Legal principles
170 In Koehler 222 CLR 44, the High Court discussed the application of the principles for determining the circumstances in which an employer, who owes an employee a duty of care to take all reasonable steps to provide a safe system of work, might need to take steps to avoid a reasonably foreseeable risk of psychiatric injury. McHugh, Gummow, Hayne and Heydon JJ discussed the content of the employer's duty. They began their analysis by noting the obligations that each party (employer and employee) owed the other, first, under the contract of employment, secondly, that equity would enforce as arising from their relationship, and thirdly, under any applicable statutory provisions, including enterprise or other industrial agreements or instruments and laws of general application, such as anti-discrimination legislation (222 CLR at 53 [21]). This consideration may be apposite in determining whether those obligations affect an employer's duty of reasonable care to avoid psychiatric injury by modifying the work that the employee has to perform. Critically, they said of that question (at 54 [22]):
No doubt other questions may arise. It is, however, neither necessary nor appropriate to attempt to identify all of the questions that could arise or to attempt to provide universal answers to them. What is important is that questions of the content of the duty of care, and what satisfaction of that duty may require, are not to be examined without considering the other obligations which exist between the parties.
(emphasis added)
171 Their Honours' recognised that a modification of the obligations that the parties to an employment relationship owe each other, including through any change to the employee's duties, hours of work, pay and position, is a function of the law of contract that requires a variation of their bargain: cf: Concut Pty Ltd v Worrell (2000) 176 ALR 693 at 698-699 [18]-[19] per Gleeson CJ, Gaudron and Gummow JJ; Cohen v iSoft Group Pty Ltd (2013) 298 ALR 516 at 526-527 [35]-[36] per Rares, Cowdroy and Kerr JJ.
172 The contractual position between the parties and any relevant statutory provisions are critical in giving appropriate content to the duty of an employer to take reasonable care to prevent a reasonably foreseeable risk of an employee suffering a psychiatric illness (Koehler 222 CLR at 55 [24]). McHugh, Gummow, Hayne and Heydon JJ held in Koehler 222 CLR at 55 [26] that, there, the employee "did not prove that the employer ought reasonably to have foreseen that she was at risk of suffering psychiatric injury as a result of performing her duties at work" and that this was because of two reasons (at 55 [27]), namely:
First, the appellant agreed to perform the duties which were a cause of her injury. Secondly, the employer had no reason to suspect that the appellant was at risk of psychiatric injury.
(emphasis added)
173 There, the employee changed her role from a full time to a part time sales representative consequent on a restructure. She accepted her new position but, when told on her first day of the scope of her duties, she said that she could not perform them in the time required. Her supervisor told her to try it for a month and, if she felt that she could not cope, she should tell him. She agreed to this and began the work. Although she subsequently complained that she had too big an area and too many stores to visit in the part time role, she never complained that she was experiencing any effect on her health (222 CLR at 50-51 [7]-[10]). Thus McHugh, Gummow, Hayne and Heydon JJ analysed her claim in negligence against her employer on the basis that the parties had agreed that her work would comprise the tasks that she performed (222 CLR at 55-57 [28]-[31]).
174 McHugh, Gummow, Hayne and Heydon JJ held that the scope of the duty of care owed to the particular employee must be assessed in the context of his or her employment relationship, the nature of the work performed and, importantly, any signs that the employee gave as to whether a risk of psychiatric harm was reasonably foreseeable (at 57 [35]). They said that an employer was entitled to assume "in the absence of evident signs warning of the possibility of psychiatric injury" that the employee considers himself or herself able to do the job (at 57 [36]). That is why they analysed whether the employer had a duty to modify the operation of the contract, that the parties had agreed, as a result of information that the employer subsequently acquired about the vulnerability of the employee to psychological harm (at 57-58 [36]-[38]).
175 Importantly, their Honours described the nature of the employee's complaints in that case as being (51 [10]):
…directed to whether the work could be done; none suggested that the difficulties she was experiencing were affecting her health. She told management that there were two ways to solve the problems she was encountering: to reduce the number of stores she was to visit, or to have her work a fourth day.
