McHatton v APCD Pty Ltd

CERTIFICATE OF DETERMINATION OF MEMBER
CITATION:	McHatton v APCD Pty Ltd [2024] NSWPIC 285
APPLICANT:	Craig McHatton
RESPONDENT:	APCD Pty Ltd
MEMBER:	Cameron Burge
DATE OF DECISION:	29 May 2024
CATCHWORDS:	WORKERS COMPENSATION - Workers Compensation Act 1987; claim for weekly benefits and medical expenses in relation to a psychological injury; fact of injury admitted, however, respondent raises defence pursuant to section 11A in relation to discipline; Held – on a common-sense evaluation of the causal chain including the lay and medical evidence, the applicant’s injury was predominantly caused by an email forwarded by his manager to the sales team on 5 May 2023 which stated the sales team would be subject to disciplinary action if they did not comply with the longstanding directions of the respondent with regards to notifying the national manager of their whereabouts when not in the office; Kooragang Cement Pty Ltd v Bates followed; Smith v Roads and Traffic Authority of NSW discussed; the applicant’s perception that the email was targeted at him because of an interaction with his manager the day before the email was sent was the predominant cause of his injury; however, the applicant’s perception of the email is irrelevant when assessing whether it was reasonable; that process involves an objective analysis of the conduct having regard to established principles; Irwin v Director-General of Education NSWCC 14068/97, Commissioner of Police v Minahan, and Ritchie v Department of Community Services followed; having regard to the totality of the evidence, the proposed actions of the respondent with regards to discipline which were the predominant cause of the injury at issue, namely forwarding the email, were reasonable; award for the respondent.
DETERMINATIONS MADE:	The Commission determines: 1. The applicant suffered a psychological injury in the course of his employment with the respondent, with a deemed date of injury of 5 May 2023. 2. The applicant's injury was caused by the reasonable actions of the respondent proposed to be taken with respect to discipline. 3. Award for the respondent.

STATEMENT OF REASONS

BACKGROUND

In or about September 2020, Craig McHatton (the applicant) began working as the Queensland business development manager for APCD Pty Ltd (the respondent) which runs an IT assets business.
The claimant's role is sales-based and customer-facing. His responsibility is to generate sales and manage customer accounts. His direct supervisor is Mr Gary Claypole, the national sales manager of the respondent. It is Mr Claypole's interactions with the applicant in May 2023 which have led to the applicant sustaining a psychological injury, in particular, an email forwarded by Mr Claypole to the sales staff on 5 May 2023.
As noted, there is no question the applicant suffered a psychological injury. However, the respondent alleges the injury was caused by its reasonable actions with respect to discipline.
Additionally, should there be a finding in the applicant's favour on the question of liability, the degree of the applicant's incapacity is also in issue.

ISSUES FOR DETERMINATION

The parties agree that the following issues remain in dispute:
(a) whether the applicant's injury was caused by the respondent's reasonable actions with regards to performance appraisal and/or discipline, and
(b) if the answer to (a) above is in the negative, what is the extent of the applicant's incapacity for employment, if any.

PROCEDURE BEFORE THE PERSONAL INJURY COMMISSION

I am satisfied that the parties to the dispute understand the nature of the application and the legal implications of any assertion made in the information supplied. I have used my best endeavours in attempting to bring the parties to the dispute to a settlement acceptable to all of them. I am satisfied that the parties have had sufficient opportunity to explore settlement and that they have been unable to reach an agreed resolution of the dispute.
The parties attended a hearing on 16 April 2024. At the hearing, the applicant was represented by Mr Moffett of counsel and the respondent was represented by Mr Gaitanis of counsel.
The parties entered into a lengthy period of conciliation, at the conclusion of which directions were made for the lodging of written submissions.
The respondent lodged its submissions on 7 May 2024. The applicant lodged his submissions on 21 May 2024. The respondent lodged its submissions in reply on 23 May 2024.

