Box Hill Institute of TAFE v Johnson

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2015 0005

BOX HILL INSTITUTE OF TAFE	Applicant
V
ROBERT JOHNSON	Respondent

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JUDGES:	WARREN CJ, HANSEN and KAYE JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	31 August 2015
DATE OF JUDGMENT:	10 September 2015
MEDIUM NEUTRAL CITATION:	[2015] VSCA 245
JUDGMENT APPEALED FROM:	Johnson v Box Hill Institute of TAFE [2014] VSC 626 (J Forrest J)

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NEGLIGENCE – Appeal – Workplace psychiatric injury – Whether applicant should have been aware of risk of further injury to respondent arising from difficult relationship with supervisor – Whether applicant’s response to risk of psychiatric injury reasonable – Whether breach of duty of care caused respondent’s psychiatric injury – Whether damages for pecuniary loss, and pain and suffering manifestly excessive – Leave to appeal refused.

NEGLIGENCE – Cross-application – Whether error in assessment of damages – 80 percent discount in damages – Cross-applicant likely to have been in same condition in two years’ time – Cross-applicant likely to have ceased work in two years – Fragile psychological state – No demonstrated error in discount – Leave to cross-appeal refused.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr M F Wheelahan QC with Ms K E Foley	Wisewould Mahony
For the Respondent	Mr G Uren QC with Mr G Worth	Slater & Gordon

WARREN CJ
HANSEN JA
KAYE JA:

In 2013, the respondent commenced proceedings in this Court, by leave, claiming damages for injuries which he alleged he sustained during the course of his employment with the applicant between October 1999 and April 2006. He claimed that during that period he sustained a back injury, and that he also sustained a psychological injury arising from the circumstances of his employment. The proceeding was heard by a judge of the trial division in September over a period of nine days. In a reserved decision,[1] his Honour upheld the respondent’s claim in respect of the back injury, and awarded him damages in the sum of $125,000. That aspect of the judge’s judgment is not the subject of this application. The judge also upheld one aspect of the respondent’s claim for psychological injury, and awarded him damages totalling $232,000, comprising $110,000 for pain and suffering damages and $122, 000 for pecuniary loss damages.
[1]Johnson v Box Hill Institute of TAFE [2014] VSC 626 (‘Reasons’).

The applicant seeks leave to appeal in respect of that aspect of his Honour’s judgment. The applicant seeks leave on three grounds relating to liability, one ground relating to causation, and two grounds relating to the assessment of damages. In response, the respondent applies for leave to appeal from the judge’s assessment of damages, and relies on six grounds in support of that application.

In order to be granted leave to appeal, the applicant must demonstrate, pursuant to s 14C of the Supreme Court Act 1986, that it has a ‘real prospect of success’ on one or more of the proposed grounds. In light of the detailed submissions that were filed in respect of the application, the court informed the parties, before the hearing of the application, that it would hear and determine the appeal instanter if the application for leave was granted.

Background

The background to the claim is set out in the detailed and thorough judgment of the trial judge.

The respondent was born in May 1955. He was trained as a motor mechanic. From 1985, he was a permanent employee of the applicant as an automotive trades teacher in the applicant’s automotive department. Until 2000, he taught at the Mitcham campus of the college. From 2000 until April 2006, he taught at the Box Hill campus.

The respondent worked in the automotive department of the Box Hill campus with approximately 12 other teachers. In 2001, Rodney Williams, who was then a teacher in that department, was promoted to the role of program coordinator, and, in that role, he effectively supervised all teachers in the department, including the respondent.

The respondent injured his back at work in April 2002 as he tried to move an engine stand. In March 2003, he suffered a significant aggravation of that injury, after which he was absent from work for a period of time. He returned on light duties in May 2003. By early 2004 he had resumed teaching on a normal basis, with restrictions on heavy lifting. In mid-2004, he aggravated his back condition in another incident in the course of a lesson.

Throughout the course of his employment the respondent suffered from anxiety and depression. He was prescribed anti-depressant medication in 1998. In mid-2003, his general practitioner, Dr Verhoef, commenced him on a daily dose of Zoloft for depression.

The respondent’s claim for his back injury related to the three incidents in which he sustained injury. The judge found that the applicant was liable to the respondent for injuries sustained by him in respect of two of those incidents. As we stated, his Honour awarded the respondent $125,000 damages in respect of that aspect of his claim.

The respondent’s pleaded claim for psychological injury alleged that he suffered that injury as a result of being subjected to bullying and harassing behaviour by Mr Williams on an ongoing basis in the course of his employment. At trial, that claim focused on the respondent’s relationship with Williams after April 2003, when the respondent returned to work following one of the incidents in which he aggravated his back injury. The respondent alleged that between that time and March 2006, when he ceased working with the applicant, there occurred some twelve separate incidents which, he alleged, constituted the bullying and harassment of him by Williams.

The judge carefully considered the evidence relating to each of those incidents in turn. His Honour did not accept the respondent’s version relating to the first eleven incidents, but did accept, broadly, the respondent’s account of the twelfth incident. Based on those findings, the judge was not satisfied that Williams bullied and harassed him over the period alleged. He therefore rejected the claim made by the respondent on that basis.

It was in that context, that the judge then turned to the last aspect of the claim by the respondent. While the respondent’s pleaded claim for psychiatric injury was based on the allegation that he had been bullied by Williams in the period that has been mentioned, in the course of trial, the claim broadened to include a claim in negligence based on an allegation that the applicant breached its duty of care to him by failing to properly intervene in the conflict that developed between the respondent and Williams. Before turning to the findings made by the judge in respect of that claim, it is necessary, first, to refer further to some of the findings the judge made in the course of rejecting the respondent’s claim that he had been subjected to bullying and harassment by Williams in the course of his employment by the applicant.

Before considering each of the twelve alleged incidents separately, the judge recorded his findings as to the reliability of the witnesses, including the respondent, in respect of that aspect of the claim. His Honour considered that the respondent was an unsatisfactory witness. The judge found him to be a very poor historian, and stated ‘… ultimately it was impossible to give any real credence to his account of events at the TAFE’.[2] In particular, his Honour found that the respondent had focused excessively on the issues which caused him to magnify the events that he recollected, that his account of events was exaggerated, that he tended to diminish matters that might adversely affect his account of his interaction with Williams, and that ultimately his description of constant bullying and harassment lacked credibility.
[2]Reasons [39].

In that background, as we have stated, the judge did not accept the respondent’s version of the first 11 incidents on which he relied. His Honour accepted the respondent’s version of the twelfth incident, as it was supported by evidence given by an independent witness who the judge found to be reliable, namely Mr Streader. It is necessary to refer in brief detail to the last five of those incidents.

The seventh incident was referred to as the ‘Good Friday incident’ of 22 March 2005. It concerned a conversation between Williams and the respondent relating to whether the respondent would be able to complete his work before the forthcoming Easter break. The respondent claimed that Williams was demeaning to him in that conversation. On the other hand, Williams stated that when he offered to assist the respondent, the latter became very aggressive and sought to intimidate him. The judge accepted Williams’ account. Relevantly, he concluded that, notwithstanding his rejection of the respondent’s evidence, ‘… the interaction (between the respondent and Williams) produced a major psychological reaction from Mr Johnson, and led to his absence from work for (at least) three weeks and resulted in his referral to a psychologist’.[3]
[3]Ibid, [328].

The eighth incident was described as the ‘in-house training incident’ of March 2005. That incident occurred around the same time as the Good Friday incident. It occurred in the context of an in-house training session, in which the respondent complained that Williams made another demeaning remark to him. Williams denied making that remark. The respondent then claimed that after the meeting he sought to speak to Williams, but was met with a verbal tirade from the latter. Williams denied that allegation, but did remember that the respondent cried at a meeting between the two men, in which the respondent told Williams ‘… that his teaching career was coming to an end’.[4] The judge rejected the respondent’s account, and accepted Williams’s account.
[4]Ibid, [336].

