Latest case updates for self-insurers – May 2025

Robinson v EACH [2024] VSCA 313

The Court of Appeal recently held that there was a reasonably foreseeable risk of a psychological illness where an employer was aware of vicarious trauma and the inherent risk to a ‘class’ of employees based on the inherent nature of the work – not from any specific observed warning signs from a particular employee. However, the ultimate finding was no breach of negligence by the employer. 

The plaintiff was employed by EACH (the defendant), a health, disability and community mental health service, as a carer peer support worker between November 2007 and November 2015. Her duties included consulting with and listening to experiences of carers and providing them with support in clinical and community settings. 

On 11 February 2015, the plaintiff attended a session concerning vicarious trauma and its effects. A week later, on 17 February 2015, the plaintiff reported psychological issues that she related to vicarious trauma. She informed her team leader, who immediately ceased any new referrals to the plaintiff with the intention she would continue to attend to her existing clients. She worked for another week before taking two months off work, returning to modified duties with no contact with clients. She was later certified unfit for work and ceased with the defendant. 

The plaintiff issued proceedings against the defendant, alleging it breached its duty of care by requiring her to work in situations that were damaging to her mental health, particularly so after the day she informed them of her issues. 

The Court of Appeal accepted the defendant was aware of a risk of vicarious trauma as early as 2010, and that the foreseeability of risk to the ‘class’ was based on the inherent nature of the work  – not from any specific observed warning signs of the plaintiff personally.

Importantly, the awareness of risk to a class of employees did not of itself mean that the defendant had breached any duty to the plaintiff. The court found that there was no breach by the defendant. 

The court accepted that the plaintiff suffered no discernible psychiatric harm as a result of any exposure to vicarious trauma before 2015. They found that the defendant took reasonable steps from the time the plaintiff put her team leader on notice of her psychiatric injury. These reasonable steps included stopping new referral clients and allocating her administrative only tasks on her return to work. The court emphasised that what constitutes an appropriate response to the established risk turns on ‘the reasonableness from the employer’s perspective at the time it becomes aware of the risk and thereafter  – not one of perfection coloured by hindsight’. 

This appeal reiterated that the foreseeability of risk of psychological injury is always present for a class of workers, where the inherent nature of their work would make them vulnerable to psychological trauma. Accordingly, in these circumstances, self-insurers should take reasonable steps to avoid psychological injury generally to workers that fall into this class. However, when considering whether the self-insurer has breached its duty of care against a worker personally, the reasonableness of the self-insurer’s conduct is confined to what occurred after the self-insurer was on notice following specific observations of warnings signs displayed by the worker personally. Further, the steps self-insurers take once the risk to a specific worker has been established do not need to be ones of perfection, but rather reasonable in the circumstances.  

Elisha v Vision Australia [2024] HCA 50 

A new precedent has recently been set in the High Court of Australia (HCA), broadening the scope of damages claimable for psychiatric injuries. Historically, damages could not be recovered for ‘injured feelings’ if it resulted from a breach of contract based on the old English common law rule of Addis v Gramophone Co Ltd [1909] AC 488, which changed on 11 December 2024.

Background

• The plaintiff, Mr Elisha, was employed by Vision Australia Limited. His employment was governed by an employment contract signed on 27 September 2006.
• In March 2015, Mr Elisha was staying in a hotel while travelling for his work, and was involved in an incident. The allegations included that Mr Elisha had telephoned a hotel worker at around 12:30am complaining of noise outside of his room and was moved to another room at around 1am.
• Mr Elisha was given a stand down letter and instructed to attend an upcoming meeting to discuss a complaint alleging his serious misconduct. The stand down letter noted that Mr Elisha had breached a number of Vision Australia’s policies, which were annexed to the letter and the allegations were confined exclusively to misconduct during the hotel incident.
• Mr Elisha’s employment was subsequently terminated on 29 May 2015 due to serious misconduct. In forming their decision, Vision Australia considered that Mr Elisha had displayed a pattern of aggressive behaviour (outside of the alleged incident) but this was not put to him and he was not given a chance to respond to these allegations.
• Following the termination of his employment, Mr Elisha was diagnosed with major depressive disorder as well as adjustment disorder with depressed mood.