EVIDENCE

Documentary evidence

The following documents were in evidence before the Personal Injury Commission (Commission) and considered in making this determination:
(a)    Application to Resolve a Dispute (the Application) and attachments;
(b)    Reply and attachments, and
(c)    respondent’s Application to Admit Late Documents (AALD) dated 10 April 2024 and attachments.

Oral evidence

There was no oral evidence called at the hearing.

FINDINGS AND REASONS

Sentence case, the defence under s 11A.

Section 11A(1) of the Workers Compensation Act 1987 (the 1987 Act), provides:
“No compensation is payable under this Act in respect of an injury that is a psychological injury. If the 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 … performance appraisal, discipline … “
An employer which seeks to make out a defence pursuant to s 11A carries the onus of establishing that defence: Pirie v Franklins Limited [2001] NSWCC 167.
“Wholly” and “predominantly” are separate concepts and a finding of one or the other must be considered. In Smith v Roads and Traffic Authority of NSW [2008] NSWWCCPD 130 (Smith) the arbitrator at first instance made a finding that the subject injury was “wholly or predominantly” caused by action taken by the respondent employer. Snell ADP (as he then was) said at [62] that the concepts of “wholly” and “predominantly” are different, and if such findings were to be made, “it needed to be one or the other.”
The phrase “wholly or predominantly caused” has been held to mean “mainly or principally caused.” The test of causation to be applied is that of a common-sense evaluation of the causal chain, as set out in the oft-cited passage of Kirby P (as he then was) in Kooragang Cement Pty Ltd v Bates (1994) 35 NSWLR 452.
The requirements to satisfy the test in s 11A are twofold, and both requirements must be met. Not only must the conduct relied on by the employer be the whole or predominant cause of the applicant’s injury, that conduct must be reasonable. The test is conjunctive, and both limbs must be satisfied.
Considering the meaning of reasonableness, Geraghty J in Irwin v Director-General of Education NSWCC 14068/97, 18 June 1998 said:
“The question of reasonableness is one of fact, weighing all the relevant factors. That test is less demanding than the test of necessity, but more demanding than the test of convenience. The test of ‘reasonableness’ is objective and must weigh the rights of employees against the object of employment. Whether an action is reasonable should be attended, in all the circumstances, by questions of fairness.”
That paragraph, and the decision of Truss CCJ in Ivanisevic v Laudet Pty Ltd (unreported, 24 November 1998) were met with approval by the Court of Appeal in Commissioner of Police v Minahan [2003] NSWCA 239 (Minahan). It is apparent that in assessing reasonableness, the Court is required to have regard to not only the end result of the conduct, but to the manner in which it was affected.
In Ritchie v Department of Community Services [1998] 16 NSWCCR 727 (Ritchie), Armitage J said:
“It is apparent that the test in this case is an objective one where one must weigh the consequences of the respondent’s conduct against the reasons given for it. It follows of course from the objective nature of the test that the evidence given by the applicant as to the perceived unreasonableness of the respondent’s conduct or from the respondent as to the reasonableness of its conduct from its perspective will not be determinative of this issue.”
Reasonableness is judged having regard to fairness appropriate in the circumstances, including what went before or after a particular action (see Burke J in Melder v AusBowl Pty Ltd [1997] 15 NSWCCR 454). As Armitage J noted in Jackson v Work Directions Australia Pty Ltd [1998] NSWCCR 45, “only if the employer’s action in all of the circumstances was fair could it be said to be reasonable.”
During 2021, the COVID-19 pandemic had meant the respondent kept its salespeople working remotely. Towards the end of that year, however, communications began being sent by the respondent to transition people back to the office.
Attached to the application are 11 emails from the respondent to its salespeople concerning the question of out-of-office work. The first such email was forwarded on 19 November 2021.
By March 2022, a requirement was placed into the emails which were forwarded by Mr Claypole inserting that the salespeople advise Mr Claypole in advance if, on a day when they were allocated to be in the office, they were away at site meetings with a client.
On 4 April 2022, Mr Claypole requested in his email that the sales team “also please start using the client meeting board again” when they were at a client site meeting, a reference to a whiteboard in the office on which people could write their expected locations on any given day.
On 6 April 2022, Mr Claypole altered the wording of the email which he forwarded to the salespeople and noted some people were arriving late to the office and leaving early. In this email, Mr Claypole made it “mandatory” that a salesperson, if at a face-to-face client meeting was to “please advise” him in advance of the meeting and start using the whiteboard again.
