Flint, Penny --- "An employer's duty of care to prevent psychiatric injury: recent cases" [2016] PrecedentAULA 45; (2016) 135 Precedent 26

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AN EMPLOYER’S DUTY OF CARE TO PREVENT PSYCHIATRIC INJURY: RECENT CASES

By Penny Flint

Reported psychiatric injury is on the rise in an employment context. Workers’ compensation claims for psychological injuries are on the increase.^[1] Whether this is because of an increase in awareness in the community about psychological injury and its symptoms and causes, or because employment is now more likely than ever to cause psychiatric injury, is uncertain. What is certain is that it is likely that we will see more of these cases come before the courts in the future.

An employer can be directly liable for a psychiatric injury to an employee by reason either of its non-delegable duty of care to provide a safe system of work,^[2] or through the direct liability that is attributed to it by virtue of the actions of those that are the ‘mind and will’ of the company.^[3] An employer can also be vicariously liable for the actions of its employees.^[4] Recent cases have examined the non-delegable duty of an employer and it is that duty and consequent liability that will be the focus of this article.

When advising clients about the common law liability of an employer for psychiatric injury arising from the duty of an employer to provide a safe system of work, it is important to remember that recently courts have repeatedly found there to be significant limitations on this duty. Although – as the High Court acknowledged in Koehler v Cerebos (Australia) Limited^[5] – it may be a matter of general knowledge that stress can bring about some psychiatric injuries, and workplaces can be stressful, the law does not impose an overarching duty on all employers to recognise that all employees are at risk of psychiatric injury from stress at work.

This article examines three 2015 decisions involving psychiatric injury which illustrate the analysis that must be undertaken in ascertaining whether it is likely that a plaintiff might succeed in establishing that a psychiatric injury is attributable to a breach of the non-delegable duty of an employer to provide a safe system of work.

Each of these cases relied on observations and principles enunciated by the High Court in Koehler v Cerebos (Australia) Limited, the Queensland Court of Appeal in Hegarty v Queensland Ambulance Service,^[6] and the New South Wales Court of Appeal in Nationwide News v Naidu.^[7]

KOEHLER v CEREBOS (AUSTRALIA) LIMITED^[8]

Koehler, a merchandising representative, brought her case on the basis that her psychiatric injury had been caused by the negligence of her employer, by imposing on her an excessive workload, despite repeated complaints that she could not cope.

The High Court held that an analysis of the content of the duty is the ‘proper starting point’ in a case involving the question of an employer’s liability in negligence for psychiatric illness.^[9] This involved taking the ‘fundamental aspects of the relationship between the parties into account’,^[10] including obligations owed under the contract of employment, obligations in equity and applicable statutory provisions.^[11] According to the Court, careful consideration of the obligations of each party will elucidate whether an employer is required to make modifications to the employee’s work as part of its duty of care to take reasonable care to avoid psychiatric injury.^[12] At the outset, there is an assumption that an employee is able to do the work they were contracted to do without suffering psychiatric injury.^[13]

The majority continued ‘insistence on the performance of a contract cannot be in breach of the duty of care’^[14] and that: ‘Developing the common law of negligence in a way that inhibited the making of agreements to do more work than the industry standard was a large step to take.’ In this context, it referred to the difficulties that might be encountered through reference to external standards.^[15]

The central question according to the majority is ‘whether, in all of the circumstances, the risk of a plaintiff sustaining a recognisable psychiatric injury was reasonably foreseeable in the sense that it was not far-fetched or fanciful’.^[16]

Further, the duty exists only if reasonable foreseeability in a particular set of circumstances is established: ‘The duty which an employer owes is owed to each employee. The relevant duty of care is only engaged if a psychiatric injury to the particular employee is reasonably foreseeable.’^[17]

Applying these principles, the High Court found that Cerebos (Australia) Limited did not breach any duty of care to Koehler to prevent psychiatric injury. This was principally because Koehler had agreed to perform the duties she was required to perform under her contract of employment. Further, although she complained repeatedly about her workload, there was no indication that she was vulnerable to developing a recognised psychiatric injury.^[18]

HEGARTY v QUEENSLAND AMBULANCE SERVICE^[19]

