STATE OF NEW SOUTH WALES v NAPIER

Court of Appeal (NSW)|2002-05-20|Before: Spigelman CJ, Mason P, Meagher JA, Kirby JJ

CITATION : STATE OF NEW SOUTH WALES v NAPIER [2002] NSWCA 402 FILE NUMBER(S) : CA 40765/01 HEARING DATE(S) : 20 May 2002 JUDGMENT DATE : 13 December 2002

PARTIES : STATE OF NEW SOUTH WALES BY ITS DEPARTMENT OF CORRECTIVE SERVICES & ANOR v ROBERT MAXWELL NAPIER JUDGMENT OF : Spigelman CJ at 1; Mason P at 34; Meagher JA at 92

LOWER COURT JURISDICTION : District Court LOWER COURT DC 79 of 1999 FILE NUMBER(S) : LOWER COURT Sidis DCJ JUDICIAL OFFICER :

COUNSEL : M L Williams SC / R S Sheldon - Appellant G O'L Reynolds SC / R J M Foord - Respondent SOLICITORS : McCabe Terrill - Appellant Denniston & Day - Respondent CATCHWORDS : Personal injury - nervous shock - psychiatric injury - duty of care - reasonable foreseeability - special relationship - vulnerability - assumption of responsibility - control - public authority - prison complex (D) LEGISLATION CITED : Correctional Centres Act 1952 DECISION : Appeal dismissed with costs

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40765 of 2001 DC 79 of 1999

SPIGELMAN CJ MASON P MEAGHER JA

THE STATE OF NEW SOUTH WALES BY ITS DEPARTMENT OF CORRECTIVE SERVICES & ANOR v Robert Maxwell NAPIER

The plaintiff sued the State of NSW, Australasian Correctional Management Pty Ltd (ACM) and International Cable Manufacturers Pty Ltd (ICM) in negligence for the injury of nervous shock and related impairments. The injury had resulted from various threats and actions of inmates of Junee Correctional Centre that were directed towards the plaintiff whilst he was employed by ICM within Junee Correctional Centre.

During the trial the plaintiff settled his claim against ICM. At the conclusion of the trial, the trial judge found against the two remaining defendants in the sum of $432, 365.

On appeal, the appellants argued that that the injury was not reasonably foreseeable, that a duty of care did not exist between themselves and the plaintiff, and that the awards of general damages and damages for future economic loss were excessive.

Judgment in this appeal was reserved until the High Court delivered its judgment in Tame v New South Wales [2002] HCA 35. As a result of this decision, the appellants' submission that the Respondent failed to satisfy the test for recovery of damages for nervous shock in the sense of experiencing a sudden sensory perception was unable to be maintained.

There are three interrelated elements relevant to the determination of a duty of care through the existence of special relationship in this matter: - vulnerability, assumption of responsibility and control. Reasonable foreseeability alone is insufficient.

Vulnerability to physical injury extends the scope of a duty of care to include protection from psychiatric injury (referred to Perre v Apand Pty Ltd (1999) 198 CLR 180 and Crimmins v Stevedoring Industry Finance Committee (1999) 2000 CLR 1).
Control is a critical consideration particularly when ascertaining the existence of a duty of care of public authorities and more specifically those with authority over persons engaged in criminal conduct (referred to Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54, Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254, Brodie v Singleton Shire Council (2001) 206 CLR 512, Proprietors of Strata Plan 17226 v Drakulic [2002] NSWCA 381).
The assumption of the appellant's responsibility is derived, as a matter of necessity from the nature of the institution within which the respondent's workplace was located (referred to Hill v Van Erp (1997) 188 CLR 159).

HELD by Mason P (Meagher JA concurring; Spigelman CJ concurring as to foreseeability and damages) dismissing the appeal:

The finding that the respondent's injury was reasonably foreseeable was open to the trial judge on the facts of the case as deficient security and a failure to respond adequately to threats and violence were likely to affect persons in the respondent's position, causing injury within the class of psychiatric illness (referred to Tame at [203] per Gummow & Kirby JJ, citing Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383 at 390, 402-3, 413-4).

In applying the criteria for determining the existence of a duty of care, there is no distinction between cases based on pure psychiatric injury and other personal injury cases (referred to Tame v New South Wales [2002] HCA 35).

As the appellants had the right to direct and control the respondent within the prison complex their relationship was a special relationship analogous to the established categories of employer: employee and occupier: lawful entrant (referred to Ellis v Home Office [1953] 2 All ER).

The existence of a special relationship extends the source of a duty to take reasonable care to prevent harm arising from the unlawful activities of third parties (referred to Smith v Leurs (1945) 70 CLR 256). This duty should not be limited to prisoners to the exclusion of persons working within a prison complex (referred to Ralph v Strutton [1969] Qd R 348, Dorset Yacht Co Ltd v Home Office [1970] AC 1004).

The award of damages was well open on the facts.

