FEDERAL COURT OF AUSTRALIA Swire Pacific Ship Management (Australia) Pty Ltd v Bose [2014] FCA 378 Citation: Swire Pacific Ship Management (Australia) Pty Ltd v Bose [2014] FCA 378 Appeal from: Bose v Swire Pacific Ship Management (Australia) Pty Ltd [2013] AATA 307 Parties: SWIRE PACIFIC SHIP MANAGEMENT (AUSTRALIA) PTY LTD v DAVID BOSE File number(s): WAD 180 of 2013 Judge(s): SIOPIS J Date of judgment: 15 April 2014 Catchwords: WORKERS' COMPENSATION – employee suffered a major depressive disorder – whether the condition was an injury for the purposes of s 23 of the Seafarers Rehabilitation and Compensation Act 1992 (Cth) – whether the depressive disorder was suffered as a result of reasonable disciplinary action. Legislation: Administrative Appeals Tribunal Act 1975 (Cth) s 44 Seafarers Rehabilitation and Compensation Act 1992 (Cth) ss 3, 10(4), 26(1) Cases cited: Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees v Chenhall (1992) 37 FCR 75 Date of hearing: 19 November 2013 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 48 Counsel for the Applicant: Mr AP Hershowitz Solicitor for the Applicant: Jarman McKenna Counsel for the Respondent: Mr HN Kelly SC and Mr TM McKenzie Solicitor for the Respondent: WG McNally Jones Staff Lawyers IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 180 of 2013 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: SWIRE PACIFIC SHIP MANAGEMENT (AUSTRALIA) PTY LTD Applicant AND: DAVID BOSE Respondent JUDGE: SIOPIS J DATE OF ORDER: 15 april 2014 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The appeal is dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 180 of 2013 ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL BETWEEN: SWIRE PACIFIC SHIP MANAGEMENT (AUSTRALIA) PTY LTD Applicant AND: DAVID BOSE Respondent JUDGE: SIOPIS J DATE: 15 april 2014 PLACE: PERTH REASONS FOR JUDGMENT 1 The applicant, Swire Pacific Ship Management (Australia) Pty Ltd (Swire), is the former employer of Mr David Bose, who until 14 May 2012 held the position of chief engineer with Swire. In his position as chief engineer, Mr Bose reported to Mr Eric Duck who then held the position of technical manager with Swire. Mr Malcolm Hearnden held the position of general manager with Swire and was Mr Duck's superior. 2 During 2011, Mr Bose had engaged in argumentative correspondence with Mr Duck in relation to technical issues associated with the operation of vessels in the Swire fleet. This had led to a meeting in September 2011 between Mr Bose and Mr Duck to try and resolve these issues. However, in early 2012, Mr Bose sent a number of emails of similar tone to Mr Duck and other employees of Swire. 3 On 11 May 2012, Mr Bose was carrying out his employment duties as chief engineer on the vessel, MV Pacific Valkyrie. Mr Duck ordered Mr Bose to install exhaust valves on an overhauled cylinder head on the MV Pacific Valkyrie. Mr Bose apparently expressed reservations about the course of action proposed by Mr Duck and declined to install the exhaust valves. Mr Duck regarded Mr Bose's response as insubordination. 4 Mr Duck then reported these events to Mr Hearnden, who had the authority to take disciplinary action against Mr Bose. Mr Duck requested that Mr Hearnden relieve Mr Bose from the position of chief engineer on the MV Pacific Valkyrie and that Mr Bose be removed from the vessel at the next port of call. 5 On 14 May 2012, Mr Hearnden, without having first given Mr Bose an opportunity to be heard, decided that Mr Bose was to be relieved of the position of chief engineer and that he was to be removed from the MV Pacific Valkyrie at the next port of call. On the same day, Mr Hearnden advised the master of the vessel, Mr Silberberg, of his decision regarding Mr Bose. Mr Hearnden's decision was communicated to Mr Bose. By reason of Mr Hearnden's decision, Mr Bose left the MV Pacific Valkyrie when it docked at Port Melbourne on 30 May 2012. 6 On 5 June 2012, Mr Bose consulted Dr Mohamed Mustapha, who was Mr Bose's general practitioner. On that date, Dr Mustapha concluded that Mr Bose was suffering from severe depression and issued a medical certificate in which he certified that Mr Bose was totally unfit for work. 7 On 7 June 2012, Mr Bose attended a meeting with, among others, Mr Hearnden and Mr Duck in relation to the preceding events. On the next day a proposal was put to Mr Bose that he apologise to Mr Duck and accept a temporary demotion. Mr Bose responded to the proposal by saying he was unwell and would respond to the proposal when he was well. 8 Mr Bose claimed and, on 11 July 2012, was refused compensation under the Seafarers Rehabilitation and Compensation Act 1992 (Cth) (the SRC Act). 9 In September 2012, a reviewable decision was made on behalf of Swire which affirmed the earlier determination. the administrative appeals tribunal 10 Before the Administrative Appeals Tribunal (the Tribunal), Mr Bose sought a review of the reviewable decision. 