This case concerned an ambulance officer, Hegarty, who suffered psychiatric illness after witnessing repeated traumatic events and brought a claim alleging negligence against his employer. The basis of Hegarty’s claim was that his psychiatric illness was attributable to his employer’s failure to train those who supervised him to identify the signs of psychiatric injury he was exhibiting, and refer him for counselling. The observations by the Court of Appeal regarding the uncertainties perceived to be inherent in the enquiry into an employer’s liability in these circumstances have been repeatedly referred to by courts determining these issues, and are revealing:

‘It must be said immediately that, while an employer owes the same duty to exercise reasonable care for the mental health of an employee as it owes for the employee’s physical well-being, special difficulties may attend the proof of negligent infliction of psychiatric injury. In such cases, the risk of injury may be less apparent than in cases of physical injury. Whether a risk is perceptible at all may depend on the vagaries and ambiguities of human expression and comprehension. Whether a response to a perceived risk is reasonably necessary to ameliorate that risk is also likely to be attended with a greater degree of uncertainty; the taking of steps likely to reduce the risk of injury to mental health may be more debatable in terms of their likely efficacy than the mechanical alteration of the physical environment in which an employee works.’^[20]

The Court of Appeal found that the Queensland Ambulance Service did not breach its duty of care to Hegarty because, on the accepted evidence, Hegarty did not exhibit signs of psychological dysfunction which called for advice to seek psychological assessment and treatment.^[21]

NATIONWIDE NEWS v NAIDU^[22]

In Nationwide News v Naidu, it was found that the surrogate employer – that is, the company that effectively had control over Naidu, Nationwide News – was directly liable for the acts of Chaloner, the Fire and Safety Officer who had systematically and brutally bullied Naidu over many years.

In considering the liability of an employer in cases involving psychiatric injury and, in particular, what is required to establish breach of duty, Spigelman CJ confirmed that when considering whether an employer’s intervention should have occurred in a particular case, the inquiry is prospective and subject to a reasonableness test:

‘The prospective nature of the inquiry as to breach has particular significance in the case of risk of psychiatric injury. In any organisation, including employer/employee relationships, situations creating stress will arise. Indeed some form of tension may be endemic in any form of hierarchy. The law of tort does not require every employer to have procedures to ensure that such relationships do not lead to psychological distress from its employees. There is no breach of duty unless a situation can be seen to arise which requires intervention on a test of reasonableness.’^[23]

RECENT CASES

Rawlings v Rawlings^[24]

Rawlings, a 54-year-old carpenter employed in his family’s business brought an action seeking damages in the Supreme Court of Victoria on the basis that that he suffered psychological injury as a result of the negligence of his employer (his mother and father) when, after the psychiatric breakdown of his father in the early 90s, he was asked by his mother to assist not only with performing the carpentry work, but also with the company’s downward-spiralling finances.

Dixon J found that there was no duty owed by the employer in the circumstances of the case.^[25] He commenced his analysis, as in Koehler, by giving careful consideration, in the first instance, to the content of the duty between the parties.^[26]

An examination of the content of the duty in this case involved, in particular, a consideration of the fact that the relationship between the parties was a close familial one.^[27] After considering the evidence, His Honour found that Rawlings’ mother, his employer, had asked him to help with the business and had given him certain tasks to perform associated with the business, not in the context of an employment relationship, but in the role of a mother asking for help from her son. Further, in turn, her son had agreed to help out as a ‘loving son’.^[28]

Other relevant factors to consider included the fact that the employer was under insolvency administration during much of the relevant period; the nature of the tasks given to Rawlings were not, according to Dixon J, onerous; Rawlings agreed to perform the tasks given to him and did not indicate he might need training or other assistance; and, further, Rawlings gave no indication to his employer that in performance of his employment duties, he was at risk of developing a psychiatric injury.^[29]

It was argued in the course of the case that because his father (also the employer) had suffered a psychiatric breakdown by reason of tasks associated with the business, the very tasks he was instructed by his mother to perform, the employer was on notice that there was a foreseeable risk that Rawlings (the employee) would also suffer psychiatric injury. Dixon J found that there was no evidence before the court that this was the case and that, in any event, the fact that one person might have a psychiatric breakdown over particular circumstances did not mean that another person would, and so these facts did not impose a duty on the employer not to give the same duties to Rawlings (the employee).^[30]

