Manly Pacific International Hotel Pty Ltd v Doyle

[1999] NSWCA 465

CITATION:	Manly Pacific International Hotel v Doyle [1999] NSWCA 465
FILE NUMBER(S):	CA 40813/98
HEARING DATE(S):	16 September 1999
JUDGMENT DATE:	16 December 1999
PARTIES :	Manly Pacific International Hotel Pty Ltd (Appellant) v Ronald Francis Doyle (Respondent)
JUDGMENT OF:	Mason P at 1; Fitzgerald JA at 2; Davies AJA at 17

LOWER COURT JURISDICTION:	Compensation Court
LOWER COURT FILE NUMBER(S) :	2508/97
LOWER COURT JUDICIAL OFFICER:	Walker J

COUNSEL:	A: M Cranitch SC, K Sibley R: B J Toomey QC, P Stockley
SOLICITORS:	A: Bruce & Stewart R: Paul A Curtis & Co
CATCHWORDS:	Workers Compensation; entitlement to compensation for psychological injury; reasonable action by employer with respect to transfer; error of law; meaning of "transfer"; meaning of "workers"; interpretation of s11A(1) of the Workers Compensation Act 1987.
ACTS CITED:	Workers Compensation Act 1987, s11A Supreme Court Act 1970, s75A Compensation Court Act 1984, s32 Interpretation Act 1987, s8
DECISION:	Appeal dismissed with costs

