(c) to the extent the respondent held suspicions about the appellant, there was no evidence as to when those suspicions arose or of their nature.
102 These were, by and large, the reasons the trial judge found in the respondent's favour. It does not appear to me that the Notice of Contention plays any useful role in the determination of the appeal.
103 The appellant submitted in reply that the trial judge's findings of fact had the invincibility required by Abalos v Australian Postal Commission (1990) 171 CLR 167 and Devries v Australian National Railways Commission (1993) 177 CLR 472. He further contended that the manner in which he was treated by the respondent after many years in which he enjoyed its unqualified trust was clearly sufficient to support the trial judge's finding that there was a "foreseeable risk of psychological injury to the plaintiff." He submitted that the evidence supported the trial judge's findings that the respondent harboured the suspicions communicated to Mr Jessup and Ms Diebert while the appellant was still working and believed he was under suspicion.
Consideration
104 As Sheller JA says in his judgment there was no doubt that as a result of his experience in the respondent's workplace the appellant suffered a recognised psychiatric illness. It was first diagnosed in May 2000 as Adjustment Disorder with Depression as defined in DSM IV Classification of Mental Disorders. By 2002 it had become a Major Depressive Disorder precipitated by his experiences at the workplace.
105 The only issue which arises between the parties, as I understand the respondent's submissions, is whether the trial judge's conclusion that, in the circumstances, the risk of the appellant developing a psychiatric condition was foreseeable could be sustained.
106 As I have already observed, I do not understand how, absent a cross-appeal, it is open to the respondent to challenge that finding of the trial judge. Had the trial judge's reasons for judgment ended at his conclusion that "the conduct of the defendant was such as to create a foreseeable risk of psychological injury to the plaintiff" and that there was a reasonably practicable means of avoiding the foreseeable risk of psychological injury, namely the process of discussion referred to in Mr Hughes' expert evidence, logically a finding for the plaintiff on breach of the employer's duty of care to the plaintiff employee should have followed.
107 After he reached his conclusion that the conduct of the defendant was such as to create a foreseeable risk of psychological injury to the plaintiff, the trial judge, in my view, embarked upon an entirely irrelevant area of inquiry. He sought to determine whether the respondent ought to have foreseen that the appellant would develop the particular psychiatric condition which was ultimately diagnosed.
108 That was an erroneous approach. It was not necessary that the particular type of disorder that eventuated be reasonably foreseeable. It was sufficient that the class of injury, psychiatric injury, was reasonably foreseeable as a consequence of the defendant's conduct: Mt Isa Mines Pty Limited v Pusey (1970) 125 CLR 383 per Barwick CJ at 390; at 402 per Windeyer J, at 412-414 per Walsh J; Tame v State of New South Wales, above, at 386 [203] per Gummow and Kirby JJ; New South Wales v Seedsman [2000] NSWCA 119 at [22], [29] per Spigelman CJ (with whom Mason P and Meagher JA agreed); Mannall v State of New South Wales [2001] NSWCA 327 at [60], [66] per Sperling J (with whom Heydon and Ipp JJA agreed).
109 Logically, therefore the trial judge made findings which were sufficient to found a verdict for the appellant. Those findings are not challenged by a notice of cross-appeal nor addressed by the Notice of Contention. In my view that is sufficient reason to uphold the appeal.
110 Sheller JA has considered the issue whether in all the circumstances the respondent ought to have foreseen that the appellant would suffer psychiatric injury and, having resolved it adversely to the appellant, has concluded that the appeal ought be dismissed. I disagree with that conclusion for the reasons I express below.
111 The respondent's duty to the appellant as his employer was to take reasonable care to eliminate all risks of injury that could be reasonably foreseen and avoided, whether they were risks to his psyche, person or property: Tame v New South Wales, above, at 365-6 [140] per McHugh J, at 413 [281] - [282] per Hayne J.
112 I note that Sheller JA agrees with the trial judge's finding that the respondent breached its duty of care to the appellant in the manner in which it treated him and continued to treat him after his return from leave in October 1998. He also accepts that the respondent's behaviour was "wrong if not disgraceful" and "demonstrated poor management" and was "disgraceful" in "allow[ing] suspicion to be directed to him". I also agree with and adopt both the trial judge and Sheller JA's conclusions in this respect. The respondent called no evidence to the effect that it was impracticable for it to have informed the appellant of the reasons it was changing his workplace and removing his books of account.
113 The issue upon which we part company is whether, in the circumstances of that breach of duty, psychiatric injury was a reasonably foreseeable consequence.
114 The question of foreseeability is, as the trial judge recognised, one for the Court to determine. Whether the respondent ought reasonably to have foreseen that its conduct might cause the appellant to suffer psychiatric harm is judged by the standards of the reasonable person, in this case, the reasonable employer: cf Tame v State of New South Wales, (at 384 [200]) per Gummow and Kirby JJ.