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40765 of 2001 DC 79 of 1999

SPIGELMAN CJ MASON P MEAGHER JA

THE STATE OF NEW SOUTH WALES BY ITS DEPARTMENT OF CORRECTIVE SERVICES & ANOR v Robert Maxwell NAPIER JUDGMENT 1 SPIGELMAN CJ: In this matter, I have had the advantage of reading the judgment of Mason P in draft. His Honour outlines the facts and the issues. Save that I wish to state my own reasons on the issue of duty of care, I agree with Mason P. 2 The continued development of the law with respect to liability for mental trauma is such that it is important for an appellate court to identify the issues that were raised for its determination. In their written submissions, the Appellants expressly abjured any challenge to the findings of the trial judge on the issue of breach. No issue was raised with respect to causation. There was no dispute that the Respondent suffered a recognised psychiatric injury. No submission was made relating to any statute or regulation which could raise issues of legal coherence. (cf State of New South Wales v Paige [2002] NSWCA 235.) 3 The primary thrust of the original submissions was directed to the alleged failure of the Respondent to satisfy a test for recovery of damages for what was, hitherto, frequently described as "nervous shock". That test was a requirement of sudden sensory perception which contained two identifiable elements: a sudden assault on the senses and direct perception of an event. Judgment in this case was reserved, pending the determination of this issue by the High Court. After the High Court's decision in Tame v New South Wales; Annetts v Australian Stations Pty Ltd (2002) 76 ALJR 1348, the Appellants could no longer maintain their contentions in this regard. 4 The focus of the Appellants' remaining submissions was on the existence of a duty of care. Both in submissions, and in the judgment of Mason P, use is made of an analogy with case law concerning relationships in which the existence of a duty of care is firmly established: occupiers' and employers' liability. Neither is precisely apposite in the particular context of an employee of an independent contractor conducting operations within a prison. 5 This is a case to which the observations of Gleeson CJ in Modbury Triangle Shopping Centre Pty Ltd v Anzil (2000) 205 CLR 254 at [14] apply: "In some cases, where there is a problem as to the existence and measure of legal responsibility, it is useful to begin by identifying the nature of the harm suffered by a plaintiff, for which a defendant is said to be liable."