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40813/98
CC 2508/97

MASON P
FITZGERALD JA
DAVIES AJA

THURSDAY 16 DECEMBER 1999

MANLY PACIFIC INTERNATIONAL HOTEL PTY LTD
v
Ronald Francis DOYLE

JUDGMENT

1 MASON P: I agree with Fitzgerald JA. 2 FITZGERALD JA: The circumstances giving rise to this appeal are set out in the reasons for judgment of Davies AJA. 3 I agree with his Honour that the Compensation Court erred in law in favour of Mr Doyle when it held that subs 11A(1) of the Workers Compensation Act 1987 does not apply to a transfer of a single worker. I also agree with his Honour that, in that subsection, “transfer” includes a move from one position to another, whether or not there is any change in location, and that Mr Doyle was transferred within the meaning of that subsection. 4 Before this Court, it was not disputed that Mr Doyle’s employment was a substantial cause of his psychological injury. That being so, the Compensation Court was required to decide whether (i) the whole or predominant cause of Mr Doyle’s psychological injury was the appellant’s action with respect to Mr Doyle’s transfer from one position to another, and, (ii) if so, whether the appellant’s action with respect to Mr Doyle’s transfer was reasonable. 5 Mr Doyle was entitled to succeed in the Compensation Court if either issue identified in the preceding paragraph was decided in the negative. If Mr Doyle established that his psychological injury was not “wholly or predominantly caused by … action taken …. by … [the appellant] with respect to [Mr Doyle’s] transfer”, he is entitled to be compensated although the appellant’s material “action” was “reasonable”. Conversely, if Mr Doyle’s psychological injury was “wholly or predominantly caused by … action taken … by [the appellant] with respect to [Mr Doyle’s] transfer”, he is entitled to be compensated if he established that the appellant’s “action” was not “reasonable”. 6 In my opinion, the act of transfer of a worker by an employer, i.e., the communication of a decision to transfer (or a proposal to transfer) the worker, is an “action taken or proposed to be taken by or on behalf of the employer with respect to transfer …” of the worker within the meaning of subs 11A(1). The worker is entitled to be compensated for psychological injury caused or predominantly caused by the communication of a decision or proposal to transfer him or her where the decision or proposal or the manner in which the decision or proposal is communicated were unreasonable. 7 Davies AJA has stated that the Compensation Court “held that the circumstances under which Mr Doyle worked [after his transfer] were the predominant cause of his breakdown” Para 28. and expressed the opinion that, for the purpose of subs 11A(1), the consequences of actions “taken or proposed to be taken by or on behalf of the employer with respect to transfer” do not include “the worker’s response to employment conditions encountered after a transfer …”. Para 27. In my opinion, that proposition is too broadly stated. 8 It was an action taken by the appellant with respect to the transfer of Mr Doyle, namely, the transfer of him from one position to another, which caused him to work in “the circumstances … which … were the predominant cause of his breakdown”. That being so, the appellant’s material action, the transfer of Mr Doyle, cannot be automatically excluded as the whole or predominant cause of Mr Doyle’s psychological injury. Whether or not the appellant’s transfer of Mr Doyle was the whole or predominant cause of his psychological injury within the meaning of subs 11A(1) is a question of fact and degree, which involves consideration of all the factors which produced Mr Doyle’s condition. 9 The Compensation Court erred in law in failing to undertake that task. 10 However, the Compensation Court held that the appellant’s transfer of Mr Doyle was not reasonable. Unless that conclusion involved an error of law by the Compensation Court, Supreme Court Act 1970, subs 75A(10). Mr Doyle was entitled to succeed in that Court despite its other legal errors. If Mr Doyle was entitled to succeed in the Compensation Court, this appeal should be dismissed. Supreme Court Act 1970, subs 75A(10). 11 Davies AJA is of opinion that the reasons given by the Compensation Court for its conclusion that the appellant’s transfer of Mr Doyle was unreasonable disclose error of law. 12 The substance of the appellant’s complaint on this issue was that the Compensation Court ignored matters relied on by the appellant to substantiate the reasonableness of its transfer of Mr Doyle. The Compensation Court said that the appellant’s case was that “managers must manage and what is good for business is reasonable.” In his reasons for judgment, Davies AJA has explained why he considers that that was not an accurate summary of the appellant’s position. 13 However, when the appellant’s reasons for transferring Mr Doyle are analysed, it is obvious that the appellant’s business efficiency and convenience were the major factor for its decision. The appellant submitted that the Compensation Court failed to take into account “Mr Doyle’s acceptance of the position [to which he was transferred] and the fact that … [the appellant] received no complaint thereafter.” Davies AJA, reasons for judgment, para 36. In my opinion, the omission to refer to those matters could not, in the present context, constitute an error of law. When notified of the appellant’s intention to transfer him, Mr Doyle had expressed doubt about his capacity to perform the duties of the position to which he was transferred. It is immaterial to the reasonableness or unreasonableness of the appellant’s action in transferring Mr Doyle despite his stated concern that, after he was transferred by the appellant, Mr Doyle performed the duties of his new position without further complaint. 14 The only other matter which the appellant submitted that the Compensation Court failed to consider was the appellant’s view that Mr Doyle was capable of performing the duties of the position to which he was transferred. That that was recognised by the Compensation Court is at least implicit in its acknowledgment that the appellant was primarily motivated by its own business interests. 15 It was not submitted that the Compensation Court’s conclusion that the appellant’s transfer of Mr Doyle was unreasonable was not open to it on the evidence. Since the appellant has failed to demonstrate that that Court ignored matters which it was required to take into account in the appellant’s favour, I am not persuaded that the Court’s conclusion that Mr Doyle’s transfer was unreasonable involved error of law. 16 I would therefore dismiss the appeal, with costs. 17 DAVIES AJA: This is an appeal from the judgment of a Judge of the Compensation Court of New South Wales, in which his Honour held that the present respondent, Ronald Doyle, was entitled to workers’ compensation by way of weekly benefits from 21 July 1996 and continuing and medical expenses. As the appeal is brought under s 32 of the Compensation Court Act 1984, it is limited to a question of law. 18 The issues in the appeal arise under s 11A of the Workers Compensation Act 1987 which, at the relevant time, read:

(1) No compensation is payable under this Act in respect of an injury that is a psychological injury unless:


(a) the employment concerned was a substantial cause of the injury, and

(b) the injury was not wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers.
…
(5) A worker’s employment is not to be regarded as a substantial cause of a psychological injury merely because the employment is a real or actual cause of the injury. The term “substantial” is used in this section in the sense of real and important.