115 The test of foreseeability in this context is no different from that applied in any other negligence case. It is the test prescribed in Wyong Shire Council v Shirt (1980) 146 CLR 40, involving "a consideration of the magnitude of the risk and the degree of probability of its occurrence, along with the expense, difficulty and inconvenience of taking alleviating action and any other conflicting responsibilities which the defendant may have". The test is "an undemanding one" and, despite recently expressed criticisms, bind this Court until the High Court decides otherwise: cf Tame v State of New South Wales at 351 [96] ff per McHugh J.
116 The question therefore, was whether, in all these circumstances, the risk of the appellant sustaining a recognisable psychiatric illness was reasonably foreseeable in the sense that it was not far-fetched or fanciful. In Mt Isa Mines Pty Limited v Pusey (above at 398) Windeyer J referred to the reasonable hypothetical observer by reference to whom reasonable foreseeability is to be assessed as:
"… not a seer who can foretell future occurrences that are quite unlikely according to the natural and ordinary course of events. Happenings that were fortuitous, in the sense that no reasonable man would have thought of them as within the range of possible consequences, cannot be said to have been reasonably foreseeable. And knowledge after the event, when it is easy to be wise cannot shew that the event was foreseeable."
117 In Tame v State of New South Wales Gummow and Kirby JJ said (at 386 [203]):
"… [Q]uestions of reasonable foreseeability are not purely factual. Expert evidence about the foreseeability of psychiatric harm is not decisive. Such evidence cannot usurp the judgment that is required of the decision-maker."
118 Later, their Honours added (at 397 [234]):
"[A]s indicated earlier … expert evidence about the foreseeability of a risk of psychiatric injury is not decisive. The question of reasonable foreseeability involves an assessment respecting the foresight of a reasonable person in the defendant's position; that foresight might differ from the foresight of qualified psychiatrists. The judgment belongs, ultimately, to a court, not to an expert witness. In making that judgment, a court will draw upon its reserves of commonsense and reasonableness."
119 In like vein, in State of New South Wales v Seedsman (above, at [32]) Spigelman CJ held that in determining the issue of foreseeability expert evidence was not always required. As his Honour said: "commonsense has a role to play in this, as in other areas of judicial decision making".
120 In Mt Isa Mines Pty Limited v Pusey (1970) 125 CLR 383 at 394, 403 Windeyer J observed:
"It is, … today, a known medical fact that severe emotional distress can be the starting point of a lasting disorder of mind or body, some form of psychoneurosis or a psychosomatic illness. For that, if it be the result of a tortious act, damages may be had…. Courts have come--slowly, cautious step by cautious step--to give damages for mental disorders resulting from a man's seeing another person hurt, without himself having suffered physical injury or been in any peril of physical harm."
121 This Court has held that employees may recover for psychiatric injury caused by the accumulation of occupational stress over time without the need to establish exposure to isolated trauma sustained in the workplace: State of New South Wales v Seedsman [2000] NSWCA 119; Mannall v New South Wales [2001] NSWCA 327 - two decisions to which the trial judge referred. The same conclusion has been reached in England in Walker v Northumberland County Council [1995] 1 All ER 737; Hatton v Sutherland [2002] 2 All ER 1 at 12 - 20; see also Barber v Somerset County Council [2004] UKHL 13.
122 Sheller JA refers to Dr McMurdo's evidence in his report of 10 June 2002 that it was doubtful any individual would foresee that the appellant would develop reactive depression as well as to his oral evidence that the circumstances of the appellant's employment "created a foreseeable risk that some form of workplace stress might occur". Dr McMurdo's opinions are not, as the authorities to which I have referred make plain, determinative - although they are not entirely irrelevant: cf Mannall v New South Wales [2001] NSWCA 327 at [67] - [69].
123 Dr McMurdo's view that the development of a psychiatric illness in the circumstances was a strong probability, while expressed by a medical practitioner, is one which, in my view, accords with a commonsense approach informed by modern appreciation of the development of psychiatric disorders. In my view a reasonable employer would foresee that the circumstances in which it suddenly, without warning or explanation, changed the appellant's working conditions, including removing the books of account from his custody, would expose him to extreme stress and, probably, to the development of a psychiatric disorder.
124 I have already referred to Windeyer J's 1970 observation that it is "a known medical fact that severe emotional distress can be the starting point of a lasting disorder of mind …" Cases such as Seedsman and Mannall demonstrate judicial recognition that the medical profession's view of the aetiology of such disorders has been accepted by the lay world. In my view the probability that the appellant would develop a psychiatric disorder as a result of the respondent's conduct was neither fanciful nor far-fetched. It was a matter which ought to have been foreseen by a reasonable employer in the circumstances of the changes wrought to the appellant's employment.
125 As I understand Sheller JA's decision, his Honour bases his conclusion that the appellant's psychiatric illness was not reasonably foreseeable upon the "marked contrast" between the facts of this case and those of Seedsman and Mannall, in both of which the employer's conduct exposed the plaintiff to stressful workplace conditions over substantial periods of time.
126 I do not share his Honour's conclusion. It might be noted that in Seedsman, even in the circumstances of police work, which might ordinarily be expected to expose an employee to stress, the employer was found to have breached its duty of care because of the sustained stress to which the plaintiff was exposed.
