Rawlings v Rawlings

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PERSONAL INJURIES LIST

S CI 2011 1388

DAVID RAWLINGS	Plaintiff
v
MORRIS JAMES RAWLINGS & ANOTHER	Defendant

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JUDGE:	DIXON J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	23-27 FEBRUARY, 2–6 MARCH 2015
DATE OF JUDGMENT:	5 MAY 2015
CASE MAY BE CITED AS:	RAWLINGS v RAWLINGS
MEDIUM NEUTRAL CITATION:	[2015] VSC 171

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TORTS — Negligence — Duty of care — Workplace injury — Psychiatric injury — Foreseeability — Scope of employer’s duty to prevent psychiatric injury — Plaintiff employed in parent’s building business which failed — Whether plaintiff assigned employment tasks in breach of common law duties in respect of the winding up of the affairs of the business by his mother following his father’s mental breakdown— Circumstances affecting relationship between employer and employee — Whether parent/child relationship relevant — Application of Koehler v Cerebos (Aust) Ltd — Whether psychiatric injury caused by employer directives in breach of a duty.

TORTS — Negligence— Assessment of damages —Psychiatric injury —Application of Malec v Hutton to assessment of damages.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr ADB Ingram with Mr G Worth	Slater & Gordon
For the Defendant	Mr RJ Stanley QC with Mr R Kumar	Thomson Geer

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Issues.................................................................................................................................................... 2

Factual findings.................................................................................................................................. 3

Did the defendants owe a duty of care........................................................................................ 18

The plaintiff’s submissions........................................................................................................ 18
The applicable principles.......................................................................................................... 23
Why no duty is owed................................................................................................................. 34
Was the relevant relationship between the parties one of employment?................. 35
The nature of the work...................................................................................................... 38
The objective signs............................................................................................................ 41

Quantum............................................................................................................................................ 49

Course of treatment and assessment of the plaintiff’s injury............................................... 49
Quantum findings....................................................................................................................... 64
Pecuniary loss.............................................................................................................................. 69
Pain and Suffering....................................................................................................................... 72

Orders................................................................................................................................................. 72

HIS HONOUR:

Introduction

The plaintiff, who is now aged 54 years, suffers from a major depressive disorder, which he claimed had destroyed his capacity for gainful employment and caused him pain and suffering. He was a carpenter and was employed from the commencement of his apprenticeship until 1994 by the defendants, who are his parents, in a building business. His father worked in the business ‘on the tools’ and he also managed the administration of the business. His mother had little practical involvement in the management of the business and no involvement in building work. The business collapsed financially in 1994 when the defendants each signed a deed of assignment under Part X of the Bankruptcy Act 1966 (Cth).

The plaintiff claims that, between January and April 1994, his mother, in connection with his parent’s bankruptcy, as his employer, directed him to undertake work for which he was neither trained nor experienced. By approximately 1993, the building business was in financial decline, although the extent of the decline and the future prospects for the business were not explained to, or understood by, the plaintiff until the accountants became involved in March 1994. The plaintiff complained about two distinct types of directions. On the one hand, directions to manage and complete three remaining building contracts and, on the other hand, directions that he delve into his parent’s financial affairs in respect of the business to assist in putting together the owner’s explanation to creditors of the failed business.

These directions came from his mother because his father broke down mentally as his business failed and was unable to work or participate at all in the bankruptcy processes. The plaintiff alleged that he had no training to undertake the work that he was directed to do and that the significant stresses that he was exposed to by doing as his mother asked caused his psychiatric injury. Immediately following the failure of his parent’s business the plaintiff underwent a left knee reconstruction and about 6 months later began experiencing anger and recurrent anxiety and depression that was exacerbated by alcohol and gambling addictions in following years. Following several suicide attempts, in 2001 the plaintiff completed alcohol rehabilitation and with the assistance of Alcoholics Anonymous has not since consumed alcohol. It was not until 2006 that the plaintiff was diagnosed with a permanent severe mental or behavioural disturbance said to arise out of or in the course of, or due to the nature of, his employment by his parents in their building business.

In 2007, the plaintiff applied, by originating motion pursuant to s 135A(4)(b) of the Accident Compensation Act 1985, for leave to bring a common law claim for damages against his employer and his entitlement to that leave was disputed. In March 2009, a County Court judge found for the plaintiff, but the employer appealed by leave against those parts of the decision that rejected the employer’s defence based on s 135AC of the Act (that the worker’s application was statute barred). In November 2010, the Court of Appeal dismissed the appeal.[1] The Court of Appeal‘s reasons set out background evidence to which I was referred by the parties but which need not be repeated in my judgment. This background explains why it is that the plaintiff, by a writ filed on 30 June 2011, seeks damages for personal injury sustained in 1994, resulting in a trial approximately 21 years after the injury was alleged to have been caused.
[1]Morris and Joan Rawlings Builders and Contractors v Rawlings [2010] VSCA 306, (2010) 30 VR 444.

Issues

The following issues arose –

(a) Did the defendants owe the plaintiff a duty to use reasonable care to avoid inflicting a psychiatric injury upon him?

(b) If yes, was any breach of that duty of care a cause of the plaintiff’s psychiatric injury?

(c) In what sum does the court assess the plaintiff’s damages for pain and suffering and for pecuniary loss.

For the reasons that I will now set out, I have concluded that the defendants did not owe the plaintiff a duty to use reasonable care to avoid inflicting a psychiatric injury upon him. Accordingly his claim must be dismissed.

Factual findings

I did not find the plaintiff’s evidence to be entirely reliable and I am unable to wholly accept his evidence. There were some areas of controversy and a number of reasons for unreliability. The most significant factor was the passage of time since the critical events in 1994. I have no doubt that the delay affected the plaintiff’s memory. In some respects, the evidence of other witnesses of events in 1994 supported that of the plaintiff, although passing time had also impaired the memories of those other witnesses. There are some contemporaneous records such as worker’s compensation claim forms and employer reports, and some medical records recording contemporaneously reported histories taken from the plaintiff and others. From about late 1994 until 2001 the plaintiff was an alcoholic. He had no insight into any relationship between his condition and the events of 1994 and he had no reason to recall the detail of events in 1994 for many years. His evidence was that the breakdown of the business was traumatic and he drank to excess to block out the trauma that caused him mental pain. I am satisfied that the plaintiff’s alcohol addiction significantly impaired or destroyed his recollection and that what he now recounts has a strong flavour of reconstruction.

Nevertheless, I consider that the plaintiff, mostly, was doing his best to be honest, not only in relation to the evidence that he gave in court, but also on occasions when he gave his history to others. It is his reliability that was adversely affected by his drinking and his mental state, and his unreliability was not limited to his evidence in court but extended to, in particular, his reliability from 2006 in giving his history to his treating psychologist and psychiatrist and to evidence from other sources concerning his knee and his capacity to work. At times, the plaintiff appeared defensive, even evasive, under cross-examination particularly about his drinking and about his capacity to function on his left knee. Mostly though, the plaintiff was consistently unwilling to respond directly to counsel’s questions, both in evidence in chief, but more particularly, in cross-examination. Commonly when he did not directly answer a question, his experiences in the processes and methods of Alcoholics Anonymous flavoured the response that he gave. As I said, I am not being critical of the plaintiff’s response to his life experience but I have been cautious in accepting the plaintiff’s evidence, both from the witness box and recorded in medical histories, particularly in key areas of dispute between the parties.

The plaintiff left school at 16 to start a carpentry apprenticeship in the family construction business, which he completed in 1980. The plaintiff continued to work for his parents until 1994. Occasionally, when there was a lull in the workflow he worked for other builders for short periods. His grandfather had been a builder and some of his uncles ran successful building businesses. The plaintiff anticipated that he would take over the family business as his own on his father’s retirement and his sister acknowledged that this was also the family expectation.

The plaintiff had been a talented sportsman, excelling in football, cricket, basketball, and golf. He played A grade amateur football for De La Salle Old Boys and was a premiership player. The plaintiff’s retirement from football was, at least partly, a consequence of injuring his knee. He stated that he appreciated that a serious knee injury suffered playing sport could affect his chosen career and his capacity to support a young family. After he retired from playing football, he became keen on golf and played weekly off a single figure handicap in his club’s competition. He still plays golf weekly.

The plaintiff first injured his left knee in about 1980 playing football and received physiotherapy for cruciate ligament trouble. He had difficulties with his knee, which could give way with twisting when he played football and at work, especially on ladders. The plaintiff made a claim for workers compensation in 1986. In March 1987, his left knee ‘went’ with associated pain and his GP immediately referred him to Mr I McLean, an orthopaedic surgeon. An arthroscopy revealed a medial meniscus lesion, which was repaired. The plaintiff further injured his left knee at work in July and November 1987 and a further arthroscopy revealed chrondral pathology to the medial femoral condyle with some tearing of the medial meniscal remnant. Because there was significant AP and rotational laxity, Mr McLean advised the plaintiff to consider an anterior cruciate ligament stabilization procedure. It would be some years before he underwent the recommended reconstruction. He saw Mr Mclean in July 1993 and surgery was again discussed but not agreed to.

As a young man, he participated in the sporting club culture of social drinking after competition and training, a pattern that continued with golf. The plaintiff drank after work with his work colleagues on some nights of the week. The plaintiff was a beer drinker, occasionally also drinking wine. The plaintiff also drank alcohol at home. I am satisfied that, relatively speaking, the plaintiff was a moderate to heavy social drinker on a daily basis, and that consumption was initially balanced by a very active lifestyle, both at work and at sport. The plaintiff’s father’s drinking habits were probably quite similar to those of the plaintiff.

The plaintiff did not exhibit any sign of problems with alcohol consumption prior to 1994. I accept the evidence of both his ex-wife and his sister that the plaintiff had no issues with alcohol abuse before the collapse of the business. I find that there was no basis for the defendants to have anticipated prior to the collapse of the business that the plaintiff had any propensity to abuse alcohol or that there was any risk to the plaintiff of psychiatric injury related to his alcohol consumption. I am satisfied that the defendants considered the plaintiff’s alcohol consumption prior to the collapse of the business to have been commonplace or usual, perhaps even typical of a sports-oriented building worker and not materially different from other family members.

