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Hor, Rima --- "Psychiatric Injury in the Workplace: The Implications of Koehler v Cerebos" [2005] SydLawRw 27; (2005) 27(3) Sydney Law Review 557

Case Notes - Psychiatric Injury in the Workplace: The Implications of Koehler v Cerebos


1. Introduction

In Koehler v Cerebos (Australia) Ltd,[1] the High Court confirmed that an employer will not be held liable for psychiatric injury sustained by an employee in the workplace unless such injury is reasonably foreseeable. Specifically, and more contentiously, the High Court asserted that an employee who has contractually agreed to undertake onerous duties cannot subsequently rely on the fact that they lodged persistent complaints about an excessive workload or an inability to cope for their claim for psychiatric injury sustained in the workplace to be successful. Instead, there must be some evidence of psychiatric injury observable by, or known to, the employer such as the employee’s external distress or prolonged absences from work. By requiring that complaints be couched in the language of psychiatric injury, the High Court seems to adopt a more conservative approach than their English counterparts in the House of Lords[2] and Court of Appeal.[3] By focusing on the employee’s contractual agreement, the High Court also appears to favour an approach that reverts back to a form of voluntary assumption of risk, a defence sparingly applied as between employer and employee. Accordingly, in Australia, while not entirely excluded, the possibility of an employer being held liable for psychiatric injury resulting from an employee’s stress in the workplace has been significantly curtailed.[4]

This paper will explore how insistence on early warning signs or clearly manifest symptoms sits uncomfortably with the nature of psychiatric injury, which is typically more complex to detect. To demand such requirements from employees, who may themselves be unaware of the onset of psychiatric injury, intimates that courts are still hesitant in their treatment and understanding of psychiatric illness. Further, the court’s legalistic approach is of some concern. At a time when stress in the workplace is a significant industrial relations and societal problem, it is somewhat unfortunate that the High Court should demonstrate reluctance to recognise that employers should assume some responsibility in managing the stress of their employees, particularly when it has clearly been brought to the attention of management.

2. Background to the High Court Decision

A. Material Facts

The appellant in this case, Ms Koehler, was employed as a sales representative. After her full time position was made redundant, she was re-engaged in April 1996 as a part-time merchandising representative. The letter of engagement reemploying her outlined, inter alia, her hours of work, starting date and car allowance, but made no reference to the duties she was expected to perform. It was correctly assumed that her duties were to be the same as before namely: negotiating sales to independent supermarkets; visiting supermarkets; moving and lifting boxes and setting up the display of goods.

On the first day of her new job, Ms Koehler was given a ‘territory listing’ specifying the areas and shops she was expected to cover. Upon seeing this, the appellant immediately informed her supervisors that she had serious concerns about being able to perform her duties. More specifically, she said that there was ‘no way’ she could reach all the stores outlined in the ‘territory listing’ within 24 hours.

Over the next few months, Ms Koehler continued to inform management that her workload was too intense. She made several complaints in both oral and written form outlining to management that she was working more than eight hours a day and that her area was too large. Evidence at trial indicated that Ms Koehler was performing the same duties she used to perform in five days over three.[5] The appellant indicated that her difficulties could be alleviated by either reducing the number of stores she had to visit or by having her work a fourth day. She even identified the shops that ought to be removed. Despite the relentless nature of the appellant’s complaints, the employer failed to instigate any change to the ‘territory listing’ or modify the appellant’s workload. The employer did not investigate the nature of the complaints any further and did not offer any other assistance. Despite assurances on her first day of work that her workload could be re-evaluated in a month’s time, Ms Koehler continued to perform the same duties for several more months. Significantly, Ms Koehler’s complaints were all related to her capacity to perform the work within the time-frame. It will be critical in the judgments of the Full Court of the Supreme Court of Western Australia and the High Court, that her complaints never indicated that her workload may be directly affecting her health.[6]

Ms Koehler’s difficulties at work culminated in October 1996 when she found that she was unable to lift cartons and felt unwell. She consulted her doctor in regards to a variety of physical symptoms including tiredness, aches and pains and insomnia. Although her complaints were initially physical, her medical practitioner diagnosed that she was in fact suffering from a psycho-physical disorder that also causes anxiety and depression (fibromyalgia syndrome). The appellant was referred to a psychiatrist who diagnosed that she was suffering a depressive illness of a moderately severe nature.

