CONTRACT - Contract of employment - Alleged breach of express and implied terms - Whether statements were promissory - Oscar Chess Ltd v Williams [1956] EWCA Civ 5; [1957] 1 WLR 370 and Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429 referred to - Whether psychiatric injury and disorder flowed naturally from any breach or should have been within the contemplation of the employer - Remoteness - Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145 and Baltic Shipping Company v Dillon [1993] HCA 4; (1993) 176 CLR 344 applied.

EVIDENCE - Whether trial judge erred in preferring the evidence of some witnesses to that of others - Whether finding by the judge about lack of reliability and gross exaggeration was inconsistent with facts incontrovertibly established, glaringly improbable, or was contrary to compelling inferences in the case - Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 and TAC v Cuthbertson [2013] VSCA 29 referred to - Rule in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 - Whether trial judge erred in accepting explanation for failure to call witnesses and refusing to draw adverse inferences.

Introduction .......................................................................................................

Employment as GWF Logistics Manager.......................................................

(1) Short-term contract with GWF ....................................................

(2) Approach to take on permanent role..............................................

(3) Contractual negotiations ...............................................................

(4) Larner's qualifications for the role ................................................

(5) Permanent position as Logistics Manager (Vic/SA)...

(6) Psychological breakdown ...............................................

(a) Hours of work ................................................

(b) The absence of a 2IC ............................................

(c) The South Australian operations .........................

(d) The disarray of the Victorian business ..................

(e) Complaints about psychological distress ...............

(f) Psychological collapse .......................................

(g) Meetings following psychological collapse ............

The disposition by the trial judge.....................................................................

Grounds of Appeal...................................................................... ...................

(1) Rejection of Amendment to Statement of Claim ....... ...................

(2) Breach of the rule in Jones v Dunkel .............................................

(3) Rejection of Larner's evidence .................................................

(4) Rejection of Goodman's evidence...................................................

(5) Placing limited weight on Green's evidence .................................

(6) Acceptance of Jeffries' evidence ........................................

(7) Acceptance of McKay's evidence ......................................

(8) Exhibit 2 ..................................................................

(9) Breach of contract ........................................................

(a) Was there a contractual promise of a 2IC? .............

(b) Was there a promise of a Manager with an inclusive style? .....................................................................

(c) Was there a promise of a PD? ................................

(d) Was there a promise about South Australia? ..........

(10) Remoteness ...............................................................

(11) Breach of duty of care ...................................................

(12) Absence of External Standard ..........................................

Conclusion ......................................................................................................

1 The appellant, David Larner, ('Larner'), appeals against a judgment entered by a judge of the County Court in favour of his former employer, George Weston Foods Limited ('GWF'), the respondent to the appeal. Larner had brought proceedings alleging that between 1 February and 26 April 2002, when he was employed as GWF's Logistics Manager for Victoria and South Australia, he suffered injury as a result of negligence by GWF and/or breach of a duty of care it owed to him.[1] Further, or in the alternative, Larner alleged that GWF had breached express and implied terms in his contract of employment.[2] He alleged that he was required to perform work which was unduly onerous and which exposed him to undue stresses and strain.[3] He was overloaded with work and not provided with guidance or assistance despite frequent requests and/or agreement to do so.[4] Larner pleaded that as a result of those breaches, he suffered severe injuries, including major depressive disorder and panic disorder with agoraphobia.[5] He abandoned his claim for pecuniary loss damages on the first day of trial.

2 The trial originally commenced before a judge sitting with a jury of six. At the conclusion of the evidence the judge granted an application by GWF to discharge the jury without a verdict on the grounds that the issues of fact and law were of such complexity as to preclude the jury being charged. He subsequently dismissed the proceeding finding that Larner had failed to establish negligence or breach of contract.[6]

3 For the reasons that follow, we would dismiss the appeal.

4 Larner alleged that he suffered the injuries complained of while employed in a permanent position by GWF, having been initially employed by GWF on a short-term contract basis for three months and then accepting an offer to join GWF permanently.

5 Larner held the short-term contract position with GWF as its Victorian Logistics Manager in the Don Smallgoods division from 30 November 2001 until about 1 February 2002. He was based at GWF's Altona premises. This was distinct from its corporate head office in Flemington. During the Christmas period there was high demand for smallgoods, especially Christmas hams, and a need to ensure there was proper distribution. Both Larner and his then supervisor, Tim Goodman, ('Goodman'), were engaged on short-term contracts. It was Goodman who hired Larner in November 2001 based on his résumé.

6 Goodman gave Larner an initial outline about GWF's processes and told him that the company was 'basically in disarray', with antiquated systems and poorly experienced staff and managers. Larner also received some information from the person he was replacing, Angus Baland, about how things worked on a daily basis through which he also became aware of logistical problems. But his interaction with Baland was limited and he did not receive any formal induction or thorough explanation of GWF's work processes. According to Larner, the problems included the working culture, the lack of work practices, staffing levels, problems with profitability, and the ineffectiveness in the way the perishable goods were being stored, distributed and then disposed of at the end of their shelf life. Larner's evidence at trial was that even though they were aware of these problems with GWF's systems and set up, he and Goodman were 'essentially babysitters': their main focus was on simply getting the stock out prior to Christmas. As a short-term contractor, his involvement in meetings was limited and he had only basic knowledge of the processes employed by GWF, and the budget.

7 In the short-term position, Larner attempted to work the contracted eight-hour day, but this almost immediately became impossible and, as Christmas approached and the work intensified, he had to work longer hours. After negotiations through Entec, the engineering and technical recruitment company that arranged the short-term position, his rate of pay was increased several times: from $288 a day initially, to $325 a day by 10 December, then to $416 a day by 7 January and $550 a day on weekends, which he found he needed to work. Although he was willing to accept an extension of his short-term contract to 29 March 2002, he said that his intention was to fulfil his contract as agreed and then move on. He did not think that either the position or the company was 'a good fit for me' because he thought 'the company was antiquated in their systems and their staffing and the way they performed their operation'.

8 Goodman gave evidence that he had been employed on a short term contract from October 2001 with the task of making sure the warehouse worked effectively through the Christmas period, it seems to avoid a repetition of a 'mess' that occurred over the previous Christmas period. He wrote a 'Christmas plan' and outsourced a warehouse to store the Christmas hams. Everything, as far as his responsibilities were concerned, 'worked almost perfectly' until two days before Christmas, when they were instructed to bring the hams back into the warehouse. He described those two days as 'a shemozzle'. He also gave evidence about other problems with GWF's processes: (1) it was untidy; the receiving process from the factory into the warehouse was 'appalling', with stock arriving and then sitting without the records being updated; (2) the cages used to cook products were dirty; (3) use-by date stickers fell off products, raising concerns about out-of-date stock and potential health implications; (4) he was told about theft within the warehouse; (5) there were broken hired pallets which were unusable but for which GWF was still being charged, causing a $750,000 loss; (6) there were no key performance indicators ('KPI's') in the warehouse; and (7) little thought had gone into tailoring production to meet client needs, with the result that the right products were not being made.

9 In late December 2001 Larner was approached by Craig Jeffries, ('Jeffries'), GWF's Regional Human Resources Manager for Victoria and South Australia, about whether he was interested in taking on the role he was performing on a full-time basis. He gave evidence that he said: 'I do not have an interest in taking on the full-time role'. He explained to Jeffries that he did not feel comfortable because he thought GWF was in disarray, and he outlined the various problems he had encountered. In particular, he told Jeffries that the problems included stock losses and theft; difficulties with keeping track of staff attendance levels due to time clocks which had been tampered with, and the practice of staff staying on in the canteen beyond their shift and then clocking off; the lack of KPI's or job descriptions in the dispatch area; broken or missing hand scanners which were meant to be used to keep track of stock; occupational health and safety issues arising from failure to separate pedestrian traffic from forklifts; broken warning systems between areas to prevent forklift collisions; old and dysfunctional buildings with overhead pipes hanging down which people had to duck under; problems obtaining information about the 30 to 40 cool-rooms used by GWF and what they contained; problems with stock rotation and expiry with use-by stickers falling off; the failure by staff to use the internal systems to keep track of stock movements; the absence of any central computer database (exacerbated by the problems with the hand scanners); and the absence of staff records to enable him to assess employees' employment history or qualifications or experience.

10 In cross-examination, Larner acknowledged that when he was first invited to apply for the permanent position he did not say he was not interested; instead, he asked Jeffries why he should have to apply when he had already been doing the job. He said to Jeffries that he should only have to submit his résumé. Jeffries also gave evidence to that effect and said that at no stage did he recall Larner expressing reluctance to accept the position.

11 Jeffries said he had no recollection of Larner saying there were chronic and systematic problems with GWF that would make him reluctant to take on the role. Jeffries' evidence was that, from his perspective, while the business 'had certain pressures on it' and it 'hadn't necessarily been achieving financial results', it 'was structured and working in an appropriate way'. Like any business, it had its problems and could be improved, but he disagreed that GWF was 'virtually dysfunctional and was out of control' or was a 'shemozzle' and a 'disaster'.

12 It was Goodman who recommended that Larner be offered the permanent role. Goodman gave evidence that he

... was exceedingly happy with [Larner]. I liked him. He was keen, he was eager and he listened. I had a lot to teach people such as David from my background and we worked well together. I was very impressed with him.

13 Larner gave evidence that throughout the short-term contract period he and Goodman worked closely together. Larner said he would meet Goodman first thing on site each day, and then they would meet on at least two or three occasions later every day, and have five or six telephone conversations each day. Goodman's evidence was that they talked regularly, every day. On a typical day he would meet Larner 'at least once', but there was no reason to meet beyond that 'because he was competent'. Once they had agreed on what Larner was to do, he did it. They formed a good working relationship.

14 Larner said a number of GWF's officers then spoke to him about staying on. In particular, he was approached by GWF's National Human Resources Manager, Ian Viney ('Viney'). He was asked about this at trial:

Q: What happened when you first met Ian Viney?

A: Ian Viney came into the dispatch area. He introduced himself. He said, 'Can we have a discussion in your office?' I said, 'Absolutely.' He said, 'We want you to take this position.' He said, 'We've made some inquiries. We've spoken to people you've worked for in the past. We've spoken to Tim Goodman. You're the guy we want. What do we have to do?'

Q: What did you say to him?

A: By his 'What do we have to do?' my understanding was what remuneration did I want. I explained to him once again at that time, it's not a remuneration based rejection, it's predominantly based on the way the operation runs 'and I'm just not confident that it's the right fit for me based on what I've seen and what I've heard while I've been here in a contract role.'

15 Goodman recalled that Larner was initially unwilling to take on the permanent role:

My memory is that he was reluctant to take it, but I sold him into it on the basis that I felt he would be good for it and it would be good for him.

16 On or about 1 February 2002, Larner met again with Viney, this time with the new CEO Meat & Dairy, Kevin Clayton, ('Clayton'). The meeting, which was held at head office in Flemington, took some two and a half hours during which Larner said he discussed at length and in some detail the issues he had raised with Jeffries, as well as other matters such as the staff's lack of skill, problems with those who did not speak English, and shift supervision. He said he told them that the proposed permanent position was not a one-person role and that he would need a 2IC (a second-in-command) from the start; indeed, if he were to accept the position, it was conditional on that being done. According to Larner:

Kevin Clayton agreed to the position and he said, 'I'll give you an undertaking that you can now move forward if and when you've accepted this position, and you can source the person you want to do it.'

17 In cross-examination he was not able to explain why he did not mention negotiations about a 2IC in his answer to interrogatory 2(b) in which he deposed that:

There was no negotiation or agreement as such in relation to the increased duties which I was required to perform.

18 Larner said in evidence that when Jeffries asked him what made him change his mind about accepting the position, he responded, 'the 2IC position which I saw as imperative and conditional upon me accepting this position today.' Jeffries could not recall Larner telling him he had been promised a 2IC by Viney and Clayton, nor did he receive any brief to take steps to engage a 2IC, despite being the Human Resources Manager.

19 Larner said that he sounded out Viney and Clayton about the hours they were expecting him to work, given that the hours he had been working in the short-term position had continuously increased. He gave the following evidence:

Q: When you had your discussions with either Mr Viney, Mr Clayton or Mr Jeffries, did you receive any undertaking or agreement from them as to setting hours of work in a permanent position?

A: In regard to the setting of hours, no, but I was assured that it wouldn't be in the realm of 15 hours or 12 to 15 hours a day.

20 He said he was told by Viney and Clayton that they were close to appointing a National Logistics Manager, who was described to him as being 'in the mould of a Tim Goodman and he will work with you ... "hand in glove".' Scott McKay, ('McKay'), was eventually appointed as National Logistics Manager.

21 Larner alleged that during the meeting with Viney and Clayton nothing was said to him about the permanent position including responsibility for GWF's South Australian operations. He said that it was Jeffries who mentioned that the permanent position included both Victoria and South Australia. This was in a separate meeting 30 or 40 minutes after the meeting with Viney and Clayton when Larner was formally offered the permanent position. Larner says he was initially surprised because he thought he would have enough to do dealing with the Victorian operation. He said that Jeffries told him, 'Don't worry about South Australia. You'll basically fly there once a month, have a cup of coffee with them, say "hello", and that will be it. You'll fly back.' Larner was cross-examined on the issue in the light of the earlier admission he had made that he was aware, before he accepted the permanent position, that it involved responsibility for South Australia:

Q: And you deny, as I understand it, that the South Australian position, you were told about that prior to acceptance of the full-time position?

A: That's correct.

...

Q: If you have a look at this document, please ... if you could return the document to me, please. My question is: have you previously said that the South Australian position was indicated to you as being part of the Victorian position prior to you accepting the Victorian position?

A: I believe that there was some document at some stage that indicated that it was prior.

22 Larner gave evidence that he and Jeffries, in their discussion before his acceptance of the permanent position, 'discussed what he and I both thought were appropriate remuneration packages within the industry of my previous knowledge and we ultimately settled around this figure', that is $118,000 per annum. Jeffries confirmed that he was instructed by Viney to offer Larner the permanent position with a package of $118,000 per annum.

23 Jeffries provided Larner with a written job offer for the position of 'Logistics Manager (Vic/SA)' in the form of a letter dated 1 February 2002, which Larner signed on 5 February 2002.[7] The letter of offer stated that the

... duties and responsibilities will be as discussed during interview and in accordance with those listed in the outline Position Description. A full Position Description will be developed with you once you have commenced.

The total remuneration package was stated to be $118,000 per annum. The letter made no mention of any terms such as provision of a 2IC, or the nature of the working relationship with the National Logistics Manager, or the hours expected to be worked.

24 Despite the reference in the written offer to the 'outline Position Description', Larner gave evidence that no such document was in existence at the time of his interview, nor at the time he signed the offer, nor was one ever subsequently developed. His understanding of a Position Description ('PD') was that it 'would fully outline the company's expectations and their goals, give you a full understanding of their requirement of you and your requirement to them; I guess the obligations on both parties and expectations.'

25 Jeffries accepted that he did not prepare a PD for the permanent position, although he recognised that a PD is an important document. However, he said that at no stage did Larner express any confusion about his role or responsibilities or the nature of what he was required to do and that essentially he was doing the same job that he had performed on the short term contract, which involved overseeing the distribution centre, supervising the 48 full-time staff over three shifts, engaging casual staff as needed, negotiating freight contracts, attending management meetings, and being responsible for stocktaking and distribution of budgetary expenditure. He explained that:

The function of the logistics manager was an integral part of the leadership team and looked after the distribution of the product and it was a short shelf-life product which means there's only so much time from when it's manufactured till it gets to the end user, so you have to be fairly much on the ball to ensure that the supply chain was moving through quickly, so it was a reasonably responsible position.

26 McKay also gave evidence that he could not recall Larner being confused about his role. He said that it 'was a role that had the overall responsibility and certainly a high salary which went with that role.'

27 At the time Larner was appointed permanently as the Logistics Manager (Vic/SA) he was 35 years old.[8] He left school mid-way through Year 12 for economic reasons. He worked in the area of logistics from 1987, holding positions between 1987 and 2001 variously described as 'warehouse manager', 'logistics manager' or 'operations manager'.[9] In 1988, while working as a warehouse distribution manager with a wholesale and retail computer company, he undertook a course at a business college.[10] He held logistical roles with Scan Audio, Vivid Australia, Fritz Logistics, and Able Storage Systems.

28 He gave evidence that in the year before working with GWF, he obtained work through William Tee & Associates, a recruitment company specialising in the logistics industry, requiring him to evaluate the procedures of companies and giving advice on how to improve them including introducing new systems to handle better the flow of business. On two separate occasions he had been asked to 'set up a distribution centre from scratch', with IPS Logistics and PC Telesales, respectively. The position with IPS Logistics, which he held for two to three months, involved establishing a 50,000 square foot distribution centre, hiring staff and obtaining equipment to manage the arrival of stock. The other position, with PC Telesales, which he also held for a few months, involved evaluating the existing systems and structures of the company because it was not coping with the volume of business. Larner implemented changes including upgrading telephones and computers, extending offices and warehousing, and purchasing new equipment to enable stock to be tracked.

