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Chapman v Simon Blackwood (Workers' Compensation Regulator)[2015] QIRC 132

Chapman v Simon Blackwood (Workers' Compensation Regulator)[2015] QIRC 132

QUEENSLAND INDUSTRIAL RELATIONS COMMISSION

CITATION:

Chapman v Simon Blackwood (Workers' Compensation Regulator) [2015] QIRC 132

PARTIES: 

Chapman, Geoffrey

(Appellant)

v

Simon Blackwood (Workers' Compensation Regulator)

(Respondent)

CASE NO:

WC/2014/335

PROCEEDING:

Appeal against a decision of Simon Blackwood (Workers' Compensation Regulator)

DELIVERED ON:

16 July 2015

HEARING DATES:

23 to 25 March 2015

22 May 2015 (Respondent's Submissions)

18 June 2015 (Appellant's Submissions)

2 July 2015 (Respondent's Submissions in reply)

MEMBER:

Industrial Commissioner Thompson

ORDERS:

  1. The Appeal is upheld.
  2. The decision of Simon Blackwood (Workers' Compensation Regulator) of 27 October 2014 is set aside.  Claim one for acceptance.
  3. The Regulator is to pay the Appellant's costs of and incidental to this Appeal.

CATCHWORDS:

WORKERS' COMPENSATION APPEAL AGAINST DECISION Decision of Simon Blackwood (Workers' Compensation Regulator) Appellant bears onus of proof Standard of proof Balance of probabilities Witness evidence Stressors - Worker sustained a personal injury in the form of a psychiatric injury - Personal injury sustained by the worker arose out of or in the course of his employment and the employment was a significant contributing factor to the injury - Stressors 6 and 8 found to be unreasonable management action taken in an unreasonable way - Appeal upheld - Decision of Simon Blackwood (Workers' Compensation Regulator) set aside - Appellant entitled to costs of and incidental to this Appeal .

CASES:

Workers' Compensation and Rehabilitation Act 2003 s 11, s 32

Newberry v Suncorp Metway Insurance Ltd [2006] QCA 48

Prizeman v Q-COMP (2005) QIC 53

Labaj v WorkCover Queensland [2003] QIC 155

MacArthur v WorkCover Queensland (2001) 167 QGIG 100

Seltsam Pty Ltd v McGuiness (2000) 49 NSWLR 262

Jones v Dunkel [1959] HCA 8

Australian Leisure and Hospitality Group Pty Ltd v Simon Blackwood (Workers’ Compensation Regulator) AND Campbell [2014] QIRC 105

State of Queensland AND Q-COMP (C/2009/42) - Decision

Comcare v PVWY [2013] HCA 41

Queensland Corrective Services Commission v Gallagher (1998) QCA 426

Q-COMP v Hohn (2008) 187 QGIG 139

APPEARANCES:

Mr S. Sapsford of Counsel, initially instructed by Industrial Relations & Employment Solutions Australia, now instructed by Romans and Romans Lawyers for the Appellant.

Mr R. Clutterbuck, Counsel directly instructed by Simon Blackwood (Workers' Compensation Regulator), the Respondent.

Decision

  1. [1]
    On 21 November 2014 Geoffrey Chapman (Chapman) lodged a Notice of Appeal with the Industrial Registrar pursuant to s 550 of the Workers' Compensation and Rehabilitation Act 2003 (the Act) against a decision of Simon Blackwood (Workers' Compensation Regulator) (the Regulator) released on 27 October 2014.
  1. [2]
    The decision of the Regulator confirmed the decision of WorkCover Queensland (WorkCover) to reject an application by Chapman for compensation in accordance with s 32(5) of the Act.

Relevant Legislation

  1. [3]
    The Legislation pertinent to this Appeal is 32 of the Act:

"32 Meaning of injury

  1. (1)
    An injury is personal injury arising out of, or in the course of, employment if

  1. (b)
    for a psychiatric or psychological disorder the employment is the major significant contributing factor to the injury.

  1. (5)
    Despite subsections (1) and (3), injury does not include a psychiatric or psychological disorder arising out of, or in the course of, any of the following circumstances
  1. (a)
    reasonable management action taken in a reasonable way by the employer in connection with the worker's employment;
  1. (b)
    the worker's expectation or perception of reasonable management action being taken against the worker;
  1. (c)
    action by the Regulator or an insurer in connection with the worker's application for compensation.

Examples of actions that may be reasonable management actions taken in a reasonable way

  • action taken to transfer, demote, discipline, redeploy, retrench or dismiss the worker
  • a decision not to award or provide promotion, reclassification or transfer of, or leave of absence or benefit in connection with, the worker's employment."

Nature of Appeal

  1. [4]
    The Appeal to the Commission is by way of a hearing de novo in which the onus of proof falls upon the Appellant.

Standard of Proof

  1. [5]
    The standard of proof upon which an Appeal of this nature must be determined is that of "on the balance of probabilities".

Evidence

  1. [6]
    In the course of the proceedings, evidence was provided by eight witnesses.
  1. [7]
    The Commission, in deciding to précis the evidence of the witnesses, and submissions, notes that all the material has, for the purposes of this decision, been considered in its entirety.

Witness Lists

  1. [8]
    The witnesses for the Appellant were:
  • Chapman;
  • Dr Paul McConnell (Dr McConnell);
  • Daniel Hillhouse (Hillhouse);
  • Bradley Johnston (Johnston); and
  • Gregory Bryan (Bryan).
  1. [9]
    The witnesses for the Regulator:
  • Erik Scholz (Scholz);
  • Paul Calabro (Calabro); and
  • Matt Halvorson (Halvorson).

Appellant

  1. [10]
    At the commencement of proceedings a Statement of Stressors [Exhibit 1] was tendered under the signature of Chapman (dated 16 January 2015).

"Statement of Stressors

No.

DATE

(dd/mm/yy)

EVENT Short description of the work events including the name of the person involved that caused your psychiatric/psychological injury

  1.  

From 2009 until 2012

The Employer expected the Appellant to be available for lengthy meetings outside business hours.  No notice was given.  The Employer cancelled meetings with little or no notice.

  1.  

From 2009 until midFebruary 2014

The Employer did not share the outcome of client meetings with the Appellant causing the Appellant to look unprepared or disconnected when next he met with the client.

  1.  

In or about 14 May 2013

The Employer held the Appellant responsible for employees no longer reporting to him after unilaterally instigating a change in reporting lines, without consultation with the Appellant.

  1.  

In or about July 2013

The Employer directed the Appellant to terminate the employment of a subordinate for discriminatory reasons, namely that the subordinate was fat and because he was a smoker.

  1.  

In or about 17 October 2013

The Employer unilaterally changed the Appellant's employment contract by amending the composition of an annual, nondiscretionary bonus payment.  The amendment reduced the bonus payment by increasing the deductible component of sales commissions from 5% to 11.5%.

  1.  

On or about 14 January 2014

The Employer failed to provide necessary budget information to the Appellant so that he could plan realistic targets and outcomes for a presentation at a strategy meeting on 17 January 2014 and then criticized the Appellant's presentation delivered at the meeting as 'lacking any detail or tangible initiatives'.  The Employer classified this feedback as an official warning.

  1.  

On 12 February 2014

The Employer by its General Manager said the Appellant, 'fuck you pal' in an aggressive, loud and hostile tone in a gathering of senior managers of the Employer in Perth discussing workplace incentives.

  1.  

On 13 February 2014

The Employer raised performance issues with the Appellant by email at 12:44 am, with a demand for a 7.00 am breakfast meeting to discuss those performance issues where the Employer did not attend that 7:00 am breakfast meeting."

Chapman

  1. [11]
    Chapman at the time of the hearing was currently unemployed having previously spent 38 years working in the electrical industry which included establishing his own business which he sold to Scholz Industries Pty Ltd (Scholz Industries) in 2009.  The terms of the sale contained provisions for Chapman to receive a lump sum payment for the business in addition to a five year contract of employment in the position of General Manager Electrical Group.
  1. [12]
    As General Manager the immediate reports to him were five State Managers which included the Queensland Manager (Bryan).  The primary function of his role was to create relationships with key electrical wholesale accounts and to ensure the State Managers understood the policies and procedures with regards to sales.
  1. [13]
    In the conduct of his role as the General Manager his evidence was that Scholz would continually set agendas for meetings outside business hours, at unreasonable hours and then cancel the meetings and reschedule them at other times.  Chapman had a contract of employment that stipulated his hours of work as 8.00 am to 5.00 pm with a provision for work to be performed outside the normal business hours of work of which Chapman had no problem.  In 2012 he told Scholz that he was finding it difficult to take calls at 9.00 pm and 10.00 pm and respond to emails for business meetings the next day.  It was agreed this would desist however Scholz continued with the conduct which saw Chapman ignore the emails.
  1. [14]
    In terms of client meetings he would meet with electrical wholesalers Australia wide to set up trading terms, discuss warranties, discounts and rebates after which he would report the outcomes to Scholz.  Difficulties arose when Scholz would hold separate meetings with the same companies and he would offer them additional rebates beyond the established guidelines which caused Chapman embarrassment and frustration when he next met with the companies.  Chapman identified the companies involved which included:
  • BGW Group;
  • MM Electrical;
  • Lawrence and Hanson Group;
  • Hagemeyer Electrical; and
  • Middendorps.
  1. [15]
    Whilst he provided information of the meetings he attended by emails so that Scholz was aware of the outcomes, the same was not afforded by Scholz which Chapman said affected his ability to complete sales.  A major change in his role occurred when the State Managers were required to report directly to Scholz which was conveyed to him by two of the managers who rang him asking what the change meant. The fact there was an absence of consultation was, according to Chapman, inappropriate as was the failure to provide any reasons to him for the change.  He did not receive a new job description.  Chapman acknowledged an email had been sent advising of the change however he had not seen the email at the time he was contacted by the two managers.
  1. [16]
    The changes to the reporting structure occurred in May 2013 which reduced Chapman's role to that of providing support to the national sales team.  On 23 January 2014 Scholz sent an email to Chapman in which he expressed his concern regarding his performance in his current role.  In the email he stated:

"Our business has seen a decline in gross margin.  I really would have expected you to have dealt with this before this meeting, consistent with your role.  I expect more from a senior member of the team."

Additionally it was stated:

"I have never received any meeting notes from your customer meetings.  We discussed the need for this some time ago.  If you check your inbox you will see dozens of meeting notes from me."

  1. [17]
    Chapman responded to the email as he was unhappy with the content which included an official warning.  They later met and according to the evidence of Chapman "put it all behind us".
  1. [18]
    The Sales Manager (at that time) for Queensland was Bryan who according to Chapman, was disliked by Scholz because "he was fat and was a smoker".  At one stage he had himself been required to performance manage Bryan for a period of three months after which Bryan reached an acceptable standard.  At one stage Scholz directed Chapman to terminate Bryan's employment which he refused to do as there were no grounds for termination.  Scholz later had a discussion with Bryan who resigned.
  1. [19]
    In October 2013 following receipt of his incentive bonus which was considerably less than previous years although sales and profitability were up, he sent an email to Scholz (dated 10 October 2013 6.21 pm) seeking a discussion around the issue.  The concerns expressed by Chapman included references to the structure of the bonus being changed without any consultation.  In an email sent by Scholz to Halvorson (on 25 October 2013) he stated that he had agreed with Chapman on the 2012/2013 payment to be based on the lower commission rates and that whilst he believed the changed rates were appropriate as far as equity was concerned, he conceded he "should have notified" him earlier.
  1. [20]
    Evidence was given around an Electric Strategy Meeting held on 23 January 2014 which Chapman found concerning in that prior to the meeting he was unable to get access to relevant information in particular to a Quick Tag program where he held a different view than Scholz on the prospects of success of the program.  Scholz would later be critical of Chapman's performance in his current role and in particular his presentation at the strategy meeting which he said "lacked any detail".  In an email on 28 January 2014 Chapman responded to the criticisms levelled against him pointing out deficiencies in the process and challenging the accusations regarding his performance.  On questions regarding Chapman's alleged inconsistencies regarding his communications, he gave evidence of an issue with a default option in his work issued Apple Air Mac computer which he was unaware of at the time.
  1. [21]
    Chapman met with Scholz on 7 February 2014 after which he sent an email to Scholz in which he affirmed the following:

"Thanks for the conversation we had around my role and our agreement to move forward.

I appreciate also that your previous correspondence surrounding a warning is now behind us and agreed as not applicable.

You have my full support and confidence and I look forward to having a few wins in the days ahead."

Chapman acknowledged that he had not received a response to that email.

  1. [22]
    Later in February 2014 there were a number of State sales meetings in various States where the executive team provided presentations on the business and strategies to improve on sales and achieve business goals.  Chapman gave evidence of his participation which included presentations undertaken by him and of no adverse comments made about his presentations at the time of their delivery.
  1. [23]
    At the Perth meeting he gave his presentation which was partly missed by Scholz who was absent from the room.  Later that evening he attended a "compulsory" dinner where the day's activities were discussed plus there was some mention of an incentive program for the top sales representative of the year who was to escort customers to Hong Kong for a function.  When discussing the criteria, Chapman made mention of the need for consideration to be given to gender as there were now female salespersons.  Scholz is alleged to have pointed his finger at Chapman saying words to the effect:

"…Fuck you pal.  You're so far off the mark.  This is a trip where I'll be taking one of our top salesmen.  It's a man's trip that can do a lot of fucking and a lot of drinking with my customers."

Chapman said he felt humiliated and belittled by the way Scholz had spoken to him and got up and walked out of the room.  Once back at his room Hillhouse and Calabro turned up at which time Calabro expressed an opinion that Scholz was out of order and should not have targeted Chapman.

  1. [24]
    Chapman received an email at 12.44 am on 13 February 2014 whilst in his room in which Scholz provided the following comment:

"Geoff,

When we discussed and agreed to our regional meetings we clearly allocated responsibilities for all.

Your specific tasks, as discussed, agreed and confirmed in Paul's email were as below

  1. Analysis by region of customer, product purchases, gaps and opportunities
  2. Rebates, trading terms and growing sales through LTI program
  3. Lifting and managing gross margin
  4. Growth in MMS business, target 30%
  5. Ownership of regional accounts
  6. Promotional Strategy, Ian Healy Activity
  7. Wholesaler display opportunities
  8. Customer credit responsibility.

In no way have you covered these topics, or prepared any presentation or action list relating to this.

Your input today was quite minimal.

In my ongoing discussion on people, accountability and integrity I felt that I made it very clear as to what is expected.

You can not attend these meetings and simply wing it.

Recently we discussed your performance and my note to you regarding this.

I believe that we have a significant disconnect in terms of your role and performance, which together we need to address.

Tomorrow I will discuss this with you.

Erik."

