WCRA: Woolies lost promotion – ‘unreasonable management action’ – knocked out on appeal

Woolworths Limited v Perrins [2015] QCA 207

The appeal flowed from the unreported judgment of now retired judge Botting. I refer to my earlier post regarding the trial and first instance decision.

His Honour McMeekin J delivered the leading judgment with whom Fraser and Gotterson JJA agreed with. The judgment comprehensively deals all the elements essential to a claim for a pure psychiatric injury. The judgment is also instructive in respect of procedural and substantive law matters, namely the importance of credibility, how it is taken into account on appeal; together with pleadings.

McMeekin J overturned the trial decision decisively and on every element essential to claim of negligence. The trial decision awarded Mr Trevor Perrins damages of $585,152.74 based on a finding that Woolworths had caused Mr Perrins psychiatric injury, which was in breach of its duty as an employer.

Mr Perrins had claimed Woolworths had twice offered management training with the view that he would then be considered for a management position, only for the offers to be cancelled by Miss Render (Woolworths) at the last minute when Mr Perrins’ absenteeism became known to her, despite both offers being previously accepted by Mr Perrins. Mr Perrins alleged this caused his psychiatric injury and further resulted in additional bullying and mocking by fellow employees of Woolworths. Mr Perrins alleged that his vulnerability to such an injury was known to Woolworths based on disclosures he had made in conversations with Mr Rodriguez.

In sharp focus was Mr Perrins past drug use and other personal significant trauma, including family court matters and being imprisoned, which had caused him to be troubled since a teenager with psychiatric and psychological issues. The nature and timing of the disclosure of these matters to Woolworths and in particular to Mr Rodriguez was a matter Judge Botting found in favour of Mr Perrins and was determinative of the trial decision.

Judge Botting found:

[146] In my view, bearing in mind what the defendant, through its various agents, knew of the plaintiff, it should have realised that in treating him the way it did there was a real risk that his reaction would be far more serious than mere disappointment at missing out again.

[147] In my view, it would have been foreseeable that such treatment would have a likelihood of causing psychological damage, and even psychiatric damage, to someone in robust health.

[148] Bearing in mind what the defendant company knew of the plaintiff’s background (from the conversations with Mr Rodriguez and Miss Render referred to above) I conclude that it should have been foreseen by the defendant that if it acted as it did the plaintiff would suffer significant psychiatric injury.

Judge Botting concluded as follows:

[156] In paragraph 7.8 of the Amended Defence the defendant pleads that any psychiatric injury suffered by the plaintiff was ‘a consequence of reasonable management action taken in a reasonable way by the defendant.’

[157] I think it will be very apparent from what I have written above that this plea must fail. In my view the actions of the defendant, and in particular those of its agent Miss Render, cannot on any view be said to be reasonable.

[158] I will not catalogue all of the shortcomings which, it appears to me, the defendant has been guilty of. Suffice it to say that in February 2009 the company knew exactly how many days the plaintiff had been absent. Miss Render took no steps to ascertain details of his absenteeism. Miss Render considered his absences such as to disqualify him from participating in the course. In those circumstances the decision to offer him a place on the Management Trainee Course cannot be said to be ‘reasonable management action;’ a fortiori the company’s actions in May, 2010.

At every turn McMeekin J could not be persuaded to agree with Botting J’s decision or that His Honour at trial was in a better position to assess the evidence.

In short, McMeekin J found the plaintiff’s claim should be dismissed and the appeal allowed because [6]:

(a)        The duty of care owed was not as extensive as the primary judge apparently assumed;

(b)        Taking Mr Perrins’ case at its highest there was no foreseeable risk of psychiatric injury to Mr Perrins in the circumstances that pertained;

(c)        If there was such a foreseeable risk Woolworths was not in breach of its duty of care;

(d)        It was not shown that any act or omission relied on as being in breach of duty caused the injury suffered; and

(e)        Mr Perrins’ case should not be taken at its highest – the essential findings of fact underpinning the judgment below cannot stand.

 

McMeekin J disagreed with judge Botting on the core issue of reasonable foreseeability. Firstly, that the “treatment” Mr Perrins received “would have a likelihood of causing psychological damage, and even psychiatric damage, to someone in robust health”.  Secondly, that Woolworths were on notice of Mr Perrins particular vulnerability because of the disclosures he made to Mr Rodriguez, namely that at some time in his past he had had difficulties with drugs, depression and the criminal law.

His Honour reiterated the test was that stated Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44 at [33]:

In Tame v New South Wales, the Court held that “normal fortitude” was not a precondition to liability for negligently inflicting psychiatric injury. That concept is not now to be re-introduced into the field of liability as between employer and employee. The central inquiry remains whether, in all the circumstances, the risk of a plaintiff (in this case the appellant) sustaining a recognisable psychiatric illness was reasonably foreseeable, in the sense that the risk was not far-fetched or fanciful.[41]

His Honour’s emphasis.

