Malouf v Pandora Jewellery Pty Ltd

CERTIFICATE OF DETERMINATION OF MEMBER
CITATION:	Malouf v Pandora Jewellery Pty Ltd [2021] NSWPIC 265
APPLICANT:	Damien Malouf
RESPONDENT:	Pandora Jewellery Pty Ltd
MEMBER:	Paul Sweeney
DATE OF DECISION:	28 July 2021
CATCHWORDS:	WORKERS COMPENSATION- Claim for weekly and permanent impairment compensation as a result of an accepted psychological injury; respondent denies liability on basis of “discipline” within section 11A; where fellow employee complained that worker used racist and offensive language at morning tea; where respondent investigated the complaint; where respondent prohibited worker from communicating with other employees who were present at morning tea during the investigation; Sinclair v The Department of Education considered; Held- that the respondent’s action not reasonable; while exemplary in many respects the blanket prohibition on communicating with other employees deprived the worker of the opportunity to put his case at its highest; award for worker.
DETERMINATIONS MADE:	1. The applicant suffered psychological injury arising out of and in the course of his employment on 24 May 2017. 2. The respondent has not established that the applicant’s injury was wholly or predominantly caused by reasonable action taken by it in respect of discipline. 3. During the period that he was absent from his employment after 29 May 2017 and throughout the first and second entitlement periods the applicant had no current earning capacity. 4. At all material times his PIAWE was $809 per week. 5. Direct the parties to bring in short minutes reflecting the applicant’s entitlement to weekly compensation in the first and second entitlement periods. 6. Respondent to pay the applicant’s medical and hospital expenses pursuant to section 60 of the Workers Compensation Act 1987. 7. Remit the matter to the President for referral to a medical assessor to certify the degree of whole person impairment as a result of psychological injury which occurred as a result of the respondent’s disciplinary actions on and after 29 May 2017. 8. Credit to the respondent for payments made. 9. Liberty to the parties to apply in respect of the above orders.

STATEMENT OF REASONS

INTRODUCTION

On 24 May 2017, Damien Malouf (the applicant) engaged in a discussion about the Manchester bombing with several work colleagues during an ordinary recess at the break room of the premises of Pandora Pty Ltd (the respondent) on the Northern Beaches of Sydney. One of the participants, Genevieve Porter, was offended by the language used in the conversation and reported it to the respondent’s human resources department.
On 29 May 2017, employees of the respondent were summoned to a meeting conducted by Kristie Clarke, the respondent’s human resources partner and Michael Boyd, the warehouse manager. The meeting was convened to discuss the conversation about the Manchester bombing the previous week in the context of the corporate values of the respondent. After the meeting concluded, the applicant was told by Patrick Padgen, his immediate supervisor, to return to the meeting room where Ms Clarke and Mr Boyd questioned him about his recollection of the conversation in the break room the previous week.
On returning to his workstation, the applicant received an email from Ms Clarke which was headed “Performance Discussion”. It advised that the respondent had “received an email complaint regarding alleged racial comments and conversations that occurred in the break room at the PDC among staff”.
The email required the applicant to attend an interview with Michael Boyd on 31 May 2017. It stated that this meeting would offer him with the “opportunity to provide information” concerning the conversation on 24 May 2017. It also stated that Ms Clarke would submit her findings to management, that a decision as to whether the complaints were substantiated would be communicated to the applicant, and that the investigation would be completed no later than 5 June 2017. The applicant was advised that the investigation was confidential.
Following the meeting with Mr Boyd on 31 May 2017, the applicant received a further letter from Ms Clarke dated 2 June 2017. It noted that it had been alleged that he made “racist and discriminatory comments” at work on 24 May 2017. It continued:
“Having regard to all evidence presented, the finding of the investigation is that the aforementioned allegations are substantiated and a formal counselling meeting is the appropriate outcome. Accordingly, I would like you to attend a meeting with Ali Hoile at 8am on Thursday 8^th June. I will also be attending this meeting. You may bring a support person with you to this meeting which will take place at Pandora Central Office in Belrose. At the meeting you will have the opportunity to formally respond to the allegations and make any further comments that you would like to be taken into consideration.
I encourage you to familiarise yourself with the Bullying & Harassment Policy and Behavioural Expectations Policy found on Infora. Please be aware that the outcome of the meeting might result in disciplinary action such as a formal warning.”
On 8 June 2017, the applicant attended the meeting with Ms Hoile, the respondent’s warehouse operations manager, and Ms Clarke. At the conclusion of the meeting he was provided with a first written warning. He refused to sign it. A copy of that warning was also forwarded to the applicant’s email address.
The applicant has not worked for the respondent since 22 June 2017. He has been incapacitated for work by reason of a psychological condition. It is common ground that the applicant suffers a psychological injury arising out of and in the course of his employment.

