Nicholas and Commonwealth Bank of Australia

[2011] AATA 218

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 218

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          Nos   2009/6041   

GENERAL ADMINISTRATIVE DIVISION		)            &    2010/3209
Re		KAREN GERALDINE NICHOLAS

Applicant

And COMMONWEALTH BANK OF AUSTRALIA

Respondent

DECISION

Tribunal G. D. Friedman, Senior Member

Date31 March 2011

PlaceMelbourne

Decision The Tribunal affirms the decisions under review.

................[signed]..............................

Senior Member

COMPENSATION – personal banker – adjustment disorder – whether injury occurred as a result of reasonable administrative action – whether applicant entitled to compensation for permanent impairment  

Safety, Rehabilitation and Compensation Act 1988 ss 5A(1), 5A(2), 5B(1), 14(1), 24(1)

Bropho v Human Rights and Equal Opportunity Commission [2004] FCAFC 16

Comcare v Mooi (1996) 69 FCR 439

Hart v Comcare (2005) 145 FCR 29

Re Lynch and Comcare [2010] AATA 38

Re von Stieglitz and Comcare [2010] AATA 263

Workcover Corporation of South Australia v Summers (1995) 65 SASR 243

REASONS FOR DECISION

31 March 2011  G. D. Friedman, Senior Member

1.      Karen Nicholas worked for the respondent as a personal banker processing loan applications.  On 28 September 2009 she lodged a claim for compensation for work induced stress and anxiety which she said was sustained on 29 June 2009 as a result of excessive workload and an interview with her manager.  Her claim was refused by the respondent on the grounds that her condition had arisen from reasonable administrative action by the employer.  Ms Nicholas also lodged a claim for permanent impairment arising from her psychological condition.

LEGISLATIVE BACKGROUND

2. Section 14(1) of the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act) provides:

(1)Subject to this Part, Comcare is liable to pay compensation in accordance with this Act in respect of an injury suffered by an employee if the injury results in death, incapacity for work, or impairment.

Section 5A of the SRC Act provides:

5A  Definition of injury

(1)      In this Act:

injury means:

(a)       a disease suffered by the employee; or

(b)an injury (other than a disease) suffered by an employee, that is a physical or mental injury arising out of, or in the course of, the employee’s employment; or

(c)an aggravation of a physical or mental injury (other than a disease) suffered by an employee (whether or not that injury arose out of, or in the course of, the employee's employment), that is an aggravation that arose out of, or in the course of, that employment,

but does not include a disease, injury or aggravation suffered as a result of reasonable administrative action taken in a reasonable manner in respect of the employee’s employment.

(2)For the purposes of subsection (1) and without limiting that subsection, reasonable administrative action is taken to include the following:

(a)       a reasonable appraisal of the employee’s performance;

(b)a reasonable counselling action (whether formal or informal) taken in respect of the employee’s employment;

(c)a reasonable suspension action in respect of the employee’s employment;

(d)a reasonable disciplinary action (whether formal or informal) taken in respect of the employee’s employment;

(e)anything reasonable done in connection with an action mentioned in paragraph (a), (b), (c) or (d);

(f)anything reasonable done in connection with the employee’s failure to obtain a promotion, reclassification, transfer or benefit, or to retain a benefit, in connection with his or her employment.

5B  Definition of disease

(1)       In this Act:

disease means:

(a)       an ailment suffered by an employee; or

(b)       an aggravation of such an ailment;

that was contributed to, to a significant degree, by the employee’s employment by the Commonwealth or a licensee.

…

Section 24 of the SRC Act provides:

24  Compensation for injuries resulting in permanent impairment

(1)       Where an injury to an employee results in a permanent impairment, Comcare is liable to pay compensation to the employee in respect of the injury.

