FEDERAL COURT OF AUSTRALIA

O’Loughlin v Linfox Australia Pty Ltd [2015] FCA 1000

THE COURT ORDERS THAT:

1.    The decision of the Administrative Appeals Tribunal, made on 20 August 2014 in proceeding 2014/0846 to affirm the decision under review, is set aside.

2.    On or before 18 September 2015, the Applicant file and serve his submission as to whether any order should be made limiting the scope of the remittal of the case to the AAT.

3.    On or before 25 September 2015, the First Respondent file and serve its submission in response.

4.    The First Respondent pay the Applicant’s costs of the appeal.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The applicant, Mr O’Loughlin, was employed by the first respondent, Linfox, as a tanker driver delivering fuel to petrol stations. On 7 September 2010 Mr O’Loughlin sustained injuries to his face and knee in a violent altercation with another man, “Mr D.”

2    At 4:00 am that day, Mr O’Loughlin commenced work. At around 10:10 am he arrived at the site of his second delivery, the Mobil service station in Pascoe Vale. He established a perimeter by placing cones around his working area. By around 11:00 am, he had finished discharging fuel but the hose from the tanker to the storage tanks was still draining and petrol fumes were being emitted. A woman drove a car into the service station’s forecourt, honking its horn. Mr D came out from the service station’s workshop, threw two objects at the car, and struck the windscreen and a window with his fist. Mr O’Loughlin intervened. The Administrative Appeals Tribunal’s (AAT) factual findings as to Mr O’Loughlin’s involvement—which it described as comprising six “interventions”—were as follows:

(i)    Mr O’Loughlin said to Mr D, “Hey you, cut it out” (first intervention). Mr D desisted and started to walk back towards the workshop and said to Mr O’Loughlin, “Shut the fuck up and mind your own business. I have the law on my side.”

(ii)    Mr O’Loughlin said to Mr D, “but you can’t do that mate, just settle down” (second intervention) whereupon Mr D turned to walk towards Mr O’Loughlin and said, “just keep out of it, mind your own business.” Mr D again turned towards the workshop.

(iii)    Mr O’Loughlin said to Mr D, “don’t speak to me like I am a piece of shit” (third intervention). Mr D turned back to Mr O’Loughlin and said, “you are a piece of shit.”

(iv)    Mr O’Loughlin, pointing his finger at Mr D, said, “don’t talk to me like that” (fourth intervention). Mr D turned away from Mr O’Loughlin and walked for 5 metres but then turned and walked again toward Mr O’Loughlin who was still pointing his finger at Mr D (fifth intervention).

3    Once within striking range, Mr D punched Mr O’Loughlin in the face several times, but then became unbalanced and fell to the ground. Mr O’Loughlin stood over Mr D and “shaped up,” as though he was going to throw a punch (sixth intervention). Mr D kicked Mr O’Loughlin in the left knee. It was the punches to Mr O’Loughlin’s face, and the kicks to his knee, that caused his injuries.

4    Mr O’Loughlin lodged a claim for workers’ compensation. On 22 September 2010 a determination was issued (Determination) accepting liability in respect of his injuries. On 7 January 2014, an agent of Linfox issued a reconsideration determination on its own motion whereby it revoked the Determination and substituted for it a decision to deny liability in respect of Mr O’Loughlin’s injury (Revocation). It was confirmed in Linfox’s written submissions before me that the Revocation did not have retrospective effect and that Linfox did not suggest that Mr O’Loughlin was obliged to repay amounts already received.

5    Mr O’Loughlin was entitled to seek merits review of the Revocation in the AAT, and he did. Mr O’Loughlin gave oral evidence and written submissions were made. On 20 August 2014 the AAT affirmed the Revocation. Its decision is published as O’Loughlin v Linfox Australia Pty Ltd [2014] AATA 577. This appeal is an appeal from the AAT’s decision. On its application, the second respondent, Comcare, was joined to this action pursuant to s 108C(8)(b) of the Safety, Rehabilitation and Compensation Act 1988 (Cth) (SRC Act).

6    There are some unstated assumptions inherent in the AAT’s disposition of Mr O’Loughlin’s claim, which are not controversial. They are that Linfox was a “determining authority” within the meaning of s 60 of the SRC Act and thus, under s 62 of the SRC Act, it was entitled to reconsider its determination on its own motion, and that any such reconsideration was a “reviewable decision,” within the meaning of s 60 of the SRC Act. By s 64(1) of the SRC Act, Mr O’Loughlin was entitled to apply to the AAT for review of the reviewable decision. Pursuant to s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act), a party to a proceeding before the AAT may appeal to this Court on a question of law.

7    Mr O’Loughlin only pressed his first ground of appeal. There is no issue that a question of law was raised. The question is whether the AAT correctly applied the statutory test in s 5A(1)(b) of the SRC Act in order to determine whether Mr O’Loughlin’s injury arose “in the course of” employment.

8    Section 5A(1)(b) of the SRC Act defines “injury” to include:

… 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.

9    Mr O’Loughlin’s ground of appeal is that in considering whether the injury he sustained was an injury “arising … in the course of” his employment, the AAT asked itself the wrong question, namely, “whether the respondent induced or encouraged Mr O’Loughlin to engage in the activity at the time the injury occurred” and thereby wrongly imposed the requirement that, for the injury to have arisen in the course of Mr O’Loughlin’s employment, he had to be “doing the very thing that [Linfox] encouraged [him] to do when the injury occurred”.