11 Section 26(1) of the SRC Act provides as follows: If an employee suffers an injury that results in his or her death, incapacity for work or impairment, compensation is payable for the injury. 12 Section 3 of the SRC Act contains the following relevant definitions: injury means: (a) a disease; or … but does not include anything suffered by an employee as a result of reasonable disciplinary action taken against the employee, or failure by the employee to obtain a promotion, transfer or benefit in connection with his or her employment. disease means: (a) an ailment suffered by an employee; or (b) the aggravation of any such ailment; being an ailment or aggravation that was contributed to in a material degree by the employee's employment. 13 Further, s 10(4) of the of the SRC Act provides as follows: If: (a) an employee suffers an injury…; and (b) the injury is a disease or an aggravation of the disease; the employee is taken, for the purposes of this Act, to have suffered the injury on the day when: (c) the employee first sought medical treatment for the disease or aggravation; or (d) the disease or aggravation resulted in the deaths of the employee or first resulted in his or her impairment or incapacity for work: whichever happens first. 14 The Tribunal found that Mr Bose was entitled to workers' compensation. In doing so, the Tribunal made the following key findings. 15 First, the Tribunal found that Mr Bose suffered a major depressive disorder which was contributed to in a material degree by actions of the employer, namely, by Mr Hearnden's decision to relieve Mr Bose of his position as chief engineer and to require him to leave the vessel. 16 In reaching this decision, the Tribunal relied upon the evidence of Dr Amit Banerjee, a psychiatrist (who provided a report dated 4 December 2012) and Dr Mustapha (who provided a report dated 15 November 2012). The Tribunal also considered the evidence of another psychiatrist, Dr Victor Cheng, but preferred the evidence of Dr Banerjee and Dr Mustapha. 17 The Tribunal accepted the evidence of Dr Banerjee that the appropriate diagnosis of the condition suffered by Mr Bose was a major depressive disorder, and the evidence of Dr Mustapha who opined that Mr Bose suffered from "anxiety, depression exacerbated by events at work". 18 Secondly, the Tribunal found that Mr Bose was, for the purposes of s 10(4) of the SRC Act, to be taken to have first suffered the disease on 5 June 2012 when he consulted Dr Mustapha and was diagnosed as suffering from a major depressive disorder. The Tribunal considered the evidence which showed that Mr Bose had consulted Dr Mustapha and Dr Banerjee before in relation to depression. However, the Tribunal found that the evidence did not establish that Mr Bose had suffered from severe depression or a major depression at the time of those consultations. 19 In this regard, the Tribunal referred to Dr Mustapha's evidence that prior to seeing Mr Bose on 5 June 2012 and prescribing antidepressant medication for him, he had last prescribed antidepressant medication for him on 27 October 2009. The Tribunal also referred to the fact that Dr Mustapha had referred Mr Bose to Dr Banerjee in February 2012 and that Dr Banerjee did not prescribe any medication for Mr Bose in February 2012. On the basis of that evidence, the Tribunal found that it was not satisfied that Mr Bose was suffering from severe depression or a major depression in the period from February to May 2012. 20 Thirdly, the Tribunal found that for the purpose of the definition of "injury" in s 3 of the SRC Act, Mr Bose's injury was caused by disciplinary action taken against him by Mr Hearnden but that the action was not reasonable. 21 In approaching this question of whether the exemption for reasonable disciplinary action applied, the Tribunal first had to identify what constituted "disciplinary action" within the meaning of the statute. In this regard, the Tribunal considered the decision of Commission for the Safety, Rehabilitation and Compensation of Commonwealth Employees v Chenhall (1992) 37 FCR 75 at 83-84 (Chenhall). The Tribunal cited with approval, and applied, the following observations of Cooper J, which addressed a like provision: The disciplinary action referred to in the definition is action which has been taken against the employee prior to the injury being suffered by the employee as a result of such action. What is clear to my mind is that it is the disciplinary action itself and not the steps anterior to the decision to take such action which is covered by the definition. Additionally, the action must be directed against a particular employee and does not include an action taken by the Commonwealth as part of the general maintenance of discipline over employees of which the particular employee is but one. Thus, action taken to determine whether or not disciplinary action will be taken against an employee, although it may be characterised as part of a system or process to maintain discipline, is not action within the meaning of the definition of "disciplinary action" in the Act. 22 The Tribunal found that Mr Hearnden's action was disciplinary action within the meaning of s 3 of the SRC Act, because it involved the imposition of a sanction on Mr Bose because of his perceived insubordination as an employee in refusing to obey the instructions of Mr Duck. As previously mentioned, the Tribunal found that Mr Bose suffered the depressive disorder as a result of Mr Hearnden's decision on 14 May 2012 that Mr Bose was to be removed from the MV Pacific Valkyrie at the next port of call and Mr Hearnden's communication of that decision to the vessel's master, Mr Silberberg. 