Swan v. Monash Law Book Cooperative

8 December 2014

The Supreme Court of Victoria handed down its decision on 26 June 2013.

The case concerned an application for damages for pain and suffering
and pecuniary loss allegedly suffered by the applicant because of
psychiatric injury at work. The plaintiff (Ms Swan) alleged negligence
on the part of the defendant (Legibook) causing her injury as a result
of exposure to an unsafe workplace, where she alleged she was subject to
bullying, harassment and intimidating conduct.

Legibook, operated a specialist law book co-operative from the
basement of the law building at Monash University. As a co-operative,
Legibook was a non-profit organisation that sold law books at discounted
prices to law students. It was operated by a board of directors
comprising current and former students at Monash University Law School.

Legibook employed two permanent part-time workers, a manager and an
assistant. Ms Swan, was employed between 2002 and October 2008. Mr
Cowell was employed as manager and was alleged to be responsible for the
bullying, harassing and intimidating conduct.

In July 2002 Ms Swan commenced as a retail-sales assistant with
Legibook. There was no formal contract of employment or applicable job
description. The advertisement to which Ms Swan responded stated that
she would be primarily responsible for book sales and customer service.
Other duties would include managing returns of unsold stock,
administering the call-operatives membership data base and otherwise
assisting the manager alongside whom she would work. The position was
permanent part-time. The business operated out of cramped quarters in
the basement of the Monash University law department.

The Judge’s findings were that from the outset the Board supported Ms
Swan’s belief that she was a colleague of equal worth, and was entitled
to be treated by Mr Cowell with proper respect and dignity. Ms Swan
was invited to make suggestions to the Board about workplace contracts,
practices and processes in the operation of the business. She also
attended Board meetings, an annual dinner of the co-operative, and
social dinners with the directors.

The Judge found that Mr Cowell did not appreciate that the Board had
extended an invitation to Ms Swan to participate in the operations of
the business. Over time, Legibook and its directors demonstrated to Ms
Swan that she was regarded as a valuable employee and colleague of Mr
Cowell, who contributed to the running of Legibook’s business.

Ms Swan first reported conflict with Mr Cowell to the Board in March
2003. A Board meeting was promptly called to discuss the matter.
Various solutions were considered but little was actually done beyond
considering the formulation of relevant policies for the bookshop.
However, the Judge found that “… the Board recognised that the
allegation was of bullying behaviour by Mr Cowell, including
occupational violence, that it needed to be investigated, that it
warranted a response, and that it could cause an injury to the plaintiff
compensable as a Workcover claim.” In the final analysis the Board
failed to follow through on its recommendations and Mr Cowell remained
ignorant of its general and specific concerns regarding his behaviour.

Therefore, despite its resolutions, the Board never settled position
descriptions for the two employees nor did it draw up workplace
behaviour policies. Although the Board didn’t consider a formal
response appropriate, it did not conduct an informal investigation or
inquiry. Likewise, neither the Board nor its members engaged in any
informal contact or dialogue with Mr Cowell to communicate its
expectations of behaviour or standards to apply in the workplace. The
Judge stated that this lack of action was explained but not excused by
the voluntary nature of the Board member’s work.

Tensions re-emerged in April 2005 and the Judge commented that whilst
the Board discussed putting new contracts in place and policies that
would clarify the roles of the two employees, ultimately no contracts or
workplace policies were implemented in the book-room.

A major conflict erupted between Ms Swan and Mr Cowell in July 2007.
Ms Swan left work in a distressed state; her psychiatric assessment was
that she suffered a “break-down” after which her personality was
changed. In finding that Mr Cowell was at fault, the Judge stated:

“Mr Cowell knew that the plaintiff felt intimidated and uncomfortable
in his presence but he didn’t care. The motive is irrelevant. Mr
Cowell had a particular attitude, flowing from his personality. It is
probable that Mr Cowell either positively disliked the plaintiff or
simply did not care for her personal idiosyncrasies. In a crowded,
cramped book-room, which was mostly a private space for the two of them,
Mr Cowell felt no compunction to treat the plaintiff with a level of
respect that is reasonably expected and commonly afforded between
colleagues working together in such a space.”

The evidence suggests that Mr Cowell had a ‘conservative, untrained
management style’ and an ‘unwillingness to accept Ms Swan as a
colleague.’

The Judge concluded that Legibook had a duty of care to Ms Swan which
was breached by its behaviour. Legibook’s behaviour fell short of the
expected standard of an employer in that it failed to do anything
effective about the matters which had been raised by Ms Swan. The Judge
also found that the Board’s lack of action from 2003 onwards was
crucial in the injury being suffered by Ms Swan. He further stated that
he was satisfied that Legibook had acted prudently and appropriately in
2003. He considered that Ms Swan would not have suffered any, or any
significant psychological injury and that Legibook’s negligence was the
cause of her injury, loss and damage.

Legibook’s conduct was the cause of Ms Swan’s injury because she was
unnecessarily and unreasonably exposed to stress factors in her
employment that cumulatively broke her mental health. Had Legibook
acted as a reasonably prudent employer and intervened, Ms Swan’s
exposure to damaging stress factors would have been eliminated or
alleviated.

The Judge assessed Ms Swan’s pecuniary loss at $292,554 and her
damages for pain and suffering and loss of enjoyment of life in the sum
of $300,000.

Implications for Employers

The Judge commented that the evidence from the psychologist
emphasised the importance of early intervention to avoid unlimited
damage and injury from sustained workplace stress and its resultant
impact on the employee.

This case illustrates the need for an employer to ensure that proper
contracts of employment and policies are in place and also to be
sufficiently aware of the “industrial culture of the workplace and
related matters” and act upon complaints before they become major
issues.

Our recommendation is for the employer to review and ensure their
workplace policies are properly reflective of the current legislative
position on bullying and are properly integrated with the employer’s
other policies. Once the policies are reviewed and amended, we would
recommend provision of education and training to senior management to
ensure that issues that could develop into a bullying situation, or an
application to FWC, are handled in-house and addressed before they
become more serious.