10    The ground of appeal challenged the approach of the AAT recorded at [25] of its decision:

The Tribunal accepts that at the time the injury was sustained, Mr O’Loughlin was engaged in service to his employer because the hose was still connected to the underground tank at the service station and the process of delivery of fuel had not been completed. However, the Tribunal agrees with the respondent that the majority in PVYW held that for an injury to have occurred in the course of employment an employee must be doing the very thing that the employer encouraged the employee to do when the injury occurred. Therefore the question is whether the respondent induced or encouraged Mr O’Loughlin to engage in the activity at the time the injury occurred.

11    Before the AAT, Linfox contended that O’Loughlin’s injury occurred whilst he was engaged in an activity. It was submitted that whether that injury occurred in the course of Mr O’Loughlin’s employment was to be determined by the following question articulated by the majority in Comcare v PVYW (2013) 250 CLR 246 at [38]: “did the employer induce or encourage the employee to engage in that activity?” (the PVYW question).

12    As is apparent from [25] of the AAT’s reasons, the AAT accepted that submission and applied the PVYW question to the determination of whether or not Mr O’Loughlin’s injury occurred in the course of his employment.

13    The fundamental issue raised by this appeal is whether the PVYW question was applicable to the circumstances in which the injury occurred.

14    Mr O’Loughlin’s case is that the AAT erroneously applied a question applicable only to an injury suffered by an employee during what was described by the majority in Hatzimanolis v ANI Corporation Limited (1992) 173 CLR 473 at 484 as, “an interval or interlude in an overall period or episode of work” (Interval). (At various points in these reasons it is necessary to distinguish between that kind of interval, and an interval between two distinct periods of work. Where “interval” is used, uncapitalised, it is a reference to intervals generally, that is, as including both kinds of interval. Elsewhere it is uncapitalised where the full description of the nature of interval is given).

15    On Mr O’Loughlin’s case, the PVYW question was part of a restatement of the principle formulated in Hatzimanolis for determining whether an injury sustained whilst an employee was engaged in an activity during an Interval was an injury that “occurred in the course” of employment. Thus, it was not a question applicable for determining whether Mr O’Loughlin’s injury occurred in the course of his employment because his injury did not occur during an Interval, but occurred whilst he was in a period of work.

16    There is an issue as to whether the AAT found that Mr O’Loughlin’s injury was sustained whilst he was in a period of work or alternatively during an Interval. Mr O’Loughlin contended that the AAT found the injury was sustained whilst Mr O’Loughlin was in a period of work.

17    Linfox’s primary submission to the AAT and the position it put to me, was that it was unnecessary for a finding to have been made that the injury occurred during an Interval. That is because the applicability of the PVYW question is not limited to an injury sustained in an interval, as the majority in PVYW did not simply restate the principle formulated in Hatzimanolis, but articulated a test applicable for the determination of whether an injury occurred in the course of employment generally and not merely during an interval.

18    In the alternative and by its Notice of Contention, Linfox contended that the AAT must necessarily have concluded that Mr O’Loughlin’s injury was suffered whilst he was engaged in an activity during an Interval.

19    Comcare supported Mr O’Loughlin’s contention that the PVYW question was applicable only to injuries suffered during an Interval. Comcare did not otherwise engage with the issues raised by the appeal.

20    Those issues raised the following questions, which I will deal with in turn:

(i)    What was the principle formulated in Hatzimanolis?

(ii)    Is the applicability of the PVYW question limited to an injury sustained in an Interval?

(iii)    If so, did the AAT find that Mr O’Loughlin’s injury was sustained during an Interval?

The Hatzimanolis principle

21    An employee who resided in New South Wales obtained a position with his employer at Mt Newman, a remote mining town in the Pilbara in Western Australia. He was told he would work in the area of Mt Newman for about three months and would be required to work on some Sundays. On the third Sunday after the employee commenced work, he and other employees joined an employer-organised trip to see the scenic Wittenoom Gorge. Whilst on their journey, the employer-provided vehicle overturned and the employee was seriously injured. The employee claimed workers’ compensation. The issue before the High Court in Hatzimanolis was whether the employee’s injury was sustained “in the course of employment”.

22    In considering that issue, the majority (Mason CJ, Deane, Dawson and McHugh JJ) recognised (at 478) that the course of employment of an employee “is not identical with the period of employment of a worker or with the work which that person performs”. Informed by observations made by Dixon J in Whittingham v the Commissioner of Railways (WA) (1931) 46 CLR 22 at 29, the majority stated that the course of employment covered more than the actual work performed by an employee and that it had long been recognised that it extended to the incidents of service. As the majority observed at 478–479, whether something done was an incident of service is a conclusion, rather than an “organizing principle” that would be of assistance in determining whether an injury not sustained during actual work was nevertheless sustained in the course of employment. Accordingly, after a discussion of the authorities, the majority formulated this principle (Hatzimanolis principle), 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”.

