Chisholm v Thakral Finance &c  NSWWCCPD 39. Roche DP.
[74 +] In a claim for compensation for psychological injury, the Commission has to decide whether the whole or predominant cause of the psychological injury was the employer’s action or proposed action with respect to one or more of the actions listed in s 11A(1), and, if so, whether the action or proposed action was reasonable: Manly Pacific International Hotel PL v Doyle  NSWCA 465; 19 NSWCCR 181 at .
The onus of establishing a s 11A defence is on the employer: Ritchie v Dept of Community Services  NSWCC 40; (1998) 16 NSWCCR 727; Dept of Education &c v Sinclair  NSWCA 465.
On the causation question, the Commission has held that “predominantly caused” means “mainly or principally caused”: Ponnan v George Weston Foods Ltd  NSWWCCPD 92.
On the reasonableness question, the Court of Appeal considered the meaning of the words “reasonable action” in Commissioner of Police v Minahan  NSWCA 239, where Foster AJA (with Sheller JA agreeing) cited with approval the following passage from Irwin v Director-General of School Education (unrep, Compensation Court, 18.6.98) where Geraghty J said:
“The question of reasonableness is one of fact, weighing all the relevant factors. The test is less demanding than the test of necessity, but more demanding than a test of convenience. The test of ‘reasonableness’ is objective, and must weigh the rights of employees against the objective of the employer. Whether an action is reasonable should be attended, in all the circumstances, by a question of fairness.”
The assessment of whether an employer has acted reasonably requires an objective assessment of the conduct involved: Jeffery v Lintipal PL  NSWCA 138 at . I intend to apply the above principles in Mr Chisholm’s case.
Department of Corrective Services v Bowditch  NSWWCCPD 244. Roche DP.
52. In Stewart v NSW Police Service  NSWCC 57; (1998) 17 NSWCCR 202 Judge Neilson considered at  what a claimant must establish in a claim for a psychological or psychiatric injury:
"In psychological cases, it is important to realise what must be proved. In Kirby v Trustees of the Society of St Vincent de Paul (NSW), NSWCC, No. 20708/94, 11 April 1997, unreported, I set out at 4 what must be proved where an allegation of psychiatric injury is made. This analysis of the law, of course, was made when s 11A was not applicable. That summary of the law is this:
'To succeed in this Court, the applicant must prove that the conduct complained of constituted 'injury' within the meaning of the Act. Where, as here, a psychiatric injury is alleged the applicant must prove either:
(i) that the nervous system was so affected that a physiological effect was induced, not a mere emotional impulse: Yates v South Kirkby Collieries Ltd  2 KB 538; Austin v Director-General of Education (1994) 10 NSWCCR 373; Thazine-Aye v WorkCover Authority (NSW) (1995) 12 NSWCCR 304; Zinc Corporation Ltd v Scarce (1995) 12 NSWCCR 566, or
(ii) the aggravation, acceleration, exacerbation or deterioration of a pre-existing psychiatric condition: Austin's case.
"Frustration and emotional upset do not constitute injury:Thazine-Aye's case; nor, semble, where [sic] a mere 'anxiety state': the Zinc Corporation case per Meagher JA at 575B.
"A 'straight litigation neurosis' is not compensable: Karathanos v Industrial Welding Co Ltd  47 WCR (NSW) 79 at 80.
"A misperception of actual events, due to the irrational thinking of the worker leading to a psychiatric illness is not compensable:Townsend v Commissioner of Police ( NSWCC, No. 8061/89, McGrath CJ, 17 February 1992, unreported [see now (1992) 25 NSWCCR 9]).
"It follows that subsequent rationalisation of earlier innocuous events, which rationalisation leads to psychiatric illness is also not compensable. Furthermore, once the applicant has established 'injury' she must prove that an incapacity for work resulted therefrom."