(emphasis added)
176 That is the context in which they concluded (at 58-59 [40]-[41]):
Nor is it necessary to decide this case on the basis that the appellant's agreement to perform the duties which were a cause of her injuries is conclusive against her claim. The identification of the duties for which the parties stipulated would require much closer attention to the content of the contractual relationship between them than was given in the evidence and argument in the courts below. For present purposes, it is sufficient to notice that her agreement to undertake the tasks stipulated (hesitant as that agreement was) runs contrary to the contention that the employer ought reasonably to have appreciated that the performance of those tasks posed risks to the appellant's psychiatric health.
…she made many complaints to her superiors but none of them suggested (either expressly or impliedly) that her attempts to perform the duties required of her were putting, or would put, her health at risk. She did not suggest at any time that she was vulnerable to psychiatric injury or that the work was putting her at risk of such an injury. None of her many complaints suggested such a possibility. As the Full Court said, her complaints may have been understood as suggesting an industrial relations problem. They did not suggest danger to her psychiatric health.
(emphasis added)
177 In Naidu 71 NSWLR 471, the Court of Appeal of the Supreme Court of New South Wales discussed the issue of when an employer (ISS Security Pty Ltd) and or, in that case, a third party at whose premises an ISS employee worked as a security guard (Nationwide News Pty Ltd), could be liable in negligence for causing psychological injury by bullying and a harassment of the guard. There, a Mr Chaloner, a senior employee of Nationwide, bullied and harassed the guard over several years. As Spigelman CJ noted, a person in a supervisory position in a corporation has duties that encompass receipt of relevant knowledge and can be found to have a duty to communicate and act on that knowledge (71 NSWLR at 480-481 [41]). He held that the only senior persons in Nationwide, apart from Mr Chaloner, who received any information about his behaviour towards the guard "did not know enough to require them to act" (at 481 [44]). He made the point that generalised statements about whether a duty of care in an action for negligence has been breached are unhelpful and that, rather, in any particular case, the whole of the circumstances, including any failure of the employee to complain, have to be considered (482 [47]).
178 There, the guard manifested to his work colleagues, but not to senior persons who were the employer's "agents to know", two signs of mental disturbance, namely, crying and a significant change in his personal behaviour over several years. He had cried only once in front of a senior officer of his actual employer, ISS. While Spigelman CJ recognised that these signs suggested an adverse effect on the employee's mind, he reasoned (71 NSWLR at 484 [57] - [60]):
However, what is required is foreseeability of a recognised psychiatric illness. The signs suggestive of psychiatric illness, rather than psychological disturbance, satisfy the not far-fetched and fanciful test of foreseeability. However, they do not, in my opinion, reach the level of possibility which would require the employer or surrogate employer to intervene.
Workers are subject to stress in both their working and personal lives which can affect their mental health. Changes in personal behaviour over a period of years may occur for many reasons. So may the response of crying. These responses did not, in my opinion, indicate psychiatric illness to the degree that required a response from the actual or surrogate employer.
An employer, like ISS, or a surrogate employer, like Nationwide News, is not, in my opinion, required to have in place systems of inquiry and/or response, to manifestations of mental disturbance in order to determine whether or not the disturbance is work related and, if so, to remedy the situation. In the present case, at least via Mr Chaloner, both ISS and Nationwide News can be taken to be aware of the systematic course of conduct by him which created the possibility that the disturbance may be work related. They did not, however, have sufficient information about Mr Naidu's response, even via Mr Chaloner, that the disturbance could be a recognised psychiatric illness requiring intervention.
(emphasis added)
179 It is not clear what test the Chief Justice was applying. As the last sentence in [60] of his reasons reads, his Honour appears to be saying that information that would lead a reasonable person in the position of the employer to recognise that there was a foreseeable risk of psychiatric injury is insufficient: rather, he said that the information had to be "that the disturbance [of the employee] could be a recognised psychiatric illness". His analysis appears to focus on, first, the employer recognising the fact of the employee having developed already, as opposed to the appreciation that there was a reasonably foreseeable risk that the employee might develop, a psychiatric illness and, secondly, a time after the illness has developed as opposed to the anterior time when an employer ought to have appreciated that the circumstances gave rise to a reasonably foreseeable risk that, if the conduct or situation continued, the employee could develop a psychiatric illness.
