S v State of New South Wales

[2009] NSWCA 164

New South Wales

Court of Appeal

CITATION:	S v State of New South Wales [2009] NSWCA 164
HEARING DATE(S):	21, 22 and 26 May 2009
JUDGMENT DATE:	17 July 2009
JUDGMENT OF:	Beazley JA at 1; Giles JA at 2; Macfarlan JA at 3
DECISION:	(1) Appeal allowed. (2) Set aside the judgment and the orders for costs made at first instance. (3) Judgment for the appellant in the amount of $1,679,936.71, together with such amount, if any, as may be assessed by the primary judge in respect of domestic assistance. (4) Remit to the primary judge the assessment of the appellant's claim for damages in respect of domestic assistance. (5) Order that until further order there be no disclosure, except to the parties to these proceedings and to the Commissioner of Police, of any part of the Court's reasons for judgment other than the description of the orders proposed to be made and any record of the orders in fact made. (6) Direct that writtten submissions and draft orders as to issues of part payment of the judgment, costs and confidentiality of portions of the reasons for judgment be filed and served as follows: (a) By the appellant and the Commissioner of Police, within 3 days of the date of the Court's judgment. (b) By the respondent, within 3 days thereafter; and (c) Any reply within 2 days thereafter. (7) Direct that the issues referred to in the last order be determined upon the basis of the written submissions and the draft orders to be filed by the parties and the Commissioner of Police.
CATCHWORDS:	TORTS - negligence - employer's duty of care - undercover police officer suffering psychiatric injury - accumulation of stress - whether duration of undercover service excessive - whether employer should have provided for compulsory reviews of officer's mental health - whether injury caused or, materially contributed to, by alleged negligence
CATEGORY:	Principal judgment
CASES CITED:	Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; (1999-2000) 200 CLR 1 Czatyrko v Edith Cowan University [2005] HCA 14; (2005) 79 ALJR 838 Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; (2002) 211 CLR 540 Koehler v Cerebos (Australia) Ltd [2005] HCA 15; (2005) 222 CLR 44 March v E and M H Stramare Pty Ltd [1991] HCA 12; (1990) 171 CLR 506 McDonald v State of New South Wales [2001] NSWCA 303 Naxakis v Western General Hospital [1999] HCA 22; (1999) 197 CLR 269 New South Wales v Fahy [2007] HCA 20; (2007) 232 CLR 486 New South Wales v Seedsman [2000] NSWCA 119; (2000) 217 ALR 583 PAB Security Pty Ltd v Mahina [2009] NSWCA 125 Roads and Traffic Authority v Royal [2008] HCA 19; (2008) 82 ALJR 870 Roads and Transit Authority v Dederer [2007] HCA 42; (2007) 234 CLR 330 Wyong Shire Council v Shirt [1980] HCA 12; (1979) 146 CLR 40
PARTIES:	"S" (Appellant) State of New South Wales (Respondent)
FILE NUMBER(S):	CA 40396/08
COUNSEL:	R J Burbidge QC/D M Shoebridge (Appellant) P Menzies QC/ P D A Mallon (Respondent) P Singleton/M England (Commissioner of Police)
SOLICITORS:	Edwards Michael Lawyers (Appellant) Crown Solicitor's Office (Respondent) Crown Solicitor's Office (Commissioner of Police)
LOWER COURT JURISDICTION:	Supreme Court
LOWER COURT FILE NUMBER(S):	SC 20125/06
LOWER COURT JUDICIAL OFFICER:	Harrison J
LOWER COURT DATE OF DECISION:	9 September 2008 and 24 October 2008
LOWER COURT MEDIUM NEUTRAL CITATION:	"S" v State of New South Wales [2008] NSWSC 933; "S" v State of New South Wales (No 2) NSWSC 1116

CA 40396/08
SC 20125/06

BEAZLEY JA
GILES JA
MACFARLAN JA

17 July 2009

“S” v STATE OF NEW SOUTH WALES

Judgment

This judgment has been edited to give effect to a non-publication order made by the Court on 5 August 2009. The portions of the judgment which are the subject of the order have been replaced by “xxx”.

1 BEAZLEY JA: I agree with Macfarlan JA.

2 GILES JA: I agree with Macfarlan JA.

: These reasons for judgment are organised under the following headings:

NATURE OF CASE AND CONCLUSIONS [4]
FACTUAL CIRCUMSTANCES [11]
The Appellant’s entry into the Police Force [11]
The Appellant’s Undercover Police Work [14]
The Appellant’s Discharge from the Police Force [27]
THE PROCEEDINGS AT FIRST INSTANCE [30]
The Claim [30]
The Witnesses [32]
The Decision [34]
ISSUES ON THE APPEAL [44]
THE APPELLANT’S MEDICAL CONDITION [47]
DUTY OF CARE [58]
BREACH OF DUTY OF CARE –
WHETHER A FORESEEABLE RISK [61]
Evidence of Foreseeability of Risk [63]
BREACH OF DUTY AND CAUSATION –
RESPONSE TO RISK [64]
Duration of Undercover Work [64]
The primary judge’s view [66]
Cumulative stress [70]
The respondent’s xxxxx xx xxx xxxxxxxx xx
undercover work [78]
Analysis of the primary judge’s reasoning [84]
Relevance of part-time undercover work [92]
Conclusion as to duration of service [102]
Causation in relation to duration of service [105]
The respondent’s assessment system [109]
Empathy with criminal targets [113]
Conclusion as to this particular of
negligence [118]

Lack of Training Particular of Negligence [119]
Counselling and Treatment Particular of
Negligence [126]
Other Particulars of Negligence [135]
DAMAGES [142]
ORDERS [143]

NATURE OF CASE AND CONCLUSIONS

4 In this case a former New South Wales police officer claimed damages from her employer alleging that she suffered psychiatric injury in the course of her work as a result of breaches by the employer of a duty of care which it owed to her. The appellant police officer worked as a full-time undercover operative for a total of about three years and as a part-time undercover operative for another eight and a half years. The work was highly stressful throughout. Near the end of her period of part-time undercover work the appellant experienced severe trauma as a result of her involvement in two particular undercover operations.

5 The employer conceded in the proceedings that following these two experiences the appellant came to suffer post traumatic stress and depressive disorders and that those disorders were caused by her involvement in undercover police work.

6 The employer also conceded that at all relevant times there was a foreseeable significant risk of an undercover operative suffering a psychiatric disorder by reason of the nature of his or her work. The appellant alleged that the employer had been negligent in not responding to that foreseeable risk by taking a variety of steps to avoid or reduce the risk.

7 The primary judge rejected that allegation and found that the employer had not committed any breach of duty.

8 My conclusion is that in light of the employer’s concession that there had been a foreseeable significant risk of serious injury, and of various other factors, including the xxxxxxxxxx xxxxxxxx xx xxxxxxx xxxxxxxxx xxxxxxxxxx xxxx xx x xxxxxxx xx xxxxx xxxxx, it was unreasonable for the employer to engage the appellant in any further undercover work after she had completed her three year period of full-time undercover work.

9 If the employer had responded appropriately to the foreseeable risk, the appellant would not have performed the part-time undercover work that she did and in particular would not have been involved in the two undercover operations which triggered her psychiatric disorders. The consequence is that the employer’s negligence is to be regarded as having caused or materially contributed to the appellant’s injury. An alternative justification for the same conclusion is that the evidence established that the part-time work in which the appellant engaged prior to the two concluding operations materially contributed to her suffering from the disorders because that work subjected her to stress which accumulated and rendered her more vulnerable to the impact of the two traumatic experiences which she came to have. Accordingly, that part-time undercover work, on this basis also, materially contributed to her injury.

10 As a result of these conclusions, the appellant is entitled to judgment in an amount which was agreed between the parties, subject to the assessment of any additional damages to which she is entitled as a result of her claim in relation to domestic assistance.

FACTUAL CIRCUMSTANCES

The Appellant’s entry into the Police Force

11 The appellant became a Probationary Police Constable in the NSW Police Force (hereafter referred to as “the Police Force” although it should be noted however that between 1990 and 2002 the Police Force was known as the NSW Police Service) on 17 May 1985. She was then aged 20. She had completed her training at the Goulburn Police Academy and had been placed first in her class of 210 trainees. She was the first female officer to have gained first place and she received the Police Credit Union Award for the achievement.