Hayne J adopted a similar approach at [102]-[103] and [105]. 6 In Modbury Triangle, the nature of the harm was personal injury caused by the criminal behaviour of strangers. The issue in the present case is whether or not the Appellants' duty of care extended to the taking of reasonable care to prevent psychiatric injury resulting from criminal behaviour, or threatened criminal behaviour, by inmates of a prison. 7 For the purposes of determining whether a duty of care exists, it is now well established that foreseeability is not enough. A number of elements relevant to the determination of duty have been identified in the case law. Those which are particularly apposite to resolution of the present case are vulnerability, assumption of responsibility and control. 8 The trial judge outlined the basically uncontested evidence as to the security situation in the factory where the Respondent worked. Between eighty and one hundred prisoners worked in the factory but there was usually only one guard, although sometimes two. The search of the prisoners as they came from the cells to the factory was described by the Respondent as "cursory". The metal detector intended to be used to check prisoners was rarely used. The physical structure of the factory included a number of blind spots where inmates would be out of the sight of staff. They were able to threaten the Respondent in circumstances where the person making the threat could not be identified. Up to three or four times a day various items, such as three pin plugs and plastic inserts, were thrown at the Respondent. On one occasion he was injured by an object thrown at him. 9 In the event, there was found at the factory a home-made gun and parts capable of being converted into another gun, together with home-made knives and daggers. The search that discovered these weapons was triggered by the discovery of shotgun cartridges hidden in milk cartons in the kitchen of the prison. These cartridges could be used in the homemade guns. The internal report concluded that the guns and cartridges had probably been prepared, not for the purposes of escape, but for the purpose of killing the Respondent and another. 10 Her Honour made the following findings: "1 The defendants were responsible for and had absolute control over security within the factory. 2 The Governor of the prison had overall control. He was aware through the complaints made to him by the plaintiff and Mr Lemays that the plaintiff was at risk and was the subject of threats by the prison labourers. 3 ACM was contractually bound to the plaintiff's employee (sic: "employer") to provide for his security. 4 The security provided was clearly deficient and clearly did not accord with the Governor's directions. Security was so deficient that it allowed visible and verbal attacks upon the plaintiff to proceed unchecked. It allowed the inmates to secure information which was used to threaten members of the plaintiff's family, and it allowed the inmates the capacity to produce weapons, most probably with the intention of harming Mr Kuperholz or the plaintiff or both." 11 There does not appear to have been evidence about how the inmates could have discovered details about the Respondent's personal life and family. 12 An appropriate starting point for the analysis in the present case is a passage in the judgment of Dixon J in Smith v Leurs (1945) 70 CLR 256 at 262, a passage which was referred to with approval in Modbury Triangle at [20], [111], [140]-[141], [146]. "It is … exceptional to find in the law a duty to control another's actions to prevent harm to strangers. The general rule is that one man is under no duty of controlling another man to prevent his doing damage to a third. There are, however, special relations which are the source of a duty of this nature." 13 The issue is whether or not the relationship involved in the present case is such a special relationship. As Gleeson CJ pointed out in Modbury Triangle at [35], the characterisation of a relationship as "special" is in some respects "question-begging". (See also at [72] per Kirby J, dissenting.) Such characterisation is in many respects a mode of expressing a conclusion, rather than a step in the reasoning. What is required is a closer analysis of the aspects of the relationship which justify that appellation. 14 A recent compilation of the relationships which have been accepted to be 'special' for these purposes is found in the judgment of Heydon JA in Ashrafi Persian Trading Co Pty Ltd (t/as Roslyn Gardens Motor Inn) v Ashrafinia [2001] NSWCA 243 at [64]. His Honour referred to a number of authorities in which a gaoler has been held liable for the conduct of inmates: Greenwill v Prison Commissioners (1951) 101 LJ 486; Thorne v State of Western Australia [1964] WAR 147; Dorset Yacht Co Ltd v Home Office [1970] AC 1004; Ellis v Home Office [1953] 2 All ER 149; L v Commonwealth of Australia (1976) 10 ALR 269. 15 The significance of vulnerability as a factor in determining the existence of a duty of care has been emphasised in a number of different contexts. (See e.g. Perre v Apand Pty Ltd (1999) 198 CLR 180 esp at [104]-[105], [118], [125]-[129]; Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1 esp at [100].) 16 On the findings of fact of the trial judge, the Respondent's position of vulnerability is clear with respect to acts of physical assault. There was no particular finding of vulnerability to mental trauma. Indeed, her Honour found the Respondent to be a person of normal fortitude. However, the Court will accept as obvious that there is a link between the realisation of physical vulnerability and mental trauma. It is, therefore, pertinent to identify vulnerability to physical assault as a relevant element in the creation of a duty of care, the scope of which is to extend to protection from psychiatric injury. 17 The second element is control. Mason P emphasises the significance of the control exercised by the Appellants over the inmates. I agree with his Honour that this is a critical consideration in the present case. Indeed, as Gummow and Hayne JJ have recently said in Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54 at [150]: "The factor of control is of fundamental importance in discerning a common law duty of care on the part of a public authority". 18 The absence of the requisite element of control was of central significance in the reasoning in Modbury Triangle. (See e.g. at [19]-[21] per Gleeson CJ, at [42]-[43] per Gaudron J, [110]-[117] per Hayne J.) The significance of control has been emphasised in other recent judgments of the High Court. (See e.g. Brodie v Singleton Shire Council (2001) 206 CLR 512 at [102]; Graham Barclay Oysters Pty Ltd v Ryan at [20], [90], [149]-[152].) 19 The significance of control, in the sense of a right to assert authority over a person engaged in criminal conduct, was emphasised recently by Heydon JA in Proprietors of Strata Plan 17226 v Drakulic [2002] NSWCA 381 esp at [75]. 20 In Modbury Triangle Hayne J said at [110]: "In those cases where a duty to control the conduct of a third party has been held to exist, the party who owed the duty has had power to assert control over that third party. A gaoler may owe a prisoner a duty to take reasonable care to prevent assault by fellow prisoners. If that is so, it is because the gaoler can assert authority over those other prisoners". 21 His Honour went on to express his conclusion in that case in the following terms at [117]: "… there is no duty to control the criminal conduct of others except in very restricted circumstances. Being an occupier of land should not be added to those exceptional cases …"

This reflects the approach of Dixon J in Smith v Leurs quoted above. 22 Her Honour's findings of fact, which I have quoted above, clearly establish the Appellants' control of matters impinging on the Respondent's physical, and therefore, psychiatric vulnerability. 23 The third element is assumption of responsibility. There are circumstances in which the terminology of "assumption of responsibility" is, as Gummow J said in Hill v Van Erp (1997) 188 CLR 159 at 229 "imprecise and beguiling but deceptively simple". (See Modbury Triangle at [25] per Gleeson CJ.) That cannot be said in the present case. 24 Her Honour found as a fact that the Appellants had responsibility and absolute control over security within the factory, even though the business of the factory was conducted by an independent party. There was a clear assumption of responsibility which was derived, as a matter of necessity, from the nature of the institution within which the factory was located. This element is closely related to the element of control. 25 As would be expected, the authority of the State over prisons, through its officers the Commissioner of Corrective Services and the Governor of each prison, was manifest in the relevant statutory scheme. At the relevant time the Correctional Centres Act 1952 provided: "6(3) The Commissioner has the care, direction, control and management of all correctional centres and correctional complexes. … 39(1) Every inmate shall whilst detained in a correctional centre be deemed to be in the custody of the governor of the correctional centre to which he has been committed or removed and the liability of the Sheriff or other person delivering such inmate shall cease on delivery of such inmate to the governor of the correctional centre. (2) An inmate does not cease to be in the custody of the governor of a correctional centre merely because the inmate is for the time being detained in some other part of a correctional complex (other than another correctional centre) of which the correctional centre forms part. 40 Every governor of a correctional centre shall have the charge and superintendence of the correctional centre for which he is appointed and he shall be liable to answer for the escape of any inmate from his custody whenever such escape shall happen by or through his neglect or default, but not otherwise."

