 SR (NSW) 119 (‘Nunan’)).

THE COURT OF APPEAL’S DECISION

The majority decision of the Court of Appeal held:

“58 The test that was required to be applied was that stated in Hatzimanolis. This requires, in the first instance, a determination or characterisation of the period or periods of work of the employee as one overall period or episode of work, or two or more; one does not first, before that task, examine aspects of, and employer’s attitudes to, how the period of work is spent; see Hatzimanolis at 483. Once the period of work of the employee is characterised, the circumstances of what occurred are to be analysed within that framework. This was not done. Nowhere does the Deputy President analyse the question whether the layover was to be characterised as part of one overall period or episode of work. If that had been done, and if the view had been reached that the appellant was engaged in one episode of work taking him to the USA and returning, the particular aspects of the way the layover was spent might take on a very different complexion.
59 For these reasons, in our view, the Deputy President failed to direct himself adequately by reference to Hatzimanolis. This was an error of law. It suffices to require the decision to be set aside and remitted to the Workers Compensation Commission for rehearing.” (emphasis included in original)

ISSUES IN DISPUTE

The grounds of appeal remain as argued before Deputy President Byron, namely that the Arbitrator erred in:

(a)his determination of whether Mr Watson was in the course of his employment at the time of his injury on 26 February 2005;

(b)finding that the injury arose out of Mr Watson’s employment with Qantas;

(c)his application of section 9A of the 1987 Act in finding that Mr Watson’s employment was a substantial contributing factor to his injury;

(d)finding the injury to be compensable;

(e)failing to follow the decision of Bishop J in Farrelly, and

(f)his interpretation of the facts and the law.

In view of the amendment I have allowed, an additional issue arises as to whether section 11 applies and, in view of the history of the matter, I give Qantas leave to dispute that alternative claim.

SUBMISSIONS, DISCUSSION AND FINDINGS

In the course of employment

The test in Hatzimanolis requires a determination or characterisation of the period or periods of work as one overall period or episode of work, or two or more.

In that case, the employer engaged the worker to work for three months at a mine at Mount Newman in Western Australia. The employer provided free accommodation, full board and some recreational facilities at a camp near the mine. The worker received an injury whilst on a trip to Wittenoom Gorge on a rest day. The trip was held to be within the course of employment because it had been organised on behalf of the employer, using vehicles and food supplied by the employer, for its employees.

The majority judgment in the High Court held (at 483):

“For the purposes of workers’ compensation law, 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. Where an employee performs his or her work at a permanent location or in a permanent locality, there is usually little difficulty in identifying the period between the daily starting and finishing points as a discrete working period. A tea break or lunch break within such a period occurs as an interlude or interval within an overall work period. Something done during such a break is more readily seen as done in the course of employment than something that is done after a daily period of work has been completed and the employee has returned to his or her home. On the other hand, there are cases where an employee is required to embark upon some undertaking for the purpose of his or her work in circumstances where, notwithstanding that it extends over a number of daily periods of actual work, the whole period of the undertaking constitutes an overall period or episode of work. Where, for example, as in Danvers, an employee is required to go to a remote place and live in accommodation provided by his or her employer for the limited time until a particular undertaking is completed, the correct conclusion is likely to be that the time spent in the new locality constitutes one overall period or episode of work rather than a series of discrete periods or episodes of work. An injury occurring during the interval between periods of actual work in such a case is more readily perceived as being within the current conception of the course of employment than an injury occurring after ordinary working hours to an employee who performs his or her work at a permanent location or in a permanent locality.”

Their Honours continued at 484:

“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. 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’.”

Mr Watson was employed as a long haul pilot and, as a result, his employment required him to travel to many overseas destinations. On 26 February 2005, it took him to Los Angeles and required him to remain in, or in the general vicinity of, that city for about 39 hours before his next flight (his next period of actual work). Remuneration in a slip port constituted a component of his employment contract. It is appropriate in these circumstances to characterise his slip time as an “an interval or interlude occurring within an overall period or episode of work” (Hatzimanolis at 483). An injury occurring during such an interval is “more readily seen as occurring in the course of employment … than when it has been sustained in the interval between two discrete periods of work”.

Having characterised Mr Watson’s period of work as an overall period or episode of work, the question to be determined is whether Qantas “expressly or impliedly…induced or encouraged” him to spend that interval or interlude “at a particular place or in a particular way”. Mr King submitted that the phrases “particular place” and “particular way” are generic expressions that should be given a broad interpretation.

Mr King argued that what Mr Watson was doing was quite usual. It was not the subject of any prohibition and it was calculated to refresh and revive him. It also gave him the opportunity to “sing the praises of the appellant on foreign soil” and it involved the use of a car at Qantas’s reduced hire rates. He argued that what Mr Watson was doing was “plainly within a general class of activity which the appellant not only permitted but impliedly encouraged”, being something that would refresh Mr Watson during hours for which Qantas paid him.

