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Accident Compensation Cases

Gilbert v Attorney-General (EMC, 21/06/00)

Judgment Text

COLGAN J (reserved):
(1)
Introduction 
Christopher Gilbert sues his former employer, now the Department of Corrections (Community Corrections Service), for special, general compensatory and exemplary damages. Together these claims exceed $900,000. They are based upon allegations of breaches of Mr Gilbert's employment contract. 
In October 1997 Mr Gilbert brought proceedings in the Employment Tribunal claiming he had been unjustifiably constructively dismissed on or about 29 March 1996. Mr Gilbert's claim to personal grievance was removed from the Employment Tribunal to this Court and was heard at the same time as his claims at common law. This judgment determines both the statutory and common law proceedings. 
The case raises important questions of employers' liability to employees about health and safety in employment and, more particularly, the psychological and general health and wellbeing of employees. It is not simply a case about whether Mr Gilbert should be compensated for losses or harm suffered by him as a result of being in a stressful and potentially hazardous job. Although those are necessary constituents of his claims, he must also establish the existence of contractual health and safety duties by his employer, their breach, causation or contribution to those losses or harms by the breaches, and that the losses or harms were reasonably foreseeable consequences of the breaches. 
(2)
The issues on the pleadings 
(2.1)
General issues 
The end of Mr Gilbert's long employment as a probation officer came about by his retirement on medical grounds. He says this was forced upon him by the multiple and long-standing breaches by his employer of terms and conditions of his employment. Mr Gilbert says his working environment was unsafe and harmful, and his employer was responsible for this. Mr Gilbert says his employer knew his working environment was unsafe, not least because he, other probation staff and executives within the department, repeatedly warned it of this and sought to change that position. The plaintiff says the defendant failed and even refused to do so, resulting in substantial and long-term harm to his health and wellbeing. 
Mr Gilbert says four factors together created the dangerous environment. These were, first, he was subjected to work overload: second, his employer failed or refused to fill vacancies in established probation officer positions: third, his employer failed or refused to address an excess of workload over numbers of positions: and, finally, his employer failed or refused to address the emergence of a pattern of rising staff absences through ill health. Mr Gilbert says these factors, together and over time, caused his ill health and eventual collapse resulting in his resignation. 
Mr Gilbert says his enforced resignation came at least 14 years before he would otherwise have retired as a probation officer. He says he has not obtained alternative employment and has no prospect of doing so. Mr Gilbert says he has lost his career, his profession, opportunities for further research and contribution to his specialist interests, and he has lost his health. Although he may or may not put it this way or so starkly, Mr Gilbert's case is that he is a broken man and his employer broke him. 
(2.2)
Breach of express terms 
Mr Gilbert's claim for damages has two causes of action. The first is breach of contract. The second is unjustified constructive dismissal. The defendant admits it was an express term of Mr Gilbert's employment that, as a “good employer”, the department would operate a personnel policy containing provisions necessary for the fair and proper treatment of employees including good and safe working conditions and opportunities for the enhancement of the abilities of individual employees: s 56 State Sector Act 1988. Also admitted were express contractual terms that the employer would abide by workplace health and safety legislation. Until 31 March 1993 this was the Factories and Commercial Premises Act 1981 and, after that date, the Health and Safety in Employment Act 1992. 
(2.3)
Breach of implied terms 
Mr Gilbert says there were also implied contractual terms. The defendant accepts it was an implied term of his employment that it would not conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of trust, confidence and fair dealing between the parties. However it denies the existence of other implied terms asserted by Mr Gilbert. These include: 
“(a)
The defendant would take all reasonable care to avoid exposing the plaintiff to unnecessary risk of injury or further injury to his physical or psychological health and in particular would provide and maintain a safe system of work. 
(b)
The defendant would take all reasonable care not to cause the plaintiff physical or psychological injury or further injury by reason of the volume, character, nature or circumstances of the work which the plaintiff was required to perform. 
 
(d)
The defendant would be a good and considerate employer, especially in dealing with the plaintiff's concerns in relation to workplace health and safety. 