Resuming, Roche DP:
53. There are three important additional requirements that must now be added to the above comments:
* under section 9A of the 1987 Act a claimant for compensation for a psychological injury must now prove that his or her employment was a substantial contributing factor to the injury;
* he or she must not be prevented from receiving compensation by reason of the provisions of section 11A of the 1987 Act, and
* the authority of Townsend v Commissioner of Police (1995) 25 NSWCCR 9 must be read subject to the Court of Appeal decision in State Transit Authority of New South Wales v Fritzi Chemler NSWCA 249. [see below]
54. In Bhatia v State Rail Authority of NSW  NSWCC 25; (1997) 14 NSWCCR 568 Judge Burke reviewed several authorities dealing with psychiatric injuries and considered what was needed in order to recover compensation.
Attorney General’s Department v K  NSWWCCPD 76. Roche DP.
 The following conclusions can be drawn from the above authorities:
(a) employers take their employees as they find them. There is an “egg-shell psyche” principle which is the equivalent of the “egg-shell skull” principle: Spigelman CJ in Chemler at );
(b) a perception of real events, which are not external events, can satisfy the test of injury arising out of or in the course of employment: Spigelman CJ in Chemler at );
(c) if events which actually occurred in the workplace were perceived as creating an offensive or hostile working environment, and a psychological injury followed, it is open to the Commission to conclude that causation is established (Basten JA in Chemler at );
(d) so long as the events within the workplace were real, rather than imaginary, it does not matter that they affected the worker’s psyche because of a flawed perception of events because of a disordered mind (President Hall in Leigh Sheridan v Q-Comp  QIC 12;
(e) there is no requirement at law that the worker’s perception of the events must have been one that passed some qualitative test based on an “objective measure of reasonableness” (Von Doussa J in Wiegand v Comcare Australia  FCA 1464 at ), and
(f) it is not necessary that the worker’s reaction to the events must have been “rational, reasonable and proportionate” before compensation can be recovered.
 The principles discussed in Chemler, which are consistent with Wiegand and Sheridan, have been applied by the Commission in several cases: see South Eastern Sydney and Illawarra Area Health Service v Nikolis  NSWWCCPD 74; Callingham v Tophos Pty Ltd t/as Central Coast Easy Care  NSWWCCPD 140; Roads and Traffic Authority of New South Wales v Gentle  NSWWCCPD 111). It is surprising and unsatisfactory that Ms Smuts has again presented the same argument that her client presented in Pye and which Deputy President O’Grady rejected. The argument is inconsistent with established authority and is plainly wrong
STA v Fritzi Chemler  NSWCA 249
Spigelman CJ, Bryson AJA agreeing, Basten JA agreeing separately.
 Plainly, perception by the person affected is normally required before there can be psychological injury...In this area of law, as in negligence, the talem qualem principle is applicable, ie employers take their employees as they find them.
With respect to psychological injury there is an 'egg shell psyche' principle which, like the equivalent 'eggshell skull' principle, is a rule of compensation not of liability.
The element of foreseeability required by the law of negligence is not the basis of the 'eggshell skull' principle and it can be applied by way of analogy to claims for compensation under the 1987 Act. See Morgan v Tame (2000) 49 NSWLR 21, esp at - and cases quoted therein. See also Tame v NSW (2002) 211 CLR 317, esp at  and Nominal Defendant v Gardikiotis (1995) 186 CLR 49 at 68.
On the perception issue, Basten JA said : "No doubt a psychological state can be based upon a delusion, but the question remains one of causation," citing Windeyer J in Federal Broom Company PL v Semlitch (1964) 110 CLR 626, at 642.
Wicks v SRA  HCA 22. French CJ, Hayne, Heydon, Crennan, Kiefel, Bell JJ in joint judgment.
The Justices noted Tame v NSW (2002) 211 CLR 317: “…in deciding whether, for the purposes of the tort of negligence, a defendant owed a plaintiff a duty to take reasonable care to avoid recognisable psychiatric injury, the central question is whether, in all the circumstances, the risk of the plaintiff sustaining such an injury was reasonably foreseeable. A majority of the Court in Tame rejected the propositions that concepts of ‘reasonable or ordinary fortitude’, ‘shocking event’ or ‘directness of connection’ were additional pre-conditions to liability.” 
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