Mr Catsanos submitted that Mr Watson was free to spend his slip time as he chose, and Qantas neither encouraged nor induced him to spend it at any particular place or in any particular way. He argued that Mr Watson engaged in activities that were entirely personal to him and Qantas had not “expressly or impliedly induced or encouraged the worker to attend on the Tavaglione family to have dinner and discuss quarter horses”. Mr King responded that Mr Catsanos’s submissions did not focus on the nature of the employment, but wrongly focused on the particular circumstances of the injury.

For the following reasons, I do not accept Mr King’s submissions.

That Mr Watson’s trip to visit friends was not the subject of any prohibition is not the relevant test. The test stated in Hatzimanolis is whether the employer, expressly or impliedly, induced or encouraged the employee to spend the interval between periods of actual work at a particular place or in a particular way. I am not persuaded that Qantas expressly or impliedly induced or encouraged Mr Watson to spend time with friends one hour twenty minutes drive from Los Angeles. That other members of the flight crew hired cars and engaged in a range of social and recreational activities during slip time merely confirms Mr Wagener’s evidence, which I accept, that what flight crew choose to do during slip time was “entirely a matter for them”.

That the trip was intended to revive Mr Watson is a relevant factor, but it is not determinative of whether Qantas induced or encouraged him to spend his time at a particular place or in a particular way. Whilst I accept that Mr Watson considered the trip to see his friends would refresh him, I note that the round trip, had it been completed, would have involved a total driving time of about two hours forty minutes, something that many people would consider quite tiring.

That it was not unusual for crewmembers to engage in social and recreational activities away from the crew hotel, and that Qantas did not prohibit such activities, provides little assistance in answering the question at hand. Mere authorisation is not enough. As Kirby A-CJ (as his Honour then was) stated in Billpat, at 593:

“To give the very substantial protections which [the Workers Compensation Act] affords, there needs, according to the majority of opinion in Hatzimanolis, to be a more direct connection with the employer’s enterprise. This involves encouragement and even inducement by the employer.”

At its highest, Qantas may have impliedly authorised Mr Watson to spend his time away from Los Angeles, if only because it failed to prohibit such excursions. However, that falls well short of inducement or encouragement.

The requirement that flight crew present for their next flight in a fit and sober state is of little weight. I know of no jobs that do not have the same or similar requirements of their employees. I accept Mr Wagener’s evidence that Qantas imposed no obligation on flight crew to follow any particular health and fitness regime.

Mr King’s submission that the trip to the Tavaglione property was an opportunity to “sing the praises” of Qantas is unpersuasive. He was neither induced nor encouraged to engage in such an activity, and there is no evidence that it was either an express or an implied term in his contract of employment. Whilst it may have provided an indirect benefit to Qantas, that is not decisive. As the majority observed (at [55]) in Watson, whether or not the activity concerned was of benefit to the employer is “simply part of the factual matrix encompassed within the High Court’s requirement” that “regard must always be had to the general nature, terms and circumstances of the employment”. It is not an element of principle in resolving the question.

The worker placed great weight on the suggestion that the trip involved the use of a car at “the appellant’s reduced hire rates” and, therefore, Qantas encouraged the use of hire cars whilst on layovers and, therefore, encouraged flight crew to travel by car during slip time. That argument is unsustainable. Mr Watson’s evidence was that “Budget Car Rentals at Long Beach and Pasadena gave Qantas crews a $20.00 a day hire rate”. He did not suggest that Qantas organised or funded that discount. The evidence from Mr Wagener, which I accept, makes it clear that the hire rate offered by Budget to Qantas staff was a commercial decision by Budget. It was not arranged by or on behalf of Qantas. In the light of this evidence, the hire rate offered by Budget gives no support to Mr Watson’s argument.

The evidence from Mr Watson, Captain Percival and Captain Marriott establishes no more than that Qantas either was, or should have been, aware that it was common practice for flight crew to engage in social or recreational activities during slip time. That knowledge does not, on its own, establish that Qantas, either expressly or impliedly, induced or encouraged Mr Watson to spend his time in Los Angeles at a particular place or in a particular way. He was free to do as he wished. He could either stay in the crew hotel, or, provided he advised the captain of his whereabouts, he could leave town and stay elsewhere.

It is instructive to consider the factual circumstances in Hatzimanolis and to contrast them to the present case. In Hatzimanolis, the employer’s supervisor (Mr Pope) organised the trip to Wittenoom Gorge for any workers who cared to go. The employer provided the vehicles (one of which Mr Pope drove) and the food. The worker was injured in the course of the trip when one of those vehicles crashed. None of the features evidencing inducement or encouragement by the employer in that case is present in Mr Watson’s case. Mr Watson hired his own vehicle, at his own expense, to visit friends with whom he had a common interest that had no connection with his employment.

In the course of argument, Mr King submitted that, had Mr Hatzimanolis declined the supervisor’s invitation to go to Wittenoom Gorge and had instead elected to go bushwalking and had suffered an injury, he would still have been in the course of his employment. Whilst that may or may not be correct, the more relevant analogy is to consider the situation where a worker from Wollongong (where Mr Hatzimanolis lived before he took the job with ANI that took him to Western Australia), having obtained employment in a remote location in Western Australia, used that opportunity to hire a car, at his own expense, to visit friends who lived within a one-hour and twenty minutes drive from that location. In such a situation, it is difficult to see how the employer could be said to have encouraged or induced the worker to spend time visiting his friends.