  1. [25]
    Chapman responded to the email at 2.38 pm on 13 February 2014 where he raised reference to having a disconnection in their relationship as causing him real stress and requesting Scholz take stock of other episodes and reflect upon them.  The other matters included:
  • an email sent at 12.44 am that was highly critical of his presentation and the expectation to absorb those comments and attend a 7.00 am breakfast with prepared responses.  The email and subsequent text arranging the meeting were extremely stressful and exacerbated his distress;
  • question emails sent after beverages had been consumed;
  • challenged the concerns about his presentation when Scholz was not in the room for 100 per cent of the presentation;
  • causing stress to him by arranging an early morning meeting and not attending the meeting; and
  • sending stressful emails after having consumed a considerable amount of alcohol.

Chapman offered the opportunity to discuss the issues facetoface.

  1. [26]
    Following breakfast Chapman spoke to other staff about his presentation receiving positive feedback, in the presence of Scholz.  He also sought to engage with Scholz about the issues.
  1. [27]
    On his return to Brisbane he was feeling unwell with symptoms that included diarrhoea and chest cramps which prompted him to make an appointment with Dr McConnell his general practitioner.  He informed the doctor of his circumstances and was prescribed sleeping tablets and referred to a psychologist.  He had previously seen the psychologist (Johnston) for personal matters that were no longer present.  On this occasion he consulted with Johnston on three occasions before being referred to another doctor.
  1. [28]
    Under crossexamination Chapman confirmed that MM Electrical and Hagemeyer were businesses he had been working with for the past 15 years [Transcript p. 147].  The other business he brought on board in the 12 month period after he commenced with Scholz Industries as an employee [Transcript p. 148].  He described the business as sales orientated retailing to wholesalers [Transcript p. 148].  Once he established relationships with clients he would hand the management of their business to the relevant State Manager [Transcript p. 149].  He would then assist the State branches on sales calls and strategies [Transcript p. 150].  In the structure of the business he worked directly under Scholz with Regional Managers and Sales Representatives immediately below him [Transcript p. 152].  There was a Finance Manager (Halvorson) but he was not aware of him also having Human Resource (HR) responsibilities [Transcript p. 153].  When he ran his own business he had responsibility for HR and Workplace Health and Safety [Transcript p. 153] although there was limited documentation regarding Workplace Health and Safety and HR procedures [Transcript p. 154].  Upon taking up his employment with Scholz Industries it was not his role or responsibility to put such policies in place [Transcript p. 155].
  1. [29]
    In terms of the business he had sold to Scholz he conceded he had no formal HR policies about bullying [Transcript p. 23].  Chapman had no awareness of a Code of Conduct and other workrelated policies in place at Scholz Industries as he only managed the electrical division [Transcript p. 24].  At the time of his employment he was not given an induction or any policies or procedures.  If he employed staff he would do the interview and then hand them over to Scholz.  None of those employees were ever briefed on HR nor was there any policies or procedures handed to them [Transcript p. 24].
  1. [30]
    The employment contract (dated 1 December 2009) was prepared by Chapman's Solicitor and although he had never signed the document he adhered to the terms and conditions [Transcript p. 27].  Chapman accepted that the contract had set business hours of work and at times he had to undertake other hours of work for which he had no entitlement for remuneration, having no problem with that arrangement [Transcript p. 29].  The issue he had was being contacted whilst having dinner and in the early hours of the morning.  The constant change of meeting times got beyond a joke [Transcript p. 29].  He had raised the matter with Scholz (verbally) in 2012 [Transcript p. 210].  He did not accept that having completed a full day at work that it was reasonable to be required to take phone calls and emails at 10.00 pm and it was not a 24 hoursaday position [Transcript p. 211].  Chapman denied that it was rare to be requested to perform work outside of the set hours [Transcript p. 212].  On the emails allegedly sent by him raising issue with the out of hours contact he was not able to tender them in the proceedings as Scholz had demanded the return of his laptop when he became ill [Transcript p. 213].  He implied that Scholz would sanitise the server and be prepared to commit a fraud to prevent those emails becoming available [Transcript p. 214].  Chapman had been requested by Scholz to sign some fraudulent documents at the time of Bryan's departure from the business and he was aware Scholz had deleted a number of emails [Transcript p. 214].
  1. [31]
    Chapman conceded the contract of employment allowed Scholz to alter his duties [Transcript p. 216].  The reporting lines had been unilaterally changed by Scholz without any consultation [Transcript p. 217].  On the reduction in his bonus without any discussion, it was eventually restored following about one month of email exchanges, with Chapman denying it was rectified the next day [Transcript p. 220]. 
  1. [32]
    On the practice of Scholz to attend meetings with clients and offer arrangements different to what was available to Chapman his evidence was he raised the issue with Scholz on many occasions always orally and he had never put those concerns into emails [Transcript p. 225].  The instruction to terminate Bryan was opposed by Chapman because it discriminated against a person because he was fat and smoked.  Chapman accepted at the time Bryan's sales budget was running at 40 per cent [Transcript p. 226].  He denied having discussed with Scholz that Bryan had to leave due to his performance [Transcript p. 227].  Chapman issued a written warning to Bryan in 2012 because amongst other things he was not getting out and doing his calls or following up on certain things [Transcript p. 230].  Chapman conceded Bryan's employment was not terminated because of his size or for being a smoker and in fact he had resigned from the company [Transcript p. 235].
  1. [33]
    The criticism by Scholz regarding a presentation on 17 January 2014 as lacking detail or tangible initiatives was the subject of questions to which Chapman gave evidence that he was not provided with all relevant financial information from Halvorson [Transcript p. 236].  Chapman had sought a range of financial information from across the business prior to the strategy meeting of 17 January 2014 [Transcript p. 240].  Chapman did not accept his presentation on the electrical side was lacking [Transcript p. 241].
  1. [34]
    The incident complained of in Perth where Scholz was alleged to have said "Fuck you, pal" in an aggressive manner according to Chapman did take place and he attended the 7.30 am meeting the next morning [Transcript p. 242].  Chapman met with Scholz sometime after the strategy meeting of 17 January 2014 at which time the written warning was withdrawn [Transcript p. 244].  Chapman had no issue with a "Role, responsibilities and expectations" document given to him by Scholz on 3 February 2014 [Exhibit 25] [Transcript p. 245].
  1. [35]
    Chapman confirmed his evidenceinchief regarding the incident with Scholz in Perth stating that Scholz was aggressive and used a hostile tone of voice saying "Fuck you, pal" and that no woman would win the trip.  Chapman did not accept the proposition this was an allegation entirely false and made up by him [Transcript p. 249].  With regards to his presentation earlier in the day, he was not aware of any concerns being raised by those in attendance [Transcript p. 250].  On the allegation that Scholz had "demanded" he attend breakfast it was Chapman's evidence that he classed the statement "could we meet" as a demand [Transcript p. 252].
  1. [36]
    Scholz had notified him in September 2014 that he would not be renewing his employment contract when it expired in November 2014 [Transcript p. 254].  The claim for WorkCover was lodged after he had commenced proceedings in Fair Work Australia [Transcript p. 255].
  1. [37]
    In reexamination Chapman gave evidence that Fair Work Australia released a decision relating to an application by him in December 2014 and his application for WorkCover was made on 4 July 2014 for an injury that occurred on 14 February 2014.  Chapman's employment contract stipulated that the remuneration should not be reduced under any circumstance but as a result to the proposed change to his bonus it was in fact a reduction.  The employment contract on hours of work had a provision that stated "…reasonably required of the employee".
  1. [38]
    On the performance improvement process entered into by Bryan, it was Chapman's evidence Bryan met all the required criteria three months after commencement being compliant by the end of September 2012.  Chapman confirmed the information he was seeking of the 17 January 2014 strategy meeting related to all aspects of the business.  He confirmed the contents of Exhibit 3 had a reference from Scholz about "dozens of meeting notes" from customer meetings attended by him.
  1. [39]
    The complaint made by Scholz about his presentation in Perth related to an audience of two, both of whom informed him the next day they had understood each and every item.

Dr McConnell

  1. [40]
    Dr McConnell, a General Practitioner, had been Chapman's treating doctor for a number of years.  He provided clinical notes relating to Chapman for the period 14 May 2003 until 12 March 2015 [Exhibit 15].  His evidence went to a consultation on 14 February 2014 where Chapman had informed he had been belittled at work in front of colleagues by his boss.  Dr McConnell diagnosed Chapman as suffering from anxiety on the basis of him being clearly distressed as a result of activities that occurred at his work.  In documentation provided to WorkCover on 11 September 2014 Dr McConnell in response to questions generated by the Insurer opined that:
  • Chapman's employment was the major significant contributing factor to his injury; and
  • there were not and non workrelated or preexisting factors impacting on Chapman.
  1. [41]
    In a Workers' Compensation Medical Certificate issued on 27 June 2014 Dr McConnell diagnosed Chapman as having "Severe Anxiety" with the worker's stated cause of injury being "Alleged bully at work".
  1. [42]
    Under crossexamination Dr McConnell gave evidence of relying upon the reporting of a patient and the accuracy of that reporting [Transcript p. 159].  In the clinical notes he agreed that an entry of 8 October 2008 had recorded Chapman exhibiting signs of stress at that time [Transcript p. 159].  This diagnosis was described as situational anxiety with a relationship to something that was happening at the time [Transcript p. 160].  In the clinical notes there was reference to Chapman exhibiting a depressive disorder on 22 January 2009 [Transcript p. 160].  Other dates upon which Chapman was being treated for various stressrelated conditions were identified as 29 October 2010, 18 April 2011 and 9 May 2011 [Transcript p. 160].
  1. [43]
    On 14 February 2014 Chapman was suffering situational anxiety [Transcript p. 161].

Hillhouse

  1. [44]
    Hillhouse, a Business Development Manager with a renewable solutions company had worked for Scholz Industries from 2010 until April 2014 when he saw the chance of a better opportunity at the new company.  At the time of departing he held a number of concerns about the company that included:
  • mistrust;
  • numbers were concealed and covered up;
  • lack of control in regards to responsibility; and
  • it became increasingly difficult to execute his duties without retribution.

Rather than having suffered some form of retribution it appeared he had a fear of it.

  1. [45]
    He became aware that State Managers reporting to Chapman changed when he received an email from Scholz advising they would be reporting directly to the owner which was the first he had heard of it.  Hillhouse did not see the new reporting practice as a normal business activity.
  1. [46]
    Hillhouse recalled travelling to the various branches in February 2014 for the purposes of presenting on the plans for the coming twelve months.  The team consisted of Calabro, Chapman, Scholz along with himself and he was present when Chapman presented in Melbourne and Brisbane where at no time did he hear any complaints regarding the presentations.
  1. [47]
    On arrival in Perth the group undertook their presentations and in terms of Chapman his presentation was the same as previously given although at times Scholz left the meeting to take some phone calls which Hillhouse thought was quite rude.  In the evening there were some drinks followed by dinner which was attended by some customers as well as all the presenters.
  1. [48]
    After dinner he was present at a discussion that involved Calabro, Scott McCallum (McCallum), Chapman and Scholz at which they discussed outcomes and incentives.  He recalled Calabro objecting to the discussion as being inappropriate.  Everyone expressed their views with Chapman the last to offer an opinion that there needed to be measurable results and it was conceivable that a female could be the winner.  Scholz came forward and made it quite clear that a female would not win the incentive trip because it was a trip for "blokes who were able to entertain customers, drink and fuck".  Scholz had singled Chapman out by telling him he was far off the mark and he said "fuck you pal".  Chapman appeared to be taken back with the comment sort of just shocking the whole table.
  1. [49]
    Chapman told Scholz that his name was "Geoff not pal".  There was some discussion back in the rooms about what had occurred down in the bar after which Chapman went to bed.  He next saw Chapman at breakfast the following morning where the presentations were discussed with the regional Sales Manager indicating they had understood Chapman's presentation the previous day.  Hillhouse observed that Chapman was clearly disturbed by the events and at 6.39 pm on 14 February 2014 he received an email from Chapman that contained the following content:

"Dan

I just wanted to send you this email to say thanks for your support, especially after the events of the dinner.

I agree that Eric's behaviour was inappropriate…I guess that amount of alcohol unleashed his real personality.  I must admit that the aggression was a bit threatening…the swearing and name calling was out of order.  I really felt uncomfortable for myself and everyone when he started the "no f..k..g listen Pal" stuff…I can't apologise for him but I wish he hadn't carried on like that.

Again thanks for the support and keep your chin up."

  1. [50]
    Under crossexamination Hillhouse gave evidence of his employment with Scholz Industries and of reporting directly to Scholz [Transcript p. 171].  His role related to the solar side of the business and he had no involvement in the daytoday business activities undertaken by Chapman in his role although he had served with him on the executive team [Transcript p. 174].  Whilst Scholz had never threatened that he would lose his job there were implications from his management style where people would resign after being the subject of suitable pressure [Transcript p. 175].  At an executive meeting held in Melbourne he had been present when Scholz gave instructions to Chapman to reduce Bryan's salary by $30,000 per annum by converting him from a Regional Manager to a Sales Representative [Transcript p. 176].
  1. [51]
    In terms of the incident in Perth involving Chapman he recalled having consumed a number of alcoholic drinks prior to and during the course of dinner, later moving on to the lobby bar.  Discussions were being conducted about an incentive plan and how metrics could be used as a measurement tool.  Chapman said that noone could be excluded from the incentive plan at which point Scholz interrupted telling him he was off the mark saying words to the effect "Fuck you, pal.  You're so wide of the fucking mark" [Transcript p. 179].
  1. [52]
    Hillhouse acknowledged that he had previously worked for Chapman as a commission sales agent for a period of 12 months and only had a social relationship during their time at Scholz Industries [Transcript p. 180].  In respect of Chapman's presentation at the Perth meeting he had no concerns about it not having reflected upon the agreed topics but it became clear later that Scholz and Calabro were expressing concerns about the presentation [Transcript p. 181].  Hillhouse was taken to an undated and unsigned affidavit said to have been prepared by him that included references to the exchange in Perth between Chapman and Scholz and where he expressed a view that someone should not send a business related email after an amount of alcohol had been consumed [Transcript p. 183].  He identified his hours of work at Scholz Industries as 7.00 am to 7.00 pm and sometimes after hour's duties [Transcript p. 184].
  1. [53]
    In reexamination his evidence was that Calabro, McCallum along with himself witnessed Scholz say to Chapman "Fuck you pal.  You're so far off the mark".  The unsigned affidavit according to Hillhouse had been prepared in July 2014 which was followed by a subsequent version that he had signed.

