Employers beware as the FWA takes flight

It’s not at all uncommon for a worker to sustain a compensable psychiatric injury due to mistreatment in the workplace. Whether it be dismissal, bullying or a significant alteration of their working conditions, these things can open up a whole suite of claims against an employer.

Let’s take the hot button issue of bullying as a hypothetical. Unbeknownst to the board of directors or business owner/s, a couple of longstanding, perhaps overly territorial, employees decide they will make life as difficult, even unpleasant, as they can for a fellow worker who they consider less competent or committed than them, or simply just unlikeable. One of them is a middle manager who decides to give the outcast employee artificially low ratings at consecutive performance reviews. Eventually, on the commendation of these protagonists, the pariah employee is made redundant. The business owners/directors think they’ve done the right thing – all in the name of efficiency and productivity!

Meanwhile, the sacked employee has seen a psychiatrist a couple of times whilst they remain an employee, as they labour under the stress caused by the mistreatment. In the beginning, the victim maybe doesn’t even say anything to anyone at work for fear of reprisal, or simply because they wonder whether they are just being too sensitive about it. By the time they do speak up, it’s near the time their termination is announced, which is the proverbial straw that breaks the camel’s back.

Six months later, the business finds itself in the Federal Court of Australia with an adverse action suit in respect of the termination, which also includes a claim for negligence in respect of a failure to have adequate protections in place to prevent the bullying the aggrieved employee has suffered at the hands of the two employees. There are also workers compensation claims by way of statutory and modified common law (“Work Injury”) damages available to the complainant. In these, the law heavily favours the employee and therefore a finding that the employer is liable for a breach of its non-delegable and quite rigorous, duty of care as well as being found vicariously liable for the two employees’ conduct towards their victim, is likely. There may also have been breaches of the employee’s employment contract and the two employees might themselves face claims personally for accessorial liability under the Fair Work Act 2009 (FWA)or as concurrent tortfeasors. Ouch! 

And recent applications of the law indicate that the employee holds all the cards here.

First of all, section 361 of the FWA gives the employee the benefit of that most delightful of evidentiary devices, the rebuttable presumption; at least for those who sit on the right side of it. That is, once the employee is able to establish on the objective facts that it appears one of the reasons the “adverse action” (eg. their dismissal) was taken is because they have exercised a “workplace right” eg. such as the right to complain about being bullied (see FWA s340), the employer must then prove otherwise. 

There is no questioning the rationale for the rule. The employee can’t possibly know what was truly in the mind of the employer in acting the way it did and therefore it is properly a matter for the latter to establish, or rebut in this case. But it still makes it hard for the employer.   

That brings me to the second little advantage the employee enjoys here. The reason for the adverse action the employee seeks to impugn need only be one among a number that were in fact at play when the employer reached the decision to act as it did (FWA s360). At least however for the employer’s sake, the objective material will need to establish that the impugned reason was a “a substantial and operative factor” in its decision making (Australian Building and Construction Commissioner v Hall [2018] FCAFC 83; 261 FCR 347). 

Thirdly, in rebutting the rebuttable presumption, the employer must demonstrate that the subjectively held belief of the key decision-maker/s, ie. manager or other superior, who carried out the action, was not that which the employee alleges. This will almost invariably lead to evidence having to be called from one or a number of persons (possibly no longer) within its organisation who are said to have been involved in the action alleged against it by the employee. All very uncomfortable and somewhat unpredictable. And it’s those persons’ subjectively held belief, not the Court’s objective view of the circumstances, that matters (Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 248 CLR 500).  

The cases where all of this gets interesting are when the Court is forced to look behind the context, ie. employee complains, employee then gets sacked/demoted/etc. – to establish whether in the true order of events, the employer really has engaged in adverse action contrary to the law.

And now the recent decision of Rares J in Leggett v Hawkesbury Race Club Limited (no. 3) [2021] FCA 1658  offers the employee even more aces in this regard. That case was argued in the Federal Court on the basis that the worker had both a Work Injury (modified common law) damages claim (negligence on the part of the employer resulting in damages payable only in respect of past and future economic loss, as dictated by the Workers Compensation Act 1987 (WCA)) and an adverse action claim under the FWA.

Firstly, in cases of this kind, the question of whether the psychiatric injury “arose out of the employment” and when that happened are matters which will normally already have been determined by an arbitrator at the Workers Compensation Commission when the issue of statutory weekly workers compensation is decided. In Leggett, the Court ruled that this created an issue estoppel on these two key questions in the successive Federal Court proceedings. 1-nil to the Applicant worker.

Then, in Leggett (no 4) [2022] FCA 622, the Court was asked to decide how damages should be dealt with. If they were dealt with under the WCA, as the Respondent employer urged, they would be subject to the relevant statutory caps on weekly earnings and no pain and suffering damages could be awarded (given the WCA only allows for awards of past and future economic loss).