It follows, having applied the test in Hatzimanolis, and having considered the general nature, terms and circumstances of Mr Watson’s employment, I am not satisfied that he was in the course of his employment at the time of his injury on 26 February 2005.

Arising out of employment

As observed in Badawi v Nexon Asia Pacific Pty Limited t/as Commander Australia Pty Limited [2009] NSWCA 324; (2009) 7 DDCR 75 (‘Badawi’), the meaning of “arising out of … employment” is settled. The majority in Badawi referred to and endorsed the approach in Nunan v Cockatoo Island Docks & Engineering Co Ltd (1941) 41 SR (NSW) 119 (‘Nunan’), where the court “adopted a commonsense approach to the application of the phrase, noting that it involved a causative element” (Badawi at [73]). In Nunan, Jordan CJ (Roper J and Nicholas CJ in Eq agreeing) held at 124:
“As the law now stands, I am of the opinion that when a worker has proved an incapacitating personal injury, then if it appears (1) that the fact of his being employed in the particular job caused, or to some material extent contributed to, the injury, and also (2) that the injury was sustained whilst he was doing the job which he was employed to do or something incidental to it, he is prima facie entitled to compensation; and it is for the employer to show if he can that there is something which disentitles him to compensation, or to full compensation.”

Whether the particular injury arose out of employment is a matter to be inferred from the facts as a matter of common sense (Badawi at [76], citing Nunan). Clarke JA expressed a similar view in Zinc Corporation Ltd & another v Scarce (1995) 12 NSWCCR 566 (‘Scarce’), where his Honour said, at 570 – 571:

“It is now well established at common law that the test of causation is a common sense one. Any controversy on the question has been laid to rest by the decision of the High Court in March v E & HM Stramare Pty Ltd (1991) 171 CLR 506. What needs to be established is that the event which is sought to be linked with the injury ‘was so connected with the loss or injury that, as a matter of ordinary common sense and experience, it should be regarded as a cause of it’. (See Halvorsen Boats Pty Ltd v Robinson (1993) 31 NSWLR 1 at 7). The question is, of course, a question of fact which ‘must be determined by applying common sense to the facts of each particular case’ (see March at 15). In my opinion, there is no reason to adopt a different approach in relation to the test of causation posed by the words ‘arising out of’. The question of fact is whether there is such a connection between the worker’s personal injury and his employment that, as a matter of ordinary common sense and experience, the injury should be regarded as having arisen out of that employment. In deciding that question, my preferred view is that the test laid down by Jordan CJ in Nunan v Cockatoo Docks & Engineering Co Ltd (1941) 41 SR (NSW) 119 at 124 – that the fact of his being employed in the particular job caused, or to some material extent contributed to, the injury – should be applied. At the very least, the test requires that the employment was a contributing factor to the injury…”

Mr Catsanos argued that the Arbitrator looked not to “causation of injury”, but to “coincidence of event”. He submitted that there was nothing about the worker’s employment with Qantas that could, applying common sense concepts of causation, be said to have caused the injury. The lack of causality, it was submitted, leads to the inescapable conclusion that there was not a sufficient connection for the worker’s injury to be properly regarded as one arising out of his employment with Qantas.

Mr King’s argument on this issue is inextricably linked to his argument on “in the course of”, though he agreed that “arising out of” requires a causative element. Relying on Badawi (at [93]), he submitted that it was necessary to look at the location of the accident in the context that it occurred whilst Mr Watson was in the course of his employment. He had left his friends’ house and was returning to the crew hotel, where he was expected to be when not engaged in a recreational activity. Badawi (at [97]) makes it clear, so it was submitted, that Mr Watson had been doing something because he had time on his hands, namely, the compulsory time during his layover at the behest of Qantas. It was therefore submitted that the proper conclusion is that the injury arose out of the employment and that the “but for” test is plainly satisfied. It was argued that, had Mr Watson not been where he was at the relevant time, he would not have been injured, and he was where he was because his employment took him to Los Angeles and permitted, or impliedly encouraged, him to be doing what he was doing. In a 39-hour interval between normal work duties, it was argued that “a sensible and realistic test of causal connection between employment and injury is called for, and a straight forward ‘but for’ test is a satisfactory one”.

Mr King submitted that Mr Watson’s employment delivered him into Los Angeles traffic, and it is a notorious fact, of which the Commission can take judicial notice, that traffic in Los Angeles is much denser and more constant than in any Australian city, and therefore statistically the risk of an accident from any relevant motoring cause, including the conduct of a drunken driver, was increased. At the oral hearing, Mr King submitted that Los Angeles is twice the size of Sydney and that the USA is more automobile intense and, as a result, there must be an increased risk of a car accident in Los Angeles compared to any Australian city.