(The Correctional Centres Act has now been repealed. Section 6(3) of the Correctional Centres Act was replaced by s232(1)(a) of the Crimes (Administration of Sentences) Act 1999. Section 39 of the Correctional Centres Act was replaced by ss72(1) and 72(2) of the Crimes (Administration of Sentences) Act .) 26 The assumption of responsibility which her Honour found to exist on the part of the State of New South Wales is manifest in a formal Order issued by the Governor of the Junee Correctional Centre on the subject of "Control of Movement - Industries", relating to the factory at which the events occurred. That Order contained the following clauses: "1.1 All inmates are to be searched upon entering and departing the industries building with movement controlled in accordance with approved Centre routine."

and "5.5 Inmates are to be searched and scanned with a hand held metal detector prior to entering or exiting the industries area."

and "6.2 The Correctional Manager responsible for industries is to carry out random security checks at no less than twice weekly intervals." 27 The responsibility assumed by the Second Appellant, Australasian Correctional Management (ACM), was manifest in the Industry Agreement it entered with International Cable Manufacturers Limited (ICM), the Respondent's employer. That agreement recited that ACM was the Manager and Operator of the Junee Correctional Centre. 28 Clause 2 of that agreement provided relevantly: "ACM grants to ICM a right of entry and use, subject to security requirements established by ACM from time to time , of that portion of the industries building allocated, together with rights of ingress and egress in accordance with established security procedures . ICM covenants that it, its employees, servants agents and sub-contractors shall comply with all directions regarding security matters given by ACM , its employees and staff, whilst in the Junee Correctional Centre and shall comply with all security and administration requirements established by ACM and provided to ICM from time to time." [Emphasis added] 29 With respect to the work activity specified in the contract, cl 5 imposed a specific obligation in the following terms: " ACM shall provide security staff sufficient to meet the reasonable security needs associated with the activity described in Item 6 . " [Emphasis added] 30 As Mason P indicates, the Appellants did not seek to differentiate their position inter se. 31 The three elements to which I have referred - vulnerability, control and assumption of responsibility - are interrelated. In my opinion, the combination of these elements was, on the basis of the findings of primary fact by the trial judge, such as to create a relevant duty of care in the present case. 32 This case falls, with a small analogical step, within the example given by Heydon JA in Drakulic at [85]: "Where gaolers owe duties to protect prisoners from being injured by the crimes of other prisoners, liability depends on the special vulnerability of the prisoners to be protected, the special knowledge which the authorities have or ought to have of the risks of injury, the assumption of responsibility by the authorities as part of the process of punishment they are administering, and the control which the authorities have". 33 I agree that the appeal should be dismissed with costs. 34 MASON P: The respondent suffered severe psychiatric injury stemming from the stress involved in his role as the factory manager at the Junee Correctional Centre in the early months of 1997. 35 The Centre as a whole was occupied and operated by Australasian Correctional Management Pty Limited (ACM) under statutory and contractual arrangements with the New South Wales Department of Corrective Services. The appellants are the State of New South Wales and ACM. 36 The Correctional Centres Act 1952 (the Act) was formerly known as the Prisons Act 1952. The care, direction, control and management of all correctional centres are vested in the Commissioner of Corrective Services (s6(3)). Part 6A (inserted in 1990) provides for the contractual management of correctional centres and for the authorisation of staff to perform custodial functions, subject to overriding power of the Commissioner. 37 ACM was appointed the manager and operator of the Centre pursuant to this statutory regime. The pleadings admit that the Centre was operated and occupied by ACM. 38 There is a factory within the prison complex. Access to it and ultimate control over it is vested in the appellants and the authorised correctional officers employed by ACM. 39 The respondent was employed by International Cable Manufacturers Pty Ltd (the employer). That company manufactured plugs and cords at the factory. The factory business was an aspect of the training and welfare of inmates (cf s6(4)). 40 Up to 80 to 100 prisoners worked in the factory. At most times there was only one guard, sometimes there were two. Prisoners were allowed to come and go into the factory with relative ease. They were searched, but only cursorily. There was a metal detector at the gate between the factory area and the inmate accommodation, but this was often turned off or not working properly. 41 The learned trial judge (Judge Sidis) made the following findings as to the control exercised by the appellants over the factory and its activities (Red 38, correcting an obvious typographical error in the third finding): 1. The defendants were responsible for and had absolute control over security within the factory. 2. The Governor of the prison had overall control…. 3. ACM was contractually bound to the plaintiff's employer to provide for his security. 42 Finding 3 is based upon a written Industry Agreement between ACM and the employer (Blue 150). That document recited that ACM was the manager and operator of the Junee Correctional Centre with responsibility for the management and operation of the inmate industries program. Clause 1 conferred upon the employer a right of entry and use of the factory "subject to security requirements established by ACM from time to time". The employer convenanted that its employees, servants, agents and sub-contractors would comply with "all directions regarding security matters given by ACM, its employees and staff, whilst in the Junee Correctional Centre and shall comply with all security and administration requirements established by ACM and provided to ICM from time to time". For its part, ACM covenanted to provide security staff sufficient to meet the reasonable security needs associated with the work activity to be undertaken (cls 5 and 7). 