Payne v Mercy Public Hospital Inc

CERTIFICATE OF DETERMINATION OF MEMBER
CITATION:	Payne v Mercy Public Hospital Inc [2025] NSWPIC 137
APPLICANT:	Michelle Payne
RESPONDENT:	Mercy Public Hospital Inc
MEMBER:	Diana Benk
DATE OF DECISION:	9 April 2025
CATCHWORDS:	WORKERS COMPENSATION - Workers Compensation Act 1987; claim for weekly benefits of compensation and medical expenses due to psychological injury; respondent relies upon section 11A defence that any injury was wholly or predominantly caused by reasonable action taken or proposed to be taken with respect to discipline/and or performance appraisal; Northern NSW Local Health District v Heggie, Hamad v Q Catering Ltd, and Attorney General’s Department v K considered; Held – action taken by respondent was reasonable with respect to discipline and section 11A applies; award for the respondent.
DETERMINATIONS MADE:	The Commission determines: 1. Award for the respondent. A brief statement is attached setting out the Commission’s reasons for the determination.

STATEMENT OF REASONS

BACKGROUND

By way of an Application to Resolve A Dispute (ARD), Michelle Payne, (the applicant), seeks weekly compensation due to an injury she claims to have sustained whilst employed with the Mercy Public Hospital (the respondent). The injury has been pleaded as follows (unedited):
“Aggravation, acceleration, exacerbation and/or deterioration of a disease.
As a result of or during the course of the Applicant’s employment as a support worker, she has contracted anxiety, depression, acute stress reaction, being a disease of such nature as to be contracted by a gradual process which such employment was a substantial contributing factor.
For a period of time before the 01.03.2021, the Applicant was employed in the service industry and this type of employment was a substantial contributing factor to the aggravation, acceleration, exacerbation, deterioration of:
• Anxiety
• Major Depressive Disorder with prominent Anxiety
• Acute stress reaction
• Chronic Adjustment Disorder with Depressed Mood.
The Respondent was the last employer of the Applicant in such employment to the nature of which the disease condition is and was due.”
The insurer for the respondent acknowledges the applicant suffered psychological injury, but maintains it was wholly or predominantly caused by reasonable action taken or proposed to be taken by the respondent with respect to performance appraisal/discipline. Liability was denied with reference to s 11A of the Workers Compensation Act 1987 (the 1987 Act).
Conciliation was unsuccessful, the matter proceeded to Arbitration on 21 February 2025 and 13 March 2025. Parties requested that I determine:
(a) whether the applicant’s employment with the respondent was the main contributing factor to her injury, and
(b) if so, whether the injury was wholly or predominantly caused by the respondent’s reasonable actions with respect to performance appraisal/discipline.
Mr Dodd of counsel instructed by Mr McCabe represented the applicant. Mr Baran of counsel instructed by Ms Mansour represented the respondent. Ms Bartolo was the insurer representative.
No oral evidence was called. In determining the matter, I considered:
(a)    oral submissions from counsel;
(b)    the ARD and attachments;
(c)    the Reply and attachments;
(d)    Applications to Lodge Additional Documents (ALAD) filed by the applicant on
6 February 2025;
(e)    ALAD’s filed by the respondent on 10 December 2024 and 21 February 2025, and
(f)    law found in the 1987 Act and specifically ss 4, 4(b), 9A and 11A.

Personnel

Before assessing the evidence, it is helpful to identify the key personnel involved in this situation.
Briefly, the applicant was employed as a Transition Aged Care Program (TACP) Case Co-ordinator, best described as a varied role including administrative and hands on care activities.[1]
The applicant reported to Clare Findlay who was the Allied Health Team Leader and line manager.
Patrick Maloney is the Nurse Unit Manager and manages the inpatient department. As the applicant was the transitional care programme case co-ordinator, they had daily interactions. Patrick Maloney was responsible for assigning patients/client and staff.
Mary-Louise (Mary Lou) Cusack, is the operations manager and Director of Nursing, responsible for the overall management of the facility. Clare Findlay reported directly to her.
Marlene Irving is an enrolled nurse. She was the applicant’s support person at the time of the meeting on 1 March 2021.
Patient “H” (whose name cannot be disclosed for privacy reasons) was an inpatient of the respondent.