12 The appellant had ambitions of rising to the top ranks of the Police Force and when interviewed by the media in 1985 said that she had ambitions to become the first female Police Commissioner. Her aspirations had a good foundation. The primary judge found that the appellant was “an outstanding undercover [police] operative, if not an outstanding police officer generally, driven by a strenuous ambition to perform well in her job and possessed of … conspicuous intelligence and capacity” (Judgment [232])). His Honour referred to her “highly promising career” later being “truncated by work-related injury” (Judgment [232]).

13 After a period in the Cronulla Local Area Command (“LAC”), in 1986 the appellant undertook secondary training. She obtained first place in the training course and the Police Association Award.

The Appellant’s Undercover Police Work

14 In August 1986 the appellant was transferred to the Drug Strike Force to perform undercover criminal investigation work which was aimed at gaining evidence for the prosecution of a number of drug dealers in the Kings Cross area. It is unnecessary to describe the detail of this work. It is sufficient to record that, being undercover police work, it was highly stressful. Undercover work was described by one of the witnesses called by the respondent, retired Detective Inspector Davis, as work in which “the operative assumes another identity and infiltrates the environment of drug syndicates or individuals who are targeted as such”.

15 In January 1987 the appellant returned to general police duties at the Cronulla LAC. She undertook examinations for appointment as Constable First Class and was placed second in the State in those examinations. She was intent at that time upon pursuing a career as a detective.

16 In January 1988 the appellant was transferred to the Special Forces (Undercover) Unit (the “Undercover Unit”). At that stage, the Unit comprised a leader, two supervisors and six covert operatives. The appellant remained in this Unit until September 1990, undertaking numerous undercover operations under assumed names and identities. Again, it is unnecessary to describe the detail of the work that she did. It is referred to by the primary judge at paragraphs [20-39] of his judgment: [2008] NSWSC 933. As he held, the appellant “lived in a constant state of anxiety. The reality of the dangers that she faced on a day-to-day basis was often brought home to her during specific operations when she exposed herself to potentially violent criminals” (Judgment [22]).

17 Stresses associated with undercover work were identified in PowerPoint form for the purposes of an undercover work training course conducted in 1990 as follows: “Danger, Fear of Exposure; Relationship with Supervisors, other Sections; Relationship with Subject; Paranoia; Loneliness”. “Relationship with Subject” was a reference to stress arising out of empathy with the targeted criminals and to the fact that undercover work had at its heart what the appellant described as “the essential fact of betrayal” by the undercover officer of those whose trust and friendship he or she had cultivated.

18 As the primary judge put it, there were many situations in which the appellant “found herself in the company of potentially violent and dangerous individuals in contrived circumstances over extended periods with the over-riding objective of deceiving them”, involving “the need to lead a double life and to alternate between two or among multiple identities and personalities” (Judgment [143]) and involving “the deceitful befriending of suspected criminals by the establishment of contrived relationships of trust and confidence that were inevitably discarded” (Judgment [269]).

19 The respondent accepted on the appeal that the appellant’s full-time undercover work comprised about four months with the Drug Strike Force and about 32 to 33 months with the Undercover Unit. The total period of full-time service was thus about three years. The appellant claimed that her service in the Undercover Unit was brought to an end in a peremptory fashion, without her being given the opportunity to ease her way back into normal police duties (Judgment [93]).

20 In the period from October 1990 until the time in February 1999 when the appellant told the Operations Coordinator for the Macquarie Region, Detective Donnelly, that she did not think that she could do undercover work any longer, the appellant undertook a mixture of general policing and undercover duties.

21 At first instance the appellant provided to the Court, in response to a request from the Court for such information, a schedule which attempted to quantify the time spent on undercover work during that period of eight and a half years. The respondent contended on the appeal that the schedule showed that “undercover” and “quasi undercover” work accounted in total for about two years, with about another four months having been occupied in giving evidence in relation to undercover work. This accorded with the primary judge’s view (Judgment [231]). The respondent defined “undercover” for the purpose of this calculation as “consorting with criminals and … adopting a persona of a drug buyer and user seeking to work oneself … up the chain of organised drug syndicates … [in such work] contact with non-[Undercover Unit] police [was] not appropriate … and the work required adoption of a criminal lifestyle” (“Note from Respondent” submitted to the Court).

22 The appellant however submitted with some justification that it was not very profitable to be adding up months spent in part-time undercover work and that:

“[t]he fact of the matter is that the fear to which undercover agents are particularly exposed is, as you would imagine, the fear of exposure of their true identity, it could range from a time when they’re deep in the countryside with armed bikies and so on, which would be catastrophic, to a situation where she runs into an acquaintance or a wife of one of the targets or something at the children’s nursery as in fact she did … [Y]ou’ve adopted your persona and … the persona has to be on foot all the time because your mobile phone can go off at any time with a target making contact with you or an informant or what have you … [T]he fact of the matter is that you are constantly ready to respond as though you were somebody other than who in fact [you] are”.

23 It is necessary to refer to two particular undercover operations which were undertaken near the end of this period of part-time undercover work because particular significance was attached to them in the medical evidence led before the primary judge.

24 The first occurred in 1998 during the investigation of a xxxxxx xx xxxxxxx xx xxxxxxxx xx xxx xxxxx xxxxx xx xxx xxxxx xxxxx. The appellant was required to pose xx xxx xxxx xx x xxxxxx xxxxxxxxx xxx xxx x xxxxxxx xx xxxxxxx xxxxxxxx. He was referred to on the appeal as “CE1”. This was also the name given to the undercover operation itself. The operation was extremely traumatic for the appellant. The details of the operation appear in the judgment of the primary judge at paragraphs [46-59].

25 The second operation involved undercover work in 1999 at Orange in New South Wales. The appellant found this operation very traumatic also. It was near the conclusion of this operation that she told Detective Donnelly from the Macquarie Region that she did not think that she could do undercover work anymore. The primary judge described the appellant’s state of mind after this time as follows:

“73 The plaintiff did not feel right after this. She continued to be upset and felt vulnerable and anxious. She was unable to communicate her thoughts about this with anyone in the police. The plaintiff never contacted welfare. Welfare did not contact her. She did not want to show any vulnerability to her fellow police officers. She said that she was concerned that if word got out that she was attending on welfare that her prospects of advancement would be adversely affected. The plaintiff also said that she thought that her experience as an undercover officer was quite different and unique and she did not expect that anyone in welfare would have anything useful to say that would assist her to deal with her specific problems. She thought that she would just get over it.” (Red 142)

26 After the conclusion of this operation in March or April 1999 the appellant did not do any further undercover work, although it was necessary for her to give evidence later in the year concerning the Orange operation.

The Appellant’s Discharge from the Police Force

27 In early 1999 the appellant saw a general practitioner in connection with anxiety, and fear of loud noises and of the dark, which she was experiencing. She was referred to a psychiatrist, Dr Sharah.

28 Soon after, she was referred to another psychiatrist, Dr Selwyn-Smith, whom she first saw in April 2000. She recounted to him a history of “anxiety, palpitations, sweats, fear of loud noises and the dark, and her continuing sense of lack of safety for herself and her partner” (Judgment [90]). She returned to see Dr Selwyn-Smith and has continued to see him regularly ever since.

29 The appellant married in April 2000. She subsequently took maternity leave and then extended annual leave, long service leave and leave without pay. Symptoms of anxiety, fear of the dark, apprehension, palpitations and sweating continued. She returned to police duties on a part-time basis in March 2003 but experienced difficulty in coping. She ceased work in May 2003 and in August 2003 submitted to the Police Force a “Hurt on Duty” claim. In 2005 she was discharged from the Police Force on medical grounds, it being accepted that she suffered from a post traumatic stress disorder (“PTSD”). The Commissioner’s Delegate accepted that the PTSD was caused by her being “hurt on duty”.