43 These findings were not challenged in the appeal. 44 The respondent was born in 1942 and educated to year 10. After leaving school he held a number of different positions, semi-skilled or unskilled. For a time he operated a service station business in partnership with his wife whom he had married in 1967. He joined the RAAF in 1975. He had various postings until his retirement in January 1997 and he earned a number of commendations. He was awarded the Defence Force Medal and, upon retirement, held the rank of Flight Sergeant. At that stage he enjoyed good physical and mental health, he was happily married and engaged in various hobbies. He was also an active member of Lions Club and it was in that capacity that he first had contact with the factory within the prison. 45 The respondent was appointed Production Supervisor at the factory in January 1997. Not long after, he was appointed Manager of the factory. He had ideas for improving the efficiency of the factory, which were discussed with the prison Governor and with Mr Alan Lemays, the industries manager of ACM. It was agreed that his proposals would be introduced. The changes included preventing the prison labour force from eating or drinking tea or coffee while they were working, sleeping within the confines of the factory, and smoking. 46 These changes were not well received by the inmates. Adverse comments progressed to threats, including death threats. Often these were made in the respondent's hearing, but in circumstances where he could not identify the prisoner concerned. From time to time items were thrown at him. On one occasion he suffered an injury requiring first aid. There was one occasion when a prisoner reacted violently when woken from his sleep. He jumped up screaming and threatening the respondent. As a result the respondent was locked in his office until the inmate could be taken away by riot personnel. 47 When the non-smoking measure was introduced, the prisoners went on strike for two hours. Thereafter threats became more frequent and more severe. The inmates made it clear that they knew the names and address of the respondent's close family. Distressing and depraved threats were made against the respondent's young daughter and son (detailed at Black 10). 48 These pressures took an understandable and foreseeable toll upon the respondent. His stress manifested itself at home. He was sleeping only two hours a night. The respondent first sought medical attention for the stress in late March 1997. 49 The respondent complained of the security situation to the Governor at their weekly meetings. The Governor told him that there should be two guards on duty during working shifts, but nothing was done to achieve this during his time at the factory. The Governor also directed that a metal wand be used to check prisoners as they entered and left the factory, but this instruction was not implemented. 50 When he arrived at work on 10 April 1997 the respondent found the factory closed and the prisoners confined to their cells. The next day he learnt that the correctional authorities had discovered in the factory a home-made gun (called a zip gun), shotgun cartridges, knives and daggers. The prison security officer told him that he and another man were believed to be the intended targets. This incident brought home to the respondent the realisation that the threats were real. Notwithstanding, he soldiered on for a couple of weeks. The taunting and threats continued. 51 The last day he worked was a Friday approximately a fortnight after the discovery of the weapons. The respondent broke down completely. He has no memory of the events of that day, but his wife gave evidence that he telephoned her, babbling, unable to tell her his name or to speak logically. She drove in and picked him up from work. His doctor put him off work for three months. He never returned. It is not in dispute that he suffered psychiatric injury. The trial judge concluded that recovery is unlikely and that the respondent had been rendered totally unemployable. 52 The respondent sued the two appellants and his employer. Part way through the trial he settled the claim against the employer. The Terms of Settlement (Red 25) included judgment for that defendant with no order as to costs and the abandonment of the employer's right to recover workers compensation payments to date. It was agreed that the respondent would remain on workers compensation (Black 43). 53 The trial continued against the appellants to judgment and resulted in a verdict against each appellant in the sum of $432,365. The appellants made common cause at the trial and there was no suggestion there or on appeal that there is any presently relevant distinction between them. 54 The claims against the appellants were brought in negligence and solely for the injury of "nervous shock" with consequential disabilities (Red 8, 9). 55 The learned trial judge recognised that a claim for pure nervous shock raised particular legal difficulties, especially one brought against persons who were not the respondent's employer. She cited the principles set out by Sheller JA in Chiaverini v Hockey (1993) ATR 81-223 at pp62,257-9 and she referred to Rowe v McCartney [1976] 2 NSWLR 72, Commonwealth of Australia v McLean (1996) 41 NSWLR 398 at 407, Morgan v Tame (2000) 49 NSWLR 21 and other authorities. 56 The following findings were made referable to the nervous shock claim (Red 50): 1. The plaintiff has established that he suffered a recognisable psychiatric injury resulting from shock. 2. The illness was caused by shock and was not the result of an accumulation over a period of time of more gradual assaults on his nervous system. It was not established that the plaintiff would have suffered more than stress not amounting to illness but for the location of the weapons, and the ammunition on 10 April 1997. 3. The injury was foreseeable. Proximity is not a matter that is in issue. 4. Although the plaintiff was not directly present when the weapons and ammunition were located, he is not disqualified from recovery by reason of the fact that there are two elements in this incident: firstly, the importing to the plaintiff of knowledge of the finding of those weapons and ammunition, and secondly, the realisation that the threats made to him by the inmates were capable of execution.

