Elisha v Vision Australia Limited

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HIGH COURT OF AUSTRALIA

GAGELER CJ,
GORDON, EDELMAN, STEWARD, GLEESON, JAGOT AND BEECH‑JONES JJ

ADAM ELISHA  APPELLANT

AND

VISION AUSTRALIA LIMITED  RESPONDENT

Elisha v Vision Australia Limited

[2024] HCA 50

Date of Hearing: 16 October 2024
Date of Judgment: 11 December 2024

M22/2024

ORDER

1.Appeal allowed with costs.

2.Set aside orders 2 to 6 of the orders of the Court of Appeal of the Supreme Court of Victoria made on 28 November 2023 and, in their place, order that the appeal be dismissed with costs.

On appeal from the Supreme Court of Victoria

Representation

P D Herzfeld SC with E Makowski and S D D Puttick for the appellant (instructed by Arnold Thomas & Becker Lawyers)

P M O'Grady KC and S E Gladman SC with L R Howard for the respondent (instructed by IDP Lawyers)

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

  1. This appeal concerns the availability of damages for psychiatric injury to an employee in circumstances where the employee was dismissed following a disciplinary hearing that was described by the primary judge as a "sham". The issues concern damages for breach of a contractual term concerning the conduct of the disciplinary hearing and for the tort of negligence. In relation to breach of contract, the questions that arise are: (i) whether the particular contract of employment incorporated the employer's disciplinary policies as terms of the contract; (ii) whether liability for psychiatric injury caused by the employer's breach of that contract is beyond the scope of the employer's contractual duty concerned with the manner of dismissal; and (iii) whether liability for psychiatric injury was too remote in the circumstances of the particular contract.

  2. The answers to each of those questions are: (i) the particular contract did incorporate the employer's disciplinary policies as terms of the contract; (ii) subject to the particular terms and context of any particular contract, liability for psychiatric injury is not beyond the scope of a contractual duty concerned with the manner of dismissal; and (iii) liability for psychiatric injury was not too remote, particularly in the serious (and unchallenged on this appeal) circumstances of breach that were found by the primary judge.

  3. For the reasons below, the appeal should be allowed and orders should be made restoring the primary judge's orders for damages for the psychiatric injury suffered by the employee. It is unnecessary to consider the further issue raised on this appeal concerning the liability of an employer for psychiatric injury of an employee based on the tort of negligence.  

    Background facts and procedural history

  4. From 2006, the appellant, Mr Elisha, was employed by the respondent, Vision Australia Limited ("Vision Australia"), as an adaptive technology consultant. Mr Elisha's employment with Vision Australia was governed by a written employment contract signed on 27 September 2006. That contract was referred to on appeal as the "2006 Contract". Mr Elisha's employment duties involved setting up or assisting with software and…

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Details
Case
[2024] HCA 50
Decision Date

CaseChat Overview and Summary

The appeal concerned Elisha (the appellant) and Vision Australia Limited (the respondent). The dispute arose from the termination of Mr Elisha's employment following an incident during work-related travel. Mr Elisha alleged he suffered a major depressive disorder as a result of the manner of his dismissal, which he contended breached his employment contract. The High Court of Australia was required to determine whether Vision Australia was liable for damages for psychiatric injury caused by the employer's breach of contract, specifically concerning the manner of dismissal, and whether the rule in *Addis v Gramophone Company Ltd* precluded such recovery. The court also considered whether the damage was too remote and whether Vision Australia's disciplinary procedure was incorporated as a term of Mr Elisha's employment contract.

The High Court's reasoning focused on the incorporation of the disciplinary procedure into the employment contract. The court held that the 2006 Contract, which stipulated that employment conditions would be in accordance with Vision Australia's Policies and Procedures and that breach of these could result in disciplinary action, incorporated the 2015 Disciplinary Procedure. The court applied the principle that the meaning of contractual terms is determined by what a reasonable person would understand them to mean, considering the text and the common intention of the parties. The court found that Vision Australia's contention that the disciplinary procedure was not a term of the contract was without merit.

The High Court allowed the appeal, setting aside the orders of the Court of Appeal and restoring the primary judge's orders for damages for the psychiatric injury suffered by Mr Elisha. The court found that the employer's breach of contract in failing to follow its own disciplinary procedure in dismissing Mr Elisha led to his psychiatric injury, and that such damages were not precluded by the rule in *Addis v Gramophone Company Ltd* nor were they too remote. The court deemed it unnecessary to consider the further issue of the employer's liability in tort for psychiatric injury based on negligence.

Orders

Orders of the court

1. Appeal allowed with costs.

2. Set aside orders 2 to 6 of the orders of the Court of Appeal of the Supreme Court of Victoria made on 28 November 2023 and, in their place, order that the appeal be dismissed with costs.