In support of his submission that the Commission can take judicial notice that the risk of having a car accident in Los Angeles was increased compared to driving in Australia, Mr King relied on Bourne v Australian Oil Refining Pty Ltd (unreported, NSW Court of Appeal, 2 July 1979). In that case, a worker slipped on a metal platform covered in oil and water. Reynolds JA (Hutley JA agreeing) and, in a separate judgment, Mahony JA held that expert evidence was unnecessary to establish that a steel surface is more slippery when wet with water than when it is dry.

Mr King submitted that, consistent with Badawi, the relevant employment is not what the worker was doing when the injury occurred, but the general nature of the work and its particular tasks. One must look, so it was argued, at what the employment involved during a layover. It involved exposure to Los Angeles traffic in a number of ways: as a driver of a vehicle, as a pedestrian, as a passenger in a vehicle such as a bus travelling between the airport and the crew hotel, and presumably as a passenger in a taxi or other public transport vehicle.

It was further argued that the question of causation must be approached on the basis that the fact that the injury occurred in the course of his employment is a relevant matter (see Basten JA in Badawi at [77]) and it was because Mr Watson was driving in the course of his employment that he was exposed to the accident that caused his injury.

I do not accept Mr King’s submissions, which are based on an assumption (contrary to my finding) that Mr Watson was in the course of his employment at the time of the accident. Though it is possible that an injury can arise out of employment, though it has not been received in the course of employment (Carr v Donnelly [1937] WCR 294; Tarry v Warringah Shire Council [1974] WCR 1; Davis v Mobil Oil Australia Limited (1988) 4 NSWCCR 8), for the reasons set out below, the present case has not established the necessary causal connection between the employment and the injury to satisfy the arising out of test.

The “but for” test is not the correct test of causation in workers’ compensation cases (see Nunan and Scarce). It is true that Mr Watson’s employment required him to be in Los Angeles. However, to say that but for his employment he would not have been in Los Angeles and would not have been injured is analogous to a worker saying, “If I had not gone to work today I would not have been injured”. Such a statement is undoubtedly true, but Mr Watson’s injury was not a consequence of the mere fact of going to work. It was a consequence of the relevant accident, which was caused by the negligent conduct of an intoxicated driver at a time when Mr Watson was not in the course of his employment. Mr Watson’s employment did not expose him to that risk because it had not encouraged or induced him to be on a freeway at Riverside at the time of the accident.

The limited utility of the “but for” test is best illustrated with an example. Say a factory worker suffers a serious hand injury whilst working with one employer. The seriousness of the injury prevents the employer from providing any suitable employment and the worker obtains light supervisory work in a warehouse with a different employer and, whilst working there, a heavy box falls from a shelf and strikes the worker on the head causing head and neck injuries. But for the hand injury, the worker would not have been working with the second employer and would not have been struck on the head by the falling box. However, it is fallacious to say that the initial hand injury caused the head and neck injury (see Windeyer J in Faulkner v Keffalinos (1970) 45 ALJR 80 at 86). I do not base my decision on this example, which, like all analogies, has its own limitations, but merely raise it to highlight the shortcomings in the “but for” test.

In the absence of evidence on the topic, I do not accept that I am able to take judicial notice that traffic in Los Angeles is much denser and more constant than in any Australian city and that, therefore, statistically the risk of an accident is increased. The essential requirement before a court (or tribunal) will take judicial notice of a fact is that “the fact is to be of a class that is generally known as to give rise to the presumption that all persons are aware of it” (Holland v Jones [1917] HCA 26; (1917 23 CLR 149).

I accept that I can take judicial notice that Los Angeles is a large modern city with an extensive freeway system. I also accept that traffic in such a city is likely to be, as it is in Australia, heavy on some occasions and light on other occasions. Traffic conditions, and accident rates, vary from country to country, and from city to city within countries. Accident rates are affected by countless variables; traffic density is only one such variable. The standard of roads is another. The weather another. Driver education another. It is also relevant to note that, in any event, the general traffic conditions at Riverside played no role in the accident; the weather was clear and the area was well-illuminated and there was very little traffic around.

Mr King did not address on section 144 of the Evidence Act 1995. That section refers to proof not being required about knowledge that is “not reasonably open to question” and is “common knowledge”. Applying that more liberal test, I am not satisfied that knowledge about traffic conditions and accident rates in or around Los Angeles is knowledge that is not reasonably open to question or common knowledge. Whether section 144 now covers the field previously dealt with by the doctrine of judicial notice is an unresolved question (Stephen Odgers SC Uniform Evidence Law, Thomson Lawbook Co, 1-24504). Whether it applies to proceedings in a tribunal (such as the Commission) not bound by the rules of evidence is also unclear. Nevertheless, applying either the doctrine of judicial notice or the test in section 144, I do not accept Mr King’s submissions about traffic accident rates in Los Angeles.

Though it is true that Mr Watson was returning to the hotel at the time of his accident, he was not required or expected to stay at the hotel. Having elected to stay there, he was not required or expected to return there.