180 Beazley JA noted that Nationwide contended that it did not owe a duty of care to the employee or, if it did, it did not breach it (at 490 [99]). Her Honour found that Mr Chaloner was, relevantly, Nationwide, and he had the responsibility for supervising the ISS employee. She held (at 505-506 [237]-[238]):
When that position is reached, the question of reasonable foreseeability for the purposes of establishing the existence of a duty of care, resolves itself in this case fairly readily. Nationwide News, as embodied by Mr Chaloner, perpetrated conduct on Mr Naidu that was prolonged, abusive, intimidating and physically threatening. It was bullying in an extreme form. Bullying has been described in a different context as a "serious and insidious form of violence": see J Elvin, "The duty of schools to prevent bullying" (2003) 11 Tort Law Review 168 at 169. This is not cutting edge psychology. Any person could reasonably foresee that the conduct engaged in by Mr Chaloner carried with it the risk of psychological or psychiatric harm. But in any event, Mr Naidu exhibited signs of such harm to Mr Chaloner. He was observed to cry and to be scared when Mr Chaloner directed such conduct towards Mr Naidu and threatened him with the loss of his job. In addition, he was observed by others at the workplace to change over a period of time from a happy person to one who appeared depressed. Accordingly, this was not a case like Koehler v Cerebos (Australia) Ltd where the plaintiff gave no outward signs of her emotional state.
It follows that there was a reasonably foreseeable risk of psychiatric injury arising from Mr Chaloner's conduct to Mr Naidu.
(emphasis added)
181 Basten JA noted that Nationwide did not challenge on appeal the trial judge's finding that Mr Chaloner's conduct was "so brutal, demeaning and unrelenting that it was reasonably foreseeable that, if it continued for a significant period of time… it would be likely to cause significant, recognisable psychiatric injury" (at 529 [397]). Accordingly, he analysed the issue as involving only whether Nationwide could be liable for Mr Chaloner's conduct (at 529 [397]). Basten JA found that Nationwide and Mr Chaloner were concurrent tortfeasors to the extent that any of his conduct was outside the scope of his employment and upheld the trial judge's finding that both were liable in full for the employee's damages (at 529 [397], 532 [409]). His Honour did not discuss whether Nationwide owed a duty of care to the employee and only discussed whether Nationwide was liable for the tort of intentional infliction of harm. However, Basten JA found that ISS (whose senior employee had seen the bullied employee cry on one occasion) neither had, nor ought to have had, knowledge of circumstances which would give rise to a reasonably foreseeable risk of cognisable psychiatric harm to the employee (at 534-535 [424]).
182 All three of the judges agreed that Nationwide was liable for Mr Chaloner's intentional infliction of harm. Spigelman CJ said that Nationwide was not negligent, Beazley JA said that it was and Basten JA did not make a finding on the issue. Thus, in Naidu 71 NSWLR 471 there was no ratio decidendi on the negligence issue.
183 In Tame v New South Wales (2002) 211 CLR 317 at 329 [5], Gleeson CJ explained that the concern of the law in dealing with situations of ordinary life to which the tort of negligence may apply is not only to compensate a person who has suffered an injury but also to address, at policy level, the effect of imposing liability upon the person who is accused of responsibility for the injury. He said that the law must take into account "the effect of [imposing] such liability upon the freedom and security with which people may conduct their ordinary affairs". His Honour developed this reasoning in Gifford v Strang Patrick Stevedoring Pty Ltd (2003) 214 CLR 269 at 276 [9] saying:
just as advances in medical knowledge have made us aware of the variety of circumstances in which emotional disturbance can trigger, or develop into, recognisable psychiatric injury, so they also make us aware of the implications, for freedom of action and personal security, of subjecting people to a legal requirement to anticipate and guard against any risk to others of psychiatric injury so long as it is not far-fetched or fanciful. In the context of a question of duty of care, reasonable foreseeability involves more than mere predictability. And advances in the predictability of harm to others, whether in the form of economic loss, or psychiatric injury, or in some other form, do not necessarily result in a co-extensive expansion of the legal obligations imposed on those whose conduct might be a cause of such harm. The limiting consideration is reasonableness, which requires that account be taken both of interests of plaintiffs and of burdens on defendants. Rejection of a "control mechanism", such as the need for direct perception of an incident or its aftermath, originally devised as a means of giving practical content to that consideration, does not involve rejection of the consideration itself.