The ninth incident was referred to as the ‘giving of advice incident’ in mid-2005. That incident was based on the evidence of Mr Streader, which the judge did not accept, and it is not necessary to set out the details of it for present purposes.

The tenth incident was referred to as the ‘student cheating incident’ of November 2005. That incident occurred when the respondent detected that some students had cheated during a test paper that he had set for them. He alleged that Williams failed to properly support him in relation to that matter. In his evidence, the respondent stated that he felt particularly aggrieved by the incident, and that from that period up to early 2006 his psychological condition deteriorated. The judge found that there was no element of bullying or harassment involved in the particular incident, but that, rather, Williams was simply doing his job. He considered that the complaint by the respondent was typical of his propensity to identify any incident he could recall, and which caused him stress, as involving bullying by Williams. Relevantly, his Honour accepted that the episode ‘… was another blow to Mr Johnson’s psyche and confidence, particularly as it reinforced his critical view of any aspect of Mr Williams’ conduct’.[5]
[5]Ibid, [350].

The eleventh incident was referred to as ‘the things happen incident’ on 23 February 2006. That incident occurred when the respondent was conducting a class. A student, who was facing away from the respondent, rudely refused to put his telephone away and face him, when requested to do so. The respondent repeated that request loudly. The student then turned around and replied ‘things happen to people who threaten me’. As a result, the respondent was particularly upset. He began crying uncontrollably and was shaking. The judge noted that his account of his reaction was confirmed by Ms Olga Hunt, the workplace support manager of the applicant. On the next day, the respondent consulted his general practitioner, Dr Verhoef. The judge (unsurprisingly) found that the incident was not one of bullying and harassment. Relevantly, he was satisfied ‘… that this incident resulted in a major psychological upset to Mr Johnson, and that in Mr Johnson’s mind, this was another example of management ineptitude which reinforced his antipathy towards Mr Williams’.[6]
[6]Ibid, [360].

After that incident, the respondent was off work for a period of three weeks, returning to work on Monday, 13 March.

The final incident was referred to as the ‘March in-service meeting’ of 14 March 2006. On that date the automotive department conducted an in-service meeting for its staff in the conference room, under the leadership of Williams.

The respondent’s evidence was that during that meeting Williams ‘lashed out’ at him. He stated that Williams alleged, in front of those who attended the meeting, that he was not performing and was not contributing. As a result the respondent quickly became very upset and started to cry. Mr Streader, in his evidence, supported the respondent’s account of the meeting. He stated that the criticism of the respondent by Williams lasted for about 10 minutes before Streader put a stop to it. He said that during that period of time the respondent was ‘… in a state of crying and hunched over and deflated and just intimidated … ‘. In his evidence, Williams could not recall the episode. As we stated, the judge accepted the respondent’s account of it, as it was corroborated by Mr Streader.

As a result of that incident, the respondent left work at 4.00pm on that date ‘utterly shattered’, and remained off work until 26 March. He attempted to return to work on that day, but was unsuccessful and he left the workplace at 4.00pm. He has not returned to work since.

Having made those findings, the judge turned to the question whether the respondent had been subjected to bullying and harassment. In considering that question, he analysed the evidence as to the respondent’s psychiatric condition provided by his general practitioner, Dr Verhoef, his clinical psychologist (Dr Pastore), two consultant psychiatrists (Dr King and Dr Strauss), and a forensic psychologist (Dr Kennedy). Based on that material, the judge considered that the respondent was a complex person, with long-standing psychological issues, which were going to affect him with or without his difficulties in his relationship with Williams.[7] While his Honour found that there was no bullying or harassment of the respondent by Williams, nevertheless he accepted that, from early 2005, the respondent believed that he was being bullied.[8] He was also satisfied that the respondent was a very difficult employee, who was resentful of authority, particularly when it affected his lifestyle and work hours. The judge considered him to be obsessive about the way he was treated by his superiors, so that the smallest affront was viewed by him as an episode of bullying.[9] His Honour was satisfied that Williams did not set out deliberately or indeed inadvertently to belittle or harass the respondent. As a consequence, the judge held that the respondent had failed in his claim that he was subjected to harassment and bullying in the course of his employment.
[7]Ibid, [372].
[8]Ibid, [391].
[9]Ibid, [398].

The judge’s reasons on liability for breach of duty of care

With that background, it is necessary to set out the reasons given by the judge for upholding the claim made by the respondent, on the issue of liability, that the applicant had breached its duty of care to the respondent, in failing to take appropriate steps to manage the conflict that had developed between the respondent and Williams, as a result of which the respondent ultimately broke down in response to Williams’ conduct in the March 2006 in-service meeting.

The judge commenced his reasoning, on this aspect of the case, by referring to the principles that apply to a claim by an employee for psychiatric injury arising out of the carrying out of work duties. In particular, his Honour referred to the decision of the High Court in Koehler v Cerebos (Australia) Ltd[10] and of the Queensland Court of Appeal in Hegarty v Queensland Ambulance Service,[11] as summarised in the judgment of Beach J (as his Honour then was) in Taylor v Haileybury[12] and of Dixon J in Swan v Monash Law Book Cooperative.[13]
[10](2005) 222 CLR 44.
[11][2007] QCA 366.
[12][2013] VSC 58.
[13][2013] VSC 326.

Having reviewed those authorities, the judge returned to the Good Friday incident (of 22 March 2005). He noted that it was triggered by the respondent’s volatile reaction to Williams. Whatever the rights or wrongs of the incident, it was clear that, as a result, the respondent suffered a significant psychological reaction that put him off work for a number of weeks. The certificates issued by Dr Verhoef in the next three months alerted the applicant to the fact that the respondent was suffering aggravation of depression due to his interactions with his superior.[14] As a result of those certificates, the applicant was ‘… placed on notice of the risk that a psychological injury arising out of Mr Johnson’s employment … of an identifiable and recognisable psychiatric condition (depression) related directly to the relationship between two of its employees’.[15] The certificates should have alerted those responsible for the administration of the respondent’s return to work program to the ongoing issues between the respondent and Williams.[16] Thus, by June 2005 there was a ‘… foreseeable risk of psychiatric injury to Mr Johnson arising out of his relationship with Mr Williams and any confrontation between the two could give rise to further injury to [the respondent’s] mental state’.[17]
[14]Reasons [410].
[15]Ibid, [412].
[16]Ibid, [414].
[17]Ibid, [417].

His Honour then summarised his findings, on that aspect of the case, as follows:

So, in summary, by June 2005 the TAFE should have been aware that:
(a) there was a serious issue between Mr Johnson and Mr Williams;
(b)Mr Johnson was suffering from a psychological condition (identified as depression);
(c)the aggravation of Mr Johnson’s depression was related to his work and particularly his relationship with Mr Williams; and
(d)it was likely that any further interaction (or confrontation) between the two would cause further injury to Mr Johnson’s psyche’.[18]

[18]Ibid, [419].

Accordingly, in the circumstances, the judge held that the applicant’s duty of care was enlivened in that respect.[19]
[19]Ibid, [420].

The judge then turned to what he described as the ‘primary issue’, namely what response a reasonable employer, in those circumstances, would have adopted to that risk, and whether the applicant fell short of that response. In considering that question, the judge referred to the relevant authorities, including Nationwide News Pty Ltd v Naidu[20] and Brown v Maurice Blackburn Cashman.[21] His Honour repeated his finding that the applicant should have appreciated that there was a risk of psychological injury to the respondent as a result of continuing friction between himself and Williams by June 2005.[22] In those circumstances, he held that it was not reasonable for the applicant to do nothing about the situation, which is what actually occurred.
[20](2007) 71 NSWLR 471.
[21][2013] VSCA 122.
[22]Reasons [428].

The judge referred to evidence given by Mr Shevlin, the human resources manager of the applicant, that, in the particular circumstances, he would have investigated the complaints that were made to the medical practitioner, and taken steps to resolve the interpersonal dispute between Williams and the respondent. The judge also referred to a meeting between Ms Hunt and the respondent in October 2005, in which they discussed the Good Friday incident. The judge considered that that meeting, as well as Dr Verhoef’s certificates, should have alerted the applicant to the need to speak to Williams about his management of the respondent. That proposition was bolstered by the respondent’s evident fragility, which was demonstrated during the student cheating and ‘things happen’ incidents in late 2005 and early 2006.[23]
[23]Ibid, [435]–[436].