Applicant’s evidence

The applicant has provided multiple statements[2] but it appears that the genesis of the problems concerned the care that she provided to patient “H”. Patient “H” was a long-time friend but also a resident at the facility managed by the respondent. Patient “H” was not the applicant’s patient but she took it upon herself to ensure that her friend was in good hands. The evidence suggests that patient “H” had great care and trust in the applicant.
[2] ARD – Folios 10 to 73.
On 22 February 2021, the applicant deposes she received a call from Annette Hill, a nurse indicating that “H” was scared and frightened and had requested the applicant to go in and stay with her.[3] The applicant stayed overnight as a friend and not in any work capacity. The papers record that the applicant did not seek the permission of her manager to undertake this action at the time she made the decision to stay overnight and it does not appear that she signed in as a visitor or notified the next of kin of her actions. The applicant confirms she took her work laptop with her and had proposed to complete her administrative work from patient “H” room.
[3] ARD – Folio 41.
The papers confirm the applicant ultimately notified her line manager (Clare Findlay) of her actions via email on 23 February 2021 at 8.25am stating that she had stayed the night as “H” was frightened and anxious and she proposed to work from “H” room if that was OK, also acknowledging that she had to ask the operations manager Mary Lou.[4]
[4] ARD - folio 77.
At about 9.30am, on 23 February 2021, the applicant was approached by Clare Findlay, requesting they both meet with Patrick Maloney, the nurse unit manager. They did so at which time the applicant records being advised that her actions constituted professional misconduct, breach of privacy and confidentiality, abandonment of duties and further that the two main carers of patient “H” had expressed some concern that they were not asked to stay the night and possibly could have their rights extinguished had patient “H” passed away. She recalls being told not to visit patient “H” at work or privately and that staff were directed not to call upon her with regards to “H”.
The applicant acknowledges she became quite upset during this meeting and was offered EAP. She was allowed to go home and availed herself of an annual leave day.
The applicant then received an email from Clare Findlay requesting she attend a meeting on 25 February 2021. This occurred and she was notified of concerns relating to professional misconduct and of a further meeting the following Monday with Patrick Maloney on 1 March 2021.
On attending work on 1 March 2021 (Monday), the applicant learned that patient “H” had died on Saturday night. She attended the meeting with her support person Marlene Irving.
At the meeting she recalls being asked to explain the evolution of her friendship with patient “H”. She informed her supervisors she had known her for a long time, shared a bond through gardening and a general understanding of each other.
The applicant recalls being questioned why she had failed to inform Ms Findlay that she was coming in to visit patient “H” in her own time; why she had stayed overnight and further why she had taken “H” home on another occasion when “H” was not her patient. She was informed these actions could amount to professional misconduct. Further as “H” was not her patient, it was professional misconduct that she remain in her room overnight.
The applicant also recalls being accused of breach of privacy protocols and that working from patient “H”’s room was a potential breach of confidentiality protocols as well.
At the meeting, it was communicated that two carers of “H” had expressed concern about the applicant’s actions fearing that they could have been denied the right to stay if the applicant had in fact passed away. The applicant communicated “I did not stop them from coming… I never tried to hide the fact that I had stayed or that I would be there at times with the carers and would often leave and given the carers their time”.[5]
[5] ARD – Folio 20.
Both Clare Findlay and Patrick Maloney informed the applicant that they were unaware that she had stayed the night (until the email in the morning) and such action constituted “misconduct”.
The applicant recalled that her support person was told to be “quiet or she would have to leave the room”. She also recalled the discussion concerning “abandonment of duties” being raised and understood that such action resulted in “instant dismissal”.
She left the meeting quite upset and made an appointment with her doctor. She composed a resignation letter and emailed it to Clare Findlay, Patrick Maloney and Mary Lou as she did not want the “allegations placed on her history”. Mary Lou indicated she would not accept the resignation.

Resignation letter (undated)

The applicant submitted a letter of resignation which was subsequently withdrawn. It is undated but relevantly states (unedited):[6]
[6] ARD – Folio 87.
“To Whom it may concern,
RE: Letter of resignation.
I Michelle Lee Payne hereby formally give my Notice of Resignation. Effective from 01/03/2021.
I would like to use my leave entitlements for the two weeks notice.
I have attached a leave certificate for 4 weeks coverage unfit to work.
Over the last 20 years, I have prided myself on compassion and empathy for patients, clients, families I have provided care for.
The Values have always been a part of my life, within my private and my work life.
Unfortunately I feel the very compassion, innovation, teamwork, empathy not only I show for our end of life patients, is the very thing that has made me crumble.
Yours sincerely
Michelle Payne”

Respondent’s evidence

Clare Finlay – Allied Health Team Leader and line manager

In her statement dated 6 May 2021 she confirmed:[7]
[7] Reply – Folio 47-56.
(a)    she was the applicant’s direct manager;
(b)    the applicant was a competent employee and at the time of this claim was not under performance management;
(c)    she was unaware the applicant had stayed overnight with “H” until receiving an email from the applicant the day after;
(d)    discussions with Patrick Maloney confirmed that they were both unaware of the applicant’s actions;
(e)    patient “H” was not a patient/client of the applicant;
(f)    on examination of patient “H” notes, it was discovered that the applicant’s name and telephone number had been written as “next of kin”;
(g)    she met with the applicant and Patrick Maloney on 23 February 2021 where the primary concern was that patient “H” was getting the best care; that there was unprofessional conduct on the ward and that appropriate persons had not been notified about patient “H”’s welfare (two recorded carers);
(h)    she recalls emphasising health care professionals must not cross the line and act as next of kin for patients or become overly familiar with them on a professional level;
(i)    the applicant told her and Patrick Maloney she had stayed with “H” four or five times previously (of which no one was aware);
(j)    that it was inappropriate for her to work in a “dying lady’s room” and especially as the area was not private and others could have seen what was on the screen;
(k)    that as she was caring for “H” in the capacity of clinician she had attended the workplace without management’s knowledge;
(l)    as she was not caring for patients who were actually under her care, she had effectively “abandoned her duties”;
(m)     she recalls telling Marlene to be quiet as she was invited as a support person only, and
(n)    she denies telling the applicant she was going to lose her job but was going to seek HR advice about the situation.