Background

Background to the litigation

For the reasons below, the appeal should be allowed and orders should be made restoring the primary judge's orders for damages for the psychiatric injury suffered by the employee. It is unnecessary to consider the further issue raised on this appeal concerning the liability of an employer for psychiatric injury of an employee based on the tort of negligence. Background facts and procedural history From 2006, the appellant, Mr Elisha, was employed by the respondent, Vision Australia Limited ("Vision Australia"), as an adaptive technology consultant. Mr Elisha's employment with Vision Australia was governed by a written employment contract signed on 27 September 2006. That contract was referred to on appeal as the "2006 Contract". Mr Elisha's employment duties involved setting up or assisting with software and hardware systems for the vision impaired. In the performance of his employment duties, Mr Elisha visited homes and workplaces across Australia. Between December 2014 and July 2015, Mr Elisha was treated by a general practitioner and a psychologist for anxiety and depression. The psychologist considered that Mr Elisha had "significantly heightened sensitivity to particular sounds", "chronic workplace stress" and "interpersonal difficulties with particular staff members". On 23 and 24 March 2015, Mr Elisha was involved in an incident while he was staying in a hotel in rural Victoria during travel for his work duties. The incident concerned one of the hotel's proprietors, Ms Trch. The circumstances of the incident were disputed but the essence of the incident involved allegations that Mr Elisha had telephoned the reception of the hotel at around 12.30am and complained of a noise emanating from outside his room. Mr Elisha was moved to another room at around 1am. Mr Elisha subsequently went on a family holiday. While Mr Elisha was away, two other employees of Vision Australia stayed at the same hotel and were informed of Ms Trch's account of the incident. Ms Trch alleged that Mr Elisha had been aggressive and intimidating during the incident, including while checking out of the hotel the next morning. The two employees reported the matter to their manager, Ms Deshayes. The matter was then escalated to Mr Elisha's manager, Ms Hauser. Since 2011 or 2012, Mr Elisha's relationship with Ms Hauser had been strained. Mr Elisha's evidence was that Ms Hauser had been "micromanaging" and "in general unpleasant to communicate with". On 8 May 2015, after being informed of the hotel incident, Ms Hauser informed the Human Resources Manager of Vision Australia, Mr Van Dyk, and a member of Vision Australia's "People and Culture" department, Ms Eagle. In informing the others, Ms Hauser's email included the following:"Unfortunately, whilst this should surprise me, it doesn't. I have had verbal reports to me about [Mr Elisha's] aggressive behaviour in the past, and I have had conversations with him over the years, but he has always managed to make excuses and explain his actions. Most recently, I sent him an email requesting that he stop parking in the visitors car park, and he responded to me very aggressively. However, in this instance, there is no excuse."

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

GAGELER CJ, GORDON, EDELMAN, GLEESON AND BEECH-JONES JJ

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: GAGELER CJ, GORDON, EDELMAN, GLEESON AND BEECH-JONES JJ

Vision Australia initially relied upon three grounds of contention, which, at the hearing before this Court, were reduced only to a contention that the 2015 Disciplinary Procedure was not a term of the 2006 Contract. Vision Australia abandoned a contention that any duty of care in tort to provide a safe system of work was not engaged because the risk of recognised psychiatric injury was not foreseeable, or that any such duty had not been breached. The incorporation of the 2015 Disciplinary Procedure It is necessary to begin with the contention that the 2015 Disciplinary Procedure was not incorporated as a term of the 2006 Contract. There was no dispute as to the principles to be applied in determining whether the 2006 Contract had incorporated terms by reference. There was no challenge in this Court to the conclusion of the Court of Appeal that neither the Community Employment, Training and Support Services Award 1999 ("the 1999 Award") nor the Vision EA was incorporated by the term of the 2006 Contract which provided that Mr Elisha's engagement was governed by the 1999 Award.[23] The issue concerning the subject matter of the terms incorporated was confined in this Court to whether the Court of Appeal was correct to conclude that the "Other Conditions" clause of the 2006 Contract had incorporated the 2015 Disciplinary Procedure. The issue concerned only the interpretation of the terms of the 2006 Contract and whether those terms gave contractual effect to the 2015 Disciplinary Procedure.[23]Vision Australia Ltd v Elisha (2023) 328 IR 299 at 322-323 [92]-[96].The meaning of the terms of the 2006 Contract The 2006 Contract by which Vision Australia employed Mr Elisha took the form of a letter of offer executed by Vision Australia which included, on the last page, provision for acceptance by Mr Elisha. The letter relevantly provided:"Conditions of EmploymentYour engagement will be governed by the terms of this letter and the [1999 Award]....Other ConditionsIn addition, Employment Conditions will be in accordance with regulatory requirements and Vision Australia Policies and Procedures. Breach of the Policies and Procedures may result in disciplinary action." The acceptance on the last page of the letter was as follows:"ACCEPTANCE:This contract may be amended from time to time by mutual agreement between the parties.I have read and fully understand the terms and conditions of employment detailed in this contract. I agree to comply with these terms and conditions of employment and all other Company Policies and Procedures.I certify that the details in my application/curriculum vitae are true and correct; and that I have no knowledge of any fact or circumstance, which may prevent fulfilment of the terms of this contract." The meaning of the terms of the 2006 Contract, like any other contractual term, "is to be determined by what a reasonable person would have understood [the terms] to mean".[24] This requires consideration of the common intention of the parties by reference to the object and text of the provision as well as the surrounding circumstances.[25] The common intention of the parties is "to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement".[26][24]Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40]. [25]Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 462 [22].[26]Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40].