THE PROCEEDINGS AT FIRST INSTANCE

The Claim

30 The present proceedings were commenced by the appellant in July 2004. She alleged in her Statement of Claim that she suffered psychological injury as a result of the negligence of the respondent, the State of New South Wales, represented by the NSW Police Force. The claim was brought both in contract and tort but it has not been suggested that it is necessary to do more than consider the claim in tort.

31 The particulars of negligence alleged in the Statement of Claim were refined from time to time. They were ultimately expressed in the following terms:

“1. Failure to devise, institute and maintain a safe system of work so as to avoid injury to the plaintiff.
2. Failure to provide the plaintiff with adequate training to perform her duties.
3. Failure to provide the plaintiff with any or any adequate psychological and/or other counselling and/or psychological or psychiatric treatment.
4. Failure to establish and maintain good and recognised procedures for the re-integration of undercover police officers in the position of the plaintiff into mainstream policing duties.

5. Failure to devise, institute and maintain a proper or adequate system for the flagging of police officers involved in numerous critical incidents as being productive of cumulative stress .
6. Failure to put into operation any system or protocol or guideline for rotation of duties of the plaintiff after a stressful incident.
7. Failure to notify the Welfare Unit or Psychology Unit.
8. Failure to put into operation any system or protocols or guidelines for operational de-briefing and 'de-roling' (sic) of the plaintiff.
9. Failure to rotate the plaintiff out of undercover work xxxxx xxx xxxxxx xxxx xxxxxxxx xxx xxxxxxxxxx xxxx.” (Judgment [3])

The Witnesses

32 The witnesses called by the appellant who are of potential significance in connection with this appeal were as follows:

• The appellant herself.
• Michael Drury: Mr Drury is a retired police officer. During his service he worked for in excess of 20 years in the fields of drugs and organised crime. He performed duties as an undercover operative and supervisor and assisted in the design and delivery of undercover investigational training.
• Professor Alexander McFarlane: Professor McFarlane is a psychiatrist whose area of particular speciality since 1983 has been the effects of traumatic stress.
• Dr Selwyn-Smith: Dr Selwyn-Smith is a consultant psychiatrist who commenced treating the appellant in April 2000.
• Dr Donald Rowe: Dr Rowe is a clinical neuro-physiologist and clinical psychologist who performed psychological and neuro-psychological tests on the appellant. He concluded that the appellant suffers from organic brain abnormalities as a consequence of a history of prolonged exposure to stress and from a post traumatic stress disorder. The primary judge however found that the evidence as to organic changes to the appellant’s brain was inconclusive (Judgment [285]).

33 The witnesses who gave evidence on behalf of the respondent included the following:

• Phillip Kaufmann: Detective Senior Sergeant Kaufmann is a serving officer who has had extensive experience in drug investigations. For a considerable period of time he acted as a supervisor in the Undercover Unit. (Reference in this judgment to the status of witnesses is to that which they had at the time of the hearing).
• Peter George: Mr George is a retired police officer who had extensive experience in specialised drug investigations and undercover operations. From 1986 to 1989 he acted as a supervisor in the Undercover Unit.
• John Stanioch: Mr Stanioch is a retired police officer who had extensive experience in drug and undercover investigations. He was the leader of the Undercover Unit from 1987 to 1994.
• David Mutton: Mr Mutton is a psychologist who was employed by the Police Force from 1990 to 2001 in the capacity of senior, and later chief, psychologist in the Police Psychology Section.
• Warren Davis: Mr Davis is a retired police officer who had extensive experience in drug and undercover investigations. He worked continuously in major drug investigations from 1984 until 1994.
• Dr John Champion: Dr Champion is a psychiatrist with a special interest in the area of post traumatic stress disorder and other manifestations of stress-related psychopathology. In circumstances mentioned below ([49-53]), Dr Champion was not cross-examined on behalf of the appellant and his evidence was not relied upon by the respondent in address at first instance or on appeal.
• Dr Wendy Roberts: Dr Roberts is a clinical psychologist. She also was not cross-examined. Again her evidence was not relied upon by the respondent in address or on appeal.
• Professor Christopher Tennant: Professor Tennant was the Emeritus Professor of psychiatry at Sydney University at the time of the hearing at first instance. He was not cross-examined and his evidence was not relied upon by the respondent in address or on appeal. However aspects of his evidence were relied upon by the appellant.

The Decision

34 The primary judge accepted that the appellant suffers from a psychiatric disorder. He said that “the ultimate diagnosis was that the plaintiff suffered from a post traumatic stress disorder following upon an original diagnosis of an adjustment disorder with marked features of anxiety and depression” but that a precise description of the appellant’s condition did not have “a very important role to play in the final result” (Judgment [285]). His Honour took this view because of various concessions made by the respondent.

35 His Honour noted that the respondent admitted for the purposes of the proceedings that “the psychological disorder that the plaintiff asserts she suffers from, however it may so be described, was materially contributed to by her employment”. He said that he would in any event have found “that the plaintiff sustained her psychiatric condition in the course of her employment with the defendant” (Judgment [135] and [136]).

36 The primary judge accepted that the respondent owed a duty of care to the appellant ([145], [156]). He examined the question of breach of the duty of care by considering whether there was a foreseeable risk of injury to the appellant in the undercover work she did for the respondent and asking what, if anything, a reasonable person in the position of the respondent would have done by way of response to any such risk (see Judgment [157-159] citing New South Wales v Fahy [2007] HCA 20; (2007) 232 CLR 486 at [62] per Gummow and Hayne JJ).

37 As to foreseeability, his Honour noted that it was uncontroversial in the proceedings that the respondent was “aware that undercover work could give rise to a risk of psychiatric injury” (Judgment [2]) and that the respondent conceded that “there was in general a foreseeable risk of psychiatric injury being occasioned to police officers” who work undercover, although the respondent said that there was an issue about the foreseeability of the risk to the appellant in particular (Judgment [120]).

38 His Honour found that at all relevant times there was in fact a risk, foreseeable to the respondent, that the appellant would suffer psychiatric injury by performing undercover work (Judgment [144]). The substance of his reasons was as follows:

(a) As a general proposition the risks to the health of undercover operatives were known to the respondent.

(b) The ongoing problems associated with the need to lead a double life and to alternate between two, or among multiple, identities and personalities were clearly distinguishable from the stresses that confronted the plaintiff in Koehler v Cerebos (Australia) Ltd [2005] HCA 15; (2005) 222 CLR 44.

(c) The respondent was “in possession of, or had access to, literature and expert opinions that warned of the risk of psychiatric injury as the result of the exposure to the stresses of undercover police work” (Judgment [143]).

39 The primary judge noted that the appellant did not contend that undercover work was “so intrinsically stressful and dangerous that it should never have been undertaken by anyone under any circumstances” (Judgment [149]) but, rather, that the appellant contended that the respondent should have responded to the foreseeable risk of psychiatric injury by taking one or more of the steps listed in the particulars set out in [31] above.

40 His Honour rejected the appellant’s case in relation to each of these particulars. It will be necessary to refer further to what his Honour said in relation to the particulars. It is sufficient at this stage to record that he found that:

(a) The training of the appellant had been adequate (Judgment [238]).

(b) “The provision of some form of counselling regime or non-specific psychological or psychiatric treatment going beyond the maintenance of a readily available and accessible welfare unit was not called for and exceeds what ought to be regarded as a reasonable response” to the foreseeable risk (Judgment [242]).

(c) Accepting (or at least assuming) that xxx xx xxxxx xxxxx was the “optimal and maximum period” for xxxxx “xxxxxxxxxx xxxxxxxxxx xxxx” xxxxxx xx xxxxxxxxx, it was not open to the appellant, who xxxxxxxxx xxxxxxxxx xxxxxxxxxx xxxx xxx xxxxx xxxxx xxxxx, “to accumulate subsequent part-time periods of occasional undercover work as a means of establishing that the defendant xxxxxxxx xxx xxxxxxxxx xxxxxx xxxxxxxxx” (Judgment [262-3]).

41 The primary judge also said that if he were wrong in his view that the respondent had not breached its duty of care, there was nevertheless no causal connection established between the appellant’s psychiatric injury and the breaches of duty she alleged. Again, it will be necessary to refer to his Honour’s findings in more detail later. It is sufficient at this stage to record that he found that:

(a) Any failure by the respondent to provide counselling, or psychological or psychiatric treatment, was not causative of the appellant’s injury because the appellant would not have attended for any counselling or treatment and would not have revealed her condition. His Honour said that she would likely have “remain[ed] silent” in order to preserve her career prospects (Judgment [268]).