(emphasis added)
184 Gummow and Kirby JJ added, as did Hayne J (at 304 [98]), that reasonable foreseeability of mental harm is not the only condition of the existence of a duty of reasonable care (Gifford 214 CLR at 295 [67]). They also pointed to the importance of identifying the interests that will be sufficient to attract the protection of the law in any given field as a condition apposite to the determination of whether a duty of care will exist in any given situation (at 300-301 [88]). They said that an employer had a duty of care in tort and a contractual obligation (either express or implied), to so order its affairs as to avoid causing injury (including psychiatric injury) or death to its employees. And, they said that the law would more readily impose a duty (or contractual obligation) of care where the employer's conduct constitutes an infringement of otherwise recognised rights of the employee.
185 Hayne J (at 302 [90]-[92]) reasoned that the test for the imposition of a duty (or obligation) of care needs to include a control mechanism, saying (at 304 [99]):
Control mechanisms developed in this way may have wider applications than just cases of psychiatric injury. But it may also be that, as knowledge about the causes of psychiatric injury and the effects of traumatic events increases, control mechanisms based on that knowledge may become evident and could be applied to claims for damages for psychiatric injury.
186 Hayne J also held that the employer owed a duty to take reasonable care to avoid harm to an employee because, as Mason J had held in Kondis v State Transport Authority (1984) 154 CLR 672 at 687-688, the employer controlled the work of the employee, and how, where and when he or she did it (214 CLR at 305 [103]).
187 Gleeson CJ explained that negligence involves "a failure to protect the interests of someone with whose interest a defendant ought to be concerned". He said that reasonableness was the essential concept to define the ambit of a legal obligation of overriding a person's proper concern for others, the breach of which sounds in damages: Tame 211 CLR at 330 [8] (see too at 383 [196] per Gummow and Kirby JJ, with whom Gaudron J agreed on this issue at 339 [44]). He also said that reasonableness is judged in the light of current community standards (at 332 [14]). Thus, the question in such a case is whether the relationship between the parties is such as to make it reasonable to require a defendant to have in contemplation a risk or danger of psychiatric injury to the plaintiff in the circumstances (at 336 [29], [33], 385 [201], 386 [203], 399 [241]).
188 In Tame 211 CLR at 339 [44], Gaudron J agreed with Gummow and Kirby JJ (see at 382 [193]) that damages are recoverable in negligence only for a recognisable psychiatric injury, but not for emotional distress. She also considered that something more than mere foreseeability of the likelihood of harm must be present in the relationship of the parties for there to be a duty to take care to avoid a risk of pure psychiatric injury (at 339 [45]).
189 Gummow and Kirby JJ said in Tame 211 CLR at 379 [185]:
Protection of mental integrity from the unreasonable infliction of serious harm, unlike protection from transient distress, answers the ''general public sentiment'' underlying the tort of negligence that, in the particular case, there has been a wrongdoing for which, in justice, the offender must pay (See Donoghue v Stevenson [1932] AC 562 at 580; Caltex Oil (Australia) Pty Ltd v The Dredge "Willemstad" (1976) 136 CLR 529 at 575; Perre v Apand Pty Ltd (1999) 198 CLR 180 at 242-243 [171]). Moreover, the assessment of reasonableness, which informs each element of the cause of action, is inherently adapted to the vindication of meritorious claims in a tort whose hallmark is flexibility of application. Artificial constrictions on the assessment of reasonableness tend, over time, to have the opposite effect.
(emphasis added)
190 They held that the particular psychiatric illness need not be reasonably foreseeable, so long as an injury within the class of recognised psychiatric illness was (at 386 [203]).
191 Hayne J said that the consideration of the control that an employer exercises over the workplace creates a duty to take reasonable care about the place and system of work so as to avoid psychiatric injury (at 413 [281]; see too per Callinan J at 436 [357]). He discussed the difficulties in distinguishing between mental distress and psychiatric injury (at 415-418 [293]-[296]). He accepted that the law recognised only a duty to take reasonable care to prevent a recognised psychiatric injury, although he applied a test that the majority rejected, namely that the plaintiff should be a person of ordinary or reasonable fortitude (at 417-418 [296], 419 [304]).
192 Of course, in the ordinary course of life, the defendant will not be a qualified psychiatrist equipped with the training and expertise to appreciate whether the nature of a plaintiff's reasonably foreseeable reaction will or may be a particular, or any, recognised psychiatric illness. The law cannot set a standard of care that is of such specificity. The reasonable foreseeability of the risk of psychiatric injury must be of an injury that the plaintiff is at risk of suffering of such severity that it would cause a psychiatric condition to develop or occur or warrant psychiatric treatment; that is an injury that goes beyond mere stress, mental distress or emotional upset.