Bradey, Kim --- "10 things you need to know about mental injury claims under the SRC" [2017] PrecedentAULA 6; (2017) 138 Precedent 18

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10 THINGS YOU NEED TO KNOW ABOUT MENTAL INJURY CLAIMS UNDER THE SRCA

By Kim Bradey

Mental illnesses are compensable under the Safety, Rehabilitation and Compensation Act 1988 (Cth) (SRCA) in limited circumstances.

Under s14 of the SRCA, compensation is payable in respect of an injury if the injury results in death, incapacity for work or impairment.

Section 5A sets out what ‘injury’ means. Mental illnesses are generally classified as diseases, and therefore compensation is payable only if there has been a significant contribution by employment.^[1]

However, the definition of ‘injury’ excludes any disease, injury or aggravation suffered as a result of reasonable administrative action taken in a reasonable manner in respect of the employee's employment; if those circumstances are met, compensation is not payable.

The policy behind this exclusion, which can be found in the explanatory memorandum to the Safety, Rehabilitation and Compensation Other Legislation Amendment Bill 2006 (Cth), is simple: disappointment with management decisions is not a basis upon which an entitlement to compensation arises.

As was observed by Rares and Tracey JJ in Commonwealth Bank of Australia v Reeve [2012] FCAFC 21 (Reeve):

‘...the purpose of s 5A was to broaden the exclusion of matters from the previous definition of ‘injury’ so that an employer would not be unduly inhibited in taking reasonable administrative action in respect of an employee’s employment. The Parliament sought to ensure that an employer would be freer to deal with an employee, by taking disciplinary action or deciding to deal with that employee as an individual in respect of his or her employment, than had been the case under what it considered were narrow judicial interpretations of the old exclusion in s 4(1)’.^[2]

There is, however, nothing in the legislative history or extrinsic materials which provides a clear statement of intention as to the limits or the breadth of the exclusion.^[3]

On its face, the exclusion in the definition of injury is restrictive. However, generally speaking, judicial interpretation of the exclusion has limited the circumstances in which the exclusion will be held to apply.

So, with this in mind, what do you need to know about mental illness claims under the SRCA?

1. WHAT IS A MENTAL INJURY FOR THE PURPOSE OF THE SRCA?

The seminal decision in relation to what comprises a mental injury for the purposes of the SRCA is found in Comcare v Mooi [1996] FCA 1587 (Mooi).

In Mooi, the Tribunal essentially found that the employee was ‘entitled to compensation on the basis that, although he was not suffering from any mental illness, mental disturbance or psychological disorder as a result of work-related stress, the condition that those stresses contributed to produce in him had an effect on his capacity for work and was still sufficient to amount to an injury within s14 of the SRCA’.^[4]

However, Drummond J of the Federal Court did not accept that s14 of the SRCA is satisfied by ‘proof of a nexus between the employment-caused mental or bodily condition of the employee and the incapacity to work or an impairment of the employee’s capacity to work’.^[5]

His Honour said that ‘so far as events that do not result in any physical harm to a worker or in the development of any observable pathology in the worker’s body but which only have some form of psychological consequence are concerned, the worker will be able to show the existence of a mental ailment, disorder, defect or morbid condition even though his resultant condition cannot be identified with the label of a recognised medical condition. But it is, I think, essential for such a worker to be able to demonstrate that, having regard to his circumstances, he is in a condition that is outside the boundaries of normal mental functioning and behaviour’ (author’s emphasis).^[6]

2. WHAT IS THE DEGREE OF CONTRIBUTION BY EMPLOYMENT REQUIRED FOR THERE TO BE A COMPENSABLE RESULT?

For a mental ailment, disorder, defect or morbid condition to be compensable, it must generally have been contributed to, to a significant degree, by the employee’s employment by the Commonwealth or a licensee.^[7] ‘Significant degree’ is defined in s5B(3) of the SRCA to mean a degree that is substantially more than material and regard must also be had to the factors contained in s5B(2) of the SRCA.