29 Larner conceded during cross-examination that the permanent position with GWF had a higher salary than anything he had earned in the past - a $118,000 package compared to around $50,000 to $60,000. This was confirmed by a summary of his gross earnings based on his tax returns between 1996 and 2001 tendered at trial by GWF.[11] He also conceded that for a salary package of $118,000 an employer could expect a manager to take on substantial responsibility. He expected the job to be demanding and he saw himself in February 2002 as a person capable of senior management. He acknowledged that he had held himself out - and regarded himself - as capable of undertaking major warehouse logistics, someone who could implement and manage strategies in relation to warehouse management and staffing, able to negotiate contracts with freighters and other external contractors, as 'a bit of a fixer'. He conceded that 'in broad terms' there was 'the expectation that I would overhaul the distribution centre including staff daily work from the ground up and put in place more modern systems for the operation of that centre.'[12]

30 Larner's partner, Paula Green, ('Green'), also gave evidence that Larner was 'a very ambitious, energetic person ... who loved a challenge' and was very outgoing in life, got things done, could look ahead to work out how things could be improved and was not shy of long work hours. She said that in the time she had known him before he took on the permanent position at GWF he was 'perfectly healthy', both physically and mentally.

(5) Permanent position as Logistics Manager (Vic/SA)

31 On the day that Larner took up his new position, McKay also started as GWF's National Logistics Manager, bringing with him 'a wealth of experience in senior roles within accounting and manufacturing industries'.[13]

32 McKay was initially based at the corporate head office in Flemington, which Larner said made it 'horrendously difficult' to communicate with him. The evidence given by McKay is that he too found being based at Flemington 'hopelessly inefficient'. Although he was available to the staff who reported to him, he felt he was unable to perform his role effectively from head office and 'needed to be really closer to the point of action, where the manufacturing and logistics were' especially since the Victorian operation was 30 per cent of GWF's revenue and activity. He made it his business to visit the Altona operation and during April he had set up a workstation in an office shared with Joe Foti, ('Foti'), and a couple of others next door to Larner's. He would then spend on average two days a week at Altona.

33 Larner's evidence was that in the period February to April 2002 he had only between six to 10 meetings with McKay, of which only two or three were sit down, one-to-one interactions. He felt that McKay was not 'putting in the time that was needed and promised.' In cross-examination, however, Larner said that he saw McKay around six to seven times on a formal one-to-one basis. According to Larner, the sporadic interactions with McKay meant that he did not know what McKay expected of him and he was hampered in his ability properly to evaluate GWF's current systems and to implement many of the changes he thought should be made. He had no authority to spend money to introduce new office systems, or purchase new equipment (such as security cameras), or contract with an external company.

34 On one occasion when both men were scheduled to attend a meeting in South Australia, Larner suggested to McKay that this would be an opportunity to discuss many of the things he had raised, or needed answers to, during the plane trip. McKay told him he had already booked his flight and would see him there. When Larner raised the issue of the lack of accessibility to McKay and his need to discuss the Victorian situation, he says that McKay told him:

I've been employed in the national position and I've got other areas of concern. My main concern at the moment is New South Wales, it's in bigger disarray than Victoria, and at the moment you're just going to have to deal with it.

35 McKay gave evidence that soon after he started he had to deal with two urgent problems in Western Australia and New South Wales. In both instances a major customer expressed dissatisfaction with the standard of the warehousing used by GWF and alternative arrangements had to be put into place at short notice. That required McKay to spend on average two to three days a week away from Victoria. Nonetheless, McKay said that he frequently maintained contact with Larner by email, and also by telephone 'probably every second day if not daily.' His recollection was that he had about 10 formal face-to-face meetings with Larner over the relevant period. Given his industry experience, he said weekly formal meetings would be the norm. Although early in his evidence he said that he was unable to say whether those meetings were all face-to-face, or whether some of them may have been by telephone while he was interstate, later after looking at his schedule for other meetings on site on the same day, he said that he was in Altona for at least four or five of the 11 meetings for which he had records.

36 During those meetings McKay said that he and Larner familiarised themselves with the business, documented the tasks they needed to perform, prioritised them and then took note of their progress. Because of the experience Larner had gained while in the short-term contract position, he was able to brief McKay about the problems he had observed and to suggest improvements, for example, to layouts in the warehouse and the organisational structure, including reviewing the work being performed by people against their role descriptions, and changing lines of reporting to have people answerable to Larner rather than to the manufacturing manager. The facility was an old one and work practices had not been changed for some time. McKay's evidence was that he and Larner had been brought in 'as a turnaround team to address the changes' that needed to be made to deal with those issues and the losses the business was experiencing.

37 During his initial interview McKay had been made aware that the company needed to improve its logistics, especially after the experience with the Christmas rush, to move to more modern warehousing and that he was to be part of a team to outsource warehousing to third parties and consolidate transport providers. He said that some of the changes that were on the drawing board were to place all products into cartons, bring in standard weights and measures, and re-organise the management of shifts, including reviewing overtime and absenteeism. These changes were commenced during March and April 2002 and implemented beyond April 2002, after Larner had left. And while he felt that GWF's operations needed a number of changes, there was 'nothing that was insurmountable, and that was proven six to nine months later when we had outsourced and turned it around.' He acknowledged there were issues with staff not properly clocking on and off, and with broken hand scanners and time clocks, but he considered these were minor, not endemic. He said:

[T]hey were just the facts of the environment and all of them were changeable through good management and subsequently were [changed]. ... the challenges were definitely not insurmountable and subsequently people on less experience and lower salaries were able to turn the business around.

38 McKay said that early in the course of working together, Larner asked McKay about his expectations for the role. They also discussed the preparation of KPI's. McKay gave evidence, based on notes he took of the meetings, that on 13 February 2002 Larner was asked to review the KPI's for the operation and to provide McKay with a copy of the organisational chart. The KPI's centred around key areas such as safety, delivering products on time, and cost. McKay gave evidence that it was a normal expectation that someone in a role as senior as Larner's role would be capable of preparing KPIs:

[KPI's are] a tool of the trade that we take with us as managers ... Somebody at that level in the organisation we would have expected to have had that training somewhere along their career.

39 McKay said that during all his discussions with Larner, it was never suggested that Larner did not understand what a KPI was or how to set them. McKay understood that Larner's salary was twice as high as the next highest state logistics manager, and given his experience, 'I was trusting very much that ... would mean that I didn't need to be alongside of him all the time.'

40 Larner gave evidence that within a few weeks of taking up the permanent position he started to feel unwell. He felt that the job was 'draining me down extensively'. Factors that he identified as contributing to this deterioration were (a) the hours of work; (b) the absence of a 2IC; (c) the South Australian operations; and (d) the disarray of the Victorian business. This led him to make complaints about his psychological distress, and ultimately to suffer from psychological collapse, after which there were meetings following Larner's breakdown.

41 Larner said that generally he was on site from 7.00 or 7.30am and would leave at 6.00 or 7.00pm. The earliest he was on site was at 5.00am and the latest time he left work was 9.30 or 10.00pm. These early morning and late night attendances were necessary to evaluate shift changeover processes.[14] He was dealing with between 70 to 100 emails a day. When he explained that he was not able to get to all the emails on his PC at work, he was ultimately given a laptop to enable him to work from home, and in particular to catch up on emails he did not have a chance to read during the day. This may have been only in the last two weeks before he ceased work. Larner estimated that he would work three to four hours in the evening on his laptop, and five to eight hours on the weekend. He agreed in cross-examination that in a sworn answer to an interrogatory he said that he commenced work between 7.00 and 8.00am and usually left for the day by 6.00pm, although he would then do work at home on his laptop.[15]

42 Green gave evidence that after Larner took on the permanent position his average workday increased so that on average Larner would arrive at work around 7.00am and leave work by 6.00 pm. She said that she and Larner moved to live in Romsey before he started work with GWF. It took about an hour to drive from their home to the Altona premises. She said that the earliest time he started was 5.00am, while the latest was around 9.00pm. He would also work at home on his laptop for about three or four hours after dinner in the evening, and went into work on Saturdays and Sundays. She said that weekend work 'would need to be balanced in with when we had the boys [his sons from an earlier marriage], so it was pretty much as required, and when he could.' Her evidence was that the two boys spent 'every weekend, if not every second weekend' with them.

43 Dr Mills, a registered psychologist who treated Larner in 2003, gave evidence that Larner had told her he was working, as a regular pattern, 18 hours a day and was on call 24 hours a day.

44 McKay said Larner told him that he was working 'longish' hours and that he had a reasonable travelling distance to get to and from home. He used this as a reason to be given a laptop to enable him to work from home, where he would be able to work without interruption. McKay said that the request for a laptop seemed a perfectly normal request for someone as senior as Larner. However, he did advise Larner that the company did not encourage people working out of hours, but the laptop was justified for occasional use. In McKay's view, Larner's role would not demand a hundred hours a week work. He was aware that Larner often attended work by 8.00am and was there until 5.30pm or so, and there were occasions when he worked at home, but he did not regard these as long hours given Larner's position of responsibility. He thought Larner may have been working in the order of 50 hours a week, which, he said:

... is typical of somebody in that ... level of role and somebody who had only recently entered the organisation and was keen to tackle a whole range of matters and bring about improvement as early as possible as the rest of us were.

45 Jeffries, who reported to the same manager as Larner and so was his 'peer', was not aware of the hours that Larner was working. He said that the normal hours were 8.00am to 5.30pm. As Jeffries explained:

I didn't check him [Larner] as he came in and came out. Salaried staff positions don't sign any timecard or punch a clock or anything else like that. They're paid a salary to do a job.

He therefore had no knowledge of whether Larner came in at 5.00am or was working until 10.00pm, or on weekends, or at home in the evenings on his laptop, unless Larner volunteered that information. He could not recall Larner telling him about working outside normal hours.

46 Larner said he raised the issue of getting a 2IC with McKay shortly after he was appointed. According to Larner, McKay's response was, 'It will not be happening.' Larner also said Jeffries told him, 'What I've now been told is it's not in the budget', although Jeffries could not recall having said that. Larner agreed in cross-examination that McKay encouraged him to develop a PD for his 2IC, and said that McKay raised the question of his progress on that task on a number of occasions. Larner explained that the failure to appoint a 2IC meant that instead of concentrating on evaluating current processes and taking steps to implement new systems, he was preoccupied with day-to-day operational issues: putting out fires, instead of looking at the big picture.

47 By contrast, McKay's evidence was that Larner only raised the need for a 2IC on 20 or 28 March 2002,[16] sometime after the two of them started in their positions. Larner said he needed support beyond that which was in place and asked that GWF recruit or promote someone into the deputy role. McKay asked Larner to prepare a PD for the role. In his view, it was appropriate for Larner to be responsible for defining the role, because he was the one who was pressing for this assistance. He rejected the suggestion that he (McKay) squashed the idea of filling such a role until the next budget cycle after 30 June. His evidence was that they 'were actively looking to develop this [PD] to refine exactly what the role would be, including considering internal people for promoting into that role.' Although he agreed there was a hiring freeze,

we were able to with appropriate justification raise a requisition for resources where we felt there was a benefit that could achieve a short payback. From my memory that was one of the roles where it was felt there could be a solid benefit gained.

48 The development of a PD for a 2IC then became an agenda item in each successive meeting Larner had with McKay. Larner made little progress with it. McKay said that he 'was sympathetic that it was taking a little bit of time and recommended [that Larner] work ... with Craig Jeffries and people in human resources' to at least get a template so he would not need to start from scratch. He did not believe that Larner was incapable of drawing up a PD, especially with the benefit of a template. Nor did Larner indicate to him that the reason he kept deferring it was he did not have the expertise or training to do it. McKay expected that someone in Larner's position, with responsibility for hiring staff in his previous employment, would be able to write up a job description.

49 In McKay's view, the creation of the PD for the 2IC 'was a task that Mr Larner just was unable to prioritise and deal with and didn't get to it.' He gave evidence that:

I recall that the need for this role in Mr Larner's eyes was urgent and therefore we sought to prioritise some other activities to enable him to be able to develop the [PD] and develop his own justification for the role. One of the mechanisms for doing that was to approve the use of the laptop so Mr Larner could work on the position description at home.

The 'other activities' to which McKay referred included Larner's daily operational matters, such as staff and shift supervision, rosters and customer service meetings, and stocktake reconciliations (with the assistance of at least one full-time inventory controller). He said it was a matter of talking through these priorities and helping Larner with delegation and offering other resources to assist with them. Indeed, McKay took it upon himself to deal with some of Larner's outstanding items himself, such as transport, being involved in the 'cartonisation' of the plant, the management of the pallet account, and going to production meetings. Some of these involvements were ones he took over 'because there was a national element to them as a way of taking things off his [Larner's] plate.' He said that it was a case of:

getting in and ... all helping out. There was lots to be done. We were part of a turnaround team, we were all new. So demarcation was not an issue. We were all getting in there to try and make improvements.

McKay did not at any stage believe that Larner required physical examination.

50 McKay could not recall Larner telling him at any point that he had been given an undertaking by Clayton or Viney about having a 2IC. By 19 April 2002, McKay had noted 'We'll lose DL if don't replace', which McKay said meant that if 'we didn't put in place the distribution and supervisor role that Larner would be at risk of leaving the organisation.' Item 5 of a meeting scheduled between Larner and McKay for 23 April indicated that Larner had reviewed the job description that had been provided to him by human resources for the distribution centre supervisor and was to make adjustments to it before a meeting to be held with Viney and Jeffries on 26 April.

51 Although the 2IC position had not materialised, there was evidence about the other forms of existing support. Jeffries gave evidence that Larner had seven roles reporting to him, including Foti whom he described as a 'statistical analyst' and the shift supervisors for each of the three shifts.[17] McKay gave evidence that Larner had four people reporting directly to him that had warehouse management or inventory management transport responsibilities, who in turn had people reporting to them. There was also Geoff Gillam, who was the Distribution Manager. There was the person in South Australia who reported directly to him. He described Foti as the inventory controller. In cross-examination Larner said that Foti was a logistics analyst with GWF, but he rejected the suggestion that Foti either reported to him or was in a position to provide him with backup or support, although he saw him most days and looked to him for assistance and information.

52 Larner gave evidence that his South Australian responsibilities were much more onerous than he was led to believe they would be. He visited that operation twice in the first five weeks of his job. He found that the operation was being run by a young woman who was a junior 2IC and, in his view, it was in as much disarray as the Victorian one. She was not able to answer his questions and said she was just concentrating on getting stock in and out. Proper documentation was lacking.

53 McKay's evidence was that the South Australian operation was just a distribution business, with no manufacturing, and was smaller than the Victorian one. He believed that Larner's role in relation to South Australia was not a demanding one: 'the lady had been managing South Australia for some time before Mr Larner or I joined [GWF] and the operation was running reasonably smoothly.' McKay said the young woman running the South Australian operation was 'very capable' and she continued to run the operation after Larner left. McKay denied that the operations of GWF in South Australia were out of control or a 'shemozzle'. After GWF recruited Colin Meade to fill Larner's role in June 2002, when it became apparent that he would not be returning to work, further improvements were made to the South Australian business to outsource the warehousing, which made it a simpler business to manage, although McKay said that some of these third party arrangements were in place before Larner left.

54 Larner gave evidence about the level of losses being made by GWF. Although, while he was still on his short-term contract, he had been told by Goodman that the business was not profitable, it was only after he took on the permanent role that Jeffries told him that the losses were in the range of $600,000 to $800,000 per month. With a total turnover of $26 to $27 million, this represented almost 30 per cent, or $9 million, per annum. Much of this was considered to be through wastage, as well as theft.

55 There was other evidence that indicated the losses were not as big as Larner recalled. Jeffries gave evidence that while he was aware of a problem with stock losses and was not able to recall how big the losses were, he did not believe they were $600,000 per month or $9 million per annum. That seemed 'like an excessively high figure' and, if that had been the case, 'you would have had certainly a hell of a lot of discussion at the leadership team about that level of stock loss.' Although Goodman gave evidence about stock wastage and theft, he did not quantify it. McKay said that while there were discrepancies in the inventory, he did not recall them being anywhere near as high as $600,000 per month. His recollection was that the Victorian business was losing in the vicinity of $1.1 million per annum. Although there was speculation at the time that the unexplained variances in stock were the result of theft, GWF ultimately found that the majority of the discrepancies were of an accounting nature as opposed to actual theft. The apparent losses were the result of inaccurate inventory recording and a mass variance largely due to inaccurate scales. As McKay explained: 'Once the inventory record accuracy processes were changed, those losses all but disappeared, albeit the same people were still working there.'

56 Larner said he told McKay that he was feeling unwell on two or three occasions. He gave evidence that three to four weeks into his new position he said to McKay: 'The amount of work I'm doing at this present point in time, it is starting to seriously affect my health.' In cross-examination, Larner said that he told McKay that he was 'starting to feel unwell' not in any formal meeting, but during brief encounters as they passed each other in the corridor or were in meetings with other people. He did not tell McKay that he was suffering from headaches or eye- strain; he made those complaints to Jeffries on more frequent occasions. When he received no satisfactory response, he sent several emails to Jeffries, copied in to McKay and Viney, outlining the lack of support and reiterating that it was affecting his health. At one point he said he wrote in an email, 'I'm drowning and something has to be done about this and very swiftly.'

57 Jeffries had no recollection of being told by Larner that he was 'drowning', or that he was experiencing headaches or problems with his eyes, or that his work was otherwise adversely affecting his health. This was despite Jeffries seeing Larner almost every day on site at Altona. No copies of these emails were in evidence or produced on discovery by GWF, Larner's laptop having been removed by GWF after Larner collapsed and the laptop then becoming lost. Jeffries' evidence was that, if an employee had said he or she was drowning, he would have done some investigation to see if the work was excessive and to see if any intervention was warranted. Moreover, if an employee had complained about his or her health being affected:

[T]he first step would have been to refer them off to the medical practitioner via the nurse to get some assessment. So I would have referred or asked the person to go and see Barbara who was the nurse and she was probably a little more qualified to deal with anything than I would be.

