Serious and wilful misconduct: ensure that it is not in the course of employment

Scharrer v The Redrock Co Pty Limited [2010] NSWCA 365

By a two to one majority the NSW Court of Appeal has held the appellant was not entitled to compensation pursuant to sections 9 and 14 of the Workers Compensation Act 1987 (NSW) ('the Act') as she was not in the course of her employment at the time she sustained the injury.

Further, the appellant was not entitled to compensation pursuant to s10 of the Act as the qualifier in subsection 10(1A) prohibited compensation when the personal injury was attributable to the worker's serious and wilful misconduct.

Background

The appellant, Ms Scharrer, crashed her employer's motor vehicle at 3:00am on 15 December 2001, sustaining serious injuries, having left her work Christmas party at 2:00am. She produced a blood alcohol reading of 0.124.

Ms Scharrer claimed weekly compensation benefits, which were paid by her employer's insurer until July 2005, following a dispute concerning ongoing entitlements.

At first instance

The matter was referred to the Workers Compensation Commission where the Arbitrator found for the appellant.

The respondent appealed to the Deputy President. In overturning the decision it was found the appellant's actions were outside the scope of employment.

The appeal

On appeal the appellant submitted:

As a point of law, the Deputy President erred in finding the appellant was not in the course of her employment as the provision of the motor vehicle and nature of her duties meant the appellant's employment continued until reaching home
If the appellant was deemed not to be in the course of her employment because of her blood alcohol reading, and / or she disobeyed her employer's direction not to drive, she was entitled to compensation pursuant to ss14(1) or (2) of the Act, both of which had to be considered.

The majority did not address the application of s9A of the Act given they deemed the appellant was outside the course of her employment.

Findings

McColl JA, dissenting, and Basten JA, in the majority, traced the legislative history of the applicable sections to appreciate their purpose and inter-relationship. Consequently, s14(1) was deemed to create a separate basis of entitlement to compensation, in addition to s9. To be entitled to compensation under s14, there was a requirement that the injury be sustained in the course of employment, with reference to the definition in s4. Section 14 states:

Compensation is payable in respect of any injury resulting in the death or serious and permanent disablement of a worker, notwithstanding that the worker was, at the time when the injury was received:
1. acting in contravention of any statutory or other regulation applicable to the worker's employment, or of any orders given by or on behalf of the employer, or
2. acting without instructions from the worker's employer, if the act was done by the worker for the purposes of and in connection with the employer's trade or business.
If it is proved that an injury to a worker is solely attributable to the serious and wilful misconduct of the worker, compensation is not payable in respect of that injury, unless the injury results in death or serious and permanent disablement.
Compensation is not payable in respect of any injury to or death of a worker caused by an intentional selfinflicted injury.

Basten JA concluded it was open to the Deputy President to find the appellant was not in the course of her employment during her trip home. The matter was distinguished from Hatzimanolis v ANI Corporation Limited [1992] HCA as the appellant was not living away from home on a remote property.

Basten JA also noted the erroneous approach to s14(1) adopted by the Deputy President, but nonetheless stated the appellant could not succeed under that section as it could not be said that her actions constituted activity that could properly be said to be done for the purposes of and in connection with the employer's business.

Section 14(2) was of no assistance as although it acted as a qualifier in respect of serious and wilful misconduct, it only operated where the 'course of employment' test was satisfied.

Finally s10(1A) precluded any claim under s10 given the appellant was held to have been engaged in serious and wilful misconduct.

Handley JA applied s14(2) in accordance with the comments of Priestley JA in Higgins v Galibal Pty Limited (1998) at 58, where it was stated:

'the only workable approach to s14(2) is that it is written on the assumption that in its absence, compensation under s9 would be denied to a worker (because on the authorities 'serious and wilful misconduct' would have the result that an injury suffered by a worker guilty of such conduct would neither arise from nor be in the course of employment) and that the provision was inserted to reverse that result by precluding the application of the case law to 'serious and wilful misconduct' of the worker resulting in death or serious permanent disablement.'

Thus, Handley JA concluded:

'In my judgment, s14(2), as the text indicates, does not deal with the scope of the worker's employment. It assumes that the injury which arises out of or in the course of the worker's employment which created a prima facie entitlement to compensation. It then denies that entitlement in cases of proved serious and wilful misconduct except where the injury results in death or serious or permanent disablement.'

McColl JA, whilst agreeing with the application of ss9 and 14, dissented, having interpreted the Deputy's President's factual findings as proof the appellant was in the course of her employment when driving home. It is not necessary for a worker to take the shortest or most direct route home, as per, Vetter v Lake Macquarie City Council [2001] HCA.

Comment

This case demonstrates the difference between activity being deemed to be outside the course of employment as opposed to serious and wilful misconduct that would take the worker outside the scope of their employment.

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