The 4-1 decision from the High Court said the woman's employer did not induce or encourage her to participate in the activity, so the federal government insurer, Comcare, was not liable to compensate her. The lower court said the woman was injured in the course of her employment and should be compensated.
The woman cannot be identified for legal reasons. She was a federal civil servant in her 30s when she hospitalized for the injury in 2007. While she and a man were having sex in her hotel room, a glass light fitting above the bed fell onto her face, injuring her nose and mouth. She later suffered depression and was unable to continue working for the government.
Comcare initially approved her claim for worker's compensation but rejected it after further investigation. An administrative tribunal agreed that her injuries were not suffered in the course of her employment, saying the government had not induced or encouraged the woman's sexual conduct. The tribunal also found the sex was "not an ordinary incident of an overnight stay" such as showering, sleeping and eating.
Federal Court Judge John Nicholas overturned that last year, rejecting the tribunal's findings that the sex had to be condoned by the government if she were to qualify for compensation.
"If the applicant had been injured while playing a game of cards in her motel room, she would be entitled to compensation even though it could not be said that her employer induced her to engage in such activity," Nicholas wrote then.
Comcare lost its appeal to the Full Bench last December, with the judges finding that the government's views on the woman having sex were irrelevant. "No approval, express or implied, of the respondent's conduct was required," they said.
But the High Court ruled that Comcare was not liable to pay compensation. It's not clear how much compensation for the woman's physical and psychological injuries was in question.
"The relevant question is: did the employer induce or encourage the employee to engage in that activity?" a summary of the court ruling said. A majority of judges -- Justices Kenneth Hayne, Susan Crennan, Susan Kiefel and Virginia Bell -- answered: "No."
Justice Stephen Gageler dissented.
The crucial facts were that the overnight stay was within the two-day period of the work trip and her employer had encouraged the woman to stay in the motel in Nowra, 100 miles south of her hometown of Sydney.
"In the absence of any suggestion that she was engaged at the time of injury in misconduct, those facts were sufficient to conclude that the injury the respondent sustained during that interval, and when at that place, was sustained in the course of her employment," Gageler said.
"The particular activity in which the respondent was engaged at the time she was injured does not enter into the analysis," he added.
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