There is no set figure for how much you can sue for emotional distress in Australia. What you can recover depends on the severity of your psychiatric injury, the state or territory where the claim is brought, and whether your harm clears the statutory thresholds that each jurisdiction imposes before any damages are payable. In New South Wales, the indexed maximum for non-economic loss in the most extreme cases currently sits at roughly $804,000, but the great majority of claims settle for a fraction of that. Fail the threshold tests and the answer is zero, no matter how genuine your distress.
What You Have to Prove Before Any Money Is Payable
Australian courts do not compensate ordinary sadness, frustration, or stress. Your emotional harm must amount to a “recognised psychiatric illness.” Both the Civil Liability Act 2002 (NSW) and the Wrongs Act 1958 (Vic) use that phrase as a gatekeeper: no diagnosable psychiatric disorder, no liability in negligence.1NSW Legislation. Civil Liability Act 2002 No 22 – Section 31 Conditions that typically qualify include major depression, post-traumatic stress disorder, anxiety disorders, and adjustment disorders diagnosed against accepted clinical criteria.
You will need a detailed psychiatric or psychological report confirming a formal diagnosis. A GP letter saying you feel anxious is not enough. The report must link the illness to the defendant’s conduct and explain how it affects your daily functioning, work capacity, and relationships. WorkSafe Queensland’s treatment guidelines require a clear DSM-5 diagnosis before funding treatment for mental injuries, and courts expect similarly rigorous evidence before awarding compensation.
The Normal Fortitude Test
Even with a diagnosed illness, a defendant only owes you a duty of care if a person of “normal fortitude” would foreseeably have developed a recognised psychiatric illness in the same circumstances.2NSW Legislation. Civil Liability Act 2002 No 22 – Section 32 Being more vulnerable than average does not automatically defeat your claim, and courts can still take into account what the defendant actually knew about your particular vulnerability. The baseline question is whether the situation was severe enough that an ordinary, resilient person might also have been psychiatrically harmed.3AustLII. Wrongs Act 1958 – Section 72 Mental Harm Duty of Care
If You Witnessed Someone Else Being Harmed
Australian law separates people who were directly harmed (primary victims) from those who suffered psychiatric injury from witnessing harm to someone else (secondary victims). As a secondary victim in NSW, you can only recover damages for “pure mental harm” arising from shock if you either witnessed the person being killed, injured, or endangered at the scene, or you are a close family member.4AustLII. Civil Liability Act 2002 – Section 30 Limitation on Recovery for Pure Mental Harm Arising From Shock Close family member means a parent, spouse or de facto partner, child or stepchild, or sibling. Friends, neighbours, and bystanders who were not at the scene face a much harder path.
Emotional distress rarely stands as a claim on its own. It usually rides alongside a motor vehicle accident claim, a workers’ compensation matter, medical negligence, public liability, or an intentional tort like assault or false imprisonment. Assault, battery, and false imprisonment are actionable without proof of damage, so any psychiatric injury they cause can be recovered on top of the underlying wrong.5Judicial Commission of New South Wales. Civil Trials Bench Book – Intentional Torts The category matters because each has its own rules and caps.
Thresholds and Caps by State
This is where expectations most often collide with reality. Every state and territory imposes a minimum impairment level you must clear before you can recover any non-economic loss, and a maximum ceiling on what you can receive.
New South Wales
Under section 16 of the Civil Liability Act 2002, no damages for non-economic loss are payable unless your injury reaches at least 15% of a “most extreme case.” The statute sets a base maximum of $350,000, indexed annually.6NSW Legislation. Civil Liability Act 2002 No 22 – Section 16 Following the Civil Liability (Non-economic Loss) Amendment Order 2025, the indexed maximum is approximately $804,000. That ceiling only applies to the most catastrophic cases. If your impairment is assessed at, say, 33% of a most extreme case, your award is a proportion of the maximum calculated under a formula that gives less weight to lower assessments. Most emotional distress claims fall in the lower ranges.
For workplace psychological injuries in NSW the bar is higher again. A common law negligence claim requires at least 15% whole person impairment, and a statutory lump sum under the Workers Compensation Act 1987 requires at least 10%.7Precedent Journal (AustLII). Damages Claimable State-by-State Summary The Motor Accidents Injuries Act 2017 also sets its own non-economic loss cap for CTP claims, separate from the general civil liability regime.
Victoria
Victoria’s Wrongs Act 1958 requires you to show a “significant injury” before you can recover non-economic loss. For psychiatric injuries, the threshold is 10% or more whole person impairment, compared to more than 5% for most physical injuries and 5% or more for spinal injuries.8Victorian Government Solicitor’s Office. Understanding Thresholds and Caps in Personal Injury Litigation Victoria also caps the maximum non-economic loss award, and the cap is indexed periodically.