In those circumstances, the judge reached the following conclusions:

In summary, I am satisfied that by June 2005 a reasonable organisation in the position of the TAFE would have:
(a)arranged for mediation of the problems between the two men with the aim of endeavouring to resolve the conflict (which particularly seemed to be centred on the duties that Mr Johnson was required to perform); and
(b)counselled Mr Williams and Mr Johnson about their behaviour towards each other. In particular, Mr Williams (who was in a position to give directions and control Mr Johnson’s activities) should have been alerted to the mental health concerns raised in Dr Verhoef’s certificates, and the necessity to use ‘kid gloves’ in his dealings with him notwithstanding his frustration at Mr Johnson’s reaction during the Good Friday incident.

I am also satisfied that this message should have been repeated to Mr Williams after Ms Hunt’s meeting with Mr Johnson in October 2005 and again after the things happen incident.[24]

[24]Ibid, [438]–[439].

The judge added that he was not satisfied that Williams had breached any duty of care to the respondent. Unlike members of the applicant’s human resources department, Williams was not aware of the diagnosis of aggravation of depression due to his relationship with Johnson.[25]
[25]Ibid, [440]–[441].

Grounds of proposed appeal on liability

The applicant seeks to rely on three grounds of appeal in respect of the judge’s conclusions on the issue of liability, namely:

(1)The judge erred in finding that by June 2005 the applicant should have been aware that it was likely that any further interaction (or confrontation) between the respondent and Mr Williams would cause further injury to the respondent’s psyche.
(2)The judge erred in finding that it was not reasonable for the applicant to do nothing about the respondent’s situation.
(3)The judge erred in finding that an adequate response by the applicant required it to undertake the steps identified by his Honour.

Each of those proposed grounds of appeal, and indeed each of the proposed grounds of appeal on the issues of causation and damages, allege error by the trial judge in reaching a factual conclusion on the basis of which he found in favour of the respondent on the issue of liability.

The principles that apply to such a ground of appeal are well established, and for the purposes of this case, can be conveniently summarised as follows:

(1)The appeal before the court comes by way of re-hearing. Accordingly, the court is required to examine the record and to give the judgment which in its opinion ought to have been given at first instance.[26]
(2)Subject to (3) and (4) below, in general, an appellate court is in as good a position as the trial judge to decide on the proper inferences to be drawn from facts which are undisputed, or which, having been disputed, are established on the findings of the trial judge. In deciding the proper inference that is to be drawn, the appellate court should give respect and weight to the conclusion of the trial judge, but, once having reached its own conclusion, it must give effect to it.[27]
(3) In applying those principles, the appellate court should make due allowance for the advantages that are available to the trial judge, and in particular, the advantage the trial judge has in evaluating the credibility and reliability of witnesses, and of gaining an appreciation of the evidence, and the import of it, as it is given.[28]
(4)In particular, in cases in which a judge’s findings of facts are dependent on the judge’s assessment of the character and credibility of the witnesses, the advantage enjoyed by the judge in that respect extends to inferences that are drawn in that context.[29]
(5)Where the judge reaches a conclusion as to the evidence of a witness or witnesses of one party, such a conclusion may be demonstrated to be incorrect, if it is contrary to incontrovertible facts or uncontested testimony, or if (in a rare case) such a conclusion is either ‘glaringly improbable’ or ‘contrary to compelling inferences’.[30]

[26]Warren v Coombes (1979) 142 CLR 531, 537 (Gibbs ACJ, Jacobs and Murphy JJ); CSR Limited & Anor v Della Maddalena (2006) 224 ALR 1, 7 [16] (Kirby J); Allesch v Maunz (2000) 203 CLR 172, 181.

[27]Warren v Coombes (1979) 142 CLR 531, 551.

[28]Fox v Percy (2003) 214 CLR 118, 126 [23] (Gleeson CJ, Gummow and Kirby JJ); Abalos v Australian Postal Commission (1990) 171 CLR 167, 179 (McHugh J).

[29]Louth v Diprose (1992) 175 CLR 612, 626 (Mason CJ), 633 (Deane J), 639–40 (Dawson, Gaudron and McHugh JJ); McIntosh v Johnson (2013) 37 VR 301, 315 [73] (Buchanan and Whelan JJA and Hargrave AJA).

[30]Fox v Percy (2003) 214 CLR 118, 128 [28]–[29]; Devries v Australian Postal Commission (1993) 177 CLR 472, 479.

In relation to those five propositions, we venture the following three observations. First, while an inference is a conclusion based on established facts, nevertheless the interplay between the finding of a particular fact or facts, and the drawing of a conclusion, is not entirely discrete. The drawing of an inference, or reaching of a conclusion, is necessarily affected by precisely how and for what reasons a judge may have accepted, or rejected, a particular piece of evidence which is important to the drawing of that inference or conclusion. Secondly, in a civil proceeding, a judge may only draw an inference or reach a conclusion in favour of a party on whom the onus of proof lies, if that inference or conclusion is the more probable inference or conclusion available on the facts of which the judge is satisfied.[31] The question whether an inference is more probable than another may be affected by the judge’s view of particular facts relied on in support of any competing inference, or of facts relied on to contradict the inference ultimately formed by the judge.
[31]Holloway v McFetters (1956) 94 CLR 470, 480-1 (Williams, Webb and Taylor JJ); Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125, 129 (Winneke P), 141 (Tadgell JA); Chapman v Cole (2006) 15 VR 150, [14]; Fuller-Lyons v New South Wales [2015] HCA 31, [47].

Thirdly, the advantages enjoyed by a trial judge, in assessing witnesses, and drawing inferences, should not be underestimated. The judge has the opportunity of listening to and observing the witnesses, and considering the evidence as it is revealed over a period of time, and of reflecting on that evidence, and its effect, in the course of the trial. That perspective affords the trial judge a substantial advantage, in reaching relevant conclusions on the facts, that is not available to a court of appeal, which is confined to a reading of the transcript and an examination of the exhibits.

Taking into account those principles, we turn to the individual grounds upon which the applicant seeks leave to appeal on the issue of liability.

Proposed ground of appeal number 1

The first proposed ground seeks to impugn the finding by the judge that by June 2005 the applicant should have been aware (inter alia) that it was ‘likely that any further interaction (or confrontation) between [the respondent and Williams] would cause further injury to Mr Johnson’s psyche’.[32]
[32]Reasons [419].

It was submitted on behalf of the applicant that that finding was erroneous. At most, the evidence was capable of providing a basis for a finding that the applicant should have been aware of a ‘risk’ of further injury to the respondent’s psyche, but it did not support a finding that the applicant should have been aware that it was likely that any further interaction or confrontation would cause further injury.

In support of that contention, it was submitted that the certificates of incapacity issued by Dr Verhoef demonstrated that, towards the end of 2005, the respondent’s symptoms were settling or resolving, or described the respondent’s symptoms as being referrable to his back pain rather than his relationship with his supervisor. The respondent had a long history of difficult relationships with supervisors (including Mr Williams), but he had not previously suffered a breakdown of the kind that he sustained as a consequence of the in-service meeting of March 2006. Thus, there was nothing in the period from mid-June 2005 until March 2006 that was sufficient to put the applicant on notice that the respondent’s reaction to his difficulties with Mr Williams would be completely different from his previous responses.

In response, senior counsel for the respondent noted that the applicant does not dispute the judge’s finding that it was likely that any further interaction between the respondent and Williams would cause further injury to the respondent’s psyche. The applicant only disputes that the applicant should have been aware that that was ‘likely’. Counsel submitted that that finding by the judge was not in error. In any event, the concession by the applicant, that it was open to the judge to find that the applicant should have been aware of a risk of such further injury, was sufficient to enliven the applicant’s duty of care to prevent that risk coming to pass.