23 The Tribunal, therefore, found that the relevant disciplinary action for the purpose of s 3 of the SRC Act, to be the decision of Mr Hearnden on 14 May 2012. The Tribunal rejected Swire's contentions that other action taken earlier by Mr Duck, or later, was relevant. 24 As to the question of whether Mr Hearnden's conduct in relieving Mr Bose from his position as chief engineer of the MV Pacific Valkyrie and ordering his removal from the vessel was reasonable, the Tribunal observed that Swire did not tender in evidence any policy or procedure documents dealing with employee disciplinary matters. 25 Further, the Tribunal observed that Mr Hearnden had given evidence that he had not considered it appropriate to contact Mr Bose in order to hear his side of the matter before making the decision because he regarded it as "his primary responsibility to support" Mr Duck. 26 At [74] of its reasons, the Tribunal found that it was incumbent upon Mr Hearnden, as the person with the authority to take disciplinary action against Mr Bose, to give Mr Bose a reasonable opportunity to be heard before deciding whether to take the disciplinary action against Mr Bose, which Mr Duck had proposed to Mr Hearnden. Instead, said the Tribunal, Mr Hearnden forthwith acceded to Mr Duck's proposal and unilaterally took the action against Mr Bose without prior consultation with him. 27 The Tribunal found that Mr Hearnden denied Mr Bose procedural fairness and his decision was, accordingly, not made in a fair, reasonable and lawful manner. the appeal 28 This is an appeal on a question of law under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth). 29 Swire formulated the following questions as comprising questions of law in respect of which it sought to invoke the Court's jurisdiction under s 44 of the Administrative Appeals Tribunal Act. 1. Whether the Tribunal erred in law in adopting the wrong approach to the test of whether the "disciplinary action" of the Applicant constituted "reasonable disciplinary action" within the meaning of the definition of "injury" in section 3 of the Seafarers' Rehabilitation and Compensation Act 1992 ("the SRC Act"). 2. Whether the Tribunal erred in law in failing to take into account relevant considerations being the evidence of "disciplinary action" prior to 14 May 2012. 3. Whether the Tribunal erred in law in limiting the inquiry of procedural fairness to the events occurring on 14 May 2012. 4. Whether the Tribunal erred in law in failing to take into account relevant considerations being the "disciplinary action" leading up to 14 May 2012. 5. Whether the Tribunal erred in law in concluding [at 59 of the Judgment] that a Major Depressive Disorder is to be taken for the purposes of section 10(4) of the SRC Act to have been suffered on 5 June 2012. 6. Whether the Tribunal erred in law in failing to take into account relevant considerations to the application of section 10(4) of the SRC Act. Questions 1, 2 and 4 30 During argument, Swire addressed these three related questions together. 31 In essence, Swire's complaint was that the Tribunal had erred in its determination that the exclusion provided for in the definition of "injury", in s 3 of the SRC Act, in relation to "reasonable disciplinary action", did not apply to the injury which had been suffered by Mr Bose. More specifically, Swire contended that, in considering this question, the Tribunal had adopted the "wrong approach" or failed to take into account relevant considerations. 32 Swire submitted that the Tribunal erred in its finding that the term "disciplinary action" embraced only the decision by Mr Hearnden on 14 May 2012 requiring that Mr Bose be removed from the MV Pacific Valkyrie and stood down from his position as chief engineer. It was contended that "disciplinary action" was not to be construed in such a narrow compass and should include, what Swire contended, was the process of disciplinary action. This process, said Swire, should also have included the history of dealings between Mr Duck and Mr Bose over the preceding 8-12 months, including the events relating to the failure by Mr Bose to follow Mr Duck's direction to install the exhaust valves. Also included within the process, contended Swire, should be the meeting on 7 June 2012. 33 In my view, the Tribunal did not err in the respect contended for by Swire. 