The plaintiff married Katherine Wilson in 1985 and they have two sons. Ms Wilson commenced studying law and is now a practising solicitor. They drifted apart and separated in 1992. After some counselling, they returned to living together but separated permanently in 1993. Both parties to the marriage described settlement of custody and property matters as amicable. The plaintiff denied that counselling had been a waste of time although notes taken by medical staff at the Albert Road clinic in 1995 specifically record his opinion to that effect. The plaintiff said whilst he was upset about the separation, and he conceded that the breakdown of a relationship is hard, he was ‘disappointed’ and his life continued. He said that golf helped him take his mind off things, he ‘moved on’ although he grieved for the loss of his sons.

The plaintiff was, and remains, close to his mother. His sister described him, in a non-pejorative way, as having always been his mother’s favourite child and agreed that the plaintiff and his mother have a close relationship. If the breakdown of the plaintiff’s marriage was stressful for him, and despite the evidence that he was not stressed to any significant degree by those events, his mother was well placed to observe the psychological impact of marriage breakdown on the plaintiff. I find that there was no reasonably observable sign to a loving mother with a close relationship with her son in the circumstances of the breakdown of the marriage that the plaintiff was susceptible to stress or to any psychological injury. In contrast, there was evidence later recorded in medical histories, particularly around his suicide attempts, that his separation from Ms Wilson became a precipitating factor in the development of his psychiatric condition.

The plaintiff was also close to his father. They worked together, played golf together, and regularly shared a beer together. It is unnecessary to make any finding as to whether there were any reasonably observable signs for the first defendant of susceptibility to stress or to any psychological injury in the plaintiff. This is because the directions given to the plaintiff in the course of his employment that are the subject of complaint were not given by the first defendant. That the first defendant was seriously mentally ill and not participating in the management of the business when the second defendant gave the relevant directions was common ground. His breakdown was the source of the problem for both the plaintiff and the second defendant. After the collapse of the business, the first defendant was assessed for, and has remained on, a disability pension.

I find that the plaintiff’s relationship with his father broke down following the collapse of the business. The plaintiff became greatly angered by his father’s failures in managing the business. His anger emerged about 6 months after the collapse of the business. It took the plaintiff many years, following his recovery as an alcoholic, to find some forgiveness of his father’s conduct. I am satisfied that the plaintiff blames his father for at least some of the downturn in his fortunes in life. I will say more about this in due course.

Neither defendant gave evidence at trial nor was medical evidence tendered, but the uncontested fact was that neither defendant was medically fit to attend court or give evidence. The defendants, while not contesting that fact, made no concession as to the cause of the first defendant’s breakdown in 1994 or his present medical condition. The plaintiff led no expert medical evidence about the cause of the first defendant’s breakdown in 1994. However, as I will later explain, the cause of the first defendant’s mental breakdown was a major issue raised by the plaintiff in the trial.

The plaintiff did not have a written employment contract with the defendant. The evidence was not entirely clear, but I am satisfied that the plaintiff was employed by his parents under an oral arrangement as a sub-contract carpenter for each job that his parents contracted for. The plaintiff identified no particular terms or conditions of his employment save for his weekly rate of pay and the provision of a car by the business for his use. His employment arrangement appeared to be structured in a common way for the building industry, save that it was not suggested that he provided a quotation for his involvement in particular jobs. The arrangement meant that transport costs and tools were tax deductible for the plaintiff. It is likely that his father estimated the carpentry wages costs in respect of the plaintiff when quoting on jobs. The plaintiff’s tax returns prior to 1994 were prepared on this basis and the plaintiff invited Mr GB Allan, a forensic accounting, to assume that his employment was structured this way when assessing his economic loss.

The plaintiff’s principal activity in the business was on the tools as a lead carpenter. The first defendant did all the administration, both of the business and of its building contracts. It was not part of the plaintiff’s agreed employment duties that he undertake administration and there was no evidence that the plaintiff was ever paid for administrative duties by the defendants. At some point prior to 1994, the plaintiff became involved in quoting work although final quotes and negotiation of contracts for new work was always the first defendant’s responsibility. He was not asked by the second defendant to quote on or negotiate for new work in the relevant period. When there were simultaneous jobs, the plaintiff would be in charge on site at one job while the first defendant managed the other site. However, the plaintiff was always subject to his father’s overriding supervision.

Prior to 1994, the plaintiff was not a registered builder and was not trained by the defendants in those aspects of a building business. He had been working on building sites for 14 years as a qualified carpenter, but he was unqualified to approve or sign off on the work of licenced trades. However, there was no evidence that he did approve or sign off on the work of licenced trades in relation to any of the three contracts completed during the relevant period. I also accept that the first defendant did not provide any training to the plaintiff in how to administer a building business or a building contract and that the first defendant usually undertook those tasks himself. I accept that the plaintiff was never trained by his father in the skills required to prepare a competitive quotation for new work, but during the relevant time his mother did not instruct him to prepare a quotation or run the building business as a going concern.

It was understood within the Rawlings family, and was common ground at trial, that when the defendants retired, the plaintiff would ‘inherit’ the business. This understanding was familial, unrelated to any contractual obligation between the parties. I am satisfied that the plaintiff expected this ‘inheritance’ from the defendants and that the plaintiff’s expectation was an employment circumstance that distinguishes this proceeding from most, if not all, industrial accident cases.

The first defendant had a home office that was the administrative headquarters of the business. It was not neatly maintained and was the first defendant’s private space into which his wife and the plaintiff, and for that matter other members of his family, rarely ventured. I accept that the plaintiff was unfamiliar with the specific accounting records of the business, but I do not accept that the plaintiff was unfamiliar generally with bank statements, materials invoices, or sub-contractor accounts. There was little evidence of the accounting procedures of the business. It operated a bank account, managed by the first defendant, and I infer that there may have been some rudimentary accounting system. Bankruptcy proceeding documents referred to ‘banking records and a job ledger’ and the plaintiff referred to cheques, and supplier and contractor invoices. The defendants employed an accountant to attend annually to tax returns but the evidence did not reveal the scope of the accountant’s retainer by the defendants. Prior to 1994, the plaintiff also engaged the same accountant to do his tax returns.

By 1993, the business was in financial decline. At one point in 1992, the first defendant mentioned a need for funds for the business to the plaintiff, who offered the business $20,000. The funds were drawn down from a facility available to the plaintiff and his wife for a renovation of their home. The plaintiff’s belief is that this advance was never repaid. I do not accept this evidence. Ms Wilson said half of the loan was repaid in late 1992 and early 1993 and the Report of the Controlling Trustee shows the plaintiff and his former wife as creditors in the sum of $10,000.

In early 1994, the business had three uncompleted contracts as its work in progress, being jobs in Marylands Avenue, Balwyn, Stevenson Street, Kew and Bay Street, Brighton. The Balwyn and Kew jobs were substantially completed, but work was continuing on the Brighton job, which included variations that were the subject of negotiations with the proprietor.

Unbeknown to the plaintiff, the defendants sold their home at Dingley in January 1994 for $170,000. Settlement was scheduled for 8 May 1994. The equity available to the defendants was $19,280 less expenses, as business debt of $150,720 was secured against the Dingley property. The defendants obtained early release of the deposit, a balance of $12,940 after agent’s commission, and these funds were applied by the first defendant to completing the Brighton building contract. The proprietor owed almost $36,000 on completion of that contract, due on 1 April 1994, exclusive of a disputed claim to a further $8,000 for contract variations.

The plaintiff’s sister Ms Katherine Stonier, who is an interior designer, assisted the first defendant in negotiations with the Brighton proprietor. Ms Stonier attended a meeting with her father with the Brighton proprietor, to press him for payment for the variations to the contract works. He refused, asserting the alleged variation works were part of the contract works. The date of this meeting is not clear, but it is significant because the plaintiff was unaware of this meeting and did not become aware that the business was in financial strife until the accountants were brought in, and that occurred immediately after this meeting. Although the plaintiff contended that he performed the duties that caused his injury between January and April 2004, the plaintiff was not instructed to perform the duties that he alleges caused his injury prior to the appointment of the accountants.

Ms Stonier suggested the meeting was sometime at the end of 1993. She said, ‘Well, I was heavily pregnant with my son and I had just finished work on maternity leave, so I think it would have been 1993, end of 1993. Look, I can’t be more specific.’ I do not accept this suggestion. The timing was reconstructed. I was also not assisted by Ms Wilson’s evidence in relation to timing. Under cross-examination, she conceded that she was unsure when the business ‘went bust’ and her evidence of the sequence of events, in context, concerned what occurred after the accountants had been appointed and the first defendant had suffered his breakdown. Having carefully considered this evidence and dates that can be fixed from documents produced in relation to bankruptcy processes, I am satisfied that the meeting with the proprietor occurred no earlier than the end of February 1994.

Ms Stonier appreciated around the time of this meeting that the business was in serious financial difficulty and the Brighton proprietor’s refusal to pay for variations, on the basis that they were part of the agreed contract works, exacerbated the financial difficulty facing the business. Almost immediately after the meeting with the Brighton proprietor, Ms Stonier called a friend who worked for Coopers & Lybrand and asked him how she could help her parents in their financial predicament. The exact date of this call was unclear but it was after the meeting with the proprietor. Her friend referred Ms Stonier to a colleague Mr Christopher Daly who was a specialist in personal insolvency and events moved quickly after that. I am satisfied that shortly thereafter Mr Daly was put in contact with Ms Stonier and her parents.

Mr Daly, unsurprisingly, had no recollection at all of this matter. The Coopers & Lybrand file had been destroyed but he examined documents filed in 1994 by his firm with the Registrar in Bankruptcy in discharge of statutory responsibilities. Mr Daly initially conferred with the defendants and recommended that their affairs be dealt with under Part X of the Bankruptcy Act. The defendants signed a statement indicating how a debtor proposes that his or her affairs be dealt with under Part X on 14 March 1994. The defendants signed their statements of affairs on 16 March 1994. It is probable then that Mr Daly first conferred with the defendants in early March 1994 and advised them to consider a Part X arrangement. I think it probable that in the initial stages of the engagement of the accountants, the first defendant had some capacity to participate and he provided some assistance about the affairs of the business in the initial stages.