Statement of Patrick John Maloney – Nurse Unit Manager

In his statement dated 6 May 2021, he confirmed:[8]
[8] Reply – Folio’s 41 to 46.
(a)    he had daily contact with the applicant;
(b)    he was not aware that she had any mental health issues or grievances prior to this incident;
(c)    the applicant was quite distressed and emotional after the meeting on
25 February 2021;
(d)    he denies telling the applicant she was in a lot of trouble but did indicate that there were:
“significant privacy concerns about other patient’s information being brought into a clinical zone, that she had been performing work duties for the organisation at a patient’s bedside without my permission”;[9]
(e)    the applicant confirmed she had only slept for three hours;
(f)    as regards abandonment of duties, this was because:
“she had to go home because she was quite distressed and tired, which meant that she was then unable to perform her employment duties”;
(g)    the applicant confirmed she gave her number to nursing staff who must have written it on patient “H” record, as “next of kin”;
(h)    he informed the applicant she could still visit the patient in normal visiting hours;
(i)    the meeting was cut short as the applicant was distressed. A taxi was offered but declined by the applicant. EAP was offered;
(j)    at the meeting on 1 March 2021 he informed the applicant that the personal relationship with patient “H” was professionally inappropriate, not misconduct;
(k)    he recalled Clare Finlay asked the support person to be quiet or leave, and
(l)    that in response to the applicant’s question if she was going to be terminated, he reassured her she was not being terminated but that it was “a performance management issue we would still need to check with HR”.
[9] Reply – Folio 43.

Statement of Mary Louise Cusack, operations manager

In her statement dated 6 May 2021, she deposed:[10]
(a)    she confirmed receipt of the applicant’s resignation and indicated she would not accept it rather inviting her to “come and talk to me”;
(b)    when they did meet, the applicant was upset and she offered EAP;
(c)    she informed the applicant that:
“it was not the intent of the meeting she had with Clare and Patrick to terminate her employment (as they did not have the authority to do so based on a meeting alone), they had simply met with Michelle to discuss the incident that had occurred, and why it had happened”, and
(d)    the applicant withdrew her resignation and told her that she would like to return to work but to date has not.
[10] Reply – Folio 37-39.

Statement of Marlene Irving – support person

In her statement dated 6 May 2021, she recalled:[11]
(a)    the applicant had high standards and would become upset if her work was ever questioned;
(b)    the applicant asked her to be her support person in a meeting as she was being accused of being “unprofessional and outside of her scope of practice”;
(c)    she recalls Clare telling the applicant she had “breached barriers with a patient and could not have a personal relationship with a patient and that she had crossed boundaries by staying with patient “H”;
(d)    she did interrupt the meeting by saying “it was a small town and we all knew each other at which time she was cautioned to be quiet”, and
(e)    when the applicant asked if she was being terminated, that neither Clare nor Patrick answered her or reassured her.
[11] Reply – Folio 33 to 36.

Medical evidence

There is extensive medical material much of it attached to the ALAD filed by the respondent on 21 February 2025 (over 1,000 folio’s) and the majority of which bears no relevance to the issue in dispute, except to confirm that the applicant had made no contemporaneous complaints of stressors prior to the above meetings. The evidence confirms the applicant has a number of physical conditions which did not interfere with her work. It also confirms the applicant has endured a number of tragic life events for which she sought mental health support, but again these events did not prevent her from working, in fact, it appears that work was a healthy distraction and my observation is that work was a pseudo therapy.

Dr Larcombe, general practitioner

In a letter of referral to Lee Francis psychologist dated 24 April 2021, she states (unedited):[12]
[12] Folio 5 – ALAD filed by respondent on 21 February 2025.
“…. Michelle was disciplined over spending time with a palliative care patient who was also a friend. Please find copies of consultation notes to follow;
Consult with Dr Nall-Bird 1/3/2021
Has been terminated from her job, devastated
Issue with relationship with palliative patient
Had been warned off seeing her.
Feels she can’t challenge the decision
Abandonment of duties when she sat with patient overnight
Professional misconduct when she took the patient home to see her garden.
Plans to look for more work
6/4/2021
… Michelle feels she has been bullied inappropriate and is devastated by not being at work”
In a report to the insurer dated 8 June 2021[13] she reported (unedited):
“I am writing in response to your letter dated 12 April 2021 which I received 17 May 2021.
1. Michelle does have a pre-existing depression but it never interfered with her ability to perform her work duties. Prior to 01 March 2021, Michelle’s psychological condition did not affect her work. Michelle suffered an acute major depressive episode following the events of l March 2021 that has resulted in her being unable to return to work at the Mercy Care Centre.
2. Michelle is suffering from a major depressive episode secondary to work place bullying.
3. Michelle is attending regular counselling with clinical psychologist, Lee Francis . I have also referred Michelle to Dr. P Bhandari, psychiatrist.
4. Michelle is currently unfit for work.
5. I expect Michelle to make a slow transition back to part time then full time work. Michelle will never be able to return to work at the Mercy Care Centre under the current management team. I recommend Michelle be referred to an independent rehab provider.
6. Michelle may be able to return to very limited part time duties in one month”
[13] Folio 17 – ALAD filed by the applicant on 6 February 2025.
In her referral letter to Dr Bhandari she wrote (unedited):[14]
“Michelle is a lady who has endured much tragedy in her life. Throughout all her personal stress, included the suicide death of her son, work was her haven.
Michelle is an enrolled nurse who has worked in aged care assessment for many years. She performed in an outstanding capacity at her duties. She states she put her heart and soul into her work. On March first year she was called into a meeting with the hospital manager, the nurse manager and the allied health manager. She thought she had been fired. She was told she was guilty of ‘abandonment of duties’ when she sat with a palliative care patient all night and into the beginning of her shift. She had messaged her supervisor as to her location at the beginning of shift. Michelle was also told she was guilty of ‘Professional misconduct when she took the patient home to see her garden . Michelle has suffered a major depressive episode following this meeting and has also been suffering anxiety. We have filed a work cover claim for depression secondary to bullying.”
[14] Folio 19 – ALAD filed by applicant on 6 February 2025.
In a further letter of referral to Lee Francis dated 16 August 2022, Dr Lacombe stated (unedited):[15]
“Thank you very much for seeing Michelle Payne, age 53 yrs, for an opinion and management. l know you are not taking new patients but I am hoping you will see Michelle whom you know and has requested to see you.
Talking to Michelle is like opening a Pandora's box of traumas.
Michelle was sexually abused by her paternal grandfather and uncle as a child . She has never told her family except for another victim as the family did not believe the older victim. Michelle went through a messy divorce many years ago.
Michelle's son Tyler committed suicide in 2018.
Michelle had suffered bullying at work and lost her job at MCC and her work cover claim was rejected.
To save money Michelle lived with her daughter Skye for a period of time until Skye became jealous that her children liked their grandmother more than their mother. Michelle had been renting her house out and the renters had ruined the inside of the house and insurance did not pay.
Michelle has recently been working for her daughter Tori and that has been successful in that Tori felt she was doing Michelle a favour and did not feel she had to pay her appropriately.
Thank you for your assessment and advice.”
[15] Folio 25 – ALAD filed by the applicant on 6 February 2025.