(citations omitted)

23    It is necessary to explain what the majority meant by “an interval or interlude within an overall period or episode of work”. The meaning is apparent from the discussion at 483. The majority spoke of an interlude or an interval as a break occurring between two periods of actual work. Their Honours recognised that an interval between two periods of work can occur within a discrete working period such as that occurring between an employee’s daily starting and finishing times. Tea breaks and lunch breaks were given as examples of interludes or intervals occurring within an “overall work period”. It was also acknowledged that an interval between two periods of work could be the break between the end of one working day and the commencement of the next. Such an interval would not ordinarily be perceived as occurring in the course of employment. However, the majority recognised that in some 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”), an interval between two days of work may occur within an “overall period or episode of work”.

Is the applicability of the PVYW question limited to an injury sustained during an Interval?

24    PVYW claimed compensation for facial and other injuries sustained whilst she was engaged in sexual activity. The injury occurred because a light fitting was displaced and struck the employee. It was sustained in a room at a motel booked by PVYW’s employer to accommodate her overnight stay so that she could visit a regional office the following day to carry out work required by the employer. PVYW’s claim was rejected by Comcare. That decision was affirmed by the AAT. A single judge of this Court upheld the employee’s appeal. Comcare’s appeal was dismissed by a Full Court: Comcare v PVYW (2012) 207 FCR 150. Comcare successfully appealed to the High Court.

25    At each stage of the litigation it was accepted that the Hatzimanolis principle was applicable. The injury was sustained in an overall period of work and there was no issue that the employee was injured during an Interval. Comcare did not submit that Hatzimanolis was incorrect. The issue before the High Court was whether the Full Court had misinterpreted the Hatzimanolis principle. The majority (French CJ, Hayne, Crennan and Kiefel JJ) found that the Full Court had. The dissentients (Bell and Gageler JJ) found that it had not.

26    At [7] the majority expressed the question on appeal as follows:

Although the respondent was injured whilst engaged in an activity, she seeks to maintain the approach of the Full Court – that the relevant inquiry is not whether she had been induced or encouraged by her employer to engage in that activity. It is not disputed that the answer to that inquiry would be “no”. On the approach for which the respondent contends, that inquiry does not arise, or is irrelevant, because she meets the condition of the alternative circumstance stated in Hatzimanolis, namely that she was required to be present at the place where she was injured.

27    The majority rejected that Hatzimanolis stood for the proposition that, absent gross misconduct, “an employer [that] requires an employee to be present at a particular place away from their usual place of work will be liable for any injury which the employee suffers whilst present there” (at [9]). If that was so, the majority reasoned, Hatzimanolis would make liability for an injury dependent upon it simply having occurred during an Interval. The majority considered that that result, if correct, would have required reconsideration of Hatzimanolis. But no reconsideration was embarked upon because, as the majority said at [11], Hatzimanolis is not to be understood as requiring that result.

28    At [14] the majority expressly stated that the case did not require reformulation of the Hatzimanolis principle but acknowledged that further explication of the principle, in light of the instant factual situation, may be required.

29    The majority then considered the reasoning in Hatzimanolis and the principle there stated. The Hatzimanolis principle was set out at [31]. At [34], the majority explained what the Court in Hatzimanolis had sought to do. It said:

It 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.

(emphasis added)

30    An important passage in the majority’s reasoning is at [38]. That is where what I have called the PVYW question was posed, and the manner in which the Hatzimanolis principle is to be applied was explained. Under the heading “Applying the Hatzimanolis principle”, the majority said:

The 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.

(emphasis added)

31    As is apparent, the order of relevant inquiry is here set out. The “starting point” is a factual finding that the injury was suffered by the employee “not whilst engaged in actual work”. The PVYW question is only a relevant inquiry if all anterior inquiries are first satisfied. In the absence of a finding that the injury was sustained during an Interval, the PVYW question does not arise.

32    I recognise that the majority expressed the gateway in different terms (“not whilst engaged in actual work”) to that expressed in Hatzimanolis (“during an interval in an overall period of work”). But, read in context, that formulation is merely one of a variety of short-hand expressions the majority used to refer to “an interval or interlude within an overall period or episode of work”, for example: “an interval between periods of actual work” (at ([26] and [27]); “between periods of actual work” (at [34]); “not whilst engaged in actual work” (at [38]); “in an interval in a period of work” (at [60]); and “an interval between periods of actual work” (at [61]). In the absence of any contest as to the nature and scope of an interval as expressed in Hatzimanolis and of any indication that the majority was concerned to reformulate that concept, there can be no doubt that in identifying the “starting point” for the application of the Hatzimanolis principle the majority stated that the injury in question must have been sustained during an Interval.

33    Senior counsel for Linfox submitted that, in the first sentence of [38], the majority in PVYW was presenting a “different organizing principle” to that laid down in Hatzimanolis. In Linfox’s submission, it was a two-stage test. The first stage focused upon the words “actual work.” Linfox said that those words ought to be read, in effect, as “carrying out duties or carrying out what is incidental to duties,” such that if an employee was carrying out duties or something incidental thereto, the employee was “engaged in actual work” within the meaning of that phrase in the first sentence of [38]. Linfox’s submission was that such an employee was therefore in the course of employment, and it was not necessary to go to the question of inducement or encouragement set out in the last sentence of [38] of PVYW: the PVYW question. The second step, which is reached only if the employee was not “engaged in actual work,” is the PVYW question. The submission was put thus by senior counsel for Linfox:

And the way of looking at the facts is to ask – looking at the injury – was that suffered while the employee was engaged in actual work? And if the answer to that is no, it won’t be in the course of employment unless you can find this encouragement or inducement in relation to the activity or in relation to the location.