If it were accepted that, contrary to my finding, Mr Watson’s employment had required or expected him to be driving at Riverside at the time of the accident (that is, if he had been in the course of his employment at the time of the accident), then it would be appropriate to hold that his injury arose out of his employment because, in that situation, his injury would have arisen out of his employment because it arose out of “circumstances encountered…within the scope of employment” (Starke J in Smith v Australia Woollen Mills Limited [1933] HCA 60; (1933) 50 CLR 504 at 518; Stewart v Metropolitan Water Sewerage and Drainage Board [1932] HCA 45; (1932) 48 CLR 216). However, given my finding that Mr Watson was not in the course of his employment at the time of the accident, I do not accept that, in the circumstances of the present case, the relevant employment “was so connected with the loss or injury that, as a matter of ordinary common sense and experience, it should be regarded as a cause of it” (Clarke JA in Scarce).

As Mr Watson’s injury neither arose out of nor in the course of his employment, his claim fails and the question of whether his employment was a substantial contributing factor does not arise. If I am wrong on the issues of arising out of or in the course of, it is appropriate, given the way the parties conducted the case, that I consider whether employment was a substantial contributing factor, which is a different or added requirement to arising out of or in the course of (Badawi at [80] to [85]). I have approached this question on the assumption (contrary to my findings above) that Mr Watson’s injury both arose out of and in the course of his employment.

Substantial contributing factor

Section 9A of the 1987 Act provides:

“9A No compensation payable unless employment substantial contributing factor to injury

(1) No compensation is payable under this Act in respect of an injury unless

the employment concerned was a substantial contributing factor to the injury.

The following are examples of matters to be taken into account for the

purposes of determining whether a worker’s employment was a substantial contributing factor to an injury (but this subsection does not limit the kinds of matters that can be taken into account for the purposes of such a determination):

(a) the time and place of the injury,

(b)the nature of the work performed and the particular tasks of that work,

(c)the duration of the employment,

(d)the probability that the injury or a similar injury would have

happened anyway, at about the same time or at the same stage of the worker’s life, if he or she had not been at work or had not worked in that employment,

(e)the worker’s state of health before the injury and the existence of any

hereditary risks,

(f)the worker’s lifestyle and his or her activities outside the workplace.

A worker’s employment is not to be regarded as a substantial contributing

factor to a worker’s injury merely because of either or both of the
following:

(a) the injury arose out of or in the course of, or arose both out of and in
the course of, the worker’s employment,

(b)the worker’s incapacity for work, loss as referred to in Division 4 of

Part 3, need for medical or related treatment, hospital treatment, ambulance service or occupational rehabilitation service as referred to in Division 3 of Part 3, or the worker’s death, resulted from the injury.

This section does not apply in respect of an injury to which section 10, 11

or 12 applies.”

The Court of Appeal reviewed section 9A in Badawi. The majority judgment (Allsop P, Beazley and McColl JJA) is conveniently summarised in the headnote, which states:

“1. The tests for an injury ‘arising out of’ employment under ss 4 and 9 and for employment being a ‘substantial contributing factor’ under s 9A must be considered separately. It is not sufficient to find that injury arose out of employment and to therefore conclude that the employment concerned was a substantial contributing factor to the injury: [85], [91].
2. The meaning of an injury ‘arising out of’ employment for the purpose of ss 4 and 9 is settled. An injury arises out of employment if the fact that the claimant was employed in the particular job caused, or to some material extent contributed to the injury. The phrase involves a causative element and is to be inferred from the facts as a matter of common sense: [73] - [76].
3. The phrase ‘substantial contributing factor’ in s 9A also involves a causative element. It is a different or added requirement to the ‘arising out of’ employment limb of ss 4 and 9, however the causal connection required for s 9A is not less stringent than that found in s 9. Mercer v ANZ Banking Group [2000] NSWCA 138; 48 NSWLR 740 not followed: [80] - [85].
4. For employment to be a ‘substantial contributing factor’ to the injury for the purposes of s 9A the causal connection must be ‘real and of substance’. The language of the section is not to be confused with interpretations such as ‘large’, ‘weighty’ or ‘predominant’. Mercer v ANZ Banking Group [2000] NSWCA 138; 48 NSWLR 740 not followed: [82]-[83], [107].
5. ‘Employment’ for the purposes of s 9A is the same ‘employment’ that is under consideration in ss 4 and 9: [91]
6. In determining whether worker’s employment was a substantial contributing factor the matters specified in s 9A(2) must be taken into account to the extent that they are relevant: [89].
7. Section 9A(2)(b) directs attention to the nature of the work performed and the particular tasks of that work and not to what the employee was doing at the actual time of the injury. It is an incorrect approach to consider some other activity other than the employment that had preceded the injury and then seek a linkage with the employment from the standpoint of that preceding activity: [95] – [98], [105].
8. The Presidential Member’s failure to consider s 9A(2)(b) by reference to the work performed and the particular tasks of that work involved a misconstruction of the provision and was an error in point of law: [99]-[100].
9. Once it is accepted that ‘substantial’ in this case means ‘in a manner that is real or of substance’ the only answer when the test is applied to the facts of this case is that the contribution of the appellant’s employment to her injury was real or of substance: [107].”