19   Mr Doyle, who was born in 1937, had been a chef throughout his working life. In November 1986, he took a position at the Manly Pacific International Hotel. After three months as a Demi Chef, he was made Larder Chef, which involved cold food preparation and carving work. In this position, he held the rank of Chef de Parti. Mr Doyle remained in that position thereafter, although he occasionally helped out in other areas. 20   In May 1996, Mr Doyle had a chest infection which brought about his admission to hospital. The trial Judge described Mr Doyle’s evidence as to subsequent events as follows:

“On the 10 July 1996 he was discharged from hospital. He consulted Dr Tattersall about returning to work. She said he could go back to work and so he contact the Executive Chef Barnard O’Hagan and told him what Dr Tattersall had said. Mr O’Hagan told the applicant to come back to work the next day. He then told him ‘I’m putting you in the sauce corner tomorrow’. The applicant responded ‘I haven’t done that in nine years at least’. Mr O’Hagan then said ‘Don’t worry, you’ll get back. I’ll put Paul with you’. The applicant explained that Paul Sanders was a Demi Chef who had worked with him previously as an apprentice.
The applicant arrived at work the next day and started work as a sauciere. He explained that the work was very different to what he had been doing. This was hot food work for Nell’s Brasserie, Gilbert’s Restaurant and buffet and functions.
The applicant said Paul was there when he arrived but only stayed with him for two days. He said he had some help from the Sous Chef on a Sunday but no other assistance. Mr Doyle said he was getting frightened by the work. He had trouble with the quantities and found himself forgetting things. He got ‘more uptight and tighter’. He became shaky and forgetful. His memory of what happened is vague. On the last day he went home crying and shaking. He went to see the family GP Dr Pacey. Dr Pacey sent him to see Dr Champion a psychiatrist and he was admitted to the Evesham Clinic on 13 August 1996 under the care of Dr Stephan and Dr Cassimatis. He was at the clinic to the 25 November 1996.”

21   The trial Judge described some of Mr Doyle’s evidence in cross-examination as follows:

“The applicant denied he had been told by Mr O’Hagan that he was to fill in for someone away on vacation. He said he told him ‘I don’t think I’ll be able to cope because I haven’t done it’. However he accepted the decision. The applicant said he had made the sauces such as choux and béchamel years ago.
His main problems were uncertainty about quantities and speed of preparation. He had forgotten some parts of making the sauces.
The applicant agreed that the purpose of giving him a demi chef was to help with the quantities. He disagreed that the demi chef, Paul Sanders was with him for the whole of the first week. Mr Doyle agreed that other chefs had been moved in the past. The applicant said that he complained about his inability to cope with the sauciere’s work to the sous chef Atil Seth and he came and helped him out.
The applicant said he felt he should have been able to do the work as a sauciere but he had trouble with the constant running around to the fridges and Gilbert’s Restaurant. The applicant said he was good in the sauce section when he was 40 years old. He didn’t have the speed anymore. The applicant said he wasn’t even up to the larder section after his illness.”

The trial Judge accepted Mr Doyle’s evidence.

22   His Honour referred to evidence by Mr Jules Siegenthaler, who had been an Executive Chef at the Manly Pacific until 1991, and who was Executive Chef at the Intercontinental Hotel and at Eliza’s Restaurant Double Bay. The trial Judge’s summary of the crux of Mr Siegenthaler’s evidence was as follows:

“Mr Siegenthaler agreed that if someone was moved from the cold larder to the sauce section he would need assistance from someone who knew what they were doing. He said that person would need help for a considerable time. He said he would talk to the person first and ask him ‘Do you want to go onto that section, what do you think, could you handle it’. He agreed if the person did not complain about being unable to cope and appeared to be doing the job he would leave them there. He would ask the sous chef to keep an eye on him.”