Johnston

  1. [54]
    Johnston, a Clinical and Consulting Psychologist, had the occasion to treat or consult with Chapman after which he prepared two reports (dated 1 April 2014 and 10 November 2014).  Chapman had been referred to him in 2011 and then in 2014 by Dr McConnell from the same practice.  In the case of 2014 he first saw him on 27 February of that year.
  1. [55]
    In 2011 he diagnosed Chapman as suffering from an adjustment disorder with mixed anxiety and depressed mood of mild severity.  The diagnosis in 2014 was the same except the severity was much greater in the moderate to severe range.  The diagnostic criteria relied upon in 2014 was the Diagnostic and Statistical Manual Fifth Edition (DSMV Classification 309.28).
  1. [56]
    The Report of 10 November 2014 contained reference to a history provided by Chapman that he had been "bullied, unjustly criticised, and professionally humiliated, in front of his peers by his employer".  The history given went to emails that had attacked him both personally and professionally.
  1. [57]
    There was, in the opinion of Johnston, a new injury in 2014 and not an exacerbation of a preexisting injury.  Johnston was not aware of any other stressors that potentially caused or contributed significantly to the symptoms he displayed at the time.
  1. [58]
    In the Report (dated 1 April 2014) [Exhibit 27] Johnston acknowledged he had "no independent corroboration of the allegations of workplace bullying made by Mr Chapman".
  1. [59]
    Under crossexamination Johnston confirmed that Chapman had informed him in April 2014 he had been the subject of increasing harassment and bullying in the workplace, publicly humiliated and having his character and professionalism unjustly criticised.  He confirmed there was no independent corroboration of these allegations [Transcript p. 268].

Bryan

  1. [60]
    Bryan, currently a Senior Account Manager, had previously been employed by Scholz Industries in 2010 as the Queensland Sales Manager.  He initially reported to Chapman however in the last six months of employment reported directly to Scholz. The change in reporting was advised by email on 14 May 2013 and took effect immediately.
  1. [61]
    In terms of doing business it was not uncommon for Scholz to do "deals" with specific customers with Bryan's evidence providing examples in the form of an electronic dimmer and a plastic fan which were offered to the Middendorp Group in around late 2012, early 2013.  Bryan did not see it as unusual for someone in Scholz's position to have particular dealings with customers however by not notifying the rest of the company details of arrangements it had at times caused him embarrassment.  Other customers favoured by Scholz were identified as BGW Group and The Lighthouse.
  1. [62]
    Bryan acknowledged that in June 2012 he had participated in a performance improvement agreement which was prior to hearing Scholz comment in a phone hookup involving the various States that "We'll have to get rid of Greg, because he's fat and he smokes".  In terms of the performance issue he finalised the program with all issues addressed.  Whilst he continued in the position sometime later he was called into Chapman's office and informed that a new employee would be taking over his role as Queensland Sales Manager and he would, on Scholz's instructions, have his salary decreased by $30,000 per annum.
  1. [63]
    Bryan continued his employment for a couple of months before going on stress leave.  An application for workers' compensation was rejected.  Subsequently on reentering the workforce he was offered a sum of money to resign which he accepted.  At the time of the reduction in salary he sought advice from Chapman who to talk to in HR but was advised the company did not have a HR department.
  1. [64]
    Under crossexamination Bryan firstly gave evidence regarding discount arrangements entered into by Scholz where a ceiling fan that wholesaled at $49 was offered at $25 [Transcript p. 280].  On becoming aware of price discrepancies in a number of orders he contacted Chapman who then elevated the issue to Scholz.  The arrangement identified to a customer that he did not have the power to provide a better deal causing him to lose credibility and feel embarrassed [Transcript p. 282].  Bryan had no personal knowledge of Scholz undertaking meetings of this nature with customers [Transcript p. 283].  On the allegation that he heard Scholz on a telephone hookup say that they needed to get rid of him because he was fat and smoked it was Bryan's evidence Scholz had admitted making those comments at a previous hearing [Transcript p. 285].  Bryan said he had tended to grow up as the subject of these types of comments but did not expect it in the business world [Transcript p. 285].  In the third month of his sick leave he was given verbal confirmation that Halvorson had been appointed to look after the HR stuff [Transcript p. 285].  He accepted that at the end of his employment his sales budget was running at around 40 per cent.
  1. [65]
    In reexamination he gave evidence that when made aware that Halvorson was to look after HR he made the assumption that Halvorson would look after all HR dealings going forward.

Regulator

Scholz

  1. [66]
    Scholz, the Managing Director of Scholz Industries, gave evidence regarding the company structure including the acquisition of companies including MMS that had been owned by Chapman and his wife.  As a condition of the sale he was obliged to enter into a contract of employment whereby Chapman was provided with a five year term of employment.  An employment contract was prepared by Chapman's Lawyers which led to him subsequently becoming the Executive General Manager for the electrical division.  The role was that of a standard CEO role being responsible for a team of people, sales, marketing and ultimately the financial health of the business, reporting directly to Scholz.
  1. [67]
    Chapman's role initially included the Regional Sales Manager having to report him however as their role evolved Scholz took the decision that they would report directly to him with the daytoday sales responsibilities remaining with Chapman.
  1. [68]
    At the time of the acquisition of MMS and another business Halvorson joined the business as the Chief Financial Officer also assuming the duties in respect of HR and payroll.  There was a position of Executive General Manager for marketing and product innovation that was held by Calabro who was based in Adelaide but spent about 40 per cent of his time in Melbourne.
  1. [69]
    Scholz in conducting the business operated mostly out of Melbourne with the amount of time spent in Brisbane being minimal.  Executive meetings were held in Melbourne always within business hours.  There were never expectations for Chapman to do anything unrealistic after hours although at times customers had after hour's functions.  Communications were conducted with Chapman via email, telephone or text and would have been very rare for him to have rang after 6.00 pm although on occasion there may have been an emergency arise if he was travelling.  Emails were sent at odd hours due to his overseas travel although there was no expectation of anyone reading an email at midnight or responding to an email half an hour later.
  1. [70]
    With regards to client meetings it was Chapman's responsibility to negotiate and deal with customers in the electrical business and as Scholz had involvement with eight other companies he never had the time to engage directly with clients.  There were never meetings behind the scenes without Chapman being aware and there was a requirement to document the details of all meetings.  Pricing was done through a price book which was computerised, for which Chapman had responsibility.
  1. [71]
    The business employed at one time an Operations Manager by the name of Frank McCarthy (McCarthy) who took responsibility for a couple of businesses during which time he introduced a number of practices into the company dealing with:
  • behaviour;
  • conduct;
  • recruitment; and
  • compliance.
  1. [72]
    Additionally he set up an occupational health and safety team which was located in Melbourne.
  1. [73]
    On 14 May 2013 Scholz after discussions with Chapman made changes that required the Regional Sales Managers to report to him directly as there were some issues with some team members.  The responsibility of sales remained with Chapman in what was described as a "matrix structure".
  1. [74]
    Scholz denied he had directed Chapman to terminate the employment of Bryan for reasons namely that he was fat and a smoker.  There were issues with Bryan's sales (which were terrible) and he had previously been performance managed by Chapman.  The business in South Queensland was losing money and they needed to get it working.  Customers complained about Bryan's performance and the sales continued to deteriorate.  Bryan had a number of personal issues prior to joining the company.  He subsequently resigned at which time an ex grata payment was made to him due to concerns about his financial position.  Prior to his leaving the business his position had changed and his salary had been reduced as an alternative to dismissing him.  Scholz had never discussed that due to Bryan being fat and a smoker his employment should be terminated.  On the allegation of making such comments in a phone hookup Scholz stated that would not have happened.  At the time of Bryan's departure no emails were removed from his computer nor was there a discussion with Chapman about that issue.
  1. [75]
    The allegation that on 17 October 2013 he had unilaterally changed Chapman's employment contract by amending the composition of an annual nondiscretionary bonus payment it was Scholz's evidence that the employment contract was never changed and the bonus calculation was on the correct commission rate.  Chapman disagreed with the calculation although acknowledging it was "probably the right formula" but was not aware of the change.  It was eventually left as it was with adjustments to be made into the future.  The issue was dealt within days of it being raised and coordinated by Halvorson.
  1. [76]
    The claim that on 14 January 2014 he had failed to provide the necessary budget information to Chapman so he could plan realistic targets and outcomes for a presentation on 17 January 2014 and then criticising his presentation was responded to by Scholz giving evidence Chapman had access to everything that was ever produced relative to the electrical division but not information pertaining to all parts of Scholz Industries.  Access was available to Chapman on the mainframe computer system which contained all the information required by Chapman.  In past years Halvorson in conjunction with Chapman had managed the budgeting process.  There was never an occasion when information was not available and Chapman's office was next door to Halvorson.
  1. [77]
    Scholz in terms of the email of 28 January 2014 [Exhibit 11] indicated it was the culmination of multiple discussions around many issues and contained an offer to sit down and work through the issues to end up with the right outcome.  At the time there were many performance issues in the business and it was not improving so he finally decided to put something in writing which he would normally have avoided.  The purpose of the warning was to highlight the critical nature of what was happening at the time.
  1. [78]
    Scholz gave evidence of the alleged incident said to have occurred in Perth on 12 February 2014 at the Rendezvous Hotel where after dinner a few of the participants stopped to have a drink at a bar in the hotel.  The discussion at some stage went to the Sales Representative of the year which he stepped back from as he felt it was not his call to make.  He denied having in an aggressive manner said to Chapman "Fuck you, pal" or pointing his finger in a threatening manner.  He further denied making the comment to Chapman:

"Fuck you, pal.  You're so far off the mark.  This is a man's trip and there'll be no woman winning it".

Scholz claimed that would have been a ridiculous thing to say as on occasions customers had brought their partners on these trips.  Also the Sales' Representatives were over 50 per cent women and the person who won the award that year was a lady from Victoria.

  1. [79]
    There was a further denial regarding the comment alleged to have been said by him that:

"This will be for a bloke that can drink a lot of alcohol and do a lot of fucking with customers to show them a good time."

