Gairns v Pro Music Pty Ltd [2024] QDC 118
An internal sales supervisor has been awarded over $300k for a psychiatric injury sustained as a result of a mishandled meeting with his employer where he was demoted and his salary was reduced without warning in front of other staff members.
Facts
Not long before the close of business on Friday 1 February 2019, the Plaintiff was called into an urgent meeting with the owner and managing director of Pro Music Pty Ltd (the Employer), Mr Corazzol. During this meeting, the Plaintiff was informed that as of the following Monday, he would be demoted from his role as an internal sales supervisor and his salary would be reduced by $4,000-$5,000. The meeting lasted for approximately 15 minutes and the Plaintiff alleged that Mr Corazzol raised his voice after having the legality of his decision questioned by the Plaintiff.
Given the open plan layout of the small office, the meeting was overheard by two (2) other employees (Mr Evans and Ms Hart) who were in the office at the time. Feeling humiliated over what had just transpired, the Plaintiff packed his bag and immediately left the office in a shocked and upset state.
On 7 February 2019, after several days off work, the Plaintiff and his then partner met with Mr Evans and Ms Hard at a coffee shop in Forest Lake where he was encouraged to return to work for his employer. However, on 18 April 2019, the Plaintiff resigned from his employment with the Employer, unable to return to the workplace.
The Plaintiff’s mental health significantly deteriorated following the meeting, resulting in ongoing symptoms of anxiety, stress and depression. Notably, the Plaintiff had a history of anxiety and depression dating back to 2013, and had previously sought psychiatric treatment. As such, the Court accepted that the Plaintiff sustained the following psychiatric injuries:
- An exacerbation of a pre-existing panic disorder, which subsequently resolved.
- An ongoing aggravation of a pre-existing anxiety disorder.
Employer's Liability
The Honourable Justice Rosengren found the Employer liable for the psychiatric injury suffered by the Plaintiff as a result of the meeting on 1 February 2019.
(1) Duty of care owed
The Court held that the Employer owed a duty of care to take all reasonable steps to avoid unnecessarily exposing the Plaintiff to a risk of psychiatric injury.
The Employer denied that it owed the Plaintiff a duty of care in relation to the meeting, relying upon the cases of State of New South Wales v Paige (2002) 60 NSWLR and Govier v Unitingcare Community [2017] QCA 12. The Employer contented that at the time of the meeting the Plaintiff was not performing tasks for which he had been engaged to perform but rather, the meeting related to the investigation of and decision making with respect to the incidents of the Plaintiff’s contract of employment.
Her Honour was unpersuaded by the Employer’s submission for the following reasons:
- The meeting did not involve the exercise of a workplace right and the conduct of Mr Corazzol, was not something to which the Plaintiff contractually agreed.
- Mr Corazzo’s conduct was not:
- in the context of investigating or deciding complaints or unlawful conduct;
- undertaken as part of a disciplinary process.
- The Plaintiff had poor prospects of an application to the Fair Work Commission.
- The meeting occurred in the course of Mr Corazzol’s duties as managing director.
(2) Risk of injury reasonably foreseeable and not insignificant
Justice Rosengren held that the risk of psychiatric injury to the Plaintiff was reasonably foreseeable and not insignificant for the following reasons:
- Office Layout: The workplace was a small open plan office with partitioned areas for senior staff. Her Honour opined that this setting did not sufficiently ensure confidentiality of the meeting with the Plaintiff, as the conversation was likely overheard by other staff. As such, Her Honour concluded that “it is not surprising the Plaintiff felt humiliated by what had transpired”.
- Employment History: The Plaintiff had been working for the Employer as an internal sales supervisor for approximately 14 years and had never been informed of any significant performance issues. The Court held that demotion in these circumstances would likely cause any reasonable employee disappointment, unhappiness and distress.
- Knowledge of emotional issues: It was well known to the Employer that the Plaintiff was an emotional person who was vulnerable to psychiatric injury and could quite easily become anxious. This was particularly the case given Mr Corazzol had witnessed the Plaintiff visibly distressed over personal issues on multiple occasions, including most recently in the weeks leading up to the meeting. Justice Rosengren therefore accepted that such knowledge on the part of the Employer inevitably increased the foreseeability of psychiatric harm to the Plaintiff.
- New Employee: Prior to the meeting with the Plaintiff, a new employee had already been advised by Mr Corazzol that he would become the national sales director, effectively rendering the Plaintiff’s position unnecessary. The Plaintiff had no knowledge of this prior to attending the meeting.
- Poor Notice: The meeting took place without prior notice, just one workday before the demotion and pay cut were set to take effect.
(3) How should the Employer have conducted the meeting?
Her Honour found that a reasonable person in Mr Corazzol’s position would have taken the following steps to mitigate the risk of psychiatric injury:
- Provided the Plaintiff with proper written notice of the specific performance concerns that would have justified his demotion in advance of the meeting.
- Provided the Plaintiff a proper opportunity to respond to such notice prior to the meeting.
- Ensured the meeting was undertaken in a confidential and calm manner, not in an open plan office, to avoid unnecessary humiliation.
While the Court acknowledged the Plaintiff’s pre-existing psychological vulnerability, it concluded that but for the Employer’s failure to take such precautions, the Plaintiff would not have likely suffered a psychiatric injury.
(4) Impact of pre-existing psychiatric injury
Justice Rosengren noted that, although the Plaintiff had a history of anxiety and depression associated with personal stressors, such as his father passing away, it was clear that his psychological symptoms of anxiety, stress and depression had in fact worsened in the months following the meeting. However, in any event, the Court concluded that Mr Corazzol took such an “inadequate and misguided approach” to the demotion and any perceived performance issues that it “would have been very distressing to any employee”, not just an employee who had a pre-existing psychologically vulnerability. As such, the Plaintiff’s psychiatric history had little-to-no impact on liability and rather, was considered by the Court in assessing quantum.
Damages for Psychiatric Injury
The damages awarded by the District Court of Queensland to the Plaintiff for his psychiatric injury were as follows:
| Damages | Payout |
|---|---|
| General damages | $4,350 |
| Past economic loss | $186,000 |
| Interest on past economic loss | $9,820 |
| Fox v Wood | $20,028 |
| Past loss of superannuation | $18,600 |
| Future economic loss | $130,000 |
| Future loss of superannuation | $14,690 |
| Past special damages | $7,729 |
| Future out of pocket expenses | $5,000 |
| Total | $395,767 |
| Less WorkCover refund | $94,570 |
| Net Damages | $301,197 |
Conclusion
The Court awarded the plaintiff damages in the sum of $301,197.00.
This decision is significant insofar as it underscores how the mishandling of employee demotions and performance discussions can result in significant liability for employers. It demonstrates how, without proper psychosocial management processes and practices in place, employers are exposing employees to unnecessary risks of psychiatric harm.
Read the decision here.