(e)
The defendant would provide a working environment and management processes that were reasonable so that undue stress would not be caused to the plaintiff. ”
The employer denies breaching the express or implied terms of Mr Gilbert's employment contract by requiring him to undertake work which was continually excessive in volume, complexity and personal stress, and requiring him to undertake work without the resources and/or supportive environment he required in order to carry out his employment safely. 
The defendant also denies that after 1995 Mr Gilbert was required by his employer to continue to work while medically unfit and to undertake work which was excessive in volume, unreasonable in extent, and which exceeded his duties and contractual obligations as a probation officer. 
The employer also denies Mr Gilbert's allegation that from 1 April 1993 (the date of commencement of the Health and Safety in Employment Act 1992) it failed to provide him with a safe working environment, to avoid harm to him at work, to provide proper professional supervision of his work, and to ensure that the plaintiff was not harmed by the inaction of his superior controlling officers. 
The employer denies that from 7 December 1993 (the date of commencement of the employer's Human Resources Manual, which was part of his employment contract), it acted in breach of the manual by creating and continuing a working environment at Mr Gilbert's place of work in South Auckland involving excessive workloads and inadequate or ineffective management. The employer also denies failure to engage adequate staff or to manage and allocate an achievable level of work to the staff available, so that it placed the plaintiff under continuing pressure and stress. 
Finally, the employer denies that after July 1995 it continued to manage Mr Gilbert's employment through his then supervising manager when the employer knew or should have known that there were serious concerns about the propriety of that supervising manager's behaviour which, whether true or not, required investigation or resolution. The employer denies Mr Gilbert's assertion this was one reason why the management of this supervisor was inadequate, deficient and in breach of the employer's contractual obligations to provide the plaintiff with competent management, an effective operating environment, and proper professional supervision. 
The defendant denies Mr Gilbert's allegation that the employer provided an unsafe system of working and an unsafe working environment. Likewise, the defendant denies that the manner in which Mr Gilbert was dealt with when he was ill led or contributed to his medical retirement from employment. 
The defendant has denied on the pleadings that it is now unlikely Mr Gilbert will ever work again and has denied he is more than 75 percent disabled. 
I do not propose to set out the particulars of each of these alleged breaches just recorded: they appear in the plaintiff's second amended statement of claim dated 10 August 1998. My conclusions on them will emerge from the subsequent summary of relevant evidence. 
(2.4)
Affirmative defences 
The defendant raises some affirmative defences to these allegations of breach of contract. The defendant says Mr Gilbert's workload was generally less (numerically) than those of other full-time probation officers and he did not, over the period alleged, complain that his own personal workload was continually excessive. 
In response to the allegation that the employer failed to provide proper supervision of Mr Gilbert's work, the defendant says that he always maintained he was unaware of anyone inside or beyond the Otahuhu office who was experienced enough to supervise him. Further, the defendant says the plaintiff chose not to take advantage of the supervision available from his superiors and did not nominate anyone outside his Otahuhu office as a possible external supervisor. 
The defendant says although there were serious concerns about Mr Gilbert's supervising manager between mid-1994 and 1996, these were investigated and resolved by the department. The defendant also says the work of a probation officer may, by its inherent nature, be stressful at times, and if the plaintiff undertook full duties, it was as a result of his choosing and not because of any direction by it to do so. The defendant also says a departmental document dealing with maximum workload guidelines was not contractual or ratified by the employer or Mr Gilbert's service organisation. 
(2.5)
The losses suffered 
Mr Gilbert's claims include compensation for loss of his career and future earnings. He says at the time of his forced retirement, there was a minimum of 13 years remaining until he reached the age of eligibility for New Zealand superannuation under the Social Welfare (Transitional Provisions) Act 1990. He claims his loss, using calculations based on his salary at the time of termination, is $501,384. Mr Gilbert says he incurred medical costs of $13,980 for hospital visits, medical tests and doctors' fees and claims reimbursement of these. 