Further, it was submitted that Dr Verhoef’s certificates of capacity, issued between 24 March and 18 July 2005, referred to the aggravation of the respondent’s depression and anxiety as being due to the conduct of his supervisor or others at work to him. The later certificates only referred to a settling of the depression because the respondent was ‘keeping distance’ (from Williams). That step, taken by the respondent, could only be temporary, as Williams was his supervisor. Dr Verhoef’s certificates informed the applicant that the respondent’s psychological injury had been aggravated to the extent that he needed to seek medical help and have time off work, and that the aggravation had been precipitated by Williams’s conduct as perceived by the respondent. In those circumstances, the applicant ought to have been aware of a likelihood that psychological injury would occur again, unless the applicant took appropriate measures as found by the judge.

Before addressing the submissions made by the applicant in respect of ground 1, it is important to bear in mind that the duty of care owed by the applicant to the respondent, as its employee, was a duty to take reasonable care to avoid foreseeable risks of injury to the respondent.[33] Thus, in the case of psychiatric injury, the duty owed by the applicant to the respondent as its employee was to take reasonable care to avoid any foreseeable risk of such injury to the respondent arising from the circumstances of his employment. [34] It was not necessary for the judge to find that the applicant knew, or ought to have known, that it was ‘likely’ that any further interaction or confrontation between the respondent and Williams would cause further injury to the respondent’s psyche. The applicant does not take issue with the finding by the judge that there was such a foreseeable ‘risk’ of psychiatric injury to the respondent arising out of his relationship with Williams, of which the applicant was aware, or ought to have been aware.
[33]Leighton Contractors v Fox (2009) 240 CLR 1, 12; Czatyrko v Edith Cowan University (2005) 214 ALR 349, 353 [12].
[34]Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44, 57 (McHugh, Gummow, Hayne and Heydon JJ); Tame v New South Wales (2002) 211 CLR 317, 336 [29] (Gleeson CJ), 385 [201] (Gummow and Kirby JJ); Nationwide News Pty Ltd v Naidu & Anor (2007) 71 NSWLR 471, 476 [15] (Spigelman CJ), 502 [215]–[217] (Beazley JA); 533 [420] (Baston JA).

Thus, ground 1 does not seek to impugn that foundational finding of fact by the judge on the basis of which the applicant’s duty of care, in respect of potential psychiatric injury to the respondent, was enlivened. Rather, counsel submitted that the finding by the judge, that it was ‘likely’ that further interaction between the respondent and Williams would cause further injury to the respondent’s psyche, informed or coloured the judge’s consideration of the steps that the applicant was required to take to avert that risk of injury. However, counsel did not refer to any part of the judge’s reasoning, on that aspect of the case, that demonstrated that his conclusion, as to the steps that the applicant ought to have taken, was affected by the finding that is sought to be impugned by ground 1. Rather, and to the contrary, the judge’s reasoning, as to the steps that he considered the applicant ought to have taken to protect the respondent against psychiatric injury, was based on what the judge considered to be a reasonable response to the foreseeable ‘risk’ of such injury arising out of the continued difficult relationship between Williams and the respondent.[35]
[35]Reasons [421]–[422], [426]–[430].

In any event, we do not accept that the applicant has demonstrated any error by the judge in making the finding which is sought to be impugned by ground 1. As pointed out by counsel for the respondent, between 24 March 2005 and 18 July 2005, Dr Verhoef issued five certificates of capacity relating to the respondent. They described the respondent as suffering from an aggravation of depression (and, in the case of the first certificate, also anxiety) due to ‘inappropriate attitude of people at work (project manager)’ (the first certificate), and ‘after altercation with supervisor at work’ (the last four certificates). The respondent was initially certified unfit to return to work, as a result of that condition, for a period of three weeks. While, as counsel for the applicant points out, the second last certificate refers to a settling of the respondent’s depressive condition, it is significant that that certificate stated that the condition was ‘… now settled by keeping distance’.

In short, the certificates issued by Dr Verhoef, and received by the applicant, placed the applicant on notice at that time that the respondent was suffering from a depressive condition that was aggravated by the relationship between himself and his supervisor.

In addition, shortly after the Good Friday incident, Mr Williams had sent an email to management in which he described the incident. In that email, Mr Williams described the respondent as having reacted, in response to a benign question asked of him, in a very aggressive and abusive manner. That email constituted Mr Williams’s formal complaint about the respondent’s behaviour. In August 2005, Mr Williams sought out Ms Hunt to inquire about the delay with which that complaint was being investigated.

Thus, those who were responsible for the administration of the respondent’s return to work program were well aware, not only that the respondent had been seriously incapacitated by his perception of the conduct towards him by Williams, but, in addition, that the incident that triggered that incapacity was one in which the respondent appeared to have acted in a volatile and troubling manner to his superior. It placed the applicant on notice that there was a real problem in the relationship between the respondent and Williams, which had resulted in an unwarranted outburst by the respondent to Williams, and which had precipitated an episode of debilitating depression for the respondent.

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. Accordingly, the applicant has failed to make out a real prospect of success on ground 1. We would decline the applicant leave to appeal on that ground.

Grounds 2 and 3: whether the applicant responded reasonably to the risk

Grounds 2 and 3 are directed to the finding by the judge that the applicant did nothing in relation to the risk identified by him, and that such a response was not reasonable in the circumstances.

Ground 2 alleges that the judge erred in finding that the applicant did ‘nothing’ in relation to the risk which he identified, and that that was not a reasonable response. The applicant takes issue with that finding for two reasons. First, it is submitted that the evidence does not support the finding that the applicant did nothing. After Ms Hunt met with Williams in August 2005 about the complaint he made concerning the Good Friday incident of March 2005, she met twice with the respondent about that matter, and spoke to other staff members about it. After the ‘things happen’ incident in February 2006, she spoke to the respondent, sent him home, and attempted to assist him to return to work.

Secondly it is submitted that, in any event, it was not unreasonable for the applicant to do nothing in the circumstances. This was not a case of bullying or harassment. While the relationship between the respondent and Williams had its difficulties, such a circumstance is commonplace in workplaces. The respondent had never complained to the applicant about Williams. After July 2005, the certificates of incapacity issued by Dr Verhoef referred only to the applicant suffering depression secondary to his back condition. Two of the certificates that had referred to his depression related to his supervisor as having settled.

Ground 3 is directed to the finding by the judge that, in discharge of its duty of care to the respondent, the applicant ought to have arranged a mediation between the respondent and Williams, and ought to have counselled them about their behaviour to each other. It was submitted that the situation between the respondent and Williams was not unusual. Reasonable care did not require the applicant to actively intervene by mediating and counselling the individuals involved. Further, Ms Hunt had tried to engage with the respondent, but he was not responsive to her. The applicant had made some counselling services available to the respondent in 2005. The respondent did not make any request for any further intervention or assistance. In addition, the finding by the judge, that the applicant should have notified Williams of mental health concerns relating to the respondent, raised privacy issues of the kind referred to by Keane JA in Hegarty v Queensland Ambulance Service.[36]
[36][2007] QCA 366, [43].

In response to ground 2, counsel for the respondent submitted that the applicant in fact did nothing in relation to the respondent’s condition. The meetings in 2005 related to the complaint made by Williams about the respondent, and did not deal with the respondent’s issues concerning Williams’s perceived conduct to him. That conduct by the applicant could not be regarded as ‘doing something’, in the context in which the respondent had suffered a serious emotional breakdown in March 2005 arising from his dealings with Williams. Further, it was submitted that it would not be reasonable for the applicant to do nothing, as it did. The applicant knew, from Dr Verhoef’s certificates, that the respondent’s problems were caused by his perception of the conduct of Williams towards him. It would have been simple for the applicant to take the steps, which the trial judge considered should have been adopted by it.