Or, alternatively expressed:

Our proposition is that an injury will be one in the course of employment if the injury occurs while the employee is carrying out the duties of his employment or something incidental to those duties, or assuming that the employee is not doing that, doing neither of those, if an injury occurs while the employee is doing something induced or encouraged by the employer.

I will call that the two-stage submission. Elsewhere in oral submissions, Linfox described the “induce or encourage” test as creating a third connection, category, or possibility, the first being actual duties, the second being something incidental thereto, and the third being something that was induced or encouraged by the employer. Being within any one of those three categories had the effect that an employee was “in the course of employment.”

34    I think it is necessary to record that the two-stage submission is not the submission that Linfox put to the AAT. The two-stage submission contemplates at least two aspects. First, the meaning of the words “actual work” in the first sentence of [38] in PVYW is of central importance. Second, one does not get to the “induce or encourage” question unless one first rules out “actual work,” meaning “ordinary duties or things incidental thereto.” Before the AAT, not only were the words “actual work” not the focus of the Linfox’s submissions, the first sentence of [38]—which before me it was submitted contained a “new organizing principle”—was omitted from the quotation from PVYW in Linfox’s written submission (at [16]), and was not referred to at all. Further, as Linfox submitted to the AAT, there were not two stages to the analysis, but only one:

17    The majority’s proposition in [PVYW] … is not confined to an injury suffered between periods of actual work … .

18    On that basis, the single question to be asked in the present case is:

18.1    Was Mr O’Loughlin doing the very thing that Linfox had encouraged him to do when, and as a result of which, his injury occurred?

18.2    The answer is plainly “no”: Linfox did not encourage Mr O’Loughlin to engage in the activity of confronting, and seeking to correct the behaviour of, Mr D and continuing that confrontation; and the injury occurred while he was engaged in that activity.

19.    Contrary to the submission advanced on behalf of Mr O’Loughlin, the reasoning of the High Court majority in [PVYW] is not confined to injury “sustained outside of the ordinary working period”.

35    There was some confusion in the way that Linfox advanced its case before me. Orally, it put the two-stage submission as outlined above, which necessarily requires determination of whether the employee is engaged in ordinary duties or something incidental thereto (or, as Linfox would have it, “actual work”). But that is not the approach that Linfox invited the AAT to adopt, nor is it the approach that the AAT adopted. That approach was that the only question that was necessary to answer was whether a particular action or presence in a particular location was induced or encouraged. In particular, it was not necessary to address whether the employee was on an interval.

36    I cannot see how the analysis contemplated by the two-stage submission can be conducted without ascertaining whether the employee was on an interval. In particular, if the employee was not on an interval and was instead carrying out actual duties, then (as Linfox submitted orally), inducement and encouragement are irrelevant. One might think, therefore, that the approach put to and accepted by the AAT had no proponents or defenders before me. But, in its written submissions, Linfox said in various places (e.g., at [32.1]) that “[t]he majority in PVYW did not limit the principle in Hatzimanolis to an interlude or interval within an overall period of work,” and other words to that effect. That cannot be reconciled with the two-stage submission. Elsewhere in Linfox’s written submissions it said things more in keeping with a two-stage submission. So, at [24]: “[w]here an employee suffers injury, ‘not whilst engaged in actual work’, the question would be what the employee was doing when he or she was injured (because there must be a temporal connection with employment).”

37    It is not clear to me whether Linfox argues that there is one question—as it put to the AAT—or two—as per the two-stage submission. But, ultimately, I am persuaded that each of Linfox’s two approaches is a wrong approach. I have already explained why—contra the approach put to and accepted by the AAT—Hatzimanolis and PVYW apply only to injuries suffered during Intervals. Thus, the approach that says it is unnecessary to determine whether an employee was in an Interval is a wrong approach. But, it is necessary for me also to explain why Linfox’s two-stage submission is a wrong approach. It has a number of difficulties. The first is that it cannot be reconciled with Hatzimanolis or cases that went before Hatzimanolis. The second, which is related, is that it is a strained (and indeed, in my view, unavailable) reading of the majority’s reasons in PVYW.

38    It is important to understand what Hatzimanolis was addressing. It was concerned with when an employee will be “in the course of employment.” As stated in Hatzimanolis, “the course of employment” covered not only actual work but also the natural incidents connected with the class of work (at 478). In Whittingham at 29, Dixon J said that in order to be in the course of employment the accident must happen “while the employee is doing something which is part of or is incidental to his service.” I interpolate to note that it is this meaning that Linfox’s two-stage submission attributed to the phrase “actual work.” Another way of phrasing that is as per Fullager J in Kavanagh v the Commonwealth (1960) 103 CLR 547 at 559: “while the worker is engaged in work which he is employed to do or in something incidental to that work.”

