Background

In March 2001, Glenn Wright (Wright) attended a course for call operators held by Optus Administration Pty Limited (Optus). Wright was employed by a labour hire company who supplied services to Optus.

On the third day of the course another attendee, Nathanial George (George), was found by the course leader employed by Optus, Natalie Hedges (Hedges), in an unauthorised place on the roof balcony of the premises. Hedges reported the incident to her superior, Trevor Williams, who attended the roof balcony along with Paul Dee (Dee), another employee of Optus.

George was observed to be unresponsive, in a trance-like state, repeatedly asking for Wright while pacing up and down the roof balcony. Wright reluctantly attended the roof balcony at the request of the employees of Optus.

Wright approached George while Dee and Hedges observed. After encouraging Wright to go close to the balcony railing to observe the view, George attempted to lift Wright off his feet and throw him from the balcony, while also punching and hitting him. Dee then intervened and restrained George, allowing Wright to escape.

The physical injuries Wright suffered were minor however he subsequently developed a serious form of post-traumatic stress disorder.

In 2009 Wright commenced negligence proceedings in the Supreme Court of New South Wales against Optus, seeking damages for psychological injury.

Decision at First Instance

Wright asserted that at the time of the incident Optus owed him a duty of care analogous to that owed by an employer to an employee. Optus argued the only duty it owed was that owed by an occupier to a lawful entrant and as such it was not liable for any injury caused by the criminal acts of George.

His Honour Campbell J found in favour of Wright, awarding him over $3.9 million in damages. Applying principles from Modbury Triangle Shopping Centre Pty Ltd v Anzil[1](Modbury), it was held that Optus owed Wright a general duty of care analogous to that of employer and employee, which extended to taking reasonable care to protect Wright from the criminal acts of others.

Decision on Appeal

This decision was overturned in a 2:1 decision on Appeal, with Basten and Hoeben JJA concluding that Optus did not owe Wright a duty to take care not to cause mental harm. Gleeson JA was in dissent.

The decision hinged on two key arguments made by Optus:

  1. Relying on the Modbury principles, Optus owed no duty of care to Wright beyond the duty owed by an occupier to a lawful entrant.
  2. Alternatively, if Optus owed a duty to protect Wright from the criminal actions of George, then Wright could not satisfy the requirements of s.32 of the Civil Liability Act 2002(NSW) (CLA) whereby the prospect of a person of normal fortitude suffering pure mental harm must be reasonably foreseeable.

Application of Modbury principles

In Modbury, the High Court held that a shopping centre owner owed no duty to take reasonable care to prevent the criminal conduct of a third party who assaulted an employee of a tenant in the car park.

Basten and Hoeben JJA disagreed with the trial judge’s application of Modbury to establish a “general” duty of care. The Court asserted that the nature of the injury, being purely mental harm, required that the terms of s.32 of the CLA, which include attention to “the circumstances of the case”, be applied before making any finding as to a general duty.

In dissent, Gleeson JA distinguished the Modbury case on the basis of Optus’ control. His Honour noted that Modbury viewed capacity to assert control over third parties as the prerequisite to the imposition of a duty to prevent foreseeable damage from their criminal actions. In Modbury whether the shopping centre owner should have but did not control access by the third party assailants was not at issue, whereas in the present case His Honour considered the issue to be “how Optus should have controlled Mr George’s contact with other employees on the roof balcony of its premises”.

Application of s.32 of the CLA

Basten and Hoeben JJA determined that “the critical question in identifying the scope or content of the duty owed by Optus to Mr Wright was to identify the risk which might give rise to mental harm.” It was noted by the Court that in cases regarding third-party attacks, it is important to identify the nature of the conduct which the defendant should have foreseen.

The majority found that the trial judge erred in identifying the risk that ought to have been foreseen was the risk that George “may assault” Wright. His Honours deemed that this was an error which affected in a fundamental way the scope of the duty found and the question of breach.

Hoeben JA held that a duty would only have existed if Optus had foreseen that the risk of the conduct of George in “seeking to kill” Wright, which “put his life in peril”, might cause a person of normal fortitude to suffer a psychiatric illness. Without a finding as to the foreseeability of such conduct, it was held that Optus was under no duty to take reasonable care to prevent such conduct.

Implications

The Court of Appeal’s finding that Optus did not owe a duty of care is significant in regarding the interpretation and application of the doctrine of vicarious liability.

The Court of Appeal stated that the trial judge had “impermissibly aggregated the knowledge” of the Optus employees and attributed such knowledge to Optus.

Further, this decision also indicated that the foresight of an employer cannot be established by attributing to it knowledge that arose in the course of events giving rise to a breach of such duty.

Relevantly, the decision also established that a finding of vicarious liability requires first a standalone finding of negligence on the part of the employee. Basten JA purported at [49]:

“If the liability of Optus were truly vicarious, then there must have been negligence on the part of the employee. What the employee ought or ought not to have done may well depend on the circumstances of which he or she was, or ought to have been aware. The negligent conduct of the employee may then be attributed to Optus. However, that is notwhat happened here.”

The Court of Appeal’s decision also reinforced the stringency of the requirement of s.32 of the CLA in establishing whether a duty is owed to prevent mental harm, and the importance of identifying with particularity the risk in question.