In response to ground 3, counsel for the respondent referred to the evidence of Mr Shevlin, the human resources manager, as to the steps that he would have taken if he had received the incapacity certificates issued by Dr Verhoef in 2005. In particular, Mr Shevlin stated that, in those circumstances, he would have investigated the complaints that had been communicated to the medical practitioner, taken steps to resolve the interpersonal dispute he discovered during the investigation, supported the worker, and potentially mediated the dispute. The judge’s finding, as to the steps that the applicant ought to have undertaken, was consistent with that evidence. The applicant was a large, organised corporate body with a human resources department. In light of the information that it received, as set out in the certificates, the applicant ought to have monitored the situation, and intervened in the manner in which the judge concluded it should have.

Grounds 2 and 3 address the question as to what response, if any, the applicant, as a reasonable employer, ought to have made to address the reasonably foreseeable risk of psychological injury to the respondent (as found by the judge) arising from the difficulties that had arisen in relation to his relationship with Williams. The answer to that question, in the case of a psychological injury, is, generally, less straightforward than in the case of physical injury.

As Hayne J observed in Vairy v Wyong Shire Council,[37] the question of what a reasonable person, in the position of the defendant, would have done, is a prospective inquiry. His Honour stated:

The inquiry into the causes of an accident is wholly retrospective. It seeks to identify what happened and why. The inquiry into breach, although made after the accident, must attempt to answer what response a reasonable person, confronted with a foreseeable risk of injury, would have made to that risk. And one of the possible answers to that inquiry must be ‘nothing’.
…
When a plaintiff sues for damages alleging personal injury has been caused by the defendant’s negligence, the inquiry about breach of duty must attempt to identify the reasonable person’s response to foresight of the risk of occurrence of the injury which the plaintiff suffered. That inquiry must attempt, after the event, to judge what the reasonable person would have done to avoid what is now known to have occurred. Although that judgment must be made after the event it must seek to identify what the response would have been by a person looking forward at the prospect of the risk of injury.[38]

[37](2005) 223 CLR 422, 461 [124] and following.

[38]Vairy v Wyong Shire Council (2005) 223 CLR 422, 461 [124]–[126].

In Nationwide News Pty Ltd v Naidu,[39] Spigelman CJ, having referred to that passage from the judgment of Hayne J in Vairy, stated:

The prospective nature of the inquiry as to breach has particular significance in the case of the 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 of its employees. There is no breach of duty unless a situation can be seen to arise which requires intervention on a test of reasonableness.[40]

[39](2007) 71 NSWLR 471.

[40]Ibid, 477 [20].

In Hegarty v Queensland Ambulance Service,[41] the Court of Appeal of Queensland was concerned with an appeal by a plaintiff who had worked as an operational ambulance officer for some 15 years, during which he had been exposed to a number of traumatic events, which had caused him to develop post-traumatic stress disorder and an obsessive compulsive disorder. The plaintiff claimed that his employer did not have in place a system whereby his supervisors were trained to identify signs of dysfunction in personnel readily exposed to distressing and traumatic experiences. In the circumstances, the Court of Appeal upheld the appeal by the defendant. In the course of his reasons for judgment, Keane JA (as his Honour then was) stated:

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 cases 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 in the end depend on the vagaries and the 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.[42]

[41][2007] QCA 366.

[42]Hegarty v Queensland Ambulance Service [2007] QCA 366, [41]; see also Taylor v Haileybury [2013] VSC 58, [116] (Beach J).

In applying those principles, it is important to bear in mind the precise nature of the risk of injury, that the judge found that the applicant should have been aware of. The judge did not simply find that the applicant should have been aware that the respondent was suffering from a psychological condition. Rather, the judge’s finding went further than that. He found that by June 2005 the applicant should have been aware that: there was a serious issue between the respondent and Williams; the respondent was suffering from aggravation of a psychological condition (depression); the aggravation of that condition was related to his work, and particularly the respondent’s relationship with Williams; and it was likely (or, at least, there was a foreseeable risk) that any further interaction (or confrontation) between the two would cause further injury to the respondent’s psyche.

The judge concluded that in response to that particular risk, the applicant was required to take steps to ameliorate the difficulties in the relationship between Williams and the respondent, particularly as perceived by the respondent. The judge did not find, as asserted on behalf of the applicant, that the applicant ‘did nothing’. Rather, and importantly, the judge found that the applicant did nothing about ‘the situation’, that is, about the difficulties in the relationship between Williams and the respondent. The judge concluded that a reasonable employer in the position of the applicant ought to have taken the two steps, specified by him, to alleviate that situation, namely, by arranging for a mediation of the problems between the two men, and by counselling each of them about their behaviour to the other.

Counsel for the applicant submitted that the applicant had done something, in that Ms Hunt did speak to the respondent in October 2005 about the Good Friday incident that had occurred earlier in the year. However, Ms Hunt spoke to the respondent, on that occasion, in order to put to him the complaint made about him by Williams. Subsequently, Ms Hunt met again with the respondent to explain to him the findings that she had made in respect of that complaint. In neither of those meetings did the applicant provide any counselling to the respondent, or to Williams, concerning the difficulties in their relationship. Nor did those meetings constitute any step taken by the applicant to mediate the difficulties that had developed between them.

Similarly, it is true, as counsel for the applicant pointed out, that after the ‘things happen’ incident in February 2006, Ms Hunt intervened, sent the respondent home, and told him to see a doctor. Such conduct by Ms Hunt was commendable. However, again, it did not constitute the applicant doing anything in relation to the fraught relationship between Williams and the respondent, nor to addressing the potential risk to the respondent’s psychiatric health arising out of that difficult relationship.

Thus, the applicant did nothing to counsel or assist the respondent in his relationship with Williams. Even more significantly, in the context of this case, the applicant did not take any step to counsel or assist Williams in his dealings with the respondent, or to caution him as to the risk of psychiatric injury to the applicant arising out of the applicant’s perception of his relationship with Williams. Indeed, as noted by the judge, Williams was not ever made aware by the applicant that the respondent had been diagnosed to have suffered an aggravation of depression arising out of his relationship with Williams.

Senior counsel for the applicant submitted that it would have been a breach of the respondent’s privacy for the applicant to have informed Williams of his condition, and of the cause of it. In support of that proposition, counsel relied on an excerpt from the judgment of Keane JA in Hegarty v Queensland Ambulance Service.[43]
[43][2007] QCA 366, [46].

In that passage, Keane JA referred to issues of privacy, which might affect the dealing by the employer, in that case, with its employee who was suffering from stress. However that passage from the judgment of Keane JA must be read in its proper context. In Hegarty, it had been suggested on behalf of the plaintiff that the defendant’s supervisors should have been properly trained to identify possible signs of stress, and to suggest to the plaintiff that he should seek professional psychiatric help. In response to that proposition, Keane JA noted that an employee might not welcome an intrusion by a supervisor, that suggested that the employee is manifesting signs of psychiatric problems, to the extent that help should be sought. It was in that context that his Honour then made the observation on which reliance was sought to be placed by the applicant:

Employees may well regard such an intrusion as an invasion of privacy. Employees might rightly regard such an intrusion as a gross impertinence by a fellow employee, even one who is in a supervisory position.[44]

[44]Ibid, [46].

In our view, the judge was well justified in determining that the circumstances that had arisen called for intervention by the applicant, as a reasonable employer, of the kind specified by his Honour. As we have already pointed out, after the Good Friday incident, in March 2005, the respondent was off work for a period of time suffering from anxiety and depression. The initial certificates of capacity informed the employer that that psychological condition constituted a reaction by the respondent to the situation which had developed with his supervisor, and to what the respondent described as an ‘inappropriate attitude of people at work’. By mid-2005, the applicant was on notice that the respondent had suffered that psychological reaction, lasting for almost four months, because of that situation. The last two certificates did refer to the respondent’s condition as having settled, but, as earlier pointed out, the certificates attributed the resolution of the symptoms to the respondent keeping his distance from Williams.

Further, as found by the judge, the meeting between Ms Hunt and the respondent in October 2005, in the context of the certificates, should have alerted the respondent to the need to counsel Williams and Johnson about their interrelationship. In cross-examination, Ms Hunt stated that when she spoke to the respondent at that time, he was ‘very upset and often didn’t make a lot of sense’. She also stated that when she spoke with him about issues, he would get so upset that it bordered on aggression, but not towards her. In re-examination, she said that that aggression was directed to ‘mainly Mr Williams but management in general as well, of the issues with his hours of work and rostering’.