…

ISSUES

3.      There was no dispute that Ms Nicholas suffers from a psychological condition which, on the basis of the medical evidence, may be characterised as an adjustment disorder with anxious and depressed mood, is outside the boundaries of normal mental behaviour and functioning (Comcare v Mooi (1996) 69 FCR 439), and was contributed to, to a significant degree, by her employment with the respondent. The condition constitutes a disease for the purposes of s 5B of the SRC Act. The issues before the Tribunal are:

Application 2009/6041

4. Was the injury suffered as a result of reasonable administrative action taken in a reasonable manner in respect of her employment such as would exclude her from receiving compensation in accordance with s 5A of the SRC Act as it would not come within the definition of injury?  This involves consideration of the following:

·What were the factors that led to Ms Nicholas’ psychological condition?

·Was reasonable administrative action taken by the respondent in respect of each factor?

·For each reasonable administrative action was the action taken in a reasonable manner in respect of Ms Nicholas’ employment?  

Application 2010/3209

5.        If Ms Nicholas is successful in application 2009/6041:

Does she satisfy the criteria for compensation for injuries resulting in permanent impairment?

Application 2009/6041

WHAT WERE THE FACTORS THAT LED TO MS NICHOLAS’ PSYCHOLOGICAL CONDITION?

6.        Ms Nicholas told the Tribunal that she commenced with the respondent in 1975 and worked in various branches until she began in the personal lending area in 1993.  From 2001 she was a Personal Relationship Banker and in September 2008 was given the role of Business Development Manager, involving the processing of home loan referrals from Devine Homes.  She said that she built up a portfolio of 300 clients, was working long hours, found difficulty in coping with the workload, and was not given adequate assistance.

7.        Ms Nicholas explained that by the end of 2008 she felt completely overwhelmed, frustrated and helpless as a result of sales targets set by her supervisor, Mr J Lenehan.  She said that in January 2009 Mr Lenehan arranged a visit to Devine Homes, Queensland with a view to receiving home loan referrals from them.  The referrals commenced in February 2009 on the understanding that eligibility would be confirmed within 48 hours of receipt of the application and supporting documentation from Devine Homes’ finance manager.  Ms Nicholas said that the volume of applications increased the pressure on her and she became increasingly stressed.

8.        In about April 2009 Ms Nicholas was contacted by the respondent’s security area in relation to allegations that she had been receiving financial benefit from the loans processed for Devine Homes clients.  Ms Nicholas emphasised that she was advised later that there was no evidence of fraud, although there was a suggestion that she had made compliance and processing errors.  However she stated that she acted in accordance with the procedures outlined by Mr Lenehan, and assumed that these had been authorised by senior management.  She also maintained that any compliance errors should have been detected by the Mortgage Services area in Sydney, and that this had been confirmed by Group Security, but the stress of this and her workload, including sales targets, became overwhelming.

9.        Ms Nicholas stated that on 29 June 2009 (the 29 June event) Mr Lenehan asked her for a list of the loans processed for Devine Homes, Queensland to be provided to the General Manager for Personal Relationship Banking, Mr D Monopoli, and she was called into a room where Mr Monopoli began to ask questions about the processing of the loan applications and about Mr Lenehan.  Mr A Thatcher, who was another Relationship Manager, was present and was taking notes.  She said that she felt intimidated by

Mr Monopoli’s questioning, his unfriendly tone and allegations that she had falsified the clients’ income stated on certain loan applications.  She became overwhelmed by anxiety.  She said she felt dizzy and began crying uncontrollably, and Mr Monopoli seemed indifferent to her distress and to the attack on her integrity.  Ms Nicholas stated that she could not understand the questioning, particularly as Group Security had cleared her of any wrongdoing.  She told the Tribunal that she had been given no prior notice of the meeting or an opportunity to have a support person present.

10.      The meeting lasted approximately 15 minutes, after which Ms Nicholas was left alone in the room for several minutes before Mr Lenehan’s assistant took her for a coffee.  She said that later that day she was told to place all her Devine Homes Loan files in boxes, and Mr Lenehan drove her home.  She was still crying and upset and felt confused and helpless, so the next day she consulted her general practitioner, Dr A Freund, who issued a medical certificate that she was unfit for work for two weeks.  He also prescribed anti-depressant medication.  Ms Nicholas said that she has not worked since then.