Mr Catsanos submitted that the concept and purpose of the introduction of section 9A was to remove the possibility of compensation for injury with only a “remote or tenuous connection with work” (Badawi at [82]). Badawi endorsed the separate comments by Meagher JA and Davies A JA in Dayton v Coles Supermarkets Pty Ltd [2001] NSWCA 153; (2001) 22 NSWCCR 46 that something which is minor is not substantial (per Meagher JA) and that “substantial” means “in a manner that is real and of substance” (per Davies A-JA) and does not apply where, as a matter of practical reality, the contribution of the employment to the injury was of, or had, “little substance” (Badawi at [82]). The majority in Badawi added (at [82]):

“The words of the statute should be adhered to: ‘a substantial contributing factor’. The ‘proper link’ in the legislative context was a causal connection expressed by the words ‘a substantial contributing factor’, meaning one that was real and of substance.”

The matters specified in section 9A(2) are to be taken into account when considering whether employment was a substantial contributing factor to the injury, though I am not confined only to the matters listed in section 9A(2) and can have regard to other factors relevant to the issue of causation.

Mr Watson was injured during an interval or interlude in an overall period of employment. Therefore, what he was doing during that interval or interlude is a consideration to which I must have regard in determining whether employment is a substantial contributing factor to the injury (Badawi at [97]). He was driving back to his hotel. In this context, and on the assumption (contrary to my finding) that Mr Watson was in the course of his employment at the time of the accident, Mr Watson’s employment contributed to the injury in that it put him in the situation where the accident occurred (see [91] above). It provided the location. However, the injury was caused by the actions of an intoxicated driver and employment did nothing to effectively contribute to it.

The Arbitrator concluded that, “but for” the employment, Mr Watson would not have been in Los Angeles and would never have been involved in his accident. As I have outlined above, that was undoubtedly true (if Mr Watson had been in the course of his employment at the time of the accident), but that is not the end of the analysis. Even accepting that the injury arose out of the employment, the employment was no more than a background matter that had limited causal relevance to the injury. The connection between the employment and the injury was not “real and of substance” but was remote and tenuous.

Mr King argued that Mr Watson’s circumstances were similar to those faced by the worker in Badawi. I do not agree. Ms Badawi was skiing with her boyfriend when she received a phone call from her supervisor requesting her to return to the resort to discuss business matters. In the course of responding to that request from her superior, she received an injury without any third party involvement. In contrast, Mr Watson was spending his free time in an overall period of work visiting friends with whom he shared a common interest in Quarter horses. He was not required or expected to return to the crew hotel, but chose to do so. Returning to the hotel did not make him “more available”, as Mr King submitted, and it was of no consequence to his employer whether he did so or not. He was not returning to the hotel to perform any work duties. In the course of returning to the hotel, he received injuries as a result of the actions of a negligent third party. There are no similarities with Badawi.

Mr King further argued that this is “quintessentially a case in which ‘arising out of’ overlaps with section 9A”. Though there is always some overlap between arising out of and substantial contributing factor (because both terms deal with causation), and, in some cases, the factors necessary and sufficient to satisfy “arising out of” will be sufficient to satisfy the substantial contributing factor test (Badawi at [85]), section 9A(3) and Badawi make it clear that substantial contributing factor is a different or added test that must be satisfied before compensation can be recovered. Mr Watson has not satisfied that test.

Mr King submitted that one looks to the “employment concerned”, that is, the overall employment or the employment generally, and one does not concentrate on the precise circumstances of the injury. Whilst that is correct, the majority judgment in Badawi stated (at [97]) that, if an employee is injured during an interval or interlude in the employment, then “what the employee is doing during such interval or interlude is a consideration to which the decision maker will have regard in determining whether the employment is a substantial contributing factor to the injury”.

Giving full weight to the “employment concerned” and the “nature of the work performed and the particular tasks of that work”, I am not satisfied that Mr Watson’s work as a pilot with Qantas was a substantial contributing factor to his injury. The injury was the kind of injury that could have happened anywhere in Australia. That it happened outside Los Angeles during an overall period of work was a coincidence of event, not a substantial contributing factor to the injury.

It follows that, if I am wrong on the issues of arising out of or in the course of, Mr Watson has not established that his employment was a substantial contributing factor to his injury, and his claim fails.

Recess claim

Mr Watson also pleads his claim, in the alternative, under the recess provisions in section 11 of the 1987 Act. That section provides:

“11 Recess claims

If a worker on any day on which the worker has attended at the worker’s place of employment pursuant to the worker’s contract of service or training contract:
(a) is temporarily absent from that place on that day during any ordinary recess or authorised absence,
(b) does not during that absence voluntarily subject himself or herself to any abnormal risk of injury, and

(c) receives a personal injury during that absence,
the injury is, for the purposes of this Act, an injury arising out of or in the course of employment, and compensation is payable accordingly.”

