Performance appraisal held to be a defence to claim for psychological injury but Worker gets a fresh arbitration on appeal | Tran v Westpac Banking Corporation [2018] NSWWCCPD4

Thi Bick Van Tran (the appellant) was employed by Westpac Banking Corporation (the respondent) as a business analyst.
In October 2015, Ms Tran received an unfavourable performance review from her manager. After attempts to change the performance review were unsuccessful, the appellant was placed on formal performance management.

On 14 March 2016, and after returning to work following a period of carer's leave, the appellant was invited to attend a performance management interview on 17 March 2016. However, the appellant was off work on due to "stress" from 15 March 2016 to 24 March 2016. On 12 April 2016, the appellant was again invited to attend a performance management interview but it was put on hold when she lodged a "grievance", alleging she was bullied and harassed by her manager.

The appellant was interviewed by the respondent's human resources department on 22 April 2016 about the "grievance", and on 13 May 2016, she was informed that her allegations against her manager had been dismissed because they were "unsubstantiated". It was recommended that the appellant be provided with a structured performance improvement plan and training.

On 26 May 2016, the appellant received an email from her manager regarding training. However, the appellant did not return to work and consulted a psychologist, Dr Selwyn Smith. On 26 July 2016, the appellant lodged a workers compensation claim for psychological injury.

On 8 August 2016, the respondent issued a section 74 notice accepting that the appellant had sustained a psychological injury but relying on section 11A of the 1987 Act in defence of the claim. Section 11A of the 1987 Act provides that no compensation is payable for a psychological injury wholly or predominately caused by reasonable action taken, or proposed to be taken, by or on behalf of an employer with respect to performance appraisal. The respondent subsequently issued two further section 74 notices dated 22 August 2016 and 28 April 2017.

The appellant commenced proceedings in the Workers Compensation Commission of New South Wales (WCC) alleging psychological injury on 2 June 2016 "as a result of the inappropriate behaviour" of her manager. The dispute proceeded to an arbitration hearing on 31 July 2017 before Arbitrator Wynyard (the Arbitrator). At the arbitration hearing, the appellant amended the application to substitute the date of injury to 26 May 2016.

In a Certificate of Determination dated 13 September 2017 (the COD), the Arbitrator entered an award in favour of the respondent.

The Arbitrator considered "it clear" that 26 May 2016 was the date of injury relied on by the appellant "as being the date of personal injury defined under section 4(a) of the 1987 Act – commonly referred to as a 'frank injury''". The Arbitrator relied on the appellant's evidence that she felt "intimidated, stressed and useless" after receiving the email from her manager on 26 May 2016 regarding training. The Arbitrator noted that the email was not tendered and he was not satisfied with the appellant's description of it. The Arbitrator considered that the appellant's case was "untenable" in establishing injury on 26 May 2016 because neither Dr Smith, nor the respondent's expert, Dr Vickery, referred to the events on 26 May 2016.
The Arbitrator did not consider it necessary to select a particular date of injury, stating that the evidence was clear that the appellant sustained a psychological injury at work, giving rise to a consideration of section 11A of the 1987 Act.

The Arbitrator accepted that both Dr Smith and Dr Vickery concurred that the appellant had a psychological injury and that it arose as a result of her experiences with her manager regarding performance appraisal. The Arbitrator was satisfied that the respondent's actions were reasonable. The Arbitrator concluded that the appellant's psychological injury "resulted from her inability or unwillingness to upskill"'.

Ultimately, the Arbitrator entered an award for the respondent. The appellant appealed the Arbitrator's decision. The grounds of appeal included the following issues:

• Whether the Arbitrator erred in not finding a date of injury; and

• Whether the Arbitrator erred in accepting a section 11A defence.

On 8 February 2016, Deputy President Snell (the Deputy President) revoked the COD and remitted the matter for re‑determination by another Arbitrator.

The Deputy President considered that the transcript of the arbitration hearing was unreliable, stating that it was frequently impossible to follow the submissions of the parties. The Deputy President formed the view that the "shortcomings" in the transcript "potentially could impede [his] ability to deal with the appeal pursuant to section 352 of the [1998] Act".

A teleconference was convened on 17 January 2018 to explore whether the parties could reach an agreement on the submissions, including whether the appellant presented the claim as one based on "a frank incident" or "the disease provisions'". Relevantly, the parties were unable to reach an agreement.

The Deputy President referred to the decision of Aluminium Louvres and Ceilings Pty Ltd v Zheng [3]. In Zheng, there was no sound recording available of the arbitration hearing. However, the Deputy President decided the appeal based on an undisputed "narration" from the employer's solicitor. Bryson JA, with Handley JA and Bell J agreeing, accepted that the Deputy President was not in error in deciding the appeal without a transcript of the arbitration hearing. However, His Honour stated that the absence of the sound recording was a "serious shortcoming'" because it greatly impeded the right of appeal. His Honour noted that the absence of a recording could lead to a rehearing but it would not be automatic.

Similarly, in Wyong Shire Council v Paterson [4] the transcript of the arbitration hearing was unavailable but the Deputy President conducted an appeal anyway. The employer argued it had been prejudiced by the lack of a transcript. However, Giles JA, with Hodgson JA and Brownie AJA agreeing, said "absence of [a] transcript is not a passport to a…fresh arbitration…even if…all concerned thought that the transcript would be forthcoming if necessary". His Honour said the lack of a transcript could be accommodated by evidence as to what was said and it came down to whether the Deputy President considered that (s)he could properly carry out the task in the absence of the transcript.

In the present case, the parties were unable to agree on the submissions made at the arbitration hearing, particularly whether the appellant's case was based on "a frank incident" or "the disease provisions". The Deputy President also noted that the Arbitrator's handwritten notes were unavailable.

The Deputy President concluded that whether the Arbitrator erred in dealing with the "injury" issue was fundamental to the outcome of the appeal, concluding that he could not properly decide the appeal in the absence of a reliable transcript. As a result, the Deputy President revoked the COD and remitted the matter for re‑determination by another Arbitrator.
 

Where a transcript of an arbitration hearing is unavailable or incomplete, on appeal, the Deputy President has discretion to decide the appeal. Relevant to the decision is if there is evidence as to what was said, such as an undisputed version of events and/or notes from the Arbitrator.

The section 11A defence is commonly relied upon by employers in cases of psychological injury. The onus of establishing a section 11A defence is on the employer and there are three limbs: i) whether the "whole" or "predominate" cause of the worker's injury was the action taken by the employer; ii) whether the employer took or proposed to take the action in the relevant category; and iii) whether the employer's actions were reasonable.

It is generally accepted that medical evidence is required, commenting on whether the whole or predominate cause of the injury was the action alleged [5]. It also must be shown that the action taken was reasonable. The test of "reasonableness" is objective and the rights of the worker must be weighed against the objectives of the employer [6].