Lee Francis, clinical psychologist

In a report dated 31 May 2021, Ms Francis reported (unedited):[16]
“…Michelle's situation is complicated and thankfully she has sought the assistance of a solicitor as there are several issues she has not detailed in her statement to the investigator and the claim is pending liability with the insurer. I have encouraged her to begin to put these in writing as they add significant context to her behaviour and ongoing interpersonal issues with her immediate manager, Claire over many years.
Michelle cannot return to employment with this employer and the return to work goal needs to be different employer/similar duties. I do not believe the employer can repair the situation or the way in which Michelle was treated and as such her skills would be better utilised in another nursing setting to which she will get a job in no time once her mental state has stabilised.
It is my clinical impression that Michelle is current experiencing a Major Depressive Episode. She did not report any suicide ideation or intent, however her risk is still significant considering her current situation, having lost her son to suicide some years ago and the grief and loss associated with the loss of her friend.”
[16] Folio 41 ALAD filed by applicant 6 February 2025.

Dr Teoh, consultant psychiatrist

Dr Teoh was qualified by the applicant and reported on 15 July 2023.[17] He takes a consistent history of events and reports the applicant was told that she had abandoned her duties; that it was professional misconduct for her to be in the room with her client and she was breaching confidentiality because she had a computer in the room with the client.
[17] ARD – Folio 1-10.
Dr Teoh recorded a history of depression and that such symptoms became significant after the work injury and before cessation of her employment. The injury aggravated her pre-existing condition and that her presentation was consistent with a chronic adjustment disorder with depressed mood. He considered at the time of assessment, the applicant was fit for suitable duties.
He concluded work was “a substantial contributing factor as she was treated unfairly at work… she was deprived of access to a client whom she had cared for. She was harassed by the manager”.

Dr Ashwinder Anand, consultant psychiatrist

Dr Anand was qualified by the applicant on 4 June 2021.[18] His history was consistent with that of others. He diagnosed major depressive disorder with prominent anxiety. He considered the events of 23 February 2021 and 1 March 2021 resulted in aggravation of her pre-existing depression and concluded:
“in my opinion, from the assessment gained by me and the observations relating to her submitting her resignation and later going onto WorkCover, it appears that the disciplinary meeting that took place in Patrick’s (the NUM’s office) in which Patrick advised Ms Payne that there were issues related to professional misconduct, breach of privacy and confidentiality and abandonment of duty against her that were being raised was the predominant cause that led to an aggravation of a pre-existing condition…”[19]
[18] Reply - Folio 57-70.
[19] Reply – Folio 66.