58 Jeffries said he did not observe any change in Larner's physical or mental health which would suggest anything was amiss; Larner remained 'as enthusiastic and upbeat and eager and keen' as he had always been. Jeffries knew that Larner was busy - as indeed everyone was - but he 'seemed to be managing the challenges and the activities down in that area.' Jeffries was aware that Larner had 'issues' with McKay and he asked Larner whether he wanted him to intervene or participate. According to Jeffries, Larner said no, he had it under control and did not need any assistance to talk to McKay.

59 McKay also said he could not recall Larner ever informing him that he was suffering from ill health as result of his work, or that he was 'drowning'. He said he knew that Larner was frustrated with the people he was working with and the work practices, but he did not express any discontent or unhappiness about his position, or indicate that he could not cope. He said:

I recall conversations where Mr Larner was frustrated, unable to keep up, unable to tackle all the tasks in the manner in which he wanted to do them. I don't remember the 'drowning', I can't recall that, but I do recall his frustrations, that he was unable to make the changes that he wanted to make in such a short period of time.

As he explained, the frustrations Larner was experiencing arose from 'actually being accountable for putting in place the things that you may have provided advice on previously as a consultant.' In cross-examination he said that he observed that Larner was not coping 'in part' but when asked in re-examination to explain what he meant, he said:

I think I could see that Mr Larner was digesting the various tasks that had to be undertaken and the process of working through the list of priorities to reallocate tasks, focus on the important, as a way of helping him focus on the immediate priorities.

According to McKay, '[w]e had an openness in our relationship for him to confide if things weren't working.' He refuted the suggestion that Larner reproached him with never being around and said that:

I certainly offered support through that period either by phone, physically or in any way I possibly could to help support David in his role.

He said he did not observe anything to suggest that Larner was suffering from any injury:

I certainly didn't ever believe that it got to the stage of requiring any physical examination. There had been no hint to me or statement from Mr Larner that he felt as though he was physically impaired through any of that time.

He also said that Larner did not exhibit any 'mental signs' that suggested he ought to see a doctor, nor did he present with any sign of psychiatric injury.

60 Larner said he also complained to GWF's National Procurement Manager, Sue Pascoe, ('Pascoe'), in late March or early April 2002. After one meeting, he recalled she said to him, 'You look like hell. They're killing you.' He also recalled that on another occasion she came into his office, grabbed him by the arm and said, 'We're going out for a bite of lunch.' When he protested he did not have time for lunch, he said that she replied, 'We're going for lunch. You and I are going out now. You can't work 12 hours plus without taking a break.' And they went off site for lunch.

61 Larner gave evidence that all these stresses came to a head on 25 April 2002, when he was working at home. He had been working on his laptop for four or five hours and started to feel clammy, very hot and developed an intense headache. His hands were shaking and his heart palpitating. He said Green told him to stop working and slammed the lid of his laptop down. The following day (26 April 2002) he was still feeling unwell, with a severe headache and trouble with his eyes blinking excessively, but he went to work anyway. He attended a number of meetings through the morning, but his symptoms returned, so he tried to make an appointment with his general practitioner, Dr Ross Jeffrey. Larner was on a telephone call to a colleague when he started to gasp for air, had severe pain in his chest and his hands were cramping. He thought he was having a heart attack or a stroke. He collapsed and was taken to Sunshine Hospital, where he spent the remainder of the day undergoing tests. The doctors diagnosed an extreme reaction to stress-related work and he was certified unfit for return to work by his GP. Larner has not returned to work since then.

62 Larner gave evidence that on 6 May 2002 he received a visit at home from GWF's nurse, Barbara Eyre, ('Eyre'), and Brian Grace, ('Grace'), GWF's WorkCover Manager. He said they suggested he not lodge a WorkCover claim at that stage. His evidence was:

She (Eyre) said that 'We know that we are responsible for this and we want to support you through your recovery,' hence not to put in the WorkCover form, 'and we will pay you as normal as long as it takes until you're fit for duties again.'

63 Green also remembered Eyre and Grace coming to the house:

They came to the house and we had a general chat about how David was going and Barbara asked that we don't put in a WorkCover claim or David doesn't put a WorkCover claim in, that they knew they were responsible for what had happened to him and they would support him through it.

In cross-examination Green agreed that later, when it became obvious that Larner would not be returning to work, Larner was told he would need to put in a WorkCover claim. Green agreed to the proposition that when it was said that GWF had some responsibility, that 'was said in the sense it happened at work.' In re-examination she repeated that she understood Eyre to mean that initially GWF did not want a WorkCover claim submitted because 'they knew they were responsible for what had happened to David.'

64 On 3 June 2002 a meeting was held between McKay, Jeffries, Grace, and another GWF employee, Anne Coxall, ('Coxall'). Larner was not present at the meeting. Handwritten notes of that meeting were created, it appears by Coxall. These notes formed Exhibit 2 at the trial. McKay's recollection was that this was a meeting 'to have a discussion about David's departure from the business and to probably receive an update of David's progress.' He agreed it could be described as 'a post-mortem of the circumstances in which his psychiatric breakdown occurred.' The following words appear in the notes:

As a manager did you have concerns about David's performance?

• David was placed in a role tactically, strategically, operationally.

• David was not given the resources to allow him to manage the process.[18]

These words appear a second time in the notes, in almost identical form, save that the word 'this' appears before 'process' rather than 'the'.[19]

65 McKay explained the reference to Larner being placed in a role 'tactically, strategically, operationally' in the following terms:

That the seniority of the role required not just day-to-day management in the business, it was about looking forward to next month, the next six months, the next year, as to how tactically the business could be improved and it also involved inputs into business strategy and strategic planning on at least an annual basis.

McKay rejected the suggestion that Larner's role was 'an exceedingly difficult one', saying:

No, I think there was the opportunity in that role to make a difference to get out of the daily grind of those matters that you talk about to actually work beyond those issues. That's a privilege afforded to such a senior manager; you have the chance to actually shape the future of the business.

66 In relation to the words 'David was not given the resources to allow him to manage the process' in Exhibit 2, McKay rejected the suggestion that it was a frank acknowledgement by senior managers that Larner lacked the resources to do the job he was given to do.

67 In dismissing Larner's claims for breach of contract and in negligence, the trial judge emphasised the proposition upheld by the High Court in Koehler v Cerebos (Australia) Limited[20] that, when considering the principles relevant to an employer's duty of care to avoid psychiatric injury to an employee, the duty owed by an employer to an employee is informed by the obligations between the parties under the contract of employment:

The content of the duty which an employer owes an employee to take reasonable care to avoid psychiatric injury cannot be considered without taking account of the obligations which the parties owe one another under the contract of employment, the obligations arising from that relationship which equity would enforce and, of course, any applicable statutory provisions.[21]

68 Larner had argued at trial that his employment contract contained express terms (which were designated 'the specific terms') and an implied term. The 'specific terms' were as follows:

1. The plaintiff would be provided immediately or shortly after the commencement of the plaintiff's contract with the defendant with a 21C to assist him in the performance of his work;
2. A National Logistics manager either appointed by the defendant already at the time of the making of its contract with the plaintiff and to commence his employment with the defendant shortly thereafter, or to be appointed by the defendant shortly after the contract with the plaintiff was made would work in an inclusive style and would work as closely with the plaintiff and would provide as much support to the plaintiff as had the previous National Logistics Manager, Mr Tim Goodman;
3. The plaintiff would be provided with a Position Description for the role of Victorian Logistics Manager;
4. He would not be required to spend any significant time or effort managing logistics at the defendant's South Australian operations.

69 The only implied term relied upon was a term that GWF would take reasonable care to provide a safe place of work and a safe system of work.

70 Larner alleged that GWF had breached the specific terms and the implied term and, as a result, he had suffered psychiatric injury. His injury was particularised as:

(a) Development of Major Depressive Disorder and Panic Disorder with Agoraphobia;

(b) Severe depression and anxiety;

(c) Impairment of memory and concentration;

(d) Insomnia;

(e) Loss of appetite;

(f) Impaired libido;

(g) Persistent fatigue.

71 GWF admitted the contract of employment, but denied that it contained the specific terms.

72 The judge held that there was no express term of the contract to the effect that a 2IC would be provided immediately, or shortly after Larner commenced the permanent position.[22] He also rejected the proposition that it was a term of the contract that the new National Logistics Manager would have an inclusive style or would provide as much support to Larner as had Goodman.[23] The judge accepted that it was an express term of the contract that Larner would be provided with a PD but he considered that the failure to provide a PD within the time period Larner occupied the permanent position 'was of no consequence'.[24] He accepted the evidence of McKay and Jeffries that Larner understood his role. He did not accept that it was a term of the contract that Larner would not be required to spend any significant time or effort managing logistics in South Australia. It followed that he found no breach of contract.

73 In dismissing the cause of action in negligence, the judge found that Larner had been performing similar duties in his short-term position to that required of him in the permanent role.[25] He also concluded that Larner had not established that the duties and responsibilities associated with the permanent role were unduly onerous or exposed him to undue stresses and strain.[26] He identified as a 'critical gap in the evidence'[27] the failure by Larner to call evidence in respect of an external industry standard by reference to which it could be determined if the work he was required to perform was unduly onerous.

74 In this context, faced with a conflict in the evidence both as to how onerous Larner's responsibilities were as Logistics Manager (Vic/SA) at GWF and the state of disarray of GWF's operations, the judge preferred the evidence of Jeffries and McKay over that of Larner and Goodman. He said:

Insofar as there is conflict between the evidence of the plaintiff and Goodman on the one hand and McKay and Jeffries on the other, I prefer and accept the evidence of McKay and Jeffries for these reasons. I found McKay to have been a most impressive witness. I do not accept the submission made on behalf of the plaintiff that he was evasive and prevaricated, rather in my opinion he was careful in his responses to all questions. He had retained contemporaneous notes of meetings and conversations with the plaintiff. These notes supported his evidence that he met the plaintiff regularly and discussed issues with the plaintiff on a regular basis. ... I accept McKay's evidence that he travelled to Perth but was not there for a three to four week block, but rather travelled to and from Victoria and Western Australia. In my opinion McKay has ... provided a comprehensive, unbiased and impartial account of the circumstances of the Plaintiff's employment between 1 February 2002 and 26 April 2002.

McKay impressed me as a straightforward, honest, truthful and reliable witness. I accept his evidence on the circumstances of the plaintiff's employment, the nature of the difficulties confronting the defendant's logistical operations and the actions he took in communicating with, supporting and assisting the plaintiff.

I also found Jeffries to have been an impressive straightforward and honest witness of truth. I accept his evidence on his dealings with the plaintiff, his observations of the plaintiff and in particular the absence of any complaint by the plaintiff.[28]

75 Not only did the judge prefer the evidence of McKay and Jeffries over that of Larner and Goodman, but he also found that Larner was an unreliable witness prone to exaggeration. He said:

The plaintiff has clearly focussed much attention on this litigation over many years. This is demonstrated by the large number of references to this litigation in histories recorded by doctors, particularly the plaintiff's general practitioner. As early as December 2003 the plaintiff's psychologist, Dr Mills, noted the plaintiff had provided a history of a claim with a reference to damages and a two year battle. The plaintiff appeared intent on providing what I consider to have been a grossly exaggerated description of the defendant's operations, his conditions of work, his lack of support and symptoms whilst working between 1 February and 26 April 2002.[29]

76 In particular, the judge rejected Larner's evidence of the hours he worked on the ground that Larner's evidence on the issue was inconsistent and exaggerated, as was apparent from the evidence Dr Mills gave with respect to what Larner had told her about his hours of work:

The plaintiff has given a number of different versions of his hours of work (a most important issue) in his evidence, Answers to Interrogatories and histories to doctors, particularly Dr Mills. It is relevant that it was at the consultation with Dr Mills in December 2003 that the plaintiff provided Dr Mills with a history that he was working 18 hours per day, he was on call for 24 hours a day, he would come home from work at 8.00pm then work on his laptop till 11.00pm and he would commence work again at 4.00am. Dr Mills was led to believe that these hours of work were a regular pattern. Dr Mills also noted that the plaintiff was expressing considerable anger at the defendant and this remained a feature of their consultations. In my opinion this history of extreme hours of work on a regular basis was an exaggerated account of the plaintiff's hours of work.[30]

77 Importantly, the judge also rejected Larner's evidence that he had sufficiently conveyed to McKay and Jeffries his psychological distress so as to render his breakdown foreseeable to them. The judge rejected Larner's evidence because of inconsistencies between his evidence and the answer he gave to an interrogatory:

In my opinion the plaintiff's evidence about the complaints he made at work was inconsistent with his Answers to Interrogatories. In his evidence the plaintiff described both stating and sending emails which stated that he was 'drowning' in his work, and he complained that his work was having an adverse effect on his health. There was, however, only a brief reference to these matters in the plaintiff's Answer to Interrogatory 7, he advised Jeffries of his concerns that the volume of work he was required to undertake was starting to affect him.

It was submitted ... that omissions from the plaintiff's Answers to Interrogatories should not undermine the plaintiff's evidence. I do not accept this submission. In my opinion there is a clear inconsistency between the plaintiff's Answer to Interrogatory 7 and his evidence in respect of the complaints made at work. [31]

78 Furthermore, he rejected the evidence of Goodman as exaggerated:

I was unimpressed with the evidence of Goodman. He stated that the defendant's operations were a disaster. It was Goodman who recommended the plaintiff for the permanent position. There was no suggestion from Goodman that the plaintiff was not able to cope with his work, rather Goodman felt the permanent position was the right fit for the plaintiff and the right fit for the company. I consider Goodman's description of the defendant's logistical operations as a disaster to have been an exaggeration.[32]

79 Ultimately, he found that McKay had provided all reasonable support, assistance and guidance to Larner and that he and Larner had a good working relationship with appropriate and regular communication.[33] He considered that Exhibit 2 had little probative value:

Exhibit 2 is of no assistance to [Larner]. It represents nothing more than a note made by a person at a meeting at which [Larner's] breakdown was discussed.[34]

80 In particular, he found that the record in the notes that 'David was not given the resources to allow him to manage the processes' was not an admission:

I accept this meeting was a post mortem in respect of the plaintiff's breakdown.

It is recorded in these notes, 'David was not given the resources to allow him to manage the processes'. I accept the evidence of McKay that this was a proposition being put forward on behalf of the plaintiff which was being addressed by those present at the meeting. I do not accept that this represented any admission by the defendant.[35]

81 The judge concluded that Larner had not established negligence and/or breach of duty on the part of GWF.

82 The judge did not accept that GWF knew or ought to have known that Larner was at risk of psychiatric injury. In particular he did not accept that 'stress' was a 'recognisable psychiatric illness'[36] and thus rejected the view that reasonable foreseeability of a risk of stress amounted to reasonable foreseeability of a risk of psychiatric illness. He emphasised that no referral had been made by Jeffries to GWF's on-site nurse or to a medical practitioner from which the inference could be drawn that Jeffries had received no complaint by Larner about his psychological health:

I accept the plaintiff's evidence that in late March or early April Susan Pascoe said to the plaintiff, 'you look like hell. They're killing you'... . In my opinion this observation could not be taken literally but rather was an expression of concern and that the plaintiff did appear stressed. This evidence must be considered in light of the other evidence which I have accepted. Neither McKay nor Jeffries had any knowledge of any matter that alerted them to the risk of the plaintiff suffering psychiatric injury. Both McKay and Jeffries had no recollection of the plaintiff complaining about any effect his work was having upon his health or that he was 'drowning' in his work. Jeffries stated that if he had received a complaint from a senior manager about his health he would have referred the person off to a medical practitioner via the nurse. This did not happen in respect of the plaintiff. Further if he had received a complaint that a colleague was complaining that he or she was 'drowning' in work he would look into the situation to see if the work was excessive, he would conduct some investigation to see if any intervention was required. No such action was taken by him in respect of the plaintiff. [37]

83 He further emphasised that McKay had seen no signs of psychological ill-health and that Larner had taken no time off from work:

Further McKay stated there was nothing about the plaintiff's presentation to suggest he was likely to suffer psychiatric injury of the nature he was now presenting at court. McKay stated that there were no physical or mental signs to suggest the plaintiff ought see a doctor or nurse.

It is also relevant that the plaintiff himself did not have any time off work during the relevant period as a consequence of any physical or mental symptoms nor did he believe he was having a psychiatric breakdown on 26 April 2002, rather he thought he was having a heart attack or stroke.[38]

84 He concluded that a reasonable person in the position of GWF, as an employer, would not have foreseen the risk of psychiatric injury to Larner.

85 Larner relied upon 30 grounds of appeal, many of which were directed to findings on evidence. In addition, at the conclusion of the hearing of the appeal leave was granted for a further ground of appeal to be added raising the issue of remoteness, alleging that his Honour had erred in finding that Larner had not established that the relevant loss was sufficiently likely to result from the breach of contract to conclude that it should have been within the contemplation of a reasonable person in the position of GWF.[39] Ultimately, the grounds of appeal can be grouped under 12 headings:

(1) Rejection of Amendment to Statement of Claim;[40]

(2) Breach of the rule in Jones v Dunkel;[41]

(4) Rejection of Goodman's evidence;[43]

(5) Placing limited weight on Green's evidence;[44]

(6) Acceptance of Jeffries' evidence;[45]

87 On the second day of the hearing, the judge refused an application by Larner to add to his pleading a further express term of his contract of employment. The proposed term was:

8A(3). The plaintiff would not be required to work for hours as long as he had previously been working whilst working for and/or with the defendant.