23   The trial Judge made these findings of fact, inter alia:

“Mr Doyle’s physical health was not great. He had experienced some heart troubles and had just suffered a major respiratory illness requiring hospitalisation and a 3 month period off work. He was run down and still suffering from chronic obstructive airways disease.
The applicant was then required to do a job against his wishes which made him very insecure and unsure because of lack of experience for almost a decade. It was a much more physical job which put him under far more pressure than his long established role.
The applicant who was by nature a perfectionist in his employment found himself unsure of what to do and in a position of having to seek advice from a young man he perceived as an apprentice. The experience was both traumatic and humiliating.
I accept the evidence of Dr Canaris and Dr Cassimatis the treating psychiatrists who say this situation caused his psychological injury.
Dr Canaris says at page 5 of his report ‘I think it is fair to say that his workplace was a substantial though not exclusive causal factor in his illness’.
Dr Cassimatis in his report of the 26 March 1996 says ‘It was my view that work related stress caused Mr Doyle to decompensate into a Major Depressive illness and Panic Anxiety Disorder’.”

24   On these findings, the trial Judge concluded:

“Other factors made him vulnerable to depression and anxiety but it was the sauciere’s work that precipitated his disability. It was the dominant factor relevant to the end result.
…
… I have found that it was the work as a sauciere that was the prevailing cause of the applicant’s injury.”

25   There is no challenge in this appeal to these findings by the trial Judge, or to his conclusions that Mr Doyle’s psychological injury arose out of and in the course of his employment at the Manly Pacific and that the employment was a substantial cause of the injury. The evidence before the trial Judge showed that it was the conditions under which he was working and his inability to overcome the problems which he encountered that brought about Mr Doyle’s breakdown. 26   The principal matter debated in this appeal was whether Mr Doyle’s injury was “wholly or predominantly caused by reasonable action taken or proposed to be taken by or on behalf of the employer with respect to transfer”, within the meaning of s 11A(1)(b). In this provision, emphasis is placed upon action taken or proposed to be taken by or on behalf of the employer. The provision differentiates between the worker’s psychological response to work done and required to be done in the course of employment and the worker’s psychological response to action taken or proposed to be taken by or on behalf of the employer. It is only the latter circumstance which causes the provision to operate. 27 The criterion of s 11A(1)(b) is “reasonable action taken … by or on behalf of the employer”. The words “with respect to” are of wide application. Transfer, demotion, promotion, etc may be the subject of the action or proposed action taken by or on behalf of the employer or matters with respect to which that action or proposed action is connected or may themselves constitute the action or a part of the action. However, the provision does not speak of an injury caused by the transfer, demotion, promotion, etc of a worker but of an injury caused by action taken or proposed to be taken by or on behalf of the employer with respect to such a matter. The words “performance approval, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers” all clearly refer to matters other than the performance by a worker of his duties. The paragraph is thus looking to the worker’s response to the employer’s action or proposed action, not to the worker’s response to employment conditions encountered after a transfer, demotion, promotion, etc. Senior counsel for Mr Doyle put the matter well when he submitted that the section was looking to the process of transfer, demotion, promotion etc rather than those acts per se. 28   The trial Judge held that the circumstances under which Mr Doyle worked were the predominant cause of his breakdown. The working conditions were hot and there was a great deal of pressure. Mr Doyle became frightened by his responsibilities. He had trouble with the quantities. He found himself forgetting things. He became uptight. He became shaky and forgetful. He had to seek assistance from a junior who had worked as his apprentice. When he went to see his physician, he was endogenously depressed and was prescribed anti-depressants. The trial Judge found that it was the work as a sauciere which was the prevailing cause of Mr Doyle’s breakdown. The trial Judge rejected the view that Mr Doyle’s psychological response was wholly or predominantly a response to an action of the employer. Mr Doyle did not wish to be transferred but accepted the decision. The trial Judge said:

“There is no suggestion in the applicant’s evidence that he was demoted. He was paid the same and remained a Chef de Parti. He may well have feared demotion but he was not demoted.”