PROCEDURE BEFORE THE COMMISSION

By these proceedings, the applicant claims weekly payments of compensation from 30 May 2017 to date and continuing. He also claims permanent impairment compensation pursuant to s 66 of the Workers Compensation Act 1987 (the 1987 Act).
The respondent disputes the applicant’s entitlement to compensation on the basis of
s 11A(1) of the 1987 Act. It asserts that the applicant’s psychological injury was wholly or predominantly caused by reasonable action taken by it with respect to “discipline” and “performance appraisal”. It also asserts that the applicant had a current work capacity during the period for which compensation is sought in the Application to Resolve a Dispute (the Application).
When the matter came on for conciliation and arbitration over the telephone on 28 June 2021, Mr Stockley, of counsel, represented the applicant and Ms Goodman, of counsel, represented the respondent. I was informed by counsel that they were unable to resolve the threshold question in respect of the application of s 11A(1) to the circumstances of the case.
I have used my best endeavours to bring the parties to a settlement of their dispute. I am satisfied that the parties, who were represented by experienced counsel, had sufficient opportunity to explore settlement but have been unable to reach a mutually satisfactory resolution.

EVIDENCE

The documents before the Commission are as follows:
(a)The Application and the documents attached;
(b)The Reply and the documents attached; and
(c)Applications to Admit Late Documents dated 6 May 2021 and 2 June 2021.
There was no objection to any of the material referred to above. There was no application to adduce further written or oral evidence in the matter and no application to cross-examine witnesses.
Before considering the submissions of the parties, it is necessary to briefly record the evidence of the applicant and the respondent’s lay witnesses. As a complaint from Genevieve Porter initiated the disciplinary action taken by the respondent, I propose to commence with her evidence. What follows is not intended to be a comprehensive survey of all of the evidence of each of the witnesses. Rather, I set out the salient aspects of their evidence so that the submissions of the parties and the way in which the Commission has determined the dispute can be more readily understood.

Genevieve Porter

By her signed statement of 20 July 2017, Ms Porter states that during morning tea on the morning of 24 May 2017, workers were discussing the Manchester bombing which occurred the previous day. She continued:
“Damien Malouf and Marcus were in discussion regarding the attack. Damien made racist remarks in relation to Islam repeatedly saying, ‘You cannot have fleas without a dog’. ‘If you get rid of Islam you get rid of terrorists’.
One of the women present said that all Muslims should be rounded up and disposed of.”
Ms Porter states that the applicant continued to make “racist remarks regarding Islam”. In response to Marcus’ suggestion that the Muslims were good people, he responded that it was “not genocide if it is Muslims.” Ms Porter says that she remained quiet during the conversation as she was afraid to speak. She felt uncomfortable and had the feeling that “if there was a Muslim in the room they would have been terrified”.
Ms Porter recounts that she sent an email to the HR Department outlining her concerns and was subsequently interviewed by Michael Boyd. She continued:
“I am aware that following my complaint that older warehouse workers could not see what was wrong with the comments made in the break room. There is a large generation gap in age of workers within the warehouse and the older workers are generally less tolerant to foreigners. They are more open to racist language and less accepting of political correctness.”

Kristie Clarke

By her statement Ms Clarke recounts that she received an email from Ms Porter which “detailed racist and discriminatory comments made in the break room at PDC by Damien Malouf” and other employees. She consulted Mr Boyd and Ms Hoile and determined that a meeting should be held of all workers concerning the behaviours expected of them by the respondent.
At the meeting on 29 May 2017, Mr Boyd made a presentation to staff addressing corporate values and canvassing the language used by staff in the breakroom on 24 May 2017.
Ms Clarke recounts that following the meeting two employees, one of whom was the applicant, were recalled to the meeting room to discuss the complaint made by Ms Porter. Both employees were advised that individual meetings with them would be scheduled for 31 May 2017 to “discuss the matter further”.
Then, on 30 May 2017, witnesses’ statements were obtained from some of those present in the break room on 24 May 2017. After obtaining these statements, Ms Clarke and Mr Boyd met with the applicant and his support person on 31 May 2017. There was further discussion of respondent’s Life Values. Ms Clarke recounts:
“We went through the allegations and there were set key phrases said by witnesses”.
Ms Clarke continues:
“Damien was advised we are in the investigation process. He was advised of the complaint and was asked who was involved in the conversation. He stated he could not recall what had happened 7 days ago as it was so long. He said his memory is sketchy at best. He then said he recalled someone saying “bombing them” in a female voice and there had been a lot of chatter about the bombing.”
Ms Clarke recounts that the applicant recalled that the conversation in the break room lasted for no longer than 10 minutes and he remembered the word “Mecca” being used and that the US is to be blamed for the bombings along with Australia and the UK. The applicant also recalled the “word Nazi being used and that the holocaust did not happen”.
Ms Clarke recounts that the applicant stated that there was no malicious tones during the conversation and while people had strong opinions “there (were) no loud voices they were having their opinions.”
The applicant was advised that the investigation was continuing and he would be advised shortly of any updates. Subsequently, Ms Clarke completed an investigation report which she forwarded to her manager and to Ms Hoile. The outcome was:
“It was substantiated due to the witness statements and lack information [sic] provided by both Damien and Lizanne that we wanted to meet with them on 8 June 2017 to find out if they had anything further to add.”
A further meeting was arranged with the applicant for 8 June 2017.
Ms Clarke says that on that occasion she summarised the process and provided the applicant with a copy of his statement from the original meeting. She says that the applicant “did not have anything else to say”. The meeting was then adjourned for half an hour and, after conferring with Ms Hoile, it was determined that the applicant should be “issued a first written warning and he would be presented with a copy.” Ms Clarke wrote out the warning during the meeting.
On 14 June 2017, the applicant emailed Ms Clarke stating that he was unhappy with the documentation he provided and questioning the process for the investigation. In view of the allegations made by the applicant, Ms Holway, Ms Clarke’s manager became “his point of contact” for future correspondence.
Ms Clarke records that the applicant emailed Ms Holway stating that he wanted his written warning quashed. He was advised of the grievance procedure which permitted a review of the finding of Ms Clarke by a senior manager. Ms Clarke continues:
“Claire Crawford the vice president of merchandising and operations reviewed and forwarded a letter to Damien dated 22 June 2017. She advised there was justifiable reasons for the written warning.”