39    A number of cases have considered the second aspect of that test, that is, what is “something incidental to that work.” In Whittingham, Dixon J said (at 29) that that which is incidental to a worker’s work depends upon the sufficiency of the connection between the employment and the thing done by the employee, which is a matter of degree, in which time, place and circumstance, as well as practice, must be considered, together with the conditions of the employment. As Stephen J identified in Bill Williams Pty Limited v Williams (1972) 126 CLR 146 at 159, it is a consideration of those factors that determines whether or not a worker has sustained his injury while engaged in something incidental to his work. It is apparent from what was said at 478–9 of Hatzimanolis that the majority was setting down an organizing principle for determining when, in the context of an Interval, an injury was sustained while doing something incidental to employment:

Incidence of service, however, is not a principle the application of which will determine whether the injury was sustained in the course of employment; it is a conclusion. When a tribunal concludes that a worker sustained injury while doing something incidental to his or her employment, it records a result which must have been reached, consciously or unconsciously, by reference to some principle or standard which leads to that result. Furthermore, while the matters to which Dixon J. referred in Whittingham must be examined for the purpose of determining whether an injury was sustained in the course of employment, those matters do not automatically determine that question. Without the assistance of an organizing principle, a tribunal of fact cannot know which of them is or are determinative.

40    The majority went on to identify a number of subsets of the overarching concept of “incidental to employment.” It observed (at 479) that Australian courts had almost invariably applied the test formulated by Dixon J in Henderson v the Commissioner of Railways (Western Australia) (1937) 58 CLR 281 when called upon to determine “whether an injury occurring during intervals between work was sustained ‘in the course of employment’” (emphasis added). It stated (at 483) that 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” (emphasis added), and gave examples of the two kinds of interval. In that context, it laid down (at 484) the organizing principle that it had set out to establish: “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.”

41    Hatzimanolis was thus concerned with quite a limited area. The “course of employment” comprises duties and things incidental thereto. Hatzimanolis was concerned only with the latter. “Things incidental thereto” can include things occurring in intervals between two periods of work and intervals within an overall period of work. Hatzimanolis was only concerned with the latter. Hatzimanolis said only that if the test set out at 484 is fulfilled, then an injury sustained in an interval within an overall period of work will have been sustained during something incidental to the employee’s work, and therefore in the course of employment.

42    That exposes the difficulty with the first stage of Linfox’s two-stage submission. Linfox reads “actual work” in the first sentence of [38] in PVYW as meaning what Dixon J set out in Whittingham—i.e., duties and things incidental to duties. It says that one does not get to the question of inducement or encouragement until one has ruled out “actual work,” that is, ruled out duties and things incidental thereto. But Hatzimanolis, which applied an “inducement or encouragement” test, was concerned precisely with whether something was “incidental thereto.” If Linfox is correct and PVYW stands for the principle that one only arrives at “inducement or encouragement” after “incidental thereto” has been ruled out, that is a radical departure from Hatzimanolis and previous authorities. It would raise a number of difficult questions, which Linfox did not answer. As Hatzimanolis is concerned with working out when something is incidental to duties, and requires an “induce or encourage test” to be applied, why is an “induce or encourage” test again applied once “incidental to” has been ruled out? Is Hatzimanolis overruled in so far as it establishes an “induce or encourage” test for working out when something is incidental to duties? If not, is it not the case that—where an interval in an overall episode of work is concerned—Linfox’s second step (application of an “induce or encourage” test) will never have any serious work to do? If the answer to the Hatzimanolis “induce or encourage” test is that (for example) an action was encouraged, then the action occurred “in the course of employment,” and the second stage is not arrived at. If the answer to the Hatzimanolis test is that the action was not induced or encouraged, then the same answer will inevitably be reached in Linfox’s second stage.

43    Indeed, in so far as Linfox did address the effect of its two-stage submission, it seems that the two-stage or three-category formulation would, if anything, add to the ways something done might be in the course of employment. The first two categories (actual duties and things incidental thereto) would include all cases already covered by Hatzimanolis, as senior counsel for Linfox acknowledged. That leaves the “induce or encourage” test—Linfox’s second stage or third category. If it is correct that all that is required to fulfil this test is that the employer encouraged the action, then (for example) if the employer encouraged its employee to visit the doctor after working hours and in so visiting the employee was injured, that injury would be in the course of employment. I choose that example deliberately because it shows that Linfox’s third category would include encouragements or inducements operating in regard to intervals between two periods of work, and because precisely that example was given in Hatzimanolis (at 483) as being one where the employee would ordinarily not be in the course of employment.

44    This brings me to the second reason why I reject Linfox’s two-stage submission. I am not persuaded that the majority in PVYW, under the heading, “Applying the Hatzimanolis principle,” would set out to establish a different organizing principle. Still less am I persuaded where the organizing principle thereby established (on Linfox’s submission) would constitute a marked departure from earlier-decided cases, and where it would raise (but not answer) a number of questions concerning how one would then treat Hatzimanolis and earlier-decided cases. Especially am I unpersuaded where, as it appears from the judgment in PVYW, no party submitted that a new organizing principle was required and there was no argument on the question. It appears to me that if that was the majority’s intent, it would have said so plainly (as in Hatzimanolis). It would have explained what was the shortcoming of the existing organizing principle. It would have explained how it was that the new organizing principle differed from the old. It would have explained how older authorities were thenceforth to be understood. In the event, the majority did none of those things, and in fact it expressly disavowed an intention to reformulate Hatzimanolis (at [14]). At no time did it suggest it was departing from, or expanding upon, what had been laid down in Hatzimanolis, and it returned in its conclusion to what Hatzimanolis had decided and how it was that that disposed of the case before the Court.