It is beyond the scope of this article to expand upon the concept of ‘significant contribution’ –however, the following should be noted:

1. In Comcare v Canute,^[8] French and Stone JJ, in dealing with the concept of ‘material degree’, noted that ‘the relevant causal connection must be established on the balance of probabilities and not left in the area of possibility of conjecture...Equally, it is plain that the present legislation was not intended to require that an employee demonstrate that their employment caused the disease or that it was the most important factor...Having said this, the changes brought about by the enactment of the SRC Act^[9] were intended to require that the contribution be “more than a mere contributing factor”...The inclusion of this term [material] imposes an evaluative threshold below which a causal connection may be disregarded.’^[10]

2. In Wiegand v Comcare [2002] FCA 1464 (Wiegand), it was stated that: ‘All that is required is that the employee is exposed to some incident or state of affairs in the course of the performance of his duties and to which he would not otherwise have been exposed, which is a [significant] contributing factor to the ailment or an aggravation of the ailment suffered by the employee. A perception held by the employee will meet a “reality” test for the purpose of the definition of disease if it is a perception about an incident or state of affairs that actually happened’^[11] and ‘...there is no requirement at law that the interpretation placed on the incident or state of affairs by the employee, or the employee’s perception of it, is one which passes some qualitative test based on an objective measure of reasonableness. If the incident or state of affairs actually occurred, and created a perception in the mind of the employee (whether reasonable or unreasonable in the thinking of others) and the perception contributed in a [significant] degree to an aggravation of the employee’s ailment, the requirements of the definition of disease are fulfilled.’^[12]

3. Whether employment has contributed to a significant degree to an ailment, disorder, defect or morbid condition is a question of fact.

3. WHETHER THE RELEVANT ACTION IS ADMINISTRATIVE ACTION?^[13]

Section 5A(2) of the SRCA sets out a non-exhaustive list of those things that comprise reasonable administrative action:

‘(a) a reasonable appraisal of the employee's performance;

(b) a reasonable counselling action (whether formal or informal) taken in respect of the employee's employment;

(c) a reasonable suspension action in respect of the employee's employment;

(d) a reasonable disciplinary action (whether formal or informal) taken in respect of the employee's employment;

(e) anything reasonable done in connection with an action mentioned in paragraph (a), (b), (c) or (d);

(f) anything reasonable done in connection with the employee's failure to obtain a promotion, reclassification, transfer or benefit, or to retain a benefit, in connection with his or her employment.’

The meaning of ‘administrative action’ was considered in Reeve. It is clear that the examples given in s5A(2) do not define exhaustively the scope of the exclusionary provision in s5A(1).^[14]

4. WHETHER THE ADMINISTRATIVE ACTION WAS TAKEN IN RESPECT OF THE EMPLOYEE’S EMPLOYMENT?

The meaning of the word ‘employment’ as it appears in the exclusion was considered in Reeve, from which the following principles can be discerned:

1. ‘It is not action with respect to the duties that an employee is employed to carry out that is the subject of the exclusion, but action with respect to the employee as employee and his or her employment relationship with the employer’;^[15]

2. ‘employment’ ‘is concerned with the conditions in which the employee works, the terms of his or her engagement and his or her duties’;^[16]

3. operational action is not caught by the exclusion;^[17]

4. the provision applies ‘to action taken in respect of the administration of the relationship of employer and employee as between the particular employee making the claim, in his or her capacity as employee, and the employer in its capacity as employer’ and ‘matters of general administration, management and the implementation of policy are excluded, even if they affect the employment of employees’.^[18]

5. WHETHER THE DISEASE, INJURY OR AGGRAVATION IS SUFFERED AS A RESULT OF THE ADMINISTRATIVE ACTION?

‘As a result of’ in the exclusion introduces a causal element that must be established before the exclusion will be held to apply.

For the exclusion to apply, the mental injury claimed must be ‘as a result of’ reasonable administrative action taken in a reasonable manner. While there may be more than one cause, at least one of those causes must meet this requirement for the exclusion to apply.