Michael Boyd

Mr Boyd states that he considered the applicant to be a good worker and thought that they “were on reasonably good terms”. On receipt of the complaint, he and Ms Clarke discussed the best course of action to take. He continues:
“We broke the complaint down to two elements being the racism and Islamophobia talk. The second part was bullying and harassment as it was alleged in conversation that younger team members values are inferior.”
Mr Boyd states that he “met with the warehouse team on Monday 29 May 2017” and outlined the expectations of the company about employees’ conduct and behaviour in and out of the organisation. He also states that “the purpose of the meeting was to investigate a complaint made in the break room regarding racist remarks”.
Mr Boyd states that on 30 May 2017 he met with Genevieve Porter. He says:
“She indicated all the comments made in her initial complaint were made by Damien Malouf. I asked her if there was anything else she could recall. There was another comment she recalled by Damien, ‘it’s not nasty if its Muslims’. She then went on to explain that Marcus Newberry challenged Damien’s comments. Damien came back with ‘Millennials do not know what they’re talking about brought up with the attitude of love and tolerance and this are not right. Their opinions are not as valid as their elders.”
Mr Boyd says that he then spoke with Ms Mason who “corroborated Genevieve’s version of events” and said she felt extremely uncomfortable and confirmed that “Damien did approach her at the end of the shift” and asked if she was offended. Mr Boyd records that he also spoke with Marcus Newberry who “confirmed their version of events”. He said that he knew Damien and “the comments did not come as a shock”.
On 31 May 2017, the applicant attended the meeting that Mr Boyd had arranged. Ms Clarke was also present. He continues:
“to try and keep the meeting consistent with my prior enquiries I structured the meeting in the same way stop I presented the same questions to Damien who had a support person present stop. He said he could not recall the conversation in question due to the length of time since then. He told me that the tone of conversation that he could not recall was abhorrent. He advised that his comment re fleas on a dog was an analogy. He then corrected me that one of the comments I made in that I said, they should be all rounded up and the mosque blown up”. He corrected me and said that was not what was said. It was actually Mecca.”
Following this meeting, Mr Boyd recalls that the applicant emailed him alleging poor management and that Mr Boyd had a history of “misrepresenting him and bullying and harassment”. Mr Boyd said that he was very upset by this allegation. He continues:
“I feel like I have always been at Damien’s side and had his back despite performance issues raised by senior management in the past in reference to his punctuality and attendance. I had previously defended his performance.”

Marcus Newberry

By his written statement dated 20 July 2017, Mr Newberry states that he is friendly with the applicant and they often have conversations during which they “respectfully disagree with one another….. no bitterness in regards to our political views and views on migration.” He says that on 24 May 2017 he and Damien were having a discussion in the break room regarding the Manchester bombing. At the commencement of this conversation there was no one else present in the break room. He continues:
“I cannot recall the exact words we exchanged regarding the Manchester bombing. I vaguely recall asking him what were his thoughts of the bombing and he thought it was bad. He was of the opinion we sought [sic] be careful of the growth of Islam and allowing migrants into Australia. During our conversation other staff stated [sic] to give their opinion.”
While this conversation was taking place another worker stated that a “bomb should be dropped on those at Mecca”. Another worker, Genevieve Porter, was not present during the whole of the conversation as she may have “walked in and out of the break room at various times”.
Mr Newberry recounts that the conversation between he and Damien was “banter”. It was not a heated argument. He continues:
“Damien by nature jokes around a lot and I cannot take his word at face value. The words spoken by some of the staff members who contributed to the conversation would be considered racist in particular bombing Mecca”.
Mr Newberry states that he has not seen the applicant since he left work. He says that he has not “seen or witnessed Damien ever been [sic] bullied or harassed in the workplace.”
By a supplementary statement annexed to the applicant’s statement of 22 April 2021
Mr Newberry states that the statement prepared by Mr Boyd following the interview on 30 May 2017 “didn’t reflect the true account I wanted to give”. He says the statement is “more the re-telling of the previous interviewee’s account which painted Damien as the sole perpetrator”. He states that most of the questions were “leading and directed at his involvement solely”. He continues:
“I stated that I started the conversation about the topic and reassured that it was never a heated argument or confrontation between me and Damien. I reiterated that me and Damien have a good rapport and I believe that he was never serious because that’s the “type of guy he is” and pointed out that he is always friendly and respectful to the Muslim security guards. I never made known in the interview, but I can acknowledge how other people in the room who don’t know Damien more personally could have taken his comments and theatrics more at face value.
I mentioned that it was an emotionally charged topic which led to several people lending their opinion and that is when the conversation escalated and got out of hand. With several people contributing to the conversation there was confusion on the point that if the comments being made were just about extremists or Muslims collectively, which was cleared up at the end”.