The plaintiff remained ignorant of the deteriorating situation until a meeting with his parents at their home after the accountants were engaged. As noted above the plaintiff saw Mr McLean about his left knee in mid-1993 and it was still troubling him in early 1994. Ms Wilson, by this time a solicitor with Holding Redlich, wrote to Mr McLean on 28 January 1994 who responded on 9 February 1994 stating that the plaintiff carried a higher risk of increased injury and increased future disability if he did not have the recommended reconstruction. The plaintiff apparently decided to go ahead with the procedure and saw Mr McLean on 28 February 1994. On 1 March 1994, Mr McLean wrote seeking written approval to proceed from WorkCover. It is unclear precisely when the arrangements were made but Mr McLean performed the procedure on 19 April 1994. Both the plaintiff and the first defendant signed a workers compensation claim form on 17 March 1994.

Ms Wilson learned of the involvement of the accountants from Ms Stonier. I find it probable that the plaintiff was motivated by the condition of his left knee and not the imminent failure of the business when he decided to go ahead with the procedure, but his decision was overtaken by events. On the same day as he signed his claim form, the first defendant signed an employer claim report nominating Coopers & Lybrand as the employer’s address for correspondence.

Ms Stonier said that her father was devastated that matters had required the involvement of Coopers & Lybrand, that he was proud, and could not deal with the fact that the business had gone under. Ms Stonier said she assumed after this point that the plaintiff was finalising everything as her father ‘was crying a lot. He just sort of shut down. He shut down.’ I am satisfied that the first defendant’s breakdown was in early March 1994 at or about the time of the appointment of the accountants. Soon after his breakdown, his mother asked the plaintiff to help her, or as the plaintiff contends, his employer instructed him to undertake the duties that would cause his compensable injury. This request or instruction occurred in early March 1994.

The second defendant telephoned the plaintiff and asked him to come around to their house before work. The plaintiff arrived at his parents’ house and encountered his father sitting on his chair crying. His mother directed him to finish the outstanding jobs of the business. He described his mother’s instructions in the following terms:

I got a phone call from my mother. You know, I was ready to go to work and my mother rang and said, "Look, you need to come round and see us." And I said, "Why?" And she said, "Well, just come round." I went round there and she said, "The business is in trouble." And then I just saw my father, and once I saw my father, who I've never seen him look like that my whole life, he was always a very imposing, strong man, I'd never seen a person just turn to jelly like that, he was just a pitiful figure. And then when mum looked at me and said, "Dad's in trouble. The business has collapsed, or it's basically in the receivers and you have to ... You've got to help your father, and you've got to do whatever you can to help the business, you've got to finish these jobs for us because we need the money. This is the receiver's name, you'd need to contact him, talk to him.

At this meeting, the plaintiff’s mother asked the plaintiff to assist with the winding up of the business. The plaintiff stated that the second defendant had no experience with the practicalities of completing a building contract and his mother asked him to do what your father would normally do. She said, ‘You’ll have to do it.’

Mum said, "You're the only person that can do - like, you're the only thing that knows about, you know, that has worked on these jobs." She couldn't do it because she didn't, she can't, she had no experience.” He recalled telling her he would do his best. “she said I had to - you know, we had to finish - I had to finish the works to complete the works to complete the contracts.

The plaintiff also said that he had the duties ‘thrust upon him’, and that he took on the tasks ‘reluctantly’, and did not ‘voluntarily assume’ them. The plaintiff said he was in a state of shock seeing his father the way he was and that the experience was like a nightmare; that he had walked into a drama with no idea how it was going to play out. I am not persuaded that the plaintiff communicated any reluctance to his mother at the time or that he stated any inability to help either from a want of training or experience or because he anticipated he might become anxious or stressed by the tasks. This evidence about his reaction was reconstructed, not recalled. Rather, his probable response to the second defendant was revealed by the following evidence:

And what did you tell her?---I said I'll do whatever I can. I mean, I'll do within my power.
…
She said you've got to help us, you've got to help us do these things, you've got to finish these jobs?---She said dad's incapable of doing anything, he can't complete these works, have to do it. Basically that was the gist of things, you'll have to do it. … I'll do my best. But I didn't know what I was getting into. To me it was just a matter of going on and finishing off the works, but it opened up an unbelievable - everything just became complicated, it just became complicated, yeah.

The plaintiff’s evidence of more specific instructions about the tasks required of him was rather vague. His mother passed on some requests from the accountants for documents they needed, such as copies of contracts, and supplier and contractor documents, bank statements, tax documents, and insurance policies. When these requests were faxed, the second defendant asked the plaintiff to ‘go into dad's office and get all the creditors, because they want to know what all the creditors were’, or to ‘get all the PPS tax forms’. The plaintiff did so and gave them to his mother who delivered them to the accountants. His mother gave no specific instructions to the plaintiff about completing the contracts, but the plaintiff assumed responsibility for finishing the jobs. The Kew and Balwyn jobs only required some minor maintenance work. The Brighton job required significant completion work and the plaintiff had to negotiate with some of the trades for their return to the site to complete or rectify their works. These tradesmen were the principal creditors of the business and, being unpaid, apparently were reluctant to return for further works. Limited funds were available from the accountants to pay trades to return to site where payment for further work was appropriate. There was no evidence of any direct dealings between the accountants and the plaintiff and I am not satisfied that the accountants before the deed of assignment was signed, or Mr Daly afterwards, gave any direction or instruction to the plaintiff.

What was less clear was the extent to which the tasks undertaken by the plaintiff in completion of the Brighton job were a significant stressor on the plaintiff. Many of the sub-contractors were friends of the first defendant who had worked with him for years and they were concerned about his health. I infer that these men would also have been well known to the plaintiff. Apart from their concern about not being paid for their work, the plaintiff gave no evidence of specific stressful or anxious situations arising in these dealings, other than with the concreters. I accept that negotiations with sub-contractors to return unpaid to the site and continue or complete works would have been unusual for the plaintiff. I also accept that the plaintiff was without training or experience in contract management. Nevertheless, the plaintiff did not, in terms, identify that activity as a task that he was unable to cope with or one that caused him anxiety to any degree. Otherwise, the plaintiff’s own work on the site was not identified as work for which he was untrained or unqualified or which caused him stress or anxiety.

There was an industrial accident on the site, with a worker sustaining a compound fracture of an arm and being rushed off to emergency. Again, the plaintiff did not, in terms, identify that at the time he was unable to cope with this incident or that caused him anxiety to any degree. His mother asked him to find the insurance policy in the first defendant’s office and he did so. He then gave it to his mother and she dealt with it.

The plaintiff did, however, identify that he later realised he worked hard in difficult circumstances to finish the Brighton job while the proprietor stood by knowing that he would not pay for these final works. The plaintiff identified the futility of his efforts to complete the job after the appointment of the accountants as a source of his angry reaction, months later, to the failure of the business. That identifiable source of stress and anxiety did not flow because of the specific directions given by the second defendant as an employer. It was a consequence of the collapse of the business. He said that, in hindsight, he should have walked away. I am satisfied that at the time he did not walk away because of a sense of duty. An ordinary employee or sub-contractor would be likely to have refused the second defendant’s request unless adequately remunerated. The duty the plaintiff sensed was a duty as a son to help his parents in their hour of need. The plaintiff accepted his mother’s imploration, and he did so willingly without any request for payment or training or any expressed concern that what she was asking of him was likely to be significantly stressful to him.

The plaintiff also referred in his evidence to some financial losses. I have referred to the loan made to the business jointly with his ex-wife. The plaintiff also said that his PPS tax for about 6 months had not been remitted to the ATO and that there were some unpaid wages towards the end. The evidence about the tax and the unpaid wages was inconclusive and inconsistent with the absence of any claim by the plaintiff as a creditor in the bankrupt estates for such debts. The plaintiff also surrendered his car, which, although registered in his name, was provided by the business as part of his salary. The car was subject to a commercial lease between the business and a financier. None of these matters related to any direction or instruction given by the defendants as employers to the plaintiff. His mother’s conduct did not cause the plaintiff’s adverse psychological reaction to these matters. As will be seen in due course, his reaction was characterised by health professionals as an adverse reaction to the failure of the business without clear distinction between the several sources of pressure and stress often affecting the plaintiff.

Between 14 March and 15 April 1994, the accountants prepared for the meeting of creditors that would approve the appointment of Mr Daly as a controlling trustee under the Part X arrangements. I find that it was during this period that the plaintiff undertook the activities that he alleges caused his injury. By 30 March 1994, Mr Daly had prepared his Report to Creditors. It is likely that the verification of the matters declared in the defendants’ statements of affairs and the development by Mr Daly of a proposal that creditors might find attractive led to the requests that were made of the second defendant and passed to the plaintiff for action. The defendants proposed to assign all of their assets to the trustee. Two family members, Mr & Mrs Stonier, agreed to waive debts due to them to enhance the attractiveness of the proposal compared with bankruptcy. The hope was expressed that the defendants might be permitted to retire with dignity.

The plaintiff described his father as being ‘a defeated man’ at the time of the creditor’s meeting on 15 April 1994. I do not underestimate the immediate impact of his father’s breakdown on the plaintiff. This impact was also a source of stress for the plaintiff that again can be generically summed up as stress in relation to the collapse of the business but which has nothing to do with any instruction or direction given to the plaintiff by his mother or any work done by the plaintiff for the business. The plaintiff said:

He was still - he was just, he was a defeated man, he was a very defeated man, I've never seen him - I mean, look, everyone was basically very - I remember at the end of the creditors' meeting a lot of people came up to him. People that had been working for him for 40 years came up to him and just said, "You're a good man, Morrie, you're a good man". It was sad, it was really sad at the time. It was hard for me too.