45    It follows that I do not accept that PVYW contains any statement of a new organizing principle. I do not accept that “not whilst engaged in actual work” in the first sentence of [38] in PVYW is to be read as meaning “not whilst engaged in ordinary duties or something incidental thereto.” Rather, as I have said, I consider that the phrase was another way of saying, “in an interval in an overall period of work.” I do not accept that the “induce or encourage” formulation in the last sentence of [38] in PVYW establishes a second stage or a third category. Rather, I consider that (as in Hatzimanolis) it describes when an injury sustained in an interval in an overall period of work will be one sustained in the course of employment. I consider that the “organizing principle” remains as set out in Hatzimanolis (as clarified in PVYW).

46    Lastly on this subject, Comcare urged the Court to not follow the judgment of Siopis J in Lee v Transpacific Industries Pty Ltd (2013) 136 ALD 652. Lee was injured whilst on a journey to visit a doctor. The AAT held that Lee’s employer had encouraged and induced him to attend the appointment with the doctor but also found that Lee was injured in an interval between two distinct periods of work. Applying Hatzimanolis and the observations of Cooper J in Gregory v Comcare Australia (1997) 72 FCR 196 at 201–202 as to the applicability of the Hatzimanolis principle to an injury occurring between two distinct periods of work, the AAT determined that the injury had not occurred in the course of employment because it was not satisfied that a temporal connection had been established between the journey undertaken by Lee and his employment by his employer.

47    Subsequent to the AAT’s decision, the judgment in PVYW was delivered and Siopis J took it into account on the appeal. His Honour at [41] held that the AAT had failed to embark upon the inquiry identified at [38] of PVYW. That was so, Siopis J reasoned, because the AAT had been “distracted by the question of the characterisation of the ‘interval’ during which the injury occurred”. His Honour’s approach at [41]–[47] seems to be based on the proposition that, post-PVYW, the Hatzimanolis principle is also applicable to an injury occurring in an interval between two distinct periods of work. Comcare contested the correctness of that view and urged me to conclude that it was clearly wrong and should not be followed. However, the facts before me do not concern an injury occurring in an interval between two distinct periods of work or the applicability of the Hatzimanolis principle to an interval of that kind. The correctness of Lee does not arise. Neither Linfox nor Mr O’Loughlin relied upon it. In the circumstances, whilst there is room for thinking that Siopis J took a different view of the intended meaning of the first sentence of [38] of PVYW to that which I prefer, I need not and ought not consider the correctness of Lee.

Did the AAT find that Mr O’Loughlin’s injury was sustained during an Interval?

48    Under a heading “Did the Injury Arise in the Course of Mr O’Loughlin’s Employment?”, the AAT set out the competing contentions of the parties and its conclusion on that question. It commenced by observing that, in PVYW, the High Court “considered the question of whether an injury sustained by an employee in a non-work activity, outside of any working period, should be considered to have arisen in the course of employment”. The AAT noted that whether “the injury occurred outside of work or any work period” was also an issue in Australian Leisure & Hospitality Group Pty Ltd v Simon Blackwood (Workers’ Compensation Regulator) & Campbell [2014] QIRC 105. The AAT recorded Mr O’Loughlin’s submission that his injury “was not sustained outside of the work period” and that the decision of the majority in PVYW did not apply to Mr O’Loughlin’s circumstances (see at [21]).

49    At [22] the reasons of the AAT turned to Linfox’s submissions and its reliance upon what the majority stated in PVYW.

50    As previously stated, it is apparent from Linfox’s submissions to the AAT that Linfox’s contention that the majority in PVYW addressed a “wider issue,” not confined to an injury “sustained outside of the ordinary working period,” was based on a selective reading of particular passages of the majority’s judgment in PVYW. Those passages were reproduced by the AAT in its reasons at [22] as follows:

35.    Because 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 ... 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.

36.    … Thus, where the circumstances of the injury involve the employee engaging in an activity, the question will be whether the employer induced or encouraged the employee to do so.

...

38     … 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.

51    Those passages were taken out of their context. That is most starkly demonstrated by the passage selected from [38] of PVYW. The selected passage omits the anterior inquiries that the majority in PVYW outlined at [38] as being the requisite inquiries, including the “starting point” that a finding be made that the injury was sustained during an Interval.

52    Having set out those passages from PVYW, the AAT at [23] recounted Linfox’s contention that “the majority’s proposition is not confined to an injury suffered between periods of actual work, and the question to be asked in these proceedings is whether Mr O’Loughlin was doing the very thing that the respondent had encouraged him to do when, as a result of which, his injury occurred”. At [24], the AAT recorded Linfox’s alternative submission that “if the majority’s proposition in PVYW is limited to the case of an injury occurring between periods of actual work, then Mr O’Loughlin’s injury was suffered in the short interval of his employment when he pursued the confrontation and continued it when the assailant walked away”.