57 The trial judge was satisfied that the appellants owed a duty of care to the respondent and that such duty had been breached. As to breach it was found that (Red 38): [The Governor] was aware through the complaints made to him by the plaintiff and Mr Lemays that the plaintiff was at risk and was the subject of threats by the prison labourers…. The security provided was clearly deficient and clearly did not accord with the Governor's directions. Security was so deficient that it allowed physical and verbal attacks upon the plaintiff to proceed unchecked. It allowed the inmates to secure information which was used to threaten members of the plaintiff's family, and it allowed the inmates the capacity to produce weapons, most probably with the intention of harming Mr Kuperholz or the plaintiff or both. Issues in the appeal 58 This appeal was argued while the High Court judgment in Tame v New South Wales [2002] HCA 35, 76 ALJR 1348 stood reserved. It was therefore agreed at the hearing that judgment in the appeal would stand reserved until the High Court judgment was delivered and that the parties could file supplementary written submissions addressing any issue affected by the High Court's reasons. 59 At the hearing of the appeal it was common ground that the finding that the respondent's illness had been caused by "nervous shock" (in the sense of a sudden sensory perception as described by Brennan J in Jaensch v Coffey (1984) 155 CLR 549 at 556-7) could not be sustained on the facts. The High Court's decision in Tame means, however that this is no longer a pre-requisite to liability for damages for pure psychiatric injury (see per Gleeson CJ at [18], per Gaudron J at [66], per Gummow and Kirby JJ at [187-8]). 60 Two issues only were raised in the appellants' challenge to the findings on liability, namely reasonable foreseeability and duty of care. 61 The appellants accepted that any duty of reasonable care owed by them to the respondent had been breached and that such breach had caused or materially contributed to the injury complained of. These concessions were clearly made in the original written submissions and in the submissions at the hearing. To the extent that the appellants seek to resile from these concessions in supplementary written submissions filed pursuant to the leave to address matters arising out of the High Court decision in Tame, those submissions have been ignored. 62 The appellants also challenged as excessive the awards of general damages and future economic loss.

Was the injury reasonably foreseeable? 63 The common law test of reasonable foreseeability is undemanding and depends on establishing that the relevant risk was not far-fetched or fanciful (Wyong Shire Council v Shirt (1980) 146 CLR 40 at 48; Tame at [96], [201], [233], [248]). In the present context it is sufficient that the class of injury, psychiatric illness, was foreseeable as a possible consequence of the appellants' conduct (Tame at [203] per Gummow & Kirby JJ, citing Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383 at 390, 402-3, 413-4). 64 Judged by these criteria, the trial judge's finding of reasonable foreseeability (Red 50) cannot be disturbed. Deficient security and failure to respond adequately to the rising tide of threats and violence were likely to take their toll on persons in the respondent's position, and lead beyond stress to breakdown and psychiatric illness. 65 The appellants submit that the injury was not reasonably foreseeable and they cite my judgment in Morgan. However, the facts of that case are so far removed that comparison is unnecessary.