The second defendant asked the plaintiff to take her and his father to the creditor’s meeting and he did so. The second defendant said that his father had to go and face the creditors. There was no obligation that the plaintiff did so, except as a supportive son. This was the only occasion that the plaintiff had personal contact with the accountants. The minutes of the creditor’s meeting suggest that it was not rancorous or even divisive. The meeting unanimously accepted the defendant’s proposals. A creditor inquired about the possibility of insolvent trading and the plaintiff, in what the minutes record as his only statement to the meeting, referred to the need to complete the Brighton contract to obtain the highest return for the creditors. It would have been clear to all at the meeting that any prospect of a return to creditors depended on the final payment for the Brighton contract being collected. That was a task for Mr Daly.

The plaintiff referred to one specific aspect of creditor’s conduct at the meeting.

You said the concreters threatened you, what was the nature of that threat from the concreters?---I think they were owed quite a bit of money, and they were - I mean, concreters are rough guys, and he just said basically that, "If we don't get our money, we'll get you."
Addressed to you?---Yes.

Nothing in the plaintiff’s evidence suggests that this conversation was more than an expression of financial frustration by ‘rough guys’. If they followed up, the plaintiff said nothing about it and there was no specific remark made by the plaintiff either to medical practitioners or in his evidence about any fear or anxiety or other reaction to this conversation. The concreters joined an informal group of the major creditors following the meeting and that group may have been further informed by Mr Daly of the outcome on the Brighton job.

The following Tuesday, the plaintiff underwent a knee reconstruction.

Did the defendants owe a duty of care
The plaintiff’s submissions

The plaintiff submitted that the defendants owed him a duty of care to reduce the foreseeable risk of psychiatric harm because a risk of psychiatric harm was foreseeable by reference to the breakdown of the first defendant, or was otherwise known to the defendants by reference to the factors enunciated by J Forrest J in Hardy v Mikropul.[2]
[2][2010] VSC 42, [218].

The plaintiff submitted that the duty, expressed in general terms, is an independent personal obligation of the employer to take reasonable steps to ensure a safe system of work is established and maintained. In written submissions, citing Pasqualotto v Pasqualotto,[3] the plaintiff contended that the coincidence of the plaintiff’s parents being his employer had no bearing on the duty of care owed to him. It was the fact the plaintiff was an employee that bore directly upon the duty of care that was owed to him.
[3][2013] VSCA 21, [19]-[20].

The gravamen of the plaintiff’s submission was that the court must ignore the parent/child relationship. His counsel submitted that the salient feature of the relationship was the oral contract of employment. The plaintiff was performing tasks expressly requested of him by one of his employers and was therefore acting in the course of his employment. He continued to be paid or owed wages and was not a volunteer. The fact that his employer was his mother was not relevant. The plaintiff was at all times acting in the course of his employment as a carpenter under the direction of his mother. That expression included not just work or service that the employee was employed to perform but anything that is incidental to that work or service.[4] There need not be a causal connection between the employment (and its incidents) and the injury. The plaintiff also submitted that Mr Daly had no authority as employer until the deed of assignment was signed after the creditors meeting on 15 April 1994. Alternatively, the plaintiff submitted that there was no good explanation as to why the second defendant should allocate the tasks to the plaintiff without warning or training rather than performing them herself.
[4]Reid Stockfeeds Pty Ltd v Lindhe [2008] VSC 305, [15].

The plaintiff contended that from January to April 1994, he had to perform every aspect of the operation and administration of the business, with no assistance or guidance from his father or his mother, and for which he had received no training from his father and had no experience. The plaintiff summarised this as being that for about three months, he was responsible for, and discharged the following duties.

(a) Management and administration matters for the business.

(b) Completing three building contracts between January and April including all matters of supervision and co-ordination.

(c) Instructing the trades about work to be done and arranging for their attendance on site.

(d) Supervising the work of tradesmen including certification of finalisation and exercising responsibility for site safety.

(e) Handling the financial affairs of the business and liaising with Coopers & Lybrand.

(f) In his father’s office which was in disarray, sorting through documents to find or collate contracts, insurance policies, bills, invoices and other source documents, bank statements and chequebooks, tax records and the like. Working out the list of creditors of the business for Coopers & Lybrand.

(g) Dealing with Coopers & Lybrand and meeting with the creditors.

The plaintiff identified the following matters as the features of the defendant’s instructions that contributed to his injury. He received threats. He had to undertake tasks for which he was inexperienced and untrained, including completing the Brighton job, which involved negotiating with trades to return to site despite being owed money. He was required to accept responsibility for site safety. He was required to piece together a picture of what was happening with the business from books of account that were in disarray. He was required to attend a creditor’s meeting. The defendants did not inform the plaintiff of a number of relevant matters such as the depth of the financial collapse, the probability that the business would not recover the moneys owing under the contract for the Brighton job, and the fact that the business was not salvageable.

The plaintiff submitted that the content and scope of the defendant’s duty to the plaintiff included ensuring he was adequately trained, supervised, monitored, assisted, and fully informed about relevant matters or failing that, not required to perform the task of running, managing and finalising the affairs of the defendant’s business between January and April 1994. The scope of the duty, the plaintiff submitted, must have included such matters because the defendants knew three matters. First, that such tasks were a cause of the first defendant’s breakdown. Second, the plaintiff had not been trained and had no experience because the defendants knew the nature and extent of the plaintiff’s work during the preceding 17 years. Third, the defendants knew the difficulties that the plaintiff would face in such work. Further, the second defendant knew these matters from the time of her phone call seeking the plaintiff’s help. They were not matters of litigious hindsight. The plaintiff submitted that there could not be any assumption that the plaintiff was capable of doing what was asked of him. The absence of any complaint that the work was affecting his health was not to the point because the duty was already engaged; obliging the defendants to identify what ought to have been done to avoid the risk of injury. An absence of complaint did not mean that the risk had abated.

The plaintiff submitted that the plaintiff’s employment contract, such as it was, was important because, at law, parties are free to contract to undertake potentially stressful work and employers are entitled to assume that employees are capable of performing the work they have agreed to perform. Here, there was no agreed variation in duties. Tasks for which the plaintiff was untrained and unqualified and which he would find stressful were ‘thrust’ on him and the defendants, knowing that, were not entitled to assume that he was capable of performing them. It cannot be said that the plaintiff voluntarily assumed, or agreed, to varied employment duties and responsibilities. The signs of the plaintiff’s inability to carry out the work assigned to him were, his counsel submitted, everywhere, but not identified by direct complaint by the plaintiff. Rather such signs were evident from the nature and extent of the work that the plaintiff was required to undertake.

The plaintiff drew my attention to Hatton v Sutherland[5] in support of a submission that the plaintiff’s lack of training and the tasks that he was directed to do required ‘harder thought’ on the part of the defendants beyond the simple terms of his contracted responsibilities. The interaction between the plaintiff’s ‘personal characteristics’ and the demands placed on him made it entirely foreseeable that he was exposed to a risk of psychiatric injury.
[5]Hatton v Sutherland, Barber v Somerset County Council, Jones v Sandwell Metropolitan Borough Council, Bishop v Baker Refractories Ltd [2002] EWCA Civ 76, [2002] ICR 613 [25], [28], [29].

The plaintiff submitted that ‘the circumstances’ suggested the plaintiff’s vulnerability to psychiatric injury. The risk fell within a class of risk that in a general way the defendants ought to have foreseen. The only conclusion open to the court was that a cause of the first defendant’s adverse psychiatric reaction was the work of winding up the business. The plaintiff submitted that this conclusion follows on these facts:

(a) The plaintiff’s observations of his father at the meeting with his mother when he was told that the business was in trouble (seen crying in the corner);

(b) The first defendant’s inability to respond to questions or provide assistance. The fact that he had shut down completely and was a mental wreck;

(c) Until that time the first defendant had been physically fit and working in all aspects of the business, particularly the tasks that the plaintiff was asked by his mother to undertake, until his ‘meltdown’;

(d) The first defendant was ‘too ashamed to talk’ to the plaintiff;

(e) At the creditor’s meeting, the first defendant was a defeated man who could not talk;

(f) The first defendant was a proud man who could not deal with the fact that his business had ‘gone under’.

The plaintiff submitted that it must follow that the work tasks that the plaintiff was asked by his mother to perform had been a cause of significant psychological distress to the plaintiff’s father. Further, it could not be far-fetched or fanciful that work that had contributed to the first defendant’s psychiatric state (when he had never previously suffered mental health problems) could, when thrust on the shoulders of the untrained plaintiff, create a risk of psychiatric injury to the plaintiff. The fact of the first defendant’s breakdown required that a reasonable employer ought to have contemplated the risk of the injury that eventuated. The plaintiff submitted that no other conclusion was open to the court because the unchallenged evidence was that the work that the plaintiff was directed to perform by his mother was work that the first defendant could not face and which was a cause of his psychiatric distress.

The plaintiff further submitted that if that submission did not find favour with the court, as is the case, reasonable foreseeability is based on the following matters.

(a) The plaintiff was untrained for the duties;

(b) The first defendant, the only available supervisor, was incapable of assisting the plaintiff;

(c) Neither the second defendant nor the accountants supervised the plaintiff;

(d) The defendants knew the plaintiff was likely to be confronted by angry creditors;

(e) The plaintiff would be required to undertake negotiations, potentially of a hostile nature, in an attempt to cajole subcontractors and others to continue working or supplying materials notwithstanding that they had not been paid.