127 The appellant was a bookkeeper working in a small workplace in circumstances where one might expect the greatest stress would have been finding his books did not balance.
128 In this case the circumstances relevant to determining the issue of foreseeability were such that, as the trial judge held, it was reasonably foreseeable that the appellant would suffer a psychiatric illness. Those circumstances included the fact that the respondent had employed the appellant as a bookkeeper in a position of trust for some thirteen years. Suddenly, and without warning or explanation, his workplace was relocated, his books of account were moved and apparently sent for examination to at least the Treasurer of the organisation, he was deprived of his cheque signing power and his computer was removed. He was effectively deprived of his "tools of trade". As he himself said, he felt isolated, victimised and under suspicion of misappropriating funds. Those were all, in my view, legitimate reactions to his circumstances. Indeed, the respondent did not challenge the legitimacy of those reactions.
129 Any reasonable employer ought, in my view, to have envisaged that its actions would be such as to cause the appellant to suffer psychiatric illness. The respondent's conduct struck at the heart of the relationship of trust which exists between employer and employee. The fact was that at the time it took the step of removing the books of account from the appellant's custody, it suspected that there had been misappropriation of funds. It did not explain that to the appellant but he, sensibly and predictably, inferred as much. The respondent ought to have perceived that that step alone, of removing the books, was such a dramatic signal to a bookkeeper of apprehension of serious misconduct that, unless clearly explained, it would subject him to extreme distress. Indeed, it was apparent from his conduct in frequently seeking explanations of what had happened to his books and why they had not been returned that he was suffering from anxiety in relation to their removal.
130 Rather than explain the situation, the respondent prolonged the distress to which the appellant was exposed by keeping him in the dark - indeed the respondent never explained its conduct to the appellant. Even when he finally resigned, rather than asking how it had come about that he had made that decision, the respondent, once again without explanation, suspended him for the remaining period of notice which he had given.
131 Dr McMurdo described the changes to which the appellant was exposed as being an "incredible change". But there was more to it than merely a change in the appellant's workplace conditions. There was a change, which as I have sought to explain, struck at the heart of the trust the appellant felt the respondent had reposed in him for so long and in circumstances where the appellant also, reasonably in my view, feared that he was, in substance, suspected (wrongly) of having engaged in criminal activity.
132 It is true that the respondent did not expose the appellant to the sustained period of stress to which the plaintiffs in Seedsman and Mannall were exposed but that is beside the point. It was reasonably foreseeable that exposing an employee even to a short period of profound stress which struck at the heart of his integrity and honesty and, indeed, caused him to fear he was suspected of criminal conduct, was as capable of causing psychiatric illness as a sustained period of stress over a lengthy period. It should however be noted in this respect that the respondent did nothing, as far as the evidence discloses, until the hearing, to indicate there had never been any misappropriation of funds.
133 The appellant's reaction to the stress to which he was exposed was neither extreme or idiosyncratic. It was, in my view, reasonably foreseeable by a reasonable employer.
134 For those reasons, too, I would uphold the appeal.
135 In my view, the matters to which the respondent refers in its Notice of Contention, namely that there was no evidence that to the extent to which the appellant encountered an atmosphere of suspicion in the workplace that was known to the respondent or its responsible officers, or that the respondent's later statements of belief were not relevant to its earlier action, are entirely misconceived. "It is but a very familiar principle of the law of evidence that subsequent behaviour may be regarded in order to indicate a state of mind which existed at an earlier time": Allied Pastoral Holdings Pty Ltd v Federal Commissioner of Taxation [1983] 1 NSWLR 1 at 6 per Hunt J (as his Honour then was). I have no doubt that correspondence showing the respondent suspected there had been a misappropriation of funds, which suspicion was also reflected in Mr Jessup's and Ms Diebert's evidence, were the reasons for the changes to the appellant's workplace environment.
136 I equally have no doubt that the appellant justifiably sensed the finger of suspicion was pointing at him and that that added to the stress caused by the unexplained changes the respondent effected. As Mr Hughes said, the "highly visible actions" by the respondent were bound to add to speculation among other staff about the appellant's conduct. Indeed, Mr Jessup referred in his letter to the Chairman of the Board to the "rumours and gossip that was spread about Barry". I have no doubt those rumours and gossip existed contemporaneously with the changes and atmosphere of suspicion of which the appellant complained.
137 The respondent called no evidence to dispute the appellant's evidence concerning the "incredible change" (to repeat Dr McMurdo's expression) to the appellant's workplace. It did not dispute that it had treated the appellant suddenly and remarkably differently to the manner in which it had treated him since 1985. Its expert evidence concerning the propriety of its handling of the situation was rejected. Apart from raising what, in my view, were specious propositions about the inferences to be drawn from the proven events, it advanced no substantive argument.
138 The appellant advanced an alternative case that the respondent ought also to have foreseen he would suffer a psychiatric injury because it was aware he was suffering from "adult adjustment disorder". It is not necessary to consider this alternative case having regard to the conclusions I have reached.