(b) In any event, the appellant had not demonstrated that her present condition would have in any way been different if the respondent “had offered the treatment for which she contends and she had actually co-operated” (Judgment [268]).

(c) Further, there was “no demonstrated causal connection between the plaintiff’s psychiatric condition and the length of time that she performed undercover work”. He said that the evidence of Dr Selwyn-Smith was clearly contrary to the appellant’s case in this respect (Judgment [271]).

42 The primary judge rejected the respondent’s contention that the appellant had been guilty of contributory negligence.

43 To cover the possibility that the appellant succeeded on appeal in establishing the respondent’s liability, the primary judge assessed damages. The respondent filed a cross-appeal contending that the assessment was manifestly excessive, but subsequently withdrew the cross-appeal. During the hearing of the appeal the parties provided agreed short minutes indicating that damages should be awarded in the amount of $1,679,936.71, excluding damages for domestic assistance, which were yet to be quantified.

ISSUES ON THE APPEAL

44 The issues on appeal are essentially confined to two questions:

• As to breach: would a reasonable employer in the position of the respondent have responded to the admittedly foreseeable risk of psychiatric injury to the appellant by taking any of the steps identified in the particulars referred to in [31] above?
• As to causation: would the appellant’s injury have been avoided if one or more of those steps had been taken?

45 As mentioned above ([37]), the respondent conceded the foreseeability of a risk of psychiatric injury flowing from undercover work but did not accept that a risk of injury to the appellant in particular was foreseeable. The primary judge however found that a risk of injury to the appellant in particular was in fact foreseeable. The respondent did not challenge that finding on appeal. It is nevertheless appropriate to refer to the evidence regarding the foreseeability of a risk of injury because the magnitude of the risk foreseen and the seriousness of the injury foreseen as possibly occurring are relevant to the question of how a reasonable person would have responded to the risk.

46 Consideration of the question of causation identified in [44] above requires reference to the evidence as to the appellant’s medical condition and to the conditions alleged to have given rise to it. I turn now to that evidence.

THE APPELLANT’S MEDICAL CONDITION

47 Professor McFarlane’s diagnosis was that the appellant was suffering from “a post traumatic stress disorder and major depressive disorder using DSM-IV criteria”. “DSM-IV” is a reference to the “Diagnostic and Statistical Manual of Mental Disorders: DSM-IV 4^th ed Washington DC, 1994” as published by the American Psychiatric Association (see New South Wales v Seedsman [2000] NSWCA 119; 217 ALR 583 at [101]). One of the criteria which must be satisfied under DSM-IV for a disorder to be classified as a PTSD is the following:

“7.8.1 Criterion A: The person has been exposed to a traumatic event in which both the following were present:
1. The person experienced, witnessed or was confronted with an event or events which involved actual or threatened death or serious injury, or a threat to the physical integrity of self or others, and
2. The person’s response involved intense fear, helplessness or horror.”

Professor McFarlane’s view was that the events involved in the CE1 and Orange operations satisfied the DSM-IV criteria.

48 Dr Selwyn-Smith diagnosed the appellant as suffering from a PTSD “with Major Depressive Episode and Anxiety”.

49 The basis upon which the appellant was given a medical discharge from the Police Force was that she had a PTSD (see [29] above) and in the proceedings at first instance, the respondent came to accept that this was the case as, in final address, senior counsel for the respondent said, after stating that there was no issue as to the existence of the duty alleged, “nor is there an issue that the police officer[‘s] service materially contributed to her post traumatic stress disorder and depression”.

50 This concession was inconsistent with the diagnostic conclusion of Dr Champion who gave evidence on behalf of the respondent. He rejected a diagnosis of PTSD. His view was that when the appellant ceased work she had an “Adjustment Disorder with anxious and depressed mood associated with the need for a separation and change of focus[,] following two years of maternity leave[,] to return to work”. He thought that “much of that adjustment [had] been accomplished by [the time of the appellant’s] retirement”.

51 The respondent’s concession was also inconsistent with the evidence of Dr Roberts and Professor Tennant, who also gave evidence on behalf of the respondent, to the extent that those witnesses indicated that they remained to be convinced that the appellant had a PTSD.

52 Nevertheless, the precise description of the appellant’s condition is of limited significance once it is accepted, as all of the experts did accept, that the appellant came to suffer from a serious psychiatric disorder and once it is recognised that, with one limited exception, the damages to which the appellant would be entitled if she succeeded on liability are agreed. As put succinctly by Professor Tennant, “whether the patient has PTSD or not it is clear that she’s quite disabled by her condition …”.

53 So far as causation is concerned, the respondent’s concession that the appellant’s disorder was materially contributed to by her engagement in undercover work was inconsistent with the views on that issue expressed by Dr Champion, as is apparent from his description of the nature of the appellant’s condition (see [50] above). It is understandable in these circumstances that the respondent did not seek to rely upon Dr Champion’s evidence, in any presently relevant way, in address at first instance or on the appeal. On the other hand Professor Tennant’s evidence as to the cause of the appellant’s disorder (however the disorder might properly be described) was consistent with the concession made by the respondent and aspects of that evidence were, as a consequence, relied upon by the appellant.

54 There is one respect in which the categorisation of the disorder suffered by the appellant is relevant. Attention was directed at first instance to the question of whether accumulated stress could play any role in the occurrence of a PTSD. I turn later to refer to the evidence given in this respect (see [72-79] below) but it needs to be emphasised at this stage that the evidence of the appellant’s medical experts and the terms of the respondent’s concession as to the appellant’s condition did not point only to a diagnosis of a PTSD but also to a diagnosis of a psychiatric disorder of depression (see [47-49] above). The appellant made the point in written submissions at first instance that her condition included a depressive disorder. The primary judge erred in suggesting that “the ultimate diagnosis was that [the appellant] suffered from a post traumatic stress disorder” (see [34] above) without acknowledging the depressive disorder from which she was also diagnosed to suffer.

55 The point has some significance because the respondent contended that accumulated stress was not relevant to the development of the appellant’s condition as Criterion A of DSM-IV only looked to particular extraordinary traumatic events and their consequences (see [47] above). It argued that whilst the CE1 and Orange operations arguably constituted such events, other aspects of the appellant’s undercover work, though highly stressful, did not. However that criterion of DSM-IV is only relevant to a PTSD. It does not have to be satisfied to found a diagnosis of a depressive order and it does not appear to be doubted that accumulated stress may materially contribute to the development of a depressive disorder.

56 This point accordingly provides a significant response to the respondent’s submission that Professor McFarlane wrongly regarded accumulated stress as playing a significant role in the development of the appellant’s condition.

57 Independent of this point, is the question of whether prolonged stress caused by events which do not of themselves meet Criterion A in DSM-IV may nevertheless make a material contribution to the development of a PTSD, by rendering a person more vulnerable to the impact of one or more Criterion A events occurring at a subsequent time. Professor McFarlane’s evidence was that they could, and that they did in fact do so in the case of the appellant. He described this as the process of sensitisation. I return to this issue in the discussion below at [72-79] of breach of duty.

DUTY OF CARE

58 The duty of care owed by an employer to an employee was described by the High Court in Czatyrko v Edith Cowan University [2005] HCA 14; (2005) 79 ALJR 838 in the following terms:

“An employer owes a non-delegable duty of care to its employees to take reasonable care to avoid exposing them to unnecessary risks of injury. If there is a real risk of an injury to an employee in the performance of a task in the workplace, the employer must take reasonable care to avoid the risk by devising a method of operation for the performance of the task that eliminates the risk, or by the provision of adequate safeguards. The employer must take into account the possibility of thoughtlessness, or inadvertence, or carelessness, particularly in a case of repetitive work” (at [12], citations omitted).