The plaintiff submitted his case was proved by the inferences to be drawn from known facts and by the application of common sense, not by expert testimony about an external standard that might demonstrate the stressful nature of the tasks allocated by his mother. The plaintiff’s case was not one where he claimed to have the expertise and capacity to perform the duties asked of him by his mother but through undertaking those tasks had a breakdown, of which Larner v George Weston Foods Ltd[6] is an example. The plaintiff submitted his case was based on the unexceptional common law principle, that an employee employed to do a particular task must be properly trained, supervised, and equipped for that task and expert evidence was not needed.
[6][2014] VSCA 62

The applicable principles

It is not doubted that the defendants were at all material times under a duty to the plaintiff to take reasonable care for his safety by providing a safe place of work, and a proper and safe system of work with efficient supervision.[7] The important issue in the context of a claim for work related psychiatric injury is often, as in this case, whether the defendants owed the plaintiff a duty of care at all, and, if so, the content of that duty.
[7]See generally Czartyrko v Edith Cowan University [2005]HCA 14, (2005) 79 ALJR 839, 214 ALR 349

In the leading decision, Koehler v Cerebos (Australia) Ltd,[8] the High Court rejected the proposition that reasonable foreseeability, simpliciter, was the determinant of the content of the duty of care in a psychiatric injury case and as the court observed in Kuhl v Zurich Financial Services Australia Ltd,[9] the scope and content of the duty necessarily depend on the circumstances of the case. Psychiatric injury in the workplace can be suffered from stress in at least two distinct scenarios, one is circumstances of bullying and/or employee behaviour that creates stress for a plaintiff, the other scenario being circumstances of overwork or pressure from employer directed workload or tasks. In this proceeding, the court is concerned with the latter scenario.
[8][2005] 222 CLR 44.
[9][2011] HCA 11, [22].

The High Court in Koehler stated that the proper starting point of a court’s inquiry into whether in all the circumstances, the risk of a plaintiff sustaining a recognisable psychiatric illness was reasonably foreseeable, in the sense that the risk was not far-fetched or fanciful, is to examine the aspects of the relationship between the parties that bear upon the content of the duty of care. That inquiry requires the court to take account of the obligations that the parties owe one another under the contract of employment, the obligations arising from that relationship which equity would enforce and, of course, any applicable statutory provisions.[10] Consideration of these obligations is likely to reveal the relevant questions that bear upon the inquiry into duty and breach. The inquiry is not limited to whether psychiatric injury was reasonably foreseeable simply in the sense of not being a far-fetched or fanciful consequence,[11] which is a requirement generally regarded as undemanding.[12] The plurality observed that it invites error to begin the inquiry by focusing upon the question of whether there was a breach of the duty to take all reasonable steps to provide a safe system of work, and the associated issues of foreseeability and the reasonable response to risk as laid down in Wyong Shire Council v Shirt,[13] because to do so may fail to take into account ‘fundamental aspects of the relationship between the parties’.[14] The plaintiff’s submissions exhibit this particular error.
[10]Koehler v Cerebos (2005) 222 CLR 44, 53 [19].
[11]Ibid, [23].
[12]Ibid, [33].
[13](1980) 146 CLR 40, 47-8.
[14]Koehler v Cerebos (2005) 222 CLR 44, 53 [19].

In Koehler, the plaintiff had told her supervisor on many occasions that she could not cope with the volume of her work, following a change from full time to part time employment. Although she suggested ways to solve the problem, she did not tell her employer that her health was being affected. The employer did not respond to her suggestion that she was unable to maintain her performance of the workload. She was diagnosed with a psychophysical disorder, a complex fibromyalgia syndrome, and a major depressive illness. The court held that a reasonable person in the position of the employer would not have foreseen the risk of psychiatric injury to the plaintiff.

The plurality identified as being of particular relevance in the proceeding before the court the parties’ obligations under the contract of employment. The plurality stated:[15]

The content of the duty which an employer owes an employee to take reasonable care to avoid psychiatric injury cannot be considered without taking account of the obligations which the parties owe one another under the contract of employment, the obligations arising from the relationship which equity would enforce and, of course, any applicable statutory provisions. … Consideration of those obligations will reveal a number of questions that bear upon whether … an employer’s duty of care to take reasonable care to avoid psychiatric injury requires the employer to modify the work to be performed by an employee.
…
What is important is that questions of the content of the duty of care, and what satisfaction of that duty may require, are not to be examined without considering the other obligations which exist between the parties.

[15]Ibid, 53-4 [21]-[22].

There is another aspect of the relationship between the plaintiff and the defendants, absent from the facts of Koehler that is presently relevant. A fundamental aspect of the relationship between the parties in the present proceeding is that of parents and child. It is implicit in the judgments in Koehler that all fundamental aspects of the relationship between the parties may bear upon the content and scope of a duty of care to avoid inflicting psychiatric injury. So much was made clear in Kuhl[16] when the High Court said:

Different classes of care may give rise to different problems in determining the nature or scope of a duty of care. In many cases a duty formulated as being one to take "reasonable care" may suffice for the finding of duty in that particular case. Cases that involve the duty of a solicitor to his or her client to exercise professional skill in accordance with the retainer, the duty of a motorist towards other users of the road, or the duty owed by an occupier of land to an entrant with respect to the condition of the premises, ordinarily involve no real controversy over the scope and content of the duty of care; these are considered at the "high level of abstraction" spoken of by Glass JA in Shirt v Wyong Shire Council. But where the relationship falls outside of a recognised relationship giving rise to a duty of care, or the circumstances of the case are such that the alleged negligent act or omission has little to do with that aspect of a recognised relationship which gives rise to a duty of care, a duty formulated at too high a level of abstraction may leave unanswered the critical questions respecting the content of the term "reasonable" and hence the content of the duty of care. These are matters essential for the determination of this case, for without them the issue of breach cannot be decided. The appropriate level of specificity when formulating the scope and content of the duty will necessarily depend on the circumstances of the case. [Citations omitted]

[16]Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11, [22].

Beyond the relationship between the parties, the content of a duty of care owed by an employer will be further revealed by careful analysis of the circumstances of the performance by the parties of their obligations under the relationship. In Koehler, the plurality further stated:

No doubt, as was pointed out in Hatton, there will be a number of factors which are likely to be relevant to answering the particular question identified in that case. Those factors would include both the nature and extent of the work being done by the employee, and the signs from the employee concerned – whether in the form of express warnings or the implicit warning that may come from frequent or prolonged absences that are uncharacteristic. What other matters might make the risk of psychiatric injury reasonably foreseeable was a question not explored in argument. It is a question that may require much deeper knowledge of the causes of psychiatric injury than whatever may be identified as common general knowledge. But neither the particular issues identified in Hatton nor the question from which they stem (was this kind of harm to this particular employee reasonably foreseeable?) should be treated as a comprehensive statement of relevant and applicable considerations.[17] [Citations omitted]

[17]Koehler v Cerebos (2005) 222 CLR 44, 54 [24].

The relevant considerations have been considered in other cases. In Hegarty v Queensland Ambulance Service[18] Keane JA (as his Honour then was) referred to Koehler in the following terms:

In the joint judgment of McHugh, Gummow, Hayne and Heydon JJ in the recent decision of the High Court in Koehler v Cerebos (Australia) Ltd, at 53–55 [19]–[25] it was said that a stable appreciation of the content of the employer's duty to take reasonable care is essential; and that it is erroneous to proceed on the assumption that "the relevant duty of care [is] sufficiently stated as a duty to take all reasonable steps to provide a safe system of work without examining what limits there might be on the kind of steps required of an employer." Further, "litigious hindsight" must not prevent or obscure recognition that there are good reasons, apart from expense to the employer, why the law's insistence that an employer must take reasonable care for the safety of employees at work does not extend to absolute and unremitting solicitude for an employee's mental health even in the most stressful of occupations. A statement of what reasonable care involves in a particular situation which does not recognise these considerations is a travesty of that standard.[19] [Citations omitted]

[18][2007] QCA 366.

[19]Ibid, [47]. (Citations omitted)

In Hardy v Mikropul Australia Pty Ltd,[20] J Forrest J emphasised the following factors from his analysis of Koehler as relevant in determining the content and scope of an employer’s duty of care:

(a) the contract of employment;
(b) the nature and extent of the employee’s work;
(c)any signs from the employee concerned (for example, in the form of express warnings or the implicit warning that may come from frequent or prolonged absences that are uncharacteristic); and
(d)an assumption that the employee by agreeing to take on the employment or the task is capable of doing the job.

The plaintiff in that case sought damages for a depressive illness associated with alcoholism and drug addiction that he contended was caused by being exposed to a drinking and drug culture with his fellow employees in, and about, his employment.

[20][2010] VSC 42 (3 March 2010).

In Taylor v Haileybury,[21] Beach J (as his Honour then was) agreed with Forrest J’s analysis in Hardy of Koehler. The plaintiff in Taylor claimed damages because of a psychiatric breakdown caused by overwork in the course of his employment as a schoolteacher. The following observations of the plurality in Koehler were influential in the reasoning of Beach J:

In Tame v New South Wales, the Court held that ‘normal fortitude’ was not a precondition to liability for negligently inflicting psychiatric injury. That concept is not now to be reintroduced into the field of liability as between employer and employee. The central inquiry remains whether, in all the circumstances, the risk of a plaintiff (in this case the appellant) sustaining a recognisable psychiatric illness was reasonably foreseeable, in the sense that the risk was not far-fetched or fanciful.
It may be right to say that it is now a matter of general knowledge that some recognisable psychiatric illnesses may be triggered by stress. It is, however, a further and much larger step to take to say that all employers must now recognise that all employees are at risk of psychiatric injury from stress at work. Yet it is that proposition, or one very like it, which must lie behind the Commissioner’s conclusion that it required no particular expertise to foresee the risk of psychiatric injury to the appellant.
The duty which an employer owes is owed to each employee. The relevant duty of care is engaged if psychiatric injury to the particular employee is reasonably foreseeable. That is why, in Hatton, the relevant question was rightly found to be whether this kind of harm to this particular employee was reasonably foreseeable. And, as pointed out in that case, that invites attention to the nature and extent of the work being done by the particular employee and signs given by the employee concerned.[22] [Citations omitted]

[21][2013] VSC 58 (22 February 2013).

[22]Koehler v Cerebos ( (2005) 222 CLR 44, 56-58 [33]-[35].

In Taylor, Beach J drew a number of observations from the decision in Hegarty with which he agreed:[23]
[23]Taylorv Haileybury [2013] VSC 58 (22 February 2013) [116].

