When is an injury suffered as a result of reasonable administrative action? – Comcare v Martin [2016] HCA 43

Peta Martin (the worker) was employed by the Australian Broadcasting Corporation. She was employed as a producer of a local morning radio program under the direct supervision of Bruce Mellett (Mr Mellett). The worker did not have a good working relationship with Mr Mellett.

The worker was temporarily appointed to the position of cross-media reporter. When the position was advertised for permanent appointment, the worker applied for it. Her main reason for applying for the position was to avoid having to work under Mr Mellett.

The worker was interviewed for the permanent position by a selection panel which included Mr Mellett. The selection panel decided not to appoint the worker for the permanent position.

The worker was informed of the panel’s decision in a telephone conversation. When the conversation turned to the worker returning to her position under the supervision of Mr Mellett, the worker broke down uncontrollably. She was diagnosed as having an adjustment disorder which rendered her unfit for work.

The worker made an application for compensation to Comcare, which was refused on the basis that her adjustment disorder was suffered as a result of reasonable administrative action, and therefore, not an injury as defined by s 5A(1) of the SRCA.

Administrative Appeals Tribunal (AAT) decision

At first instance, the worker was successful before the AAT.⁵

The AAT found that the worker had suffered an injury within the meaning of s 5A(1) of the SRCA for which Comcare was liable to pay compensation.

The AAT found that, in the worker’s mind, returning to her position under the supervision of Mr Mellett was a direct and foreseeable consequence of the decision not to appoint her to the permanent position and triggered the deterioration in her mental condition.

The AAT also found that Mr Mellett’s participation in the selection panel which resulted in the decision was not taken in a reasonable manner.

Federal Court of Australia (FCA) decision

On appeal to the FCA,⁶ the AAT’s decision was overturned.

Comcare challenged the AAT’s conclusion that the decision not to appoint the worker to the permanent position was not taken in a reasonable manner.

The primary judge, Griffiths J, found that the AAT’s conclusion was affected by an error of law, set aside the decision, and remitted the matter back to the AAT to be determined according to law.

Full Federal Court of Australia (FFCA) decision

The worker appealed to the FFCA⁷ which, by majority, allowed the appeal.

In setting aside the decision of the FCA, the FFCA construed the phrase ‘as a result of’ in s 5A(1) of the SRCA as requiring the application of a ‘common sense’ approach to causation.

Murphy J, with Siopis J agreeing, held that Griffiths J of the FCA misconstrued the phrase in a way that led it to fail to apply common sense to the facts, confusing consequence with causation.

High Court of Australia (HCA) decision

By grant of special leave, Comcare appealed to the HCA which unanimously allowed the appeal.

One of the grounds of appeal was that Murphy J of the FFCA had erred in construing the phrase ‘as a result of’ in s 5A(1) of the SRCA.

The HCA held that the phrase ‘as a result of’ is naturally read. It refers to the contribution made to the suffering of an injury by an event in the course of an employee’s employment which answers the description of reasonable administrative action. It does not impose its own separate and free standing test of causation.

The HCA referred to the Commonwealth Parliament’s explanatory memorandum,⁸ stating that the purpose of the exclusion for reasonable administrative action in s 5A(1) of the SRCA is to insulate employers from the need for concern about the psychological effects of their decisions on employees. Further, the HCA stated that the purpose of the exclusion in s 5A(1) of the SRCA would be defeated if its operation was dependant on the subjective psychological drivers of the reactions of the employees.

The HCA concluded that the causal connection required in s 5A(1) of the SRCA is met if, without the taking of the administrative action, the employee would not have suffered the injury. The HCA considered that the nature of the perceived consequence – whether personal or professional, direct or indirect, real or imagined – was beside the point.

In allowing the appeal, the HCA effectively restored the orders made by the FCA and remitted the matter to the AAT to determine, according to law, whether the administrative action was taken in a reasonable manner.

This case confirms that an injury for the purposes of compensation does not include an injury suffered as a result of reasonable administrative action taken in a reasonable manner. This includes action in relation to an employee’s failure to obtain a promotion, reclassification, transfer or benefit, or to retain a benefit, in connection with his or her employment. It also includes action taken in relation to performance appraisal, counselling, suspension and disciplinary action.

Further, this case confirms that the causal connection required in s 5A(1) of the SRCA – ‘as a result of’ – is naturally read. It is not dependant on the subjective psychological drivers of the reactions of employees. The worker’s perception of the consequences of administrative action is not relevant.

Employers need to remember that any administrative action must be reasonable.

There are similarly worded provisions in the legislation of states and territories (such as New South Wales) and it is likely that the HCA’s approach to statutory interpretation will be adopted.