It is necessary to closely examine the true cause of the mental injury as it is often not the administrative action that has resulted in the mental injury, but something else. If that something else is not caught by the meaning of ‘reasonable administrative action’, then the exclusion will not apply.

The most recent decision of the High Court dealing with the SRCA, namely Comcare v Martin [2016] HCA 43 (Martin), addresses the causal connection required by virtue of the expression ‘as a result of’ appearing in the exclusion.

The following principles can be discerned from the High Court’s unanimous decision:

1. the exclusionary phrase ‘as a result of’ in s5A(1) does not impose its own separate and free-standing test of causation, but rather refers relevantly to the test of causation spelt out in s5B(1);^[19]

2. ‘an employee has suffered a disease “as a result of” administrative action if the administrative action is a cause in fact of the disease which the employee has suffered. The administrative action need not be the sole cause... What is necessary is that the taking of the administrative action is an event without which the employee’s ailment or aggravation would not have been a disease: it would not have been contributed to, to a significant degree, by the employee’s employment’;^[20]

3. ‘the operation of the exclusion is not dependent upon the subjective psychological drivers of the employee’s reaction’;^[21]

4. ‘what is required to meet the causal connection connoted by the exclusionary phrase in s5A(1) in its application to disease within s5A(1)(a) is therefore that the employee would not have suffered that disease, as defined by s5B(1), if the administrative action had not been taken. That is to say, the causal connection is met if, without the taking of the administrative action, the employee would not have suffered the ailment or aggravation that was contributed to, to a significant degree, by the employee’s employment’;^[22]

5. ‘The causal connection giving rise to the exclusion from the definition of injury is met where the disease suffered by the employee is a mental condition or an aggravation of a mental condition suffered by the employee in reaction to a failure to obtain a promotion, including in reaction to a perceived consequence of that failure to obtain a promotion. The nature of the perceived consequence – whether personal or professional, direct or indirect, real or imagined – is beside the point.’^[23]

In considering the meaning of ‘as a result of’, the High Court specifically rejected the view expressed by the majority of the Full Court of the Federal Court that ‘as a result of’ in s5A(1) required the application of a ‘common sense’ approach to causation.^[24]

6. WHETHER THE ACTION IS REASONABLE ADMINISTRATIVE ACTION?

Only administrative action that is reasonable is caught by the s5A(1) exclusion. Reasonableness is not determined by reference to guidelines or policies that an employer may have in place. While a consideration of guidelines or policies is relevant to understanding whether action was taken in a reasonable manner, it is wrong to be distracted by guidelines or policies from the real question in s5A; namely, whether action was reasonable administrative action taken in a reasonable manner.^[25]

Whether administrative action is ‘reasonable’ is ordinarily a question of fact.^[26]

One factor that may be taken into account when assessing whether administrative action is reasonable is the proportionality of that action to the issue being addressed.^[27]

7. WHETHER THE REASONABLE ADMINISTRATIVE ACTION IS TAKEN IN A REASONABLE MANNER?

For the exclusion to apply, any reasonable administrative action has to have been taken in a reasonable manner.

In Comcare v Martinez (No 2) [2013] FCA 439 (Martinez), Robertson J stated that:

1. ‘the impact on the employee cannot of or by itself establish whether or not administrative action was taken in a reasonable manner within the meaning of s5A(1)’;^[28]

2. ‘the fact that there is more than one way of taking an administrative action may well cast light on the reasonableness of the manner adopted. This is not to say that there may not be more than one way of doing things reasonably. Nor is it to gainsay the proposition that the question is not whether the administrative action could have been done more reasonably’;^[29]

3. an objective judgement of reasonableness is required;^[30]

4. whether administrative action is taken in a reasonable manner depends on the administrative action, ‘the facts and circumstances giving rise to the requirement for the administrative action, the way in which the administrative action impacts upon the worker, and the circumstances in which the administrative action was implemented, and any other matters relevant to determining whether the administration [sic] action was taken in a reasonable manner by the employer.’^[31]