  1. [80]
    Scholz thought the discussion took place around 11.00 pm and acknowledged he sent Chapman an email in the early hours of the morning indicating he was unhappy with his contribution in that he had failed to present critical information that was important and of wanting to discuss the issues with him the following morning so that there could be some final alignment as to handle the final day of the visit.  There had already been a prearranged meeting in the morning and he wanted to have a chat prior to that meeting.  As it turned out through no fault of Chapman's they were not able to meet.  Chapman went on sick leave following the Perth trip.
  1. [81]
    Under crossexamination Scholz accepted that to remove the reporting of State Managers from reporting to the Executive Officer to whom they reported without telling him would be industrially unfair and he would never do that [Transcript p. 2104].  Prior to changing the reporting of the State Managers he had a discussion with Chapman about the changes and the reasons why, with Chapman saying he was perfectly comfortable and words to the effect "you own the business".  He further understood his responsibility as Executive General Manager had not changed.  The reasons discussed with Chapman was the fundamental change in the business with the introduction of logistics and the need to lift sales performance [Transcript p. 2105].  There was also an issue where one of the Regional Managers had left because they would not work with Chapman [Transcript p. 2105].
  1. [82]
    Scholz could not recall when he spoke to Chapman about the change to reporting but it was prior to the email of 14 May 2013 which said the changes were "effective immediately", probably about a week before [Transcript p. 2106].  Scholz indicated he probably had notes of the meeting in a handwritten book that was in Melbourne [Transcript p. 2107].  His lack of experience in matters such as this was the explanation for not having his diary available for these proceedings [Transcript p. 2108].
  1. [83]
    Three of the managers at that time were not happy with Chapman with regards to his inappropriate behaviour and one had complained of being bullied.  There had been a number of serious complaints about Chapman over time having been made on multiple occasions.  Chapman was asked by Scholz to apologise to two members of the marketing team [Transcript p. 2109].
  1. [84]
    Halvorson had initially evolved in to the HR role as he understood HR matters and whilst he was a qualified accountant he had "common sense" [Transcript p. 2110].  At the time Chapman left Scholz Industries Halvorson was the designated HR Officer [Transcript p. 2110].  Scholz was unable to provide documentation regarding Halvorson's appointment as the HR Officer [Transcript p. 2111].  A practice and procedures document had been developed by McCarthy to ensure the company kept up with latest rules and regulations.  Scholz could not recall if the pack contained a grievance procedure but the recommended approach was for staff to talk to their managers [Transcript p. 2112].  Scholz was unable to give evidence that there was a bullying policy or procedures for handling grievances or disputes prior to the Fair Work Australia hearing [Transcript p. 2112].  Scholz was taken to a Fair Work Commission Form (dated 14 May 2014) [Exhibit 29] in which he had sworn his business had no bullying policy or procedure for handling grievances or disputes [Transcript p. 2113].
  1. [85]
    On having telephoned Chapman around meal times expecting to have a conversation, it was his evidence that 95 per cent of all communication would have been within working hours, depending upon whether they were travelling.  The same applied to emails and texts [Transcript p. 32].  There was never a demand for response immediately to emails.  Scholz was taken to an email [Exhibit 3] which had been sent to Chapman by him at 12.39 am on 23 January 2014 from Melbourne which according to him was critical of Chapman's performance which was significantly below par and contained a written warning.  At the time he had felt the need to put his concerns in writing [Transcript p. 34].
  1. [86]
    On the subject of the written warning he had raised with Chapman on a number of occasions concerns about his performance and Chapman had continued not to perform as he should have in his role as a manager in the business.  There had been no other written warnings [Transcript p. 35].  Some six months prior to the issuing of the written warning there had also been discussions about specific issues around Chapman's performance [Transcript p. 36].  Scholz conceded the written warning sent to Chapman in the early hours of the morning was something likely to cause him concern [Transcript p. 37].  He had given no thought to the timing of the email as he was quite concerned with what had happened earlier in the day [Transcript p. 37].
  1. [87]
    Scholz believed that an email was a passive form of communication but that an SMS was closer to a telephone call [Transcript p. 38].  On the presentation given by Chapman in Perth according to Scholz it varied from the presentations given earlier in other States as each presentation was tailored around the regions [Transcript p. 310].  Scholz refused to accept the presentations in all States were the same except for a change in local figures although he conceded there were a number of similar components [Transcript p. 311].  There were no issues raised with Chapman with regards to the Melbourne and Brisbane presentations [Transcript p. 311].  The next presentation was to be in Sydney in some seven days' time yet it was, according to Scholz's evidence, crucial that he appraised Chapman of his deficiencies by email at 12.44 am and followed up with an SMS at 12.45 am [Transcript p. 312].  Both forms of communication were related and Scholz agreed it would be reasonable for the recipient to assume that to be the case [Transcript p. 313].  Despite requesting a meeting with Chapman at 7.00 am on 13 February 2014 because of a number of circumstances, Scholz made the judgement not the have the meeting [Transcript p. 314].  He denied having consumed a considerable amount of alcohol prior to sending the email [Transcript p. 315].
  1. [88]
    Scholz denied he called on clients on a oneonone basis to discuss business in relation to orders and product with the responsibility for sales and clients resting with Chapman.  If there was any interaction at all Chapman was advised on outcomes if there was to be any impact on the business [Transcript p. 316].  He denied doing a deal with the Middendorp Group where he reduced the price on ceiling fans from $49 to $25 [Transcript p. 317].  Acknowledged was a rebate he put in place with Lighthouse for LED downlights said to have occurred in the early days of the business and Chapman was made aware of the arrangement [Transcript p. 317].  There was no recall of dealings of a similar nature with BGW [Transcript p. 318] nor meetings with Hagemeyer Electrical [Transcript p. 319].
  1. [89]
    The business purchased from Chapman (MMS) delivered about 30 per cent of Scholz Industries' revenue and was an important part of the business with Chapman empowered to run MMS and the electrical division as it grew [Transcript p. 320].  Scholz accepted the email of 14 May 2014 disempowered Chapman by removing the report of his general managers by the introduction of a matrix management structure however he continued to have direct responsibility for the sales functions [Transcript p. 320].  He continued to claim that he held discussions with Chapman prior to the decision but was unable to produce any documentation to support the claim [Transcript p. 321].  It was not a fundamental change to Chapman's role as he continued to provide national sales management support and sales management [Transcript p. 322].  The managers remained part of Chapman's team according to Scholz despite changes to reporting [Transcript p. 323].  The move in effect removed some of the burden from Chapman and pushed it down to the managers [Transcript p. 325].
  1. [90]
    After the removal of the reporting of the managers from Chapman Scholz conceded that he still held him accountable for sales figures in general [Transcript p. 327].  Scholz described the meaning of the official warning given to Chapman as "a note to Mr Chapman spelling out numerous areas of concern, all of which culminated in the overall poor performance of the business.  The business was making losses.  So and he was the executive general manager" [Transcript p. 327].  In a discussion with Chapman the next day he addressed the issues and with Chapman being aware of Halvorson's HR role he could have spoken to him about the warning [Transcript p. 328].  The written warning was "a very clear statement that I [Scholz] was concerned about his performance in a number of specific…..things" [Transcript p. 329].  The issues identified in the document had previously been discussed with Chapman on countless occasions [Transcript p. 330].  Whilst he had an awareness there were processes where an individual could be dismissed for performance issues, dismissal though was something he had not contemplated [Transcript p. 332].
  1. [91]
    On 3 February 2014 he met with Chapman and they reached agreement that the issues around his performance would be worked through with it being an open discussion and no friction between them [Transcript p. 333].  There was no agreement that the official warning was not applicable and as such the warning was never revoked [Transcript p. 334].  In hindsight he acknowledged he should have responded to an email from Chapman (dated 7 February 2014) in which Chapman had referred to the warning as being behind them and not applicable [Transcript p. 334].
  1. [92]
    In the case of Bryan there had been a number of complaints about his performance of which Chapman was aware and there were also personal issues at play around his wife and other things.  There was a process put in place by Chapman to help him get his figures up and improve the situation and a previous process that had failed to improve the situation [Transcript p. 336].  At no time had Chapman said Bryan was a good salesman and Chapman did not know how to deal with the situation requesting that Scholz and Halvorson help him [Transcript p. 337].  Bryan's role had been restructured which included a salary adjustment for the purposes of helping him without sacking him despite there being grounds for dismissal on performance [Transcript p. 337].  In October of that year Bryan sent a note to both Chapman and Halvorson saying that for personal reasons he wanted to leave the organisation and sought a calculation of existing entitlements.  Scholz reaffirmed earlier evidence that he had never expressed a view that Bryan was not a suitable employee because he was fat and a smoker [Transcript p. 338].  No representations were made to Chapman about getting rid of Bryan but he had on multiple occasions instructed Chapman to get Bryan's performance up [Transcript p. 339].
  1. [93]
    A review was carried out of the costs of the organisation which identified inconsistency between commissions paid to external parties for sales of MMS versus the internal people, so to be fair he asked Halvorson to look at it.  A calculation was based on the profitability and the aligning of the commissions reduced the amount Chapman was to receive.  After Chapman spoke to Halvorson about the situation Scholz reversed the decision to change and it was agreed there was a need to find a formula which delivered fairness [Transcript p. 340].  The decision of Scholz was to change the percentage of the bonus without consultation with Chapman and was done unilaterally by him [Transcript p. 341].  Scholz accepted the position expressed by Chapman that the bonus was part of his remuneration and the change to the commission structure from 5 to 11 per cent had made a difference to the bottom line of MMS and had dramatically reduced his bonus [Transcript p. 342].  Scholz maintained there was nothing unreasonable in what had been done [Transcript p. 343].
  1. [94]
    There were questions over the failure to provide appropriate documentation for the electric strategy meeting held in January 2014 when there had been a requirement placed on Chapman in relation to the whole of the group and for him to properly address the issue he was required to go beyond his normal area of operations.  Such information was readily available through Halvorson who occupied the office next to Chapman [Transcript p. 344].  The shared service team of which Chapman was a member were encouraged to contribute to other parts of the business [Transcript p. 344].  At this meeting Chapman had failed to come up with one constructive strategy or plan that would have substantially improved the business [Transcript p. 345].
  1. [95]
    On 5 February 2014 Scholz had sent an email to Chapman, Calabro and Hillhouse where he suggested some thought should be given to the criteria for the October Show in Hong Kong regarding eligibility, selection criteria prize and who selects in relation to the show.  The issue, it was agreed by Scholz was to be discussed at the dinner in Perth [Transcript p. 349].  When it was raised he recalled Chapman speaking about the issue but did not recall any comments from him that a woman may meet the criteria of being the salesperson of the year [Transcript p. 349] although conceding he may have made such a comment that Scholz had missed due to a "noisy environment".  He had no recall of Chapman remonstrating with him on the evening and he denied using the words "Fuck you, pal" in an exchange with Chapman [Transcript p. 350].  On the subject of women his own two daughters worked in the business and the best representatives were women [Transcript p. 351].  The sending of the email at 12.44 am and the SMS at 12.45 am on 13 February 2014 was admitted with Scholz not believing that that SMS was a "big impost" as they were already scheduled to meet at 7.30 am [Transcript p. 351].  That morning Scholz recalled comments by Chapman that McCallum and Bender had no problems with the presentation by Chapman the previous day but in the circumstances he was not sure what else could have been said at that time [Transcript p. 353].
  1. [96]
    In reexamination Scholz gave evidence of the business meeting the cost of the dinner on 12 February 2014 and that Calabro had purchased a bottle of wine that was consumed after dinner.

Calabro

  1. [97]
    Calabro the Executive General Manager for Innovation and Marketing at Scholz Industries working out of the South Australian Office.  He was aware of the company's HR process and of Halvorson's part in that process since the time Calabro joined the company in 2010.  Additionally he was aware of publications including a Code of Conduct or induction book that was given to him at the time of joining the business.  In his employment with Scholz he had not experienced any HR matters but had he done so he would have spoken to either Scholz or Halvorson.  He met Chapman when he joined the business in 2010 with Chapman already a part of the organisation at that time.
  1. [98]
    In early 2014 he was part of a group that ran a number of regional sales conferences including the one held in Perth in February 2014.  The team presented around product, sales and marking activity after having made earlier presentations in Melbourne and Brisbane that were the same presentations relied upon in Perth.  He witnessed the presentation made by Chapman and later that evening attended a dinner at the Rendezvous Hotel.
  1. [99]
    At the conclusion of the dinner a group comprising of Chapman, Hillhouse, McCallum, Bender, Scholz and himself stayed on and talked about various matters which included sales representative of the year.  The gathering took place in a relaxed environment and was described by Calabro as a "healthy discussion".  There was some discussion between Chapman and Scholz but he had no recall of hearing comments such as:
  • "Fuck you, pal";
  • "This is a man's trip and there will be no women winning it"; and
  • "It's going to be a bloke who can drink a lot and do a lot of fucking with the customers to give them a good time".
  1. [100]
    With the exception of Bender (who left earlier) all participants left the venue at the same time and returned to their accommodation.  There was some limited discussion on their return to their hotel.
  1. [101]
    Under crossexamination Calabro confirmed that apart from the necessity to import local figures applicable to sales for each region the presentation content was essentially the same for all presentations and from his observations that applied to Chapman as well [Transcript p. 363].  He could not recall whether Scholz attended all sessions [Transcript p. 364].  The first day of the conference was when the presentations would occur with the second day providing the regional managers with the opportunity to present back to the group [Transcript p. 365].  His awareness of Halvorson being the nominated HR representative came from his involvement as a member of the executive committee and from information contained in the induction booklet he had received [Transcript p. 366].  Scholz Industries also had procedures for handling grievances or disputes which was contained in the policies and procedures manual kept inside the group.  On whether such procedures existed prior to July 2014 Calabro was "not sure" [Transcript p. 366].
  1. [102]
    At the after dinner meeting in Perth on 12 February 2014 Calabro gave evidence of being sober enough to know what was going on and not being able to recall the specifics of Chapman's comments around the sales representative of the year criteria [Transcript p. 368].  In fact he was unable to recall his own input into the sales representative discussion [Transcript p. 369].  Calabro could recall concerns about having the discussion in the presence of McCallum as he was a potential awardee of the prize [Transcript p. 369].  Calabro was taken to a statement prepared by himself on 21 July 2014 [Exhibit 30] regarding differences in his evidence before the proceedings and the content of the statement as it applied to McCallum's attendance at the meeting where the sales representative issue was discussed [Transcript p. 370].  After they returned to their rooms he accepted there was some further discussion but he could not remember what was said [Transcript p. 372].
  1. [103]
    On the email sent to Chapman at 12.44 am on 13 February 2014 he believed it was necessary to send the email at the time in question [Transcript p. 372].  He had no recall of Scholz ever saying at an executive meeting that Bryan was fat and a smoker and he was not pleased with Bryan [Transcript p. 373].  On the changes to the reporting structure for Regional Managers he became aware of the changes after the email of 14 May 2013 had been sent out [Transcript p. 374].

Halvorson

  1. [104]
    Halvorson, the Financial Controller for Scholz Industries, has held the position since 2009.  He was a member of the Institute of Chartered Accountants with an involvement in the accounting profession going back to the early 1990s.  Apart from his Chartered Accountant qualification he has no other formal qualifications.  In previous employment he had a level of responsibility in both HR and occupational, health and safety matters.  One of the companies acquired by Scholz Industries (Air Additions) had a procedures handbook that related to HR and that had been updated once or twice over the years to include matters such as:
  • sexual harassment;
  • workplace harassment;
  • computer usage;
  • motor vehicle usage; and
  • dress code.

The documents were provided to employees in hard copy at the time of employment and were available also electronically.  Whenever the policy changed the alterations were disseminated to relevant employees by the relevant managers.

  1. [105]
    Chapman was known to him and he was familiar with the contract of employment entered into by Chapman and Scholz Industries which included the incentive bonus scheme.  Sometime around 201112 or 2013 the bonus was set at 10 per cent of the net profit whereby at the same time the sales representatives were being paid a 5 per cent bonus.  A change to the structure took an amount of seven to eight thousand dollars out of the bonus he would have received in previous years which prompted Chapman to bring it to his attention.  He provided to Chapman detailed calculations supporting the change and suggested he raise any issues with Scholz.  To his knowledge Chapman did that after which Halvorson was instructed to change the commission back to the original percentage.  The period of time involved in the change was a week or two.  Financial information was distributed to all executive general managers on a monthly basis and Chapman was welcome to seek additional information.  He never refused a request from Chapman for financial information.
  1. [106]
    Under crossexamination Halvorson gave evidence that originally all members of the executive were given financial information for all divisions however overtime that became unwieldy.  He was authorised to release financial information relating to the whole business but prior to releasing such information he would have discussed the matter with the main director (Scholz) [Transcript 379].  Halvorson identified an employee handbook [Exhibit 31] as being the 2010 version which was handed to employees on commencement of employment [Transcript p. 380].  Other documents provided at the same time included:
  • payroll information;
  • superannuation choice forms; and
  • collecting drivers' licence details [Transcript p. 380].
  1. [107]
    In terms of HR information and workplace health and safety details given to employees, they consisted of the content in the employee handbook [Transcript p. 381].  Halvorson confirmed that he was the HR officer for Scholz Industries [Transcript p. 381].  The employee handbook [Exhibit 31] may have been a 2011 version [Transcript p. 382].  Halvorson agreed if the change to Chapman's incentive bonus had been left in place he would have taken home $8,000 less in that financial year [Transcript p. 383].  The decision to reduce Bryan's salary from $110,000 down to $80,000 was not his decision but a decision of Scholz and Chapman [Transcript p. 385].  The ex grata payment to Bryan was made following a discussion he had with Scholz [Transcript p. 385].
  1. [108]
    In reexamination Halvorson's evidence went to his involvement in processing Bryan's exit from the business and an email received from Bryan at the time [Transcript p. 332].