59 It was not contended, nor could it have been, that a duty of this character was not owed by the respondent to the appellant. Further, it was not contended that any particular aspect of the contractual arrangement between the appellant and the respondent, or the statutory framework in which those contractual arrangements existed, bore any particular significance in the context of the issues arising upon this appeal: compare Koehler v Cerebos [19] - [25]; Fahy at [18] – [28], [93] and [234]. Further, there was no challenge to the primary judge’s reference with apparent approval to the proposition that “the duty of care owed by the State of New South Wales to police officers is in no way distinguishable from that owed by any other employer to its employees” (Judgment [147] quoting McDonald v State of New South Wales [2001] NSWCA 303 at [46] – [47] per Stein JA). Nor was it contended that the employer’s duty of care was not capable of extending to the avoidance of psychiatric injury, that being a proposition well-established by authority (for example, Koehler v Cerebos, Fahy).

60 It is relevant however to mention that the basis of employment of the appellant by the respondent was clearly one under which the respondent had the discretion to assign the appellant to such particular types of policing work as it chose. As appears from [16] above, the Undercover Unit was a small one. The evidence did not suggest that undercover work done outside the Undercover Unit was extensive. Apart from undercover work, there was of course a wide variety of other types of police work undertaken by the Police Force. The evidence did not suggest that the bulk of such other work involved stresses and dangers of the same magnitude as undercover work. As the appellant’s employer, the respondent was thus in a position to direct or otherwise cause the appellant “to go in harm’s way and to do so in circumstances over which the respondent was able to exercise control” (Crimmins v Stevedoring Industry Finance Committee [1999] HCA 59; (1999-2000) 200 CLR 1 at [276] cited in New South Wales v Seedsman at [162] per Mason P). This ability on the part of the respondent gives emphasis to the existence of the duty of care owed to the appellant and is part of the background against which the issue of breach of duty is to be considered.

BREACH OF DUTY – WHETHER A FORESEEABLE RISK

61 As recognised by the primary judge (see [36] above), consideration of breach needs to be approached by identifying any risk of injury to the appellant from her undercover work which would have been foreseeable to a reasonable employer in the position of the respondent and asking what, if anything, that reasonable employer would have done by way of response to the risk (Wyong Shire Council v Shirt [1980] HCA 12; (1979) 146 CLR 40 at 47-8; Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; (2002) 211 CLR 540 at [190]; New South Wales v Fahy at [56]; Roads and Traffic Authority v Dederer [2007] HCA 42; (2007) 234 CLR 330 at [65]).

62 I have noted in [37, 45] above the concession that was made by the respondent as to the existence of a foreseeable risk of psychiatric injury arising from undercover police work and also the finding of the primary judge, not challenged on appeal, as to the existence of a foreseeable risk of injury to the appellant in particular. The respondent conceded on the hearing of the appeal that what was foreseeable was a significant risk of injury and that the foreseeable risk was of significant injury. The evidence clearly supported the making of these concessions.

Evidence of Foreseeability of Risk

63 To assist in assessing the response which a reasonable employer would have made to the risk, it is appropriate to identify as follows the principal evidence on the issue of foreseeability of risk:

(a) Mr Drury (see [32] above) gave evidence that “as at 1986 and later times in which the [appellant] served as an Undercover Police Officer, the NSW Police Force were aware that undercover duties were productive of stress or psychological sequelae” and that:

“In fact, during the period 1986 and 1987 I was based in the United States for several reasons. During that period I was contacted by then Detective Chief Superintendent Jim Willis, Commander, Drug Law Enforcement Bureau, NSW Police, and instructed to collect and collate appropriate training materials and methodologies from several areas of the North Americas, where upon my return to Australia in 1988 I would be required to develop the curriculum and syllabus for the 1 ^st formal Undercover Training program as commenced within the NSW Police Service. A key area of that training program addressed such issues as Stress and its management, in addition to medical and psychological services that were available within and to the NSW Police Service.”

(b) Mr Mutton, who was for a considerable period the senior and, later, chief psychologist in the Police Psychology Section, gave evidence as follows:

“16. A regular monitoring review of undercover officers was instituted in the early 1990’s when it became apparent that this was an important strategy in maintaining psychological health. It did not occur earlier as it took time and experience for knowledge to evolve. The history of post traumatic stress disorder dates back to the early 1980’s and it was based mainly on the experiences of war veterans. It was not until the late 1980’s that theories underpinning critical incident stress management were recognised and enunciated by Jeffery [sic] Mitchell in his publications. The NSW Police Service based their approach largely on his work from the late 1980’s onwards. In short, stress arising from undercover and other police work was really only recognised and discussed from the late 1980’s onwards. It should be remembered that this realisation only emerged within the professional fields of Psychology and Psychiatry and were yet to be fully applied to emergency service workers by the decision makers of the New South Wales Police who themselves were not mental health professionals.”

(c) In September 1987 a Discussion Paper entitled “Stress and the Undercover Police Officer” was prepared by Sergeant Leonard of the National Police Research Unit. The Executive Summary in the Paper included the following:

“Stage 2 of the report considers stresses that arise in the operational stage.
Social identification of the police officer with the target or target group is identified as a major problem. Operatives also tend to extend role play into their personal lives. This affects their family and friends and in turn creates stressful situations. This stage also recognises the “grey area” of police undercover work. With very little, or no guidelines, undercover police do not have a yard-stick against which to determine just how far they should play the role in a criminal world. Long periods of inactivity when the operative is between operations or legitimising his cover are also recognised as a problem as well as loneliness and stress from unsatisfactory relationships between the controller and operator.
The post operational stage identifies that the extension of the role play, or the adoption of the role play, creates problems when the operative returns to normal police duties. Lack of discipline and the inability to fit back into the peer group are the most stressful problems. Feelings of guilt about their covert activity, as well as an increased fear of retribution create stress for the operative during this stage. This stage concludes with the recognition that empathetic post operational supervisors and post operational debriefs will assist an operative to adjust to normal police activity.”
The concept of conflicting or changing allegiance was said in the body of the Paper to be a not unusual phenomenon, with a well-known exemplification being ‘the Stockholm Syndrome’, “where hostages develop positive feelings towards their captors accompanied by negative feelings towards the authorities. These positive feelings are often reciprocated by the captors”.
The Paper concluded by referring to “the unique stress problems of police officers who perform undercover duties”.
In 1987 the National Police Research Unit Review published an article by Sergeant Leonard entitled “Conflict of Allegiance as a Stress for the Undercover Police Officer” which was said to be “taken from” the Discussion Paper.

(d) A document headed “Policy for Psychological Assessment for Specialist Groups” was in evidence. The index to the relevant Appeal Book indicates that the document was part of a larger document entitled “Progress Report: Psychological Screening of Police Officers dated 15 August 1991; Burn out Programme”. The former document commences with the following, under the heading “Responsibility”:

“The NSW Police Service is legally responsible for careful selection of Special Operatives as well as their care throughout their specialist assignment. In terms of risk management it is in the Department’s interest to reduce the risk inherent in the appointment of unsuitable officers. The risks of working in specialist roles such as Undercover and in the State Protection Group are well known (Chandler,1990, Girodo, 1995 and Leonard, 1987). These include anxiety, depression, post traumatic stress disorder, dissociative reactions, paranoid reactions and so on.
Therefore, it is important that each applicant undergo psychological assessment prior to appointment to high risk specialist areas.”
Bearing in mind the date of the document and other evidence as to Mr Girodo’s writings, the reference to “Girodo 1995” would appear to be a typographical error for “Girodo 1985”.


(e) The contents of the 1990 Course Outline have been referred to above in [17]. The Course Outline for the 1988 Undercover Training Course, which was the first such course and which was attended by the appellant, referred to sessions on stress management involving psychologists and a psychiatrist.

BREACH OF DUTY AND CAUSATION - RESPONSE TO RISK

Duration of Undercover Work

64 The particulars identifying the steps which the appellant contended that the respondent should have taken are listed in [31] above. It is convenient to deal with the last of the nine particulars first. The particular was expressed as a complaint of a “failure to rotate the [appellant] out of undercover work xxxxx xxx xxxxxx xxxx xxxxxxxx xxx xxxxxxxxxx xxxx” but it was clear from the manner in which the case was put on behalf of the appellant that the word “rotate” was not intended to suggest that it was permissible to return the appellant to undercover work after a break. Furthermore, the appellant accepted that the fact that she undertook a total of about three years, xx xxxxxxxx xxxx xxx xxxxx, full-time undercover work (see [19] above), was not of itself a basis for a complaint as to the duration of the undercover work.