8. BASED ON ALL OF THE CIRCUMSTANCES OF THE INDIVIDUAL CASE

As indicated above, a finding as to whether there has been ‘reasonable administrative action taken in a reasonable manner’ is a finding based upon all of the circumstances of an individual case.^[32] In Keen v Workers Rehabilitation and Compensation Corporation [1998] SASC 7056 (Keen), Bleby J observed:

‘...whether administrative action is taken in a reasonable manner is very much a question of objective fact, and is to be determined against the ordinary standards of reasonable employers in all the circumstances of the case. Whether administrative action is reasonable or is taken in a reasonable manner depends first on the finding of the primary facts as to what occurred in the taking of the administrative action, namely what decision was made, who made it and why it was made, what was done, what was omitted to be done and the factual background against which the decision was made or implemented.’

9. TIMING IS EVERYTHING

Often, an employee develops a mental injury as a result of non-excluded work factors but fails to obtain treatment or take time off work in relation to the condition.

However, the condition can then result in decreased performance at work, which often leads to administrative action being taken in relation to that decreased performance, and then the taking of time off work due to incapacity.

The exclusion is enlivened in these circumstances, for while the initial onset of the mental injury is not caught by the exclusion, it is difficult to avoid a conclusion that excluded factors caused an aggravation of the mental illness resulting in an incapacity for work.

10. WINNER TAKES ALL

Under the SRCA, a claim will fail if any of the causes of an injury arising out of or in the course of employment falls within the exclusion, even if other causes do not. This differs from the position in most of the states and territories, where similar exclusions apply only if the injury is, for example, caused wholly or predominantly by an excluded factor.^[33]

CONCLUSION

There is no doubt that successfully pursuing mental injury claims under the SRCA is a difficult task. However, a comprehensive knowledge of the principles expounded by the cases referred to above will assist in maximising an employee’s chance of recovering compensation in respect of their mental injury under the SRCA.

Kim Bradey is a member of the Victorian Bar, having previously been a solicitor for 20 years. She practises in personal injuries and has practised in the area of Commonwealth compensation since 1996. PHONE [phone]. EMAIL [e-mail].

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^[1] See definition of ‘disease’ in s5B(1) of the SRCA.

^[2] At [73] and cited with approval by the majority in Martin v Comcare [2015] FCAFC 169, [103].

^[3] Reeve, [25] (Gray J).

^[4] Mooi, [8].

^[5] Ibid, [9].

^[6] Ibid, [12].

^[7] SRCA s5B(1).

^[8] [2005] FCAFC 262, [68].

^[9] That is, from requiring that employment be a contributing factor to it being a material contributing factor.

^[10] Cited with approval in Comcare v Sahu-Khan [2007] FCA 15; (2007) 156 FCR 536.

^[11] Wiegand, [24].

^[12] Ibid, [31].

^[13] This and the four following headings (headings 3 to 7) are those factors identified by Murphy J in Martin v Comcare [2015] FCAFC 169, [70].

^[14] Reeve, [26] (Gray J); [62] (Rares and Tracey JJ).

^[15] Ibid, [30] (Gray J).

^[16] Ibid, [60] (Rares and Tracey JJ).

^[17] Ibid, [31] (Gray J).

^[18] Ibid, [33] (Gray J); [60] (Rares and Tracey JJ).

^[19] Martin, [43].

^[20] Ibid, [45].

^[21] Ibid, [46].

^[22] Ibid, [47].

^[23] Ibid, [48].

^[24] Ibid, [42].

^[25] Comcare v Martinez (No 2) [2013] FCA 439, [77].

^[26] Drenth v Comcare [2012] FCAFC 86, [26].

^[27] As in Re Thappa and Comcare [2013] AATA 629.

^[28] Martinez, [73].

^[29] Ibid, [81].

^[30] Ibid, [82].

^[31] Ibid, [83], citing from Keen v Workers Rehabilitation and Compensation Corporation (1998) 71 SASR 42, 47-8.

^[32] Martin v Comcare [2015] FCAFC 169, [12].

^[33] Hart v Comcare [2005] FCAFC 16, [21] – [23]. See also Reeve, [54]-[56] and [24].