Potter v Gympie Regional Council

This case is significant for two reasons. First, Brown J found that administrative policies the employer has in place in relation to interactions with the employee do not necessarily form part of the employee’s contract of employment. Second, it builds upon cases like State of New South Wales v Paige and Govier v Uniting Church in Australia Property Trust, that the employer’s duty to take reasonable care to the employee to provide adequate support does not extend to disciplinary procedures and the exercise of the employer’s contractual rights under the contract of employment. In an important judgment, her Honour held that no duty of care was owed by the Council to safeguard against the risk of psychiatric injury in relation to the plaintiff’s suspension, and that on the facts psychiatric injury was not reasonably foreseeable.

Brown J

10 February 2022

Briefly, the plaintiff had worked for Council for a number of years prior to issues being raised concerning his work performance. Thereafter, following a meeting about his performance he was suspended due to a complaint being made by a staff member which the Council referred to an external investigator for resolution. [1]. Before being informed of the outcome of the investigation he suffered stress and anxiety and could not return to work. He then brought a claim against the Council on the basis that he had suffered a psychiatric injury as a result of the Council’s negligence in dealing with work performance issues and suspending him from his employment. The defendant successfully argued that no duty of care arose in relation to the decision to suspend him, since the decision was made pursuant to a contractual right and the exercise of a contractual right by an employer does not give rise to a duty of care.

The process of suspension

The plaintiff’s position was that, given the suspension involved his everyday work activities and was part of an investigation not a disciplinary process, unlike in Paige and Govier the defendant still owed him a duty of care during the period of suspension, inclusive of a duty to provide a safe system of work. [364].

In relation to whether a duty of care arose in the context of the defendant’s decision to suspend the plaintiff, her Honour observed that in this case:

“The decision to suspend or direct the plaintiff on full pay was not part of the investigation itself although made in the context of a decision to investigation [sic] allegations against him. Unlike Govier, it was therefore not made in furtherance of a contractual right to carry out an investigation. However, it was made pursuant to the exercise of a contractual right to give reasonable directions which has been found to extend to a direction to suspend or not to perform work on full pay during the course of an investigation. As was found by Lee J in Avenia, the power is not limited to a formal ‘disciplinary process’ but extends to circumstances where the employer ‘is seeking to reasonably determine issues or find facts relevant to allegations or suspicions of employee misconduct’.” [391].

It was also the case that no prior Australian authority had found that a duty of care attaches to a decision to suspend as opposed to a duty to provide adequate support. [397]. Justice Brown considered the better view to be that there was implied in the contract of employment a term that the Council could provide reasonable and lawful directions to an employee, which might include suspension pending the outcome of an investigation. [398].

Her Honour clarified that a duty to an employee to protect them from psychiatric harm does not extend to injury suffered by undertaking the very obligation imposed by the contract: see Woolworths Limited v Perrins [2016] 2 Qd R 276, [43]; Koehler v Cerebos (Australia) Ltd (2005) 222 CLR 44, [21]. Here, the Council had a contractual right to give a direction to suspend or not to perform work to an employee on full pay whilst allegations were under investigation as long as the direction was reasonable. Her Honour stressed that the decision to suspend or direct an employee not to work on full pay, whilst related to the investigation process, is distinct from it. Further, where the employer genuinely holds the view that it is within the scope of its duties to inquire into or investigate allegations of inappropriate behaviour, it will generally follow that their entitlement to suspend or direct an employee not to work on full pay amounts to a reasonable direction. Here, her Honour concluded that:

“The present case is not concerned with decisions relating to the investigation process itself or disciplinary processes as was the case in Paige and Govier. However, like Paige and Govier, it does relate to a decision-making process concerning the incidents of a contract of employment and not the carrying out of tasks by an employee such that it is outside the scope of the duty of an employer to provide a safe system of work and the plaintiff ‘s duty of care would be a novel duty of care.” [399].

Her Honour was not prepared to find that any duty of care was owed to the plaintiff in relation to the decision to suspend him, “even if the exercise of the contractual right was careless”. [402].

The resultant psychiatric injury – was it reasonably foreseeable?

On the facts it was apparent that the Council was uninformed as to any prior psychiatric illness nor any special vulnerability on the plaintiff’s behalf. In that regard her Honour relevantly noted the following:

(1) Such a pre-condition is not necessary to ground a suspicion that an employee is at risk of psychiatric injury. [412].

(2) Something in addition to workplace stress or mere predictability is requisite in order to find that the risk of psychiatric injury to an employee by an employer is reasonably foreseeable. [412].

In her Honour’s assessment, whilst the pressures caused to the plaintiff by the relevant events were of a nature which he had not experienced previously, they were simply not extreme enough that they would make a psychiatric injury reasonably foreseeable in a person of normal fortitude. She concluded that an employer can assume that in the event disciplinary procedures are commenced, an employee will be able to cope with those as they would any other usual rigours of a job:

“There is no precondition that psychiatric injury would be suffered by a person of normal fortitude. It is the risk of the employee concerned sustaining a recognisable psychiatric illness that must be reasonably foreseeable, in the sense that the risk was not far-fetched or fanciful.” [412].

Overall, her Honour did not accept that the signs of stress exhibited by the plaintiff were an abnormal reaction to the suspension, or that they deviated from the norm of what would have been expected from someone of normal fortitude. [413]. In her view, there was insufficient indicia for an employer to reasonably foresee the risk of psychiatric injury to the plaintiff. [414].

Did the Council owe a duty of care to lift the suspension when the report was received?

The plaintiff contended that the failure to lift his suspension when the external investigator’s report was received was a breach of duty of itself. Her Honour held that that was not the case, since at that juncture the investigation was incomplete and the defendant was not obliged to lift the suspension prior to the completion of the investigation. [541]. Whilst it is often the case that an investigation will be concluded when a report is furnished (see Downe v Sydney West Area Health Service (No 2) (2008) 71 NSWLR 633), here the defendant had not yet had the opportunity to meaningfully consider the report and assess the findings made. [432]. In addition, her Honour observed that in any event, had the defendant lifted the suspension at that point, it might have jeopardised his condition. [557].

Disposition

In the result, the claim was dismissed. [711].

A Jarro