It was submitted on behalf of Mr Watson that:

(a)on any given day during the worker’s layover in Los Angeles he would be at the crew hotel, which would be his “place of employment”, his employer having put him and other crewmembers into it and it being their gathering point for arrival and departure and for keeping in contact;

(b)in going to dinner Mr Watson was temporarily absent from the hotel and his absence was an authorised one;

(c)he did not voluntarily subject himself to any abnormal risk of injury;

(d)the law must adapt to changed employment circumstances, and/or

(e)in the alternative, the whole layover period in Los Angeles can be looked upon as an “ordinary recess” in that it was “regular and compulsory” and the provisions of section 11 are made out.

I do not accept that section 11 applies in this case.

The worker’s argument depends on a finding that the crew hotel was the “place of employment”. The term “place of employment” is not defined in the 1987 Act. It extends to the employer’s premises and to wherever workers perform their duties under their contract of employment. At its highest, the crew hotel was a meeting place and/or a pick-up and drop-off point. Flight crew performed no work there and were not even required to stay there. It was not a place of employment.

If I am wrong on this issue and it is assumed that the hotel was a place of employment, I do not accept that Mr Watson’s absence from the hotel was either an “ordinary recess” or an “authorised absence”.

Dealing first with “authorised absence”, Mr Watson’s absence from the hotel required no authorisation because he was always free to do as he wished in Los Angeles. He was not required or expected to stay at the crew hotel. He merely advised the operating captain that he would be visiting friends but would be returning to the hotel the same evening. He could have stayed with his friends, or at another hotel. He did not need, and did not seek, permission or authorisation to leave the hotel. Authorisation is needed where, without it, the worker would have to be engaged in his or her employment. Though I have held that the stay in Los Angeles was part of an overall period of employment, Mr Watson was not engaged in any active duties and therefore he did not need authorisation to visit friends. The visit to see his friends was therefore not an “authorised absence”.

Assuming (contrary to my finding) that the crew hotel was a place of employment, the question arises as to whether Mr Watson was injured during an “ordinary recess”.

The High Court considered this expression in Landers v Dawson [1964] HCA 35; (1964) 110 CLR 644 (‘Landers’). In that case, the worker was a baker who lived in his employer’s house and, during the summer months, was available for duty at any hour of the day or night when he was required to work by his employer. At the bakery, his duties consisted of assisting with dough-making and with baking bread. He also made morning deliveries of bread to local customers and, several days a week, to customers at Peterborough, a seaside resort about 15 miles away. He was not ordinarily required for work between the time when he completed his delivery rounds in the mornings and the time when he started dough-making in the afternoon. With the employer’s permission, the worker would go swimming at Peterborough after his deliveries and before returning to the bakery. While at the swimming pool, he tripped and broke his neck. The majority (Kitto, Taylor, Menzies and Owen JJ) said (at 651):

“Their Honours referred to and relied upon Drummond v. Drummond (1960) VR 462 in which it was said that s. 8 (2) (a) was ‘intended to cover injury sustained during a break in work, such as for morning or afternoon tea, or lunchtime, or a ‘smoko’ or similar break normally referred to as a ‘recess’. . . . The word ‘recess’ in its normally understood acceptation refers to a relatively brief interruption in an otherwise continuous period of work. It is normally associated with rest, refreshment or relaxation, such as ordinarily occurs at regular times, such as lunchtime, morning or afternoon tea, or ‘smoko’. It is a period of rest incidental to a period of labour in its general acceptation. The recess is something in the nature of an interval between two or more periods of work in the normal day (1960) VR, at pp 463, 464 .’ With that statement we agree and, indeed, counsel for the appellant made no criticism of it.” (emphasis added)

The argument in Landers proceeded on the basis that, because the worker was available (to work) for 24 hours of the day and any break in that period, whether for sleep or food or for activities such as swimming, was a “recess” and that, if allowed as often as it had been, it was an “ordinary recess”. The High Court described that argument as “unsound” and added:

“The appellant was not working a continuous twenty-four hour day interrupted by relatively short breaks for refreshment or relaxation. During the substantial intervals of the day and night when he was not required to work, his time was entirely his own. He was off duty and could use his off duty periods for any purpose that he thought fit. The only effect of his getting the respondent’s permission to go swimming was that a period was defined within which he would not be expected to be available for work at the bakery.”

In Tooth & Co Ltd v Injac (1994) 10 NSWCCR 437 (‘Injac’), the worker was employed as a chef between 9.00 am and 3.00 pm, and 5.00 pm and 9.00 pm. During the interval between shifts, he usually returned to his home but, on the day of his injury, he attended his bank and was injured while crossing the road after he left the bank. The trial judge awarded compensation. By majority (Mahony and Powell JA), the Court of Appeal reversed the decision. Mahony JA observed (at 439E) “ordinarily, ‘recess’ is used to denote a break in the actual execution of work during a period of time when the worker is in the course of his employment”. His Honour added that, even though working conditions should not be stereotyped, he did not think that a period of two hours between shifts during which the worker was free to do what he wished was within the phrase “ordinary recess”.