65 The complaint by the appellant as to the length of her undercover work was a prominent one in the appellant’s case throughout the proceedings. Early in the trial Senior Counsel for the appellant put the proposition that the appellant “should not have been permitted to go as long as she did” in undercover work. In final address, he referred to a complaint of the appellant as to the respondent “not putting the operatives or at least [the appellant] out of under cover after two years or at the most three”. As the respondent said on appeal in relation to the appellant’s case at first instance, “it was fundamental to the appellant’s case that she worked undercover for a grossly excessive period”.

The primary judge’s view

66 The primary judge commenced his consideration of this particular in the following way:

“262. The fundamental proposition underpinning this particular of negligence is that xxx xxxxxx xx xxxxxxxxxx xxxxxxxxxx xxxx xxxxxxxxx xxx xxxxx xxx xxxxxxxx xx xxxxxxxx xx xxxxxxxxxxx xxxxxxxx xxx xxxxxx xxxxx xxxx xxxx xxxxxxxxx. xxxxx xx xxxxxxxx xx xxxxxxx xxxx xxxxxxxxx xxxxxxx xxx xxx xxxxx xxxxx xx xxxxxxxxxx xx xxx xxxxxxx xxx xxxxxxx xxxxxx, xxxxxxxx xxx xxxxxxx xxxxxxxx xxx xxxxxxxxxxx xx xxx xxxxxxxx. xxxxxxxx xx xxxx xxxxxxxxxx xx xxx xxxxxxxxxx xxxx xxx xxxxxx xx xxxxxxxxxx xxxx xx x xxxxxxxxxx xxxxxx. In the present case the plaintiff performed a continuous period of undercover work of between two and three years from 1988 until 1991 and at times thereafter on an ad hoc or occasional basis as earlier described.
263. The plaintiff was xxxxxxx xxx of the undercover unit xxxxx xxxxxxxxxxxxx xxx xxxxx xx xxxxxxxx xxx xxxxxxxxxx xxxx. Ironically, one of her complaints in these proceedings is that she found it difficult to adjust to regular police work at that time, a consequence that would necessarily confront her when rotated out of full-time undercover work. Be that as it may, if the content of the defendant’s duty did extend to or include xx xxxxxxxxxx xx xxxxxx xxxx xx xxxx xxxx xxxxxxxxxxxxx xxx xxxxx xx xxxxxxxxxx xxxxxxxxxx xxxx xxx xxxx xxxxxxxx, the defendant did not breach that duty. The plaintiff was rotated out of that work. The fact that she was permitted to return to it from time to time is beside the point. xxx xxxxxxxxxx xxxx xxxxx xxx xxxxxxxxx xxx xxxxxxxxxxxx xx x xxxxxxx xxxxxx xx xxx xxxx xx xxxxxxxxx xxxxxx xx xxxxxxx xxx xx xxxxxxxxxx xxxx xxxxxxxxxxx xxx xxxx xxxx xxxxxx xxxx xxxx xxxx xxxxxx xx xxxxxxx xxxxx xxx xx xx xxxxx. xx xx xxx xx xx xxxx xxxx xx xxx xxxxxxxxx xx xxxxxxxxxx xxxxxxxxxx xxxxxxxxx xxxxxxx xx xxxxxxxxxx xxxxxxxxxx xxxx xx x xxxxx xx xxxxxxxxxxxx xxxx xxx xxxxxxxxx xxxxxxxx xxx xxxxxxxxx xxxxxx xxxxxxxxx.
264. Much of the evidence given in this case has proceeded upon the basis that the plaintiff spent somewhere in excess of ten years in undercover work. Many witnesses have given statements that appear to operate on such an assumption. The plaintiff’s Schedule A of Particulars of Employment and Incidents provided details of her service history that did not support such an assumption. It is instructive to record what that document contains: …”.

67 His Honour then set out some general particulars of the appellant’s service history which had been supplied by the appellant. Because of their generality, these particulars provided only limited information as to the undercover work done by the appellant after she left the Undercover Unit. Considerably more detail was provided in the “Schedule of Undercover Work and Related Court Proceedings”, which had been provided pursuant to a request of the primary judge (see [21] above), and also, of course, in the appellant’s evidence.

68 The primary judge then concluded in relation to this particular of negligence as follows:

“265 The clear evidence of Dr Selwyn-Smith, set out above at par [134], is that "it is the nature of the work that is traumatic, not necessarily the duration of the work". He also said, after referring to a series of stressful and frightening incidents to which the plaintiff had been exposed, that "[t]aken in totality this in my judgment is far more significant than the exact number of hours, weeks, days, months she worked as an undercover officer". I prefer this evidence of the plaintiff's treating practitioner to other evidence that favours a different conclusion. There is no sufficient support in the evidence for the existence of any breach of this supposed duty. If this particular of negligence were to be made out it would require support at least from epidemiological material, either locally or abroad, or its equivalent. There is no such evidence and no other evidence that satisfies me that exposure to undercover work for some arguably excessive period can be separated from exposure to the work at all as an identifiable cause of psychiatric injury”.

69 The earlier paragraph of the judgment to which his Honour there made reference was in the following terms:

“134 The doctor was not cross-examined in a way to suggest that the plaintiff's work was not the cause of her psychiatric condition except in one relatively minor respect. It was suggested to Dr Selwyn-Smith that the plaintiff had not in fact engaged in police undercover work for the whole of her 15 or so years in the police service so that to the extent that his conclusions appeared to be based upon such an assumption they would have to be modified. The doctor responded as follows:


"I think, I think it is the nature of the work that is traumatic, not necessarily the duration of the work. I mean, certainly I would expect someone doing undercover work for a reasonable length of time is going to be stressed to a degree but not necessarily experience post traumatic stress disorder, that is my point. You only need one significant event to develop post traumatic stress disorder.

My understanding of the history was that [the appellant] had, if you will, been exposed to a number of sub-threshold events which were certainly significant but which did not necessarily decompensate her. But taken together in totality, if you will, the [CE-1] event in particular, the [Orange operation] event in particular, you talked about before the arrest of Ozgur and being bitten in of itself being traumatic. I had also, Ozgur certainly threatened her, she had at least two threats on her life, she had a guard to take her home. Taken in totality this in my judgment is far more significant than the exact number of hours, weeks, days, months she worked as an undercover officer"”.

Cumulative stress

70 Critical to the appellant’s case that a reasonable employer would not have permitted her to continue doing undercover work for as long as she did was the proposition that stress such as that to which undercover operatives are subjected tends to accumulate over time, or at least frequently does so, such that it is unreasonable for an employer to permit an employee to perform undercover work for more than a period of 2 to 3 years. Significant support for this proposition and a conclusion that the respondent was aware of the phenomenon at relevant times is to be found in xxx xxxx xxxx xxx xxxxxxxxxx xxxx xx xxxxxx x xxxxx xx xxx xxxxxx xx xxxx xxxxxxxxxx xxxxxx xx xxx xxxxxxxxxx xxxx xxxx xxxxxxx xxxxxx. Such support is also to be found in the expert medical evidence called by the appellant. I now turn to this.

71 The principal evidence on this topic was given by Professor McFarlane. As indicated in [57] above, Professor McFarlane gave evidence as to the process of sensitisation which he described as a process whereby the individual becomes more vulnerable to the impact of Criterion A DSM-IV events as a result of repeated exposure to events of a lesser stress level. Professor McFarlane said that “unlike most individuals who develop post traumatic stress disorder, the degree of threat that [the appellant] faced was a prolonged fear of being discovered, interspersed with times of particular threat” and that the appellant’s undercover work “placed her at a significantly greater risk of developing PTSD in response to her continued exposures”. He said that there was “a predictable risk of prolonged exposure of the officers in undercover roles in terms of the officers’ capacity to function and the impact of this service on their psychological well-being” and that “the duration of [the appellant] in an undercover role is one central issue in the onset of her disorder”. He also said that whilst the CE1 and the Orange operations appeared to “have been critical to her becoming overtly symptomatic, it should not be ignored that these exposures were built upon a cumulative load of exposure” and that “the duration of an officer’s work as an undercover agent is particularly noteworthy as it increases the probability of [sensitisation] occurring”.