Applying s109 of the Constitution, Rares J deemed that the WCA, as a State Act being inconsistent with the FCA, a Federal Act, had no work to do on the issue of damages and that therefore the Federal statute covered the field. The broad scope of compensation that can be awarded under s545 of the FWA meant the worker got full freight on her past and future economic loss (less the weekly compensation payments she had already received) and a significant award for pain and suffering – plus interest. Another win for the worker.       

The only thing to be decided in Leggett now is costs. In adverse action claims under the FWA they are only awarded in limited circumstances (s570); they do not just follow the event. Given that the award of damages took place under the FWA but the Applicant also had success on her negligence and contract claims, it will be interesting to see what the Court does on this front.

Regardless, employers beware. Take care of them workers and if you need to dismiss, make sure the reasons are sound.               

Leave a comment

Filed under Civil, damages, Industrial, Negligence, statutory interpretation

Don’t let Redaction drive you to Distraction

It is surprisingly common to hear that a party has uplifted documents produced under subpoena only to find that large chunks of them have been redacted.

The producing party it seems has taken it upon itself to decide whether the information is sensitive or otherwise not relevant to the proceedings and acted accordingly. Extremely annoying! 

In these circumstances, I suggest citing the decision of Fagan J in LG v Brian Brock as executor of the estate of the late Leo Clarke [2016] NSWSC 323 along with some polite advice that such choices are the domain of the Court and not the subpoena recipient. If that fails, get a motion on seeking to have the documents produced in their unredacted form.

In LG, the plaintiff alleged certain historic abuse had been committed against her by a priest and sought documents from various parties under subpoenas directed at information revealing any other complaints made by others against said priest.

The producing parties redacted the name and contact details of certain persons mentioned in the documents on what appeared to be the basis of relevance. The gravamen of the relevance objection argued in Court (and the basis for the unilateral decision to redact before production) appeared to be that the persons that would otherwise have been identified had made complaints only after the period of alleged molestation suffered by the plaintiff.

His Honour was unconvinced, explaining that on broad principles of relevance as they relate to subpoenas (ie. adjectival relevance), it is clear that the redacted details could well for example, lead to evidence being given by the unrevealed persons such as complaints made to the defendant by persons other than from themselves (eg. their parents, teachers and the like).   

There was also passing reference in the judgment to a line of decisions that appeared to support redaction of documents when they are produced under discovery. His Honour found however that this did not apply by analogy to subpoenaed documents, as the addressee parties argued it should.

His Honour did envisage circumstances where it may be appropriate to redact documents before they’re produced under subpoena (eg. if the part revealed a “protected confidence” under s126B of the Evidence Act 1995), but the producing party may only do so with the Court’s imprimatur via exercise of its discretion under UCPR (NSW) 33.8; the same rule that empowered it to rule that the documents in LG should be produced in their unredacted form.

None of this is earth shattering stuff I suppose but useful to have in your kit bag all the same.    

Leave a comment

Filed under Civil, notices to produce

Non-delegable duty of care: the reach of Burnie Port Authority re-ignited

Such is my barrister’s brain, that whilst reading The Hobbit to my son the other night, I got to thinking about the similarities between non-delegable duties of care and the magic ring featured in the book. In The Hobbit, the ring grants its wearer invisibility and so comes in very handy as Bilbo Baggins continues his quest to recover the dwarves’ lost treasure from the evil dragon, Smaug. As the story unfolds, the ring is also shown to have quite a personality of its own, at times capricious and Delphic, particularly as the saga of the next book, The Lord of the Rings unfolds.

Those two words also seem apt to describe non-delegable duties of care. In fact, “Delphic” is a word Kirby J used in the High Court decision of Montgomery to describe past efforts of that Court to clarify the underlying rationale for non-delegable duties.  Indeed, any review of the authorities shows that the distinction between when there should and shouldn’t be a non-delegable duty imposed upon a defendant is far from clear.

Take for example, this passage from the judgment of Justice (Joseph) Campbell in Transfield Services (Australia) v Hall (2008) 75 NSWLR 12 at [119] as his Honour sought to encapsulate an aspect of Gaudron’s judgment in Lepore:

“Like the majority in Burnie [Port Authority], her Honour was saying that cases where there was a non-delegable duty exhibited a particular characteristic, but was not saying that all cases that exhibited that characteristic were cases where there was a non-delegable duty.”         

What can be said with some certainty however is that overall, there has been a general reluctance in this country to expand the categories where a non-delegable duty will be found beyond those prescribed by Mason J in Kondis (ie. hospital/patient, school/pupil and employer/employee).

