Moir v Workcover/Royal and Sun Alliance

4 The claimant, along with his wife, was a Director of the employer company.

5 They were the only shareholders. The claimant was also the Manager of the company.

6 The respondent contends that the applicant's psychiatric condition was generated by the claimant's business decisions in his capacity as a Director and not in his capacity as a Manager.

7 The distinction between the activities of a Director and those of a Manager where the Manager is a Director of the company is divided by a thin line often blurred. The difficulties of dissecting the activities of the employing entity as distinct from the controlling entity is often almost metaphysical.

8 These were alluded to by Gilchrist J in Caldwell v WorkerCover Corporation/Allianz Australia (Adelaide Technical Rubber) 2002 SAWCT 89.

9 I note the remarks therein at par 19 that whereas there is a very clear line between the stresses that relate to employment and those that do not so that what is required is weighing up the relative significance of those that fall on one side of the line against those that fall on the other, and in the case of a working Director that line is not so easy to draw.

10 For some years the applicant's company operated a very successful business as an agent for Telstra in selling mobile phones and connections to the Telstra network. There were a number of shops. There was significant staff. The applicant managed that business very well. He did so very successfully. He was a "hands on" Manager taking an intense personal interest both in the performance of the stores and the performance of his staff and at times in the personal problems of his staff.

11 In the late 1990s the stores were in financial trouble. However the business survived those problems and continued to prosper.

12 I have the clear impression that the applicant's views on the direction of the overall business direction prevailed.

13 During the year 2000 the applicant explored the possibility of selling the entire business. After negotiations with a number of possible purchasers, Vodafone (a competitor in the market with Telstra) made the Directors an offer they chose not to refuse. A condition of this offer was that the applicant should remain and manage the business.

14 I do not know what the terms were. I do not have to know. Ties with Telstra were severed in November 2000. The decision to "migrate the business" to Vodafone was clearly an ownership "ie Directorial" decision.

15 The decision turned out to be an economic disaster. In a fairly short time ie about eight months it precipitated the employer into administration, then liquidation as well as into a morass of litigation against Vodafone.

16 The effect on the applicant's lifestyle was catastrophic. No money was coming through. The four children had to be withdrawn from private schools.

17 A measure of the change was that with Telstra the business sold 800 new connections a month. With Vodafone in seven months there were 500 new connections.

18 The impact on the applicant as a Manager was that he worked harder and longer. He had to placate his staff who were aware of impending failure. He worked shifts at stores when staff did not come to work. He did not employ casual staff to cover staff annual leave but did the job himself. Creditors became angry. The full story is set out in the worker's statement and also in the useful histories given to the psychiatrists, doctors Siklich and Tottman.

19 In spite of the applicant's herculean efforts, the business went into voluntary administration in July 2001.

20 The applicant (and his wife) lost everything. One evening about the time of the July creditors' meeting a group of former staff attacked his house with rocks. They "bricked" it. The applicant slept in his car for four nights as the result thereof.

21 The effect of this financial disaster on his wife and family was a catastrophe both in financial and personal terms.

22 In September 2001 his then GP Dr Jenny Bowen began treating him for anxiety and depression. She referred him to a psychologist. Early the next year she referred him to Dr Ivan Siklich a psychiatrist who first saw the applicant on 30 May 2002 and under who's care he still remains.

23 There is no doubt that the applicant has the qualifying illness or disorder of the mind.

24 There is no doubt that the condition precedent of that illness was the Director's decision to "migrate the business from Telstra to Vodafone" and the subsequent perceived non-performance by Vodafone of its obligations to the company. There is no doubt this led to the decline of the business.

25 Equally it is clear that it was the applicant's efforts as Manager to arrest or ameliorate that decline, impacted upon his personality. His efforts as a Manager to save the business are described (tb 360-367) and they were the activities of a Manager although his efforts were also directed to salvaging his family's investment. These efforts went well beyond the normal activity of a Manager but were made by the applicant as Manager.

26 He was confronted with sales plummeting from 30 to 40 phones per day with Telstra to one or two per day with Vodafone. In particular he was not given, he says, anything like the Managerial support from Vodafone which had been promised. The evidence of his work pattern January to July 2001 was not challenged. The evidence of sleeplessness, anxiety, etc was not challenged.

27 The respondent's first line of defence is that it was not until September 2001 ie after he had in fact lost his Manager's job, that the applicant first sought medical treatment. Indeed it was not for another seven or eight months that he was first given psychiatric assistance.

28 If common experience of life teaches us one thing, it is that the manifestation of psychological trauma is not always contemporaneous with the trauma. That manifestation can come months sometimes years later.

29 A simpler and ad hominum explanation might be that as the business declined and the applicant's stress became more frantic, the applicant did not have the time or the luxury to reflect on his psychological state. He was too busy trying as Manager to save the sinking ship. The experience of having his house attacked at night by former staff must have been psychogically devastating. It was a statement about him as a person.