In Worrell v Longworth [2000] NSWCC 42; (2000) 20 NSWCCR 400, the worker was employed on the respondent’s property as an irrigation foreman. He worked variable hours and was paid an hourly rate for time worked. At peak times, he worked 12 hours per day, seven days per week. On the day of his injury, he had worked two or three hours until 8.00 am and he intended to resume work at 5.00 pm. The worker lived in rented accommodation five to ten kilometres from the property. The employer rang him at his home and invited him and his family to a picnic at the dam on the property. The worker accepted. While in an inflatable rubber craft towed by a speedboat driven by the employer, the towrope snapped. While the worker was reattaching the rope, the boat accelerated and the worker was injured.

Burke CCJ held that the dam site was not a place of employment at the time of the accident. His Honour added (at [29]), though not definitively or exclusively, that an ordinary recess was one of the normal breaks occurring in the period of work. The tea break and lunch break were the most obvious. He considered that a relevant authorised absence has much the same characteristics as an ordinary recess, “particularly as to circumscribed duration, except that it is a variation from the norm and more extraordinary than routine”.

In Hevi Lift (PNG) Ltd v Etherington [2005] NSWCA 42; (2005) 2 DDCR 271, the worker was employed as a helicopter pilot operating out of Dacca in Bangladesh. He was on 24-hour call, working 28 days on and 28 days off. He experienced extreme pain in his back after getting up in staff quarters in which he resided for the purpose of carrying out his employment. The trial judge held that section 11 did not apply because the worker worked 24 hours a day and any event within those 24 hours occurred within his normal hours of work and, accordingly, was not a recess. The worker succeeded on other grounds and the employer appealed. The worker filed a Notice of Contention arguing that (relying on Landers) an “ordinary recess” could occur during a period of continuous employment. After referring to Hatzimanolis, McColl JA (Mason P and Beazley JA agreeing) stated (at [53]) that the worker’s “interlude on the couch had to be capable of being characterised as having occurred during an ordinary recess to satisfy s 11(a)”.

Her Honour then said (at [54]):

“As Landers makes plain an ‘ordinary recess’ is a break which occurs during a continuous period of work. It is irrelevant whether that period of work is 8 or 24 hours a day, as long as the interval during which the injury occurs can be characterised as having occurred during the period of employment rather than when the employee is off duty as in Landers or between shifts: see Tooth & Co Ltd t/as Mona Vale Hotel v Injac (1994) 10 NSWCCR 437.”

Applying the above authorities, I do not accept that Mr Watson’s trip to visit his friends can be characterised as an “ordinary recess” when he was temporarily absent from his place of employment on any day. Allowing for the fact that Mr Watson’s stay in Los Angeles was an overall period or episode of work, the visit to his friends had none of the features associated with an “ordinary recess”, as explained in the authorities. It was not “a relatively brief interruption in an otherwise continuous period of work” (Landers). Mr Watson had completed his work once he completed his post flight duties on the flight deck. As was the case with the worker in Landers, Mr Watson’s time in Los Angeles “was entirely his own”.

If Mr Watson’s place of employment was the aircraft he flew from Australia, I do not accept that he was temporarily absent from it “on any day”. When he left the aircraft, he started his slip time, which was normally 39 hours. That was not an “ordinary recess” on “that day”.

The alternative argument is that the whole of the slip time in Los Angeles was an ordinary recess. Whilst I agree that legislation must look to changed working arrangements and adapt to changed employment circumstances, I do not accept that a break of over 39 hours comes within the terms of an ordinary recess in section 11. The section is intended to cover relatively brief interruptions to work, for example, a lunch break or some similar break, that start and finish within a 24-hour period. The second reading speeches referred to by Powell JA in Injac make that crystal clear.

For completeness, I add that I am satisfied that by subjecting himself to traffic in and around Los Angeles, Mr Watson did not subject himself to an abnormal risk of injury. As I have found, there is no evidence, and I am not satisfied, that traffic in or near Los Angeles posed any greater risk than one would expect from traffic in an Australian city. The risk of injury by car accident is a risk faced by every road user in every modern city.

CONCLUSION

Having conducted a review on the merits, I have determined that the true and correct position is that Mr Watson did not receive an injury in the course of or arising out of his employment on 26 February 2005. In the alternative, if he did receive such an injury, his employment was not a substantial contributing factor to that injury. Further, I am not satisfied that section 11 of the 1987 Act applies.

DECISION

The Arbitrator’s determination of 5 February 2008 is revoked and the following orders made:

“1. Award for the respondent.
2.No order as to costs.”

COSTS

Each party is to pay his or its own costs of the appeal.

Bill Roche
Deputy President

14 April 2010

I, TUYET WALLIS, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE

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Citations

Qantas Airways Limited v Watson (No 2) [2010] NSWWCCPD 38

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[2010] NSWWCCPD 38

5 February 2008