(a)First, in a negligent infliction of psychiatric injury case, the risk of injury may be less apparent than in cases of physical injury.
(b)Secondly, whether a risk is perceptible at all may in the end depend upon the vagaries and ambiguities of human expression and comprehension.
(c)Thirdly, whether a response to a perceived risk is reasonably necessary to ameliorate that risk is also likely to be attended with a greater degree of uncertainty; the taking of steps likely to reduce the risk of injury to mental health may be more debatable in terms of their likely efficacy than the mechanical alteration of the physical environment in which an employee works.
(d)Fourthly, the private and personal nature of psychological illness, and the consequential difficulties that attend the discharge of an employer’s duty in this respect, must be acknowledged as important considerations.
(e)Fifthly, the dignity of employees, and their entitlement to be free of harassment and intimidation, is also relevant to the content of the duty that might be asserted by a plaintiff.
(f)Sixthly, issues of some complexity arise in relation to when and how intervention by an employer to prevent mental illness should occur, and the likelihood that such intervention would be successful in ameliorating an employee’s problems.

In Taylor, Beach J identified, as present in the case before him, a number of hallmarks of ‘litigious hindsight’ but the decision in that case turned on a careful examination of the terms and conditions of employment. The court concluded that while the plaintiff’s workload was undoubtedly heavy, it was the job that he chose to do at the time he commenced his employment with the defendant and without the benefit of hindsight there was no reason for the defendant to suspect that the workload it required of the plaintiff placed him at any risk of psychiatric injury.

Consideration of such matters directs a court’s attention to whether the risk of psychiatric injury is perceptible and is a risk that requires a response from the employer. What was significant in Koehler was that although the plaintiff had made many complaints to her superiors, none of those complaints suggested that her attempts to perform her duties would put her health at risk. She did not suggest any vulnerability to psychiatric injury or that the work was putting her at risk of such an injury. Her complaints may have been understood as suggesting an industrial relations problem, but they did not suggest danger to her psychiatric health. Further, the plaintiff’s agreement to perform those very duties that are later found to be a cause of psychiatric injury may be of considerable significance in determining whether an employer has breached its duty of care. The employer was entitled to assume that the plaintiff could perform the tasks she had agreed to perform without injury to her psychological health and it had no reason to suspect that she was at risk of psychiatric injury. When made, her complaints about her workload did not alert her employer that her duties were putting her health at risk or that psychiatric injury was a possibility. The plurality stated:

An employer may not be liable for psychiatric injury to an employee brought about by the employee’s performance of the duties originally stipulated in the contract of employment. In such a case, notions of ‘overwork’, ‘excessive work’ or the like have meaning only if they appeal to some external standard. … Insistence upon performance of a contract cannot be in breach of a duty of care.[24]

[24]Koehler v Cerebos ( (2005) 222 CLR 44, 56 [29].

In Larner v George Weston Foods Ltd,[25] the Court of Appeal applied Koehler when an unsuccessful plaintiff appealed the finding that the employer was not negligent on grounds that included that the trial judge erred in interpreting, and applying to the evidence, the principles in Koehler. The plaintiff submitted that the trial judge’s misconceptions of the relevant principles were reflected in the analysis about the content of the employer’s duty of care; what the law required the plaintiff to prove to demonstrate a reasonably foreseeable risk of psychiatric illness; the issue of whether stress constituted a recognisable psychiatric illness; and whether the plaintiff’s unchallenged evidence supporting an inference of the employer’s knowledge of the risk that the plaintiff would sustain a recognisable psychiatric illness was inappropriately considered. The plaintiff also attacked the judge’s observation that the plaintiff’s case suffered from an absence of any evidence of an external standard against which one could determine whether the work required of the plaintiff under his contract was unduly onerous.
[25][2014] VSCA 62.

On analysis of the contractual relationship between the parties, the obligation that Larner assumed was to fulfil a role carrying significant seniority, managerial responsibility, and autonomy. His employer was entitled to assume, at the time of entering into the contract, that Larner was capable of doing the job for which he was appointed. Further, when appointed, there were no signs warning of the possibility of psychiatric injury, and the circumstances suggested that the plaintiff would be fully capable of discharging the nature and extent of the work to be done. The Court of Appeal considered that these factors ran counter to any suggestion that the employer ought reasonably to have appreciated that the plaintiff was at risk of psychiatric illness in performing his duties. Rather than indicating that he was vulnerable to psychiatric injury, the plaintiff gave every appearance, at the relevant time, of being capable of carrying out the work required. The absence of warning signs was reinforced by the fact that the initial diagnosis after the plaintiff’s collapse was of a physical and not psychological collapse. A submission that there were signs that were or ought to have been apparent to the employer that the plaintiff was being adversely mentally affected by his work failed on an analysis of the findings properly open to the trial judge on the evidence. The court rejected, as beside the point, an analysis in hindsight that the plaintiff had an obsessional personality that was more susceptible to breakdown and to not coping with stressors that threatened his sense of control.

The court also held that the absence of evidence of an external standard against which the trial judge could assess whether the plaintiff was obliged to engage in ‘overwork’ or ‘excessive work’ was an important contributing factor in the judge’s reasoning that the risk of psychological collapse was not foreseeable to the employer. It was open to the judge to take the absence of an external standard into account as a relevant consideration and to consider its omission as a critical gap in the evidence.

In A Z v The Age [No 1],[26] the plaintiff failed to establish a claim for damages for breach of a duty to take reasonable care to avoid her suffering psychological injury or to minimise the injury that she may suffer. She suffered from a post-traumatic stress disorder and major depression and claimed that, when employed by the defendant as a photographer, she became sensitised to the risk of psychological injury and broke down on an assignment for the defendant to photograph families of the victims of the first Bali bombings. The court considered that on the evidence before it, applying Koehler, the risk of psychiatric injury to this particular plaintiff was not foreseeable. The plaintiff further contended in support of the proposition that the plaintiff’s injury was foreseeable that a more generalised risk of injury to journalists was evident from a body of academic knowledge, which the court rejected as irrelevant to the plaintiff’s circumstances.
[26][2013] VSC 335.

In Swan v Monash Law Book Co-Operative,[27] a plaintiff who suffered a major depressive disorder and a generalised anxiety disorder, with features of traumatisation established on Koehler principles that her employer owed her a duty of care in circumstances that bear no resemblance to the present case.
[27][2013] VSC 326.

In Doulis v State of Victoria,[28] a secondary school teacher with a chronic severe major depressive condition succeeded, on Koehler principles, in establishing that it was reasonably foreseeable that he might suffer a recognised psychiatric injury because of his teaching allotment and that the defendant had a duty to take reasonable care to avoid that injury occurring to him and a duty to minimise the risk of him suffering that injury by modifying or removing part of his teaching load and by providing him with support and monitoring.
[28][2014] VSC 395.

Most recently, in Johnson v Box Hill Institute of TAFE,[29] the plaintiff failed to establish a claim for damages for a major psychiatric injury consequent being bullied and harassed at work by his manager in eleven separate incidents, but succeeded in his claim for injuries to his back and neck from being required to engage in unreasonable manual handling and for a major psychiatric injury consequent upon being required to teach a heavy workload. J Forrest J was not persuaded that his manager bullied the plaintiff. However, as the plaintiff’s claim was founded on a psychiatric injury caused by his employer, the court returned to the principles in Koehler. Forrest J emphasised[30] the following principles from Koehler:
[29][2014] VSC 626.
[30]Ibid [406].

(a)Where a proceeding is grounded in psychiatric injury arising out of the carrying out of work duties, careful analysis of the content of the duty of care is required before questions of breach are considered.
(b)Reasonable foreseeability of psychiatric injury to the particular employee alone is not sufficient to enliven the duty of care.
(c)Other relevant considerations as to whether a duty of care is enlivened include:
(i)the contract of employment and obligations arising from it; and
(ii)evident signs of an employee’s inability to carry out work activities associated with the risk of psychiatric injury.

(d)Absent those evident signs ‘warning of the possibility of psychiatric injury’, the employer is entitled to assume that the employee is capable of performing his or her job.

Forrest J then referred to the principles drawn by Beach J in Taylor from Hegarty that I set out above. The court found that the TAFE Institute was on notice of the risk of a psychological injury arising out of Mr Johnson’s employment – the ‘evident signs’, to use the words in Koehler, of an identifiable and recognisable psychiatric condition (depression) related directly to the relationship between two of its employees.[31] Forrest J concluded that the considerations identified by Beach J in Taylor were relevant on the evidence before him. These findings led to some complexity in the assessment of damages that are not presently relevant.

[31]Ibid, [412]

Pasqualotto,[32] on which the plaintiff relied, does not elucidate the applicable principles on this application. In the passage relied on in Pasqualotto, Osborn JA stated:

The duty of care that an employer owes to an employee may vary according to the particular susceptibility of an employee to injury. If the employer knows that the employee has a predisposition to injury then the employer must take special precautions to avoid that injury. The duty of care that an employer owes to an employee may vary according to the particular susceptibility of an employee to injury. If the employer knows that the employee has a predisposition to injury then the employer must take special precautions to avoid that injury. This is a case like Perkovic v McDonnell Industries Pty Ltd, in that negligence lies in an imperative order given by the employer to the employee; namely the order of the appellant’s father to keep working when the appellant sought to be relieved from his duties because of pain in his back. The order given was an order no reasonably prudent employer could have given. The critical enquiry is whether, at the time the order was given, it foreseeably subjected the appellant to a risk of avoidable injury. In my view, it is plain that it did. [Citations omitted]

[32][2013] VSCA 21, 2013 Aust Torts Reports 82-125, [19]-[20].

There are important factual differences between Pasqualotto and this case. Pasqualotto was concerned with a predisposition to physical injury that was known to the employer who happened to be the plaintiff’s father and not with the issue of foreseeability of a risk of psychiatric injury. The nature of ‘imperative order’ in that case and the circumstances that preceded it were also quite distinct from the facts here. With respect, I see no inconsistency between Osborn JA’s statements of principle and Koehler. The fact that the employee was also the son of his employers does not import a different duty, but it is a circumstance that is relevant to identification of the content of that duty.

Why no duty is owed

The following considerations are relevant in the analysis of Mr Rawlings’ claim, in particular in assessing whether the particular risk of psychiatric injury to the plaintiff was not, in the circumstances, far-fetched or fanciful.