In addition, as pointed out by the judge, during that period the frailty of the respondent’s psychological state was made quite evident to the applicant, in his reaction to the Good Friday incident in 2005, to the student cheating incident in late 2005, and to the ‘things happen’ incident in February 2006.

In those circumstances, the evidence demonstrated that the respondent had suffered a significant aggravation of underlying depression in 2005. It was evident to the applicant that the respondent was vulnerable to stressful issues in the workplace, and in particular to the difficulties that had arisen in his relationship with Williams. In those circumstances, the judge was correct in concluding that a reasonable employer, in the position of the applicant, would have taken appropriate steps to address the underlying difficulties in the relationship between Williams and the respondent, in discharge of its duty to take reasonable care against the risk of injury to the respondent arising from those difficulties. For those reasons ground 2 should fail.

For the same reasons, the applicant has failed to establish ground 3. As found by the judge, the foreseeable risk of injury to the respondent arose out of the fraught relationship that he had with Williams. The obvious solution to that problem, and the appropriate response to that risk, would have been to intervene in the relationship, by counselling both men, and by mediating between them. Neither of those steps would have been particularly onerous. As senior counsel for the respondent pointed out, the applicant is a large, well-resourced organisation, with a human resources department. The steps, that the trial judge found the applicant ought to have taken, were neither burdensome nor complex. At the risk of repetition, the foreseeable risk of injury to the respondent’s health arose from the difficulties in the relationship between himself and Williams. It was that risk that the applicant was required to address. Given that the underlying foundation of the risk was the fraught relationship between the two men, the exercise of reasonable care on behalf of the employer required it to take steps to address it, in the manner found by the judge.

In those circumstances, the applicant has failed to make out grounds 2 and 3 of the application. We would not grant leave to appeal on those grounds.

Ground 4 (causation)

The fourth ground, relied on by the applicant, is that the trial judge erred in finding that the breach by the applicant of its duty of care to the respondent was a cause of psychiatric injury to the respondent.

Before turning to the submissions made in respect of that ground, it is necessary to set out relevant aspects of the judge’s findings on the issue of causation.

The judge commenced that aspect of his reasons by accepting that Williams ‘blasted’ the respondent at the in-service meeting of 14 March 2006. He noted that the confrontation went on for some time, and reduced the respondent to tears. His Honour stated ‘there is no doubt that his precarious mental state was further affected’.

The judge further concluded that if Williams had received appropriate counselling concerning his dealings with the respondent, the March in-service meeting would have been handled differently. Williams would not have contemplated ‘blasting’ the respondent, particularly if he knew of the latter’s fragile psyche. Accordingly, his Honour was satisfied that the breach by the applicant of its duty of care to the respondent, in failing to provide mediation and counselling services after mid-2005, was a cause of the respondent’s breakdown resulting from the conduct towards him by Williams at the March meeting.

In dealing with the question of damages, the judge elaborated on his finding that Williams’ conduct, in the March meeting, was a cause of the respondent’s psychiatric injury. He noted that the respondent’s psychological state was patently fragile during the period from mid to late 2005 until early 2006. The ‘things happen’ incident of February 2006 ‘also took a significant toll on his mental state’.[45] In his report, the psychiatrist, Dr Pastore described it as ‘almost the straw that broke the camel’s back’. Thus, the judge considered that the evidence established that the respondent had significant long-standing psychological issues in struggling to cope with his work environment, and that he was demoralised by his work situation.
[45]Reasons [465].

The judge then noted that the only evidence directed specifically to the March in-service meeting was that of Dr Pastore, who described the effect of that meeting as being ‘very critical’ in the development of his condition. His Honour was sceptical about Dr Pastore’s conclusions, as he did not mention the March in-service meeting in any of his reports. The judge noted, from the 2002 questionnaire, that the respondent had a tendency to become obsessed and preoccupied with wrongs done to him by others, so that there was a significant risk that any interaction between himself and Williams could have produced the final insult to his psyche. In that context, the judge was ‘convinced’ that the respondent would not have continued to work as a TAFE teacher for much longer, even if the March in-service meeting had not occurred. He stated, ‘I think that incident was simply the final straw that broke a particularly fragile camel’s back’.[46]
[46]Ibid, [476].

The applicant takes issue with the finding, by the judge, that the March in-service meeting was a cause of the respondent’s injury, for three reasons. First, it was submitted that the weight of the medical evidence did not support a finding that Williams’ conduct at that meeting was a cause of the respondent’s breakdown. Dr Verhoef’s notes did not refer at all to that meeting. The reports of Dr King, a consultant psychiatrist, focused on the ‘things happen’ episode in February 2006 as the incident that precipitated the respondent’s psychiatric collapse. In his evidence, the respondent himself stated that before the ‘things happen’ incident, his psychological state was ‘rock bottom’. It was submitted that, in those circumstances, the evidence established that the ‘last straw’ was in fact the things happen incident on 23 February 2006.

Secondly, it was submitted that the judge found that if Williams had received appropriate counselling, it was likely that he would have handled the March 2006 in-service meeting differently. It was submitted that, in that connection, the judge erred in finding that Williams ‘blasted’ the respondent at the in-service meeting. In fact, the term ‘blasted’ had been used by Mr Streader in describing a different incident in February 2005, and there was no suggestion Williams was aggressive in that way in the March in-service meeting.

Thirdly, it was submitted that the judge’s finding on causation was inconsistent with his findings in relation to the respondent’s personality and psychology. The judge found that the respondent was a difficult employee, who perceived the smallest affront to him as an episode of bullying. In those circumstances, the judge should not have concluded that some mediation and counselling would have made any difference to the relationship between himself and Williams.

In response, it was submitted that the judge was correct in finding that the March in-service incident was a cause of the respondent’s final breakdown. That breakdown took place after the meeting. Mr Streader’s description of that meeting depicted Williams conducting himself in an aggressive manner to the respondent. As a consequence, the respondent became distraught, so much so that Streader felt constrained to tell Williams that he had to stop. The event was a harrowing one for the respondent, and had a significant effect on him. He had been keen to return to work after the incident. He made one attempt to do so on 27 March, but he became extremely anxious the closer he came to work on that day.

It was pointed out that the respondent had been a TAFE employee from 1985, that he enjoyed his work, and that he was recognised as a good teacher. He did not become unfit to work until after the mid-March 2006 incident. In those circumstances, it was submitted that the judge was correct in finding that the approach by Williams to the respondent on that day was a cause of his final breakdown.

It is correct, as the applicant points out, that none of the medical evidence provided direct support for the finding by the judge that the conduct of Williams, at the March in-service meeting, was a cause of the final psychological breakdown of the respondent. The judge did refer to Dr Pastore’s evidence that provided some such support, but, for the reasons he stated, the judge discounted that evidence.

Nevertheless, there was a significant body of circumstantial evidence which provided firm support for the judge’s conclusion, on the balance of probabilities, that the conduct of Williams at that meeting was a material cause of the breakdown suffered by the respondent.

On any view of the evidence, the respondent was particularly vulnerable from a psychological point of view. As noted by the judge, the evidence demonstrated that the respondent had significant long-standing psychological issues, in the context of which he struggled to cope with his work environment. In the period of twelve months leading to the March in-service incident, further events occurred which constituted insults to the respondent’s psyche. As the judge found,[47] the student cheating episode, of November 2005, was ‘another blow to Mr Johnson’s psyche and confidence, particularly as it reinforced his critical view of any aspect of Mr Williams’ conduct’. Similarly, his Honour was satisfied that the ‘things happen’ incident of 23 February 2006 ‘resulted in a major psychological upset to the respondent, and, to the respondent’s perception, was another example of management ineptitude which reinforced his antipathy to Williams’.[48] In his evidence, the respondent stated that after the incident of 23 February 2006, his condition improved, but he still felt that he was in a vulnerable state and was still quite stressed. It was in that state that he then attended the in-service program on 14 March.
[47]Ibid, [350].
[48]Ibid, [360].