B. Nature of the Claim

The appellant’s claim was grounded in negligence. She argued that the employer had breached a common law duty to provide a safe system of work. At first instance, the appellant also sued for breach of statutory duty derived from s19(1) of the Occupational Safety and Health Act 1984 (WA) requiring employers to provide a safe system of work. By the time the case reached the High Court, the appeal was only concerned with the claim for negligence.

C. Procedural History

In the District Court of Western Australia, Commissioner Greaves found that the appellant’s workload was indeed excessive and that the employer did not need any special skills or qualifications to foresee that this workload could expose the appellant to a risk of psychiatric injury.[7] By refusing to offer the appellant any assistance or change her hours of work, the employer failed in a duty to ensure that all reasonable steps were taken to provide the appellant with a safe system of work particularly as the options open to the employer to rectify the situation were not deemed to be particularly expensive or inconvenient.[8] As the employer was found to be liable in negligence, there was no need for Commissioner Greaves to also consider the claim for breach of statutory duty. The appellant was awarded damages in the sum of $856742.81.

The employer appealed to the Full Court of the Supreme Court of Western Australia (Malcolm CJ, McKechnie and Hasluck JJ).[9] Here, by contrast, it was held that the employer could not reasonably have foreseen that the appellant’s duties of work could have led to a risk of psychiatric injury. Whereas Commissioner Greaves appeared persuaded by evidence of the strenuous workload, the Full Court — consistent with their role at an appellate level — focused on the more technical aspects of the case, and in particular the requirement for ‘reasonable foreseeability’.[10]In the absence of any ‘external signs of distress or potential [psychiatric] injury’, an employer could not be expected to realise their employee was exposed to a risk of psychiatric injury.[11] Ms Koehler appealed to the High Court.

3. High Court Decision

The main judgment in the High Court was delivered by Justices McHugh, Gummow, Hayne and Heydon with a separate but supporting judgment from Justice Callinan. For the purposes of the High Court decision, it was no longer contentious that the appellant ‘sustained and suffered from a recognised psychiatric illness’.[12] It was also conclusively established that the appellant’s work was the cause of the subsequent injury.[13] Accordingly, the High Court had to consider the ‘determinative issue’ of reasonably foreseeability.[14] In assessing whether psychiatric injury was reasonably foreseeable, the High Court outlined the basic principles governing the law of negligently inflicted psychiatric injury in the workplace. The risk of injury must not be far-fetched or fanciful.[15] The duty of care is owed to the particular employee with knowledge of their workload which is why it is significant to consider the nature and extent of work being done and any signs of the risk of psychiatric injury.[16] The principle in Tame v NSW of ‘normal fortitude’ was confirmed as not applicable when assessing the liability of employers.[17] In addition, the duty of care is determined at the time the contract was entered into. The employer cannot be bound by information he or she later acquires about the vulnerability of a particular employee.

Ultimately, the High Court found that there were two factors indicating that the injury was not reasonably foreseeable. Firstly, it was critical that the employee had agreed to undertake the work.[18] This was seen as indication of the employee’s ‘willingness to try’ and her agreement apparently meant she could not have feared for her health.[19] The fact that the parties had made a contract that required a standard of work higher than industry standards was acceptable because the parties freely entered into the contract.[20]

Secondly, the High Court held that there was no reason for the employer to suspect a risk of psychiatric injury.[21] Here, it was held that the signs emanating from Ms Koehler indicated an industrial relations problem not a medical grievance. There were no prolonged absences from work. There were no complaints about the appellant’s health let alone psychiatric injury. The court also emphasised the difference between psychiatric injury and stress.[22] While recognising that some psychiatric illnesses may be caused by stress, the High Court demonstrated considerable reluctance to recognise that all employees are at risk from psychiatric injury because they suffer stress at work.[23]

Although the High Court reached the same conclusion as the Full Court, there was a notable difference in their approach. In particular, the High Court emphasised that viewing the case solely through the lens of reasonable foreseeability may be limiting because it overlooks fundamental aspects of the employment relationship.[24] Instead, the content of duty of care needs to be analysed in conjunction with other obligations that may exist between parties such as their contractual agreement and other statutory responsibilities.