Applicant

The applicant’s evidence is contained in a statement of 21 July 2017 and in a supplementary statement dated 22 April 2021. In his initial statement, the applicant recounts the circumstances of the conversation in the break room on 24 May 2017. He says that
Mr Newberry initiated the conversation with him that morning about the Manchester bombing and queried whether it was a terrorist attack. He responded by saying that it was an act of terrorism and that Islam was “definitely involved”. The applicant recounts that as
Mr Newberry “was up for a good debate” he offered him an analogy “‘fleas on a dog’ – fleas need a host and the dog plays host to the fleas and the fleas can’t survive without the dog.” He says that is all he said at the time. He continues:
“Despite the fact that we were engaged in a one-on-one conversation, several other people added their thoughts and opinions on the subject. There were an additional 6 or more people in the room at any one time … and it became so loud in the room that it was very hard for us to continue our conversation, or to discern which people in attendance were adding their comments and opinion, as the room became a chorus of voices and not much of what was being said was distinguishable enough to reply anyway, given that there was a lot of frivolous comments being made, not-to-mention the cacophonous sounds in the room”.

Another contribution the applicant made to the conversation was by correcting a woman who enquired of the place Muslims go to pray. He told her it was Mecca, after which she responded that they “should drop a … atomic bomb on them when they’re all there for Ramadan”.
The applicant says that at no stage did he act in an aggressive manner or bully or harass anyone. He describes at length the meeting that he was summoned to with other staff members and Mr Boyd and Ms Clarke on 29 May 2017. He was unconcerned when the discussion in the breakroom was raised by Mr Boyd as he had a clear recollection of not saying anything offensive at that time. He devotes many paragraphs to criticisms of Mr Boyd and his actions as the warehouse manager over several years.
After descending the stairs from the break room at the conclusion of the meeting, the applicant was advised by Mr Padgen that he was required back at the meeting room. He states:
“I went red and was quite embarrassed, as I couldn’t imagine why I was being summoned back to the meeting room and also because everyone else was wondering the same thing. I don’t blame Patrick Padgen for telling me, in front of other employees, to go straight back upstairs but I do believe he could have acted a little more surreptitiously when advising me that I had to go straight back into the meeting room.”
The applicant says that he couldn’t believe “their poor judgement” in having him recalled to the meeting in circumstances where it would be obvious to other members of the staff. On speaking to Mr Boyd and Ms Clarke, he was told that “they were just making some enquiries and no one had been accused of anything yet.” He advised Ms Clarke that he remembered the Manchester bombing attack being discussed during the morning break on 24 May 2017. He stated that it was a normal conversation. However Mr Boyd and Ms Clarke apparently said that it was not “an appropriate topic to discuss”.
The applicant says that he had an “overwhelming feeling that I was in a dangerous situation, given that I was dealing with two people who were clearly not competent or qualified enough to handle an investigation that relied on hearsay evidence”. He advised Ms Clarke and Mr Boyd that he was not “about to rely on my recollections of an uneventful morning tea”. He says:
“I was not asked what I had said at morning tea and Michael Boyd and Kristie Clarke both made it abundantly clear that I was not, and had not been, accused of anything and that the complaint that was made was not made about me.”
Ms Clarke indicated, however, that he would shortly be sent an email and he indicated that it could be sent to his workstation.
The applicant says that on leaving the meeting he was “inundated” with questions from fellow workers and felt “humiliated and embarrassed that there was no consideration” for his privacy.
Shortly after the conclusion of their discussion, he saw the email from Ms Clarke advising him of the complaint, the allegation of his involvement, and the investigation. He says he experienced “a great deal of fear and anxiety”. He left work and went home. He states:
“I had done nothing wrong but I was already being treated like I had and, worse still, everybody knew about it. Things were starting to take their toll on me and I knew I needed to go out of there.”
He felt unable to go to work because of his anxiety but also because he had been advised not to speak to other workers about the allegation and if he attended work it would be almost impossible to avoid this given the fact that his recall to the meeting on 29 May 2017 had been common knowledge. The applicant complained to Ms Clarke by way of an email of these concerns but received no response.
The applicant recounts that Marcus Newberry informed him that at his interview on the following day Mr Boyd did not give him the opportunity to “give a true account of what really happened” and having Mr Boyd state the applicant’s name over and over again “influenced his statement to that which would serve Mr Boyd’s agenda”. The applicant again complained to the respondent’s HR Department about Michael Boyd’s actions. When he received no response to his email he thought “that I would not be safe at work”. He says:
“Michael Boyd, given his position in relation to me, ought never have been permitted to interview witnesses. If his position wasn’t a deterrent to them, then his disregard for ethics and values, not to mention his behaviour towards me in the past, should certainly have precluded him from interviewing witnesses. I cannot return to work so long as Pandora turns a blind eye to a corrupt HR Department, and equally corrupt senior management team, who are seemingly beyond reproach and above the law?”
The applicant next recounts his meeting with Mr Boyd and Ms Clarke on 31 May 2017. He says:
“I was asked more leading questions and was never asked to give my version of what happened, or what was actually said, or in the way it was said. Hence, I replied that my memory of the day was sketchy at best, and I wasn’t sure why I was there and why I was being asked such questions and, for all I knew, I might have been there to inform on others.”
The applicant says that he took the view that “it was best to say as little as possible”. He says that at no stage during the meeting was he directly asked whether he had made a specific statement.
The applicant recounts that he first saw Dr Skiavos on 31 May 2017 and was certified as unfit for work and referred to a psychologist Joanna Schmidt.
The applicant then recounts the meeting of 8 June 2017. He says that he was handed the statement taken by either Ms Clarke or Mr Boyd at his interview on 31 May 2017 as well as Ms Clarke’s report, which contained a summary of the allegations and the witness’s statements. Subsequently, he was handed a written warning which he refused to sign.
The applicant recounts that on Friday 9 June 2017, he responded to an email from Kristie Clarke by advising her how “reprehensible her actions were, in that she precluded other employees’ privacy and confidentiality and breached Pandora’s values and ethics and that was a serious breach of conduct.” He also advised Ms Clarke that the whole investigation lacked “procedural fairness”. Four days later he received an email from Ms Clarke advising that the respondent’s vice president of HR, Ms Holway would contact him to discuss his concerns further.
On 16 June 2017, the applicant received an email from Ms Holway asking him to advise her of the outcome he was seeking. He reacted poorly to this. He says:
“I struggled to comprehend what was happening and why Pandora was stonewalling me like this. I had never felt so insignificant and unvalued before and didn’t know what to do about it. I was being bullied by the people who were supposed to prevent the bullying occurring in the workplace.”
On 16 June 2017, the applicant replied to Ms Holway advising her that he wanted the substantiation of the allegations and the written warning quashed and furnished reasons in support of his request. On 19 June 2017, he received a further email from Ms Holway asking him to provide precise details of the aspects of the investigation process that had been mishandled or were in breach of company policy. She also offered him an independent review by a senior executive of the respondent.
Ultimately, on 20 June 2017 the applicant advised Ms Holway that he would welcome an independent review “as long as there was no conflict of interest involved”. On 22 June 2017 he received an email advising that Claire Crawford had reviewed his grievance and concluded that it was reasonable that a written warning was issued to him. The applicant took the view that he was “dealing with yet another person who had absolutely no interest in procedural fairness” and who had “just confirmed every story of corrupt behaviour, blatant misconduct, unscrupulous practice and cover-ups” he had heard about Pandora’s senior management team.
The applicant did not return to work after the receipt of this email. He thought that it was unsafe for him to return to “a toxic environment where sustained and systematic bullying” is encouraged by senior management.
By his supplementary statement, the applicant refers to the notes of interview taken by
Mr Boyd. He denies a number of statements:
·        “you can't have fleas without the dog [ie, get rid of the 'dog' to get rid of the 'fleas”;
·        “There can only be one supreme race and it shouldn't be them";
·        "Could have easily let their 'brother' in 'in the service of Allah' because even the non-radical ones will tum if given the option";
·        "Genocide is a perfectly acceptable solution if perpetrated against Muslims”,and
·        "It’s not Nazi if it is Muslims".
In respect of the statement of Genevieve Porter, the applicant denies stating the following:
(a) “If you get rid of Islam you get rid of terrorists”;
(b) “He also said it is not genocide if it is Muslims”.