WorkCover legal proceedings 

Elisha v Vision Australia Limited [2022] VSC 754

Mr Elisha commenced proceedings against Vision Australia in the Supreme Court of Victoria in 2020, claiming compensation for his psychiatric injury that he sustained after the termination of his employment. At trial, it was found that the disciplinary procedure was incorporated as a term in Mr Elisha’s employment contract. Vision Australia had therefore breached the contract by failing to provide Mr Elisha with a letter before the meeting outlining all particulars of his alleged aggressive behaviour, including the alleged patterns of aggressive behaviour that was not included in the letter. All allegations were required to be listed in accordance with Vision Australia’s disciplinary procedures. Vision Australia’s conduct was condemned as a ‘sham’ and ‘disgrace,’ from the point management was involved. Mr Elisha was awarded damages exceeding $1.4 million.

Vision Australia Limited v Adam Elisha [No 2] [2023] VSCA 288; 328 IR 357

Vision Australia subsequently appealed the decision of the trial judge to the Court of Appeal (VSCA). The VSCA agreed that a breach of contract was present but determined that the trial judge erred in awarding damages from a breach of contract, citing the rule in Addis. The previously awarded damages were considered too remote, meaning that at the time of entering the contract, it was not reasonably foreseeable that the psychiatric injury could result from a breach of that contract. The appeal was allowed and the orders for damages were set aside.

The High Court Appeal

Elisha v Vision Australia [2024] HCA 50

Mr Elisha appealed the VSCA decision to the Hight Court (HCA), and was ultimately successful on the following grounds:

1. Vision Australia’s disciplinary procedure was incorporated as terms into Mr Elisha’s employment contract, and Vision Australia breached the contract by failing to follow the disciplinary procedure;
2. the psychiatric injury caused by Vision Australia’s breach of contract is within the scope of contractual duty concerned with the manner of dismissal; and
3. liability for a psychiatric injury is not too remote in the circumstances of the particular contract.

The HCA observed that the VSCA’s previous reliance of Addis was ‘misplaced’ for multiple reasons, including that the case was decided more than a century ago in a different social context and has been overtaken substantially by more recent decisions in the UK and Australia. 

In relation to remoteness, it was found that there was ‘a serious breach of disciplinary procedures involving serious unfairness’ on behalf of Vision Australia. This included the ‘serious possibility of causing development of a serious psychiatric illness, which should reasonably have been contemplated by the parties at the time they entered the contract.’

The VSCA’s orders were set aside and Mr Elisha’s previous damages of $1.44 million was restored.

Key learnings for self-insurers:

• Employment policies and procedures should be carefully reviewed and updated to ensure that they are up-to-date and consideration given to whether they should be excluded from contractual terms.
• Ensure correct policies and procedures are followed and consider all evidence when disciplining an employee or terminating their employment.
• Offer support to employees during the disciplinary process.
• Be aware that a breach of contract risk does exist for psychiatric injuries where the breach is not too remote, and it could be reasonably foreseeable that an injury could occur at the time of entering the contract.
• Causation is key and the specific facts of a case are important to determine whether a breach of contract has arisen, including the seriousness of the breach and whether any misconduct has occurred. 

Bodiyabaduge v Victorian WorkCover Authority [2025] VCC 2

The plaintiff sought leave under the Workplace Injury Rehabilitation and Compensation Act 2013 (Vic) (WIRC Act) to commence common law proceedings for alleged injuries to her right shoulder and both elbows sustained in the course of her employment as a sterilisation technician. While there was a claim for the left arm, the crux of this case was whether the plaintiff would meet the pecuniary loss threshold. 

The plaintiff deposed that she had constant daily right arm pain, which could extend from her shoulder down to her wrist, and that her pain impeded her to perform activities such as cooking, cleaning, gardening and driving. The plaintiff had undergone numerous investigations, treatment, cortisone injections and two right shoulder arthroscopies. 