Submissions

On behalf of the respondent it was submitted:
(a) injury is not in dispute. The respondent accepts the applicant sustained an injury within the definition of s 4b of the 1987 Act but seeks to rely on the defence found in s 11A of the 1987 Act specifically with regards to discipline and or performance appraisal;
(b)    the respondent understands that it bears the onus of establishing that employment was the whole or predominant cause of injury and also that its conduct was reasonable and is satisfied that it can easily meet that onus;
(c)    the evidence demonstrates that the whole or predominant facts that give rise to the applicant’s injury was the meetings that transpired on 25 February 2021 and 1 March 2021 which queried her conduct and were part and parcel of an investigation that could lead to disciplinary measures;
(d)    the actions taken by the respondent were objective and reasonable and the way the respondent dealt with the situation was fair, the meetings were suspended when the applicant was upset, EAP was offered, a support person was allowed, she was given an opportunity and specifically asked to paint the picture of her relationship with Patient “H”. The records show no assumptions were made as the applicant was allowed to “state her case”. She was never told that she would be terminated but was told that given the seriousness of the matter that HR would be involved. The correct policies and procedures were followed which are ‘reasonable’;
(e)    the ARD suggests that the applicant suffered injury on account of the nature and conditions of her employment with some records suggesting bullying and harassment, which has not been established by the medical evidence or the history. Whilst the perception of the event may be sufficient to constitute such a view, they must be based on real events. I was referred to the matter of Attorney General v K.[20]
(f)    as for the discipline process, it had only commenced. The meetings were called to obtain from the applicant information about the background of her association with patient “H”.   The process was never completed as the applicant resigned and then withdrew her resignation and never returned. No decisions had been made about her employment, the meetings were an information gathering exercise, however it is admitted that discussions were had about the seriousness of her conduct including professional misconduct, potential breaches of privacy, amongst other matters;
(g)    the applicant’s work ethic and commitment to her role is not disputed. Whilst there may have been performance issues almost eight years ago, none were present at the time of the events concerning patient “H”, quite the opposite, all witnesses confirming the applicant was experienced and dedicated to her role;
(h)    the referral to the clinical psychologist by the treating doctor at first instance refers to the events concerning patient “H” and the aftermath. There is no reference to bullying or harassment;
(i)    the medical evidence suggests that the applicant is troubled by a number of events and does not establish employment is the main contributing factor to her psychological injury;
(j)    the medical evidence also suggests that shortly after resignation, the applicant was keen to seek work. She has found work albeit in a salon which is not commensurate with her skills. There is no medical evidence suggesting that she is unfit to return to her pre-injury duties role with her pre injury employer.   She has returned to work and demonstrated a capacity to continue with that work, and
(k)    pre-injury average weekly earnings (PIAWE) is not in dispute.
[20] Attorney General's Department v K [2010] NSWWCCPD 76.
On behalf of the applicant, it was submitted:
(a)    I was referred to the commentary on performance appraisal in the matter of Irwin v Director General of School Education[21](Irwin) particularly the comments relating to the process of performance appraisal and it was emphasised that this is not a case concerning performance appraisal and at best it doesn’t even reach the threshold of discipline within the meaning of s 11A;
(b)    the respondent’s conduct was not reasonable. The applicant was ambushed in multiple meetings and even the support person was silenced;
(c)    the case theory being pronounced by the respondent is an artificial construct on causation which primarily relies on the temporal connection between the meeting and psychiatric symptoms and ignores the difficulties the applicant had with Clare Finlay in the past;
(d)    the matters raised in the meeting were inappropriate, particularly the issue of “abandonment of duties”. The applicant never abandoned her duties. Admittedly she left work but only after she sustained “injury”. The raising of this matter during the meeting was not founded on any evidence and contributed to the applicant’s mental decline;
(e)    likewise the issue of breach of privacy and confidentiality has been inflated. The applicant was working in a private area and there is no evidence that anyone’s privacy had been breached;
(f)    as to staying with patient “H” overnight, the applicant did so as requested by the nurse on duty and at the patient’s request;
(g)    in summary there is insufficient evidence to justify the grounds raised in the meetings by both Clare Findlay and Patrick Maloney. It was an unsubstantiated ambush at a time when the applicant was clearly vulnerable as patient “H” had died a few days earlier.   The process was not reasonable and so the respondent’s defence fails on that basis;
(h)    the respondent has not provided a copy of its policies and procedures given the matters raised, and
(i)    it was emphasised that the applicant’s perception is a primary consideration. If conduct which actually occurred in the workplace was perceived as creating an offensive or hostile working environment, and injury followed, it was open to the Commission to conclude that causation was established (Chemler).[22]
[21] Irwin v Director General of School Education NSWCC 14068/97 Unreported.
[22] State Transit Authority of New South Wales v Fritzi Chemler [2007] NSWCA 249.
Submissions by the respondent in reply:
(a)    the statements of the witnesses are largely consistent. There is no need to cross examine the applicant in such circumstances. It was emphasised that to draw any findings of factors or inferences, I only needed to be satisfied that the circumstances raised a more probable inference in favour of what was being alleged (Luxton); [23]
(b)    there is no evidence of bullying and harassment;
(c)    the applicant has not denied her activities concerning patient “H”. Whilst she may believe for her actions were appropriate, they are inconsistent with the policies and procedures of the respondent, which have been filed by the respondent in the ALAD and s 78 notice. The respondent had an obligation to query her actions and if found to be wanting, to correct them, as it works in a highly regulatory landscape which requires transparency and professionalism;
(d)    that I cannot adopt the applicant’s evidence of what she believes is the causation of her injury but rather turn to the medical evidence relating to causation (Hamad),[24] and
(e)    the applicant’s perception of events as communicated to Dr Larcombe were not real. She initially informed Dr Larcombe she had been terminated and could not appeal the decision made, but she had not been terminated and nor had any decision been made.
[23] Luxton v Vines [1952] HCA 19; 85 CLR 352, 358.
[24] Hamad v Q Catering Limited [2017] NSWWCCPD 6.

APPLICATION OF THE LAW, FINDINGS AND REASONS

The law relevant to this application is found in the 1987 Act.
A psychological injury must satisfy the definition of injury within the meaning of s 4 of the Act (relevantly):
“‘injury’
(a) means personal injury arising out of or in the course of employment,
(b) includes a ‘disease injury’, which means:
(i) a disease that is contracted by a worker in the course of employment but only if the employment was the main contributing factor to contracting the disease, and
(ii) the aggravation, acceleration, exacerbation or deterioration in the course of employment of any disease, but only if the employment was the main contributing factor to the aggravation, acceleration, exacerbation or deterioration of the disease…”
Section 11A (1) of the 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 transfer, demotion, promotion, performance appraisal, discipline, retrenchment or dismissal of workers or provision of employment benefits to workers.” (my emphasis)
At this juncture, it is prudent to unpack s 11A, a task that is easier said than done, given that no two cases the same and each case will turn on its own merits. However the fundamental principles as they are relevant to this matter follow.

What is a psychological injury?

This is defined in s 11A (3A) of the Act as;
“‘psychological injury’is an injury (as defined in section 4) that is a psychological or psychiatric disorder. The term extends to include the physiological effect of such a disorder on the nervous system.”

What does “wholly or predominantly” mean?