Mr Gilbert claims he has a reduced capacity to enjoy normal domestic, social, and working life and relationships and has suffered mental distress because of this. He says his quality of life has suffered as a result of his serious illness including, for example, that he now sleeps excessively and can only undertake minimal household tasks. Mr Gilbert says as a result of his illness, his social activities have been curtailed and he has become socially isolated. He says he has been unable to undertake many leisure or recreational pursuits. He says he is socially embarrassed because he has no occupation, and is seriously unwell. He asserts he feels humiliated, embarrassed, powerless, and despondent. Mr Gilbert says he is financially constrained and was forced to consider such major steps as refinancing and selling his house when he did not have the capacity to deal with such stressful issues. He says as a result of his illness and financial circumstances, he has been unable to undertake part-time study in an alternative field in which he was interested. He says he was subjected to numerous medical examinations, many of them of indefinite outcome. Mr Gilbert says his future is most uncertain and bleak because of his health and career concerns and his reduced life expectancy. For these losses or injuries, Mr Gilbert claims $300,000. 
(2.6)
Exemplary damages 
Mr Gilbert says the actions of his employer, as summarised above, were in gross violation of his employment contract and deserve sanction and punishment. Mr Gilbert claims exemplary damages of $100,000 for the outrageous conduct of the defendant. 
(2.7)
Mr Gilbert's own causative or contributory actions 
The defendant says if it is found that any of the alleged acts or omissions constitute a breach of contract, then any loss or damage suffered by the plaintiff was caused wholly by his own actions or, alternatively, Mr Gilbert's contributed to that damage. In particular, it says Mr Gilbert failed to advise his managers of any or all concerns he had about the nature, mix or number of cases of his personal workload. The defendant claims Mr Gilbert failed to negotiate a different workload if his was causing him stress to the extent it was affecting his physical and mental health. It says that by refusing to use whatever means of supervision were available to him, whether internal or external to the Probation Service, Mr Gilbert contributed to that damage by his requesting cases concerning violent and/or sexual offenders. The defendant also says Mr Gilbert caused or contributed to his injuries by continuing to smoke heavily despite a non-smoking policy at work and despite knowing the risks to his health. 
The employer's case is that Mr Gilbert chose to retire on medical grounds when options such as reduced hours or a transfer to another office were available to him. Mr Gilbert is also said to have chosen to disregard medical advice about his heart condition and did not take appropriate steps to minimise stress, either by negotiating a light or different workload mix or suggesting he work part time. 
Finally, the defendant pleads an additional affirmative defence permitted by leave during the trial. It says Mr Gilbert is responsible for his plight by not acknowledging and not disclosing to his employer the existence of his depression and failing to take steps to properly address it with medication. It also claims he chose to carry on with his work contrary to changes to the manner in which probation work was conducted under the Criminal Justice Act 1985, thereby causing stress to himself. 
(2.8)
Personal grievance (unjustified constructive dismissal) 
In his second cause of action, unjustified constructive dismissal, Mr Gilbert says that he had no option but to retire on medical grounds when he did, following the defendant's unreasonable or unfair conduct as summarised above. Mr Gilbert says his employer's breaches of contract led him to resign. He says his constructive dismissal was unjustifiable and resulted in an early ending to his career, causing him to suffer significant loss of remuneration. He says he has not worked since his resignation and is now unlikely to ever work again in his chosen field, or at all, and is likely to rely on an invalid's benefit. 
Mr Gilbert says his constructive dismissal has also caused him to suffer damage to his reputation, loss of dignity, injury to his feelings, and humiliation. He seeks reimbursement of lost wages under s 40(1)(a)(i) Employment Contracts Act 1991 (the sum of $501,384), the balance of 13 years of working life at his resignation annual rate of salary of $38,568. Mr Gilbert also claims, under s 40(1)(c)(i) Employment Contracts Act 1991, the sum of $100,000 as compensation for humiliation, loss of dignity, and injury to feelings arising out of his unjustified constructive dismissal. 
(2.9)
The issues for decision summarised 
Although they overlap in many respects, the questions posed by the pleadings are different in the common law and the personal grievance claims. The substantive issues I have to decide in both causes of action can be summarised as follows: 
(1)
What were the contractual duties owed by his employer to Mr Gilbert? 
(2)
Did the employer breach these? 
(3)
What injuries/losses did Mr Gilbert suffer? 