Woolworths v Perrins^[31]

Perrins, a 30 year old with a prior psychiatric history (probably unknown to Woolworths on the evidence as accepted by the Court of Appeal) had applied for and been accepted twice into a management training course. Application to participate in this course was not straightforward and involved a somewhat rigorous process, including psychological testing, which Perrins had passed. Paperwork provided as part of the application process indicated that there was no guarantee that anyone undertaking the course would be provided with a management position or an ongoing management position. On both occasions, at the eleventh hour, Perrins was told that he could not undertake the course, as his record of leave had been excessive and in breach of management policy. On the second occasion, following notification of his withdrawal from the course, Perrins suffered a psychiatric injury. Relevantly, at the commencement of his employment Perrins had signed two documents indicating that he was not aware of any conditions that may adversely affect his performance.^[32]

The trial judge (who made a number of findings of fact that were not ultimately accepted by the Court of Appeal), found that the Perrins had suffered psychiatric injury as a result of a breach by Woolworths of its duty of care to Perrins and awarded damages.

The Court of Appeal held that the scope of the duty did not extend as wide as the trial judge found and, further, that there had been no breach.

As in Koehler, the court began with a consideration of the content of the duty between the parties and, in particular in this case, a close consideration of the contractual obligations of the parties.

In the first instance, the Court found that Woolworths had a legitimate interest and a right to impose its criteria in relation to absenteeism, and the denial of entry into the management course if those criteria were not met.

‘To import a duty of care that depended on Woolworths not acting on a failure by an employee to meet its criteria would be to completely ignore Woolworths’ legitimate interests in the process.’^[33]

‘to deny Woolworths its right to control its own process and deny people access to the Management Training Course if they did not meet basic criteria is to deny Woolworths its right to control its own processes.’^[34]

Further, it was relevant that Perrins had applied to participate in the management training course, subject to an express term, that there was no guarantee he would ultimately gain a leadership position, and that Woolworths could transfer him out of a leadership role if he failed to fulfil requirements. The court found that because it was clear in the documentation he had signed in applying for the course, that not being able to be accepted into the course and be able to pursue a management role, was a possible outcome, it was fundamental to both sides that he had accepted that he had the capacity to deal with the disappointment of not ultimately becoming a manager.

In relation to foreseeability, the Court of Appeal said that the ‘test of reasonableness requires an assessment of the ‘degree of probability that the risk of psychiatric injury may occur, even when the reasonable foreseeability test of a risk that is not far-fetched and fanciful, has been satisfied as well as a consideration of the conflicting obligations on the employer’.^[35]

The Court of Appeal considered that the risk of an employee suffering a recognisable psychological injury in these circumstances was very small. ‘My view is that disappointed ambition is a commonplace in the employment situation....but psychiatric decompensation as a result is not commonplace. In my judgement very few people would react and suffer psychiatrically as did Mr Perrins if placed in his situation.’^[36]

The low risk of injury, the lack of evidence showing that Woolworths knew Perrins was vulnerable, the fact that Perrins himself knew about his own absenteeism, as well as a consideration of Woolworths interests in the circumstances, led to the Court of Appeal’s finding that there was no duty on Woolworths to do things in any other way than it had.^[37]

Box Hill Institute of Tafe v Johnson^[38] [Application for Leave to Appeal this decision is fixed for hearing]

Johnson pursued a case alleging that his employer was negligent, as he had been subjected to 12 instances of bullying behaviour at work by his supervisor, Williams. Johnson was an automotive trades teacher employed by Box Hill TAFE during the relevant period. The judge at first instance did not accept Johnson’s version of 11 of the incidents, and in fact found that he was an unreliable witness, but did accept his account of what had happened in the last incident, a meeting in which Williams had publicly reprimanded Johnson, following which Johnson broke down psychologically and was incapacitated for work. Despite not accepting Johnson’s versions of the earlier incidents, the evidence of what had occurred on these occasions, as accepted by the judge at first instance and the Court of Appeal, was found to be relevant in invoking a duty of care on the part of Box Hill TAFE to protect Johnson from psychiatric harm.^[39]

