When the pot VR1 gets worn/dirty/noisy and the wiper breaks contact with ground, the current will flow through VR1 from one end to the other through the base of the transistor, and pull the output down to roughly 2v. That's better than having the output float high.

Thanks SgtWookie, this was a real head scratcher for me to until I read your post.

 

Perhaps the TI datasheet http://www.ti.com/lit/ds/symlink/lm317.pdf figure 19 holds the answer. It is similar, but not the same circuit.
In the TI circuit, the purpose is slow-turn-on for the regulated voltage. Initially the capacitor C4 is not charged, the transistor conducts and ramps up the regulator voltage slowly as C4 charges. One the cap is charged it will turn off the transistor and the output voltage should be stable.

 

Folks, this forum had exactly this discussion a few weeks ago and concluded that Sgt Wookie's solution was correct. I have a couple of these circuit boards and the schematic is correct. The fail-safe solution has to be the right one.