29 In these circumstances, it seems to me that the trial Judge concluded that Mr Doyle’s injury was neither wholly nor predominantly caused by action taken or proposed to be taken on behalf of the employer but rather was caused by the working conditions which he encountered. His Honour was therefore bound to conclude that s 11A(1)(b) did not apply. Mr Doyle’s breakdown resulted wholly or predominantly from the incidents of the work as a sauciere, not from the employer’s actions. Mr Doyle suffered a psychological response not to those actions but to the work he was assigned to do. 30 The trial Judge did not express his conclusion in that way. The trial Judge held, first, that the move which Mr Doyle was required to undertake, from that of Larder Chef to Sauciere, was not a transfer. The trial Judge said that “transfer” usually involves a shift from one place to another and that Mr Doyle was moved only a short distance within the kitchen of the Manly Pacific. 31   In my opinion, that interpretation of the word “transfer” was too narrow. The word is used in the employment context. As such, it encompasses a move from one position to another whether or not there is any change in location. In determining whether or not there is a transfer, a change in the nature and responsibilities of the work performed may be of more importance than a change in the place where the work is carried out. Mr Doyle was moved from the position of Larder Chef to that of Sauciere. That was a transfer. 32 The trial Judge further held that, in s 11A(1)(b), the word “workers” was to be read in its plural form and did not encompass action taken or proposed to be taken by or on behalf of the employer with respect to one worker. However, the word “workers” in s 11A(1)(b) should be read as encompassing the singular, in accordance with s 8(c) of the Interpretation Act 1987. There is nothing in the context which requires a contrary interpretation. 33   Finally, the trial Judge held that the direction given by Mr O’Hagan to Mr Doyle to undertake the work of a sauciere was not reasonable. The trial Judge said:

“I have taken into consideration at all the evidence presented in this case including the facts that the applicant had been extremely ill for 3 months, that he was almost 60, had been doing the one job for a decade and any skills he had as a sauciere were in the distant past. I find it was not reasonable in all the circumstances for the respondent to place the applicant in the sauciere’s position in the manner in which it did.”

34   However, the trial Judge did not discuss, in this aspect of the case, the evidence of Mr O’Hagan, the Executive Chef, that the person who had been the Sauciere had retired and his position needed to be filled, that another employee had done a sterling job as Larder Chef while Mr Doyle was ill and that it was convenient to put Mr Doyle into the sauce section while others took leave. He considered that Mr Doyle was capable of doing the work. 35   The trial Judge stated the case for the employer on this aspect, in this way:

“1. Mr O’Hagan’s view as a manager with a brief to increase profits by reducing staff and food costs is that multiskilling and flexibility are essential to a modern kitchen. He is supported in that view by Mr Murray. The respondent’s case is that managers must manage and what is good for business is reasonable.”

However, those were not the substantial facts as explained by Mr O’Hagan. Mr O’Hagan was faced with a vacant position because of a retirement and because others were on leave. He considered that Mr Doyle had the experience. Although Mr Doyle expressed a doubt as to whether he would be able to do his job, Mr O’Hagan believed that Mr Doyle could do it. Mr O’Hagan received no complaint of Mr Doyle’s work or any complaint from Mr Doyle.

36 My concern with the approach taken by the trial Judge is that the statutory provision is concerned to see, not whether a transfer, demotion, promotion, etc itself was reasonable, but whether action taken by or on behalf of the employer with respect to such transfer, demotion, promotion, etc was reasonable. It seems to me that the trial Judge unduly limited his consideration of the facts and failed to take into account the fact of and the content of the conversation between Mr O’Hagan and Mr Doyle, the fact of Mr Doyle’s acceptance of the position and the fact that Mr O’Hagan received no complaint thereafter. These matters were all relevant to and significant to the question whether Mr O’Hagan’s actions, with respect to the transfer, were reasonable. It would also have been relevant, if it were the fact, that the transfer was only temporary whilst other members of the staff were on leave. 37 In the circumstances, it seems to me that, on this aspect of the case, the trial Judge failed to take into account relevant circumstances and unduly narrowed his consideration of the issues to be decided. Nevertheless, for the reasons I have given, the trial Judge was bound, having regard to his findings of fact on causation, to hold that s 11A did not apply. Accordingly, his judgment should stand. 38 In my opinion, the appeal should be dismissed with costs.

**********