11.In a diary note of the 29 June event Mr Monopoli stated:

I asked Karen if all customers involved were interviewed.  Karen replied that ‘she tried to at least speak to all customers’ or interview them.  I asked when? She said during the process.  I asked before the application was sent to credit?  She said no not always.  Karen also said she couldn’t be sure for all customers, as at times the deals were shared around due to work load or annual leave so she couldn’t guarantee that they were all spoken to. 

12.      In a statement dated 9 October 2009 Mr Thatcher said that during the 29 June event Mr Monopoli had asked Ms Nicholas about applicants for loans being interviewed at the time of the application, and Ms Nicholas had indicated that they were interviewed wherever possible, but that she had been on leave and that applications had been spread around the office.  Mr Thatcher said in his statement:

…She further stated that she tried to interview each applicant, or at least to talk to them, but she couldn’t say that she did it for 100% of the time.

13.      Ms Nicholas stated that she received a letter dated 1 July 2009 from Mr Monopoli referring to a number of alleged breaches of the respondent’s Statement of Professional Practice, and informing her that she was to be stood down (or suspended) immediately until the alleged breaches were investigated.  She said that on receiving the letter she burst into tears as she had no prior notice of such action.  She felt ashamed that she was being investigated, and this was aggravated by the receipt of the letter.  She felt unable to inform her family of her illness or the 29 June event.  On 27 July 2009 she attended a psychiatrist, Dr G Hogan, and has been under his care since then.

14.      In respect of the allegations against her, Ms Nicholas stated that she responded in a letter dated 9 September 2009 in which she said that she believed she had conducted herself in the manner outlined in the Statement of Professional Practice, and noted that some of the alleged breaches (such as not verifying income on loan applications prior to approval, and using non-bank-approved valuers) resulted from directives from
Mr Lenehan.  In her reply she also said:

I have been employed with the CBA for over 34 years and in that time have always conducted myself with integrity and honesty.  If I have made any errors they certainly would not have been intentional and may have been due to my failing health caused by recent excessive work pressures, (which were outside of my control).  I did not realize that my health was being affected to such an extent that has now resulted in me having a mental breakdown.  After consultation with my treating psychiatrist I now realize that my health had been declining over a number of months until it finally gave way on 29th June 2009.

15.      In a document she prepared for Dr Hogan in August 2009 Ms Nicholas said that she was at a loss to understand why she had been treated differently from her colleagues, who processed files in the same way but were not stood down.  She said that this had caused great anxiety, tension and depression.  In the document she also stated:

Clients in Queensland were contacted by us only if we required clarification of the application or any further documentation.  Generally we would not contact the client until after approval this was also discussed at this meeting.

16.      In September 2009 a report by Ms A Fuller of the respondent’s Credit Support

& Monitoring area identified areas of non-compliance by Ms Nicholas with the respondent’s policy and procedure in connection with valuations obtained from non-bank valuers, and the report expressed concerns about the extent of contact with borrowers.

17.      On 17 September 2009 Brosnan Investigation Services was commissioned to investigate Ms Nicholas following the 29 June event.  In its report dated 16 October 2009 Brosnan noted that Mr Lenehan stated that Ms Nicholas did not appear to be suffering from stress or anxiety in the previous 12 months and had not reported any stresses to him.  She did not report any stresses or workload problems to Ms K Finch, who had managed Ms Nicholas’ team for 10-15 days.  Brosnan noted that Ms Nicholas, when interviewed, made no allegation that she was harassed, bullied, threatened or abused in the 29 June event or in her employment generally.  The report stated that although Ms Nicholas had claimed there was a build up of workplace pressure in the 12 months prior to the 29 June event, there was significant evidence of adequate staff to handle the increase in work volumes and Ms Nicholas never sought assistance with her work.  Brosnan concluded that Mr Thatcher was impartial and objective; Mr Lenehan presented as an experienced and caring supervisor; and Mr Monopoli was a capable, hardworking and professional manager.      