The validity of these arguments and the Court’s overall approach will be considered below.

4. Analysis

A. Reasonable Foreseeability and Psychiatric Injury: Attempting to see what Cannot be Seen

Although described as the ‘next growth area’[25] of claims, the area of psychiatric injury in the workplace remains in its embryonic stages. The first case that was successfully upheld was the relatively recent decision of Walker v Northumberland County Council in 1997.[26] In Australia, it has been estimated that claims for psychological injury could rise by 38 per cent this financial year.[27] Despite this, psychological injury remains an uncertain facet of negligence claims perhaps because psychiatric injury is notoriously more difficult to detect than physical injury.[28] Accordingly, establishing an appropriate test of reasonable foreseeability tends to be shrouded in controversy. Critics note that psychiatric symptoms are easier to fake and even claim that workers should be able to deal with stress.[29] While some of these concerns are valid, most appear antiquated when considering medical research which has long recognised the gravity and legitimacy of psychiatric injury. As Des Butler persuasively argues, there is a need for courts to be consistent with medical trends.[30]

Further, fears about opening up floodgates appear to be unfounded when the English approach has hardly exposed employers to excessive litigation.[31] Yet, it is precisely this fear of an inundation of claims that appears to be underlying Callinan J’s decision. As His Honour notes with some scepticism, the test for reasonable foreseeability is often so broad that ‘With enough imagination and pessimism it is possible to foresee that practically any misadventure, from mishap to catastrophe is just around the corner.’[32] Accordingly, the High Court appears to have limited the scope for which claims for psychiatric injury may arise. While some caution is indeed advisable, the High Court’s requirement for external signs of distress or injury represents a more stringent approach than was discussed in the leading English authority on psychiatric injury in the workplace, Hatton v Sutherland.[33] In this decision, the English Court of Appeal and in particular, the leading judgment of Hale LJ (as she was then) considered four cases relating to psychiatric injury arising from the workplace. The four cases canvassed a range of factual situations. In two of the situations, employees did not inform their supervisors of their stress. In another situation, Mr Barber successfully appealed the decision of the Court of Appeal in Barber v Somerset County Council and this will be discussed further below.[34] Therefore, the only case where the Court of Appeal found an employer to be liable, albeit ‘not without some hesitation’, was where the employee, Mrs Jones, had complained about her workload.[35]

Mrs Jones was an administrative assistant who had to work ‘excessive hours’[36] in order to discharge her duties. Like Ms Koehler, Mrs Jones made her complaints obvious to management including a five-page document outlining her grievances in relation to being overworked. There are some pertinent differences between Mrs Jones’ situation when compared to that of Ms Koehler. For example, and the High Court would find this significant, the hours Mrs Jones was working extended beyond those required in her contract of employment whereas Ms Koehler contractually agreed to undertake her workload. The significance of contractual agreement will be questioned in part (b) below. At this stage, it is sufficient to note that this was not a particularly pivotal factor for the English Court of Appeal. Instead, her Lordship noted that it was critical that Mrs Jones’ employers knew that excessive demands were being placed on her and that despite complaints being made, no assistance was ever provided.[37] Accordingly, the English Court of Appeal stated that:

The question, therefore, is not whether [the problems at work] had in fact caused harm to her health…but whether it was sufficiently foreseeable that they would do so for it to be a breach of duty for the employers to carry on placing unreasonable demands upon her.[38]

Hale LJ identified a number of factors for the court to consider when determining reasonable foreseeability including express warnings or implicit warnings that may come from frequent or uncharacteristically long absences from work.[39] The High Court, by contrast, affirmed that such indicia may be helpful but emphasised that it is not a ‘comprehensive statement of relevant and applicable considerations’[40] preferring to give equal weight to the contractual obligations that may exist between the parties.

