In March 2015, the safety and legal communities were put on notice by a landmark NSW Supreme Court trial judgment. An employer was ordered to pay $3.9 million in damages after a worker was traumatized by a colleague’s attempted murder on a roof balcony. That initial decision sent shockwaves through human resources and safety departments, effectively signaling that employers could be held liable for unpredictable, hyper-violent criminal acts if any prior unusual behavior had been noted.
In February 2017, the New South Wales Court of Appeal completely overturned that ruling. The appeal decision clarifies the legal boundaries of employer liability for pure mental harm and outlines how organizations should practically evaluate psychiatric risks.
Hindsight Bias vs. Prospective Foresight
The Court of Appeal’s decision centered on a fundamental flaw in the original trial judgment: the reliance on hindsight. At trial, the judge aggregated the isolated observations of various staff members to conclude that the business should have known the assailant was a severe danger.
The Court of Appeal rejected this approach, ruling that a business’s liability must be assessed prospectively based on what was actually known before the event, rather than looking backward after a tragedy has unfolded.
While staff on the day noted that the assailant was behaving strangely, pacing, and appearing to be in a trance, his actual actions prior to the assault were calm. The court ruled that while the staff might have been apprehensive about his strange behavior, it was not reasonably predictable that he would launch a sudden, murderous assault. Under Section 32 of the Civil Liability Act 2002 (NSW), a duty of care to prevent mental harm only exists if the specific type of extreme violence and resulting psychiatric illness was reasonably foreseeable.
Corporate Knowledge Cannot Be Blindly Aggregated
The second critical takeaway from the appeal decision directly affects how corporate knowledge is treated. The court confirmed that you cannot legally piece together separate, minor observations from different employees to build a case that a corporation possessed full, combined knowledge of a severe risk.
Furthermore, the court found that the front-line employees acted reasonably and with common sense on the day. One supervisor even intervened physically to save the worker’s life. Because the individual staff members did not breach their personal duty of care based on the unpredictable information they had at the time, the corporate entity could not be held vicariously liable for the outcome.
The structural reality of the appeal ruling follows this path:
- Observation: Strange, unusual, or erratic behavior is noticed in the workplace.
- Legal Test: Was a sudden, life-threatening criminal assault a predictable outcome of that specific behavior beforehand?
- Court Finding: No. Unpredictable, extreme violence cannot be treated as a reasonably foreseeable risk.
- Result: The $3.9 million judgment is set aside, and the employer is not liable for pure mental harm.
Practical Lessons for Safety Executives
While this appeal victory protects businesses from being held liable for entirely unpredictable criminal acts, it does not lessen an employer’s core workplace safety duties. Instead, it provides clear, realistic guardrails for managing psychological safety:
- Focus on Practical Workplace Procedures: The court explicitly noted that it is unreasonable and impractical to expect businesses to have a specific policy for every rare or extreme emergency. Instead of burying teams in complex paperwork for highly unusual scenarios, focus on general emergency management, escalation paths, and clear lines of communication.
- The Duty of Care is Not Endless: A business has an incredibly high duty to protect its workforce, but it is not an absolute insurer against every hidden or erratic human action. The law requires businesses to address risks that are known and likely, not every rare possibility.
- Differentiate Between HR Conduct and Immediate Safety Risks: While this common law ruling sets a high bar for proving negligence regarding mental harm, statutory safety regulators still look closely at how businesses manage known workplace hazards. When erratic or hostile behavior is reported, the correct response is a calm, objective review of immediate operational safety rather than panic.
Source Material & Further Reading
- Primary Judgment: Optus Administration Pty Limited v Glenn Wright by his tutor James Stuart Wright [2017] NSWCA 21 (Decision handed down 17 February 2017)
- Statutory Framework: Civil Liability Act 2002 (NSW), Section 32 (Mental harm duty of care)
- Historical Reference: Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61 (The foundational principle regarding liability for the criminal acts of third parties)
