A judgment that captured the attention and curiosity of both employment and personal injury lawyers was the High Court case of Elisha v Vision Australia Limited [2024] HCA 50.
On 11 December 2024, the High Court allowed an appeal from a judgment of the Court of Appeal of the Supreme Court of Victoria concerning the damages available to an employee following dismissal. This decision resulted in the Plaintiff receiving $1,442,404.50 in damages.
Background
In September 2006, the Appellant, Mr Elisha commenced employment at Vision Australia Limited, a not-for-profit organisation, as an adaptive technology consultant. In December 2014, Mr Elisha attended his general practitioner for anxiety and had complained of being sensitive to noise.
In March 2015, Mr Elisha was involved in an incident while he was staying in a hotel in rural Victoria during a work-related trip. Specifically, it was alleged that Mr Elisha had telephoned the reception of the hotel at around 12.30am and complained of a noise emanating from outside his room. Mr Elisha was moved to another room. One of the hotel’s owners alleged that Mr Elisha had been aggressive and intimidating toward her, including using loud, aggressive tones and displaying rude and dismissive behaviour.
After his employer learned of the hotel incident, a decision was made to stand Mr Elisha down for breaching several workplace policies. Mr Elisha was given a ‘stand down letter,’ and a meeting was arranged to allow him the opportunity to respond to the allegations, all of which related to the hotel incident. Mr Elisha denied the allegations.
From March to July 2015, Mr Elisha attended a psychologist for anxiety and depression.
After meetings with Mr Elisha and the hotel staff, Mr Elisha’s employer decided to terminate his employment by way of a termination letter, believing he had acted in the manner described by the hotel staff, and to which Vision Australia say constituted serious misconduct.
Notably, Vision Australia’s termination letter cited Mr Elisha’s alleged prior aggressive behavior, yet he was not provided with a chance to address or respond to these allegations at the time of the investigation. Some of the allegations of prior aggressive behavior discussed at trial included claims that he had acted rudely or aggressively toward his manager and raised his voice at her when she attempted to address an issue with him.
After being terminated, Mr Elisha was diagnosed with a major depressive disorder and an adjustment disorder with depressed mood. He was assessed as having no future capacity for work.
In June 2015, Mr Elisha commenced unfair dismissal proceedings against his employer in the Fair Work Commission which settled and resulted in him being paid $27,248.68.
Mr Elisha then commenced proceedings in the Supreme Court of Victoria, claiming damages for the psychiatric injury he suffered as a result of his employer’s breach of contract and the handling of the disciplinary process. As an alternative, Mr Elisha argued that Vision Australia breached its duty of care in the manner in which it handled his termination.
Decision of the Primary Judge
During the trial, Vision Australia argued that the Deed of Settlement regarding the unfair dismissal precluded Mr Elisha from bringing further legal proceedings against Vision Australia. The Primary Judge rejected this argument.
The Primary Judge found that the termination letter provided to Mr. Elisha was vague, and that he was neither notified nor given an opportunity to respond to the allegation regarding his alleged history of aggression. The Primary Judge also expressed the ‘serious possibility’ that termination could result in psychiatric illness or distress.
After considering all aspects, the Primary Judge determined that Mr Elisha was treated unfairly by Vision Australia, and that the disciplinary process was not only unjust but also breached both the Enterprise Agreement and the 2015 Disciplinary Procedure, which were part of Mr Elisha’s employment contract.
Additionally, the Primary Judge considered Mr Elisha’s alternative argument regarding duty of care and concluded that the type of duty he argued for was not owed.
Decision of the Court of Appeal
The Court of Appeal held that damages for psychiatric injury were not available for the breach of contract by Vision Australia because:
- Damages for psychiatric injury were not available for a breach of contract, unless the injury resulted from physical harm caused by the breach, or if the contract’s main purpose was to provide enjoyment or relaxation; and
- Mr Elisha’s psychiatric injury was too remote from the breach of contract.
The Court of Appeal also agreed that that the type of duty of care Mr Elisha argued for was not owed.
Decision of the High Court
Mr Elisha appealed the Court of Appeal’s decision, and it was determined that an employer can be held liable for a psychiatric injury sustained by an employee as a result of the employer’s breach of the employee’s employment contract during a disciplinary process.
Therefore, the appeal was dismissed.
The High Court did not otherwise address whether Vision Australia owed Mr Elisha a duty of care to ensure a safe system for investigation and decision-making concerning disciplinary actions and termination of employment. Therefore, at present, employers do not owe their employees a duty of care to protect them from developing a psychiatric illness during disciplinary or termination procedures.
What can we learn from this case?
While this case serves as an important reminder for employers to review their contracts, disciplinary procedures, and processes, it also highlights the need for employees to carefully review any Deed of Settlement to fully understand their rights to pursue employment and/or personal injury claims, especially if they have already reached a previous settlement.
For more information about this important case law, or to discuss your circumstances and entitlements in a work injury claim, contact Brave Legal on 03 9070 9816.
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Anastasia Nagorny