SUBMISSIONS

As the submissions of counsel are in writing I do not propose to reiterate each of their arguments in these short reasons. Ms Goodman took the Commission chronologically through the material in evidence for the purposes of making a submission that the respondent’s disciplinary actions which lead to the applicant finally ceasing employment on 26 June 2018 were reasonable.
She also addressed the medical evidence which she submitted established that disciplinary action by the respondent was the whole or predominant cause of the applicant’s psychological injury.
Finally, she addressed the issue of the applicant’s capacity submitting that the Commission would be satisfied that the applicant had a capacity for work on a restricted hours basis in accordance with the opinion of Dr Bisht, the respondent’s qualified psychiatrist.
Mr Stockley stated that the thrust of his case was to “challenge the proposition that whatever the action was on the part of the employer that caused this injury was reasonable”. He emphasised the following:
(a)    That the evidence established that the applicant had a lack of rapport, confidence or some distrust of Mr Boyd before these events occurred;
(b)    That the recall of the applicant to the general meeting of 29 May 2019 clearly identified the applicant as an employee who was being “singled out for some particular attention”;
(c)    The abrupt alteration in the respondent’s position between the interview with
Ms Clarke and Mr Boyd on 29 May 2017 and the email received a few minutes after the meeting which raised for the first time the fact that there was a formal complaint against the applicant;
(d)    The prohibition of the applicant speaking to fellow employees so that he was unable to refresh his memory of the event and obtain their recollections on the conversation of 24 May 2017;
(e)    The failure of the respondent to obtain a description from Ms Porter “in a narrative fashion” as to what was said on 24 May 2017;
(f)    The failure of the respondent to obtain a similar narrative account of what was said at the break room on 24 May 2017 by those present; and
(g)    That no objective reading of the notes taken on 30 and 31 May 2017 suggested that the respective witnesses were “given anything but the opportunity to ascribe authorship to a series of statements”.
In respect of the last proposition Mr Stockley referred to the second statement of
Mr Newberry which concluded by stating that he did not feel that his original statement “reflects my re-telling of events”. Rather, the basis of the statement was confirmation of the accounts of previous interviewees “which painted Damien as the sole perpetrator”. This evidence raises a significant doubt about the procedure embarked upon by the respondent.
In response Ms Goodman submitted that the applicant’s evidence should not be accepted when it was not corroborated by other evidence. She referred to the applicant’s evidence that he told Mr Boyd on 31 May 2017 that he couldn’t remember much of the conversation the previous week but subsequently said in his statement that he could clearly remember the event. Contrary to Mr Stockley’s submission, Ms Goodman submitted that the one-on-one notes were not unreliable. Each witness had signed the note dealing with the comments made on 24 May 2017 and who made them.
It will be necessary to return to some aspects of the submissions in resolving the dispute between the parties.