88 The proposed term reflects the circumstance that Larner had been working for GWF on a short-term contract since 30 November 2001, some two months before he was offered the permanent position. In refusing to permit the amendment, the judge took the view that it was a new allegation, no notice had been given, and GWF would be prejudiced by the amendment:

[13] Mr Rush on behalf of the defendant objected to the amendment to include the express term of the contract of employment that, '8A(3). The plaintiff would not be required to work for hours as long as he had previously been working whilst working for and/or with the defendant'. It was submitted on behalf of the defendant that this was a new allegation. It referred to allegations concerning the hours the plaintiff was working for or with the defendant prior to 1 February 2002 and it apparently arose from discussions between the plaintiff and the defendant. Mr Rush submitted that this was effectively an allegation that the plaintiff had been working long hours prior to 1 February 2002 and he had been told by the defendant's management prior to his acceptance of the offer of permanent employment on or about 1 February 2002 that he would not have to work those long hours any more.

[14] It was submitted on behalf of the defendant that whilst the particulars of negligence had always alleged that the plaintiff was required to perform work between 1 February 2002 and 26 April 2002 which was unduly onerous and stressful the allegation contained in paragraph 8A(3) was a new allegation. The defendant had at all times been aware that the nature of the plaintiff's case was that he was performing onerous and stressful work and he was working long hours, however the new allegation was that it was a specific term of the contract of employment agreed upon in discussions between the plaintiff and the defendant that the plaintiff would not be required to work hours as long as he had previously been performing whilst working for and/or with the defendant.

[15] I accept the submission ... that this proposed amendment to paragraph 8A to incorporate as an express term of the contract of employment that the plaintiff would not be required to work for hours as long as he had previously been performing whilst working for and/or with the defendant is a new allegation. It has been made at a late stage, the second day of the hearing, and I accept that there is prejudice to the defendant. No Notice has been provided of this proposed amendment. I find that the defendant is prejudiced by this late amendment.[52]

89 Larner says that the ruling was erroneous. The judge did not say what the prejudice was; and, it is contended, there was none.

90 It is true that the judge did not identify the prejudice in his ruling. But it is nevertheless clear enough what prejudice the judge must have had in mind:

(1) The events the subject of the claim had occurred more than 10 years before the trial. At all stages until the trial, the proceeding concerned events that had occurred between February and April 2002.

(2) Further, although the statement of claim annexed to the writ was dated 3 December 2004, the writ was not issued until 28 October 2005. The claim in the original statement of claim was that Larner had suffered psychiatric injury as a result of the negligence and/or breach of duty of GWF. On 12 May 2008, the pleading was amended by the inclusion of an action in which it was alleged that Larner was injured as a result of the breach by GWF of the contract of employment.

(3) Further, the proceeding was first listed for trial on 22 November 2006. That date was vacated. It was then fixed for hearing on 21 September 2010. That date was also vacated and the proceeding was fixed for hearing on 7 March 2012.

(4) On the first day of the trial, Larner applied to further amend his statement of claim so as to extend the relevant period of employment in which it was alleged that Larner was required to perform work which was unduly onerous from the period February 2002 to 26 April 2002 to the longer period between 30 November 2001 to 26 April 2002. Until then, all the allegations were confined to the period 1 February 2002 to 26 April 2002. GWF objected to those amendments on the basis that the whole preparation of its case had been confined to the latter period: that was the period about which its lawyers had sought instructions, that was the period to which it had addressed its interrogatories; that was the period to which it had referred its medico-legal experts. GWF opposed the amendment on the basis that, if it were allowed, GWF would be required to 'go back and reinvestigate and go back to witnesses to put into perspective a new case'. The judge refused the application to amend and the ruling was not appealed.

91 In our view, the prejudice identified by the judge in refusing the proposed amendment put forward on the second day of the trial is in substance the same form of prejudice that GWF would have suffered had the amendment sought on the first day of trial been granted. That prejudice arose because GWF had prepared for trial on the basis that there was no complaint in the proceeding about the work performed by Larner during the short-term contract. The amendment to insert paragraph 8A(3) would have had the effect that the relevant period of employment at issue included the period of the short-term contract as well as the duration of the permanent position. There would have been a need to investigate precisely the terms upon which he was recruited on a short term basis, the negotiations which led to the various pay rises he was given, what Larner's hours of work were during the short-term contract and what was discussed during the negotiations that led up to the permanent position about the hours of work that applied during the period of the short-term contract. Just as with the proposed amendment on the first day of trial, so too the proposed amendment on the second day of trial would have required GWF to 'go back and reinvestigate and go back to witnesses to put into perspective a new case'. It was not sufficient for Larner to argue that he always intended to call evidence about the whole of the conversation he had had with Viney and Clayton. GWF had prepared its case on the basis that the terms of the contract alleged included the specific terms and the implied term, all of which referred to the period of permanent employment. In our view, to propose a new contractual term that was dependent upon an inquiry about the hours Larner had worked in the short-term contract position unfairly extended the field of inquiry beyond the scope of the case GWF had prepared its response to, and did so at a very late stage.

93 Larner submitted that the judge erred in failing to draw adverse inferences from GWF's failure to call as witnesses Clayton, Viney, Pascoe, Foti, Grace, Eyre and Coxall. In particular, Larner submitted that the judge erred in finding that GWF had provided an adequate explanation for its failure to call Clayton and Viney.

94 A solicitor for GWF[53] gave evidence at trial, on affidavit, that Clayton could not be located and attempts to subpoena him had proved unsuccessful. Viney had informed GWF's solicitor that he had 'little recollection' of Larner and could not recall ever having attended a meeting with him. Moreover, Viney had been abusive and rude in his communications with GWF's solicitor and was angry at having been contacted in relation to the proceeding.

95 In our view, the judge was entitled to accept the evidence of GWF's solicitor as explaining the failure to call Viney and Clayton. It does not appear that GWF's solicitor was challenged as to her explanations for the absences of those witnesses. That being so, it was for the judge to assess whether those explanations were sufficient to preclude the drawing of an inference that the uncalled evidence of those witnesses would not have assisted GWF's case.[54] That evidence not having been challenged, Larner cannot now contend that the absence of the witnesses was unexplained. The explanations being on their face sufficient Larner cannot now contend that an adverse inference should be drawn against GWF.

96 As GWF submitted, it is not a necessary consequence of the rule in Jones v Dunkel[55] that every failure to call a relevant witness warrants the drawing of an inference that the evidence of that witness would not have assisted that party's case. As Windeyer J observed in Jones v Dunkel, whether an adverse inference can be drawn will invariably depend upon the availability of an explanation for the failure to call a witness other than fear of exposure:

These [adverse] inferences, to be sure, cannot fairly be made except upon certain conditions; and they are also open always to explanation by circumstances which made some other hypothesis a more natural one than the party's fear of exposure.[56]

97 Adequate alternative explanations for a failure to call a witness have been recognised as including an inability to subpoena a witness, or hostility and lack of co-operation from a witness.[57] As Kirby P observed in Ghazal v GIO:

The rule in Jones v Dunkel is one of commonsense reasoning. It provides that an unexplained failure by a party to call a witness may, in appropriate circumstances, lead to an inference that the uncalled evidence would not have assisted the case of the party who might be expected to call the witness. It is important to note that this is a facility. It is not an obligation in the reasoning of the decision-maker ... The rule has no application if the failure to call the witness is satisfactorily explained or readily understood. The usual explanations are the absence of a witness from court and a reasonable explanation for not compelling the witness' attendance by subpoena. [58]

98 We consider that the evidence relied upon by GWF adequately explained its failure to call Viney and Clayton other than a 'fear of exposure' on its part. We consider in detail below the claims made in relation to the contractual negotiations between Larner and Viney and Clayton and the inferences that can be drawn from the whole of the evidence.[59]

99 We also observe that the judge was prepared to infer from the failure of GWF to call Foti and Pascoe that their evidence would not have assisted GWF's case.[60]

100 It is fair to say that the roles played by Grace, Eyre and Coxall did not loom large in Larner's case at trial and it was unnecessary for the judge to make an express finding based on the rule in Jones v Dunkel with respect to them.

101 We reject those grounds of appeal that rely upon the rule in Jones v Dunkel.

102 Larner submitted that 'in the broad' the substance of his appeal was that the judge did not have, nor express, sufficient reasons for rejecting his evidence or the evidence of Goodman and Green; nor did he have, or express, sufficient reasons for accepting the evidence of GWF's witnesses, especially in the context of other uncontested circumstances and the force of Exhibit 2.

103 The judge resolved the conflict of evidence before him in favour of GWF, wholly, or at least substantially, on the basis of his findings as to credit, namely, that Larner was not a reliable witness,[61] he was 'unimpressed' with Goodman[62] and, by contrast, McKay and Jeffries impressed him as truthful and reliable.[63]

104 Larner relied upon a range of authorities that confirm that 'even when the trial judge has expressed conclusions as to the credibility of a particular witness, that does not represent the end of analysis by the appellate court'.[64]

105 The present appeal is brought under s 74(1) of the County Court Act 1958. In TAC v Cuthbertson[65] Whelan JA discussed the nature of the jurisdiction which this Court exercises under that provision. He said:

Fox v Percy has been cited and considered on many occasions since it was decided, and the applicable principles were re-considered by the High Court in CSR Ltd v Della Maddalena.

... the following propositions can be taken as established:

(1) An intermediate appellate court can, and must, overturn a factual finding where, after a review of all of the evidence, the intermediate court considers that an incorrect inference has been drawn from undisputed facts, facts incontrovertibly established, or facts as found by the trial judge.

(2) Where a trial judge has made a finding based upon credit an intermediate appellate court can, and must, overturn that finding where the finding is inconsistent with facts incontrovertibly established, is glaringly improbable, or is contrary to compelling inferences in the case.

A trial judge has advantages over an intermediate appellate court in the fact finding process which an appellate court ought to recognise and acknowledge. This does not alter the appellate court's statutory obligation to determine appeals after its own review of the evidence, but it should act as a restraint upon an appellate court reaching a conclusion that a factual error has been made. The traditional view of the importance of a trial judge's ability to observe the demeanour of witnesses has declined in significance, and is almost entirely dismissed by some, but it remains the more generally accepted view that the capacity to observe demeanour will be significant in particular cases and particular circumstances. The nature of the trial process gives the trial judge advantages in fact finding which extend beyond the capacity to observe demeanour. The trial judge sees the case evolve through the witnesses themselves in a process which, in certain kinds of cases at least, has a closer connection to the events in question than the process on appeal. The trial judge sees and hears the people who participated in or observed the relevant events. The appellate court can only read about it. In cases which turn upon accounts of events given by witnesses from memory, as opposed to cases which turn more on documentary or other records, this may be important. But there are also some respects in which the appellate process has advantages.[66]

106 With respect, we agree with the observations of Whelan JA.

107 Considering the whole of the evidence, we do not consider that the finding made by the judge about the lack of reliability of Larner's evidence was inconsistent with facts incontrovertibly established, glaringly improbable, or was contrary to compelling inferences in the case.

108 Larner submitted that the judge erred in finding that he was not a reliable witness where there was evidence that: (1) he had not given a grossly exaggerated description of GWF's operations, his lack of support or symptoms; and (2) he had worked long hours at the workplace, at home in the evenings and on the weekends. He submitted that this evidence was consistent with his answer to interrogatory 7, namely, that he had complained of having difficulties to various officers of GWF and that on some issues there was unchallenged confirmatory evidence from Green or from Goodman. He argued that insufficient weight was given to the concession made by Eyre when she said to Larner, on visiting his home, 'We know we are responsible for this'. Furthermore, his evidence was corroborated by the content of Exhibit 2. Larner also submitted that the judge failed to take account of the emails he had sent reporting his complaints about deficiencies in the logistics operations, especially an email sent on 24 January 2002 (Exhibit 8), and the emails documenting the impact on his health. The judge had also allegedly failed to analyse the evidence and draw appropriate inferences from GWF's loss of Larner's laptop and/or the information stored on it.

109 In assessing the judge's finding that Larner was not a reliable witness it is important to observe that he found direct inconsistencies between Larner's evidence and the evidence of other witnesses. In particular, there were inconsistencies in relation to the evidence Larner gave as to his hours of work in the version he provided to medical practitioners and the version that he deposed to in his answers to interrogatories and in his evidence at trial.[67] It was the evidence of Dr Mills that the history Larner gave her was of working 18 hours per day (beginning work at 4.00am and then coming home from work at 8.00pm and working on his laptop until 11.00pm, and then beginning again at 4.00 am) and being on call 24 hours a day.[68] Her evidence was that Larner led her to believe that this was a regular pattern. This was in stark contrast to Larner's answers to interrogatories in which he deposed to usually starting work between 7.00am and 8.00am and finishing by 6.00pm and that he often worked at home for a few hours on his laptop.[69] The evidence given by Green also did not support the history Larner had given to Dr Mills, namely, Green said that Larner's hours of work increased until he was working from 7.00am to 7.00pm, and that the earliest he worked was 5.00am and the latest 9.00pm, while he also worked at home on his laptop.[70] There was also evidence that the very early start or late finish was not part of a pattern but necessary to observe shift changeover practices.[71]

110 We consider that the judge was correct to regard Larner's hours of work as 'a most important issue'[72] and to conclude that Larner gave inconsistent and exaggerated accounts in respect of it.

111 The judge also considered, correctly in our view, that the evidence Larner gave that he complained orally to Jeffries and McKay, and in emails, about the effect of the employment upon his health, including sending an email to Jeffries stating that he was 'drowning' in his work, was inconsistent with his answers to interrogatories which did not mention that he complained in these terms. Interrogatory 7,[73] upon which the judge relied, inquired of Larner about any instructions, directions, or warnings he had given to GWF (or GWF had given to him) about his work; injuries; provision of assistance when carrying out the work; his fitness for work; his ability to perform the work; changes to his work; changes to his health and each of the complaints and requests referred to in the Statement of Claim which alleged negligence on behalf of GWF by failing to heed requests and complaints by Larner in relation to the need for consultation with respect to the tasks and duties required of him as Logistics Manager (Vic/SA); staffing levels; lack of procedures; lack of support for senior management; the appointment of a 2IC and inappropriate timeframes and schedules. To this interrogatory, Larner answered:

As I began to become aware of the onset of symptoms with headaches, eye strain and thereafter tiredness, lethargy and a feeling of being run down and unwell I advised the Victorian Human Resources Manager Craig Jeffries of my concerns that the volume of work which I was required to undertake was starting to affect me. I believe that I would have first spoken to Jeffries about two or three weeks after first February, 2002 but nothing was done by the Defendant to alter the duties which I was required to perform and indeed as described in my earlier answers, there was a gradual increase in the scope of my duties through until the time that I suffered a breakdown on 26th April, 2002. Save as aforesaid, I am unable to answer this Interrogatory and object to so doing ...[74]

112 Specifically, the email of 24 January 2002 (Exhibit 8),[75] while it squarely raised concerns Larner had about missing product and the risk of theft by despatch staff and distributors neither indicated that the operations of GWF were unmanageable nor suggested that his personal health was being affected. Significantly, Larner's acceptance of the permanent position occurred at a time after he had sent this email, from which it could be inferred that he did not view the operations of GWF as either dysfunctional or unable to be salvaged. Given the unsatisfactory nature of Larner's evidence, the judge was correct not to use the loss of the laptop on which Larner alleged his emails of complaints were made as a basis from which it could be concluded that those emails were sent. The judge's reasons for rejecting Larner's evidence support this course.

113 The account of GWF's operations Larner gave was only partly confirmed by the evidence of Goodman. Goodman's description of GWF's operations as a 'shemozzle' was confined to the two days before Christmas; the 'Christmas plan' he had conceived 'worked almost perfectly' all the way through up until those two days. The judge was entitled to take into account that the permanent position Larner took up involved being a member of a 'turnaround' team the purpose of which was to make management changes for which Larner appeared to be well qualified. Furthermore, the management problems identified by Larner were remedied within six to nine months after he was replaced,[76] indicating that McKay was correct when he described the problems as 'not endemic', and the operations as 'requiring improvement' rather than a 'shemozzle'. The losses were nowhere near that asserted by Larner[77] and very little product appeared to have been stolen.[78]

114 We do not consider that the judge erred in considering that Larner's evidence grossly exaggerated his psychological symptoms leading up to his collapse, as was apparent from his own mistaken diagnosis that what he was suffering on 26 April was a heart attack or a stroke. We discuss this in more detail below.

115 We consider the judge's finding that Larner had grossly exaggerated his account of GWF's operations, his conditions of work, his lack of support and his symptoms between 1 February and 26 April 2002[79] was not glaringly improbable. Suffice it to say while we consider below the force of Exhibit 2, and the statement made by Eyre, we do not view those matters as incontrovertibly establishing facts with which the judge's findings were in conflict. We do not accept those grounds of appeal based upon the rejection of Larner's evidence.