Admittedly, Mrs Jones had also made two written complaints claiming that the problems at work were causing harm to her health but she did not identify this harm to be psychiatric injury. Moreover, nowhere in the judgment of Hale LJ did she indicate that the complaints be linked to external signs of distress.[41] The decision in Hatton v Sutherland now needs to be read in conjunction with Barber v Somerset County Council.[42] In this case, the employer ignored Mr Barber’s complaints about stress at work. The House of Lords held that his employer failed to provide a safe system of work. The two decisions indicate that, under English law, an employer may be held liable for psychiatric injury if an employee has clearly indicated problems with their workload and the employer fails to take appropriate steps in response. The onus is placed on the employee to alert the employer of the employee’s inability to cope, not to demonstrate symptoms of psychiatric injury.

The ability of an employee in the circumstances of Ms Koehler to persistently lodge complaints should not be overestimated. Many workers may feel inhibited because of the pressure to portray that they are a competent worker and certainly one who is not suffering a psychiatric illness. For Australian courts to further insist that complaints be couched in the language of psychiatric injury appears unnecessarily harsh. As case law in this area reveals, often the nature of psychiatric injury is such that the employee may not even be aware of the symptoms. Here, both Ms Koehler and her doctor were initially under the impression that she was suffering a physical problem. By the time a definite link between psychiatric injury and workplace conditions can be complained of, the damage may already have been done.

The High Court emphasised that stress and psychiatric injury are distinct conditions.[43] While this is a valid distinction to make, they themselves recognised established medical evidence indicating that stress is one of the most important causes of psychiatric injury arising from the workplace.[44] This link has also been confirmed by research in this area.[45] Despite purporting to search for vital signs, the High Court then appears to overlook the most obvious sign of all — complaints of stress suffered at work.

Therefore, the interpretation of what signs are needed to hold an employer liable represents a subtle point of divergence between Australian and English law. As Peter Handford remarks, imposing more precise preconditions into the realm of the employers’ general duty ‘threatens to derail an important body of case law carefully built up for the protection of employees.’[46]

B. Assessing the Willingness of the Employee

In determining reasonable foreseeability, the High Court placed some emphasis on the fact that Ms Koehler willingly agreed to undertake the duties she had to perform. By this, the High Court acknowledged the fact that Ms Koehler signed the contract. The agreement, according to the High Court, signified that the employer could not have appreciated that there was any risk of psychiatric injury. This line of reasoning that focuses on contractual agreement is of some concern not least because the contract in this case outlined only the ‘bare bones’[47] of the employment relationship and the subsequent agreement was by the Court’s own admission ‘hesitant’ in nature.[48]

The authority for such a presumption is nevertheless consistent with a number of authorities including discussions in Hatton v Sutherland.[49] The principle basically affirms that in the absence of other evident signs warning of the possibility of psychiatric injury, an employer is entitled to assume that the employee is capable of performance if the employee has contractually agreed to undertake the duties.[50] Arguably, the principle is designed to operate in situations when the employee gives the impression that they are managing their workload and insists on continuing their work. As Lord Rodger of Earlsferry discusses in Barber v Somerset County Council, in such instances, an employer can do no more than warn of the dangers — they cannot forcibly prevent the employee from working extra hours if the employee so desires. In Hatton v Sutherland, two of the cases involved employees who decided to keep their concerns and problems to themselves. For example, Mrs Hatton was even seeing a stress councillor but decided not to inform her employer of this.

It appears unpersuasive that the principle should also prevail when the employee has clearly indicated that they are incapable of coping. After all, employers’ duties may need to be read in light of the surrounding context. While it is true that Ms Koehler signed the contract, it is also crucial that from the very first time she saw her ‘territory listing’, she strongly objected to the amount of work she had to perform. Her agreement may be more accurately summarised as ‘reluctant’ rather than ‘willing.’ Nevertheless, the High Court appears disposed to prioritise the formality of the contractual arrangement whilst allowing employers to close their eyes to an employee’s immediate and persistent complaints about the level of the workload. The implication of such an approach is that an employee is expected promptly to refuse to sign a contract if they fear they will not be able to perform. Clearly such an expectation overlooks the reality that many employees may not have the luxury of refusing the opportunity of work.