30 I therefore reject the time differential proposition as having any real substance.

31 The respondent's second line of defence was that there were stressors in the applicant's life other than that which operated in the first half of 2001:-

A He had required psychiatric treatment from 1996 to 1998.

B His marriage relationship was unsatisfactory and was under stress.

32 In my view neither of these factors prevent the events of 2001 from being a "substantial" cause of the applicant's disability". I don't propose to repeat what either I or the Full Tribunal said in Auld (2000 SAWCT 42 and 155) about "substantial cause".

33 The third and most significant defence was twofold:-

A The cause (and I am dealing with that word in the Sheriff's case sense) of the disability was the Director's decision to leave Telstra and join with Vodafone

B The actual cause of the disability was the "loss of control" of the business. Control was lost to the administrators who are engaged in litigation against Vodafone for the benefit of the creditors.

34 As to the Director's business decision, I hold that as in Caldwell's case that was the activity of the applicant as a Director - qua Director.

35 However in the circumstances of this case it does not mean it was the only cause or the only substantial cause of the disability.

36 The practical working out of that decision (ill judged though it might have been) meant that the Manager bore the burdens of implementing that decision and dealing with the consequences thereof in the day to day operation of the company.

2 As a defence to an ongoing entitlement for compensation.

A Dr Bowen, after detailing the treatment for the depression and anxiety which she described in the notes at (tb 36):-

"Philip's role was that of managing director with full responsibility for the running of the business. He is currently unfit for any kind of employment."

"between December 2000 and July 2001 he tried to keep the business going but by March 2001 he was finding it very difficult. In July 2001 at the first administrators meeting Mr Moir said that he "lost it". He said that he decided to kill himself and that his plan was to hang himself."

At (tb 40) "The identifiable work event or circumstances have been outlined. This relates to the alleged failure of Vodafone in December 2000 to fulfil the contract that they had committed to with Mr Moir. ... Mr Moir has lost any control over the matter."

39 In this report Dr Siklich did not comment on the substantial cause issue. In a further report of 20 December 2002 in response to the applicant's solicitor asking for elucidation of the "substantial cause issue" Dr Siklich said (tb 44):-

"In his role as Manager he had to maintain staff motivation. This was difficult given that many of the employees' earnings were based on commission sales. He also had to deal with their general disenchantment at the direction the company had taken. ...

staff turnover had increased as people began leaving ... he found himself doing two or three other jobs simply to cover shortfalls and working longer and longer hours. ... Given the pressures that Mr Moir was under I think it is reasonable to state that his role as the manager of the company significantly contributed to his depression disorder, his panic disorder and the re-development of his bulimia nervosa."

"it is only reasonable to now conclude that the set of circumstances that Mr Moir found himself faced with during the first half of 2001 in his role as General Manager of the company was a significant cause in the deterioration in his mental state." (tb 45)

40 Dr Siklich gave evidence and the material at p 90, p 91, p 92, p 93 and p 96 is significant.

41 I have already quoted his opinion on 20 December 2002.

42 At tb 47 that opinion might be limited to the first half of 2001

43 However it is again modified at tb 47 and at tr 91 Dr Siklich said that

"the pressures he was under in work in his management role were severe and significant and caused a decompensation and the adjustment disorder - the anxiety...

I thought that they, as significant factors in his illness presentation, were present for perhaps six to nine months, but that his current presentation is very much - if not entirely - due to the process of the liquidation and everything that's followed since. It's very difficult when it's the same business, but there are two streams running, and they can both be significant at certain temporal points, but that doesn't mean that they're both significant now."

44 In Dr Siklich's report of 10 April 2003 he noted that "my area of expertise is psychiatry and not the law, more particularly company law" (tb 46). He was stressing his unfamiliarity with the distinction of a Director's duties from a Manager's duties or at least the legal significance thereof.

45 Dr Vance Tottman then reported and gave evidence. His reports are found at tb 49. That report doesn't address the substantial cause issue. He was asked to do so by the applicant's solicitor and reported on 5 March 2003.

46 His original diagnosis was an adjustment disorder due to work stressors and in his situation the work stressors are quite obvious.

47 When asked to address the substantial cause issue he gives a very comprehensive report of the material Mr Moir had retold to him.

"the real difficulties he had were in keeping the company going in his dealings with staff and creditors. It would seem to me, from the data (and Dr Tottman had before him a lengthy record of interview of 19 pages of an investigator and the applicant) ... that much of his stress was related to his role as a manager and, therefore, in my opinion, his role as a manager caused much more of a contribution than an insignificant or minor degree of contribution would have done. Therefore, the data suggests that his role as a manager was a significant causative factor and, therefore, a substantial cause of his depressive condition."

49 I allowed (in the exercise of my discretion) both Counsel to cross-examine Dr Tottman.

50 In evidence tr 112 and following Dr Tottman discussed the role of "vindication" in the applicant's makeup tr 113

"His fear was that he's not the honest employer that everybody thought he was. It's very much a personal self image with him."