DISCUSSION AND FINDINGS

The exposition of the law relating to s11A (1) in Northern NSW Local Health Network v Heggie [2013] NSW CA 255 (Heggie)) provides a useful starting point for any decision involving the section. In that case, Sackville AJA said this at [59]:
“The following propositions are consistent both with the statutory language and the authorities that have construed s 11A(1) of the WC Act:
(i) A broad view is to be taken of the expression ‘action with respect to discipline’. It is capable of extending to the entire process involved in disciplinary action, including the course of an investigation.
(ii) Nonetheless, for s 11A (1) to apply, the psychological injury must be wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer.
(iii) An employer bears the burden of proving that the action with respect to discipline was reasonable.
(iv) The test of reasonableness is objective. It is not enough that the employer believed in good faith that the action with respect to discipline that caused psychological injury was reasonable. Nor is it necessarily enough that the employer believed that it was compelled to act as it did in the interests of discipline.
(v) Where the psychological injury sustained by the worker is wholly or predominantly caused by action with respect to discipline taken by the employer, it is the reasonableness of that action that must be assessed. Thus, for example, if an employee is suspended on full pay and suspension causes the relevant psychological injury, it is the reasonableness of the suspension that must be assessed, not the reasonableness of other disciplinary action taken by the employer that is not causally related to the psychological injury.
(vi) The assessment of reasonableness should take into account the rights of the employee, but the extent to which these rights are to be given weight in a particular case depends on the circumstances.
(vii) If an Arbitrator does not apply a wrong test, his or her decision that an action with respect to discipline is or is not reasonable is one of fact.”
The concept of reasonableness in s11A is not clearly defined in the case law. In Commissioner of Police v Minahan [2003] NSWCA (24 September 2003) the Court of Appeal referred to decisions of the Compensation Court relied upon by Walker J, at first instance, without suggesting that they were erroneous. In Irwin v Director-General of School Education (unreported, 18 June 1998) Geraghty J, stated:
“The question of reasonableness is one of fact, weighing all the relevant evidence. The test is less demanding than the test of necessity, but more demanding than a test of convenience. The test of “reasonableness” is objective and must weigh the rights of employees against the objective of the employer. Whether an action is reasonable should be attended, in all the circumstances by a question of fairness.”
Then in Ivanisevic v Laudet Pty Ltd (unreported, 24 November 1998), Truss J, stated:
“In my view when considering the concept of reasonable action the Court is required to have regard not only to the end result but to the manner in which it was effected”.
The judgment in Heggie casts some doubt on whether it is always necessary to consider the rights of the employee. Obviously, it will be necessary to undertake that task in many cases: c.f. Pirie v Franklins Ltd [2001] NSWCC 167 (10 September 2001). I see no reason why this is not such a case.
The case law also establishes that a finding that an employer has not proven that a disciplinary action is reasonable is not a finding that it is unreasonable. But reasonableness does not require the employer’s actions in respect of discipline to be flawless.
The Application nominates a date of injury of 29 May 2017. The matter was conducted, however, on the basis that the question of whether the applicant’s injury was caused by the reasonable actions on the part of the employer required the examination of circumstances before and after this date. Both counsel addressed on this basis and it is appropriate to determine the issue in dispute on the basis argued by the parties.
Given the approach of the parties, I accept that each of the actions of the respondent with respect to discipline from the convening of the meeting of warehouse employees and the subsequent recall of the applicant to the meeting on 29 May 2017 until he finally ceased work on 22 June 2017 materially contributed to the applicant psychological injury. It is those actions which must be considered in determining whether the defence under section 11A defeats the applicant’s claim.
Ms Goodman submitted that the applicant’s evidence should not be accepted because he told Ms Clarke and Mr Boyd in May 2017 that he had little recollection of the conversation in the breakroom on the morning of 24 May 2017 whereas he says in his primary statement he had a clear recollection of what was said at that time. I doubt whether this is an appropriate basis to reject the evidence of the applicant. The applicant says that it was best to “say as little as possible” at these meetings both in the interests of self-preservation and of not implicating his colleagues.
Whether that was a wise course is open to doubt. However, it does not necessarily follow that his evidence should not be accepted because he chose not to reveal to his employer in detail his recollection of the conversation. Accordingly, the applicant’s evidence is to be given the same weight as the other evidence in the matter.
It is probable that the applicant’s psychological injury was either wholly or predominantly caused by disciplinary actions taken by the respondent arising from the discussion in the break room on 24 May 2017 up to the cessation of his employment. That conclusion is consistent with the opinion of both the qualified psychiatrists, Dr Bisht and Dr Dinnen.
Mr Stockley did not submit to the contrary. That leaves the issue of reasonableness.
It is common ground that it was appropriate for the employer to respond to the complaint by Ms Porter. It was not argued that a disciplinary response was unwarranted either generally or by reference to the respondent’s Code of Ethics. There were numerous references to this Code in the evidence but it did not figure prominently, if at all, in the submissions of counsel.
Once it is accepted that a disciplinary response was necessary, it is my impression that the plan of action agreed upon by Mr Boyd and Ms Clarke was quite sensible. It was proposed to interview witnesses, including the applicant, within a week of the event to establish the facts and to reach a conclusion on culpability and penalty in a period of roughly two weeks. Assuming that the evidence obtained supported a conclusion of culpability, it is not suggested that the penalty of a written warning was unreasonable.
Having informed the applicant and Lizanne of the decision to undertake an investigation on the afternoon of 29 May 2017, Ms Clark wrote to him on 2 June 2017 informing him that the “allegations are substantiated and a formal counselling meeting is that the appropriate outcome.” The letter also informed the applicant that he could bring a support person with him to the meeting where he would have the opportunity to:
“formally respond to the allegations and make any further comments that you would like to be taken into consideration.”
It indicated that the outcome of the meeting might result in disciplinary action “such as a
formal warning”. It also indicated that the matter was “confidential and not to be discussed
with any other Pandora employee.”