The applicant has criticised the judge’s description of the conduct of Williams in that meeting, submitting that the judge erred in stating that Williams ‘blasted’ the respondent. However, the judge accepted the description of what occurred in the meeting given by the witness Mr Streader. Mr Streader stated that although the meeting was intended to be a team building exercise looking at the history of the team, the focus very shortly turned solely to the respondent. Everything that was stated by Williams focused on the respondent in a negative manner. That went on for ‘about 10 minutes’. During that period, the respondent became very teary eyed, he was hunched up and very upset. Mr Streader told Williams that he had to stop, because ‘I could just see that it wasn’t healthy’. He said that things then came to a halt. He said that the respondent remained hunched over and teary eyed. Streader told the respondent to go home, and said ‘the man didn’t look well’.

It was following that incident that the respondent went off work. He attempted to return to work on 27 March, but felt unable to do so. He has not worked since. The respondent had been employed by the applicant for more than 20 years. Notwithstanding his psychological issues, and the deterioration of them, he had managed to continue at work between mid-2005 and February 2006. He also managed to return to work, albeit with difficulty, after the ‘things happen’ incident of February 2006.

Taking those matters into account, the judge was not only justified, but also correct, in concluding that the conduct of Williams in the March in-service meeting constituted ‘the final straw’ that broke a fragile camel’s back. As such, his Honour was correct in finding that that conduct constituted a cause of the respondent’s psychological incapacity.

The second question that arises, in respect of the issue of causation, is whether the judge was correct in finding that the failure of the applicant to give Williams appropriate advice and counselling, concerning the respondent’s condition, would have made any difference to the relationship between the respondent and Williams, and thus prevented the respondent’s breakdown.

In that connection, the judge found that Williams was not aware of the respondent’s diagnosis of aggravation of depression arising from his relationship with Williams. His Honour noted that Williams had said that he felt ‘incredibly sorry’ for the respondent following the Good Friday incident one year previously in March 2005. Williams considered that the respondent was a good employee. In those circumstances, the judge was well justified in concluding that if Williams had been given the appropriate information and counselling, he would have adopted a different approach to the respondent at the March in-service meeting. Thus, the judge was correct in concluding that the breach by the applicant, of its duty of care to the respondent, was a cause of his breakdown in March 2006, and thus a cause of his psychological injury.

Furthermore, it must be borne in mind that, on the issue of causation, the judge had the advantage, not shared by this Court, of assessing the evidence of the witnesses who were important on that issue. The conclusion by the judge, that the conduct of Williams in the March in-service meeting precipitated the respondent’s psychological breakdown, was an inference based on his assessment of the respondent’s psychological state immediately before the March in-service meeting, and his Honour’s assessment of the evidence of Streader as to how Williams conducted himself in that meeting, and how the respondent reacted to that conduct, in that meeting. Similarly, the judge’s conclusion that if the applicant had given Williams appropriate counselling as to his dealings with the respondent, he would have adopted a different approach in the March in-service meeting, depended at least in part on the judge’s assessment of Williams, who he had the opportunity to observe in the witness box. In that way, both conclusions drawn by the judge, critical to his ultimate conclusion on causation, were materially connected with, and influenced by, his Honour’s assessment of witnesses. In that way, the judge had an advantage, not shared by this Court, in determining whether those conclusions were more probable in the circumstances.

For those reasons, we would decline the applicant leave to appeal on ground 4.

Grounds 5, 6 (damages)

Grounds 5 and 6 of the application relate to the judge’s assessment of damages. Ground 5 contends that the judge’s assessment of damages for pecuniary loss of $122,000 was excessive having regard to the judge’s findings of fact. Ground 6 contends that the judge’s assessment of pain and suffering damages at $110,000 was manifestly excessive.

Before considering those grounds, it is necessary to set out, briefly, the judge’s reasons on the issue of damages. His Honour commenced by noting that the principles stated in cases such as Malec v JC Hutton Pty Ltd[49] were relevant, in light of his conclusions as to the respondent’s precarious mental state before the March in-service meeting. The judge noted that despite his invitation, neither counsel was prepared to grapple with the prospect that he might reach the conclusion on the basis of which he ultimately found in favour of the respondent on the issue of liability. That problem was compounded by the fact that, with one highly qualified exception, none of the medical evidence addressed the discrete effects of the March in-service meeting. However, his Honour noted that, notwithstanding those difficulties, he was required to do the best he could to determine an appropriate award of damages.
[49](1990) 169 CLR 638, 642-3.

The judge considered that there were three matters which were relevant to his analysis. First, as a result of his psychological condition, the respondent was unable to work, his lifestyle and enjoyment of his past-times were significantly affected, and he remained fixated with the way he was treated while at the TAFE. Secondly, before the March 2006 in-service meeting, the respondent was contemplating leaving the teaching profession as soon as he could. Thirdly, his psychological state was patently fragile during the period from mid to late 2005 to early 2006. In that period he was battling to cope with the normal incidents of teaching. A number of the incidents, including the ‘things happen’ incident, took a toll on his mental state. The respondent had significant long-standing psychological issues and was struggling to cope with his work environment. In that context his Honour found that the March in-service meeting was the ‘final straw that broke a particularly fragile camel’s back’.[50]
[50]Reasons [476].

Based on those findings, the judge was satisfied that the respondent’s problems with his anxiety and depression would have affected him, regardless of the March in-service meeting, within two years of the date of that incident. In other words, his Honour was satisfied that any adverse effects on the respondent’s psyche resulting from the March in-service meeting would have been subsumed by his overall psychiatric condition within two years of the March in-service meeting.[51] On that basis, he awarded the respondent pain and suffering damages in the sum of $110,000.
[51]Ibid, [480].

The judge noted that the undiscounted amount for past loss of earnings was $561,404, together with approximately $48,125 in relation to future loss of earning capacity to the age of 60. Applying the principles stated by the High Court in Malec, the judge considered that the prospect of the respondent working to the age of 60 in the normal course of events was no more than 20 percent. Accordingly, he considered that the claim for economic loss should be reduced by a factor of 80 percent, producing damages for that item in the sum of $122,000. His Honour noted that that assessment tallied, in a general sense, with what the respondent would have earned if he had remained in employment for approximately two years after February 2006.[52]
[52]Ibid, [484].

In support of ground 5, the applicant submitted that the judge erred in his assessment of pecuniary loss damages. His Honour found that in all probability the respondent would, in any event, have worked for no more than two years. It was submitted that the judge ought to have applied a discount, to the amount of loss sustained by the respondent during that period, on the basis that the respondent’s anxiety and depression might have rendered him unable to work at some stage within that period of time.

The submission made by the applicant is misconceived. The discount applied by the judge was to the claim by the respondent for economic loss damages sustained by him up to the working age of 60 years. There is nothing in the evidence that required the judge to apply a higher discount factor than 80 percent. The fact that the judge found that, on the balance of probabilities, the respondent would have ceased work after two years in any event, did not oblige the judge to apply a greater discount to the economic loss. If the judge had based his assessment of pecuniary loss damages on the two year period, his Honour would have been obliged to factor in, in favour of the respondent, some allowance for the possibility that the respondent might have worked for a period beyond the two year mark. In our view, the approach taken by the judge was quite appropriate. His Honour was able to cross-reference the discount factor (80 percent) with his assessment, on the probabilities, of when it was likely that the respondent would have ceased work in any event. In that way, the assessment by the judge was correct, and appropriate.

In support of ground 6, the applicant contends that the assessment of pain and suffering damages of $110,000 was manifestly excessive because, as the judge found, the evidence pointed to the respondent suffering long-standing psychological issues, in the context of which he was unlikely to continue working for more than two years in any event.