This term is not defined by the Act. Review of the case law establishes the following:
(a)    “wholly” and “predominantly” are separate concepts and only one of the definitions needs to be satisfied. The words are independent of each other;
(b)    it is generally accepted that it means “mainly or principally caused” (Poonan):[25]
(c)    the question of causation must be addressed by medical evidence(Hamad)[26], and
(d)    causation is a question of fact to be determined on the evidence in each case (Kooragang).[27]

[25] Ponnan v George Weston Foods Ltd [2007] NSWWCCPD 92 (Ponnan).

[26] Hamad v Q Catering Limited [2017] NSWWCCPD 6.

[27] Kooragang Cement Pty Ltd v Bates (1994) 35 NSWLR 452.

What does “reasonable action” mean?

Again, not defined by the Act and difficult to succinctly define, however the following non exhaustive summary of key principles are acknowledged:
(a)    in determining whether conduct was reasonable, all relevant factors must be taken into consideration including the rights of both employee and employer (Rashov);[28]
(b)    the test is objective and must weigh the rights of employees against the object of the employment. Whether an action is reasonable should be attended, in all circumstances, by questions of fairness (Irwin);[29]
(c)    when considering the concept of reasonable action a decision maker is required to have regard not only to the end result but to the manner in which it was effected (Ivanisevic);[30]
(d)    the reasonableness of a person's actions is assessed by reference to the circumstances known to that person at the time the action is taken (Heggie);[31]
(e)    procedural and policy documents of the employer will be relevant evidence to consider. However, reasonableness will not be established simply because the employer complied with their own protocols if those protocols were not reasonable, and (Aravanopules),[32]and
(f)    the concept of reasonablenessdoes not require a counsel of perfection. It requires, 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.
[28] Aristocrat Technologies Australia Pty Ltd v Rashov [2005] NSWCCPD 66 at [82].
[29] Irwin v Director General of School Education (NSWCC, Geraghty J No 14068/97, 18 June 1998, unreported).
[30] Ivanisevic v Laudet Pty Ltd (unreported, 24 November 1998).
[31] Northern NSW Local Health Network v Heggie [2013] NSWCA 225.
[32] Rail Corporation NSW v Aravanopules [2019] NSWWCCPD 65 at [81].

What does “discipline” mean?

Again, this is not defined in the Act. The case law suggests that the definition is wide-ranging, relevantly:
(a)    a broad view is to be taken of the expression “action with respect todiscipline”. It is capable of extending to the entire process involved in disciplinary action, including the course of an investigation (Heggie);[33]
(b)    an employer’s process of drawing the worker’s unsatisfactory work performance to her attention, asking her to improve her performance and suggesting ways of doing so and of offering assistance in training has been defined as discipline, and
(c)    reprimands about standard of work were held to come within the primary meaning of “discipline” (Milovanovic).[34]
[33] Northern NSW Local Health Network v Heggie [2013] NSWCA 255 (Heggie).
[34] ISS Property Services Pty Ltd v Milovanovic [2009] NSWCCPD 27 at [83].

What does performance appraisal mean?

Authorities establish:
(a) an extended and continuing assessment process may not be a performance appraisal. The process and the time taken to engage in it must be objectively reasonable in all of the circumstances of the case (Dunn).[35]
(b) Performance appraisal:
“is not a vague, continuing, informal process. It is defined to be somewhat like an examination, not a continuing assessment. Performance appraisal is more like a limited discreet process, with a recognised procedure to which the parties move in order to establish employee’s efficiency and performance” (Irwin).[36]
[35] Dunn v Department of Education and Training [2000] NSWCC 11.
[36] Irwin v Director General of School Education NSWCC 14068/97 Unreported.

Has the applicant sustained a psychological injury?

The medical evidence supports that the applicant has sustained an aggravation of a pre-existing psychological injury. I accept the opinions of Dr Teoh, Dr Anand, Dr Larcombe and Lee Francis. I so find. I also note that this was not disputed by the respondent. Section 4(b)(ii) is satisfied.
Despite a significant past history of psychological trauma, the evidence and conduct of the applicant reveals she was functional and well managed. I find that the incidents at work as described above were the main contributing factor to the claim for psychological injury and incapacity resulting therefrom.

Was the applicant subject to ‘discipline’?

Before embarking on a discernment of s 11A it is necessary to be satisfied that the meetings that occurred at work on 23 February 2021, 25 February 2021 and 1 March 2021 fall within the definition of discipline.
I find that the meetings that took place on these three dates do form part of a fact finding disciplinary process and the applicant was subject to ‘discipline’. The authority of Heggie clearly establishes that the definition is broad and that any action with respect to disciple is capable of extending to the entire process involved in the disciplinary action, including the course of initial inquiries and/or investigation. In these circumstances, the disciplinary process was commenced on 23 February 2021 but was never completed due to the applicant’s withdrawal from the process. I so find.

Was the psychological injury wholly or predominantly caused by the above disciplinary process?