116 Larner's complaint about the judge's rejection of Goodman's evidence is that the judge failed to demonstrate any or any adequate path of reasoning or analysis leading to that rejection, in particular where GWF 'did not challenge'[80] Goodman's evidence that GWF's logistical operations had been 'a disaster' or a 'shemozzle'; his evidence about stock theft; his evidence about GWF's failure to provide Larner with an induction or PD or Goodman's credit generally.

117 GWF responded by submitting that the sequence of events showed that far from Goodman believing that Larner would not be able to cope with the work, it was he who recommended Larner for the permanent position and thought that he would be the right fit for both the position and for GWF. It was Goodman who 'sold him [Larner] into it on the basis that I felt he would be good for it and it would be good for him'.[81] He regarded Larner as 'very much' capable of discharging the responsibilities associated with the permanent position. This was not the conduct of someone who regarded the management problems in GWF's organisation as insurmountable. The judge had a proper foundation for taking the view that Goodman's description of GWF's logistical operations as a 'disaster' or a 'shemozzle' was an exaggeration.[82]

118 Moreover, the evidence Goodman could give about the operations of GWF was naturally limited. Goodman himself was careful to qualify the answers he gave, noting that he worked at GWF for only a limited time some 10 years before he was giving evidence at trial. He therefore could 'only remember the high points and the low points'. Moreover, he was engaged on a short-term contract, as was Larner, with the specific task of ensuring that the warehouse operated properly over the busy Christmas period. Goodman was not at GWF to assess the wider systemic problems and then fix them. Moreover, as mentioned above, Goodman's evidence was that the plan he implemented 'worked almost perfectly' until two days before Christmas.[83]

119 Goodman's evidence about stock theft had to be considered in the context of the evidence to the contrary given by McKay about the discovery made after GWF had undergone some re-organisation that the apparent losses were the result of inaccurate inventory recording and a mass variance largely due to inaccurate scales.[84]

120 The failure of GWF to provide Larner with a PD was a matter which the judge expressly accepted.

121 The judge's rejection of Goodman as a reliable witness was thus not a matter which was inconsistent with facts incontrovertibly established, glaringly improbable, or contrary to compelling inferences in the case. More importantly, it was clarified on the appeal that Larner was not seeking to establish that the state of GWF's logistical operations, as evidenced by Goodman, itself caused Larner's breakdown. The real issue was whether, when faced with the challenge of working in the permanent position for GWF, Larner started to evince signs that ought to have alerted GWF to a risk of psychiatric illness. Goodman's evidence was that he saw no symptoms of Larner suffering any psychological injury at the time Goodman left GWF in late January or early February 2002.

122 We do not accept the ground of appeal based on the rejection of Goodman's evidence.

123 The complaint with respect to Green is that his Honour failed to demonstrate any, or any adequate, path of reasoning or analysis which led him to place only limited weight on Green's evidence where there was no challenge to her evidence in respect of Larner's hours of work on weekdays, in the evenings and on the weekend; his attendance upon the workplace on the weekend; his appearance and behaviour between February and April 2002; her having met Grace and Eyre; her understanding of the support which GWF was to provide to Larner in his work duties; and to her credit generally.

124 The judge noted that Green's evidence included her observation that Larner was becoming more fatigued and worn down during the period of his employment with GWF. His Honour also referred to Green's evidence that Larner's hours of work increased until he was working from 7.00am to 7.00pm, and that the earliest he worked was 5.00am and the latest 9.00pm, while he also worked at home on his laptop.[85]

125 It is understandable that Green's evidence was given limited weight. Her evidence that Larner would arrive at work at about 7.00am and leave work at 6.00pm was inconsistent with McKay's. There was also some doubt as to whether travel time was being included or excluded. The latter understanding is open given the time needed to travel between Romsey and GWF. This is also consistent with the evidence of McKay that the long hours of which Larner complained included travelling time.[86] Green's evidence about Larner working on weekends is also ambiguous, suggesting that it was not every weekend, and perhaps at most every second weekend when Larner did not have custody of his children. [87] Furthermore, Green's evidence that Larner worked in the evenings links that work to the use of the laptop, which was made available to Larner only after some delay.[88] This was also confirmed by McKay.[89]

126 We consider that there was no error in the limited weight given by the judge to Green's evidence.

127 The judge preferred the evidence of Jeffries to that of Larner. Larner submitted that Jeffries's evidence demonstrated that he retained very little recollection of events concerning Larner's employment at GWF, or of the meeting the minutes of which are Exhibit 2. He also made concessions during cross- examination that GWF 'had certain pressures on it' and it 'hadn't necessarily been achieving financial results'.

128 However, in our view, the judge was entitled to prefer the evidence of Jeffries. The concessions he made were qualified and he insisted GWF 'was structured and working in an appropriate way'[90] and 'there's always problems with logistics'.[91] The judge was correct in finding that Jeffries did not agree that GWF's problems were a disaster although he accepted there could be improvement.[92] He accepted that there were problems with theft of stock and he and Larner together searched the distribution vans when looking for stolen goods. He accepted that there were some problems when GWF introduced time clocks. He had interviewed Larner for the short-term contract position after Larner had been short-listed and he found him keen and eager, up-beat and up-tempo and considered his résumé to have demonstrated that he had the relevant experience. Thus, he was in a position to comment on Larner's conduct and how he appeared over the period the subject of complaint with the knowledge of the pre-Christmas period. It was uncontested that Jeffries saw Larner almost every day, at least for a short period. He maintained that Larner remained enthusiastic and up-beat. He did not accept that the interactions were too short to permit him to make an observation of value. He did not recall that Larner ever made a complaint to him about the stresses he was under or that the stresses were adversely affecting his health. His response that 'I suppose it could have happened' has to be seen in the context of the earlier response that he could not recall any complaint. We consider that his Honour was correct to find that Jeffries had no recollection of Larner's complaint.[93] We discuss further the issue of the complaint and any warning signs that emanated from Larner below.

129 We consider that it was open to the judge to prefer the evidence of Jeffries and that he adequately explained why he did so.

130 We reject those grounds of appeal relating to the judge's treatment of the evidence of Jeffries.

131 Larner challenges the adequacy of his Honour's reasons for preferring the evidence of McKay, in particular, in light of the contents of a statement taken from McKay on 7 September 2005 (Exhibit 24) ('McKay's statement') that was argued to be inconsistent in many respects with his evidence at trial and in light of concessions made by McKay in cross-examination.

132 Larner also challenged the judge's preference for McKay's evidence in light of Exhibit 2. We deal with Exhibit 2 below.

133 Larner argued that the differences between McKay's statement and his evidence were most significant in respect of McKay's statement:

(1) providing corroboration as to the unsatisfactory nature of GWF's operations, by reference to their unsatisfactory state elsewhere;

(2) providing evidence of McKay not having provided assistance which Larner had wanted, through absences and attention to operations elsewhere;

(5) providing evidence of Larner's inability to cope, and of his mental state, and of McKay's knowledge of it.

134 Taking each of the matters alleged in turn, in McKay's statement, he accepted that when he was first appointed he needed to attend to difficulties in other States and he was not around the Victorian operations. He said:

Regarding his [Larner's] comments on a lack of support, I was also new to the role and responsible for all of the State(s) not just Victorian. At that time a major customer Woolworths in Western Australia was considering moving from one warehouse provider to another as at that time their operations had been poorly managed ... As such, on my second day I was told to go to Perth and sort this out where I spent the next three to four weeks. Then in my fourth week, Woolworths had visited New South Wales and found that some of their product had been stored above 4° incorrectly. ... I went to New South Wales the next few weeks to organise this. It is therefore true to say that the majority of my attention was away from Victoria at this time though I was still spending a proportion of my time in Victoria.[94]

135 He also accepted that Larner had remarked that he was unable to get quality time with him, although he insisted they did have regular meetings with an agenda:

My management style is to attempt to meet weekly with my managers where ever possible ... We [he and Larner] would have daily communication both by phone and e-mail in order to provide input and direction. We meant [met] physically each Friday morning at around 10am with a fixed agenda for which I still have the notes. During these meetings we would discuss key performance indicators what worked and what didn't. To me David appeared relaxed with the formality/informality style of our meetings. Towards the end of his time with the company, he became unsettled that some things he wanted weren't falling into place. He commented to me that I was never around.

136 In his evidence at trial McKay acknowledged that there were problems in Western Australia and New South Wales when he commenced and that he that took up a great deal of his time. While in McKay's statement he said this necessitated him spending a three to four week block in Perth, his evidence was that he spent only two to three days on average away from Victoria. Although his evidence on this issue was not wholly consistent with McKay's statement, his Honour was alert to the lack of consistency and we consider he was correct to treat it as insignificant.[95] What was important was not in itself McKay's absences from Victoria but the level of contact he had with Larner and the relevant direction and guidance he gave him. On that issue McKay said at trial:[96]

• When he was away, he spoke on the telephone to Larner 'probably every second day if not daily' and they were in contact by email;

• 'We met formally face to face on or about 10 occasions through that period [from February to April]'; in cross-examination he said, after consulting his schedule, that at least four or five of the 11 meetings for which he had notes were face-to-face;[97]

• 'We talked about a series of actions that were required to make improvements to the business, and then we documented those' and these included jobs for Larner to do to put those matters in place.

137 Although McKay's statement about the telephone and email contact indicated daily contact, while his evidence was of something lesser, the regularity of the contact was established as was the discussion of work issues.[98] Moreover, McKay had retained contemporaneous notes of the face-to-face meetings and conversations with Larner and the judge was correct to give weight to that.[99]

138 With respect to the alleged probative value of the state of GWF's operations in other States, McKay said in evidence that he was able to fix the problem in Western Australia and there was no further evidence about whether the problem in New South Wales was resolved. In those circumstances, we do not consider that his Honour was obliged to take into account problems that had arisen in other States as corroborative that GWF's operations in Victoria were a disaster or a 'shemozzle'. It was conceded that the GWF's operations in Victoria and South Australia required improvement and that problems existed which the new logistics team, including Larner and McKay, were expected to deal with as part of a 'turnaround' team. In our view, the evidence about the reason for McKay's absences from Victoria could not support any larger proposition. Moreover, in McKay's statement, he also emphasised that GWF's operations in Victoria and South Australia were later resolved and that Larner's replacement had been readily capable of discharging the obligations associated with the role of 'logistics manager' in both Victoria and South Australia with no extra resources:

With regards to the suggestion that it took three people to replace him when he went off, I find this interesting as I went to the market place to find a contractor to help me manage. I employed: Colin Mead who held the position for approximately 16 months, filling David's role in total and also South Australia with no other resources.

139 In respect to the provision of a 2IC, McKay's statement was to the following effect:

Regarding the position of the second in charge, David had argued that he needed an assistant and was unsure if he could find one within his group or would require to source this from outside. I believe that every meeting we held we discussed this topic and on each occasion I would ask him to put together a position description so that we could determine whether we could fill the position internally or externally. Week after week I asked him to do this and he would state that he never had time commenting at one stage that he needed a laptop in order to do it. When he made this remark I suggested that he should not be working from home. I had given him a number of position descriptions which I held on a template in order to help him with this and suggested he seek the human resources managers input as well. I don't believe he ever completed this or presented it before he ceased work.

140 As noted above,[100] in his evidence at trial he said:

• that the development of PD for a 2IC became an agenda item for each successive meeting with Larner after Larner raised it;

• that 'there was a hiring freeze; however, we were able to with appropriate justification raise a requisition for resources where we felt there was a benefit that could achieve a short payback. From my memory that was one of the roles where it was felt there could be a solid benefit gained';

• that it was appropriate for Larner to develop the role because he was pressing for the assistance: 'I think the plaintiff [Larner] was describing to me the type of person - that they wanted to deputise them and therefore was charged with the responsibility of describing that in a position description';

• 'I was sympathetic that it was taking a little bit of time and recommended working with Craig Jeffries and people in human resources - could be an avenue to at least getting a template started so he could amend a template, instead of starting from scratch';

• there 'was ... a template to follow within the organisation designed by the employer to be adapted to specific roles'; 'the template is pretty self-explanatory as to how the position should be classified. It's not a document that would require lots of training';

• [In response to the question of whether the fact that Larner was unable to complete the PD for the 2IC indicated an inability he might have had to complete the task] 'No, and it certainly wasn't offered by the plaintiff [Larner] as to why the position description was not completed'.

141 McKay's evidence in chief, and in cross-examination, on the issue of the 2IC was broadly consistent with McKay's statement. While in McKay's statement he acknowledged that the need for a 2IC was raised by Larner, in his evidence he referred to the contents of Exhibit 2 that suggested that he and Larner together developed the idea.[101] We do not see this minor difference as of any significance.

142 With respect to Larner's hours of work, McKay's statement said:

Regarding David's claim of working 100 hours per week, I was aware that he was working long hours though this was his own choice including the travelling distance he had to and from our premises. I recall he would generally be in early before 8.00am and would usually stay till around 5.30pm though I was happy for him to leave earlier. He did eventually get a laptop though this took some time after I had started.

143 As noted above,[102] at trial McKay said:

• 'I was aware that he was often in by 8 o'clock and there until 5.30 or so at night';

• he agreed that 'long hours' meant something beyond that; he was 'aware that there were occasions when he was working at home but ... my recollection is that they were not frequent - they were not long hours at home so I would have felt that he may have been working, excluding travel, in the order of 50 hours a week which is entirely typical of somebody in that role'.

144 The remark in McKay's statement that he was aware that Larner was working 'long' hours was to be understood in the context of the remark that this included travelling time and that he then referred to specific hours which were the same as that repeated in evidence. What was more important is that he was aware that the hours Larner was working, whether on site or at home with the assistance of a laptop, were typical of someone in the role of entering the organisation and designing and implementing improvements. What was also important is that Larner had sworn in an answer to an interrogatory, as mentioned above, that he usually left at 6.00pm[103] and that Larner had, on any account, exaggerated his hours of work to the psychologist as being in the order of 18 hours a day, beginning work at 4.00am, working on his laptop until 11.00pm and being on call 24 hours a day.[104] Faced with the broadly consistent evidence of McKay in relation to Larner's hours of work, and the inconsistent and exaggerated positions taken by Larner, we consider that the judge's acceptance of McKay's evidence on the issue was not inconsistent with facts incontrovertibly established, glaringly improbable, or contrary to compelling inferences in the case.

145 With respect to the allegation that Larner complained to McKay about the pressure he was under, McKay's statement said:

I was on the site at Altona on the 26/4/02 and was told by Barbara Eyre the occupational health and safety nurse that David had had a dizzy spell and had been taken to the doctors. Shortly before this episode he had remarked of being unable to get quality time with me and I wasn't available as much as he would like. ... I was aware that David was becoming increasingly agitated as he made the transition from observer (contractor) to doer (permanent) and being unable to achieve things within his timeframes.[105]

146 McKay's evidence at trial was, as noted above:[106]

• That he did 'recall conversations where Mr Larner was frustrated';

• 'I do recall his frustrations, that he was unable to make the changes that he wanted to make in such a short period of time';

• He denied that he was 'never around almost from the word go' and in response to that suggestion said he 'certainly offered support through that period either by phone, physically or in any way I possibly could to help support David in his role'.

147 While we deal with the issue of the complaints Larner allegedly made in more detail below, suffice it to say a comparison of McKay's statement with his evidence at trial does not reveal any error by the judge in accepting the evidence of McKay as an honest, truthful and reliable witness.

148 Subject to the observations we make in relation to Exhibit 2, we reject those grounds of appeal that impugn the judge's acceptance of McKay's evidence.

149 Exhibit 2, the handwritten notes of the meeting of 3 June 2002, appears on its face to contain a series of questions to McKay and his answers. The meeting, as described above,[107] was a 'post mortem' of the circumstances leading to the onset of Larner's psychological collapse. Larner did not attend the meeting.

150 Larner submitted that it was significant in itself that GWF saw fit to hold a meeting to inquire into the causes of Larner's breakdown, and to ask questions of McKay during it. This was said to be of particular significance given the evidence of Larner that Eyre had said to him 'We know that we are responsible for this'[108] and the evidence of Green that Eyre and Grace has said to her words to the same effect.[109]

151 Exhibit 2 contains the statements mentioned above:

'David was placed in a role tactically, strategically, operationally.'

'David was not given the resources to allow him to manage the process'.

152 In cross-examination, McKay gave evidence that the statements 'could be' a record of an assertion made by Larner, and not a statement of the views of the people present at the meeting. More specifically, he said:

I don't know what the basis of that sentence was, whether it was just a dot point that the recorder put there by way of assertion or whether it was a response - I don't see it as a response to a question but ...

153 In response to the suggestion that the statements meant what they said on their face, namely, that Larner did not have available to him the resources to perform the tactical, strategic and operational roles which had been allocated to him, McKay said:

Or it could be a recording of what Mr Larner maintained was the situation, not an expression by anybody in that meeting. I think this page is actually someone's rougher notes that had been recorded into a neater summary on the front page.

...

... I think that's an assertion that's been carried to the meeting as background and has then been commented upon.

154 When it was suggested by counsel that the statements were a frank acknowledgement by senior managers, including McKay and Jeffries, who were responsible for the supervision of Larner, that Larner lacked the resources to do the job that had been given to him to do, McKay said:

I maintain that's the assertion because if you look at the lines below it, they are what was discussed as being the actions or what took place to demonstrate that the resources were being provided or to be provided to help manage the process.

155 The lines below the statements record the following:

28/2 Scott & David started to define a role for a DC supervisor to assist with day to day matters.

