Allianz has lost a lawsuit over workplace bullying charges filed by a former manager, and must pay him $1.39 million in compensation.

The District Court of NSW ruled the insurer “is liable to pay” Craig Ward for economic damages plus interest and costs because abuse from his supervisor left him medically unfit to return to the workforce.

A psychiatrist reported Mr Ward suffers “severe residual” post-traumatic stress disorder and depressive symptoms.

The bullying took place over 14 months and began shortly after a new state manager, a former army commander identified only as Mr Smith, joined the insurer in 2003.

Mr Ward alleged he was shouted at and told he “was hopeless at his job” several times.

On one occasion, he was slapped so hard on his head that he nearly hit his computer keyboard. He says he was hit on the shoulder at other times.

Evidence from other employees corroborated Mr Ward’s account. The state manager was removed from his post in April 2004 and given a national role. He later left the insurer.

Allianz argued it could not be held liable for the physical aspects of Mr Smith’s behaviour, but the judge disagreed.

“He embarked on one course of conduct aimed at achieving what he saw as his single goal, the improvement of the business,” Judge Justin Smith said.

“That course of conduct included physical abuse that was, on any view, improper. However, it was intimately connected with Mr Smith’s task because it was done in the apparent execution of the authority Allianz had given him as state manager.”

Mr Ward went on leave in December 2010 and never returned to work. His psychiatrist says he is unlikely to be able to work before his eligible retirement date, which is 15 years away.

“He has been unable to work since December 2010 and has no capacity to return to work,” Judge Smith said.

“That incapacity was materially caused by the conduct of Mr Smith. The defendant is liable to pay the plaintiff damages for his economic loss, both past and future.”