State of New South Wales v Fahy

The New South Wales Court of Appeal considered an appeal by the State of New South Wales against a decision of the District Court in favour of a police officer, Mr Fahy. Mr Fahy had brought proceedings against his employer, alleging negligence arising from his exposure to a traumatic event during his service, which he claimed led to post-traumatic stress disorder. The core of the dispute concerned whether the State owed Mr Fahy a duty of care to provide a safe system of work, specifically by not leaving him alone during the traumatic event, and whether this failure caused his subsequent psychiatric injury.

The Court of Appeal was required to determine whether the State owed Mr Fahy a duty of care to ensure he was not left alone during the traumatic event, and if so, whether this duty was breached. Further, the Court had to consider whether any breach of duty caused Mr Fahy's post-traumatic stress disorder, and if so, whether the damages awarded were correctly assessed, particularly in light of Mr Fahy's refusal to take prescribed antidepressant medication, which raised the issue of failure to mitigate his loss. The Court also had to assess whether the injury was divisible and if the damages were capable of apportionment.

The Court found that a duty of care could exist between employees in the context of a safe system of work, even when one employee's actions or omissions contribute to another's injury. It held that past exposure to traumatic events did not preclude a finding of reasonable foreseeability of harm. The Court determined that the State's conduct had materially contributed to Mr Fahy's injury, and that the injury was not divisible in a way that would prevent the tortious conduct from being a cause of the loss. However, the Court found that the District Court had erred in its assessment of damages by failing to properly consider Mr Fahy's refusal to take prescribed medication as a failure to mitigate his loss.

Consequently, the Court of Appeal allowed the appeal, setting aside the original order. The matter was remitted to the District Court for a redetermination of the allowance to be made for Mr Fahy's failure to mitigate his damages. The Appellant was ordered to pay three-quarters of the Respondent's costs of the appeal.