A finding that the employer’s general approach to the disciplinary process and the penalty imposed was reasonable is a useful starting point for a finding that its actions with respect to discipline were reasonable. That is because it is necessary to consider the process as a whole in reaching a conclusion as to reasonableness. In the oft quoted passage from Department of Education & Trainingv Sinclair [2005] NSWCA 465 (20 December 2005) (Sinclair), Spigelman CJ at [97] said this:
“His Honour’s analysis, as that of the Arbitrator, appears to assume that any specific blemish in the disciplinary process, however material in a causative sense or not, was such as to deprive the whole course of conduct of the characterisation “reasonable action with respect to discipline”. In my opinion, a course of conduct may still be “reasonable action”, even if particular steps are not. If the “whole or predominant cause” was the entirety of the disciplinary process, as much of the evidence suggested and his Honour appeared to assume, his Honour did not determine whether the whole process was, notwithstanding the blemishes, “reasonable action”. For this alternative reason the appeal should be allowed.”
The thrust of the applicant’s case relates to the procedure adopted by the respondent to implement the plan and the role of Mr Boyd, the warehouse manager in jointly conducting the investigation. Plainly, the caselaw states that the process must be fair. The applicant argues that the manner in which the response was undertaken was at times awkward, impinged on his rights, and undermined the ability of the investigation to reveal the truth.
Mr Stockley lastly submitted that a truthful account of the conversation on the morning of 24 May 2017 would have been more readily established by the respondent if Mr Boyd had taken a narrative statement from each of the employees who were interviewed on 30 and 31 May 2017. While that approach commends itself to a lawyer or investigator, I am not sure that the warehouse manager of jewellery business would necessarily regard it as the best approach to ascertaining what was said at morning tea the previous week. I appreciate that each aspect of the enquiry as to reasonableness for the purposes of section 11A(1) requires an objective evaluation of the respondent’s actions. But the question of reasonableness must also be evaluated in its industrial context.
Mr Boyd concedes that he took the same approach to each of the five witnesses interviewed on 30 and 31 of May 2017. I say five because it seems likely that Lizanne was also interviewed and her statement is not in evidence. She was probably found culpable by
Ms Clarke, although the finding was subsequently overturned in circumstances which are not addressed in the evidence. Mr Boyd put to each of the witnesses a number of statements allegedly made on the morning of 24 May and asked the interviewee which employee made the statement. These statements are very similar to those which the applicant denies making in his supplementary statement. They are recorded in the penultimate paragraph of my summary of his evidence. The source of the statements is probably Ms Porter’s email.
I accept that Mr Boyd’s approach to obtaining an account of what was said by staff on 24 May 2017 was probably not best practice. Putting statements to witnesses may have influenced their answers. In the circumstances of this case, however, I doubt that it could lead to a conclusion that the respondent had not established that its actions were reasonable. Each of the three witnesses signed a typed copy of the face-to-face notes made by Mr Boyd. All three agreed on four statements/comments made by the applicant. Mr Newberry, who is well disposed to the applicant identified all but one statement as being made by the applicant. Mr Boyd recorded that Mr Newberry “doesn’t specifically remember that one”. The answers he recorded from Mr Newberry and Ms Mason corroborated Ms Porter’s written complaint.
Mr Stockley also submitted that the applicant harboured some distrust or lack of rapport with Mr Boyd because of his previous conduct and this impinged on the fairness of the investigation or caused the applicant to believe that it was unfair. It is clear that the applicant has an intense dislike for Mr Boyd. It is not evident, however, that it was ever directly brought to the attention of the respondent or that the respondent ought to have known of it. Certainly, Mr Boyd seemed to be unaware of it. In his statement he describes the applicant as a good worker. He says “I cannot fault the work that he does.” He also states that he was on “reasonably good terms” with the applicant and knew him socially up to a point.
In response to the applicant’s allegation of misrepresentation and bullying by email, which appears to have taken place around the time the applicant ceased work Mr Boyd says:
“He did not provide examples of bullying and harassment. I forwarded the email to HR and I did not reply to his email. I was very upset by the allegations. I feel like I have always been at Damien’s side and had his back despite performance issues raised by senior management in the past in reference to his punctuality and attendance.”
Secondly, Mr Boyd’s involvement in the matter was largely confined to the investigation of the facts. The decision to issue a warning was made by Ms Clarke in conjunction with
Ms Hoile at their meeting with the applicant on 8 June 2017. Mr Boyd was not at that meeting. It was Ms Hoile, presumably his superior who signed the written warning. Thirdly, the typed face-to-face notes or the other contemporaneous material does not suggest that Mr Boyd was biased or unfair in going about the job of collecting evidence.
It must also be borne in mind that the applicant regards the entirety of the respondent’s senior management and HR department as “corrupt bullies who are above reproach and above the law”. In those circumstances, it seems likely that any senior employee appointed to carry out the investigation would not have had the confidence of the applicant. I am not persuaded that the applicant’s distrust or lack of rapport with Mr Boyd undermined the fairness of the investigation.
With the one exception, I regard the other criticisms of the investigation raised by the applicant as blemishes which do not detract from the reasonableness of the investigation or the disciplinary process. The exception relates to the respondent’s instruction to the applicant to keep the investigation confidential and not to speak to fellow employees. This is reminiscent, of course, of one of the specific matters held by the arbitrator to be unreasonable in Sinclair. I have also previously found a blanket prohibition on speaking with employees to be unreasonable in other circumstances.
In this case the applicant argues that the prohibition on him speaking with other employees restricted his ability to refresh his memory and obtain their recollection of the events of the morning of 24 May 2017. I doubt whether there was any real need for the applicant to refresh his memory of what he said in the breakroom as he says in that he had a “clear memory” of what he said. The other aspect of the applicant’s submission, however, cannot easily be cast aside. The respondent’s command that the applicant refrain from speaking to other employees effectively prevented him from obtaining factual information that may have assisted him in deflecting or mitigating the allegations of racist language or offensive language.
I appreciate that the respondent may have a legitimate interest in confidentiality. This was not articulated at the arbitration hearing. However, it is self-evident that the respondent would wish to protect the author of the complaint and possibly other workers who were interviewed in respect of it. Ms Porter says in her statement that there was some interest in who made the allegation among the staff at the warehouse and that many of the older staff were supportive of the applicant.
As I indicated above, five witnesses were interviewed. The statements of four of them are before the Commission. The notes of Mr Boyd’s interview with Lizanne, who was also alleged to have used racist language, has not been tendered. According to the applicant and Ms Porter there were two other people present, Diana, a casual employee, and Leanne Hutton. In her statement of 20 July 2017, Ms Clarke states that Diana was no longer employed by respondent. It is not entirely clear whether she left before or after the investigation of the language used at morning tea on the morning of 24 May was completed by Mr Boyd and Ms Clark. There is no explanation of the failure to tender Lizanne’s statement to Mr Boyd or of the decision not to interview Ms Hutton.
The troubling aspect of this state of affairs is that the prohibition on speaking with other employees has deprived the applicant of obtaining information from at least two other employees whose evidence may have assisted him. Whether or not their evidence would have assisted the applicant and, if so, whether Ms Clarke and Ms Hoile would have preferred their evidence to the evidence already obtained is unknown. However, it is in necessary to consider whether it was fair for the respondent to prohibit the applicant from talking to witnesses who were present in the breakroom at morning tea on 24 May 2017, when it either did not interview them or, alternatively, did not put their statements into evidence.
While I have discounted many of the criticisms of the process as mere blemishes, this aspect of the investigation and decision-making process of the respondent is more than a blemish. It goes to the heart of the question of fairness. It is for the respondent to prove that its processes were fair. In many respects, the process adopted by the respondent was exemplary. It acted on the complaint expeditiously; interviewed witnesses; retained a signed copy of the notes made at interview; provided the applicant with two opportunities to put his case; and came to a decision which on the available evidence is difficult to criticise.
On reflection, however, I have concluded that the respondent has not established that the procedure adopted was fair. The applicant was deprived of an opportunity to put his case that he had not used racist or language at morning tea in the breakroom at its highest by reason of the respondent’s prohibition on him speaking to any fellow employee about the investigation.