Submissions

Regulator

  1. [109]
    Chapman to be successful needs to satisfy the Commission on the balance of probabilities as to the existence of a causal link between the injury sustained and work performed pursuant to s 32 of the Act.  The Commission must be satisfied the employment was the major significant contributing factor to the injury with the onus on Chapman to prove that the action taken by the employer did not fall under the umbrella of reasonable management action as defined at s 32(5) of the Act, that is management action taken in a reasonable way by the employer in connection with the worker's employment.  Further Chapman must prove that he did not possess an expectation or perception of reasonable management action taken against him, sufficient to cause any medical condition of which he complains.
  1. [110]
    The submission addressed the content of the eight stressors relied upon by Chapman which in effect was a reproduction of the Statement of Stressors [Exhibit 1]. 
  1. [111]
    In the course of the evidence details emerged in respect of the business background of Chapman and his role with Scholz Industries as Executive General Manager of the Electrical Group following the acquisition of his business by the company in 2009.  Chapman was retained on a relatively handsome salary of $170,000 per annum plus a bonus arrangement.  The contract stipulated business hours of 8.00 am to 5.00 pm with an expectation for work outside those hours for which Chapman "had no problem with".  Given the nature of the contract of employment in the circumstances it is submitted that ordinarily a worker in receipt of such a salary package would be expected to work outside business hours and that event does not fall in the category of a stressor in any event.
  1. [112]
    On the stressor complained of regarding Scholz having separate meetings with wholesalers and other corporate individuals in which he would promise rebates outside the guidelines and not inform Chapman it was alleged the unilateral change in reporting conditions affected Chapman.  Scholz as the Managing Director in any event had the province of such action and the evidence was of a nature that it did not constitute a stressor.
  1. [113]
    It was accepted that Scholz as Managing Director could make alterations to the regulated conditions of employment contained within the contract of employment and the terms of the contract were accepted despite the assertion that the contract was never signed.  The allegation by Chapman that there were no procedures in place with respect to performance improvement nor workplace safety demonstrated by him a lack of insight into company affairs and the overall management of his portfolio.  Evidence and exhibits placed before these proceedings confirmed what was in place at the time of his employment.
  1. [114]
    On the requirement to terminate the services of Bryan complained of by Chapman it was clear there was a need to performance manage him and there was no supporting evidence from a number of individuals who gave evidence that Scholz had instigated the termination of Bryan because he was "fat and a smoker".  There was evidence of underachieving and an inability to perform that had led at one point to his reduction from part of the management team to ordinary sales and a loss of income.  There was no question that Bryan's exit from the business was performance based.  The alleged stressors regarding this incident do not appear as specific aspects of "bullying" in the medical evidence.
  1. [115]
    The reduction in the salary component by way of the incentive bonus was short-lived and was corrected within a short time frame, resolved after discussion.  On the complaint that financial information was not available to him to effectively enable him to be a worthwhile participant in the strategy meeting, his evidence was contradicted by Halvorson which had the effect of identifying a lack of performance evidenced by his failure to fossick out necessary information from Halvorson (which was available) and repeated aspects of non-performance which saw the need for an official warning.
  1. [116]
    It appeared that the major issue upon which Chapman relied as his "stressor" was the Perth incident.  The finger pointing and the use of profanities allegedly by Scholz had led to him feeling humiliated and belittled.  Also the direction by Scholz on the night of this particular incident for Chapman to attend a breakfast meeting to discuss events and not turn up was also the subject of complaint.  Scholz denied the events as alleged.
  1. [117]
    The submission dealt at length with aspects of credit that emerged from the evidence in the proceedings and in particular raised concerns around the evidence of Chapman on matters that included:
  • absence of knowledge about HR, general policies and procedures;
  • allegations that there were no HR general policies and procedures in place at the time of and during his employment, then purporting to identify an individual who could confirm such claims but then not called to give evidence;
  • failure to give precise times relating to work performed outside the contract hours;
  • in respect of the bonus payment it was evident that an anomaly occurred and was rectified soon after;
  • there was no documentation to support that Bryan was terminated because he was "fat and smoked" with the evidence identifying performance matters of not meeting budget and that in fact he had "simply resigned" from the company; and
  • the allegations relating to the Perth presentation, the dinner and after dinner events were denied by Scholz and not supported by any other individual present at those events.
  1. [118]
    Scholz gave his evidence in a forthright manner and the lack of any evasiveness in the way he gave his evidence should lead to his evidence being preferred against that of Chapman who in many respects was evasive and his evidence was contrary to the exhibits tendered such as the Work Health and Safety Policy - HR Policy.  Scholz was candid in his evidence regarding various meetings with individual clients and his interactions did not constitute the complaint made by Chapman.
  1. [119]
    The alteration to the business practice of having various managers report directly to the Managing Director cannot in itself be seen as a stressor particularly with the evidence of Scholz that Chapman was fully appraised of the reasons for the alteration in structure of the corporation.  Scholz had said there was no friction between himself and Chapman with there being many occasions where Scholz had communicated issues of concern that needed to be worked on and offered assistance to Chapman.  It however had go to a stage where due to Chapman not performing he had seen fit to issue him with a warning.  The issues regarding Bryan were denied by Scholz.
  1. [120]
    Scholz's evidence concerning allegations about the dinner in Perth and the matters regarding women and the trip to Hong Kong were denied by Scholz as were the allegations in relation to his engagement with Chapman.  On the breakfast meeting the following morning he had decided to discuss the serious issues with Chapman about his performance but had declined once again to raise them.
  1. [121]
    Scholz had demonstrated throughout his evidence a thoughtful and consistent management approach particularly to Chapman whom he gave many opportunities to rectify difficulties that were identified by Scholz during Chapman's tenure with the corporation.
  1. [122]
    The evidence from Calabro primarily focused upon the incident in Perth and in evidence he described the discussion between Scholz and Chapman as a healthy discussion having no recall of Scholz making the comment "Fuck you, pal, you're off the mark".
  1. [123]
    Halvorson gave evidence as to the existence inter alia of an employee handbook which contained policies and procedures relating to HR and of the change to and rectification of the issue with the bonus payment.
  1. [124]
    The medical evidence called by Chapman consistent with the law relating to issue of causation, a doctor cannot swear to the issue.  In that regard all Dr McConnell could state was that various complaints were made by Chapman and as such the doctor was dependent upon that self-reporting.  Similarly with the evidence of Johnston who stated in his report "I have no independent corroboration of the allegations of workplace bullying made by Mr Chapman".

Relevant Legal Principles

  1. [125]
    The issue in this case was said to purely turn on the credibility of Chapman who bears the onus of proof and not whether Scholz Industries had in place relevant HR policies at the time as simply this was not presented as a stressor.  A further issue is not whether Scholz Industries may have inappropriately cautioned an employee by a mechanism they thought was compliant with workplace standards.  The issue is whether each of the eight stressors is made out on the evidence as identified by Chapman who is required to make out each of the stressors on the balance of probabilities.  There was no evidence that Chapman had any pre-existing injury that could have been exacerbated or aggravated in any way by work.  Admissions made by the Regulator as to injury only goes to the fact of injury, not the sustaining of the injury, through employment.  The matter of Newberry v Suncorp Metway Insurance Ltd[1] was cited.
  1. [126]
    The facts as alleged by Chapman must truly form a reasonable basis for a definite conclusion to be affirmatively drawn of truth of which the Commission may be reasonably satisfied.  To reach that conclusion Chapman seeks the Commission to identify with each of the stressors as being stressors which have given rise either singularly or cumulatively out of management action that allegedly was unreasonable and causative of his condition.  Each of the stressors relied upon must be considered as a global evaluation of the actions is the Regulator's understanding of the case so as to identify with unreasonableness.  Applying the considerations as to whether in fact the events themselves constitute stressors or mere blemishes, recourse ought to be given to Prizeman v Q-COMP[2].
  1. [127]
    Stressors 1, 2, 3, 4, 5 and 8 were said by the Regulator to constitute mere blemishes, if at all with Stressors 6 and 7 may be in a position to be categorised as stressors.  Both Stressors 6 and 7 are denied on the evidence of Scholz save and except to the extent the event constituting stressor 6 was warranted and part of management action, given the difficulties Scholz was experiencing with Chapman.
  1. [128]
    Chapman was employed by Scholz Industries on a salary that required him to perform at a high level and the complaints made by him would find no support even if one were looking to a person on an award wage in circumstances where that individual possessed no actual, all but limited, management and control.
  1. [129]
    Chapman had been required to work pursuant to contact of employment for which he received a "handsome sum of money" together with bonuses which were paid up to the date of termination.  The lodgement of the application for workers' compensation and the running of the Appeal is consistent with the timeline that saw the conclusion of his contact of employment.  For the duration of the contract he made no complaint and suffered no condition.  Objectively it was submitted that the identified stressors did not occur in the manner in which Chapman asserts but if in fact, any of them did, then one must have regard to the generic features on the environment within which each occurred.  These included:
  • employer was expecting results from Chapman who himself had been a Managing Director and owner of business;
  • Chapman did not have the best interests of the employer at heart, having already collected a substantial sum of money from the sale and after a period of time now found himself answerable to the employer,
  • Chapman failed to realise the power of the employer in being able to dictate the terms of employment even when done with consultations;
  • that the tasks of an Executive General Manager would relate to the control and determination of employment inferiors which was not an arduous task;
  • Chapman was supplied with budgetary information applicable to his area of employment and was not entitled to know the trade secrets or other information within the exclusive domain of the employer;
  • a discussion with an employee about difficulties by an employer was an ordinary event and occurrence in the day-to-day performance of work activities;
  • Chapman was given repeated chances to rectify mistakes made  but was not attuned to criticism from the employer;
  • there was no independent evidence to support Chapman's allegations around the events in Perth; and
  • any impropriety alleged against Scholz was denied.
  1. [130]
    It was submitted the Appeal should be dismissed with costs.

Appellant

  1. [131]
    Extensive written submissions of 41 pages and 280 paragraphs were filed on behalf of Chapman and contained material under the following headings:
  • Preliminary
  • Praecipe of Argument
  • Nature of Proceedings
  • The Elements
  • The Issues Alive for Determination by the Commission
  • Hearing de novo
  • The Major Significant Contributing Factor - the medical evidence
  • The Major Significant Contributing Factor - the lay evidence
  • The Facts - Stressors 1 to 8
  • Section 32(5) of the Act
  • Respondent's Submissions
  • Fair Work Commission Findings
  • Conclusion and Orders Sought.
  1. [132]
    The Appeal is against a decision of the Regulator to reject an application for workers' compensation lodged on 4 July 2014.
  1. [133]
    Two major and proximate events leading to Chapman's decompensation occurred on 12 and 13 February 2014 with each involving management action that was both unreasonable and taken in an unreasonable way.
  1. [134]
    The events of 12 and 13 February 2014 encompassed the following:
  • Scholz made demeaning comments to the appellant in front of his immediate subordinates on the evening of 12 February 2014;
  • Scholz then sent an email to Chapman at 12.44 am with a manufactured list of complaints critical of Chapman's presentation of the previous day;
  • At 12.45 am Scholz sent a text message "requesting" a meeting between Scholz and Chapman at 7.00 am on the morning of 13 February 2014;
  • Scholz failed to attend that meeting until 7.35 am when the chance for any meaningful discussion had passed.
  1. [135]
    Dr McConnell gave evidence in the proceedings that the matter related by Chapman as causative of his anxiety condition was due to the conduct of his "Boss".  Johnston on 10 November 2014 noted in a report a description from Chapman of the precipitating events:

"Being bullied, unjustly criticised and professionally humiliated, in front of his peers, by his employer."

  1. [136]
    The effect of the actions of Scholz as outlined in Stressors 7 and 8 was to impact on the wellbeing of Chapman.  The demeaning and abusive language used by Scholz on 12 February 2014 was corroborated by the evidence of Hillhouse and consistent with the reports to Dr McConnell and Johnston.  Cognisant of the import of these factors in the aetiology of the psychiatric illness and a likely finding regarding the reasonableness, the Regulator now raises for the first time that the events of 12 and 13 February 2014 did not occur at work.  Such a claim is incorrect and not maintainable in fact or at law.
  1. [137]
    The official warning sent to Chapman at 12.39 am on 23 January 2014 prior to the events in Perth was criticised and labelled unfair for a number of reasons which included matters such as:
  • requested strategies that could not have been formulated without information not provided;
  • conduct of sales team no longer under his chain of command;
  • failure to respond to emails outside of hours;
  • misinformation; and
  • failure to appreciate the nature of Chapman's electronic calendar.
  1. [138]
    The official warning was issued without consultation with Scholz's HR department and failed to appraise Chapman of the matters alleged prior to the issuing of the warning.  The process failed also in not discussing the matters at a time and place where Chapman could have had the option of a support person.  Scholz had demonstrated a complete disregard for industrial relations and the evidence in the proceedings that the warning was never revoked, should have been pointed out by Scholz in reply to Chapman's email of 7 February 2014.  The conduct was unfair and amounted to unreasonable management action taken in an unreasonable way.
  1. [139]
    There had been a demeaning disregard for Chapman by the actions of Scholz in the failure to consult with him prior to removing the reporting of Regional Managers from his duties.  Scholz some six months later at his sole discretion decided to change Chapman's bonus arrangement which resulted in a significant difference in the bonus payable to him.  Scholz acknowledged his failure to notify Chapman of his decision and that it could be seen as a disregard for the position held by Chapman.  The management action was hastily conceived, poorly implemented, executed without consideration for Chapman and was management action that was both unreasonable and taken in an unreasonable way.
  1. [140]
    The nature of the proceedings was by way of a hearing de novo with Chapman bearing the onus of proof with the submissions citing a number of authorities that included:
  • Labaj v WorkCover Queensland[3];
  • MacArthur v WorkCover Queensland[4];
  • Seltsam Pty Ltd v McGuiness[5]; and
  • Jones v Dunkel[6].
  1. [141]
    The submission identified the elements which Chapman must satisfy as:
  • whether he was a worker pursuant to s 11 of the Act;
  • that he sustained an injury;
  • that the injury sustained arose out of or in the course of his employment with Scholz Industries;
  • that injury was one to which employment was the major significant contributing factor; and
  • that the injury being of a psychiatric or psychological nature is one that did not arise out of management action.

In the alternative:

  • that should the injury have arisen out of management action then the management action involved was either unreasonable or not taken in a reasonable way; and
  • that the injury did not arise out of the workers' perception of management action which was being taken against the worker.
  1. [142]
    A number of the abovementioned elements were not of dispute with only the following issues requiring resolution:
  • arising out of or in the course of employment and significant contributing factor;
  • reasonable management action taken in a reasonable way; and
  • the worker's expectation or perception of management action taken against the worker.
  1. [143]
    At s 32(5)(b) there are two elements contained that involves a consideration of whether the management action causative of the injury was:
  • taken "against" the worker; and
  • the worker's perception of the management action was not in accord with that of a reasonable person.

Both elements must apply for the section to have any operation.

  1. [144]
    The medical evidence was sufficient to address the arising out of or in the course of employment and the major significant factor as is the more stringent test to be satisfied by Chapman.  Dr McConnell's clinical notes record a consultation on 14 February 2014 which included a history provided by Chapman and a note of him suffering a condition referred to as "anxiety" and the prescribing of medication (Tamaze).  There were no recent consultations of significance relating to psychiatric illness.  Dr McConnell further assist the Commission on his answers to questions posed by WorkCover on 12 September 2014.  The medical certification identified the following:
  • psychiatric illness diagnosed as "severe anxiety";
  • Chapman was totally incapacitated for work as and from 14 February 2014; and
  • his employment was the major significant contributing factor to his inquiry.

There was no real challenge to the above conclusions by the Regulator.

  1. [145]
    It is of note that the Regulator had not adduced any medical evidence to the contrary.
  1. [146]
    Johnston provided a more definitive diagnosis where in his report of 1 April 2014 he diagnosed the DSM-IV condition of Adjustment Disorder with mixed anxiety and depressed mood and confirmed that diagnosis in his second report of 10 November 2014.  Johnston clearly distinguishes a prior episode of psychiatric discomfiture experienced by Chapman in 2011 being mild and settling quickly with minimal intervention.  In 2014 he presented with symptoms with the nature of their cause different and "much more severe".  The 2014 symptoms according to Johnston were not an exacerbation or recurrence of any earlier problem.
  1. [147]
    In the 10 November 2014 report he stated the following:

"My impression was that the severity and constancy of the bullying and criticism to which Mr Chapman was allegedly subjected by his employer, would overwhelm an average person's coping abilities, and result in the psychological difficulties he was experiencing early in 2014."