(4)
Were the injuries/losses caused or contributed to by the breaches? 
(5)
Were Mr Gilbert's injuries/losses reasonably foreseeable to the employer? 
(6)
What monetary compensation should be paid for those injuries/losses? 
(7)
Were the employer's breaches of contract repudiatory so that Mr Gilbert was entitled to accept that repudiation by resigning and was therefore constructively dismissed? 
(8)
If so, was Mr Gilbert's dismissal unjustified? 
(9)
If so, what remedies is Mr Gilbert entitled to for unjustified dismissal? 
(10)
Alternatively, did Mr Gilbert's employer breach express and implied terms and conditions of his contract of employment? 
(11)
If so, were such breaches repudiatory of the employment contract? 
(12)
Did the employer's breaches of contract cause Mr Gilbert's ill health that was the basis of his resignation? 
(13)
If so, what damages is Mr Gilbert entitled to? 
(2)
Preliminary jurisdictional issues 
(3.1)
The 6-year limitation 
Because of s 4(1) of the Limitation Act 1950 Mr Gilbert is only able to sue on causes of action (breaches of contract) that arose within 6 years before the proceedings were issued in mid-July 1997. Although the defendant pleaded that Mr Gilbert is statute-barred, counsel for the Attorney-General conceded at the end of the trial that the events relied upon by the plaintiff as breaches of contract occurred within the limitation period. No question of statutory limitation now arises. 
(3.2)
The accident compensation coverage limitation 
The Attorney-General put forward a second affirmative defence which, if successful, would exclude much (but not all) of the compensation claimed. This relied upon the statutory bar to proceedings in s 14(1) Accident Rehabilitation and Compensation Insurance Act 1992. Although now repealed, that Act governed the events in question and the plaintiff's claim. The defendant says Mr Gilbert's claim for compensatory damages arises directly or indirectly from personal injury. Also in closing submissions, I noted leading counsel for the defendant, Mr Banks, to concede that the nature of the damage to Mr Gilbert's health emerged in evidence and did not arise out of personal injury. Because, however, the defendant's position did not go so far as to expressly abandon that specific defence, I now set out my reasons for concluding that Mr Gilbert's claim is not so barred. 
The Accident Rehabilitation and Compensation Insurance Corporation confirmed in writing that it accepted that the proceedings were not statute-barred under s 14(1) and waived its opportunity to be heard in, or be a party to, this proceeding under s 14(5). Section 14(1) provided: 
14. Application of Act excludes other rights—(1) No proceedings for damages arising directly or indirectly out of personal injury covered by this Act or personal injury by accident covered by the Accident Compensation Act 1972 or the Accident Compensation Act 1982 that is suffered by any person shall be brought in any Court in New Zealand independently of this Act, whether by that person or any other person, and whether under any rule of law or any enactment. ”
Section 8 specified that the 1992 legislation applied to personal injury occurring in New Zealand on or after 1 July 1992 for which there was cover under the Act. 
“Personal injury” is defined in s 4 as follows: 
“(1) For the purposes of this Act, ‘personal injury’ means the death of, or physical injuries to, a person, and any mental injury suffered by that person which is an outcome of those physical injuries to that person, and has the extended meaning assigned to it by section 8(3) of this Act. 
(2) For the purposes of this Act, no cardio-vascular or cerebro-vascular episode shall be regarded as personal injury unless— 
(a)
It is a result of medical misadventure; or 
(b)
It is a work injury by virtue of section 6(1) of this Act. ”
One of Mr Gilbert's conditions the subject of the proceeding, is cardiovascular (variant angina) which, to be “personal injury” must also be a “work injury”.Section 6 defined “work injury” as follows: 
“(1) For the purposes of this Act, ‘work injury’, in relation to any person, means personal injury arising out of and in the course of employment of that person; and includes a cardio-vascular or cerebro-vascular episode where— 
(a)
That episode is caused by physical effort or physical strain arising out of and in the course of employment; and 
(b)
That physical effort or physical strain is abnormal in application or excessive in intensity for the person suffering it. 