Was there a duty of care? 66 Reasonable foreseeability of injury is not decisive of duty although it is clearly relevant. 67 The reasons of the majority justices in Tame establish that there is no hard and fast line dividing cases based on pure psychiatric injury and other cases of personal injury as regards the criteria for determining whether a duty of care exists. In particular, there is no pre-requisite of the plaintiff's "direct perception" of a traumatic incident, nor need there be a "sudden shock". 68 The majority in Tame have also rejected any requirement to show that the plaintiff was a person of "normal fortitude", not that this was an issue in the present appeal because of the finding that the respondent was of such character. 69 The decks having thus been cleared, the respondent submits that the facts amply establish a duty of care. 70 The respondent relies upon his status as a permitted entrant into a correctional centre operated and occupied by the appellants. 71 The respondent further submits that his relationship with the appellants was sufficiently analogous to that of an employee as to generate a relevant duty of care stemming from that relationship alone. In this regard he relies upon my judgment in New South Wales v Seedsman [2000] NSWCA 119 which, he submits, is consistent with the reasoning of the High Court in Tame. 72 If necessary, the respondent further relies upon aspects of the particular relationship as it existed and developed in the two month period culminating in his breakdown at work. He points to the governor's awareness of his role in the factory; the authorisation and encouragement of the measures which generated exceptional resentment from some of the inmates; and the Governor's knowledge of the threats and of his concerns about the level of security at the relevant time. Some of these matters go to the issues of breach and reasonable foreseeability, but they are also capable of supporting a finding of duty (see Tame at [12] per Gleeson CJ). 73 As regards personal injury, certain relationships generate a duty of reasonable care that are so well recognised that citation of authority is unnecessary. These include occupier: lawful entrant and employer: employee. 74 A subset of the latter relationship is "the duty on those responsible for one of Her Majesty's prisons … to take reasonable care for the safety of those who are within" (per Singleton LJ in Ellis v Home Office [1953] 2 All ER 149 at 154) (see further below). 75 The control vested in a prison authority is the basis of a special relationship which extends to a duty to take reasonable care to prevent harm stemming from the unlawful activities of third parties (Dorset Yacht Co Ltd v Home Office [1970] AC 1004, Modbury at 264, 292, Howard v Jarvis (1958) 98 CLR 177 at 183, Hall v Watsmore [1961] VR 225, Nada v Knight (1990) ATR ¶81-032, Cekan v Haines (1990) 21 NSWLR 296). In speaking of control, I emphasise the right to control (see Propietors of Strata Plan 17226 v Drakulic [2002] NSWCA 381 at [75] per Heydon JA who states that (in this context) a "gaoler has control over prisoners even if those prisoners are running amok and injuring the plaintiff, because the gaoler has the right to control the dangerous prisoners"). 76 There is no reason in principle or precedent why the beneficiaries of such duty should be limited to prisoners to the exclusion of persons working inside a prison complex (cf Ralph v Strutton [1969] Qd R 348, Dorset ). 77 The relevant duty is, of course, one of reasonable care. What that involves in the case of dangerous prisoners is, fortunately, not an issue in the appeal. 78 Nor is any question raised in the appeal as to the causal link between the appellants' negligence and the plaintiff's injury even though, conceptually, that is a different matter to the link between the prisoners' conduct and the injury. 79 In my view, the relationship between the appellants and the respondent fell easily within the bounds of the established category of occupier: entrant, including the special subset of prison authority and lawful entrants to a prison occupied and controlled by the authority. 80 It is unnecessary to go further, but if it were, I would hold that the relationship between the appellants and the appellant was sufficiently analogous to that of employer and employee as to generate a commensurate duty of care, extending (in light of Tame) to a duty to exercise reasonable care to protect against psychiatric injury (see my judgment in Seedsman. See also Tame at [139]-[140] per McHugh J (Diss) and Patrick Stevedores (No 1) Pty Ltd v Vaughan [2002] NSWCA 275.) The appellants had the power to direct and control the respondent (cf Crimmins v Stevedoring Industry Finance Committee (1999) 200 CLR 1); through the Centre's Governor and ACM's industries manager they supervised and approved the management activities of the respondent; and they had the right of control over the population of the Centre including correctional officers, prisoners and entrants generally. The appellants had actual knowledge of the risk of injury, the threats that had been made and the (limited) measures taken in response to them. 81 To hold the appellants amenable to a duty of reasonable care is entirely consonant with the following principles, stated by Gummow and Kirby JJ in Tame (at [185], citation omitted): A fundamental objective of the law of negligence is the promotion of reasonable conduct that averts foreseeable harm. In part, this explains why a significant measure of control in the legal or practical sense over the relevant risk is important in identifying cases where a duty of care arises. Further, it is the assessment, necessarily fluid, respecting reasonableness of conduct that reconciles the plaintiff's interest in freedom of action. So it is that the plaintiff's integrity of person is denied protection if the defendant has acted reasonably. However, protection of that integrity expands commensurately with medical understanding of the threats to it. 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. 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 to reasonableness tend, over time, to have the opposite effect.

82 This was not a case where the plaintiff's illness stemmed solely from what he was told by way of bad or distressing news touching third parties (cf Mount Isa Mines at 407, Tame at [228], [366]). Free speech or other policy considerations therefore have no bearing on this issue. Nor does the imposition of a duty of care cut across other duties of the appellants, interfering with the coherence of the law (cf Tame at [123]-[126] per McHugh J). The respondent saw and heard many of the prisoners' threats and assaults at first hand. Some threats were relayed to him, but that was both understandable and the performance of the very duties of care owed to the respondent by the appellants. The respondent's interest in being kept fully informed, for his own safety, places him in a different position to relatives and friends of a loved one who is killed, injured or put in peril as discussed in the authorities cited at the beginning of this paragraph. 83 The appellants sought to bring themselves within the principles discussed in cases such as Modbury Triangle Shopping Centre Pty Ltd v Amzil (2000) 205 CLR 254 and Ashrafi Persian Trading Co t/as Roslyn Gardens Motor Inn v Ashrafinia [2001] NSWCA 243, (2002) ATR ¶81-636. They invoke the "general rule … that one man is under no duty of controlling another man to prevent his doing damage to a third" (Smith v Leurs (1945) 70 CLR 256 at 262 per Dixon J). However, as Dixon J recognised in the sentence immediately following, there are special relationships which are the source of a duty of this nature. As I indicated above, the relationship between the controller of a prison complex and a person such as the plaintiff is one of them.