  1. [148]
    The evidence of both Dr McConnell and Johnston was not challenged by the Regulator nor was there any medical evidence contrary to the conclusions expressed by these practitioners.  The Commission was requested to reach a conclusion that Chapman sustained an injury of a psychiatric or psychological nature and the events that occurred in the course of his employment was the major significant contributing factor to that injury.
  1. [149]
    The submission went to the lay evidence before the proceedings and initially addressed the issue of the abuse by Scholz on the evening of 12 February 2014 as contributing to the causation of the injury.  The evidence revealed the details of the discussion which occurred between Chapman and Scholz prior to the abuse.
  1. [150]
    The abuse alleged by Chapman was corroborated by Hillhouse and it was incongruous for the Regulator to now allege that such a conversation did not involve matters pertaining to Chapman's employment as was the proposition that the conversation occurred "outside of normal working hours".  The Regulator had contended the nature of Chapman's employment was not a nine to five job and of requirements to be contactable outside ordinary working hours was part of his normal retainer at the executive management level.
  1. [151]
    A number of cases in relation to this area recently analysed by Deputy President O'Connor in Australian Leisure and Hospitality Group Pty Ltd v Simon Blackwood (Workers’ Compensation Regulator) AND Campbell[7] were cited in the submission.  In the absence of submissions on this issue it is apparent the Regulator has thought better of its position and now maintains the events of 12 and 13 February 2014 are "simply denied".
  1. [152]
    In terms of the eight stressors there was significant commentary around the evidence of Chapman in the proceedings, in addition to criticism in particular of the evidence given by Scholz.  There were some 21 pages of the submission dedicated to the stressors, all of which was carefully considered by the Commission but for reasons of economy the decision will include a brief summary only of the conclusions argued on behalf of Chapman.

Stressor 1

  1. [153]
    The sending of emails containing negative performance evaluations and an "official warning" at those times was management action which was neither reasonable nor taken in a reasonable way.

Stressor 2

  1. [154]
    The action of Scholz had the effect of undermining the credibility of Chapman with his customers and thereby poisoning his ability to secure long-term effective working relationships.  Many of the business relationships had been established by Chapman prior to joining Scholz Industries.

Stressor 3

  1. [155]
    In terms of the company structure the two at the top were Scholz followed by Chapman.  Chapman had been empowered to "run the business" and the actions of Scholz on 14 May 2013 to unilaterally and without consultation change the reporting structure of the Regional Managers (effective immediately) led to Chapman suffering humiliation.  The conduct was unreasonable and accepted by Scholz that to make such a change without discussion would be unreasonable.  Scholz's evidence on having informed Chapman prior to the change was described as "disingenuous".

Stressor 4

  1. [156]
    The activities of Scholz in relation to Bryan were not specifically the subject of this stressor but they did exemplify the disingenuous nature of Scholz's evidence.  The inappropriate approach by Scholz to the termination of Bryan was not so much the problem but the requirements of what Scholz was to put into effect against Chapman's recommendation was at the very least management action taken in an unreasonable way.

Stressor 5

  1. [157]
    The proposed change to reduce the bonus payment to Chapman was ill-considered and implemented without forewarning or consultation of any type, having a direct affect upon his remuneration.  It was not as "short-lived" as alleged by the Regulator and was management action which was unreasonable and taken in an unreasonable way.

Stressor 6

  1. [158]
    Stressor 6 related to the failure of Scholz to provide information to Chapman to enable him to properly perform his function.  It was not about the employer's undeniable right to promote a healthy discussion in relation to strategy, efficiency and successful operations.
  1. [159]
    The criticisms of Chapman (at the time) regarding sales were unfair as in the six months prior to the January 2014 criticisms, he lacked control over the sales figures of the Regional Managers due to their reporting to him being removed.
  1. [160]
    The serious and unarguable consequence adopted by Scholz was the issue of an "official warning" which in effect was a "shambolic approach" adopted by him in relation to industrial relations policies and had its natural consequence in the inappropriate ill-conceived and untimely issuing of that warning.  Compounding these actions was the sheer arrogance of Scholz in denying the official warning had been retracted and to continue to rely upon a warning issued in such abysmal ignorance of basic industrial procedures and fairness.
  1. [161]
    It was not reasonable management action and it was not management action which had been taken in a reasonable way.

Stressors 7 and 8 - The events of 12, 13 and 14 February 2014

  1. [162]
    The previous stressors indicated management action which was deficient and which would be regarded as unreasonable in accordance with the term used in the Act.  The events in Perth on 12 and 13 February 2014 were the most significant in the psychiatric illness sustained by Chapman.  These events involved management action which was neither reasonable nor taken in a reasonable way.
  1. [163]
    The Commission's constrained to consider the case advanced by Chapman as outlined in the "Statement of Stressors" however it was submitted that a quintessential function of the Commission in cases of a psychiatric nature is to assess the weight given to each of the stressors.  Generally a greater weight will naturally be placed upon those which are proximate to "decompensation" and cessation of work.  The Commission is invariably assisted in this assessment by medical practitioners regarding the contribution of those factors in the aetiology of illness.  Dr McConnell and Johnston both gave evidence regarding causation that pointed inexorably to Stressors 7 and 8 as being the factors causative in a real and proximate sense of the psychiatric complaint.
  1. [164]
    On the matter of the presentations made by Chapman as part of a national event both Hillhouse and Calabro corroborated Chapman's evidence that presentations in Melbourne, Brisbane and Perth were exactly the same save for the insertion of local sales figures with Calabro confirming that Scholz was present for all the presentations.
  1. [165]
    Scholz denied the allegations that he was aggressive and hostile towards Chapman and of not having used the language said to have caused concern to Chapman.  Scholz and Calabro did not deny the following:
  • the issue of Salesman of the Year and the trip to Hong Kong and the criteria for selection was discussed;
  • that there were comments made by Chapman in relation to that issue; and
  • that there was a discussion involving Scholz in relation to that issue.
  1. [166]
    The untimely email at 12.44 am on 13 February 2014 from Scholz corroborates that there had been an altercation between Scholz and Chapman and this had provoked the ill-considered behaviour of Scholz in sending the email.
  1. [167]
    On consideration of the evidence it was open to the Commission to infer that the communication from Scholz at 12.44 am had its origins in the disagreement which had occurred at post dinner drinks where Chapman had expressed a difference of opinion regarding the gender discrimination which was then being expressed by Scholz.
  1. [168]
    The communication in the circumstances was management action which was not reasonable and not taken in a reasonable way having regard to:
  • the time at which the communication was made;
  • the opportunity to raise those issues in a timely fashion given ample opportunity in relation to two presentations of exactly the same material in Melbourne and Brisbane; and
  • the inevitable inference that the communication arose out of alcohol fuelled discontent with the after dinner discussion.
  1. [169]
    There was a further inappropriate communication from Scholz at 12.45 am on 13 February 2014 requesting a meeting at 7.00 am which again was not reasonable management action in that it required Chapman's attendance to discuss an email critical of his performance which had been sent one minute earlier.  The unseemly haste of communication further supports the inference that it was generated through mala fides.
  1. [170]
    The Commission will note in the email of 13 February 2014 at 2.38 pm Chapman referred to the stress occasioned by the following activities of Scholz:
  • the early morning email of 12.44 am and its highly critical comments;
  • the unfairness of the criticism in circumstances where Scholz was not present in the room for 100 per cent of his presentation;
  • the failure of Scholz to attend the morning meeting at 7.00 am on 13 February 2014; and
  • the fact that the criticism levied by Scholz apparently was based upon hearsay rather than personal observation.
  1. [171]
    The evidence revealed that on 14 February 2014 Chapman attended his General Practitioner and on the same day emailed Hillhouse referring to the inappropriate behaviour of Scholz and thanking Hillhouse for his support.  These were events which in the course of human experience were likely to cause a person in the position of Chapman some distress and not in any view could this management action be considered reasonable.
  1. [172]
    The Commission was requested to consider the management action on a global basis which would lead to a finding that it was unreasonable and taken in an unreasonable way.  Chapman's visit to his General Practitioner on 14 February 2014 was proximate to the events of 12 and 13 February 2014.

Section 32(5)(b) of the Act

  1. [173]
    The applicability (if any) of this section of the Act was canvassed in the submission with argument advanced that the following two essential elements were not applicable in terms of the abovementioned section of the Act:
  • that the management action in question was taken "against" Chapman; and
  • that Chapman's expectations or perception of that management action did not accord with that of a reasonable person.
  1. [174]
    Cited was State of Queensland v Q-COMP[8].

Regulator's Submission

  1. [175]
    In terms of the Regulator's submission, issue was taken with a number of issues that included content in paragraphs 7, 19, 22 and 38(c) of the submission.

Fair Work Commission Findings

  1. [176]
    Whilst acknowledging the Commission was not bound by the decision of Fair Work Australia delivered by Commissioner Hampton on 9 December 2014, the decision was commended to the Commission on the basis it considered the same facts upon which this Appeal had been litigated.  There were particular references to paragraphs 125 to 127 (inclusive) which were said to identify the derogatory and demeaning conduct of Scholz on the evening prior to sending the email and the SMS which was said to amount to management action which could never be considered as reasonable.
  1. [177]
    The Orders sought were:
  • that at the relevant time Chapman was a worker within the meaning of that term as used in section 11 of the Act;
  • that Chapman sustained a psychiatric injury best described as an adjustment disorder with mixed anxiety and depressed mood;
  • that the psychiatric injury sustained by Chapman arose out of his employment and is one to which his employment was the major significant contributing factor.

Section 32(5)(b) of the Act had no application on the unchallenged facts.

  1. [178]
    It was submitted the Appeal should be allowed, the decision of the Regulator set aside and the Regulator to pay Chapman's costs.

Regulator in Reply

  1. [179]
    It was indicated that the submission on behalf of the Appellant contained a considerable amount of material that had not been the subject of reference in the Regulator's submission and in particular the question of whether the events in Perth were work-related.  The absence of a submission on this point would have been contrary to the High Court of Australia decision in Comcare v PVYW[9].
  1. [180]
    The submission of the Appellant with regards to the medical evidence in this case as being of significant regard was questioned in that it was quite clear in the circumstance the medical evidence could not establish causation, save and except in exceptional circumstances.  This was not an exceptional circumstance and in the matter of Queensland Corrective Service Commission v Gallagher[10] in dealing with the issue of causation applicable to pure stress cases the (then) Chief Justice said:

"In the instant case there was no evidence from the psychiatrists who gave evidence linking any failure on the part of the appellant, a failure that is to establish particular systems of counselling and other care, with the respondent’s development of the depressive disorder. The evidence from the psychiatrists and other medical witnesses stopped at a link between the respondent’s depression and the workplace generally (not any breach by the appellant in respect of the workplace system …".

The submission which relied heavily upon psychological evidence as bridging the gap in the case of Chapman was said to be erroneous.

  1. [181]
    The entirety of Chapman's submission was based upon his credit and the fact he is a reliable and truthful witness.  Chapman complains of an industrial relations system that was either non-existent or otherwise "blemished" and was such as to cause him the alleged stress and anxiety he suffered with respect to the most recent or the latter of stresses.  That submission fails simply because of the decision of President Hall in Q-COMP v Hohn[11] which indicated that the concept of reasonableness does not equate with perfection, nor does it equate with industrial fairness.  The unchallenged evidence of Scholz was that despite imperfections that may have existed in the overall system he had given Chapman every conceivable chance and assistance to develop himself within the business and he had failed.
  1. [182]
    Despite assertions to the contrary the event relied upon by Chapman lacked corroboration with the Regulator continuing to maintain that in the absence of other evidence supporting Chapman's contention, the case is weak and relies only upon the testimony of Chapman.

Conclusion

  1. [183]
    The status of Chapman as a "worker" pursuant to s 11 of the Act was unquestioned in the course of the proceedings and it was clear and unambiguous that for all intents and purposes he was at all relevant times a "worker" entitled to lodge an application for workers' compensation.

Personal Injury

  1. [184]
    Chapman lodged an application for compensation with WorkCover Queensland on 4 July 2014 in which he identified the nature of injury as "Psychiatric" having occurred as a result of "Workplace Abuse and Harassment" at various locations.  Prior to the lodgement he had first sought medical treatment in relation to the alleged injury on 14 February 2014 where on attendance with Dr McConnell it was recorded he was at the time suffering anxiety and was prescribed the medication Temaze.  In subsequent visits to Dr McConnell the clinical notes for visits on 21 February 2014 and 28 February 2014 also contained references to anxiety.
  1. [185]
    Dr McConnell completed a Workers' Compensation Medical Certificate on 27 June 2014 in which he diagnosed Chapman as having "Severe Anxiety".
  1. [186]
    Johnston, a Clinical and Consulting Psychologist, saw Chapman on 22 February 2014 on a referral from Dr McConnell and in a Report (dated 1 April 2014) stated that:

"At present Mr Chapman fulfils the Diagnostic and Statistical Manual of Mental Disorders (Fifth Edition) criteria for the following disorder:

  • Adjustment Disorder with mixed anxiety and depressed mood (DSM-V Classification 309.28) moderate to severe."
  1. [187]
    There was no evidence of a medical nature that provided a contrary view with respect to Chapman not having suffered a psychiatric condition and accordingly it is open to find that at the time relevant to these proceedings Chapman suffered a personal injury of a psychiatric kind.

Did the personal injury arise out of or in the course of his employment with Scholz Industries

  1. [188]
    At the initial consultation with Dr McConnell on 14 February 2014 Chapman informed that in terms of the history of his injury it happened "At work boss had belittled at work in front of colleagues".  At subsequent consultations with Dr McConnell on 21 February 2014, 28 February 2014 and 14 March 2014 he stated the following (respectively):
  • "No HR at Work
  • having continued difficulties at work
  • trouble at work".
  1. [189]
    In the Workers' Compensation Medical Certificate issue by Dr McConnell on 27 June 2014 he recorded the worker's stated cause of injury as being "Alleged bully at work".
  1. [190]
    Johnston having seen Chapman on 22 February 2014 and based upon a history provided at the time by Chapman recorded:

"Mr Chapman stated that, for the last 18 months, he has been subjected to increasing harassment and bullying in the workplace from the business owner.  He alleges being sworn at, threatened, publicly humiliated, and having his character and professionalism unjustly criticized."

  1. [191]
    A perusal of the Clinical Notes relating to Chapman's history in terms of consultations with Dr McConnell and other General Practitioners at the Cavendish Road Clinic in the 12 month period immediately prior to his attendance on Dr McConnell on 14 February 2014 revealed no reference to a medical condition of anxiety or the like.
  1. [192]
    On the basis of no evidence of factors beyond the work activities of Chapman that may have contributed to his condition I conclude that the personal injury suffered by Chapman arose out of or in the course of his employment pursuant to the Act.