18.      Ms Nicholas told the Tribunal that in her claim for compensation she explained that in answer to the question: What action, exposure or event happened to cause your injury or illness? she stated that her workload was far in excess of the work volumes anticipated when the position was established in late 2008, together with staff shortages and other work-related pressures.  She also said in her claim that Dr Hogan had informed her that the 29 June event was the catalyst for her psychological condition in conjunction with the work pressures.  She explained that in a letter dated 24 September 2009 Mr Monopoli informed her that, as a result of an investigation, a finding had been made that she had engaged in improper conduct relating to various policy and compliance breaches, and that the letter was to serve as a first and final warning.  She said that although the letter noted that her personal illness leave was to expire on 6 October 2009 and a return to work was expected, she continued to receive medical certificates stating that she was unfit for work.  On 18 February 2010 she received a letter terminating her employment.

19.      In clinical notes dated 30 June 2009 Dr Freund stated in respect of the consultation with Ms Nicholas:

Not coping at work Stress not sleeping Breaking down, started 4/52 weeks ago.  Structural Change Customer survey, Higher sales reqt Boss does not want failures, CBA Bourke Street Melb files Exam due to Qld Affair, to reassess posn

Dr Freund’s notes do not contain any record of claims of stress or anxiety in the several years before the entry of 30 June 2009.

20.      Ms Nicholas next consulted Dr Freund on 14 July 2009.  His notes of the consultation stated:

Was stood down pending investigation, on pay, Going to do a W/cover claim ref to Psych Had to go to Qld, c [with] her boss he did all talking he introd referral Source for Devine homes they did Valuations c [with] a Valuer-wont lose any Money has been c [with] them

34 Years/Actions

During the consultation Dr Freund referred Ms Nicholas to Dr Hogan.  In the referral letter Dr Freund noted that Ms Nicholas had been stood down and stated that…she appears to have been chosen as the bunny for the mistakes of her superiors.      

21.      In a report dated 27 December 2009 Dr Hogan stated that Ms Nicholas had told him on 27 July 2009 that the 29 June event was distressing and that her job had been stressful before she was stood down.  Dr Hogan concluded that, on the history given, her condition had resulted from the 29 June event, which she had perceived as confusing, aggressive and highly unjustified.  In oral evidence Dr Hogan agreed that other events such as the questioning of her integrity had been significant, but said that this arose in the context of the 29 June event. 

22.      The Tribunal accepts that Ms Nicholas found the 29 June event to be stressful and that she believed that she was treated unfairly and unreasonably on that date.  However the Tribunal takes into account that in the clinical notes by Dr Freund at the consultations on 30 June 2009 and 14 July 2009 there was no mention of the 29 June event.  In her evidence Ms Nicholas agreed she was distressed on 3 July 2009 when she received the letter of 1 July 2009 informing her that she had been stood down pending further investigation, and she acknowledged that one of her major concerns was that her integrity had been questioned as a result of investigations into her involvement with loan applications for Devine Homes, Queensland.  This is confirmed by Dr Freund’s reference to her standing down in his clinical notes of 14 July 2009, plus his recorded concerns about valuations in Queensland. 

23.      The first mention of the 29 June event was almost one month later, on 27 July 2009, when Ms Nicholas consulted Dr Hogan, and this was after she had received notice that she had been stood down.  In Dr Freund’s referral letter to Dr Hogan there is no mention of the 29 June event.  It was Dr Hogan’s assessment that the 29 June event was a catalyst for her psychological condition that led to her claim for compensation in September 2009 in the manner set out in her claim.     