(a) The relationship between the parties, being an employment relationship overlaid with a close familial relationship;

(b) The failure of the employment relationship with the appointment of a controlling trustee under the Bankruptcy Act 1966 (Cth) at the relevant time;

(c) The nature of the allocated work tasks, objectively assessed (the issue of external standard);

(d) The acceptance by the plaintiff without demur of the tasks later identified as productive of stress causally related to the plaintiff’s injury;

(e) The evidence of the condition of the plaintiff’s mental state prior to the relevant time as observable by his employer and/or his mother in the context of alternate sources of stress for the plaintiff;

(f) The issue of warning signs or complaints from the plaintiff following on the employment request and during the period of performance of the stressful tasks;

(g) Whether any response to a perceived risk would be practical; and

(h) The timing, circumstances, and content of the initial diagnosis of the plaintiff’s psychiatric injury.

Several key issues militate against finding a duty of care in the present case. First, the nature of the employment relationship is unusual, as it is overlaid with a familial relationship. It is not insignificant that the employer’s representative in instructing the plaintiff was his mother. Second, there was no perceived risk of psychiatric injury, whether viewed from the perspective of the employer or that of a reasonable employer. Such a risk to the plaintiff was not foreseeable from the mental breakdown of his father. Third, the particular circumstances said to have inflicted employment stress on the plaintiff are intertwined with stressful circumstances that are familial. Mostly the evidence of, and for, the plaintiff emphasises his reaction to familial based disappointments rather than the employment tasks. Fourth, the employer was under insolvency administration and the affairs of the employer were in the hands of the trustee appointed under the Part X deed. Fifthly, there is the nature of the employment tasks themselves.

Relevant to the issue of capacity to work was the state of the plaintiff’s left knee, which has been already referred to. A workers compensation claim in January 1996 shows that after the knee reconstruction, the plaintiff continued to have issues with his knee. The plaintiff stated in his claim that he was suffering from a recurrence of knee problem, and stress and depression. The plaintiff saw Mr McLean in September 1999. The plaintiff said he was told to keep up with his knee rehabilitation, as he did not require further treatment.

The plaintiff’s left knee problem was again cited in a WorkCover claim in 2006. A report of Mr Brydon dated 31 August 2006 described the plaintiff as having a ‘significantly degenerative knee’, likely to benefit from further physiotherapy or an arthroscopy. The plaintiff could not recall why he saw Dr Bryden, although Dr Bryden reported to Dr Shap, suggesting that his GP had referred him for specialist assessment.

Dr Shap has considered for some time that the plaintiff was now precluded from the building industry and/or heavy manual work. In 2007, in a letter to Melbourne Injury Lawyers, Dr Shap confirmed ‘physically his L knee is unable to cope with the rigors of manual labour,’ and ‘his L knee arthritis prevents him from doing manual labour.’ Dr Shap observed when giving evidence that ‘he is unfit to work in the building industry due to his knee problem and [because he] suffers psychological distress caused by the traumatic events surrounding the bankruptcy and closure of his father’s construction business in 2008’. Dr Shap suggested that the plaintiff’s left knee alone would not put him out of the workforce, but it would stop the plaintiff doing heavy work. The plaintiff could have worked in some kind of managerial role within building and constriction if not for his anxiety and depression over anything to do with building.

In cross-examination, Dr Shap agreed that he could not point to any reference in his records to anxiety and depression affecting the plaintiff’s ability to work as a builder before the plaintiff began seeing Ms Perrett-Abrahams, and that pre-2006 the plaintiff’s knee injury would have prevented the plaintiff from continuing in the building industry. Nevertheless, Mr Radley, a vocational assessment specialist commissioned by the plaintiff’s lawyers, reported on 30 April 2014 that although the plaintiff’s knee injury had improved, it precluded any return to manual work. Mr Radley identified that the barriers to the plaintiff returning to work included a high level of anxious and depressed mood, social anxiety, and panic attacks.

The plaintiff said his knee is fine. He can play golf on it and he denies experiencing any instability with it. His wife offered also said that the plaintiff’s left knee does not currently bother him. His evidence conflicts with some of the medical evidence and records of his complaints about knee pain over the years and was not entirely convincing. However, I am satisfied that the plaintiff’s knee has improved somewhat over time.

On balance, the evidence of his experience of ongoing pain persuades me that after his knee reconstruction the plaintiff’s left knee would have stopped him from pursuing a full-time career as a carpenter, although as Dr Shap suggested he could have moved into a managerial role but for his psychological reaction to building employment. Further, his poor recovery from his reconstruction may have followed on the significant deterioration in his mental condition, which likely had a detrimental effect on his commitment to rehabilitation. The defendants have not persuaded me that the plaintiff’s left knee was a distinct cause of the plaintiff’s economic loss as it seems clear from various medical reports that the plaintiff’s main issue with returning to the building industry in some form was and remains a psychological one.

Quantum findings

The assessment of damages for both pain and suffering and loss of earning capacity is to be undertaken, as the High Court stated in Malec,[34] on the basis that the plaintiff is entitled to damages for pain and suffering on the basis that his condition is the direct result of the defendant’s negligence. Those damages must be reduced, however, to take account of the chance that factors, unconnected with the defendant’s negligence, might have brought about the onset of a similar condition.
[34](1990) 169 CLR 638, 645.

In Smith v Gellibrand Support Services Inc,[35] the Court of Appeal approved of observations made by Ipp JA in Seltsam Pty Ltd v Ghaleb.[36] Ipp JA said that Malec required the application of the following principles to calculating damages:[37]

(a) In the assessment of damages the law takes account of hypothetical situations of the past, future effects of physical injury or degeneration, and the chance of future or hypothetical events occurring.
(b) The court must form an estimate of the likelihood that the alleged hypothetical past situation would have occurred.
(c) The court must form an estimate of the likelihood of the possibility of alleged future events occurring.
(d) These matters require an evaluation of possibilities and are to be distinguished from events that are alleged to have actually occurred in the past, which must be proved on the balance of probabilities.

[35][2013] VSCA 368, [72].

[36][2005] NSWCA 208, [103].

[37]Ibid, [71].

Ipp JA continued:[38]

What was said in Watts v Rake and Purkess v Crittenden now has to be qualified by these principles (cf Commonwealth of Australia v Elliott at [81]). Malec has an important bearing, for example, on the way in which a court must determine whether a defendant has discharged the ‘disentangling’ evidentiary burden on it of showing that part of the plaintiff’s condition was traceable to causes other than the accident and that, had there been no accident, the plaintiff would have suffered disability from his pre-existing condition.
Where a defendant alleges that the plaintiff suffered from a pre-existing condition, the evidential onus as explained in Watts v Rake and Purkess v Crittenden remains on the defendant and must be discharged by it. Nevertheless, to the extent that the issues involve hypothetical situations of the past, future effects of physical injury or degeneration, and the chance of future or hypothetical events occurring, the exercise of ‘disentanglement’ discussed in those cases is more easily achieved. That is because the court is required to evaluate possibilities in these situations – not proof on a balance of probabilities.
Without intending to give an exhaustive list of possibilities, it may be that, had the defendant’s negligent act not occurred, a pre-existing condition might have given rise to the possibility that the plaintiff’s enjoyment of life and ability to work would have been reduced and to a susceptibility to further injury; in addition, other causes entirely unrelated to the defendant’s negligent act might have contributed to the plaintiff’s ultimate condition.
Appropriate allowances must be made for these contingencies. A proper assessment of damages requires the making of a judgment as to the economic and other consequences which might have been caused by a worsening of a pre-existing condition, had the plaintiff not been injured by the defendant’s negligence. A pre-existing condition proved to have possible ongoing harmful consequences (capable of reasonable definition) to the plaintiff, even without any negligent conduct on the part of the defendant, cannot be disregarded in arriving at proper compensation.
As was pointed out in Newell v Lucas (at 1601 per Walsh J, with whose judgment Hardie and Asprey JJ agreed), the court must determine whether a comparison may be made between the plaintiff’s condition prior to the injuries sustained by the defendant’s negligence (including the plaintiff’s economic and other prospects in that condition) and the plaintiff’s condition and prospects after the injuries. Nothing in Watts v Rake and Purkess v Crittenden precludes the judge from carrying out this exercise.
[Citations omitted]

[38]Ibid, [104]-[108].

Applying the principles to this case, if I were satisfied that the defendants breached their duty of care to the plaintiff when assigning him various tasks related to the winding up of the business, I would also have to be satisfied that these negligently assigned tasks were a direct cause of the plaintiff’s psychiatric injury. While I am satisfied that the plaintiff has a significant psychiatric injury, the plaintiff did not persuade me that its cause was the impugned conduct of the employer. Certain psychological and medical conditions affected the plaintiff before and after the onset of his psychiatric injury, which were not caused by any breach of duty by the defendants. The issues were whether there was aggravation of a pre-existing condition or aggravation from non-compensatory causes. Assuming the defendants’ alleged negligence was a direct cause of the plaintiff’s injury, as I do for the purposes of this assessment, would the plaintiff’s psychological condition bear any resemblance to his present condition absent other factors. I also bear in mind where the onus of proof lies.

I make the following findings.

The plaintiff had not been treated for any psychiatric injury or psychological condition prior to the collapse of his parents’ business, aside from a visit to marriage counselling in 1991. He had no issues with alcohol abuse and his family had no concerns before the collapse of the business about the plaintiff’s psychological welfare. The plaintiff had been a sporty and generally happy person, very proud of his role in the family business. He was an occasional gambler and social drinker. It was not likely that the plaintiff was suffering from a pre-existing psychiatric condition before the collapse of his parents’ business, which was susceptible to aggravation.

There were varieties of potential stressors affecting the plaintiff at the time of his first suicide attempt - marital breakdown, the loss of his prospect of inheritance of a building business, the loss of trust in his father, the loss of a career, a knee reconstruction - that were the causes of the plaintiff’s psychiatric injury. Any assumed adverse effects resulting from the defendants’ alleged breaches of employer’s duty were unlikely to have had any causative effect.

I have expressed above my views about the role of the failure of the business in the plaintiff’s injury and the role of the plaintiff’s knee injury in his current incapacities, both his psychiatric condition and his loss of earning capacity.