The VWA submitted the plaintiff’s evidence as to her English language ability and computer proficiency was inconsistent with her prior employment and training, after extensive cross-examination on such topics. They also submitted that during her oral evidence, she exaggerated or downplayed her English language and computer proficiency. 

Although Her Honour Judge Magee considered the plaintiff’s evidence of her limited English appeared contrary to her training and employment history, neither party sought to test the plaintiff’s evidence without the assistance of the interpreter during the hearing. Emphasis was also given to the fact that the independent medical examinations, Medical Panel examination and vocational assessments were all undertaken with the assistance of an interpreter. 

The VWA’s independent occupational physician, Dr Joseph Slesenger, considered the plaintiff was not capable of performing her pre-injury role; however, she did have capacity for suitable employment. Her Honour considered this alone justified a conclusion of a ‘very considerable’ consequence, such that the narrative test was satisfied. Further, Her Honour stated that all suitable roles identified were ‘front facing’ roles that required a high degree of English proficiency. Her Honour accepted the plaintiff’s reports of ongoing pain, regular flare ups and lack of English proficiency would prevent her from undertaking suitable employment and retaining the suitable roles relied on by the VWA. 

In cases where pecuniary loss is being defended, it is important to consider a plaintiff’s relevant circumstances, including their age, education, skills and work experience. Particularly in circumstances where English is not the plaintiff’s first language, job options where significant face-to-face interaction is expected may not be accepted by a court as suitable employment options, even when other skills can be transferred. Lastly, Her Honour gave significant weight to the fact the plaintiff could not perform her pre-injury role (which was also conceded by the VWA), and how this alone, in her view, was enough to satisfy the narrative test. 

Malik Dua v Coles Group Limited [2024] VMC 15

Ms Dua (the plaintiff) worked for Coles as a casual retail assistant and later as a full-time bakery manager. On 25 October 2022, the plaintiff lodged a plaintiff’s injury claim form against Coles for bilateral plantar fasciitis. Her claim was accepted but later terminated on 21 March 2023, on the basis her injury had resolved, she was not incapacitated for employment and, if she was incapacitated, any incapacity was not materially contributed to by her employment. Ms Dua issued Magistrates’ Court proceedings challenging this decision. 

An extensive amount of social media material was tendered by the defendant at the hearing of the matter. This material showed the plaintiff in various social and recreational settings across a 22-month period. Of note, the social media material included the plaintiff dancing in formal attire and heeled shoes, and walking on a track at the You Yang ranges. By contrast, the plaintiff had contemporaneously told doctors she was unable to dance at all. The defendant also showed surveillance footage showing the plaintiff walking normally and without any observable limp, again in contrast to how she had presented to doctors. 

Magistrate Hoare accepted that the social medial photos were ‘snap-shots’ of people living their ‘best lives’ rather than how their ordinary day-to-day lives are led in between times’. However, the defendant presented a considerable volume of these snap-shots, showing the plaintiff in different contexts and settings over a 22-month period. Accordingly, Magistrate Hoare accepted this evidence was at odds with the plaintiff’s evidence and history given to doctors. Magistrate Hoare commented on the fact that between October and November 2022 the plaintiff’s social media showed her dancing in a wholly unrestrained fashion at six separate social or recreational events. By contrast, over this same period of time, the plaintiff was reporting being unable to bear the pain in her heels, walking with a limp and heel pain at levels of 8 out of 10, and being sad every day. 

Due primarily to these credit concerns, Magistrate Hoare accepted the opinion of Dr Slesenger, occupational physician, that the plaintiff’s condition had resolved, and the plaintiff was fit to return to her pre-injury role. In doing so, she rejected the opinions of the plaintiff’s treating practitioners, Dr Ramaswamy and Dr Khan, noting that these reports were based on a history the plaintiff failed to establish as being accurate or credible.

The matter shows the importance of credit material, even in disputes that appear to be primarily medical disputes. Where it can be demonstrated that the plaintiff is not providing an accurate account of their restrictions to their treating practitioners, the report itself can be called into question.