24.      The Tribunal notes that the report by Brosnan makes reference to an interview with Ms Nicholas, who did not complain about the behaviour or actions of Mr Monopoli at any time after the 29 June event.  The Tribunal accepts the evidence from Mr Monopoli, supported by Mr Thatcher’s recollection of the 29 June event, that Ms Nicholas acknowledged that she may not have complied fully with the respondent’s  policies and procedures.  This is consistent with Ms Nicholas’ notes prepared for Dr Hogan, as well as her assertion to Mr Monopoli in her letter of 9 September 2009 that any errors made by her may have been due to health concerns, and with the results of Ms Fuller’s investigation.   

25.      For these reasons the Tribunal concludes that, although the 29 June event was a contributing factor to Ms Nicholas’ psychological condition, other factors led to the condition.  Consequently the Tribunal finds that the following factors led to her psychological condition:

·

the decision by the respondent on 1 July 2009 to stand down (or suspend)

Ms Nicholas for alleged breaches of the respondent’s Statement of Professional Practice (the suspension decision);

·the decision by the respondent on 31 August 2009 to issue a formal first and final warning following an investigation (the warning decision); and

·the 29 June event.

WAS REASONABLE ADMINSTRATIVE ACTION TAKEN BY THE RESPONDENT IN RESPECT OF EACH FACTOR?

The decision by the respondent on 1 July 2009 to stand down (or suspend) Ms Nicholas for alleged breaches of the respondent’s Statement of Professional Practice

Was the administrative action reasonable?

26.      In Workcover Corporation of South Australia v Summers (1995) 65 SASR 243 Doyle CJ stated at 247:

[T]he words … “administrative action” do not seem apt to embrace every instruction of and action by an employer. The expression chosen suggests that Parliament had in mind a particular type of action by an employer, and something other than a mere instruction or requirement that the worker perform her duties…

27.      In Re Lynch and Comcare [2010] AATA 38 Senior Member Professor Creyke concluded that administrative action must be some specific incident in the course of the employment, or specific or identifiable course of conduct by an employer.  She stated at [97]:

What amounts to ‘administrative action’ is defined only to the extent of the examples given in section 5A(2). These refer to performance appraisal, counselling, suspension or disciplinary action and 'anything done in connection with' any of these examples. The examples are not exhaustive and the words 'in connection with' have been interpreted as words which 'have an ambulatory significance capable of a wide range of applications.’ These indications imply that ‘administrative action’ is capable of having a broad meaning.

28.      In respect of whether administrative action is reasonable, Senior Member Professor Creyke observed in Re von Stieglitz and Comcare [2010] AATA 263 at [67]:

Whatever administrative action is to be taken must be ‘reasonable’.  Reasonableness is a chameleon-like concept, tailored to the circumstances.  As a minimum, to be reasonable the action must be lawful.  What is reasonable is assessed objectively and relates to the specific conduct involved in light of the process overall.  Reasonableness must be assessed against what is known at the time without the benefit of hindsight, taking into account the attributes and circumstances, including the emotional state, of the employee concerned.  There must be nothing ‘untoward’ about the actions involved, and the administrative action must not be ‘irrational, absurd or ridiculous’.

29.      In Bropho v Human Rights and Equal Opportunity Commission [2004] FCAFC 16, the Full Federal Court held at [79]:

There are elements of rationality and proportionality in the relevant definitions of reasonably...The judgment required in applying the section, is whether the thing done was done ‘reasonably’ not whether it could have been done more reasonably or in a different way more acceptable to the court…

30.      In respect of the suspension decision, the Tribunal takes into account that
Ms Nicholas had asserted on a number of occasions that she had done nothing wrong.  However the Tribunal has accepted the evidence from Mr Monopoli, as supported by the recollections of Mr Thatcher, that in answers to questions asked by Mr Monopoli during the 29 June event, Ms Nicholas acknowledged that she may not have complied fully with the respondent’s policies and procedures, particularly the requirement to contact applicants for loans before the applications were processed.

