In a landmark hearing, Birmingham City Council admitted liability for personal injury to Beverley Lancaster, 43, caused by stress at work.
Mrs Lancaster, a senior draughtswoman, who was switched from her backroom job to a front-line post dealing with irate council tenants, suffered panic attacks and bouts of clinical depression.
Dr Alfred White, a consultant psychiatrist, told Birmingham County Court that Mrs Lancaster's "fastidious, meticulous and obsessive" personality had meant she was at a considerable disadvantage at the sharp end of local authority work.
Mrs Lancaster wept as she told the court that the pressure of working in the Sutton Coldfield neighbourhood housing office had destroyed her confidence and ability to carry out the most mundane duties. Shesaid she had tried to rebuild her life by undertaking part-time voluntary work, but found even the most basic jobs daunting. It was now difficult for her to perform two tasks at the same time. "If I am just answering the phone I can cope, but if I am doing work on the computer and the telephone rings, I go into a state of panic. I can't handle two things at once, as I always could," she said.
Mrs Lancaster began work at the council as a 16-year-old clerk and was promoted to the drawing office. Eventually she became a senior draughtswoman in charge of 10 staff. Her job was abolished and she was transferred to a job in the housing department for which she had no training, the court was told.
Her counsel, Kevin O'Donovan, said the job in the housing office was very different to her previous posts. "At the neighbourhood office people come into contact with tenants. They wouldn't be there unless they were disgruntled about something and this ranged from those who were normally demanding, to those who were extremely demanding and downright rude.
"The nature of the work was so different that she had difficulty coping," he said.
Mrs Lancaster suffered illness resulting in absences and she finally retired on grounds of ill health in February 1997.
Assistant Recorder Frances Kirkham QC yesterday reserved judgment in the case and adjourned the matter until a date to be fixed.
Mrs Lancaster stands to receive a six-figure sum of compensation from the local authority.