72 Dr Selwyn-Smith gave evidence to similar effect. Part of the evidence quoted by the primary judge and discussed at [70] above referred to the significance of the appellant’s exposure to a number of “sub-threshold events”. Later in his evidence Dr Selwyn-Smith referred to the appellant’s statement during the Orange operation that she did not think that she could do undercover work anymore as “the culmination of a sequence of multiple stressors at which time she developed a “full-blown psychiatric disorder”. He said that the CE1 and Orange events were “of themselves highly significant” and “extreme stressors” but that they were “superimposed upon pre-existing stressors also of significance”. It was the totality of those stressors which he said led to her disorder.

73 As indicated in [49-51] above, by conceding that the appellant suffered from a PTSD, the respondent made a concession which was inconsistent with the medical evidence which it called. As the respondent did not rely in any presently relevant respect upon the evidence of Dr Champion, Dr Roberts and Professor Tennant in address at first instance, or on appeal, it is unnecessary for me to examine that evidence beyond referring to aspects of Professor Tennant’s evidence relied upon by the appellant as supporting her case.

(b) Mr George said that “if there was any criticism of the [appellant] it was that she had a propensity to feel empathy for the target and the informants.” He said that “we spoke about this on many occasions and … I would remind her that she was still a serving police officer and this was her main role. Certainly, the sentence, ‘you just have to decide which side of the fence you are on’ is something that I could have said in that context”. Mr Stanioch, who was the leader of the Undercover Unit, said that if Mr George had reported to him that he had had many conversations with the appellant “arising from her concern that the operations which she was conducting were resulting in problems for family, for young people in the family, things of that nature”, “she would have been offered the option to leave the unit if she wanted to or she would have been referred to the psychologist to consult him”.

(c) Mr Davis also gave evidence on this topic. He was in charge of the team in which the appellant worked in her initial three month period of full-time undercover work (see [14] above). Mr Davis gave evidence that “my only concern about the [appellant] was that she and [another operative] felt sympathetic to the drug suppliers they were purchasing drugs from. I advised them to the best of my recollection that they were police officers and their sympathy was misplaced”.

116 Evidence bearing upon the significance to be attached to this evidence was as follows:

(a) The 1987 Discussion Paper of the National Police Research Unit on “Stress and the Undercover Police Officer” said in its Executive Summary that “social identification of the police officer with the target or target group is identified as a major problem” (see further at [63(c)] above). The article published in the National Police Research Unit Review drew on this Paper. That article was entitled “Conflict of Allegiance as a Stress for the Undercover Police Officer” and discussed means by which the conflict might be able to be avoided or ameliorated (see [63(c)] above.

(b) It was put to Mr Mutton in cross-examination that “there is a considerable problem of empathy”. His response was: “It is a potential problem, yes”.

(c) The 1990 Undercover Training Course Outline identified “relationship with subject” and “over identification” as stresses involved in undercover work.

(d) Mr Drury answered in the affirmative when asked the following question: “if an operative were to say to her supervisor that she was experiencing problems associated with the [targeted] persons whom she saw to be good persons but involved in using drugs, would that be a sign that would suggest itself to you as requiring further investigation?”.

117 The respondent submitted that the appellant’s “expression of ‘empathy’ in 1988 was not an expression of a symptom of a psychological disorder. It was nothing more than an expression of an ordinary emotion”. This is true. However, as the evidence above shows, the development of such feelings was a problem for undercover operatives (a “major problem” according to the National Police Research Unit Discussion Paper). Their presence in the appellant should have emphasised to the respondent a need to limit the duration of her undercover service, xx xxxxx xx xxxx xxx xxxxxxxx xx xxx xxxxxxxx xxxxxxx xxxxx.

Conclusion as to this particular of negligence

118 My conclusions as to this particular of negligence, including as to causation, are sufficient to require a judgment in favour of the appellant for the agreed amount. I proceed however to deal briefly with the other particulars of negligence which were relied upon.

Lack of Training Particular of Negligence

119 The appellant’s second particular of negligence comprised an allegation that that the appellant had not been given “adequate training to perform her duties” (see [31] above).

120 The primary judge rejected this allegation of negligence by treating it, in effect, as an allegation that the appellant had not been sufficiently trained in an operational sense. Thus he said that the appellant “gave no evidence that she was ever confronted at some stage in her career with a situation or circumstance with which she was, for want of adequate training or experience, unable to deal” (the primary judge’s emphasis) and that “the adequacy of the training that the [appellant] received was reflected in her success” (Judgment [237-8]). He said that “the work was inherently stressful whatever the officer’s level of training and experience might have been” (Judgment [238]).

121 This did not adequately reflect the way in which the appellant had put her complaint, at first instance, as to the lack of adequate training. As the primary judge recognised earlier in his judgment, the complaint also embraced an allegation that she had not been trained “in the techniques of stress management and the recognition of possible psychological and psychiatric symptoms or signs” (Judgment [155]). This aspect of the complaint was not dealt with in the judgment.

122 Nevertheless, I do not consider that the appellant is entitled to succeed on this particular of negligence. She attended an undercover training course as a trainee early in her time with the Undercover Unit and in subsequent years attended further courses as a trainer. She acknowledged that as a consequence of her experience and of her attendance at these courses she was “very conscious of the sorts of pressures that are on undercover operatives” and “the stresses that they face” and that certainly by 1995 she was “aware of other undercover operatives who had suffered psychological disorders” caused by the pressures of the job.

123 Mr George gave evidence that at the course at which the appellant attended as trainee “David Mutton, the Police Psychologist and others in the mental health field whose identities I cannot now recall lectured the course in relation to stress and management of their mental health. They [were] advised [of] strategies to reduce [stress] and what to be aware of and how to address any symptoms. Finally, they were told what avenues were available to them” to seek help. The Course Outline for that course was consistent with this evidence.

124 This description of the training which the appellant received was consistent with the training which Professor McFarlane said was appropriate.

125 As there was no evidence which pointed to the inadequacy of this training, the appellant’s case in relation to this particular fails.

Counselling and Treatment Particular of Negligence

126 The primary judge concluded that the respondent was not negligent in failing to have in place a system, applicable to the appellant, for regular compulsory reviews, counselling and, if necessary, psychological or psychiatric treatment. His Honour said about this:

“241 When consideration is given to such things as the magnitude of the risk, the gravity of the harm, the cost and practicability of preventing it, and the end to be achieved, the simple expedient of introducing active reviews of employees engaged in work that was known to have recognised potential risks to health may not seem to be an unreasonable requirement to impose in response to that risk. If the size and scope of the employer's operation is relevant, there could be little to say against the proposition that what was introduced in 1991 could have been introduced earlier. If the interests of other employees are relevant, then the reasonable response favours the plaintiff given the operational dangers associated with undercover work. If one of the issues is that an employer can only be expected to take steps that are likely to do some good, the defendant's adoption and retention of a system of six-monthly reviews arguably gives some actual indication that some benefit has resulted. …
242 However, the defendant's duty has to be formulated by reference to factors that include the incidents of her employment. That employment exposed the plaintiff to a foreseeable risk that she might suffer psychiatric harm. Whilst the defendant may have been required to take reasonable steps to reduce or eliminate that risk, the provision of some form of counselling regime or non-specific psychological or psychiatric treatment going beyond the maintenance of a readily available and accessible welfare unit was not called for and exceeds what ought to be regarded as a reasonable response. The question is one of extent and degree. The question has to be assessed prospectively and not through the prism of hindsight. The plaintiff’s allegation is formulated in terms of adequacy, but the plaintiff’s development of a psychiatric injury does not automatically produce the answer to whether or not the defendant took adequate steps for the plaintiff's safety in fact. Adequate steps are not to be equated with perfection. The defendant was required to do what was reasonable. In my opinion it did so. The defendant has not breached its duty of care in the circumstances.”