As indicated above, the applicant has claimed multiple issues which caused stress during the course of employment prior to her cessation of employment. The ARD fails to provide particulars and the applicants statement/s are lacking on details of any incidents that may have contributed to her psychological illness apart from the issues relating to patient “H” and the fall out thereafter.
I have reviewed the extensive medical material and have noted that there are no contemporaneous complaints of psychological symptoms relating to the workplace prior to the patient “H” incident.
The clinical notes are relevant in this matter. Dr Larcombe in her multiple reports suggests psychological relapse as a result of the events relating to patient “H” and the fall out. Likewise so does Dr Teoh and Dr Anand. I note that Lee Francis is the only practitioner to allude to other matters prior to the incident with patient “H” but her report is vague and whilst she does attempt to introduce other workplace events, she fails to account for the fact that the applicant continued to work without complaint or absence relating to any psychological injury prior to that time.
I have cause to doubt the veracity of the applicant’s perception of events (Attorney General v K). The applicant reported to Dr Larcombe that she was terminated, which is not the case. She told Dr Larcombe that she could not appeal the decision, yet no decision had been made. I find her perception is not based on ‘real events’ as the employers evidence, which I accept, (including the three statements by those in charge which are largely consistent) clearly reveal no decision had been made, her resignation was not accepted and the inquiry was still in its infancy. I note Ms Irving stated that the applicant’s question regarding termination was not answered but find that this is inconsistent with the statements of Clare Finlay, Patrick Maloney and Mary Louise Cusack. I accept that neither Clare Finlay nor Patrick Maloney had jurisdiction over termination. I accept that they informed the applicant she was not being terminated but was potentially subject to actions by HR.

As indicated above, the applicant argued that “as a result of and during the course of her employment” she contracted a disease injury within the meaning of the Act. To succeed on this point, the applicant must demonstrate on the balance of probabilities that the conduct complained of resulted in an ‘injury’ within the meaning of the Act. Whilst briefly summarised above, in the case of psychological injury, it is necessary to emphasise the applicant must show that:
“the nervous system was so affected that a physiological effect was induced, not a mere emotional impulse ... …Frustration and emotional upset do not constitute injury ... nor, ... a mere ‘anxiety state’ .... a ‘straight litigation neurosis’ is not compensable; ... a misperception of actual events, due to the irrational thinking of the worker leading to a psychiatric illness is not compensable ... It follows that subsequent rationalisation of earlier innocuous events, which rationalisation leads to psychiatric illness is also not compensable. Furthermore, once the applicant has established ‘injury’ ….incapacity for work resulted therefrom.”[37] (Stewart)
[37] Stewart v NSW Police Force [1998] NSWCC 57.
Authorities also establish that if conduct which actually occurred in the workplace was perceived as creating an offensive or hostile working environment and a cognizable injury followed, it is open for the Commission to conclude that causation was established.[38] (Chemler)
[38] State Transit Authority of New South Wales v Fritzi Chemler [2007] NSWCA 249 Basten J.
The first presentation to the general practitioner relating to workplace stressors only occurred after the above meetings. There is no contemporaneous evidence to establish that the applicant sustained ‘injury’ and ‘incapacity’ prior to 1 March 2021 arising from the conduct of peers or direct supervisor or any workplace activity.
Having regard to the evidence and authorities, I find there was no incapacity or injury arising from alleged bullying and harassment of the applicant prior to 1 March 2021 (Stewart). There does appear to be anxiety and tension arising from personal circumstances but no diagnosable injury resulting in incapacity prior to that time, with incapacity following only after the 1 March 2021 meeting when the applicant presented to his general practitioner maintaining she had been unfairly treated in the workplace.
Having regard to the above, I find that the injury was wholly or predominantly caused by the disciplinary action. As summarised above, this finding has been made on the basis of the medical evidence and the chronology of events.
These findings are also supported by the resignation letter which is silent on any such issues.

Was the action taken or proposed to be taken by the employer “reasonable action”?

