104 The Defendant relied on Reid v Rush & Tomkins Plc [1990] 1 WLR 212 at 221, and submitted that, unless there is some special feature, the mere existence of an employment relationship does not give rise to a duty on the employer to protect an employee from the infliction of purely economic loss. The Defendant submitted that the pleadings disclose no reasonable cause of action because there is no duty of care to prevent the type of loss alleged.
105 Claimed loss (b) at [101] above concerns damage to reputation and professional standing. The Defendant submitted that no duty lies in respect of the negligent infliction of loss of this kind. It was submitted that a series of decisions has established that, where a plaintiff claims damages for injury to reputation by reason of what was communicated about him or her, the plaintiff's remedy lies in defamation, and he or she cannot sue in negligence: Sattin v Nationwide News Pty Limited (1996) 39 NSWLR 32 at 44-45; Sullivan v Moody [2001] 207 CLR 562 at 580-581 [54]; Gacic v John Fairfax Publications Pty Limited [2005] NSWSC 1210 at [42]. The Defendant submitted that the basis of the Plaintiff's claim for damage to reputation in the present case is obscure. It was submitted that paragraph 469 of the proposed Amended Statement of Claim does not specify how the damage is said to have occurred or what comprises it. The Defendant submitted, however, that to the extent it is based on anything allegedly communicated about the Plaintiff, it cannot succeed.
106 Loss (d) at [101] above is alleged to be psychiatric harm in the nature of an anxiety/depressive disorder. The Defendant submitted that a duty of care to prevent the occurrence of harm in the form of psychiatric illness would only arise if the Defendant ought to have foreseen that a person of normal fortitude might, in the circumstances of the case, suffer a recognised psychiatric illness if reasonable care was not taken: s.32(1) Civil Liability Act 2002. In the present case, the Defendant submitted that the relevant facts appear to be that certain complaints made by the Plaintiff were not properly investigated (paragraph 465) and that this caused the Plaintiff to suffer from an anxiety/depressive disorder (paragraph 469). The causal link between these two events is not specified in the pleading. However, the Defendant assumed for the purpose of argument, that the asserted link is that the alleged failure properly to investigate the Plaintiff's complaints was a cause of the decision not to renew his contract, which decision would not have been taken had the complaints been properly investigated, and that this decision somehow led to the Plaintiff suffering psychiatric harm. In those circumstances, the Defendant submitted that it could not have been foreseen that a person of normal fortitude would suffer a recognised psychiatric illness had reasonable care not been taken.
107 The Defendant emphasised two matters in this respect. Firstly, the "circumstances of the case" which the legislature considered relevant to the s.32(1) test were, with one exception, remote from the present case. By reference to the circumstances in s.32(2) Civil Liability Act 2002, the Defendant submitted that there were not present in this case the existence of a sudden shock, the witnessing of a person being killed, injured or put in peril or the existence of a relationship between a plaintiff and the person being killed, injured or put in peril. Only the fourth circumstance, a pre-existing relationship between the Plaintiff and the Defendant, was present in this case. The Defendant submitted, however, that the relationship of employer and employee was one which it was open to the Defendant to bring to an end, either by not renewing the Plaintiff's contract or by terminating the contract in accordance with its terms.
108 The Defendant submitted that the circumstances in which Courts have recognised a duty to prevent the infliction of purely psychiatric harm have been narrowly confined. It was submitted that, in the workplace context, the mere fact that a person was an employee, or that psychiatric harm was predictable, does not lead to a conclusion that such harm is reasonably foreseeable: Nationwide News Pty Limited v Naidu (2007) 71 NSWLR 471 at 477-478 [20]-[24]. Rather, the Defendant submitted, the Courts have emphasised the need to examine what it is that the employee has undertaken to do, and the manifestation of any warning sign that psychiatric harm might eventuate: Koehler v Cerebos (Australia) Limited [2005] 222 CLR 44 at 57-58 [35]-[36].
109 In the present case, the Defendant submitted that the suggested proximate cause of harm (the failure to renew the Plaintiff's contract) was a possibility inherent in the very nature of the employment relationship. The Defendant submitted that the fact (which must be assumed in the Plaintiff's favour on this application) that the Plaintiff's employment would have continued had his complaints been properly investigated, failed to grapple with the circumstance that the possibility of the Plaintiff's employment being brought to an end by the Defendant at some future point would always have remained. Further, the Defendant submitted that it was not suggested in the pleading that there was any warning sign which ought to have alerted the Defendant to the risk that the failure to renew his employment would have led to the Plaintiff suffering psychiatric harm. The Defendant submitted that paragraphs 470 and 471 of MFI1 did not assist the Plaintiff on this application, with the matters contained in paragraph 470 being clearly irrelevant to the Plaintiff's situation and the allegation in paragraph 471 being vague and general without identifying any particular sign of harm.
110 Further, the Defendant submitted that the pleadings in relation to this claim are embarrassing. Firstly, because they fail to specify material facts relevant to the scope of the duty alleged. Secondly, because they fail to specify material facts relevant to the breach of the duty alleged and, thirdly, because they fail to specify material facts relevant to the damage alleged. The Defendant relied upon Yovicherich v Royal Australian and New Zealand College of Radiologists [2005] NSWSC 1208 at [33]-[37].