53    To that point in its reasons, the AAT recorded two issues put in contest by the parties on the question of whether Mr O’Loughlin’s injury arose in the course of his employment. First, whether the “[PVYW] majority’s proposition” was confined to an injury suffered “between periods of actual work”. Second, whether Mr O’Loughlin’s injury was sustained “outside of the work period”.

54    Those issues are resolved in the next paragraph of the reasons (at [25], set out at [10] above). The first sentence of [25] is the AAT’s conclusion as to the second question. The second and third sentences of [25] encompass the AAT’s conclusion on the first question. In other words, at [25] the AAT accepted Mr O’Loughlin’s contention that he was injured whilst in a period of work rather than during an Interval, but regarded that as being of little moment because the AAT accepted Linfox’s contention that the PVYW question was applicable in any event.

55    Senior counsel for Mr O’Loughlin characterised [25] of the AAT’s reasons as being a finding that Mr O’Loughlin was in the course of his employment. Conversely, senior counsel for Linfox characterised it as a harmless reference to the undisputed fact that Mr O’Loughlin was employed by Linfox. I reject both submissions.

56    It would be wrong, in my opinion, to read the first sentence of [25] as a finding that Mr O’Loughlin was in the course of his employment, because that was the ultimate question and such a finding would render unnecessary (on the AAT’s approach to PVYW) everything that followed concerning inducement and encouragement.

57    But it would also be wrong, for a number of reasons, to read it as saying nothing more than that Mr O’Loughlin was in the employ of Linfox. First, it would be an odd thing for the AAT to say that it accepted Mr O’Loughlin was employed by Linfox because the hose was still connected to the underground tank. That is a non sequitur: one would not say, for example, “I accept that X was employed by Y Bricklayers because at 11:00 am on the day in question he was laying a brick.” What would it mean if X was not, at 11:00 am, laying a brick but instead having a coffee break—would X not then be employed by Y Bricklayers? Second, it is an unusual wording to say that the AAT “accepts” that Mr O’Loughlin was employed by Linfox when that fact was not in contest. Third, if it was a harmless finding that Mr O’Loughlin was employed by Linfox, the commencement of [25] is an odd place to make that finding. It would be more usual to include it at the front of a decision, and indeed fourth, we find at [1] that Mr O’Loughlin commenced working for Linfox in mid-2010 and that in September 2010 he was delivering fuel to a service station, so there would not appear to be any need for another comparable finding, later. Fifth, and finally, if all that was being said was that Mr O’Loughlin was employed by Linfox it would not make sense for the AAT to commence its next sentence, “However,” as it did. “However,” at the beginning of a sentence, is used by way of qualification of the preceding sentence or clause, as a whole. If the previous sentence was a harmless finding that Mr O’Loughlin was employed by Linfox, the next sentence would not be phrased by way of qualification.

58    The correct interpretation of the first sentence of [25] is that the AAT there found that Mr O’Loughlin was not in an Interval. Instead, he was engaged in duties. I have reached that conclusion having also considered Linfox’s alternative contention raised by its Notice of Contention that:

If, as contended in ground 2(a) of the Notice of Appeal, the principle articulated by the majority of the High Court in Comcare v PVYW [2013] HCA 41 applies only to the case of an injury occurring during an interval between periods of actual work, the Tribunal’s findings of fact (recorded in paragraphs 26–29 of the Tribunal’s Reasons) were such that the Tribunal must necessarily have concluded (consistently with the Respondent’s submission noted in paragraph 24 of the Tribunal’s Reasons) that:

(a)    the injury suffered by the Applicant was suffered while and because the Applicant was engaged in an activity – namely, his confrontation with a person (Mr D) at the service station;

(b)    the Applicant suffered that injury during an interval between periods of the Applicant’s employment, being an interval that the Applicant chose to take from his employment duties in order to pursue his confrontation with Mr D at the service station;

(c)    the Respondent did not induce or encourage the Applicant to engage in the activity of confronting Mr D; and

(d)    therefore the Applicant’s injury did not occur in the course of his employment within s 5A(1)(b) of the Safety Rehabilitation and Compensation Act 1988.

59    There can be no issue that the findings of fact recorded at [26]–[29] support the conclusions contended for in (a) and (c). The findings made in those paragraphs do not, however, support the contention that the AAT came to conclusion (b), that Mr O’Loughlin was injured during an interval.

60    Paragraphs [26]–[29] of the AAT’s reasons are framed, and the nature of the issues they address is informed by, the question posed at the end of [25], thus:

Therefore the question is whether the respondent induced or encouraged Mr O’Loughlin to engage in the activity at the time the injury occurred.

61    Paragraphs [26]–[29] answer that question, as is confirmed by the conclusion at [29] where the AAT said:

In all the circumstances, Mr O’Loughlin was injured when, after the first intervention, he engaged in the activity of confronting the assailant and continuing the confrontation by initiating the other interventions, none of which was induced or encouraged by the respondent.

(emphasis added)

62    Read in proper context, it is apparent that the AAT’s reasons at [26]–[29] are not addressing the issue raised by (b) as to whether Mr O’Loughlin’s injury was suffered during an interval between periods of work. What is addressed is whether the activities in which Mr O’Loughlin engaged were induced or encouraged by Linfox. That is consistent with my conclusion that the answer to whether the injury was sustained in an interval had already been given by the AAT in the first sentence of [25] of the AAT’s reasons.

