Extreme employment trauma results in extreme damages payout

The recent case of Cronin-Lampe v. The Board of Trustees of Melville High School (No 2) is an expensive warning that employers must take effective steps to mitigate and prevent the types of psychological health and safety risks that arise in the workplace. 

Mr and Mrs Cronin-Lampe were employed as guidance counsellors at Melville High School (MHS) from the late 1990s to 2012. Over that period, both experienced severe workplace trauma resulting from a heavy workload, which included approximately 32 deaths in the MHS community - many by suicide, some by other unexpected tragedy, and some from illness. Both Mr and Mrs Cronin-Lampe left their employment in 2012, having been diagnosed with Post-Traumatic Stress Disorder (PTSD). They each raised a personal grievance based on disadvantage, asserting that health and safety and other workplace obligations had not been met.

Judge Corkill of the Employment Court found the MHS had breached contractual duties and that the basis for a personal grievance was established. Mr and Mrs Cronin-Lampe had suffered foreseeable harm (PTSD) as a result of the employer's breaches. They were awarded almost NZ$1.8 million in damages, being the higher of the remedies available for either breach of contract or under the Employment Relations Act for disadvantage.

Key takeaways on psychological trauma case

A workplace with exposure to psychological trauma requires proactive care: Mr and Mrs Cronin-Lampe had provided extensive counselling services as part of their employment (for a wide range of traumatic events). The nature of their job exposed them to the types of risks that required a formal health and safety plan and proactive steps being taken to manage the risks. Careful monitoring by the employer would have assisted it to meet its health and safety obligations towards Mr and Mrs Cronin-Lampe, but this did not occur. While the type of risks which arose in this instance may not arise in all workplaces, it is important that employers identify any risk to mental health that arises by virtue of the work performed.

Health and safety duties are implied into any employment contract: The court found duties owed under the Health and Safety in Employment Act 1992 (HSE Act) (being the former Act in force when the conduct occurred) and the Secondary Teachers' Collective Agreement were implied into their terms of employment. The implied duties recognised by the court included those to:

• Take all practicable steps to ensure the Cronin-Lampes’ safety.
• Ensure that effective methods were in place to identify and assess hazards to determine their significance, and to eliminate significant hazards where practicable or isolate them from the Cronin-Lampes where not.
• Where a significant hazard could not be eliminated or isolated, to minimise and monitor its effects.
• Take all practicable steps to ensure harmful workplace hazards did not arise.
• Provide reasonable opportunities for the Cronin-Lampes to participate in processes for the improvement of health and safety in the workplace.
• Co-operate in good faith to improve workplace health and safety.

MHS did not dispute that it held these duties but argued that their conduct had met the standard required to discharge their obligations. The court disagreed, holding that although MHS had not been malicious it had failed to manage legitimate employment concerns.

Historical events no bar to claim: Mr and Mrs Cronin-Lampe were able to bring personal grievance actions despite the conduct reaching back to 1992. Ordinarily, section 114(7) of the Employment Relations Act 2000 operates to bar any personal grievance action that is brought later than 90 days after the action on which it is based occurred (excepting sexual harassment claims). Leave to bring the action after 90 days was granted as there were exceptional circumstances. The court found Mr and Mrs Cronin-Lampe had been so traumatised by the matters giving rise to their grievance that they were unable to properly consider bringing the action at the time. The Cronin-Lampes’ personal grievance claims were ultimately set to one side as greater damages were available to them for the breaches of contract. 

The Accident Compensation Act 2001 was no bar to recovery: Section 317 of the Accident Compensation Act 2001 operates to bar claims for damages resulting from a qualifying personal injury. To be a qualifying personal injury under the ACC Scheme a work-related mental injury must be caused by a sudden event. Judge Corkill found that the conduct causing trauma was not a sudden event and thus Mrs Cronin-Lampe was not covered by the ACC Scheme. This was a practical solution as Mrs Cronin-Lampe had previously applied for and been declined ACC coverage for her mental injury. If Mrs Cronin-Lampe had been covered by the Scheme and barred from her employment claim she would have been left without remedy.

A wide range of damages is available for mental harm: Given the Cronin-Lampes had established both a personal grievance and breach of contract, Judge Corkill elected to award common law damages for breach of contract as that allowed them to receive the highest amount. Damages were awarded up to a nominal date of 31 March 2019 on the basis that the Cronin-Lampes had delayed bringing their claim to pursue ACC claims, and this was not a delay attributable to the wrongdoing of MHS. Damages were also reduced by 5 per cent following a finding that the Cronin-Lampes had contributed to their own loss in failing to appropriately recognise and report the adverse effects of their employment conditions to MHS.

Range of remedies as a result of mental harm

While Mr and Mrs Cronin-Lampe could not recover exemplary damages, they did obtain a wide range of remedies as a result of mental harm:

• Non-economic losses for humiliation, loss of dignity and injury to feelings. Judge Corkill considered damages previously awarded for a similar degree of mental injury, scaling them up for inflation. On this basis, Mrs Cronin-Lampe was awarded NZ$123,500 and as Mr Cronin-Lampe better withstood the working conditions, he was awarded 75 per cent of this amount, being NZ$92,625. Had the personal grievance regime been used for damages they would have received band 3 compensation of NZ$85,000 and NZ$63,750 respectively.
• Lost earnings. Following the 2012 PTSD diagnosis, Mrs Cronin-Lampe was unable to work, and Mr Cronin-Lampe was significantly restricted. Damages for lost earnings were awarded for breach of contract for a seven-year period. Had the award been made under the Employment Relations Act 2000, a two-year award would have been appropriate. The total awarded to both under this head was NZ$1,341,856.
• Superannuation. Mr and Mrs Cronin-Lampe were also awarded NZ$4,692 and NZ$22,860 respectively as they were unable to contribute to their superannuation scheme during their unemployment. 
• Sale of rental property. After leaving their employment Mr and Mrs Cronin-Lampe sold a rental property to their daughter to meet their living expenses. The court awarded the value of the capital gain they would have benefitted had they not sold.
• Lost rental income. The court awarded NZ$53,604 for lost rental income that the Cronin-Lampes would have earned had they not been required to sell the property to meet their living costs. 
• Medical costs. Mr and Mrs Cronin-Lampe also received a payment of NZ$10,032 for medical costs.

The decision is a stark reminder to employers that failing to take a proactive approach to discharge health and safety obligations to prevent psychological harm can have expensive consequences.

Susan Rowe is a partner at Buddle Findlay in Christchurch. Alex Rielly is a summer clerk at Buddle Findlay in Christchurch.