127 As to causation, the primary judge found that the appellant “would not have revealed her condition to anyone if counselled and would not have attended any additional counselling or treatment in whatever form, if it had been provided as the [appellant] alleges it should have been. The [appellant] would have preferred her own career prospects to the preservation of her health even if ordered to attend for psychiatric assessment and in all likelihood would have … remain[ed] silent if there were any perceived, let alone real connection between the counsellor or doctor and the Police Service” (Judgment [268]).

128 The primary judge indicated that in any event he was “not satisfied that the [appellant] has demonstrated that her present condition would have been in any way different if the [respondent] had offered the treatment for which she contends and she had actually co-operated” (Judgment [268]).

129 I do not agree with the primary judge’s conclusion that there was no negligence in the respect alleged in this particular. In paragraph [241] (see [126] above) his Honour gave reasons why “active reviews” might be considered to have been a reasonable response to the risk. He concluded in the following paragraph that a reasonable response did not require more than “the maintenance of a readily available and accessible welfare unit” but did not explain why that was so. My view is that the magnitude of the risk of psychiatric injury, the seriousness of the potential injury and the other considerations referred to in paragraph [241] of his Honour’s judgment did indicate that a reasonable employer in the respondent’s position would have ensured that the appellant was reviewed, counselled and, if necessary, treated on a regular basis.

130 The following matters need to be noted in relation to the primary judge’s conclusions on causation.

131 First, before the CE1 and Orange operations in 1998-9 the appellant did not display any symptoms of a psychiatric disorder. Whilst, for the reasons referred to in [70-77] above, her undercover work was sensitising her and thus rendering her more vulnerable to the impact of any traumatic events which she might subsequently experience, there was no disorder, and apparently there were no symptoms of a disorder, present to be uncovered prior to 1998. As the primary judge put it, the appellant “was not accumulating some discernable or detectable residue of psychological pathology during her time in the Police Service” (Judgment [254]: primary judge’s emphasis). The respondent put the position correctly in its written submissions on appeal when it contended that regular testing before the Orange operation in 1999 “would have done no more than, at its highest, demonstrate the existence of a risk of the development of a disorder. It would not have demonstrated the existence of a disorder, because there was none and after 1999, when a disorder was manifest, testing would not have provided any further information”.

132 Secondly, as the appellant’s submissions record, following the Orange operation in 1999, the appellant “sought private medical assistance at the instigation of her husband” and soon after “was referred to a psychiatrist and treated in March 2000 for depression, panic attacks and severe anxiety”. The appellant’s problems were thus identified at that time and she came into the hands of competent medical practitioners. The evidence does not warrant a conclusion that her present condition would be materially better if she had received any different or additional medical treatment in or after 1999. As Dr Selwyn-Smith put it, by March of 1999 “the die had been cast”.

133 Thirdly, there was evidence, not referred to by the primary judge in the context of his finding referred to in [127] above, that the purpose of compulsory reviews was to identify problems which operatives would not voluntarily identify. For example, Mr Kaufmann agreed that one of the reasons for the compulsory psychological assessments was “to ensure that [the undercover operatives] weren’t concealing either from themselves or from their commanders problems which have started to get on top of them”. Further, the tenor of Professor McFarlane’s evidence was that a trained clinician would not necessarily be thwarted by the reluctance of an operative to reveal his or her psychological problems.

134 Fourthly, whilst prior to the CE1 and Orange operations there was no disorder and there were apparently no symptoms of a disorder present to be uncovered (see [131] above), compulsory psychological assessments and counselling would have been likely to reveal that the appellant had been subjected to the stresses of undercover work for an excessive period of time (see [112] above) and had developed feelings of empathy with criminal targets which was a problem for her from a psychological point of view (see [117] above). Armed with this information, a reasonable employer would have removed the appellant from undercover work and done so prior to her involvement in the CE1 and Orange operations. I accordingly do not agree with the primary judge’s conclusion that causation was not established in relation to this particular of negligence.

Other Particulars of Negligence

135 The remaining particulars of negligence (see [31] above) are as follows:

136 The first particular (as to a safe system of work) was conceded by the appellant to be an overarching allegation, the details of which were provided by the subsequent particulars. It does not require separate consideration.

137 I have dealt with particulars 2, 3 and 9 earlier.

138 As to particular 4, if the respondent failed to take reasonable steps to re-integrate the appellant into ordinary policing duties after she completed her full-time undercover work (see [19] above) that failure was not shown by the evidence to have had any consequence in relation to the development of the psychiatric disorders from which the appellant came to suffer. A similar comment as to lack of causative significance can be made as to particular 8 which related to “operational de-briefing and de-roling”.

139 Particular 5 related to the “flagging of police officers involved in numerous critical incidents as being productive of cumulative stress”. To the extent that this particular is to be understood as applicable to the activities of the appellant prior to the CE1 and Orange operations, it has force in the manner described in paragraphs [112] above, that is, as indicating that the appellant should have been identified as an operative who was performing undercover service xxxx xxxxxx xxx xxxxxxx xxxx xxx xxxxx xxxx xxxxxxx xxxxxx xx xxxxxxx xx xxxx xxxx xxxxxxxxx. To the extent that it related to the CE1 and Orange incidents and to the period thereafter, it lacks causative significance for the reasons referred to in [129-130] above.

140 Particular 6, related to “rotation of duties of the plaintiff after a stressful incident”. In one sense this allegation may be seen as overlapping with xxx xxxxxxxxxx xxxxxxxxxx xxx xxxxxxxx xx xxxxxxxxxx xxxxxxx. To that extent, the allegation has force but does not add any further substance to that other particular. The particular was not otherwise supported by the evidence.

141 The seventh particular was “failure to notify the Welfare Unit or Psychology Unit”. Again this allegation overlaps to some extent with that concerned with the xxxxxxxx xx xxxxxxxxxx xxxx (see particularly paragraphs [109-112] above as to monitoring and identifying the appellant as someone who was performing undercover work for an excessive period of time). The evidence did not otherwise provide support for this allegation.

DAMAGES

142 The parties agreed that if the appellant established the liability of the respondent she would be entitled to a judgment for damages in the amount of $1,679,936.71, together with such amount as may be assessed in respect of domestic assistance. They further agreed that if the appellant were successful on appeal, the proceedings should be remitted to the primary judge for assessment of the claim for domestic assistance.

ORDERS

143 For the reasons I have given, I conclude that the respondent breached a duty of care that it owed to the appellant, and that that breach materially contributed to the development of the psychiatric disorders from which the respondent accepts that the appellant suffers.

144 The appellant foreshadowed an application for a partial payment of the agreed judgment amount pending the assessment of the claim in respect of domestic assistance. Any such application should be the subject of written submissions.

145 As the primary judge’s judgment on costs shows that offers of compromise were made at first instance, orders to be made in respect of costs should be the subject of written submissions.

146 It was agreed between the parties that, as the proceedings in part involved matters of confidentiality in relation to operations of the NSW Police Force, in the first instance the Court’s reasons for judgment should be made available to the parties only. This was intended to provide the opportunity for the Commissioner of Police to apply to the Court for appropriate confidentiality orders in respect of the Court’s reasons for judgment prior to their publication to the public.

147 I propose the following orders:

1. Appeal allowed.

2. Set aside the judgment and the orders for costs made at first instance.

3. Judgment for the appellant in the amount of $1,679,936.71, together with such amount, if any, as may be assessed by the primary judge in respect of domestic assistance.

4. Remit to the primary judge the assessment of the appellant’s claim for damages in respect of domestic assistance.

5. Order that until further order there be no disclosure, except to the parties to these proceedings and to the Commissioner of Police, of any part of the Court’s reasons for judgment other than the description of the orders proposed to be made and any record of the orders in fact made.

6. Direct that written submissions and draft orders as to issues of part payment of the judgment, costs and confidentiality of portions of the reasons for judgment be filed and served as follows:


(a) By the appellant and the Commissioner of Police, within 3 days of the date of the Court’s judgment.

(b) By the respondent, within 3 days thereafter; and
(c) Any reply within 2 days thereafter.

7. Direct that the issues referred to in the last order be determined upon the basis of the written submissions and the draft orders to be filed by the parties and the Commissioner of Police.

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