Was the personal injury one which employment was the major significant factor

  1. [193]
    The psychiatric injury suffered by Chapman according to his evidence had its genesis in the workplace and arose in the main as a consequence of unreasonable management at the hands of Scholz.  The medical evidence which was limited to evidence adduced from witnesses called by Chapman was supportive of the proposition that his employment was the major significant factor.  In the case of Dr McConnell he provided a document to WorkCover on 11 September 2014 in which he opined:
  • Chapman's employment was the major significant contributing factor to his injury; and
  • there were not any non-work-related or pre-existing factors impacting on Chapman.
  1. [194]
    Johnston in evidence was of the opinion that the 2014 injury was a new injury and not an exacerbation of a pre-existing injury.  Johnston also was unaware of any other stressors in Chapman's life at the time that had potentially caused or contributed significantly to the symptoms he displayed at the time.
  1. [195]
    There is no question that each of the medical witnesses placed to some extent reliance upon the history provided at the time of consultation by Chapman.  However this of itself is not an unusual concept and in fact his evidence around the causation of the injury remained largely undisturbed in the course of cross-examination.
  1. [196]
    Dr McConnell in the course of his cross-examination was required to address Chapman's medical history in relation to various stress-related conditions which were documented in the clinical notes as having been treated on:
  • 8 October 2008;
  • 22 January 2009;
  • 29 October 2010;
  • 18 April 2011; and
  • 9 May 2011.
  1. [197]
    The diagnosis at the time of the previous conditions was that of "situational anxiety" having arisen due to something that was occurring at a particular time which was also his diagnosis of the injury for which Chapman had presented on 14 February 2014.  In consideration of the historical position there was no other alternate medical opinion offered in the proceedings with a gap of two years and nine months between Chapman's last stress-related diagnosis prior to 14 February 2014 which supports the proposition that the injury subject to this Appeal is entitled to be considered as a "stand alone" injury without links to previous events.
  1. [198]
    I am therefore satisfied that the personal injury suffered by Chapman was one in which his employment was the major significant contributing factor.

Whether the operation of s 32(5) of the Act excludes the personal injury suffered by Chapman on the basis of reasonable management action taken in a reasonable way

  1. [199]
    In the determination of this facet of the Appeal the situation faced by the Commission is that the evidence of either Chapman or Scholz will need to be preferred to that of the other in relation to the particular events.  Both witnesses in the view of the Commission were equally impressive as they were equally unimpressive at differing stages of their testimony.
  1. [200]
    In terms of lay evidence that could be considered as corroborative of either of these witness's accounts, came from in the case of Chapman, former employees of Scholz Industries in Hillhouse and Bryan with neither witness appearing to be positively disposed towards the company following their departures from the business.  The witnesses relied upon in the same circumstances for Scholz were Calabro and Halvorson who at the time of hearing continued to occupy management positions within Scholz Industries.
  1. [201]
    The evidence with regards to material before the proceeding of a contemporaneous nature to the matter to be determined will assume a significant level of importance.

Stressor 1

From 2009 until 2012

The Employer expected the Appellant to be available for lengthy meetings outside business hours.  No notice was given.  The Employer cancelled meetings with little or no notice.

  1. [202]
    Chapman held the position of General Manager - Electrical Group having gained the appointment as part of the arrangement that followed the acquisition by Scholz Industries in 2009 of his business.  In terms of the hierarchy of the business he was positioned in the layer immediately below that of Scholz and for which he appears to have been well remunerated.  The contract of employment which governed the terms and conditions applicable to him identified the normal working week consisting of 40 hours with the hours of work being 9.00 am to 5.30 pm which were subject to change at the discretion of the employer.  A further provision of the contract relating to business hours stated:

"The Employer acknowledges and agrees that the Employer retains other employees on the basis that they work the Working Hours of the Employer specified in Item 10 of the Items Schedule.  The Employee acknowledges and agrees that it shall be required to devote as much time as is required to fulfil the Job Description and Responsibilities associated with Position.  The Employee acknowledges and agrees that it shall conform to such hours of work as may from time to time reasonably be required of the Employee and shall not be entitled to receive any remuneration for work performed outside the Employee's Working Hours."

  1. [203]
    Chapman gave evidence that at times he had undertaken hours of work outside the set business, hours of work for which he had no entitlement for remuneration and of having no problem with the arrangement.  For a stressor said to have occurred over a period of time from 2009 to 2012 there was little in the way of evidence to support Chapman had been expected to be available to attend for lengthy meetings outside of business hours for which he received little or no notice of cancellation of such meetings.
  1. [204]
    The onus on Chapman in respect of satisfying the stand of proof regarding Stressor 1 has not been met.

Stressor 2

From 2009 until midFebruary 2014

The Employer did not share the outcome of client meetings with the Appellant causing the Appellant to look unprepared or disconnected when next he met with the client.

  1. [205]
    The basis of this stressor was that Scholz would attend client meetings and at times would negotiate a price on certain items of product at a rate lower than specified in the price book and a price that could not be met by Chapman or other staff when doing business with the same clients.  Bryan gave evidence of a ceiling fan being wholesaled at $49 which had been offered at $25 to certain clients.  This particular discount had caused Bryan embarrassment and impacted on his credibility with clients which was interesting as in the course of his evidence he expressed no concerns around embarrassment when at a particular time his own sales were at only 40 per cent of budget.
  1. [206]
    Scholz denied he participated in such a process and that he had not called on clients on a one-on-one basis to discuss business in relation to orders.  He went further in giving evidence that if any of his interactions were to have any impact on the business he advised Chapman of those discussions.
  1. [207]
    Chapman failed to provide any documentary evidence to support the allegations regarding this practice and in evidence only referred to two items being discounted those being a ceiling fan and a dimmer.
  1. [208]
    Nevertheless in examining the management action aspect of the allegation assuming Chapman's position was the case it must be understood that Scholz Industries is a business owned and managed by Scholz and it is unquestionable that Scholz would have a power of discretion to reduce the price of an item should he chose to exercise that option without necessary consulting with Chapman or others.
  1. [209]
    The impact of such behaviour on Chapman when one considers the range of product distributed by Scholz Industries would be minimal at best, which is supported by the fact that in consultations with his General Practitioner and Psychologist, Chapman at no time saw fit to raise this as an issue that related to the causation of his injury.
  1. [210]
    On the scenario that Chapman's evidence was to be accepted it is not the view of the Commission that the management action in providing discount in such circumstance was unreasonable management action taken in an unreasonable way.

Stressor 3

In or about 14 May 2013

The Employer held the Appellant responsible for employees no longer reporting to him after unilaterally instigating a change in reporting lines, without consultation with the Appellant.

  1. [211]
    On 14 May 2013 at 3.17 pm Scholz forwarded an email to multiple recipients (including Chapman) regarding the competitive position, strategy and structure of the business.  In order to meet a number of challenges and opportunities he advised of some "critical changes" to the structure including the:
  • Innovation, Marketing and New Product Commercialisation; and
  • Regional Sales Management.
  1. [212]
    In terms of Regional Sales Management the content of the email was as follows:

"Our business strategy is very focused on ensuring we push down decision making, and at all times strengthen our customer service and relationships.  We must ensure we are highly proactive, and very hands on.

Around the country we now have six regional managers, (Darren Bender in WA, Scott McCallum in SA/NT, Andrew Mobilia in Victoria/Tas, Peter Macri in NSW/ACT, Roger Andrews in South Queensland, and Kevin Eastwell in North Queensland) who's effectiveness directly impacts the success of our business.

Effectively immediately, our regional managers will report to me.

This move is designed to not only recognize the importance of the roles, but allow each region to develop as a business, with each manager taking greater ownership for customers, staff, costs, pricing and business development/growth.

Importantly, Geoff Chapman will continue to provide national sales management support, whilst also managing the MMS business, Key Accounts, national project coordination, Key Account Price Files, etc."

  1. [213]
    The issues for Chapman were the changes to the reporting structure had reduced his role in providing support to the national sales team, the absence of consultation and not providing of reasons for the changes.
  1. [214]
    Scholz denied the allegation that the changes were made without consultation with Chapman indicating discussions had occurred prior to the decision being made.
  1. [215]
    The email in terms of Innovation, Marketing and the New Product Commercialisation identified that Calabro would head up that division effectively immediately and advising other team members would have no change to their responsibilities.
  1. [216]
    That the changes to the sales reporting did remove an important aspect of Chapman's role is unarguable and warranted as a minimum, advice regarding the reasons for change prior to informing Chapman's subordinates of the new reporting structure.  The email advice did indicate that "Over the last few months we have been reviewing our competitive position as well as strategy and structure" without identifying who the "we" were or if it included Chapman.
  1. [217]
    If as alleged by Chapman there was no consultation prior to the change being announced by the 14 May 2013 email then that would be an action of management that was inappropriate and not in the circumstance reasonable.  At the time of the change to the reporting Chapman offers no evidence of decompensation and in subsequent initial consultations with the medical practitioners does not mention that decision as having contributed to his psychiatric condition.
  1. [218]
    On consideration of the evidence I have determined the management action of not having consulted with Chapman prior to removing the reporting obligations of his subordinate staff, if that was the case, would have been unreasonable to a level where it could be considered that of no more than a "blemish" within the realms of reasonable management action.

Stressor 4

In or about July 2013

The Employer directed the Appellant to terminate the employment of a subordinate for discriminatory reasons, namely that the subordinate was fat and because he was a smoker.

  1. [219]
    Chapman's role of General Manager had with it undoubtedly the inherent responsibility to both engage and terminate staff.  In the case of Bryan the evidence was not contested that at times his performance had not met the standards required to the extent that Chapman had been required to performance manage him at one stage.  Subsequently he was offered and accepted a lessor role than that of Regional Manager which included a $30,000 per annum reduction in salary.
  1. [220]
    Chapman's allegation of being required to terminate the employment based on Bryan being "fat and a smoker" was the subject of support from Bryan who claimed to have heard Scholz utter those comments in a telephone hook-up.
  1. [221]
    As it stands sometime after being demoted Bryan took leave from the employment for which he filed an unsuccessful workers' compensation claim.  Bryan on his return negotiated an exit package with no termination at the hands of the employer (alone) occurring.  Whilst noting that Bryan had existed the employment not at the hands of the employer (alone) that is not to say there was no desire by Scholz to terminate his employment which was evident as a result of an email sent by Scholz on 24 July 2013 to Roger Andrews in which he advised the following:

"Roger,

Had a discussion with Chappy and we believe best to finish Greg up on Friday.

Chappy can get to the office about 4 pm.

Grounds for dismissal are strong.

  1. No calendar and planning when instructed.
  2. Low level of sales.
  3. Poor quality reporting.
  4. Numerous warnings, in writing.
  5. Customer feedback poor.

I will email the original note sent to Greg.

We should give him the opportunity to resign.  If he chooses not to, we need to prepare a note dismissing him.

We will pay him 3 weeks, that is our obligation.  Plus any holidays owed.

Need to get his phone, etc. etc."

  1. [222]
    As a stressor I am unable to find it has any standing in terms of contributing to Chapman's psychiatric condition due to any form of unreasonable management action taken in an unreasonable way.

Stressor 5

In or about 17 October 2013

The Employer unilaterally changed the Appellant's employment contract by amending the composition of an annual, nondiscretionary bonus payment.  The amendment reduced the bonus payment by increasing the deductible component of sales commissions from 5% to 11.5%.

  1. [223]
    Chapman's employment had been regulated by a contract of employment that whilst not signed by either party had been adhered to in the course of employment.  In addition to the salary component there was participation in an Incentive Scheme, the details of which were contained in Appendix 1 of the Employment Agreement:

"INCENTIVE SCHEME

The Employee Incentive Scheme shall be applied in the manner set out below.

The Employee shall be entitled to the incentive as:

  1. (a)
    cash;
  2. (b)
    shares in the Employer of the equivalent value; or
  3. (c)
    an option to acquire fully paid shares in the Employer of the equivalent value,

to be agreed to by the parties at the relevant time, and if no agreement is reached by the parties, then as cash, within 3 months of each respective financial year.

The incentive shall be calculated in accordance with the following.

  1. (a)
    Ten (10) percent of net profit after tax of the Managed Marketing and Sales Business;
  2. (b)
    A share of net profit before tax of the Employer, to be determined a the Employer's discretion; and
  3. (c)
    A share of net proceeds in the event of a sale of the Employer or the Managed Marketing and Sales Business, to be determined at the Employer's discretion.

Final and Binding

The Employer's external accountant's determination of any amount to be paid pursuant to the Incentive Scheme is final and binding on the parties in the absence of evidence of any manifest error."

  1. [224]
    The Incentive Scheme in the initial years of employment went along without "a hitch" until October 2013 when Scholz (on his own evidence) unilaterally altered the method used to calculate Chapman's bonus by increasing from the bonus pool the percentage of commission paid to sales representatives thus having a considerable negative effect on the bonus received by Chapman to the tune of approximately $8,000.
  1. [225]
    On 10 October 2013 in an email to Scholz, Chapman took issue with the decision in which he said amongst other things:

"I do have to confess that decisions such as the change to the commission percentages that affect me financially are in my opinion inappropriate…given our agreement".

  1. [226]
    On 17 October 2013 Scholz advised Chapman of the following:

"More than happy to discuss this, as per my earlier email.

For clarification, the scheme has not changed in any way.

The costs have been adjusted to reflect current operating costs, which is totally at my discretion.

We can cover this face to face next week."

  1. [227]
    Scholz on 25 October 2013 provided an email to Halvorson in respect of Chapman's bonus in which he stated:

"Following our discussion with Geoff, I have agreed to the 2012/13 payment based on the lower commission rates.

Whilst I believe these are the appropriate rates to charge as far as equity is concerned, I should have notified Geoff earlier.

With regards to 2013/14, the new rates apply.

I would like to meet with you and Geoff to discuss how we can further lift profitability this year."

  1. [228]
    The failure of Scholz to consult with Chapman on a matter of such significance puts into question his management conduct in May 2013 when he removed the reporting of Regional Managers from Chapman who evidenced it had been done in the absence of any consultation.
  1. [229]
    Strictly in terms of the decision to unilaterally alter the bonus structure for calculating Chapman's entitlement through the Incentive Scheme despite rectification after some 15 days was unreasonable management action taken in an unreasonable way.

Stressor 6

On or about 14 January 2014

The Employer failed to provide necessary budget information to the Appellant so that he could plan realistic targets and outcomes for a presentation at a strategy meeting on 17 January 2014 and then criticized the Appellant's presentation delivered at the meeting as 'lacking any detail or tangible initiatives'.  The Employer classified this feedback as an official warning.