A further reminder as to what was required was forwarded in an email from Mr Claypole to the sales staff on 27 June 2022 which omitted any reference to the use of the whiteboard and instead requested the national sales manager be notified in advance of their whereabouts. The email was introduced as “a further gentle reminder”, a phrase with which members of the Workers Compensation Division of the Personal Injury Commission are sadly all too familiar when they are late in producing their decisions.
Similar further emails were forwarded by Mr Claypole until, on 5 May 2023, he sent an email in the following terms:
“Hi guys, moving forward, as well as using the whiteboard for meetings when leaving the office on an allocated day (must provide client – and name) e.g. – Phillips – Anthony Bartlett.
Along with advising myself, via a call or SMS (if I am unavailable).
** If you are not in the office on allocated day, or part thereof, due to client F2F meetings (not phone or Teams calls) or other, please advise myself in advance.
This is mandatory.
Bruce – Mon/Tue/Wed
Garett – Mon/Wed/Fri
Craig – Tue/Thu/Fri
Gary – Mon/Wed/Thur
Failure to comply will result in official warnings.
Cheers Gary Claypole” (original emphasis)
As the applicant noted in his submissions, prior to this email, it had been more than 12 months since Mr Claypole had last referred to there being a requirement that the sales team use the whiteboard. During that period, three emails had been forwarded stipulating the so-called mandatory requirements placed on members of the sales team, and they did not mention a requirement to enter information on the whiteboard. The emails did, however, require the sales team to advise Mr Claypole of their proposed whereabouts.
Relevantly, however, the applicant’s own statement indicates he placed his whereabouts on the whiteboard in any event. This much is made clear in his recounting of a conversation he had with Mr Claypole on 4 May 2023, in which reference is made to Mr Claypole noting the applicant placing his proposed whereabouts for that day on the board.
On that day, the applicant had awoken and found his phone was not working. He attended the office for the regular sales meeting and told Mr Claypole he wished to attend a client called DXC to catch up with people and that he had to get his phone fixed, which he was going to do first because he had no other means of communication.
According to the applicant, he then sent an email to everyone advising them his phone was dead; he would try to get it back up and running as soon as possible, and if there were any problems to send him an email. At around 1.00pm, the applicant had his phone fixed, after trying at a previous store without success.
According to the applicant:
“24. When I got the phone working, I saw that I had a text from Gary saying ‘Where are you? Give me a call.’ I got in the car and called him, and he asked where I was. I said I just got my phone fixed and he is like, ‘Oh, why are not you here? I am at DXC you told me, and you put up on the white board that you were going to be here.’ I said, ‘No, I said I told you I had to get my phone fixed first as I did not have a phone and then I was going to go to DXC.’”
According to the applicant, Mr Claypole began questioning him and seemed to doubt his version of events before asking if he would be in the office the following day, to which the applicant replied in the affirmative, prompting Mr Claypole to indicate he would speak with the applicant then.
On 5 May 2023, the applicant attended the office. Just after 9.00am, an email from Mr Claypole concerning notification of sales team member whereabouts arrived, and contained a change from previous weeks by the inclusion of notification that anyone who did not advise Mr Claypole of their whereabouts and their intentions on the whiteboard would be issued with official warnings. According to the applicant:
“28.   My immediate reaction was ‘What’s he changed that for?’ My brain did not just trigger straight away because, really, you kind of have to be performance managed and stuff like that before you can just start issuing official warnings to people. I thought that there was a certain process you got to follow.
29.    I thought one of the other guys has done something bad here but throughout the day I realised it is because of the day before, Gary used me as a weapon and changed this thing to now give everybody in the sales team official warnings if they fail to follow his processes.
30.    Through talking to the guys, I realised that it was not them, and they did not even really understand what had happened. I explained it to them, and they were like, ‘Look, do not worry about it. That is okay.’ And it was not okay. Gary changed that part of the email to address me because I had asked the other guys if they had done anything and what it was about. It was because of the previous day, when I had to get my phone fixed, I had written on the whiteboard that I would be someplace, but I was not. Gary’s message in the email is associated to that. Gary put in the email about official warnings to attack me and the team. He used the situation from the previous day to attack the team for no reason. The attack is threatening us with official warnings.