"He talks about getting an old car for one of his employees that needed a car, and he also felt very personally responsible because one had taken out a mortgage and one had taken out a loan. He was almost like a father." (tr 115)

"Q And if some of them banded together to brick his house and throw eggs at his house it's likely to have a pretty severe impact on him isn't it.

51 I was initially concerned that the applicant might be disadvantaged by having to face a defence in the alternative that by the end of 2001 or shortly thereafter the substantial cause was the corpus of financial concerns which it is said are not to be the problems of a Manager but of ownership. In any event the applicant's employment ceased at the end of July 2001. I do not entertain those concerns now for a number of reasons:-

1 No issues were filed because the case came into the hearing list on an expedition order from Gilchrist J thus bypassing the Chamber Judge system. However counsel for the applicant did not assert that the applicant's case as put was disadvantaged by having to debate the issue of ongoing incapacity distinct from incapacity at an earlier date thus perhaps exposing the compensating authority to the argument that after a favourable finding it was necessary for them to have recourse to s 36(1)(b) (ceased to be incapacitated by the compensable disability) (Hornhardt v WCC/HIH 2000 WCT 157 par 12).

2 The date of the determination was 19 November 2002. The trial commenced 20 May 2003.

52 The facts of this case are far more complex than Caldwell.

i It involves as I have said the almost metaphysical distinction between the activities of a Director of a company and the activities of that person as the Manager thereof.

ii Both psychiatrists explicitly acknowledge that they had only slight knowledge of or understanding of the ramification of the distinction between a Director and a Manager. Eg Dr Siklich (tb 46) "My area of expertise is psychiatry not law." Dr Tottman (tb 53) "I am extremely ignorant and naïive regarding business matters."

iii Neither psychiatrist was originally asked to address the central issue ie substantial cause. They addressed that problem only after the applicant's solicitors requested them so to do.

iv The determination relies on the view of Dr Tottman that the disability did not arise from employment. Presumably the report was that of 1 November 2002. That report does not say that. It is a misreading thereof to suggest that it does.

53 I accept the evidence of the applicant as being that of a truthful witness. It was not contended otherwise.

54 Both the psychiatrists were model witnesses in that they both attempted to give objective evidence on a particularly difficult subject - where language is inadequate and perhaps the search of the legal process for a degree of certainty clashes with psychiatric analysis of human behaviour and personality which is far more complex. Neither expert showed any trace of partisanship.

55 Dr Siklich: On the face of it his oral evidence was in conflict with his report. In his report of 16 December 2002 he said that in the applicant's role as General Manager of the company was a significant cause in the deterioration of his mental state. "I think it is reasonable to state that his role as the manager of the company significantly contributed to his depressive disorder, his panic disorder, and the re-development of his bulimia nervosa." (tb44)

56 In evidence he said, as I have previously noted, that the decompensation and the adjustment disorder - the anxiety, were factors that perhaps were caused by the managerial activity for perhaps six to nine months (I'm not certain whether this means up to July 2001 or into early 2002). (tr 91)

57 Dr Siklich seems to imply at (tr 91) that the causal influence of the stress of management had evaporated following relinquishing the position of Manager.

58 Dr Tottman in his second report of 5 March is quite definite that the applicant's employment activity is quite clearly a significant cause of the mental illness.

59 In evidence Dr Tottman did not resile from that position although he did not discount the importance of a loss of control of the business. The loss of control as a causative factor in the applicant's current medical presentation was of more significance to Dr Siklich than to Dr Tottman.

60 One insight which I found useful came from Dr Siklich at tr 93. In an exchange with the Bench regarding a lasting effect of the disability that could be attributed to the employment managerial activity and particularly whether that disability could sensitise him ie make his personality more vulnerable to future assaults or less likely to enable him to cope with a future assault he said:-

"That sensitivity or sensitisation, if you will, is certainly there. The impact in a person who has been highly functioning and who then finds himself to be not quite as highly functioning as they thought and who then has to reappraise their self-view and, in the process, loses some self-confidence or gains doubt - it does have a corrosive effect. Mental illness has a corrosive effect." (tr 93)

61 I doubt if further elucidation of that topic would be helpful as it would enter the realm of speculation.

62 In the final analysis, the issue of whether the Management employment activity was a cause of the disability and further whether it was a substantial cause are questions of fact.

63 Notwithstanding the careful submissions of Mr Luke I am persuaded on the balance of probabilities that the employment activities are a substantial cause within the meaning of the Act of the worker's current disability.

64 His evidence and that of Dr Tottman and the insight of the corrosive effect on the applicant's personality of the events of 2001 culminating with the assault on his house persuade me that the applicant is entitled to compensation.

65 I reverse the determination and order the compensating authority to accept the claim.

Parties are advised that if a party wishes to appeal against any part of this decision which is appealable pursuant to s 86(1) of the Act such appeal must be filed with the Registrar in accordance with the form titled Notice of Appeal within 14 days of the delivery of this decision and must be served on all parties.