QUT - The Australian School of Philanthropy and Non Profit Studies Implications of this case This case, where a small nonprofit enterprise was subject to substantial damages, demonstrates that nonprofits need to have appropriate policies in place for dealing with workplace behaviour. In addition, they need to act promptly and effectively when complaints are received so that liability does not arise. As His Honour said (at [187]): The opinion evidence from the psychologists emphasised the importance of early intervention to avoid or limit the damage and injury that flowed from sustained workplace stress and its resultant impact on the plaintiff. I accept that evidence. [emphasis added]

1. Swan v Monash Law Book Co-operative [2013] VSC 326 (Supreme Court of Victoria,
Dixon J, 26 June 2013)
This was an application for damages for pain and suffering and pecuniary loss allegedly
suffered by the applicant because of psychiatric injury caused by her work for the defendant.
The plaintiff alleged that the negligence of the defendant caused her injury by exposing her
to an unsafe workplace in which she was subject to bullying, harassing, and intimidating
conduct.
The defendant, 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 nonprofit
organisation that sold law books at discounted prices to law students. It was operated by a
board of directors (the board) comprising current and former students at Monash University
Law School.
At the relevant time Legibook employed two permanent part-time workers: a manager, and
an assistant. The plaintiff, Ms Swan, was employed as the assistant between 2002 and
October 2008. Mr Kriston Cowell was employed as manager between 2002 and 2007. He
was alleged to be responsible for the bullying, harassing and intimidating conduct. The
chairman of the board at relevant times was Mr Paul Somers. Mr Somers had been a
director of Legibook since 1997, first as a law student and, from 2001, as a solicitor.
In July 2002, the plaintiff applied successfully for a position as a retail-sales assistant with
Legibook. There was no formal contract of employment or applicable job description. The
advertisement to which she responded stated that she would be primarily responsible for
book sales and customer service. Other responsibilities would include managing returns of
unsold stock, administering the co-operative’s membership database and otherwise
assisting the manager alongside whom she would work. The position was permanent part-
time in nature.
The business operated out of small, cramped quarters in the basement of the Law
Department building at Monash University. Legibook used one computer to operate a
financial management and accounting software system, Quicken, and a member’s database
program. Some modernisation occurred during 2002, and the evidence was that the plaintiff
did considerable work to update the database once a new computer system was installed.
His Honour’s general findings were that from the outset the board engendered the plaintiff’s
belief that she was Mr Cowell’s colleague, an employee of equal worth, entitled to be treated
with proper respect and dignity (at [23]). The plaintiff was invited to make suggestions to the
board about matters concerning workplace contracts, practices, and processes in the
operation of the business of the bookroom, to attend board meetings, an annual dinner of
the co-operative, and social dinners with the directors. Each was an occasion for the
processes and operations of the bookroom to be discussed, and the plaintiff was never
discouraged from participating in such discussions. His Honour found that Mr Cowell did not
appreciate that the board had extended that invitation to the plaintiff (at [25]).Over time,
Legibook and its directors demonstrated to the plaintiff in various ways that she was
regarded as a valuable employee who contributed to the running of Legibook and a
colleague of Mr Cowell, of equal worth.

2. The plaintiff 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. Nevertheless, His Honour found that: ‘From the start, 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’ (at [37]).
At that time, Mr Somers asked what the plaintiff expected, stating that the board could take
some sort of disciplinary measure or just take her comments on notice. The plaintiff
apparently responded that the comments should be taken on notice. In the context of these
observations, Mr Somers recommended to the board that Mr Cowell’s alleged conduct did
not warrant any formal warning or further investigation, but that the board should take the
action that had already been proposed to address the plaintiff’s complaints (workplace
policies, position descriptions and formal contract of employment), and should maintain an
ongoing dialogue with both staff members individually at regular intervals. However, the
board failed to follow through on its recommendations and Mr Cowell remained ignorant of
its general and its specific concerns.
Therefore, despite its resolutions, the board never settled position descriptions for the two
employee positions or drew up workplace behaviour policies. Although the board did not
consider a formal response appropriate, no informal investigation or inquiry was conducted.
Neither did the board or any of its members engage in any informal contact or dialogue with
Mr Cowell for the purpose of communicating the board’s expectation of behavioural
standards to apply in the workplace. His Honour said that this lack of action was ‘explained
but not excused’ by the voluntary nature of the board members’ work (at [49]).
Tensions re-emerged in April 2005. His Honour commented that (at [56]):
The board members told the plaintiff Legibook would implement policies to make
things work better. They said they understood she was very unhappy but that this
should not happen again as the board would put the contracts into place that would
clarify the employees’ roles. The plaintiff could not recall whether the board acted
after this meeting, but putting contracts in place and workplace policies in the
bookroom did not occur and why it did not remains unexplained.
A major conflict erupted between the plaintiff and Mr Cowell in July 2007. The plaintiff left
work in a distressed state. The psychiatric assessment of the plaintiff was that she suffered
‘a breakdown’ in July 2007, after which her previous ‘bubbly’ personality was altered.
His Honour held that Mr Cowell was at fault (at [61]–[62]):
Mr Cowell knew that the plaintiff felt intimidated and uncomfortable in his presence,
but he didn’t care. 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 the crowded, cramped
bookroom, which was mostly a private space for the two of them, Mr Cowell felt no
compunction to treat the plaintiff with the level of respect that is reasonably expected