20/3 DL advised SM that he would have SC supervisor pd by 5/4/02.

10/4 - SM follow up - would have by 12/4.

19/4 - still outstanding.

156 The first date indicated, contrary to McKay's evidence, that it was 28 February rather than 28 March that a PD for a 2IC was discussed between he and Larner.[110] McKay continued:

I'm saying that that was an assertion that set the background to the question for the further explanation. So I'm saying that that's what I believe was asserted as a premise and I was then asked to describe my reaction to that.

157 Jeffries did not recall the meeting.[111] However, when asked about his reading of the statements he said that:

158 Larner was not cross-examined about the statements as having represented an earlier assertion he had made and nor was this put to Goodman or Green.

159 Neither Grace nor Coxall were called to give evidence about the meeting.

160 The judge accepted McKay's evidence about the force of the statements in Exhibit 2. As noted above, he said:

It is recorded in these notes, 'David was not given the resources to allow him to manage the processes'. I accept the evidence of McKay that this was a proposition being put forward on behalf of the plaintiff which was being addressed by those present at the meeting. I do not accept that this represented any admission by the defendant. The document then contains a series of dates and notes which are consistent with McKay's diary entries concerning his meetings and discussions with the plaintiff. In my opinion, Exhibit 2 is of no assistance to the plaintiff. It represents nothing more than a note made by a person at a meeting at which the plaintiff's breakdown was discussed.[112]

161 Larner submitted that the judge was wrong to accept McKay's evidence on Exhibit 2 on the ground that (1) if it had been Larner's assertion, it must have been before his breakdown and is supportive of his case that he had complained; (2) if it was a recording of a statement made by someone at the meeting, it would have been asserted without a basis for it; and (3) in any event, the statements read more as an answer by McKay to a question put to him.

162 GWF accepted that in general the questions identified had been posed for McKay to answer so, it said, it was unnecessary to call Grace or Coxall because McKay was the primary witness in relation to Exhibit 2. GWF argued that it was open to his Honour to accept McKay's evidence on Exhibit 2 because whether or not Larner made an assertion in these terms it was the essence of his case that he had not been given appropriate assistance and McKay was being asked how he would respond to such a proposition. GWF ultimately relied on the advantage the judge had to observe the demeanour of McKay as a witness and he was obviously impressed with McKay as a witness of truth.

163 The difficulty for GWF is that it is apparent from the series of McKay's answers at trial that he begins by speculating or engaging in conjecture as to what the statements might mean, and ends by answering conclusively that the statements represented an assertion to which he was being asked to respond, which he did, by identifying the progress towards the provision of resources. In our view, McKay's evidence should have been treated by the judge as no more than conjecture or speculation about the force of the statements in Exhibit 2. It was unnecessary for the judge to accept McKay's conclusions about the force of Exhibit 2. However, while we consider that his Honour erred by accepting McKay's conclusions on Exhibit 2 as more than speculation, we do not consider that the error was material. It was not necessary for the judge to go so far as to accept that McKay was correct in this evidence in order to maintain that his evidence was to be preferred to that of Larner's, in the event of conflict, for all the other reasons canvassed above as to the unsatisfactory nature of Larner's evidence and the general coherence and integrity of McKay's evidence.

164 We reject the grounds of appeal based upon his Honour's treatment of Exhibit 2.[113]

165 Larner submitted that the judge erred in his failure to find that any of the specific terms pleaded had been established by the evidence.

166 The judge found that GWF made a formal offer of permanent employment to Larner by letter dated 1 February 2002, which was accepted on 5 February 2002. In relevant part, that letter, signed by both Jeffries and Larner said:

Dear David,

It is with pleasure that I offer you the position of Logistics Manager (Vic/SA) with George Weston Foods Limited ACN 008429632 ('GWF') with effect from a date to be agreed with yourself. Your employment, on commencement, and the terms and conditions applicable to your employment are as described in this letter of engagement:

1. Position

1.1 Title

Logistics Manager (Vic/SA).

1.2 Location

Altona plant - 248 Blackshaws Road, Altona, Vic.

1.3 Reporting relationship

In this position you will report to the National Logistics Manager.

1.4 Duties and responsibilities

Your duties and responsibilities will be as discussed during interview and in accordance with those listed in the outline Position Description.[114] A full Position Description will be developed with you once you have commenced.

It is also within the scope of your duties & responsibilities to make recommendations to management in all other areas of activities to maintain and improve the professional and efficient running of the Group.

2. Remuneration

...

Your initial total remuneration in this position will be $118,000 per annum ...

...

17. Amendment

This letter forms the basis of the terms and conditions of your employment with GWF. Any amendment to these terms and conditions will be in writing, signed by both you and GWF.

...

Please read this letter carefully and do not hesitate to contact Craig Jeffries ... should you have any queries in relation to these terms and conditions. If you are in agreement with the terms and conditions contained within this letter, please sign the attached copy and return it to Craig Jeffries prior to commencing your employment ...

167 It is apparent from the terms of the letter that it does not contain the pleaded specific terms. Larner gave evidence that the specific terms were oral consisting of conversations between himself and Viney and Clayton. Larner was the only witness who gave direct evidence of the content of that conversation. It is the evidence described above.[115]

168 Larner submitted that the whole of the evidence demonstrated that it was probable that he did not initially intend to take up a permanent position but agreed to continue to work for GWF on the basis of the promises on which he gave evidence, made in the two and a half hour interview with Viney and Clayton, and that in that interview he told Viney and Clayton he was reluctant to continue, and they persuaded him to do so by promising conditions of employment which dealt with his concerns reflecting the specific terms alleged. Larner submitted that those probabilities should have been inferred from the following:

(a) Larner (and Goodman) considered that there were considerable problems with GWF's logistical operations, and this was in fact the case, and indeed that this was known by GWF's officers.

(b) It is then also likely that Larner discussed his perception of the weak state of GWF's logistical operations with Viney and Clayton, and that he would need a 2IC to assist him, direction from a superior, a position description and lesser working hours [than in the short-term contract position[116]] and that these were promised to him.

(c) In cross-examination it was put to Larner that nothing had been said about a 2IC or extra staff. However, it was not suggested that there had not been an interview, that it had not taken two and a half hours, or as to what the content of an interview of that length was, if not as sworn to by Larner. The evidence of McKay showed that Larner considered that a 2IC, a superior to provide direction, and a PD to define his duties and responsibilities, to be important to him.

(d) Viney and Clayton were not called. In any event, there was no direct contradictory evidence, and clearly the interview was likely to have dealt with terms of employment and inducements for Larner to take the job. No other content was suggested.

(e) The letter of offer dated 1 February 2002 did not specify particular work conditions, duties or responsibilities. They were stated to be, as set out above,[117] 'as discussed during interview and in accordance with those listed in the outline Position Description.' As has been emphasised, there was no position description and the only direct evidence of what was discussed during the interview was the evidence of Larner.

169 Despite the fact that Larner was the only witness to give direct evidence of what took place in his meeting with Viney and Clayton, in our view it was open to the judge to find that there was no contractual promise that a 2IC would be appointed, or that a National Logistics manager would be appointed who had an inclusive style, or that Larner would not be required to spend any significant time or effort managing logistics at GWF's South Australian operations. We consider that not only was it open to the judge to make those findings, but that he was correct in doing so.

170 Several matters need to be considered. First, were the representations made? Second, if they were made, were they intended by the parties to be contractual promises? Third, on the assumption that they were contractual promises that were not performed, did the failure to perform them cause Larner the loss and damage of which he complains, and, finally, if so, is he entitled to damages? The latter issue raises the question of remoteness which we discuss below. Briefly, in our opinion, it is likely that some representations were made, if not precisely those alleged by Larner. However, in our view the representations were not promissory, and, even if they were, it is unlikely that the failure to perform them caused the psychiatric injuries that Larner alleges.

171 Even though Larner was the only witness to give direct evidence of his meeting with Viney and Clayton, it is still the case that it was necessary for the judge to be satisfied on the balance of probabilities that the representations, as alleged, were made at that meeting and that those representations were contractual.

172 In rejecting the proposition that the contract contained the specific term that Larner would be provided immediately, or shortly after commencement of his contract, with a 2IC to assist him in the performance of his work, the judge said:

I do not accept that this was an express term of the contract of employment. I have reached this conclusion for these reasons. I do not accept the plaintiff's evidence that there was a promise or representation made by Clayton, Viney or Jeffries on or about 1 February 2002 to provide the plaintiff with a 2IC. I accept the evidence of McKay that there was a discussion between the plaintiff and himself concerning the 2IC on 28 February 2002 and this issue was discussed on a number of subsequent occasions. I accept the evidence of McKay that he and the plaintiff together developed a view that the 2IC role was required. I accept the evidence of Jeffries that at no stage was he briefed to recruit a 2IC. It is, in my opinion, very significant that Jeffries, as the relevant Human Resources Manager, had no recollection of any representation, promise or discussion concerning the appointment of a 2IC. Further, whilst working between 1 February and 26 April 2002 the plaintiff had a number of meetings with McKay in which there were discussions about the plaintiff formulating a position description for a 2IC but at no stage did the plaintiff indicate that he had been promised a 2IC by either Viney, Clayton or Jeffries.[118]

173 During Larner's evidence in chief, the following exchange took place:

Q: In terms of performing the task what assistance was discussed between them to be provided for you?

A: I mentioned initially that this is not a one-person role. It is not a position that I can take on with the limited knowledge I've got until I get completely into it. I said there would be a 2IC or an assistant to me required in this position and it would be something that would be required immediately. If I ultimately did accept the position it was conditional on that being done.

Q: In terms of the 2IC role was there any discussion as to who would make the arrangements for the engagement for a 2IC?

A: There was .

Q: What was that?

A: Kevin Clayton agreed to the position and he said, 'I'll give you an undertaking that you can now move forward if and when you've accepted this position, and you can source the person you want to do it.'

Q: Did it ever happen?

A: Never did.

174 Shortly after his meeting with Viney and Clayton, Larner had a meeting with Jeffries. In examination in chief, Larner gave the following evidence:

Q: When you saw Jeffries, did you discuss with him also the position of the 2IC?

A: I did.

Q: What did Jeffries say in relation to the 2IC?

A: That discussion revolved around Craig stating, 'You're now willing to take the position. What's happened? What's the change?' I responded, 'Well, basically after the 2.5-hour meeting with Kevin Clayton and Ian Viney and the assurances that had been made,' of the support that will be in place, new management procedures, including the appointment of Kevin Clayton which, at that meeting, I discovered had only been very shortly earlier and, I said, 'the 2IC position which I saw as imperative and conditional upon me accepting this position today.'

175 Later, in examination in chief, the following exchange took place:

Q: Just before I forget, in terms of the 2IC position description, who was to arrange that?

A: I was to arrange that.

176 Even if one were to confine oneself solely to Larner's evidence, it would be difficult to be satisfied that, while some representation may have been made to him about a 2IC, the representation would have had the unqualified character that he alleges. As he himself said, what was agreed was that he was to prepare the PD for the 2IC. There cannot have been an unqualified representation that a 2IC would be appointed immediately or shortly after the commencement of Larner's contract in the absence of the PD that Larner was himself to prepare. If it fell to Larner to arrange the PD it stood to reason that there could be no appointment until Larner had completed that task. Ultimately, Larner was not able to finish the preparation of a PD for the 2IC.

177 Any representation that may have been made about a 2IC was not, in our opinion, promissory in the manner pleaded. In particular, any representation cannot have stipulated the time in which the appointment would be made in the manner alleged. The fact that a party would not have entered into a contract but for a representation is not, of itself, sufficient to transform the representation into a contractual promise.[119] Whether a representation is intended to be promissory depends upon the intention of the parties, objectively ascertained. The intention of the parties 'can only be deduced from the totality of the evidence'.[120] As Lord Denning said in Oscar Chess Ltd v Williams:[121]

The question whether a warranty was intended depends on the conduct of the parties, on their words and behaviour, rather than on their thoughts. If an intelligent bystander would reasonably infer that a warranty was intended, that will suffice.

178 In our opinion, any representation about a 2IC was 'so obscure and incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention'.[122]

179 Furthermore, there was other evidence that made it unlikely that Viney or Clayton made the alleged unqualified representation. As mentioned above, in cross-examination Larner was unable to explain why he did not mention negotiations about a 2IC in his answer to interrogatories when he was invited to describe any change in his work during the period after he commenced permanent employment that was the subject of negotiation or agreement or increase in pay.[123]

180 Moreover, as the judge emphasised, Jeffries, who originally approached Larner about taking on the permanent position, had no recollection of a discussion about a 2IC.[124] Nor, as the Human Resources Manager, did he recall being briefed to take steps to arrange the appointment of a 2IC.[125] He was asked a number of questions on the issue:

Q: If I could ask you specifically: was there any discussion about him [Larner] having a 2IC?

A: No, I don't have any recollection of that.

...

Q: Did he indicate to you at any stage that he had been promised at the interview where he accepted the position of Victorian and South Australian manager that he'd been promised a 2IC?

A: Well, I don't recall that. I had no brief to go and find a 2IC for him.

...

Q: A 2IC, if that had been agreed with the CEO, Mr Clayton and the national HR manager, Mr Viney, the fact of the matter is that at no time before the plaintiff collapsed on 26 April 2002 was such a person provided to assist him?

A: Well, I wasn't given any brief to recruit a 2IC.

...

Q: Then there's a discussion about the DC supervisor. We've heard that's the 2IC role. That's a matter you know nothing about?

A: Well, like I said, I don't recall having a brief to go and recruit a DC supervisor.

...

Q: When you were assigned the task of making the job offer to Mr Larner, was there any instruction to you about getting a 2IC?

A: No.

Q: Was there any comment at all by Mr Larner during the course of those discussions about the job offer of a 2IC?

181 Larner said that he was told by McKay that there would be no 2IC, and that Jeffries explained to him that this was because of budgetary considerations. During cross examination, Larner gave evidence that he and McKay had had a discussion and that he had been encouraged to prepare a PD that would define the role for a 2IC but that McKay 'emphasised that it would not happen prior to June'.

182 As indicated above, McKay agreed that he had several discussions with Larner about the appointment of a 2IC. He agreed that he had had discussions with Larner that there was a 'need for this role and that we should get on with starting to describe what this role should do', but could not could recall any discussion with Larner 'about undertakings that might have been given by other people to [him] about that role.' In the cross-examination on this issue in the context of McKay's statement, McKay made it plain that at each meeting with Larner they would discuss the preparation of the PD for a 2IC; that a PD would permit them to assess whether the appointment could be made externally or internally; that McKay suggested Larner adapt a template; and that GWF would not be inhibited from making the appointment by any hiring freeze because of the potential for a solid benefit to be gained.[126]

183 In our view, the preponderance of the evidence demonstrates that there was no specific term of the contract for a 2IC in the terms alleged and that, insofar as any representation may have been made about a 2IC during the time of the contractual negotiations or later, the appointment of a 2IC was in active consideration by GWF between the time of Larner's appointment and his psychological collapse. The failure of GWF to appoint a 2IC was ultimately attributable to Larner's inability to complete the relevant PD.

(b) Was there a promise of a Manager with an inclusive style?

184 Larner gave evidence that the appointment of a new National Logistics Manager was discussed at the meeting with Viney and Clayton on 1 February 2002. He said:

Q: In terms of the new incoming national logistics manager, did you know that that was Scott McKay at that stage?

A: Not at that stage. I knew that they were very close to appointing somebody. They said, 'We've got the man that we want.'

Q: Well, the man that they wanted, did they indicate the type of relationship that he would be having with you that they intended?

A: They did.

Q: What did they say about that?

A: They said he is in the mould of a Tim Goodman and he will work with you and they described it as 'hand in glove'.

Q: Were you told that he would be at Flemington head office and not at Altona?

A: I was not.

185 In our view, the representation of which Larner gave evidence was simply too vague and inchoate to be promissory. We agree with the judge that any representation about such an appointment was not promissory in the manner pleaded. Had the specific term alleged been included in the contract of employment one would expect there to be a reference to the appointment of the National Logistics Manager in the letter dated 1 February 2002, but other than a reference to the reporting relationship, there is none, let alone mention of an undertaking that the appointee would have a particular style of management.

186 The judge found that it was an express term of the contract of employment that Larner would be provided with a PD of the role of Victorian Logistics Manager.[127] He noted that there was no specification of the time period by which the PD was to be provided and that Larner worked in the permanent position for a short duration only. As mentioned above,[128] he held that the failure to provide the relevant PD was of no consequence.[129] It was submitted on the appeal that the failure to provide Larner with a position description was far from trivial; he was 'left briefless in a ... relatively chaotic situation.' The difficulty with the submission is that Larner had already been engaged in the same type of activities under the short term contract and his complaint was that he had to work too hard, not that he did not know what he was expected to do. We see no error in the judge's conclusion.

187 With respect to the last of the four specific terms, namely, that Larner 'would not be required to spend any significant time or effort managing logistics at [GWF's] South Australian Operations',[130] we consider that it was open to the judge to conclude that the description of the permanent position contained in the letter of 1 February 2002 was inconsistent with such an oral promise. The letter described the responsibilities associated with the permanent position as including the operations in South Australia. Whatever representations may have been made about the state of operations in South Australia, those representations could hardly be of a promissory character when the description of the permanent position was unequivocal as to its geographical limits.