The definition of reasonable is broad and I have summarised key principles in paragraph 51 above.
In this case, the applicant has admitted that she stayed overnight without permission to care for “H”. This is significant given the circumstances. I acknowledge this was allegedly done at the request of Annette Hill, a nurse on duty, but the conduct was not approved by her direct supervisor Clare Finlay and more importantly the nurse unit manager, Patrick Maloney. The real issue here is that patient “H” was not a patient of the applicant, rather a friend and the lines between friendship and professional conduct became somewhat blurred. Further the evidence suggests that she was asked by Annette Hill to go in “and stay with her”, but does not refer to a request to stay overnight. The applicant did not report to Annette Hill. Ms Hill was not the nurse unit manager and does not appear to have the jurisdiction to alter rosters for the respondent, such lines of authority resting with either the nurse unit manager, Claire Finlay or alternatively the operations manager.
The respondent in my view was correct to question the applicant about her activities with patient “H”, especially given that there were outside carers involved who were not informed of her activities and that her direct line supervisor and nursing manager were not informed (until after the event). The records do not establish the applicant signed in as a visitor that evening or had received approval to remain overnight as a visitor. These are standard matters in any care facility which seem to have been disregarded by the applicant. (I have no doubt she engaged in these actions with good intention, but without any regard to possible consequences that could ensue from her actions). For example, had she sustained an injury, without formal approval to have remained on site, legal complexities would ensue. Likewise, had something happened to patient “H” whilst she was present with her in neither an official or unofficial capacity (having not been approved to stay as a visitor or formally be on shift), other consequences would have flowed. I find that the respondent’s actions of questioning the applicant in relation to the overnight stay and previous stays to be entirely reasonable and appropriate, given that facilities such as the respondent’s are subject to high regulation and scrutiny. It would have been remiss of the respondent to have not addressed the issue. Fortunately, whilst there were no adverse events on the evening that the applicant remained with patient “H”, had there been, significant fallout could have occurred, particularly given the applicant did not have the correct approval from her line manager to stay with a dying individual who was not even her patient. In this regard, I find the actions of the respondent reasonable. It was appropriate that the discussion be had and that together expectations be set.
Much was said about the nature of the discussions and that the applicant was ambushed. I cannot make such a finding. I note that two meetings were aborted given the applicant was visibly upset. She was offered EAP support and even transport home which she declined. The discussions no doubt were uncomfortable and possibly even unexpected by the applicant, but the manner in which they were executed was reasonable.
I also note that the respondent raised the issue of potential privacy and confidentiality breaches. The applicant had her laptop in the room of patient “H”. I understand that this was a private room but still accessible by other nursing staff who could have been privy to information that was open on a screen. The applicant made light of this allegation, maintaining that there were no privacy breaches recorded and no confidentiality was compromised. I think the point has been missed. When handling personal information, a staff member must ensure that their conduct promotes privacy and confidentiality. The operation of a laptop in an area that is not secure does little to safeguard these key principles. I again find that the respondent’s concern about this issue was well placed, appropriate, in accordance with Privacy Legislation and it was reasonable for it to bring it to the applicant’s attention. On this note, I again find the actions of the respondent to be reasonable.
The next issue, which I found unusual was the allegation of “abandonment of duties”. I still cannot comprehend what was being meant by the use of the term. The applicant did not abandon her duties within the legal definition of this term. She continued to work until she was told to go home. Admittedly she remained on the premises for which she was not authorised through the proper chain of command, and was not fit to work the next day due to fatigue and her emotional state. This is not abandonment. The two statements on this issue are divergent. Clare Finlay maintains that “abandonment” meant that the applicant was not caring for her actual patients whilst on shift, whilst Patrick Maloney suggests that abandonment meant not being fit for work and having to leave the day after she stayed overnight in an unauthorised capacity. Whilst the use of the term is misplaced, I find that this does not render the conduct of the employment as not being reasonable. (It is well established that the concept of reasonableness does not require a counsel of perfection. It requires that all of the circumstances be considered objectively).
I find that the applicant likely knew that her conduct was questionable, if not inappropriate. She emailed Clare Finlay of her actions of staying the night with patient “H” the following morning and not the evening before. She also understood that she needed to obtain approval to work in the room of patient “H”. This was especially so given that patient “H” was not a client/patient of the applicant and that her carers had not been advised.
Much was said about the applicant’s handwritten number being recorded as “next of kin” on patient “H” file. The file was not in evidence, presumably due to privacy concerns and whilst this conduct would be classified as inappropriate and unprofessional, given the applicant had other carers, I am unable to make any formal findings in the absence of evidence. In any event, nothing turns on this given that I have found that the disciplinary process was reasonable to address the conduct of the applicant which exceeded her authority and placed in jeopardy privacy and confidentiality.
Counsel for the applicant indicated that the process was not reasonable and provided quite florid submissions that the breach of privacy allegation was embellished and that the applicant was ambushed in the meeting, with the voice of the support person being suppressed. I accept that Marlene Irving was asked to remain silent and this is consistent with the role of a support person. She did not attend the meeting as an advocate but rather for support and given that she was not present during the relevant events relating to patient “H” and the other matters raised, she would add little to an already difficult process. Counsel for the applicant asked me to infer that the treatment of Ms Irving was dismissive as was the treatment of the applicant. I decline to make those findings for the reasons discussed above.
Having regard to the authorities discussed above, I find on careful review of the evidence that the overall disciplinary action was “reasonable action” within the scope of s 11A. This is because;
(a)    the applicant was made aware of the issues to be discussed and their serious nature;
(b)    three meetings were convened, the first two aborted due to the applicant’s emotional state with the third meeting proceeding with the presence of a support person;
(c)    I accept that the applicant was informed that she would not be terminated but rather that the allegations were serious and that HR would be involved;
(d)    the applicant has decades of experience in the health care sector and the above issues were known to her;
(e)    the applicant was well aware that patient “H” was not her patient and that she would have had to sign in as a visitor or alternatively seek approval of the carers to remain overnight with patient “H”, and then obtain approval from her line managers and the nurse unit manager, which she failed to do so. I acknowledge she was requested to stay with the patient by a nurse on duty, but she did not report to that nurse and there is no documented record or direction that she remain with the patient overnight, such conduct being entirely voluntary by the applicant;
(f)    the issues relating to inappropriate relationship with patient “H”, caring for patient “H” whilst she was not her client/patient, confidentiality and privacy concerns are all appropriate matters to be discussed by the respondent with the applicant in the regulatory environment being operated. The applicant admitted she used her laptop in patient “H” room and stayed overnight. The allegations are not exaggerated and were confirmed by the applicant both in word and deed;
(g)    the claim of “abandonment of duty” is an unusual discussion to be had in the context of the situation and appears to be a term used inappropriately. However, I find that the use of this term, in whatever context, does not detract from the overall need for the respondent to discuss and address the behaviour of the applicant which it potentially considered inappropriate and unprofessional, and
(h)    the s 78 notice refers to policy and procedures and submissions were heard on this point. The process is unique to the respondent and other health care settings and are well documented. This of itself does not make it reasonable, as the entire circumstances must be reviewed objectively, however, given the role of the applicant, the nature of the employer, the mandatory base line competencies that must be demonstrated (and on which the community relies), I find that the disciplinary process and indeed the way in which it was carried out was reasonable action having regards to the rights and obligations to both the respondent and the applicant.
Having regard to the totality of the evidence, I am satisfied that the respondent has discharged its onus on the balance of probability that the applicant’s injury was wholly or predominantly caused by reasonable action taken with respect to performance appraisal.

SUMMARY

For the reasons above, I find that the psychological injury was wholly or predominantly caused by the reasonable action taken by the respondent with regards to discipline. This means the s 11A defence succeeds and there will be an award for the respondent.

[2025] NSWPIC 137

9 April 2025