It was open to conclude that the plaintiff’s separation from his wife and children contributed to the decline in his mental health. Based on the plaintiff’s comments to various medical practitioners at the time, that was a factor leading to the plaintiff’s first and second suicide attempts. It is probable that the plaintiff was not cognisant of the impact of his separation on his psychological health until he had also lost his income, his relationship with his father, and his inheritance, matters that plainly caused his breakdown.

The plaintiff’s Meniere’s disease affected him in periodic attacks and would not have prevented him from working, although he may occasionally have needed to take sick leave. I accept that the plaintiff could continue working as a carpenter whilst suffering from Tinnitus. I am satisfied that neither his Meniere’s disease nor his tinnitus were a cause of the plaintiff’s present psychiatric condition, and did not contribute to his breakdown or subsequent inability to work.

Another source of stress and anxiety for the plaintiff, emphasised by the defendants as explaining the plaintiff’s current condition, was his fractured relationship with his eldest son, which I have already discussed. The plaintiff’s expert evidence downplayed the significance of that fractured relationship to a greater extent than I am prepared to accept. Nonetheless, the defendants have not persuaded me that this matter is a significant operative cause of the plaintiff’s current condition and I regard it as no more than a negative factor in the exigencies of life for a person with the susceptibility to stress experienced by the plaintiff in 2008.

I am satisfied that the plaintiff would have struggled to continue working in the building industry after the collapse of his father’s business regardless of whether he had agreed with his mother to help her wind up the business, given the various factors which I have detailed - his father’s deception, his marriage breakdown, his knee reconstruction, the loss of his inheritance and his employment, his problems with his son. These psychological insults would have eventuated regardless of whether the plaintiff was asked to take on various tasks to assist in the winding up of the business. However, assuming as I do for this exercise, that the plaintiff has established that he suffered a psychological injury cause by a compensable breach of duty by his employer, it is likely that his psychiatric illness can only be attributed in a minor way to his employer’s demands.

The plaintiff does not believe that he is capable of returning to work because of his anxiety and issues with stress. There was a consensus amongst the medical experts that the plaintiff has little to no future capacity to work.

Presently, the plaintiff suffers from a severe form of an adjustment disorder with chronic anxiety and depression and his prognosis is for only partial restoration. He has no current work capacity and such incapacity is likely to prevail for the foreseeable future. He continues to suffer from migraine headache, sexual dysfunction with loss of libido, sleep dysregulation with nightmares, hypervigilance, excessive rumination, chronic anxiety with panic episodes, and mood decompensation with social withdrawal and isolation. The plaintiff is taking Diazapam, Lorazepam, Seretide, Xanax, and his history over the past 20 years has been one of suffering the effects of anxiety, depression, left knee pain, and the problems of social isolation and personal suffering that accompany such conditions.

The plaintiff remains substantially compromised in most aspects of his life. He has little to no contact with former friends, is largely confined to the house aside from occasional golf trips or trips to the beach, continues to suffer from debilitating depression and anxiety symptoms, suffers from headaches, tinnitus and Meniere’s disease, and is unlikely to return to work. The plaintiff described suffering from debilitating panic attacks. This proceeding and the stress associated with it has contributed to his psychiatric problems.

Pecuniary loss

The plaintiff submitted that ultimately he would have continued to work in his parents’ business, taken it over, and performed duties that were approximately 50% sedentary work and 50% work on the tools. That opportunity was not lost to him due to any breach of a duty owed to him as an employee. Once the defendants became insolvent, any further comparison with that business became irrelevant, save that the court can notice the financial insecurity inherent in the industry as a relevant vicissitude.

Calculations in respect of the economic loss sought by the plaintiff were provided through the evidence of a forensic accountant, Mr Allan. Mr Allan assumed the plaintiff’s loss of earnings commenced on 1 July 1995, he has no current ongoing earning capacity, he would have retired at age 67, he received the benefit of compulsory contribution schemes such as Incolink, CoINVEST and compulsory employer superannuation contributions, and he applied a 6% discount rate in respect of future sums. For his primary calculation, Mr Allan assumed a weekly cash receipt over a full year, including the leave period, of $1000. Employer provision of a car seems to have been ignored. Mr Allan opined that the plaintiff’s total anticipated net lost earnings from 1 July 1995 to 23 February 2015, after-tax and after deducting his estimated after-tax earnings from actual employment and social security benefits from 1 July 1995 to 30 June 2009, would be $874,919. Mr Allen also calculated that lost superannuation for the same period would have been $263,512. Finally, on the same assumptions the plaintiff’s loss of earning capacity was assessed at $548,229.

Mr Allen made an alternative calculation using the average gross cash earnings of all male bricklayers, carpenters, and joiners in Australia. On this basis, the starting average weekly sum calculated on the same basis was $962 and past loss was assessed at $646,999, future loss to 67 was assessed at $548,229 and lost superannuation at $263,512.

Each of these calculations was made on assumptions that Mr Allen was instructed to make and he did not compare the figures he used to the plaintiff’s actual earnings during his employment by the defendants. Further, there was no direct evidence on a number of matters, for example, there was no evidence about superannuation payments being made for the plaintiff by the defendants or by the plaintiff on his own behalf after July 1995. Mr Allen assumed an expected average earnings rate on superannuation investments of 9%. The analogy was, on the evidence, most inexact and there was merit in the defendants’ submission that care be taken in the use of the raw figures identified by Mr Allan.

The defendants took issue with Mr Allan’s calculations based on the plaintiff deriving income of $1,000 per week in his employment with the defendants, because this figure was not reflected in the plaintiff’s tax returns. The defendants submitted that the plaintiff’s pre-injury earnings were best reflected by his tax returns, and these should be considered when calculating pecuniary loss rather than the cash payment that the plaintiff said he earned.

I accept the defendant’s submission. The plaintiff paid tax on a declared income of $21,136 in 1991/1992, $10,250 in 1992/1993, and $33,157 in 1993/1994. The 1993/1994 year included $6,888 in workers compensation payments as the plaintiff underwent the knee operation in April 1994. I estimate that his weekly after tax income was $406 in 1991/1992, $197 in 1992/1993, and $850 in 1993/1994. The plaintiff was never going to continue to receive a cash payment from the defendants, because that business was insolvent from March 1994. The plaintiff did not persuade me that, but for his injury, he would have obtained either sub-contract carpentry work or earned profits as a self-employed builder equating with the cash payment he stated that he received from the defendants prior to 1994. The plaintiff’s gross after tax earnings in the period 1995 – 2001 were $186,911. Assuming a 52-week working year, as Mr Allan did, that averages at $513 per week. Moreover, being self-employed, the plaintiff would have needed to make provision for his superannuation out of those earnings. On the other hand, I am satisfied that the plaintiff lost earnings when self-employed from mid-1995 because his capacity to work was diminished by alcoholism, anxiety and depression. Moreover, due to those conditions, he did not file tax returns for many years and the tax returns that were tendered in evidence were, in part, estimated with the acquiescence of the Tax Office. With the tax debt to be expunged by bankruptcy, it may have been the case that accuracy and reliability in the figures was not the primary consideration.

The plaintiff did not express a clear view on the age he would anticipate retiring if not for his psychiatric injury. His father’s career was similarly cut short and does not offer guidance as to the age that the plaintiff might have retired. I am not persuaded that 67 represents a probable retirement age for the plaintiff and I consider the generally accepted age of 65 to be appropriate in the circumstances.

The defendants also submitted that Mr Allan’s inclusion of superannuation failed to take account of the reality of the failure of the business, and that, assuming the defendants paid superannuation contributions, employer contributions would have ceased when the plaintiff became self-employed, as he was between 1995 and 2001. The defendants submitted that it was unclear the plaintiff ever had the temperament or skills to successfully run his own business, even absent psychiatric injury. I find it more probable that the plaintiff would have continued to be self-employed, there being no basis in the evidence to find otherwise.

It is unlikely the plaintiff, given his knee condition, could have worked as a carpenter until the age of 65. There is an appreciable contingency that his knee may have persuaded, or forced, him into early retirement. It seems more likely that, absent his psychiatric problems, he would have moved into a managerial or supervisory role after his knee reconstruction. Had that transition been made, the plaintiff may have been more likely to work to age 65. On the other hand, his psychiatric condition probably affected his ability to recover from his knee reconstruction. The plaintiff may have been able to return to carpentry full time had he been able to recover, unimpeded by his psychiatric condition, from his knee reconstruction. I am not persuaded that the plaintiff would have worked past the age of 65 and I assess at 50% the prospect that the plaintiff would have made a successful transition from carpentry to managerial building work as an employee.

Considering the plaintiff’s knee and the evidence generally, a significant discount for vicissitudes of 20% is appropriate.

A further important contingency is that I find it probable that the plaintiff, absent the defendants’ alleged breaches, would have suffered a similar psychiatric injury in any event for the reasons discussed above. For those reasons and applying the principles in Malec, I assess the prospect of the plaintiff working full time to age 65 absent the alleged negligent acts of the defendants to be tenuous. Rather, it is probable that the plaintiff’s earning capacity would have been lost to his development of the psychiatric condition that he now suffers in the absence of fault on the part of the defendants. The figures derived from Mr Allan’s evidence must be substantially reduced.

Considering these matters, I assess the plaintiff’s lost earnings to trial at $100,000 and his lost earning capacity at $140,000. The Fox v Wood component was assessed to be $24,833.

Pain and Suffering

After allowing for vicissitudes, but before considering matters arising under the principles in Malec, I would have assessed the plaintiff’s pain and suffering damages in the sum of $250,000. However, I would discount the assessment significantly because, viewed most favourably to the plaintiff, the causal consequences of the breaches of duty alleged against the defendants were, on the evidence, greatly overshadowed in comparison with other factors that I have discussed and which I am satisfied caused the plaintiff’s psychiatric injury. I will also substantially discount that assessment and assess the plaintiff’s pain and suffering damages in the sum of $50,000.

Orders

There will be judgment for the defendants.

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[2015] VSC 171

5 MAY 2015