188 Moreover, Larner's evidence was evasive on the question of whether he knew that the responsibilities associated with the permanent position extended to South Australia before he signed the contract[131] and the judge was mindful of this.[132]

189 Given the preponderance of evidence, and the inferences that were open from the circumstances of the case, there was no need to call evidence from Clayton or Viney on the contractual negotiations and no basis for inferring that their evidence would not have assisted GWF.

190 Furthermore, we consider that the judge's findings were supported by the absence of any evidence from Goodman that Larner had only accepted the permanent position on the basis of certain caveats, the provision of a 2IC, the assurance that the new National Logistics Manager would have an inclusive style, and so on. Goodman was not asked in evidence in chief about any of the specific terms. While he said, in cross-examination, that Larner had initially been reluctant to take on the role but he persuaded him to accept it,[133] he gave no evidence that Larner's acceptance of the permanent position was premised on certain promises having been made. In those circumstances the inference is open, based on the principle in Jones v Dunkel, that Goodman was unable to give any evidence on that topic or whatever evidence he could have given would not have assisted Larner's case. The application of the principle in Jones v Dunkel to the circumstance in which a witness who might be expected to have knowledge of a matter gives no evidence of it was considered in R v GEC[134] where Vincent JA said:[135]

There appears to have been little consideration in the authorities of the applicability of the Jones v Dunkel principle in situations where a witness is called and fails to give evidence in chief concerning a matter that it would be reasonable to anticipate was within the witness's personal knowledge. It was said in Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd by Handley JA that:

There appears to be no Australian authority which extends the principle of Jones v Dunkel to a case where a party fails to ask questions of a witness in chief. However I can see no reason why those principles should not apply when a party by failing to examine a witness in chief on some topic indicates 'as the most natural inference that the party fears to do so'. This fear is then 'some evidence' that such examination in chief 'would have exposed facts unfavourable to the party'.

In my opinion, this view is clearly correct. Ordinarily a party calling a witness can be expected to know what it is that the witness is likely or able to say and to adduce relevant evidence from the witness. If nothing is asked about a particular topic concerning which the witness might be expected to have knowledge, then the inference may be open that either the witness was unable to provide evidence on that topic or that any evidence that the witness might have been able to give would not have advanced the case of the party concerned. There is no reason why the principle should be confined to situations in which a witness is simply not called at all, nor is it an adequate response to state that a cross-examining party is able to address the situation.[136]

191 It follows that we reject those grounds of appeal based on breach of contract.

192 The issue of remoteness raises the question that if the specific terms had been included in the contract and were breached, is Larner entitled to damages? It depends upon an earlier acceptance that the relevant representations were made and were promissory in character. We have rejected each of those pre-conditions. However, putting that to one side, we are also of the view that that even if those pre-conditions were satisfied, damages should not flow from the breach of any of the representations.

193 Parties are entitled to damages for breach of contract where they have agreed or are taken to have agreed that that remedy should be available in those circumstances. Again, the measure of such damages will be what the parties have agreed or are taken to have agreed. Putting commercial contracts to one side, parties rarely make express provision for the consequences of breach, let alone for the measure of any damages. In the absence of some express provision, the law will imply a term that a party injured by a breach of contract will be entitled to damages. If a party cannot establish that damage has been suffered, the party is entitled only to nominal damages.[137] A plaintiff must establish that the breach has caused damage and that the damage is not too 'remote'.

194 In his further written submissions, Larner distinguished a breach of contract that causes a party to be so distressed that he or she suffers a mental injury or disorder from a breach of contract where the breach itself causes personal injuries 'in the form of psychiatric injuries or mental disorders'. He contended that his circumstances fell into the latter category and the failure of GWF to provide the agreed support or assistance contemplated by the specific terms of the agreement itself caused the injuries and disorders from which he suffered. Those injuries and disorders were argued to be not too remote: either they flowed naturally from the breach or were of a kind that should have been within GWF's contemplation.[138]

195 GWF referred to the strength of Larner's résumé, his satisfactory performance in the short-term contract position and the absence of any evidence in his work history of any inability to handle responsibility. His work history showed that he had been working in logistics since 1987, including setting up distribution centres from scratch, and advising companies on efficiencies arising from the introduction of new systems.[139] Each of these matters supported an inference that Larner was well qualified to undertake the permanent position as the GWF's Logistics Manager (Vic/SA), notwithstanding the responsibility and challenges presented by the role. GWF submitted that, it therefore followed, 'on the basis of the information available to [GWF] in early February 2002, it (or a reasonable person in its position) would not have considered it sufficiently likely that [Larner] would suffer mental injury as a result of the alleged breaches over a period of some three months'.[140] Thus, in the event that any breach of contract was established, the loss suffered by Larner was too remote to sound in damages.

196 In Hadley v Baxendale,[141] the issue of remoteness was addressed. Alderson B famously said:[142]

Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, ie, according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.

197 In Baltic Shipping Company v Dillon,[143] Brennan J considered the rules in Hadley v Baxendale and said:

Remoteness is governed by the rules in Hadley v. Baxendale which prescribe the measure of damages in respect of breach of contract to include not only damage naturally resulting from the breach ('ie, according to the usual course of things') but also damage which might 'reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it'. Additional or special knowledge known to both parties may widen or contract the scope of liability for breach. These rules have been merged in a single principle expressed by Lord Reid in C Czarnikow Ltd v Koufos and adopted in this Court:

'The crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have realised that such loss was sufficiently likely to result from the breach of contract to make it proper to hold that the loss flowed naturally from the breach or that loss of that kind should have been within his contemplation.'

The relevant question is therefore whether 'disappointment of mind' is sufficiently likely to result from a particular breach 'to make it proper to hold that the loss flowed naturally from the breach'.[144]

198 Larner's psychological breakdown occurred on 26 April 2002 after having taken up the permanent position on or about 1 February 2002. The relevant question is this: can it be said that a breakdown occurring within a few months of the commencement of Larner's appointment, together with the psychiatric injuries of which he complains, may fairly and reasonably be considered as arising naturally from the failure of GWF to appoint a 2IC, or to appoint a National Logistics Manager who would work in an inclusive manner or 'hand-in-glove' with Larner, or from the failure to provide a PD for the permanent position, or from the time and effort Larner needed to expend with respect to the South Australian operations? Or could those injuries be said to have 'reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it'? We think not. We consider that a reasonable person, on the information available to GWF when the contract of employment was made, would not have realised that such loss as Larner suffered flowed naturally from a breach of contract or was of a kind that should have been within contemplation. At the time the contract of employment was entered into, Larner had portrayed himself as a highly experienced manager in diverse areas of logistics who was a problem solver and by then had some knowledge and experience of GWF's operations. He was offered a salary that was almost twice that which he had enjoyed in any other position he had occupied and which was believed to be twice as high as the next highest State logistic manager. In our view, the fact that he may have said that the job needed more resources and a more limited scope, would not have suggested to a reasonable person that, if his terms were not met, it was sufficiently likely that he would suffer the psychological injuries of which he complains.

199 We reject the additional ground of appeal based on the issue of remoteness.

200 At the heart of Larner's case at trial was the allegation that GWF had breached its duty of care. On appeal, Larner submitted that the judge erred in interpreting, and applying to the evidence, the principles enunciated by the High Court in Koehler v Cerebos. Larner submitted that his Honour misconstrued the submissions made on his behalf about those principles, in particular the content of GWF's duty of care; what the law required Larner to prove to demonstrate a reasonably foreseeable risk of psychiatric illness; the issue of whether stress constituted a recognisable psychiatric illness; and the judge's treatment of Larner's unchallenged evidence that Pascoe said to him 'you look like hell. They're killing you' and 'You can't work 12 hours plus without taking a break', which, it was argued, evidenced GWF's knowledge of the risk that Larner would sustain a recognisable psychiatric illness. Larner also attacked the judge's reasons as inadequate in rejecting his claim in negligence.

201 In Koehler v Cerebos the plaintiff, Ms Koehler, suffered psychiatric injury while employed as a part-time sales representative after working in a full-time capacity in the same position for the same company. Following a review of the company's business after the loss of a major client, Ms Koehler had been retrenched as a full time employee and offered part time work for 24 hours over three days a week. The letter of engagement for her new employment set out only the 'bare bones' of her engagement (start date, hours, hourly rate, car allowance and out of pocket allowances) but it did not set out the duties she was expected to perform. It was only when she started in the part-time position that she was told the territory she was expected to cover. She indicated immediately that she would not be able to cover the stores listed in the time for which she was employed. However, she agreed to give it a try for a month. She subsequently complained both orally and in writing on many occasions that the area she was required to cover was too big and that at times she needed to work more than eight hours a day. However, all her complaints related to whether the work could be completed. She did not complain that the problems she was experiencing were affecting her health. She suggested that the number of stores she needed to visit be reduced, or that she be allowed to work a fourth day, or she should have help to do her work. The employer took no action. Ultimately, Ms Koehler was diagnosed with complex fibromyalgia syndrome and a major depressive illness. She alleged that the failure of the employer to take the steps she identified constituted both a breach of its common law duty and a breach of an implied term to provide a safe system of work.[145]

202 The High Court affirmed the decision of the Full Court of the Supreme Court of Western Australia that the absence of any material available to the employer which would have alerted it to a specific risk of psychiatric injury meant that such a risk was not foreseeable. A reasonable person in the position of the employer would not have foreseen the risk of psychiatric injury to Ms Koehler. In a joint judgment delivered by McHugh, Gummow, Hayne and Heydon JJ,[146] their Honours observed that simply because a claim is framed in negligence, it invites error to begin the inquiry by focusing upon the question of whether there was a breach of the duty to take all reasonable steps to provide a safe system of work, and the associated issues of foreseeability and the reasonable response to risk as laid down in Wyong Shire Council v Shirt,[147] because to do so may fail to take into account 'fundamental aspects of the relationship between the parties.'[148]

203 The Court held that the parties' obligations under a contract of employment will necessarily have a bearing on the content of the employer's duty of care and what may be required from the employer to discharge that duty:

The content of the duty which an employer owes an employee to take reasonable care to avoid psychiatric injury cannot be considered without taking account of the obligations which the parties owe one another under the contract of employment, the obligations arising from the relationship which equity would enforce and, of course, any applicable statutory provisions. ... Consideration of those obligations will reveal a number of questions that bear upon whether ... an employer's duty of care to take reasonable care to avoid psychiatric injury requires the employer to modify the work to be performed by an employee.

...

What is important is that questions of the content of the duty of care, and what satisfaction of that duty may require, are not to be examined without considering the other obligations which exist between the parties.[149]

204 The Court emphatically repudiated the view that there is 'only one question'[150] to ask where an employee claims damages from an employer for negligently inflicted psychiatric injury, namely, 'whether this kind of harm to this particular employee was reasonably foreseeable',[151] stating: 'That proposition should be rejected.'[152] The initial question must lie in determining the content of the duty of care and the kinds of steps required of an employer in the particular circumstances of the case, informed, in particular, by the terms of the contract of employment.

205 The factors that are most likely to be relevant in determining the content of the duty of care, and what is required of an employer to satisfy the duty of care it owes, include both the nature and extent of the work being done by the particular employee; 'and the signs from the employee concerned - whether in the form of express warnings or the implicit warning that may come from frequent or prolonged absences that are uncharacteristic'.[153]

206 An employee's agreement to perform those very duties which are later found to be a cause of psychiatric injury may be of considerable significance in determining whether an employer has breached its duty of care. As the High Court said:

An employer may not be liable for psychiatric injury to an employee brought about by the employee's performance of the duties originally stipulated in the contract of employment. In such a case, notions of 'overwork', 'excessive work' or the like have meaning only if they appeal to some external standard. ... Insistence upon performance of a contract cannot be in breach of a duty of care.[154]

207 An employer's obligations under a contract are not to be read subject to a duty to excuse performance if performance is injurious to psychological health, nor to be qualified by hindsight. In the absence of warning signs, an employer can assume that someone who enters into a contract of employment believes himself or herself to be capable of performing its duties:

[S]eeking to read an employer's obligations under a contract as subject to a qualification which would excuse performance, if performance is or may be injurious to psychiatric health, encounters two difficulties. First, the employer engaging an employee to perform stated duties is entitled to assume, in the absence of evident signs warning of the possibility of psychiatric injury, that the employee considers that he or she is able to do the job. Implying some qualification upon what otherwise is expressly stipulated by the contract would contradict basic principle. Secondly, seeking to qualify the operation of the contract as a result of information the employer later acquires about the vulnerability of the employee to psychiatric harm would be no less contradictory of basic principle. The obligations of the parties are fixed at the time of the contract unless and until they are varied.[155]

208 The employer thus had a right to assume that Ms Koehler could perform the tasks she had agreed to perform without injury to her psychological health and it had no reason to suspect that she was at risk of psychiatric injury. Her complaints about the lack of time to cover the relevant territory did not, at the time they were made, give rise to any suspicion that her duties were putting her health at risk or the possibility of psychiatric injury. Rather,

[H]er complaints may have been understood as suggesting an industrial relations problem. They did not suggest danger to her psychiatric health. When she did go off sick, she (and her doctor) thought that the illness was physical, not psychiatric.[156]

209 We have already concluded that here, the contractual relationship between the parties was one in which there was no obligation on GWF to provide Larner with a 2IC; no obligation to appoint a National Logistics manager with an inclusive style who would work 'hand in glove' with Larner; and no obligation to ensure that Larner would not be required to spend any significant time or effort managing logistics at GWF's South Australian operations. The obligation Larner assumed when he entered into the contract was to fulfil the role of Logistics Manager for Victoria and South Australia, a role carrying significant seniority, managerial responsibility and autonomy. GWF was entitled to assume, at the time of entering into the contract, that Larner was capable of doing the job for which he was appointed.

210 At the time the contract was made, on or about 1 February 2002, there were no signs warning of the possibility of psychiatric injury. On the contrary, the circumstances suggested that Larner would be fully capable of discharging the nature and extent of the work to be done:

(1) he came to the workplace with a résumé which indicated that he had a background and expertise in fixing logistics problems and rebuilding dysfunctional businesses;[157]

(2) he had held himself out - and regarded himself - as capable of undertaking major warehouse logistics;[158]

(3) he had experience of GWF's operations by reason of his short-term contract position and had already identified areas to be addressed and discussed those with GWF officers;[159]

(4) he accepted that 'in broad terms' there was 'the expectation that I would overhaul the distribution centre including staff daily work from the ground up and put in place more modern systems for the operation of that centre;'[160] he was to be part of a 'turnaround team' and be part of fixing problems and improving efficiency;[161]

(5) he had been recommended for the job by Goodman, (because 'he would be good for it and it would be good for him') with whom he had a close daily working relationship and who had formed a positive impression of Larner's capabilities;[162]

(6) he was described by both his partner and by his work colleagues as being keen, ambitious, proactive and acknowledged that he presented as 'a bit of a fixer';[163]

(7) he was regarded as so desirable that GWF was prepared to pay him a comparatively generous salary package, which it appeared was twice that of the next highest paid of his State counterparts.[164]

211 Given the general assumption that an employer is entitled to make that if someone enters into a contract of employment, that employee considers himself or herself able to do the job, these factors run counter to any suggestion that GWF ought reasonably to have appreciated that Larner was at risk of psychiatric illness in performing his duties. Far from there being any indication that he was vulnerable to psychiatric injury, Larner gave every appearance, at the time he agreed to take on the permanent position, of being capable of carrying out the work required. Not only was there such an appearance but, indeed, Larner clearly considered himself capable of the job because he was already performing much the same job and queried why, in those circumstances, there was a need for him to formally apply for the permanent position, believing that providing his résumé should be sufficient.[165]

212 Larner submitted that during the course of his employment, there were signs that were apparent to GWF, or ought to have been apparent, that Larner was being mentally affected adversely by his work. There were signs that he was becoming dysfunctional and this was being ignored by GWF. He claimed that these were completely or largely uncontradicted by the evidence. In our view, the submission is untenable and fails to grapple with the evidence that was accepted by the judge, and which we have indicated above, it was open for him to accept. Larner relied on the following:

(1) Larner's dependence on McKay for guidance. - The difficulty is that McKay did not give evidence that he found Larner was unable to take steps to progress matters without seeking guidance from him; he rather identified a frustration in Larner in his being 'unable to make the changes that he wanted to make' as a matter of implementation.[166] Indeed, he considered that the short-term contract position had enabled Larner to identify what needed to be done; and that he was 'by far the most experienced of the state logistics managers' which engendered McKay to trust 'that David's experience would mean that I didn't need to be alongside him all the time'.[167] McKay did not accept that there was a relationship of dependency. Jeffries said that Larner expressed no confusion as to his role.[168]

(2) Larner's inability to get things done, including preparing the 2IC PD or the KPI's. - However, Larner never indicated to McKay that the reason he had not prepared the 2IC PD was because he was unable to complete it.[169] While he kept deferring its completion, he did not indicate to McKay that he lacked the expertise or training to do it.[170] Larner never suggested to McKay that he did not understand what a KPI was or how to set them.

(3) Larner's expressing frustration and becoming increasingly agitated. - However, the frustration expressed was similar to Ms Koehler's in that it related to work and not being able to implement changes within his chosen timeframes; so too, the agitation was directed at a lack of achievement in implementing change.[171]

(4) Larner's long hours of work, thought to be unnecessary. - However, the evidence of the hours Larner worked left the issue disputed and uncertain. Larner's own evidence of the hours he was working was unsatisfactory as he had exaggerated his hours to the psychologist, Dr Mills, and there were inconsistencies between his evidence and his answer to interrogatories.[172] The disputed state of the evidence precludes reliance on the hours Larner worked as a sign that Larner was not coping.