The stated reasons of the judges of the High Court deciding Montgomery for keeping the categories limited come down to the harshness of the consequences upon a defendant of so doing and that any further expansion may have the artificial consequence of outflanking established common law principles surrounding vicarious liability (see Kirby J at [44]); in some instances, the strict liability that attaches to non-delegable duties makes it effectively the same as a finding of vicarious liability. Some High Court judges even maintain that a preferable approach would be to simply adjust the applicable duty of care itself, rather than imposing the non-delegable net over a given case. Take for example, the comments of Justices Wilson and Dawson in Stevens v Brodribb Sawmilling (1986) 160 CLR 16 at 42-43:

“The direction taken in this Court has also been away from strict liability for tortious behaviour. There is a preference for the view which is more in harmony with the ordinary principles governing liability for negligence, namely, that the extent of a duty of care will depend upon the magnitude of the risk and its degree of probability…”

The attraction for plaintiffs of course is that a non-delegable duty lifts the standard of care up so high that it makes it much easier for them to get home; somewhat like the ring in The Hobbit. If not strict, it imposes a liability to see that reasonable care is taken – quite a high standard; though if this makes it an impossible standard to meet, a non-delegable duty will not normally be imposed.

Such was the case in Montgomery where the High Court refused to find a non-delegable duty was owed by a local Council for the negligence of its contractor in creating a hazard during footpath installation works because, given it had had such limited involvement in the works, this was a duty that Council would never have been able to meet.          

Against this background, I consider any judicial finding of a non-delegable duty outside Mason J’s categories in Kondis to be quite significant. This is what took place in a decision handed down late last year by Justice (Stephen) Campbell in the NSW Supreme Court decision of Hossain v Unity Grammar College Ltd [2019] NSWSC 1313.

Interestingly enough, His Honour’s findings were prefaced by the following (at [101]):

“And I appreciate that the decision of the High Court in Leichardt Municipal Council v Montgomery evinces what might be regarded as a strong reluctance to extend the established categories of non-delegable duties. If the door has not been slammed closed, it is barely ajar and guarded by a vigilant, juristic sentinel.”

Hossain was a case in which the Plaintiff was seriously injured when a leak caused LPG gas to settle in the ceiling space of a building. It was then ignited when the Plaintiff switched on a light upon entering the room immediately below.  The contractor which caused the leak in negligently conducting gas connection and installation works was uninsured and so a number of others were sued, including the head building contractor.    

The head contractor’s insurer argued that its delegation of the gas connection works to an ostensibly skilled contractor discharged its duty of care to the Plaintiff. However, his Honour found that more was required of the head contractor. Pointing to one of the key indicia of the existence of a non-delegable duty, “control,” Campbell J found:

“There is no doubt that [the head contractor] has taken advantage of its control of the premises to introduce a dangerous substance namely LPGas and to carry on a dangerous activity in terms of facilitating [its use].”

In his judgment at [103], His Honour then quoted from Burnie Port Authority (atp. 554), a case in which the High Court found an occupier liable for the damage caused by a fire that escaped from its land, even though it was ignited by someone else:         

“In the case of such [dangerous] substances or activities, however, a reasonably prudent person would exercise a higher degree of care. Indeed, depending upon the magnitude of the danger, the standard of ‘reasonable care’ may involve ‘a degree of diligence so stringent as to amount practically to a guarantee of safety.’ ”      

In the end, Campbell J found that the non-delegable duty in Hossain involved the principal contractor “seeing that reasonable care is [or had been] taken,” which for reasons given in preceding paragraphs, his Honour found it had not.       

An interesting side note to this decision is that in Transfield, the decision of Justice (Joseph) Campbell to which I made mention above, Justice (Stephen) Campbell in his capacity as senior counsel for the Plaintiff/Respondent argued that Burnie Port Authority justified a finding that a non-delegable duty should be owed by a head contractor in circumstances where similar factors were at play as those in Burnie.

In Transfield, the head contractor was tasked with maintaining plant and equipment on the HMAS Stirling which it then subcontracted to another. The plaintiff suffered serious injury when a rope he was using to abseil gave way. The rope was supposed to have been properly inspected by the contractor.

The broader argument on the appeal in Transfield was effectively whether a non-delegable duty should be found in circumstances where an inherently dangerous activity (such as abseiling) was taking place in respect of which the head contractor had some “proximity” and/or “control” in relation to the Plaintiff. Faced with an argument put by Campbell SC as he then was, Campbell JA rejected outright that such a generalised notion could form the basis for finding a non-delegable duty existed. In this context, His Honour also expressed the view that Burnie Port Authority ought to be limited to its facts.

Justice Stephen Campbell however relied on Burnie Port Authority as one of the principal foundations for his decision in favour of a finding that the head contractor did owe a non-delegable duty to the Plaintiff, Mr Hossain who had been the subject of negligence where a dangerous substance/activity had been involved.

It will be interesting to see whether this aspect of the decision is appealed but for now the door through which a principal contractor can be found to owe a non-delegable duty of care to an injured third party in certain circumstances remains very much ajar. So too, the non-delegable duty of care ring now glows a little brighter.                       

Leave a comment

Filed under Civil, Negligence, Non-delegable duty of care