In the decision of Woolworths Limited v Perrins, the Court of Appeal considered whether ‘management action’ taken by Woolworths was in breach of their duty to their employee, Perrins, leading to his psychiatric injury.

The facts

The respondent, Trevor Perrins, was employed at the Woolworths’ Larapinta Distribution Centre as an order selector, forklift operator and truck unloader commencing as an employee in May 2008. Mr Perrins had an extensive history of drug and sexual abuse from age 12. He blamed his former partner for suffocating his eight month old child whilst on drugs and he had been incarcerated for drug offences, break and enters and driving whilst disqualified.

On application for employment with Woolworths, Mr Perrins completed two pre‑assessment forms in April 2008 and December 2008 in which he denied any pre‑existing physical or emotional factors which would impact negatively on his performance. He also denied he was on any medication at the time of completion of the forms or recovering from any illness.

In late 2008, Mr Perrins applied to join a management training programme. He was accepted on the programme by Woolworths in a letter of offer of 2 February 2009. Shortly prior to Woolworths’ offer, Mr Perrins claims that he told the Logistics Manager for Woolworths, Mr Rodriguez, his entire history of drug abuse, loss of his child, criminal history and the fact he suffered depression.

The management programme was due to commence in July 2009. On 6 July 2009, a week before the commencement of the programme, the HR Manager, Ms Render, learnt that Mr Perrins had been counselled for absenteeism, having reach 489.32 hours over a period of 12 months, of which 358.75 hours were for the period Mr Perrins was in gaol. Woolworths had in place a policy whereby workers were not to exceed 100 hours off work over a six month period. If a Woolworths’ employee was in breach of this policy they were not permitted on the management programme. Ms Render implemented this policy and removed Mr Perrins from the programme.

During a discussion with Ms Render on 6 July 2009 regarding the plaintiff being removed from the programme, Mr Perrins said he had family issues and was stressed. However, he claimed his issues had been sorted out and everything was fine. Ms Render gave Mr Perrins a Woolworths’ Standard Individual Performance and Development Programme so that Mr Perrins was clear on what the competencies were that the company required for the trainee management programme.

On 17 May 2010, Mr Perrins again was offered and accepted a place on the management training programme. Mr Perrins claims he sought reassurance from Ms Render that he would definitely start the programme. He said‘because if I’m going to go through the same thing I’ve just been through I don’t think I could handle it.’ On or about 1 July 2010, Ms Render decided to remove Mr Perrins from the programme due to further absenteeism. Ms Render tried to contact Mr Perrins on the telephone to advise him of her decision but was unable to do so. On 5 July 2010, Mr Perrins attended at the Distribution Centre expecting to start the programme. He was informed by another HR Manager, Mr Cook, of Ms Render’s decision to remove Mr Perrins from the programme. Mr Perrins immediately felt unwell, went home and slept for days and eventually sought medical treatment. His was later diagnosed with a psychiatric illness.

Reasonable management action

Mr Perrin alleged in each allegation of negligence an act or omission involving ‘unreasonable management action’:

  1. Ms Render could have made timely enquiries of the payroll clerks and if she had done so, would have learnt that Mr Perrins’ absenteeism was at an unacceptable high level.
  2. The failure to advise him that the issues related to the first withdrawal from the programme were ongoing.
  3. Having wrongly picked the plaintiff for the course, Woolworths acted insensitively in its handling of his removal.

The court held that to deny Woolworths its rights to control its own process, as the first and second allegations required, was to ignore entirely Woolworths’ interest. Woolworths’ intentions were to invest time, money and personnel in training future leaders of the company.

Mr Perrins argued that due to a casual conversation with a manager in which Mr Perrins revealed something of his past, Woolworths came under a duty of care not to rely on their own criteria in respect of that employee, and if it did so, Woolworths are liable for the consequences on that employee’s reaction to their reliance.

His Honour noted in the matter of Koehler v Cerebos the High Court’s position was that the duty owed to an employee to protect the employee from psychiatric harm does not extend to injuries suffered from undertaking the very obligation imposed by the employment contract. McMeekin J pointed to the terms contained in the two letters of offer for the trainee programme in that Woolworths expressly informed the plaintiff that he was not guaranteed a leadership position even if he successfully completed the course. Woolworths reserved its rights to transfer Mr Perrins back to his previous role if the plaintiff was failing to fulfil the requirements of the position during the programme. Both parties operated on the assumption that the thwarting of the plaintiff’s ambition was a possible outcome and Mr Perrins had the capacity to deal with disappointed ambition.

Reasonable foreseeability

His Honour Justice McMeekin did not accept the trial judge’s findings that the treatment Mr Perrins received ‘would have a likelihood of causing psychological damage, and even psychiatric damage, to someone in robust health.’His Honour pointed out that disappointed ambition was commonplace in the employment situation, but psychiatric decompensation was not. McMeekin J did not accept that Woolworths had notice of any vulnerability.

If Mr Perrins coped perfectly well with his disappointment on the first occasion why would Woolworths assume it would be disastrous to Mr Perrins’ psychiatric health if he was again removed from the programme. His Honour said there was no reliable evidence of the conversations with Mr Rodriguez and Ms Render and Woolworths had no notice of the vulnerability. Even if assuming the conversations took place, they could not have alerted a reasonable employer that Mr Perrins was liable to decompensate into a psychiatric illness.

Credit

His Honour did not accept the evidence the plaintiff was bullied, which was causative of the first symptoms of injury. This allegation could not be supported on the evidence and he specifically noted was not pleaded in the Statement of Claim. His Honour also concluded that the plaintiff fell into a class of witness whose evidence ought to be rejected unless it was inherently probable or confirmed by other cogent evidence.

McMeekin J concluded that the repeated focus by the plaintiff’s legal representatives on what was an ‘unreasonable management action’ did more to obscure than expose what was in issue. Woolworths’ submissions on appeal was that an employer can be as unreasonable as it pleases provided it does not breach its duty of care. In conclusion, there was no foreseeable risk of injury against which Woolworths was required to guard. The appeal was allowed and the judgment at first instance was set aside. The respondent was ordered to pay Woolworths’ costs of and incidental to the trial and appeal.

Click here to read the decision.