31.    That is the first time he has ever threatened official warnings to anybody, the first time anybody was put in a threatening situation prior to that email being sent. You can see in the email how many times it was sent prior, and then to change that to that after what happened the day before.”
Mr Claypole denies the applicant’s version. In his statement attached to the Reply, Mr Claypole refers to the email on 5 May 2023 then states:
“29.   That email thread had been sent many times over the past few years as we migrated from working from home to coming back into the office. Part of the company’s edict was to at least get a minimum of three days in the office per week so we set up a roster with the sales team including Bruce Hamilton, Gareth Tame, the claimant and myself.
30.    That email that is referred to on 5 May had been sent out many times over the past year or 18 months. It was just a reminder to all the guys and was not directed at the claimant whatsoever.
31.    The email was sent out on 5 May because Bruce had just come back from being off with prostate cancer and Gareth was actually going to other clients but was not putting it on the board, which did not follow process that we had agreed. It is a continuation of the same email that had been going to the team for over a year since we started coming back into the office.”
The applicant wrote to Mr Claypole alleging the email had been directed at him, consistent with the terms of his statement. Mr Claypole responded immediately denying this was the case.
The applicant alleges the communication to the sales team on 5 May 2023 was neither reasonable nor communicated reasonably, as it elevated the requirement to make a recording on the whiteboard to a threat, was worded haphazardly, did not clearly outline the circumstances of the requirement to personally notify Mr Claypole of being away from the office such as to create confusion, and exhibited a change in tone of the language in from previous emails which was not reasonable in the absence of an accompanying explanation.
The applicant submits the email was clearly directed to him, coming as it did the day after the incident involving his phone. He submits that the applicant was travelling from having his phone repaired to then visit a client when Mr Claypole telephoned him and in those circumstances it was less than reasonable that disciplinary action or the threat of disciplinary action could be raised over a technical minor breach of a requirement, namely writing on the whiteboard, which had not been the subject of any email for over a year.
The applicant also submits Mr Claypole’s statement that the email was not directed at the applicant means the forwarding of the email to him was of itself unreasonable. Likewise, the applicant submits Mr Claypole’s explanation that the email was sent in response to another staff member having come back from prostate cancer would alone mean the email could not be said to be reasonable.
As the respondent noted, there is no dispute the applicant suffers from a psychological injury. I accept the respondent’s submission the evidence of the applicant and the balance of the medical evidence from independent medical examiners (IMEs) Dr Kumagaya and Dr Goyal supports a finding that the predominant cause of the applicant’s injury was the email sent to staff by Mr Claypole on 5 May 2023. Although Dr Kumagaya provided an opinion that the applicant’s injury was further exacerbated by an unsupportive work environment, he was nevertheless of the view the email of 5 May 2023 primarily resulted in the applicant’s injury. As noted in the discussion of the relevant authorities, there can only be one whole or predominant cause of an injury.
Neither party disputed that the conduct of Mr Claypole was in the nature of discipline or action proposed to be taken with respect to discipline. In any event, I am satisfied the conduct which is the predominant cause, namely the email of 5 May 2023, was in relation to proposed disciplinary conduct. I am therefore satisfied on the balance of probabilities that the first limb of the test for establishing a defence pursuant to s 11A, namely whole or predominant cause, has been satisfied in this matter.
The question then is whether the conduct of the respondent upon which it relies is reasonable in the circumstances.
It must be remembered when considering the question of reasonableness that the standard required to succeed is not one of perfection or complete correctness. As his Honour, President Judge Phillips noted in Van Vliet v Landscape Enterprises Pty Ltd [2022] NSWPICPD 49:
“139. Having made these findings, it then was necessary for the member to consider the concept of reasonableness for the purposes of s 11A(1). The member instructed himself with respect to the case law which is regularly applied in this area.
140. In particular, the member noted that ‘reasonableness does not require the employer's actions in respect of discipline to be flawless’ …
179. The concept of reasonableness in s 11A(1) does not, with respect, require a counsel of perfection. It requires, consistent with the authorities, that all of the circumstances of the case are considered and that the action then be considered in an objective sense to be reasonable or not …”