Incapacity

Dr Bisht, a psychiatrist who provided a report to the respondent on 17 December 2020 expressed the opinion that the applicant had possessed an earning capacity for a period of about 12 months. Prior to that time he had been totally incapacitated for work. There is, therefore, no real issue that the applicant had no current earning capacity during the first and second entitlement periods in the matter. The second entitlement period ends at the latest on 25 November 2019, which is more than 12 months before the applicant saw
Dr Bisht. I should add that Dr Dinnen also expressed the view that the applicant had no current earning capacity and that that the serial reports of his treating psychologist
Ms Schmidt are consistent with the opinions of Dr Bisht and Dr Dinnen.
I doubt that I have jurisdiction to make an award for weekly compensation beyond the second entitlement period.
It was not disputed at the arbitration hearing that the applicant’s PIAWE was $809 per week. The claim pleaded runs from 29 May 2017, although there is a suggestion in the evidence that the respondent paid compensation. But that may only have been for medical expenses. It is also evident that the applicant worked for a period after 29 May 2017. In the circumstances, I propose to order that the parties lodge short minutes of order reflecting these reasons. That is that the applicant had no current earning capacity during the period that he was absent from employment after 29 May 2017 and throughout the first and second entitlement period.
I propose to make an award for the applicant in respect of medical and hospital expenses pursuant to section 60 and refer the claim for permanent impairment compensation to the President for referral to a medical assessor.
I give liberty to apply in respect of these matters as they involve issues which were not the subject of consideration at the arbitration hearing.

[2021] NSWPIC 265

28 July 2021