His Honour held:

  1. When one examines the relevant facts pertaining here, in my judgment, the employer could not have reasonably foreseen that by taking him off the course for trainee managers there was a risk of causing such mental anguish to Mr Perrins as to result in psychiatric decompensation.
  2. On the facts as found the human resources manager made a mistake – she twice failed to check Mr Perrins’ absenteeism record before inviting him onto the management programme.  Indeed it may be too harsh to say that she made a mistake.  It seems that she relied on a system by which information came to her, she not being in a position to physically observe Mr Perrins and his performance of his duties.  Thus Ms Render relied on information from team leaders in the usual way and because of the timing of the counselling that took place she was not alerted by them to the true state of affairs until after the letter of offer was sent.  Thus she learnt of the true state of affairs very late, about a week before the programme was to start on each occasion.  Mr Perrins was informed immediately on the first occasion but very belatedly on the second.  There was merit in the trial judge’s view that the matter was not handled sensitively. That the belated recognition of Mr Perrins’ absenteeism and the insensitive manner of his removal from the course might cause disappointment, frustration at Ms Render’s allegedly incompetent performance of her duties, and even anger from Mr Perrins at his time being wasted and his expectations built up are all understandable reactions.  But in judging his expected reaction it needs to be recalled that Mr Perrins had himself been responsible for the absenteeism, had retained his employment and was told that he would be re-considered for the training course in the future.  Against that background the notion that informing an employee that they had failed to meet certain objective criteria, expected of all employees, previously laid down and previously advised, would result in decompensation into psychiatric illness does not seem to me to be “reasonably foreseeable”.
  3. My view is that disappointed ambition is a commonplace in the employment situation, sometimes resulting from events far more unfair than a colleague belatedly but accurately carrying out her duty, and sometimes disappointments occur on many more occasions than the two here, but psychiatric decompensation as a result is not commonplace.  In my judgment very few people would react and suffer psychiatrically as did Mr Perrins if placed in his situation.
  4. Finally I observe that I see no reason why I should not give effect to my own views in preference to those of the primary judge.  The primary judge has no advantage here and while no doubt due deference needs to be given I am not only entitled but required to give effect to my own view on which side of the line the case falls.[49]

[49]         Warren v Coombes (1979) 142 CLR 531 at 551Fox v Percy (2003) 214 CLR 118 at 127-128 [27] per Gleeson CJ, Gummow and Kirby JJ.

 

As to Mr Perrins disclosing his history to Mr Rodriguez, McMeekin J went to some length to detail the evidence as to the compelling reasons to treat Mr Perrins’ evidence with caution and concluded:

  1. In my view, given these many problems, Mr Perrins fell into that class of witness whose evidence ought to be rejected unless it was inherently probable or confirmed by other cogent evidence.

 

In doing so His Honour departed from the trial judge’s view as to the reliability of Mr Perrins’ evidence and referred to Atkin LJ’s observation in Société d’Avances Commerciales (Société Anonyme Egyptienne) v Merchants’ Marine Insurance Co (The “Palitana”) (1924) 20 LI L Rep 140 at 152, that “an ounce of intrinsic merit or demerit in the evidence, that is to say, the value of the comparison of evidence with known facts, is worth pounds of demeanour.”

As to breach of duty, McMeekin J found judge Botting made no finding of the act or omission that constituted the breach of the duty of care. As to the content of the duty of care owed, His Honour referred to the well settled authority of Koehler v Cerebos (Australia) Ltd and found:

  1. There was no finding that there was any sign (as opposed to the disputed conversation, to which I will come) that Woolworths’s managers should have observed to alert them to any psychological vulnerability.  To the contrary Mr Perrins advanced himself implicitly as fit to cope with the disappointment of missing out.
  2. The case presented was that because of a casual conversation with a manager in which Mr Perrins revealed, in words not detailed, something of his past, Woolworths came under a duty of care not to rely on their own criteria in respect of that employee, and if it did so Woolworths was liable in damages for the consequences of that employee’s reaction to their reliance.
  3. I know of no authority for the importation of such a duty of care.
  4. Koehler is authority for the proposition that the duty owed to an employee to protect the employee from psychiatric harm does not extend to injury suffered by undertaking the very obligation imposed by the contract.  The duty for which Mr Perrins’ contends effectively extends to just such an injury.
  5. Examination of what express contractual terms there were confirms my view that the duty cannot extend as far as it must for Mr Perrins to succeed on these arguments.  As inKoehler there has been no comprehensive examination attempted here of the extent of the obligations of each of the parties.  But what is clear enough is that Mr Perrins’ involvement in the trainee programme was subject to the terms contained in the two letters of offer of 2 February 2009 and 17 May 2010.
  6. Woolworths expressly informed Mr Perrins in those letters that he “was not guaranteed a leadership position” even if he successfully completed the course.  As well Woolworths had expressly reserved its right to transfer Mr Perrins back to his previous role if the Company thought that Mr Perrins was “failing to fulfil the requirements of the position” during the programme.
  7. It is apparent that both Mr Perrins and Woolworths operated on the assumption that the thwarting of his ambition was a possible outcome of the process and one that Mr Perrins might well have to live with.  It was fundamental then to both sides that Mr Perrins had the capacity to deal with disappointed ambition.
  8. It is inconsistent with the reservation of those rights by Woolworths, and Mr Perrins’ acceptance of those reservations, that their relationship was also subject to a duty not to injure him by withdrawing him from the trainee course before it began.  To put the point another way – if Woolworths had no duty to preserve Mr Perrins’ management ambitions either during or after the trainee course, why did they owe such a duty either before it commenced the selection process or at any time up to the commencement of the course?  The answer that Mr Perrins gives is – because I might suffer injury.  That was the only answer that could be advanced inKoehler and it was held not sufficient to justify the scope sought to be given there to the employer’s obligations.  That was so, in part, because the plaintiff’s “agreement to undertake the work runs contrary to the contention that the employer ought reasonably to have appreciated that the performance of those tasks posed a risk to the appellant’s psychiatric health.  It runs contrary to that contention because agreement to undertake the work not only evinced a willingness to try but also was not consistent with harbouring, let alone expressing, a fear of danger to health.”[33]  The reasoning is applicable here, albeit applied not to performance of tasks but rather his continuation in the course.  I cannot see that there is any distinction.

[33]         Koehler at [28].

As to the allegation of bullying and harassment, McMeekin J found it was not pleaded or sustained.  The failure to plead the claim was serious:

  1. It was hardly surprising that counsel for Woolworths did not put to Mr Perrins that the conduct did not occur.  The first notice that the defendant had of the assertion was Mr Perrins’ claim in his evidence-in-chief that it had occurred.  No notice of the allegation had been given.  No reference to such conduct had been made to any medical practitioner.  No particulars of who was involved or precisely what was said and when were given.  How counsel could have obtained any instructions on the point and at so late a stage is not clear.
  2. The relevance of this finding, for the primary judge, is that it led his Honour to accept that Mr Perrins’ frustration at his treatment would be “exacerbated” by this alleged conduct. There was no objection to the evidence, presumably because counsel for Woolworths thought that he could turn the complaint to his advantage, so long as it remained an unpleaded cause of the harm sued for.  That was one of the arguments put below – if the conduct occurred it meant the end of Mr Perrins’ case as his injury was the result of an unpleaded cause and not the subject of any medical evidence.  Alternatively it was said the late introduction of these claims went to credit.  In oral argument on appeal the proposition was put that there was simply no basis for accepting that any such conduct occurred.  I agree.

Finally, Mr Perrins failed on causation. His Honour stated the recognised test (below), but found there was no evidence to satisfy it:

173.            In order to establish the necessary causal link between any arguable negligence on the part of the employer and the injury suffered by the employee, it is necessary to show that the measures that it is said the employer failed to adopt would protect the employee from injury, not “could” or “might”: Queensland Corrective Services Commission v Gallagher [1998] QCA 426 at [26] – [27] per de Jersey CJ citing Vozza v Tooth & Co Ltd (1964) 112 CLR 316, 319; Turner v South Australia (1982) 56 ALJR 839, 840 per Gibbs CJ.  In that latter case Gibbs CJ said:

“When the employer does unreasonably fail to take a precaution against danger, the plaintiff cannot succeed unless he satisfies the court that if that precaution had been taken the injury would probably have been averted, or, in other words, that the safety measures would have been effective and that he would have made use of them if available: Duyvelshaff v Cathcart & Ritchie Ltd (1973) 47 ALJR 410 at 416-417, 419.”

176.            The same point can be made about each of the pleaded causes and to the re-casting of the case on appeal.  Each assumes that but for the matter complained of (reliance on “well known issues”; failure to advise of “on going issues”; using past issues to deny entry; notification two days before rather than some other, unspecified, time; failing to apply “proper standards … of qualified human resources departments” – whatever they might be), there would have been no injury – but without any evidence that was so.  As was said in Gallagher the fact that the plaintiff might attribute his decompensation to a certain cause does not establish that it was so.

His Honour concluded with the statement that:

178.    While I have reached a very different view to the primary judge I cannot leave the case without recording that his Honour was not greatly assisted by the way in which the plaintiff’s case was pleaded and argued.  The repeated focus on what was said to be “unreasonable management action” did more to obscure than expose what was in issue.  As Woolworths submitted on appeal an employer can be as unreasonable as it pleases provided it does not breach its duty of care.  The pleading seems to have raised a false issue and led to a failure to address fundamental questions of the duty owed, its breach and the causation of harm, despite the efforts of counsel for Woolworthsto keep matters on track.

(footnote omitted)

David Cormack – Brisbane Barrister & Mediator

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