31.      The Tribunal accepts that, in view of Ms Nicholas’ answers, Mr Monopoli had reasonable grounds for concluding that Ms Nicholas may have committed breaches of the respondent’s Statement of Professional Practice which, if proven, might have had significant consequences for the respondent.  The Tribunal finds that the action taken by the respondent in the suspension decision constitutes administrative action.  The Tribunal also finds that in the circumstances the respondent acted properly in outlining the nature of the allegations in its letter dated 1 July 2009 and in informing Ms Nicholas that the allegations would be investigated.  Further, the letter invited Ms Nicholas to respond to the allegations in writing.  Because of the serious nature of the allegations the Tribunal finds that the administrative action of standing down (or suspending) Ms Nicholas on full pay immediately until the completion of the investigation was lawful and was not untoward, irrational or ridiculous.  The Tribunal finds that the administrative action was a reasonable suspension action in respect of the employee’s employment (s 5A(2)(c) of the SRC Act) and constitutes reasonable administrative action for the purposes of s 5A(1) of the SRC Act).

Was the reasonable administrative action taken in a reasonable manner in respect of Ms Nicholas’ employment?

32.      During the 29 June event Mr Monopoli became aware that Ms Nicholas may have committed breaches of the Statement of Professional Practice.  There is no dispute that Ms Nicholas became upset during the meeting.  The Tribunal is satisfied that Mr Monopoli acted appropriately by not suspending her at the meeting, particularly in her distressed state.  Instead he waited for two days and specified the allegations in writing in the letter dated 1 July 2009.  The allegations were set out in detail, together with the relevant extracts from the Statement of Professional Practice and the consequences for

Ms Nicholas if the allegations were proved. The letter provided a proposed date for the investigation to be concluded and an explanation of Ms Nicholas’ opportunities to respond to the allegations, including an invitation for Ms Nicholas to bring a support person to a meeting to respond to the allegations and to provide a written response prior to the meeting. The action taken by Mr Monopoli directly affected Ms Nicholas’ employment with the respondent. In all the circumstances the Tribunal is satisfied that the respondent’s actions as described in Mr Monopoli’s letter dated 1 July 2009 were taken in a reasonable manner in respect of Ms Nicholas’ employment for the purposes of s 5A(1) of the SRC Act.

Should the disease suffered by Ms Nicholas be excluded from the definition of injury?

33.      In view of the Tribunal’s finding that the suspension decision was a factor that led to her psychological condition, the Tribunal finds that her condition or disease was suffered as a result of the reasonable administrative action taken in a reasonable manner in respect of her employment.  Consequently her condition does not come within the definition of injury in the SRC Act and she is not entitled to compensation.

34.      In Hart v Comcare (2005) 145 FCR 29 the Federal Court of Australia held that, provided that a disease is suffered as a result of any of the circumstances specified in the exclusionary proviso in the definition of injury in the SRC Act, that disease is not an injury (later applied to s 5A of the SRC Act), and it is immaterial whether that disease is also suffered as a result of any other employment-related circumstance. Therefore it is sufficient that the relevant condition is suffered as a result of any of the circumstances specified, and it is not necessary that that disease be suffered solely as a result of any of those circumstances.

35.      In view of the Tribunal’s findings regarding reasonable administrative action in respect of the suspension decision, there is no need to consider whether the administrative action taken in respect of the warning decision or the 29 June event satisfies the criteria for excluding the condition from the definition of injury.

Application 2010/3209

36.      As a result of the Tribunal’s findings in respect of application 2009/6041 that

Ms Nicholas is not entitled to compensation under the SRC Act, she cannot satisfy the criteria for compensation for injuries resulting in permanent impairment.

DECISION

37.      The Tribunal affirms the decisions under review.

I certify that the thirty-seven [37] preceding paragraphs are a true copy of the reasons for the decision of:

G. D. Friedman, Senior Member

Signed: ……………………[signed]. ……………………………….

Kate Conners  Associate

Dates of hearing:  23 and 24 March 2011

Date of decision:  31 March 2011

Counsel for the applicant:            Mr R Seit
Solicitor for the applicant:            Ryan Carlisle Thomas
Counsel for the respondent:        Mr D Richards
Solicitor for the respondent:        Clarke Legal