Appeal against damages 84 The appellants also challenge the awards of general damages and damages for future economic loss. Each is said to have been excessive. 85 Judge Sidis said: As far as assessment of the plaintiff's damages is concerned, his life since April 1997 can only be described as miserable. Diagnoses of his condition vary from nervous breakdown through to post-traumatic stress disorder; major depressive episode; chronic adjustment disorder with anxiety amounting to generalised anxiety disorder; depression amounting to major depression; panic disorder; agoraphobic symptoms. Initially those treating the plaintiff expressed some hope of recovery and return to full employment. The prognoses set out in the medical reports have become increasingly guarded because of the period of time which has passed without improvement. His symptoms, past and present, have been summarised by Dr Sowden, his current treating psychologist, as at 21 May 2001. The symptoms which the plaintiff has experienced were as follows: He experiences generalised fearfulness; he has lack of drive; dysphoria; self-depreciation and has engaged in suicidal ideation and suicidal intent (he planned to kill himself by gassing himself in his car in his garage. He had the pipe length cut and prepared.) His subjective depression has been high and he has been suffering mental dullness and brooding; he suffers bizarre mentation in the form of psychotic symptomatology; he experiences severe irritability; he is experiencing low self-esteem in the form of self doubt and submissiveness; he has been experiencing social discomfort in the form of introversion; he has also been suffering social alienation and self-alienation; he is experiencing family discord and family alienations; he has been detaching emotionally from his family; he has very low motivation and is suffering an inability to disclose information about himself psychologically; he is very anxious; he is suffering lassitude and malaise and numerous somatic complaints, for example he has health concerns, such as gastro-intestinal symptoms; he has persecutory ideas; he feels he is losing control of his mind; he has feelings of unreality and difficulties with concentration and memory; he feels that life is a strain and he worries excessively; he has suffered panic attacks since working at ICM. These attacks occur when in a group of strange people, and they also occur at night time. He continues to dream, although he cannot recall the content or nature of his dreams. Dr Sowden was asked how the plaintiff had progressed and she noted that he had progressed in that he is now less suicidal, has fewer persecutory ideas, is expressing less self-alienation, and is improving his ability to manage his panic attacks, although they still occur. She said he has less generalised fearfulness and his depression is less intense, but is still present. His somatic symptoms are less severe, and he is more integrated with his family and not emotionally detached to the same degree. She stated that he continues to suffer post-traumatic stress disorder, panic attacks and depression and that his occupational prognosis was bleak. She was of the view that he would not be able to secure meaningful employment in the future and that he was capable of performing odd jobs for family members only, where there was a tolerance of his cognitive difficulties associated with his psychological condition. The majority of medical opinion indicated that the plaintiff will require considerably more treatment and that it is unlikely that he will return to meaningful employment. The plaintiff's own evidence, and that of his wife and son, told of a change in his condition since April 1997. There have been periods of black despair staring at walls. He left home for a period travelling in north-eastern New South Wales for two months, camping in his car. He said he wanted to get away from home because he thought he was being difficult to get along with. There is evidence of continuing panic attacks, agoraphobia, sleep interruption and night sweats, and the plaintiff said that the threats made by the prisoners still remain on his mind. There is evidence of failed attempts at employment, he worked for two days a week in a saleyard, literally counting beasts, but he could not cope with this. There is evidence that he attempted to assist his son in his son's business of manufacturing awnings, but he made too many mistakes in measuring and he was relieved of any such further obligation. His son said that when he attends at his business premises he is apt to wander off without notice and he could not be relied upon to undertake any regular clerical work. All this evidence leads me to one conclusion, and that is that the plaintiff suffers from a considerable disability, both as affects his amenity of life, and his income earning capacity. I find that recovery from his condition is regrettably unlikely. The plaintiff is now fifty-nine years of age, with only six years left in which to recover to return to any form of employment. There is little prospect that this will occur as there has been so little progress in the four years since the incident complained of.

86 The appellants submit that the upper limit of an appropriate range for general damages was $100,000. I do not agree. The award was well open on the facts, none of which are challenged in any specific manner. 87 As to economic loss, the appellants submit that the judge erred in concluding that the respondent would have worked until age 65, had he not be injured: and that the injuries left him with no residual earning capacity. 88 The impact of the injury upon earning capacity was an issue on which medical opinion was divided, although some doctors were of the view that the respondent was unable to return to gainful employment. None of the doctors was cross-examined on his or her report. 89 The calculations of future economic loss were agreed at trial. The judge, who saw the plaintiff and his son give evidence, was entitled to conclude from that evidence and the medical reports that the plaintiff would be unable to return to any gainful employment in consequence of his continuing disabilities. 90 There was some evidence that the plaintiff would have worked until the conventional retiring age of 65 had he not been injured (Blue 94). There was no evidence that he had intended to retire earlier than then. 91 The appeal should be dismissed with costs. 92 MEAGHER JA: I agree with Mason P. **********

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Cases Cited (23)