(5) his complaints to Jeffries and McKay of feeling unwell, and drowning. - The difficulty is that both Jeffries and McKay disputed that Larner made complaints about his health or claimed that he was 'drowning'.[173] Larner did not have any time off work for mental or physical problems. There was an on-site nurse and Jeffries, who as the Human Resources Manager was responsible for the health of all the staff, stated that if Larner had complained about his health he would have referred him to a medical practitioner via the nurse.[174] Jeffries said he did not recall any complaint from Larner about headaches, or eye-strain, or that he was not coping, despite seeing him every day at Altona.[175] Jeffries maintained that Larner remained enthusiastic and up-beat when employed by GWF, as he had been when he was interviewed.[176] McKay did not at any stage believe Larner required medical examination. He saw no signs that Larner required referral to a nurse; no sign that he suffered from psychiatric injury. McKay did not feel that Larner was not coping except in the sense of needing help to focus on immediate priorities.[177] Moreover, the question arises, if it was so readily apparent that his health was suffering, why did Larner not seek any medical assistance himself, either from his own general practitioner or from the on-site nurse?

(6) his physical appearance at work, apparent to Pascoe.[178] - However, the incidents were isolated ones and while it may have been evidence that Larner appeared to be stressed, an observation of stress does not entail that an employer, without any particular relevant expertise, is to be taken to have recognised the risk of psychiatric injury.[179]

(7) the evidence that Eyre had said that 'We know we are responsible for this' and Green's evidence that Eyre and Grace had said words to the same effect.[180] - However, Eyre's statement was said in the context of a discussion about whether or not Larner would need to complete a WorkCover claim and in the context of an acknowledgement that Larner had suffered a work-related injury for which GWF would have to accept responsibility. Green accepted in cross-examination that the statement made by Eyre 'was said in the sense it happened at work' although she maintained in re-examination that it was an acknowledgement that 'they knew they were responsible for what had happened to David.' While we consider that the judge ought to have expressly dealt with the statement made by Eyre in his reasons, which he did not, we consider that the statement was readily explicable and the reasons were not rendered inadequate by its omission.

(8) the effect on Larner's psychological health, as referred to in Exhibits 24 and 2. - We have already dealt with both Exhibits 24 and 2. Suffice it to say that, relevantly, while in McKay's statement (Exhibit 24) he spoke of Larner being agitated[181] this was explained as being in the context of Larner making 'the transition from observer (contractor) to doer (permanent) and being unable to achieve things within his timeframes'[182] and not of a sufficient order that it ought to have alerted GWF to the risk of psychological collapse or enlivened an obligation on GWF to take steps to avoid that risk. There was no observed concern to Larner's mental health that McKay was able to identify. Exhibit 2 focused upon Larner's performance and whether adequate resources were provided to him and while there was mention of the meetings between McKay and Larner as having 'varied' results because, in what must have been a reference to Larner, 'often would not say what he was doing' and 'had to be prompted' there was no mention of signs of a risk of psychiatric injury.

213 It is not to the point in relation to the claim in negligence that there is medical evidence that Larner has an obsessional personality, which is more susceptible to breakdown and to finding it difficult to cope with stressors which threaten his sense of control. The evidence offers only an insight gathered in hindsight as it was not known by GWF at the time Larner entered into the contract or at any time during Larner's employment.[183] Koehler v Cerebos is unequivocal in rejecting the relevance of such hindsight to the determination of an employer's negligence.

214 The absence of warning signs is reinforced by the fact that the initial diagnosis after the collapse was of a physical and not psychological collapse, just as in Koehler v Cerebos. Larner thought he was having a heart attack or a stroke.[184]

215 We consider that the judge was correct in his application of Koehler v Cerebos and, more generally, that there was no error in the judge's conclusion that the claim in negligence was not made out and that his reasons were adequate in demonstrating how he arrived at that conclusion.

216 Associated with the claim that the judge erred in failing to find that GWF was negligent was the claim that the judge erred in finding that the problems with GWF's logistics operations were of a minor nature when Larner gave evidence that there were stock losses of $600,000 or more a month, which, Larner submitted, was not challenged on cross-examination. Larner also claimed that the judge's findings were inconsistent with Goodman's evidence that the operations were a 'shemozzle' and a 'disaster', which, Larner submitted, was also not challenged on cross-examination.

217 We make two responses to this claim: the first is that, as mentioned above, ultimately the problem of stock losses appeared to be attributable to errors in calculation and the problems in the logistics operations were resolved, after Larner left, within a relatively short time-frame.[185] That in itself suggests that the problems were relatively minor. The second is that there was no need to challenge Goodman's evidence on the state of GWF's logistical operations because his evidence that it was a 'shemozzle' was qualified by the evidence that everything 'worked almost perfectly' until two days before Christmas whereupon it became a 'shemozzle'. The juxtaposition of the two notions itself suggests the word 'shemozzle' was an overstatement. Such qualified evidence could not bear the reliance Larner wished to place upon it. There was also ample contradictory evidence that although there were problems, they were not insurmountable or a 'disaster'. In our view, it was open to the judge to characterise the difficulties of GWF's logistical operations as 'minor'.

218 We reject those grounds of appeal that challenge the judge's finding that Larner had failed to establish negligence on behalf of GWF.

219 The final grounds of appeal challenge the observation by the judge that Larner's case suffered from an absence of any evidence of an external standard against which one could determine whether the work Larner was required to perform under his contract was unduly onerous. Larner submitted that in the present case, the matter of an external standard is irrelevant and the judge erred in requiring him to lead such evidence where there was evidence that GWF had not discharged its contractual obligations, that it had reason to suspect that he was at risk of suffering recognisable psychiatric illness, or alternatively, that it knew of such a risk through its servants or agents such as Pascoe. Alternatively, Larner submitted that if he was required to lead evidence of an external standard, he fulfilled this requirement by tendering GWF's employment policies created in February 2006[186] and the judge erred in finding no evidence had been adduced and that the absence of similar employment policies in 2002 was of no consequence.

220 As mentioned above, in Koehler v Cerebos the High Court made it clear that the question of whether or not the duties performed are 'onerous' or 'excessive' is relative, and needs to be assessed by having regard to an external standard, such as evidence of industry practice.[187] The judge found that Larner called no evidence about any external standard to enable a finding to be made that the work Larner was required to undertake was unduly onerous or stressful.

221 In the absence of any evidence of an external standard from Larner, the evidence before the judge about industry practice and expectations came from GWF, namely: (a) McKay's evidence that he would expect someone at Larner's level of seniority to be capable of preparing KPI's and PD's, that longish hours would be expected, and that someone in Larner's position would not be expected to need to have his or her supervisor alongside all the time; and (b) Jeffries' evidence that senior managers do not clock on and off, but manage their own time and are paid to do a job.

222 It might be expected that a responsible position at management level, where the employee is engaged as part of a 'turnaround team', would inevitably entail some level of stress. That, after all, is why such an employee gets paid a relatively generous amount. The question is the point at which an employer could reasonable anticipate that the work is so onerous, and the level of stress is so great, that it raises a foreseeable risk of psychiatric illness. It might be said that this is the point at which the abilities and capacities of the employee are no longer matched by the work to be performed thereby creating a foreseeable risk of breakdown.

223 We have already concluded that, in the circumstances of the case, it was not reasonably foreseeable to GWF that there was a risk of Larner's breakdown. The absence of evidence of an external standard against which the judge could assess whether Larner was obliged to engage in 'overwork' or 'excessive work' was an important contributing factor in the judge's reasoning that the risk of psychological collapse was not foreseeable to GWF. We consider that it was open to the judge to take the absence of an external standard into account as a relevant consideration and to consider its omission as a 'critical gap'[188] in the evidence.

224 We reject those grounds of appeal based upon the absence of evidence of an external standard.

225 Larner failed to establish that a reasonable person in the position of GWF would have foreseen the risk of psychiatric injury through his performance of the obligations which he had contracted to undertake. Based upon the findings of the judge which have not been successfully impugned, Larner has not established that his employer ought reasonably to have anticipated that it would expose him to psychiatric injury by requesting him to perform his contractual obligations. That is to say, the content of his employer's duty of care was informed by the nature of the contractual obligations which he had undertaken to perform.[189]

226 Larner challenged the judge's findings of fact which rested largely upon credibility findings concerning Larner and his primary witnesses. Larner contended that the credibility findings made by the judge do not insulate his reasons from proper analysis.[190] No facts, however, have been identified which are 'incontrovertible' or 'glaringly improbable' or 'contrary to compelling inferences' or that demonstrate that the judge 'failed to use or has palpably misused his advantage' so as to demonstrate that his conclusions are erroneous.[191] There is also no substance in Larner's contention that the judge did not subject the important evidence to adequate analysis in his reasons for decision. The judge in his comprehensive reasons carefully evaluated all of the important evidence.

[1] Further Further Amended Statement of Claim, [7].

[5] Ibid [6], [7] and [16A]. The Further Further Amended Statement of Claim refers to 'agrophobia' in [6], but we take it that this should be 'agoraphobia'.

[6] Larner v George Weston Foods Limited (unreported, County Court of Victoria, 10 May 2012) ('Reasons').

[7] Exhibit 6. Although the letter is dated 5 April 2002, Larner's evidence was that this is a mistake and he signed it on 5 February 2002.

[8] Larner's date of birth is 27 March 1966.

[10] The course was part-time, two nights a week, over eight to 10 weeks.

[11] Exhibit 18. That document showed earnings of $44,317 in 1996/97, $25,625 in 1997/98, $26,057 in 98/99, $54,262 in 1999/2000 and $29,524 in 2000/2001.

[12] Exhibit 15, answer to interrogatory 9.

[15] Exhibit 15, answer to interrogatory 11(b).

[16] However, to the contrary see [156] below.

[17] Jeffries said that 'he would have thought' that Larner understood that Joe Foti reported to him.

[20] (2005) 222 CLR 44 ('Koehler v Cerebos').

[21] Koehler v Cerebos (2005) 222 CLR 44, 53 [21].

[48] Grounds 26-30. Although the grounds alleging breach of contract came after the grounds for negligence in the Notice of Appeal, it is more sensible to consider the contractual issues first given the reliance upon Koehler v Cerebos and the inter-action between the obligations under the contract and in tort.

[49] Ground 28A. The parties were permitted to file written submissions on the additional ground of appeal.

[51] Grounds 24-25. The Notice of Appeal initially contained as Ground 31 the allegation that his Honour erred in the exercise of his discretion in discharging the jury without a verdict on the tenth day of trial because the issues of fact and law were of such complexity as to preclude the jury being charged. However, this was abandoned at the hearing of the appeal.

[52] Larner v George Weston Foods Limited (Ruling No 1) (Unreported, County Court of Victoria, 8 March 2012), [13]-[15].

[54] O'Donnell v Reichard [1975] VicRp 89; [1975] VR 916, 929.

[55] [1959] HCA 8; (1959) 101 CLR 298.

[56] [1959] HCA 8; (1959) 101 CLR 298, 321.

[57] Fabre v Arenales (1992) 27 NSWLR 437, 450.

[58] (1992) 29 NSWLR 336, 343 (original emphasis).

[59] See [189] below.

[63] Ibid [113], [114] respectively.

[64] State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) [1999] HCA 3; (1999) 160 ALR 588, [63]-[64] (Gaudron, Gummow and Hayne JJ), [93]-[94] (Kirby J), [139] and [155] (Callinan J). See also Fletcher Construction Australia Ltd v Lines Macfarlane & Marshall Pty Ltd [2002] VSCA 189; (2002) 6 VR 1, [18]; Goodrich Aerospace Pty Limited v Arsic (2006) 66 NSWLR 186, [27]-[28]; and Cooper v Hobbs [2013] NSWCA 70, [83].

[65] [2013] VSCA 29.

[66] [2013] VSCA 29, [31], [33]-[34] (footnotes and citations omitted). See also Jew v Holloway [2013] VSCA 260, [32]-[36].

[68] See [76] above.

[69] See [41] above. Reasons, [129(5)].

[70] See [42] above. Reasons, [50].

[71] See [41] above.

[75] Exhibit 8 began: 'Over the past weeks that I have been on site the issue of missing stock has compounded to the point where certain SKU's [Stock Keeping Units] are now counted per shift three times a day as they have ongoing shortages' and went on to give specific examples and express further concerns about theft.

[76] See [37] above.

[77] See [55] above.

[78] See [55] above.

[81] See [15] above.

[83] See [8] above.

[84] See [55] above. Reasons, [82].

[86] See [142] below.

[87] See [42] above.

[88] See [41] above.

[89] See [142] below.

[96] As noted at [35] above.

[97] See above [35].

[98] See [35] to [39] above.

[100] See [47]-[49] above.

[101] See [155] below.

[102] See [44] above.

[103] See [41] above.

[104] See [109] above.

[106] See [59] above.

[107] See [64] above.

[108] See [62] above.

[109] See [63] above.

[110] See [47] above.

[111] See [127] above.

[112] Reasons, 129(10). See [80] above.

[113] The allegation that Exhibit 2 also demonstrated that GWF had knowledge of facts between February and April 2002 from which it could be inferred that it reasonably foresaw the risk of psychiatric illness to Larner is considered below.

[114] See [23]-[24] above.

[115] On the contractual negotiations, see [16]-[26] above.

[116] Reliance on this issue raised the question of the challenge to the judge's refusal to grant leave in respect of the proposed amendment to the statement of claim which we have already rejected.

[117] See [166] above.

[119] JJ Savage & Sons Pty Ltd v Blakney [1970] HCA 6; (1970) 119 CLR 435, 442-3.

[120] Heilbut, Symons & Co v Buckleton [1912] UKHL 2; [1913] AC 30, 51.

[121] [1956] EWCA Civ 5; [1957] 1 WLR 370, 375.

[122] Scammell (G) & Nephew Ltd v Ouston [1941] AC 251, 268, (Lord Wright, quoted by Barwick CJ in Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8; (1968) 118 CLR 429, 437).

[123] See [17] above. Exhibit 15.

[124] See [172] above. See also [18] above.

[125] See [18] above.

[126] See [47]-[48] and [139]-[141] above.

[128] See [72] above.

[130] See [68] above.

[131] See [21] above.

[133] See [15] above.

[134] [2001] VSCA 146; (2001) 3 VR 334.

[135] With whom Charles and Batt JJA agreed.

[136] Ibid 344-5 [41] (citation omitted).

[137] Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 118 (Deane J); Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286, 301 (Latham CJ), 307 (Rich J), 311-312 (McTiernan J).

[138] Larner referred to Goldman Sachs JBWere Services Pty Ltd v Nikolich [2007] FCAFC 120; [2007] 163 FCR 62, [71]-[74] (Black CJ).

[139] See [27]-[28] above.

[140] Respondent's Submissions on Remoteness, dated 5 December 2013, [6] (original emphasis).

[141] (1854) 9 Ex 341; 156 ER 145. See Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64, 92 (Mason CJ and Dawson J), 98-99 (Brennan J), 119-120 (Deane J), 135-136 (Toohey J), 174 (McHugh J).

[142] (1854) 9 Ex 341, 355.

[143] [1993] HCA 4; (1993) 176 CLR 344.

[144] [1993] HCA 4; (1993) 176 CLR 344, 368.

[145] She also alleged a breach of statutory duty under the relevant Western Australian legislation.

[146] Callinan J delivered a separate concurring judgment.

[147] [1980] HCA 12; (1980) 146 CLR 40, 47-8.

[148] Koehler v Cerebos (2005) 222 CLR 44, 53 [19].

[149] Ibid 53-4 [21]-[22], as mentioned, [67] above.

[152] Ibid 54 [23]. In doing so, the Court disapproved of the approach adopted by the English Court of Appeal in Sutherland v Hatton [2002] EWCA Civ 76; [2002] 2 All ER 1.

[155] Ibid 57-8 [36], citing Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337, 347; BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266, 283.

[157] See [28] above.

[158] See [29] above.

[159] See [6], [9] and [16] above.

[160] See [29] above. Exhibit 15, answer to interrogatory 9.

[161] See [36] above.

[162] See [12] and [15] above.

[163] See [29] above.

[164] See [39] above.

[165] See [10] above.

[166] See [59] above (emphasis added).

[167] See [39] above.

[168] See [25] above.

[169] See [39] above.

[170] See [48] above.

[171] See [145] above and see further below.

[172] See [76] and [41] above.

[173] See [57] and [59] above.

[174] See [57] above.

[175] See [57] above.

[176] See [128] above.

[177] See [49] and [59] above.

[178] See [60] above.

[179] Koehler v Cerebos (2005) 222 CLR 44, 57 [34].

[180] See [62]-[63] above.

[181] See [145] above.

[183] Dr Nathar, a psychiatrist called on behalf of Larner at trial, first saw Larner in December 2002.

[184] See [61] above.

[185] See [37] above.

[187] Koehler v Cerebos (2005) 222 CLR 44, 56 [29].

[189] Koehler v Cerebos (2005) 222 CLR 44, 53 [19], 53-4 [21]-[22].

[190] Jew v Holloway [2013] VSCA 260, [33].

[191] Fox v Percy [2003] HCA 22; (2003) 214 CLR 118; Jew v Holloway [2013] VSCA 260, [33].