This is because the earlier incidents evidenced a situation of mounting conflict (not bullying of one by the other) between the two parties, Johnson and Williams. Further, following one of the incidents in particular, Box Hill TAFE was put squarely on notice that as a result of the interactions between the two men, Johnson was suffering a recognised psychiatric illness. The notice to Box Hill TAFE was a medical certificate, given to a representative of the human resources department, which stated that Johnson, was suffering an ‘aggravation of depression’ as a result of interactions between himself and his supervisor. The Victorian Court of Appeal held that ‘in those circumstances, the judge was well justified in concluding that the applicant should have been aware that it was likely that any further interaction between the respondent and Williams would cause further injury to Johnson’s psyche’^[40] and, further, that the judge was correct in finding that a reasonable employer in the position of Box Hill TAFE ought to have taken action, directed at both men, to prevent psychiatric harm to Johnson, including both mediation and counselling.^[41]

CONCLUSION

Courts have imposed significant limitations on employer liability for psychiatric injuries in an employment context. The first step in the analysis when examining employer liability is the content of the duty, which involves an examination of the relationship and obligations between the parties. Relevant considerations include the contract between the parties, equitable interests and statutory rights, the nature of the work to be performed under the contract, whether the employee has held themselves out as being able to do the work, and the employer’s rights and interests, including that an employer is entitled to assume that the employee can perform the job they have been employed to do without risk of psychiatric injury. The central test of reasonable foreseeability is directed to the particular circumstances of the case and the particular employee. Further, the reasonably foreseeable risk must be of a recognised psychiatric injury. The question that must be asked is: was it reasonable to require an employer to take action in the circumstances to prevent psychiatric injury? Relevant considerations include whether the employer was on notice that this particular employee was vulnerable to the development of a recognisable psychiatric injury in the circumstances of the particular case. The employer’s rights and interests are also relevant considerations.

Penny Flint is the owner of Peninsula Injury Lawyers, a law firm for injured people on the Mornington Peninsula in Victoria.

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^[1] See, for example, http://www.worksafe.vic.gov.au/about-vwa/data.

^[2] See, generally, Koehler v Cerebos (Australia) Limited [2005] HCA 15; (2005) 222 CLR 44.

^[3] See Nationwide News Pty Ltd v Naidu & Anor; ISS Security Pty Ltd v Naidu [2007] NSWCA 377; (2007) 71 NSWLR 471.

^[4] See State of New South Wales v Lepore [2003] HCA 4; (2003) 212 CLR 511.

^[5] See Koehler above note 2, at para [34].

^[6] Hegarty v Queensland Ambulance Service (2007) Aust Torts Reports 2007.

^[7]See Nationwide, note 3 above.

^[8] See Koehler, note 2 above.

^[9] Ibid para [21].

^[10] Ibid para [19].

^[11] Ibid para [21].

^[12] Ibid para [21].

^[13] Ibid para [36].

^[14] Ibid para [29].

^[15] Ibid para [31].

^[16] Ibid para [33].

^[17] Ibid para [35].

^[18] Ibid para [40].

^[19]See Hegarty, note 6 above.

^[20]Ibid per Keane JA, para [41].

^[21] Ibid para [101].

^[22] See Nationwide, note 3 above.

^[23] Ibid para [20].

^[24] Rawlings v Rawlings [2015] VSC 171.

^[25] Ibid para [80].

^[26] Ibid para [83].

^[27] Ibid para [64].

^[28] Ibid para [86].

^[29] Ibid para [102].

^[30] Ibid para [112].

^[31] Woolworths Limited v Perrins [2015] QCA 207.

^[32] Ibid para [12].

^[33] Ibid para [47].

^[34] Ibid para [47].

^[35] Ibid para [151].

^[36] Ibid para [73].

^[37] Ibid paras [153-155].

^[38] Box Hill Institute of Tafe v Johnson [2015] VSCA 245.

^[39] Ibid para [62].

^[40] Ibid para [51].

^[41] Ibid para [63].