Conclusion

63    It follows that, in the absence of a finding that Mr O’Loughlin’s injury was sustained during an interval in an overall period of work, the AAT posed and answered the PVYW question. It was wrong to do so. For reasons I have given above, in the absence of a finding that Mr O’Loughlin was injured during an Interval, the PVYW question was not applicable to Mr O’Loughlin’s circumstances and the AAT was wrong to ask that question in determining whether Mr O’Loughlin’s injury occurred in the course of his employment.

64    Mr O’Loughlin should therefore succeed on his ground of appeal.

65    If, contrary to my conclusions above, PVYW did establish a new organizing principle in terms of Linfox’s two-stage submission, the AAT would also have erred. It was fundamental to Linfox’s two-stage submission that before the “induce or encourage” question could be asked, it was necessary to exclude that the employee was engaged in “actual work,” which Linfox read as meaning “ordinary duties or things incidental thereto.” There was no finding that Mr O’Loughlin was engaged neither in ordinary duties nor in things incidental thereto. To the contrary, the first sentence of [25] of the AAT’s decision is a finding that Mr O’Loughlin was carrying out his duties or something incidental thereto.

Disposition

66    It follows from that conclusion that I should make an order setting aside the AAT’s decision to affirm the Revocation. The parties’ positions on the question of any further relief were not entirely clear.

67    Mr O’Loughlin’s belated suggestion (made in submissions in reply) that I should make a declaration that the injury to him arose in the course of his employment, must be rejected. As I understand it, that suggested course was founded upon Mr O’Loughlin’s submission, which I have rejected, that the AAT made a finding to that effect. This Court is only empowered to make a finding of fact where the finding is not inconsistent with the findings made by the AAT: s 44(7)(a) of the AAT Act.

68    Senior counsel for Mr O’Loughlin accepted that if the Court rejected that the AAT had made a factual finding that the injury arose in the course of Mr O’Loughlin’s employment, the case should be remitted for redetermination. There remains, however, a final question as to whether any order ought be made limiting the scope of the remittal. A remittal may be on a confined basis, or at large: Repatriation Commission v Nation (1995) 57 FCR 25 (Beaumont J, with whom Black CJ and Jenkinson J agreed); Stateships v Lawson (2009) 107 ALD 42 at 53 (Gilmour J). Where no condition is imposed on remittal, the whole of the case is remitted without limitation as to the presentation of further evidence or as to the scope of the matter to be dealt with: Rigoli v Commissioner of Taxation (Cth) (2014) 141 ALD 529 at [34] (Edmonds, Jessup and McKerracher JJ). An unqualified remittal, even for a matter to be determined according to law, would require the whole of the matter to be heard and decided again, and all questions of law and fact relevant to the claim to be considered and determined: Rigoli at [34], citing Peacock v Repatriation Commission (2007) 161 FCR 256 (Downes, Lander and Buchanan JJ).

69    Confined remittals can cause difficulty, for reasons identified by Gummow and Hayne JJ in Minister for Immigration and Multicultural Affairs v Wang (2003) 215 CLR 518 at [73]–[74]:

Necessarily, the findings that are recorded in the Tribunal’s written statement of its decision and reasons will reflect the matters that the applicant for review will have sought to agitate. No less importantly, the findings that are recorded will reflect what the Tribunal considered to be material to the decision which it made on the review. And what was material to that decision will depend upon the view that the Tribunal formed about the relevant legal questions that the review presented.

It follows, therefore, that to attempt to divorce the Tribunal’s statement of its findings on what it considered to be a material question of fact, from the decision it made and, in particular, from its reasons, may be dangerous in cases like the present where it is accepted that the Tribunal made an error of law. There are several reasons why it may be a dangerous process. First, there is the notorious difficulty of disentangling findings of fact from conclusions about applicable legal principle. Secondly, assuming that those difficulties can be surmounted, the findings of fact which the Tribunal makes after hearing and assessing the body of material and submissions will necessarily reflect the Tribunal’s conclusions about applicable legal principle and will be directed to the questions that those principles present. If, in that review, the Tribunal makes an error of law and a subsequent review is ordered, what is the Tribunal then to do if further findings are to be made about subjects with which the first Tribunal dealt? For it to take, as its starting point, findings that were made on that earlier review under a misapprehension of applicable legal principles may, indeed often would, skew the second factual inquiry by the Tribunal.

70    Nevertheless, there may be good reason to limit the scope of the referral including by the Court making an order under s 44(5) of the AAT Act that the case be heard and determined without the hearing of further evidence. I should specify whether I am remitting the whole case, or only part, and, if so, which part: Peacock at [24]. As Downes, Lander and Buchanan JJ there stated, “Parties should routinely put submissions on the topic”. As no submissions were put, it is appropriate that I make directions requiring Mr O’Loughlin and Linfox to file and exchange short written submissions as to whether any order ought to be made limiting the scope of the referral.

71    It was not in contest that costs should follow the event. I will also make an order that Linfox pay Mr O’Loughlin’s costs of the appeal.

Associate:

Dated:    10 September 2015