(2) Personal injury that is medical misadventure does not arise out of and in the course of employment unless it results from treatment by a registered health professional on behalf of the employer at a place of employment under the control of the employer. ”
There is no suggestion that Mr Gilbert's cardiovascular condition, the subject of the proceeding, was caused by physical strain or effort, and therefore does not fall within the definition of a work injury. 
I accept, on the evidence, Mr Gilbert has not suffered an “accident” which, for the purposes of the legislation, is defined as: “A specific event or series of events that involves the application of a force or resistance external to the human body and that results in personal injury, but does not include any gradual process … ” 
To fall within the scope of the legislation, Mr Gilbert's injuries must have been “a gradual process, disease, or infection arising out of and in the course of employment”. This description is taken from s 7, which provided: 
7. Personal injury caused by gradual process, disease, or infection arising out of and in the course of employment—(1) Personal injury shall be regarded as being caused by gradual process, disease, or infection arising out of and in the course of employment only if— 
(a)
In respect of a period that ended on or after the 1st day of April 1974, the employment task performed by the affected person, or the environment in which it was performed, had a particular property or characteristic which caused or contributed to that personal injury by gradual process, disease, or infection; and 
(b)
The property or characteristic is not found to any material extent in the non-employment activities or environment of that person; and 
(c)
The risk of suffering that personal injury is significantly greater for persons performing that employment task in that environment than for persons who do not perform that task in that environment. 
(2) Nothing in subsection (1) of this section shall require that the property or characteristic be present throughout the whole of the person's employment. 
(4) Notwithstanding anything in subsection (1) of this section, personal injury that is related to non-physical stress shall be deemed not to have been caused by gradual process, disease, or infection arising out of and in the course of employment. ”
Important is the exclusory phrase above in subs (4)“ … personal injury that is related to non-physical stress shall be deemed not to have been caused by gradual process, disease, or infection arising out of and in the course of employment”
There are cases reinforcing these conclusions. In WDS v ARCIC unreported, Judge Beattie, 7 January 1998, DC Christchurch 1/98 DCA169/93, Judge Beattie concluded that “emotional stress and tension” caused by “continual emotional trauma whilst working in an unsatisfactory work environment” did not constitute personal injury by gradual process under s 7. The stress factors that caused the post-traumatic stress disorder were non-physical in quality. 
Similarly in AB v ARCIC (1996) 1 BACR 336 Judge Ongley concluded physical injury caused by non-physical pressure or influence was not personal injury covered by the Act. The Judge found that ss 4 and 7(4) excluded mental injury that was not an outcome of physical injury and also personal injury that was related to non-physical stress. 
Finally in ETN v ARCIC unreported, Judge Beattie, 27 October 1998, DC Auckland 227/98, Judge Beattie held s 7(4) is concerned entirely with physical cause, that is the cause must be a physical stimulus, regardless whether the injury manifests itself physically. It is Mr Gilbert's case that his workload and working environment caused physical as well as psychological harm to him but that these injuries were caused by non-physical stress. 
As Mr Rennie for the plaintiff pointed out, before 1992, such injuries as were suffered by Mr Gilbert were covered by the accident compensation legislation. Such coverage was, however, removed from that date, requiring the plaintiff to sue in proceedings such as these to be compensated. 
Mr Rennie's submissions on this question, which I have summarised above and I accept as a correct statement of the law, were not contradicted or even responded to by Mr Banks. Although jurisdiction cannot be conferred either by consent or in the absence of opposition, I find no aspect of Mr Gilbert's claim is statute-barred. 
(4)
Orders prohibiting publication of evidence and other matters 
On Friday 20 November 1998, the eve of the trial, counsel for the Attorney-General applied ex parte in Chambers for an order prohibiting the publication or broadcast of any details of alleged conduct or behaviour criticised by the plaintiff in connection with this case and directed at any member or former member of the staff of the Department of Corrections at its South Auckland offices. In a judgment issued on the same day under AC41E/98, Goddard CJ made an order in these terms. 
Some time at the commencement at the trial was taken up with this and related questions concerning allegations of misconduct made against another employee of the Department of Corrections and its predecessors. On 23 November, by consent, I discharged the order made on the previous Friday by Goddard CJ. In substitution I made the following order: 

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