  1. [230]
    In January 2014 Scholz Industries held a strategy meeting in Melbourne and at 12.39 am on 23 January 2014 Scholz sent an email to Chapman in which he described his presentation as having "lacked any detail, or tangible initiatives" and went on to offer criticism regarding Chapman's reference to the sales team of not having delivered as being totally unacceptable particularly where "the guys were part of your team both directly and indirectly" with "the buck" stopping with Chapman.
  1. [231]
    The email then identified the following concerns regarding Chapman's overall performance:
  • "From a more general perspective, I am quite concerned at the amount of messages and calls I have made to you with no response.  I expect more from a senior member of the team.
  • I have never received any meeting notes from your customer meetings.  We discussed the need for this some time ago.  If you check your in box you will see dozens of meeting notes from me.
  • We discussed the need to use electronic calendars.  You yourself have been very critical of managers that have nothing in their calendars.  Yours it totally empty.
  • Whilst I do not demand reports from you, I really struggle to understand your activities.  You spend little time in the office whilst in Brisbane.
  • The non-attendance at the Gemcell trading term meeting last year remains a problem.
  • I am struggling to understand what sales growth and initiatives you are delivering to the business."
  1. [232]
    In concluding the email he then confirmed "that this is an official warning regarding your performance" and mentioned that he would be seeking a response in relation to the matters raised.
  1. [233]
    Chapman prosecuted a case that if there were deficiencies in his reporting at the strategy meeting they were attributable to the failure of Scholz to allow him access to sufficient financial information to address all the criteria required of him and he had on 14 January 2014 requested from Scholz "a copy of every individual overhead line detail that shows a variance against budget" and from that point he would start the planning process to achieve a realistic outcome.
  1. [234]
    The real questions that arise from Scholz's email of 23 January 2014 are as follows:
  • the timeliness of sending the email (12.39 am); and
  • the manner in which concerns were raised about the presentation, other performance matters and the imposition of an official warning without first affording Chapman an opportunity to respond to allegations.
  1. [235]
    The actions of Scholz were against a background where he claimed to have HR expertise operating within the business and it goes without saying that a HR operative with the very basic of HR knowledge or training would advise of the necessity to hear an employee's response to performance or conduct issues prior to implementing a disciplinary penalty in the form of an official warning.
  1. [236]
    Further compounding the decision of Scholz not to observe the most basic of industrial relations procedures was his failure also to take into consideration the dispute resolution clause contained within the employment agreement which stated:

"If any dispute relating to the employment of the Employee or the interpretation of this Agreement is not resolved between the parties within a reasonable period of time not exceeding fourteen (14) days from the date that dispute first arises, the dispute will be referred by the parties to a mediator agreed to by the parties or failing agreement, a mediator appointed by the President from time to time of the Queensland Law Society Inc. having jurisdiction in the area in which the Employee's duties are performed, prior to either party commencing court proceedings.  The parties acknowledge and agree that this Clause will not prevent a party seeking urgent interlocutory relief.

  1. [237]
    Chapman as one would expect entered into discussions with Scholz which prompted him to forward an email to Scholz on 7 February 2014 in which he stated the following:

"Thanks for the conversation we had around my role and our agreement to move forward.

I appreciate also that your previous correspondence surrounding a warning is now behind us and agreed as not applicable.

You have my full support and confidence and I look forward to having a few wins in the days ahead."

  1. [238]
    Scholz in evidence denied that he had withdrawn the official warning issued by email on 23 January 2014 and from his perspective it had remained in place.
  1. [239]
    The Statement of Stressors identified a failure to provide relevant budget information as a stressor but in essence it was the decision of Scholz to issue Chapman on 23 January 2014 with an official warning without any recourse to the most basic of industrial relations protocol or to afford him natural justice that allowed Scholz's conduct to be found as unreasonable management action taken in an unreasonable way.

Stressors 7 and 8

On 12 February 2014

The Employer by its General Manager said the Appellant, "fuck you pal" in an aggressive, loud and hostile tone in a gathering of senior managers of the Employer in Perth discussing workplace incentives.

On 13 February 2014

The Employer raised performance issues with the Appellant by email at 12:44 am, with a demand for a 7.00 am breakfast meeting to discuss those performance issues where the Employer did not attend that 7:00 am breakfast meeting.

  1. [240]
    The purpose of determining Stressors 7 and 8 together is that they had their origins in a management team visit to Perth on 12 and 13 February 2014 as part of a national program that had already seen visits to Melbourne and Brisbane as part of that program.
  1. [241]
    Following a number of presentations the travelling party including Chapman, Scholz and others dined together on 12 February 2014 and after dinner it is alleged in a group discussion that took place over further drinks Chapman raised an issue of gender in respect of the sales representative of the year and a proposed trip to Hong Kong for the recipient.
  1. [242]
    It was Chapman's evidence that his contribution around the issue of gender drew an aggressive response from Scholz who had in a hostile tone said:

"…Fuck you pal.  You're so far off the mark.  This is a trip where I'll be taking one of our top salesmen.  It's a man's trip that can do a lot of fucking and a lot of drinking with my customers."

At the time of making the alleged comment Scholz was pointing his finger at Chapman.  It was Chapman's evidence that he had felt humiliated and belittled by the conduct of Scholz and of having walked out of the room.  Hillhouse in evidence corroborated Chapman's evidence regarding this incident.

  1. [243]
    Scholz denied having used the profanities as alleged with his evidence corroborated by that of Calabro who recalled the discussion as being "healthy" but he did not have recall of any of the profanities being used by Scholz as alleged.  Scholz in further evidence informed the Commission that the sales representative who was given the award in 2014 was a female.
  1. [244]
    On 13 February 2014 at 12.44 am and 12.45 am Scholz sent electronic messages to Chapman in the form of an email and SMS (respectively) each of which were said to have concerned Chapman.
  1. [245]
    The email from Scholz was critical of his presentation the previous day containing the following commentary:

"When we discussed and agreed to our regional meetings we clearly allocated responsibilities for all.

Your specific tasks, as discussed, agreed and confirmed in Paul's email were as below

  1. Analysis by region of customer, product purchases, gaps and opportunities
  2. Rebates, trading terms and growing sales through LTI program
  3. Lifting and managing gross margin
  4. Growth in MMS business, target 30%
  5. Ownership of regional accounts
  6. Promotional Strategy, Ian Healy Activity
  7. Wholesaler display opportunities
  8. Customer credit responsibility.

In no way have you covered these topics, or prepared any presentation or action list relating to this.

Your input today was quite minimal.

In my ongoing discussion on people, accountability and integrity I felt that I made it very clear as to what is expected.

You can not attend these meetings and simply wing it.

Recently we discussed your performance and my note to you regarding this.

I believe that we have a significant disconnect in terms of your role and performance, which together we need to address.

Tomorrow I will discuss this with you."

  1. [246]
    The SMS message forwarded one minute after the email stated:

"Geoff.  Could we meet prior to Darren at 7 am at the same venue."

The SMS gave no reason or purpose for the 7.00 am meeting request however having followed an email sent one minute prior, Chapman could be forgiven for making the assumption the two were interrelated.  Additionally he had the experience of having received an official warning by email at 12.39 am on 23 January 2014 following another presentation which had not met with Scholz's approval and it was possible history in the form of another disciplinary action was likely to occur that morning.  It is of record Scholz whilst in vicinity of the area occupied by Chapman at 7.00 am that morning chose not to proceed with the meeting.

  1. [247]
    At 2.38 pm on 13 February 2014 Chapman sent as email in response to Scholz's email in which he expressed concern at Scholz's non-attendance at the 7.00 am meeting and of the stress he felt with regards to the process in addition to go on to say:

"…however sending a stress causing email at that time of night, after considerable alcohol and on the back of hearsay from a peer on the same corporate level does weigh heavily upon me."

  1. [248]
    A most notable aspect of Chapman's 2.38 pm email, being his first interaction with Scholz following the events of the previous evening and he made no mention whatsoever of the aggressive behaviour he alleges against Scholz involving the discussion about the sales representative award.  He did express in the same email he agreed with Scholz that they had "a disconnection that is causing real stress".
  1. [249]
    Later on 14 February 2014 at 6.39 pm he sent an email to Hillhouse regarding Scholz's behaviour in which he stated:

"I just wanted to send you this email to say thanks for your support, especially after the events of the dinner.

I agree that Eric's behaviour was inappropriate…I guess that amount of alcohol unleashed his real personality.  I must admit that the aggression was a bit threatening…the swearing and name calling was out of order.  I really felt uncomfortable for myself and everyone when he started the "no f..k..g listen Pal" stuff…I can't apologise for him but I wish he hadn't carried on like that.

Again thanks for the support and keep your chin up."

  1. [250]
    In terms of Stressors 7 and 8 there can be no question of a relationship between Chapman's employment and the events subject to the stressors and I make such a finding.
  1. [251]
    The evidence around Stressor 7 threw up contradictions none more notable than the alleged aggressive objection by Scholz to the suggestion from Chapman that a female would have to be considered for the sales representative award and the unchallenged evidence of Scholz that the winner of award was in fact a female.  The failure of Chapman to raise the issue contemporaneously with Scholz around an issue he described as having caused him to be humiliated and belittled yet take issue with other matters said to have caused him stress at the same time is somewhat bewildering.
  1. [252]
    I am unable to conclude (after the consideration of competing evidence) that on the balance of probabilities the behaviour of Scholz was as alleged by Chapman however the use of such profanities amongst a group of males, most of whom had consumed a number of alcoholic beverages, one would suspect would in the circumstances not be causative of the psychiatric injury of which Chapman complains.
  1. [253]
    I do not make a finding the behaviour was unreasonable management action taken in an unreasonable way in respect of Stressor 7 causing the decompensation of Chapman.
  1. [254]
    The conduct of Scholz with regards to Stressor 8 is confirmed by exhibits that have him contacting Chapman by email and SMS at 12.44 am and 12.45 am.  In terms of the SMS it was not a demand to meet as evidenced by Chapman but more a request however it had the potential to cause some disruption to Chapman's sleep.  The email is a different form of communication that may in circumstances sit for some time before being opened although it appears to be the case that Chapman opened the email at around the time it was received and had the remainder of the time up until 7.00 am that morning to focus on the content which clearly criticised his work performance the previous day and spoke of a "disconnect" that needed to be addressed.
  1. [255]
    The email in my view was capable of being considered as similar to the previous email from Scholz sent on 23 January 2014, again sent in the early hours which took issue with Chapman's performance and resulted in an official warning.  Chapman was entitled to conclude the request for a meeting a 7.00 am was for purposes of addressing the content of the email and the fact Scholz chose not to go ahead does not lessen the stress he may have felt following receipt of the email and SMS.  The circumstances around the 7.00 am meeting were not helped when Scholz decided not to proceed with the meeting and failed to extend to Chapman that decision leaving him to ponder for the remainder of the day whether Scholz was going to engage with him on the contents of the email or not.
  1. [256]
    Once again Scholz had decided to embark on an industrial relations path without regards for proper custom and practice, thus rendering the management action of sending the email at 12.44 am and the SMS at 12.45 am requesting a meeting the following morning sent immediately after the email as unreasonable management action taken in an unreasonable way.

Consideration of the Stressors

  1. [257]
    The Commission having considered the stressors contained within the Statement of Stressors is satisfied based on the requisite standard of proof Chapman had not established that Stressors 1, 2, 4 and 7 fitted within the category of unreasonable management taken in an unreasonable way in connection with his employment and accordingly could not be considered as causative of the psychiatric injury.  However in terms of Stressors 3, 5, 6 and 8 the evidence before the proceedings based upon the requisite standard of proof was sufficient to establish the management action of the employer had been unreasonable management action taken in an unreasonable way in connection with Chapman's employment.
  1. [258]
    Whilst it has been determined that there was unreasonable management action at play in respect of Stressors 3 and 5, I have been unable to find that a temporal link existed between the conduct engaged upon and Chapman's diagnosed psychiatric injury.  However in the case of Stressors 6 and 8 it is the opinion of the Commission that each of those particular stressors by the fact of their potential to have a detrimental impact on Chapman's immediate and long-term employment circumstances and the manner in which they were raised by the employer were major significant contributing factors to his psychiatric injury and more importantly directly proximate to the first medical intervention on 14 February 2014.
  1. [259]
    The factual outcome that four of the stressors were not found to be unreasonable management action taken in an unreasonable way and that two were found to be unreasonable management action taken in an unreasonable way without a temporal link to Chapman's psychiatric injury does not preclude him from receiving compensation for a personal injury if the remaining two stressors were found to be major significant contributing factors.
  1. [260]
    In the matter of Q-COMP v Hohn[12], Hall P stated:

"If indeed it was the submission of Q-COMP at first instance that once an injury was in any way touched by reasonable management action reasonably taken it is not compensable, I agree with the Commissioner (paragraph 3 at p. 666) that such a submission '...overstates the effect of s. 32(5).'.  Indeed, in my view, the submission is inconsistent with Delaney v Q-COMP (2005) 178 QGIG 197.  That case involved an appeal against a decision by an Acting Industrial Magistrate which teased out the transactions and events and concluded that Mr Delaney's adjustment disorder with mixed anxiety and depressed mood was attributable to a number of interactions with his superiors each of which constituted reasonable management action reasonably taken.  There was a successful appeal to this Court.  However, as is pointed out at [71, 015] by the learned author of Watson, Industrial Laws of Queensland (who appeared for Mr Delaney), Mr Delaney did not in that appeal challenge every finding that an interaction contributing (in some way) to Mr Delaney's decompensation was reasonable management action reasonably taken.  One finding was allowed to remain in place on the appeal.  In consequence, Mr Delaney was bound by the finding on the appeal.  If the submission attributed to Q-COMP at first instance was correct, Mr Delaney's appeal should have failed.  The appeal succeeded.  The remaining finding of reasonable management action reasonably taken was treated by both parties as inconsequential so long as it stood alone."

Finding

  1. [261]
    On consideration of the evidence, material and submissions before the proceedings the following findings are made:
  • Chapman at all relevant times a "worker" pursuant to s 11 of the Act;
  • Chapman sustained a personal injury in the form of a psychiatric nature pursuant to s 32 of the Act;
  • the personal injury sustained by Chapman arose out of or in the course of his employment with Scholz Industries with the employment being the major significant contributing factor to the injury; and
  • the operation of s 32(5) of the Act in relation to Chapman's personal injury is not excluded on the basis that Stressors 6 and 8 were found to be unreasonable management action taken in an unreasonable way by Chapman's (then) employer in connection with his employment.
  1. [262]
    The Appeal is upheld and the decision of Simon Blackwood (Workers' Compensation Regulator) of 27 October 2014 is set aside.  The claim for workers' compensation is one for acceptance.
  1. [263]
    The Regulator is to pay the Appellant's costs of and incidental to this Appeal.
  1. [264]
    I order accordingly.

Footnotes

[1] Newberry v Suncorp Metway Insurance Ltd [2006] QCA 48

[2] Prizeman v Q-COMP (2005) QIC 53

[3] Labaj v WorkCover Queensland [2003] QIC 155

[4] MacArthur v WorkCover Queensland (2001) 167 QGIG 100

[5] Seltsam Pty Ltd v McGuiness (2000) 49 NSWLR 262

[6] Jones v Dunkel [1959] HCA 8

[7] Australian Leisure and Hospitality Group Pty Ltd v Simon Blackwood (Workers’ Compensation Regulator) AND Campbell [2014] QIRC 105

[8] State of Queensland AND Q-COMP (C/2009/42) - Decision

[9] Comcare v PVWY [2013] HCA 41

[10] Queensland Corrective Services Commission v Gallagher (1998) QCA 426 

[11] Q-COMP v Hohn (2008) 187 QGIG 139 

[12] Q-COMP v Hohn (2008) 187 QGIG 139 

Close

Editorial Notes

  • Published Case Name:

    Chapman v Simon Blackwood (Workers' Compensation Regulator)

  • Shortened Case Name:

    Chapman v Simon Blackwood (Workers' Compensation Regulator)

  • MNC:

    [2015] QIRC 132

  • Court:

    QIRC

  • Judge(s):

    Member Thompson IC

  • Date:

    16 Jul 2015

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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