The authorities make it clear that, in order to succeed on appeal from an assessment by a judge of general damages, the appellant must demonstrate that the judge has acted on a wrong principle, or misapprehended the facts, or, for some other similar reason, has made a wholly erroneous estimate of the damages suffered. It is not enough that the appellate court might have awarded a different sum.[53] The appellant does not point to any particular error made by the judge in the assessment of general damages. Rather, it relies solely on the ground that the assessment is ‘manifestly excessive’. As we have noted, the judge found that as a result of his psychological condition, precipitated by the March in-service meeting, the respondent became unable to work, his lifestyle and enjoyment of past-times were significantly affected, and he remained fixated as to how he was treated by the applicant. While an assessment of general damages must take into account that, in any event, it was probable that the respondent would have been significantly affected in his life within the next two years, nevertheless the amount awarded by the judge to the respondent in respect of his pain and suffering damages is not manifestly excessive.
[53]CSR Ready Mix (Australia) Pty Ltd v Payne [1998] 2 VR 505, 508 (Winneke P); Wellington Shire Council v Steedman [2003] VSCA 115, [29].

For the above reasons, we do not consider that grounds 5 and 6 have a real prospect of success. We would decline the applicant leave to appeal in respect of those grounds. They are not reasonably arguable.

Cross-application for leave to appeal

The cross-application for leave to appeal, in respect of the award of damages to the respondent, contains six grounds, which we paraphrase as follows:

(1)The judge erred in finding that within two years after the March 2006 in-service meeting, the respondent would have been in exactly the same psychological condition as he currently is due to the other events in his life which impacted on his psyche.
(2)The judge erred in finding that the prospect of the respondent working to age 60, absent the effects of the March in-service meeting, was no more than 20 percent.
(3)The judge’s assessment of the prospects of the respondent working to age 60 at 20 percent, absent the effects of the March in-service meeting, was unreasonably low.
(4)The judge made his assessment of the prospect of the cross-applicant working to age 60, absent the effects of the March in-service meeting, and came to the conclusion that the cross-applicant would have been in exactly the same psychological condition as he currently is due to other events in his life, without taking into account properly:

(a) The cross-applicant’s breakdown was the result of Williams’ behaviour at the March 2006 in-service meeting, which behaviour was well out of the ordinary.

(b) The respondent was only 51 years of age in March 2006, he had worked for 20 years with the applicant without difficulty, he was a valued employee, and he only had a few years to go to the age of 60.

(c) The cross-applicant gave evidence of his intention to work to the age of 60.

(d) Dr Verhoef gave evidence that if the cross-applicant had not had a psychological breakdown in March 2006 he would have been capable of teaching on a restricted basis.

(5)The judge made his assessment of the cross-applicant working to age 60, absent the effects of the March 2006 in-service meeting, and came to the conclusion that the cross-applicant would have been in exactly the same psychological condition as he currently is due to other events, on the basis of an erroneous view of the evidence of Mr Brittle and Dr Strauss.
(6)The trial judge made his assessment of the prospect of the cross-applicant working to age 60, absent the effects of the March 2006 in-service meeting, and came to his conclusion that the cross-applicant would have been in exactly the same psychological condition as he currently is due to other factors, without any expert evidence to that effect.

In support of those grounds, it was submitted that the questionnaire, which the cross-applicant completed for Mr Brittle in 2002, did not justify the view that in 2006 he was still contemplating leaving the teaching profession as soon as he could. In fact, the cross-applicant did not resign until after the events at the in-service meeting in March 2006, notwithstanding the issues that he had with his working situation, and his psychological condition. The cross-applicant’s breakdown was the result of Williams’ behaviour at that meeting, which was out of the ordinary. Dr Verhoef gave evidence that if the cross-applicant had not had the psychological breakdown, he would have been able to continue working. The cross-applicant had been an employee of the cross-respondent for almost 20 years, he had got on well with some of his fellow teachers, and he was a good teacher who enjoyed his work. Notwithstanding his difficulties, he had coped with his teaching duties until the March 2006 meeting. Accordingly, it was submitted that the judge erred in proceeding on the basis that the cross-applicant would only have worked for another two years, and that by that time he would have been in exactly the same psychological condition as he now is.

The cross-applicant has not demonstrated any error in the assessment of damages by the judge. The respondent’s answers to the questionnaire in 2002 related to a conflict with his supervisor four years previously. The judge concluded that that conflict (in 1998) had had a ‘profound and ongoing effect on Mr Johnson’s ability to function, and … it produced episodes of stress, anxiety and depression’.[54] In addition, the judge accepted the evidence of Williams that, after the Good Friday incident of March 2005, the cross-applicant told him that he was not enjoying his work, and that he was looking forward to getting out of it. Based on that evidence, the judge was entitled to act on the basis that the cross-applicant was contemplating leaving the teaching profession as soon as he could.
[54]Reasons [248].

More significantly, the judge was justified in finding that, even in the absence of the events of the March 2006 in-service meeting, it is likely that the cross-applicant would have been in the same condition as he is now, and that he would have ceased work, two years after that date. The judge was well justified in finding that the cross-applicant’s psychological state was particularly fragile in the period between mid-2005 and early 2006. To repeat, he had had long-standing depression and anxiety problems. The Good Friday incident of March 2005 had been sufficient to trigger an exacerbation of his underlying depression that was of sufficient seriousness to require him to take three weeks off work. The certificates of capacity evidenced that the cross-applicant continued to suffer from that aggravation of his depression for a period of some four months. As found by the judge, the student cheating incident in November 2005, and the things happen incident of February 2006, were additional significant stressors to the cross-applicant’s psyche. In his own words, when the cross-applicant returned to work on 13 March 2006 (one day before the March in-service meeting), his psychological state was vulnerable. Further, as the judge found, the cross-applicant had a tendency to become obsessed and preoccupied with his perception of wrongs done to him by others. Thus, there was a significant risk that any interaction between himself and Williams (no matter how benign) could have produced a final insult to his psyche which would have caused him to cease work.[55]
[55]Reasons [475].

In those circumstances, the judge was well justified in characterising the March in-service incident as one that was ‘simply the final straw that broke a particularly fragile camel’s back’.[56] The absence of any medical evidence to that effect does not stand in the way of such a factual finding. Indeed, the factors to which we have referred compel such a finding. In those circumstances, the cross-applicant has not demonstrated any error by the judge in his assessment of damages. In particular, the cross-applicant has not demonstrated any error by the judge in determining that there should be an 80 percent discount applied to his claim for loss of earning capacity.
[56]Ibid, [476].

Moreover, the judge’s finding, that within two years after the March 2006 in-service meeting, the respondent would in any event have been in the same psychological condition, if that meeting had been conducted differently, was, again, based significantly on the judge’s assessment as to the respondent’s psychological state immediately before that meeting took place. In making that assessment, the judge had the advantage, not shared by this Court, of hearing and observing the evidence given by the respondent, and other witnesses, as to the respondent’s level of functioning and his condition in the period leading up to that meeting.

For these reasons, none of the grounds relied on by the cross-applicant, in support of his cross-application, have a real prospect of success. Accordingly, we would decline the cross-applicant leave to cross-appeal on the basis of those grounds.

Before departing from the application, and the cross-application, on the issue of damages, we should refer to the comment made by the judge[57] that, despite his invitation, neither counsel was prepared to grapple with the prospect of the conclusions that he reached on the issue of liability. Having reviewed an extract of the transcript of counsel’s final addresses, it would appear that senior counsel for the applicant dealt cursorily with one aspect of that matter. However, it appears that senior counsel for the respondent did not address the judge at all on it. As the judge noted, the issue that he had to deal with was difficult. His Honour was thus left without assistance on that aspect of the case. The lack of such assistance made his task more difficult. Notwithstanding that lack of assistance, neither side has been able to establish any error by the judge in his assessment of the respondent’s damages. It is incongruous that, notwithstanding counsel’s lack of assistance on that issue at trial, each party in this application nevertheless has sought to impugn the findings that the judge made on the issue.
[57]Ibid, [459].

Conclusion

Accordingly, the application by the applicant for leave to appeal, and the cross-application by the respondent for leave, should each be dismissed.

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Box Hill Institute of TAFE v Johnson [2015] VSCA 245

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[2015] VSCA 245

10 September 2015