3. and commonly afforded between two colleagues working together in such a space. It
is out of personality conflict of this sort in that confined and isolated space, which
cannot be fully analysed in a courtroom, that the repeating pattern of Mr Cowell’s
conduct towards the plaintiff became unreasonable. I am satisfied that Mr Cowell’s
conduct towards the plaintiff was initially disrespectful, arrogant, and uncaring. Mr
Cowell saw no need to be polite to the plaintiff, but he did see a need to be
controlling and to assert that he was in charge. I accept the plaintiff’s evidence of
receiving his anger and other bad moods. It was evident that he has some need to
manage these emotions. I think it probable that Mr Cowell reacts poorly to stress and
it will appear that a number of the critical incidents occurred at times when he was
under stress.... One significant feature of the plaintiff’s character is that she likes
things done properly and naturally looks for more efficient or better ways of
completing tasks, perhaps something of a perfectionist or a little obsessive. This
feature of the plaintiff’s personality grated on Mr Cowell and, given that he had no
capacity to enjoy casual conversation with the plaintiff, was a significant part of their
social interaction. What resulted was that Mr Cowell’s private interaction with the
plaintiff was not polite or respectful and that became a pattern.
The evidence suggested that Mr Cowell had a ‘conservative, untrained management style’,
and an ‘unwillingness to accept the plaintiff as a colleague’ (at [92]). On the plaintiff’s part,
His Honour identified an inability to recognise that she could not cope with her manager’s
behaviour, and that a breakdown was looming (at [95]).
After the 2007 incident, the board engaged a mediator, who reported to the board on 3
August 2007. His Honour described the mediator’s report as ‘of no assistance to the court’.
After this, Mr Somers met with the plaintiff and explained, yet again, that the board intended
to resolve the situation by bringing in employment contracts, workplace policies, counselling
for each employee and a system of separate split shifts so that they would not work together.
Meanwhile, the plaintiff had consulted her general practitioner, a clinical psychologist and a
specialist psychologist. His Honour accepted all the medical evidence given by these
professionals.
Did the defendant have a duty of care? His Honour held that it had, especially since it had
been put on notice by the plaintiff (at [168]):
...no question of foreseeability, objectively assessed, of a risk of a psychiatric injury
to the plaintiff from conduct of the type complained of arises in this case. Mr Somers
was told in writing that the plaintiff considered she was working under very strained
conditions because she was being continually subjected to sarcasm, hostility,
rudeness and violent behaviour, threat of termination or lack of consultation within
the workplace. Mr Somers immediately appreciated that such an environment within
Legibook could cause a psychological or psychiatric injury to the plaintiff and the
board’s awareness of that risk is plainly evident in minutes of its meetings and in
written communications between directors from 25 March 2003. The duty of care to
take reasonable care for the plaintiff’s mental health in the context of a risk that she
might be injured by workplace bullying was engaged by this time.

4. Was that duty breached? His Honour held that it was; the behaviour of the defendant from
March 2003 through until August 2007 fell short of the expected standard of an employer in
that it failed to do anything effective about the matters which had been raised with it by the
plaintiff ( at [176]).
Did the breach cause the injury? The board’s lack of action from 2003 was crucial. His
Honour said (at [190]):
I am satisfied that had the defendant acted prudently and appropriately in 2003, it is
likely that the plaintiff would not have suffered any, or any significant, psychological
injury and that the defendant’s negligence, as I have found it, was a cause of her
injury, loss and damage. The defendant’s conduct operated as a cause of the
plaintiff’s injury because she was unnecessarily and unreasonably exposed to stress
factors in her employment that cumulatively broke her mental health. Had the
defendant intervened as a reasonably prudent employer would have done, that
exposure to damaging stress factors would have been eliminated or alleviated, in
severity, duration, or repetition.
The defendant was liable. His Honour assessed the plaintiff’s pecuniary loss at $292,554.38
and her damages for pain and suffering and loss of enjoyment of life in the sum of $300,000.
The case may be viewed at: http://www.austlii.edu.au/au/cases/vic/VSC/2013/326.html
Implications of this case
This case, where a small nonprofit enterprise was subject to substantial damages,
demonstrates that nonprofits need to have appropriate policies in place for dealing with
workplace behaviour. In addition, they need to act promptly and effectively when complaints
are received so that liability does not arise. As His Honour said (at [187]):
The opinion evidence from the psychologists emphasised the importance of early
intervention to avoid or limit the damage and injury that flowed from sustained
workplace stress and its resultant impact on the plaintiff. I accept that evidence.
[emphasis added]