The High Court’s approach is, once again, unlike the decision taken by the majority of the House of Lords in Barber v Somerset County Council. In that case, even though the contract made reference to employees being required to ‘work such additional hours as may be needed’, it was still found that the employer had breached their duty when the employee complained of the stress of working excessive hours.

The High Court also insisted that reasonable foreseeability must be assessed at the time the contract was entered into as the ‘obligations of the parties are fixed at the time of the contract until and unless they are varied.’[51] As such, an employee is effectively locked into the amount of hours they initially agree to do even if it later emerges that they may have overestimated their abilities and are unable to cope. If a zealous employee ambitiously agrees to take on an intense workload, it would appear that the employer is effectively exonerated from any further requirements to alleviate stress that may subsequently develop once the employee realises and complains of the intensity of their workload.

Although not specifically articulated as such, the analysis of the High Court in regards to Ms Koehler’s contractual agreement bears the hallmarks of a defence of voluntary assumption of risk. In essence, the High Court implicitly argued that as the employee consented to and continued with her strenuous workload, she voluntarily assumed a risk of injury and forfeited her rights to compensation. However, in recent times, the defence of voluntary assumption of risk has been applied strictly and cautiously in the context of employment relationships.[52] It is in very rare circumstances that an argument of voluntary assumption of risk will defeat a claim initiated by an employee against an employer.[53] The House of Lords has also established that an employee’s knowledge of the risk is not, in and of itself, sufficient to exonerate the defendant from any responsibility.[54] The employee must assume not merely the risk of injury but the legal risk consequent upon that injury.[55] Here, the repeated protests of Ms Koehler strongly suggest that she was not willing to bear the legal risk of her injury. Consequently, the judgment of the High Court through its subtle homage to the defence of voluntary assumption of risk appears to take a retrograde step in a field of case law which, in recognition of social and economic changes, has resisted efforts to bind an employee merely by virtue of their contractual agreement to risks that may arise from the employee’s work. The High Court’s approach to this issue reveals a preference for a technical, legalistic approach to resolving such disputes that is inconsistent with the realities of workplace relations and the interactions between employer and employee.

C. Interpretation of a ‘Safe System of Work’

Traditionally, the duty to provide a ‘safe system of work’ has been upheld in a physical sense where the actions (or more commonly, the inactions) of the employer threaten the physical wellbeing of an employee.[56] The judgment in Koehler v Cerebos implies that the High Court is reluctant to extend the concept of a ‘safe system of work’ to encompass an environment that is free from stress. In this regard, it is interesting to compare the judgment of the High Court in Czatyrko v Edith Cowan University handed down contemporaneously.[57] In this case, the High Court once again considered the same piece of Western Australian Occupational Safety and Health legislation[58] and found that the university had breached their duty to provide a safe system of work by failing to implement relatively inexpensive safety mechanisms. The appellant suffered considerable physical injuries. Although this reduces comparison of the cases to a somewhat superficial level, it nonetheless appears that the High Court is more willing to offer protection where the injury was physical rather than psychological. Accordingly, it echoes arguments discussed above that psychiatric injury still struggles to gain the recognition and protection of other forms of injury.

5. Conclusion

The decision in Koehler v Cerebos clarifies a contentious area of the law in terms of when psychiatric injury will be held to be reasonably foreseeable in the workplace. It imposes a stricter requirement for employees who wish to succeed in a claim by insisting their complaints of stress be linked to some external signs of psychiatric injury. The judgment may be interpreted as a cautious decision and the court appears to demand criteria that may not accommodate the true nature of psychiatric injury. Rather than confront the role of stress in the workplace, the decision appears to indicate that stress is an inescapable component of modern workplaces for which the employer will not ordinarily be held liable.

[*] Final year student, Faculty of Law, University of Sydney.

[1] [2005] HCA 15; (2005) 214 ALR 355 (hereafter Koehler v Cerebos).

[2] Barber v Somerset County Council [2004] UKHL 13; [2004] 2 All ER 385.

[3] Hatton v Sutherland [2002] EWCA Civ 76; [2002] 2 All ER 1 (hereafter Hatton v Sutherland).

[4] For liability of employer to family members of the employee, see generally Gifford v Strang Patrick Stevedoring Pty Ltd (2003) 214 CLR 269.