It is important at this point to remember that whilst a worker’s perception of events which actually transpired is sufficient to make a finding of psychological injury (see State Transit Authority of NSW v Chemler [2007] NSWCA 249 (18 September 2007)), that perception is irrelevant in determining whether the reasonableness requirements of s 11A are made out. The latter exercise is an objective one, and the trier of fact must look at the conduct as a dispassionate observer of the totality of the evidence surrounding both the conduct relied on and the manner in which it was effected: see Ritchie, referred to at [19] above.
Having regard to the factual matrix of this case, I am satisfied on the balance of probabilities that the respondent's actions proposed to be taken with respect to discipline which caused the applicant's injury were reasonable. Although the email of 5 May 2023 to the sales team was the first which mentioned that a failure to comply with the direction to make their whereabouts known would result in a formal warning, there had been a long line of emails sent on a regular basis emphasising that this requirement must be met. Mr Claypole explained that the team as a whole had not been meeting the requirement to a sufficient standard, and he was therefore sending regular emails to them requiring them to do so.
Importantly in my view, the email of 5 May 2023 does not name the applicant, and I accept Mr Claypole's evidence it was not sent in response to the events of the previous day. The applicant was part of a small sales team, consisting of four people including Mr Claypole himself. The entire team received the email, which Mr Claypole has explained was not sent in relation to the applicant’s absence from the client's premises at the expected time because he had been having his phone repaired, a fact which, on his own evidence, was notified to the respondent. Had the email been sent to the applicant individually, or in response to the events of the previous day in circumstances where the respondent knew of the need for the applicant’s phone to be repaired, the conduct would not be reasonable.
Importantly, the applicant does not attack the reasonableness of the requirement to keep the national sales manager informed of each salesperson's whereabouts. Rather, the matter which predominantly caused the applicant's injury was the email of 5 May 2023. The fact the applicant believed this email was targeting him is not relevant when evaluating reasonableness under s 11A. Taking into account the longstanding pattern of emails being forwarded and the nature of the relationship between the applicant and Mr Claypole, I am satisfied the conduct relied on was reasonable, accepting as I do Mr Claypole’s explanation for the forwarding of the email and its contents.
In my view, the email is entirely reasonable, taking into consideration the background of previous emails; that the applicant along with the rest of the sales team was plainly aware of the compliance with the matters raised in the series of emails over the course of the previous 12 months was something of importance to the respondent; that the applicant’s own evidence notes he had written his proposed whereabouts on the whiteboard on 4 May 2023 despite his submission previous emails had omitted such a requirement, and that there is no suggestion the requirements of the respondent re notification of whereabouts were regarded as overly onerous by the applicant or by his colleagues.
The email of 5 May 2023 is, at best, a modest warning to the entire team in the circumstances. It does not single out the applicant. It impresses upon the entire sales team the importance of making their location known to Mr Claypole in the manner required by the respondent, which had not been questioned or the subject of any complaint by the applicant or by any of his co-workers.
In the circumstances, I am satisfied on the balance of probabilities that the applicant's injury was predominantly caused by the reasonable actions of the respondent proposed to be taken with respect to discipline. Accordingly, there will be an award for the respondent.

SUMMARY

For the above reasons, the Commission will make the findings and orders set out on page 1 of the Certificate of Determination.

[2024] NSWPIC 285

29 May 2024