34 In my view, the exclusion in respect of "reasonable disciplinary action" within the context of the definition of "injury" in s 3 of the SRC Act, applies in circumstances where the following requirements are satisfied: (a) the injury suffered by the employee resulted from the employer taking disciplinary action against the employee, and (b) that disciplinary action was reasonable. 35 The application of this test requires also the Tribunal to identify what action constitutes the taking of "disciplinary action" as opposed to other steps that may be taken in relation to the employee. In approaching this question, the Tribunal applied the observations of Cooper J in Chenhall referred to above. In that case, Cooper J considered an argument along similar lines to that made by Swire in this case, namely, that "disciplinary action" is to be construed as the whole process leading up to, and including, the disciplinary action effected by a person authorised to do so upon the employee. Cooper J rejected the argument and, in observations cited by the Tribunal, distinguished between the disciplinary action itself and the steps anterior to the making of the disciplinary decision. The same rationale would apply in relation to steps which are posterior to the disciplinary action itself. 36 In my view, the Tribunal did not err in the manner in which it approached the question of whether the exclusion in respect of "reasonable disciplinary action" applied. 37 The Tribunal found that the injury caused to Mr Bose had been as a result of the action of Mr Hearndon on 14 May 2012 and that such action was "disciplinary action" because it was a sanction against Mr Bose and was taken by the person who, on his own evidence, was authorised to effect disciplinary action upon Mr Bose. That finding was plainly open on the evidence to the Tribunal. 38 It follows that, on the evidence, in determining whether the exclusion applied, the earlier dealings between Mr Bose and Mr Duck leading up to Mr Hearnden's decision on 14 May 2012, and the subsequent meeting on 7 June 2012 were irrelevant. It follows also that the Tribunal did not err in failing to have regard to those matters in considering whether the exclusion in respect of "reasonable disciplinary action" in the definition of "injury" in s 3 of the SRC Act, applied. 39 Accordingly, each of these questions of law is answered in the negative. Question 3 40 In support of its appeal based on this question of law as formulated, Swire, in effect, contended that the Tribunal misconstrued the content of the test required to consider whether "disciplinary action" was "reasonable disciplinary action" within the meaning of the definition in s 3 of the SRC Act. 41 Swire contended that the content of procedural fairness as applied to this case, required the Tribunal to have regard to the fact that Mr Bose, during his previous dealings with Mr Duck, leading up to the decision of Mr Hearnden, had an opportunity to meet allegations of insubordination. Accordingly, said Swire, the Tribunal had erred when it considered whether there had been a breach of procedural fairness by reference only to the manner in which Mr Hearnden had made his decision on 14 May 2012. 42 This contention is dependent upon the acceptance of Swire's contentions in respect of questions of law 1, 2 and 4. It follows from the fact that Swire has failed to make good those contentions in respect of these questions of law, that this contention also fails. 43 In my view, once the Tribunal found that the relevant disciplinary action was the decision of Mr Hearnden made on 14 May 2012, the Tribunal correctly had regard to whether that action was "reasonable disciplinary action" by reference to whether Mr Hearnden had accorded Mr Bose procedural fairness. 44 The appeal based on this question of law is dismissed. Questions 5 and 6 45 Swire's complaint in relation to questions 5 and 6 was that the Tribunal had erred in concluding that Mr Bose first suffered the major depressive disorder on 5 June 2012, because the Tribunal did not consider the question of whether Mr Bose had in fact suffered a major depressive disorder prior to the events of 14 May 2012. 46 Although couched as a question of whether the Tribunal failed to take into account relevant considerations, the complaint is in reality, a complaint about the fact finding engaged in by the Tribunal. It does not give rise to a question of law. 47 In any event, it is plain that the Tribunal did have regard to the medical evidence in relation to the medical condition of Mr Bose before 5 June 2012. This appears in [58] and [59] of the Tribunal's reasons and is referred to at [18]-[19] above. As mentioned, the real position is that Swire simply disagrees with the fact finding engaged in by the Tribunal. Accordingly, the appeal based on these two questions of law as formulated by Swire, is dismissed. 48 Swire's appeal is dismissed. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis. Associate: Dated: 15 April 2014