[5] Koehler v Cerebos, above n1 at 357 (McHugh, Gummow, Hayne & Heydon JJ).

[6] Id at 363.

[7] Cerebos (Australia) Ltd v Koehler [2003] WASCA 322 at 32 –43 (hereafter Full Court decision) (Hasluck J).

[8] Koehler v Cerebos, above n1 at 358.

[9] Full Court decision, above n7 at 71.

[10] Role of an appellate court is discussed at 62–68, Full Court decision (Hasluck J).

[11] Id at 75.

[12] Koehler v Cerebos, above n1 at 357 (McHugh, Gummow, Hayne & Heydon JJ).

[13] Ibid.

[14] Id at 360.

[15] Id at 362; and 367 (Callinan J); Wyong Shire Council v Shirt [1980] HCA 12; (1980) 146 CLR 40.

[16] Koehler v Cerebos, above n1 at 362.

[17] Ibid; Tame v State of New South Wales; Annetts v Australian Stations Pty Ltd [2002] HCA 35; (2002) 211 CLR 317 at 322–333.

[18] Koehler v Cerebos, above n1 at 361.

[19] Ibid.

[20] Ibid.

[21] Ibid.

[22] Id at 362.

[23] Ibid.

[24] Koehler v Cerebos, above n1 at 358.

[25] Nicholas Mullany, ‘Fear for the Future: Liability for Infliction of Psychiatric Disorder’ in Nicholas Mullany (ed), Torts in the Nineties (1997) at 107 referred to by Hale LJ in Hatton v Sutherland, above n3 at 1.

[26] [1994] EWHC QB 2; [1995] 1 All ER 737.

[27] Marcus Priest, ‘Drawing a Line in the Sand on Job Negligence’ Australian Financial Review (7 April 2005) at 3.

[28] Hatton v Sutherland, above n3 at 4 (Hale LJ).

[29] Discussed in David Mason, ‘Occupational Stress — The Final Word?’ (2004) 154 NLJ 642.

[30] Des Butler, ‘An Assessment of Competing Policy Considerations in Cases of Psychiatric Injury Resulting from Negligence’ (2002) 10 TLJ 13.

[31] Brenda Barrett ‘Recent Cases — Notes — Employers’ Liability for Stress at the Work Place: Neither Tort nor Breach of Contract’ (2004) 33 Industrial Law Journal 343 at 344.

[32] Koehler v Cerebos, above n1 at 367 (Callinan J).

[33] Hatton v Sutherland, above n3.

[34] Barber v Somerset County Council, above n2.

[35] Id at 406 (Lord Rodger).

[36] Id at 404 (Lord Rodger).

[37] Id at 406.

[38] Ibid.

[39] Id at 399 (Lord Rodger).

[40] Koehler v Cerebos, above n1 at 360.

[41] Also noted in Peter Handford, ‘Work Stress: Rubbing Salt in the Wounds?’ (2004) 12 Tort L Rev 126 at 128.

[42] Above, n2.

[43] Koehler v Cerebos, above n1 at 362.

[44] Ibid.

[45] Elizabeth Coppins ‘Psychiatric Injury in Employment’ (1997) 8 Auckland University Law Review 387.

[46] Handford, above n42 at 128. Although Handford’s comments were directed towards the Full Court decision, they are equally applicable to the decision of the High Court.

[47] Koehler v Cerebos, above n1 at 356.

[48] Id at 363.

[49] Hatton v Sutherland, above n3 at 36.

[50] Ibid.

[51] Koehler v Cerebos, above n1 at 362.

[52] Rosalie Balkin & Jim Davis, Law of Torts (3rd ed, 2004) at 376.

[53] Imperial Chemical Industries Ltd v Shatwell [1964] UKHL 2; [1965] AC 656.

[54] Smith v Charles Baker & Sons [1891] AC 325 at 355 (Lord Watson).

[55] Balkin & Davis, above n53 at 376.

[56] William Creighton & Andrew Stewart, Labour Law (4th ed, 2005) at 602.

[57] [2005] HCA 14; (2005) 214 ALR 349.

[58] Occupational Safety and Health Act 1984 (WA) s19(1).

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