Other States and Territories
Queensland, South Australia, Western Australia, Tasmania, the Northern Territory, and the ACT each have their own civil liability legislation with distinct thresholds and caps. For workplace injury claims, South Australia requires 5% or more whole person impairment under the Return to Work Act 2014, while the Northern Territory requires 15% or more.7Precedent Journal (AustLII). Damages Claimable State-by-State Summary If your injury occurred outside NSW or Victoria, get jurisdiction-specific advice early. The thresholds alone can determine whether you have a viable claim.
How Courts Actually Set the Dollar Figure
Compensation for emotional distress sits under “non-economic loss,” which covers pain, suffering, loss of enjoyment of life, and loss of ability to participate in activities you previously enjoyed. Several factors drive the number:
- Severity and duration. A chronic, treatment-resistant condition like severe PTSD attracts higher damages than a moderate adjustment disorder that resolves within a year.
- Functional impact. Courts assess how the illness affects your ability to work, maintain relationships, care for yourself, and engage in daily activities. Someone who cannot leave their home is placed differently from someone managing symptoms while holding down a job.
- Age. A younger person living with a permanent psychiatric condition for decades will generally receive more than an older claimant with the same diagnosis.
- Comparable cases. Judges use previous decisions involving similar injuries as benchmarks, adjusting for individual circumstances. This creates rough consistency across awards.
Non-economic loss is only one part of a total damages award. You can also recover economic losses: past and future lost earnings, medical and treatment costs, domestic assistance, and out-of-pocket expenses tied to the injury. In practice, the economic loss components often exceed the non-economic loss award, particularly where someone has been unable to work for an extended period. When people talk about a psychiatric injury settling for a large sum, the bulk of that figure is usually lost earnings, not the pain-and-suffering component.
Time Limits That Can Wipe Out the Claim
Miss the deadline and your claim is dead, regardless of merit. In NSW you generally have three years from the date the injury was “discoverable” to file proceedings. The Limitation Act 1969 defines discoverability as the point when you knew, or ought to have known, that you were injured, that the injury was caused by the defendant’s fault, and that the injury was serious enough to justify a claim. There is also an absolute 12-year long-stop period running from the act or omission itself, and whichever expires first applies.9AustLII. Limitation Act 1969 – Section 50C Limitation Period for Personal Injury Actions
Victoria follows a similar structure: three years from discoverability with a 12-year long-stop. Queensland imposes a three-year limitation period under the Limitation of Actions Act 1974 running from the date the cause of action arose. Three years is the standard limitation period for personal injury claims across most Australian jurisdictions, though the starting point and extension rules vary.
Psychiatric injury creates a particular trap here. Depression or PTSD can develop months or years after the triggering event, and people often do not connect symptoms to the original incident straight away. The discoverability rules acknowledge this, but they are not infinitely forgiving. If you have psychological symptoms after an accident, workplace incident, or other traumatic event, get advice sooner rather than later.
What You Actually Keep After Costs, Tax, and Centrelink
The gross award and the amount that lands in your account are not the same figure.
Most personal injury lawyers offer no-win, no-fee arrangements, but you may still be responsible for disbursements even if you lose. Disbursements include court filing fees, expert psychiatric reports, barrister’s fees, and copying costs, and they can run to thousands of dollars.10Victorian Legal Services Board. No Win No Fee Cost Agreements Contingency fees, where the lawyer takes a percentage of your payout, are prohibited in Australia. If you win, an uplift fee of up to 25% of the legal fees may be charged. The biggest financial exposure in an unsuccessful claim is adverse costs, where the court orders you to pay a portion of the other side’s legal costs.
Compensation for personal injury or illness, including psychiatric harm, is generally exempt from capital gains tax. Section 118-37 of the Income Tax Assessment Act 1997 provides that any capital gain or loss from a payment relating to a wrong, injury, or illness you suffer personally is disregarded.11AustLII. Income Tax Assessment Act 1997 – Section 118-37 Where part of your settlement compensates for lost income, the tax treatment of that component may differ, so tax advice before settling is worth the cost.
If you have been receiving Centrelink income support and then receive compensation for loss of income, your payments may stop and Services Australia may require you to repay past income support covering the same period. This is called Centrelink compensation recovery.12Services Australia. Centrelink Compensation Recovery You must notify Centrelink when you receive compensation; failing to do so can create serious debt problems. Services Australia offers an online estimator for the preclusion period and recovery charge. Build this into your settlement calculations, because the net amount you keep can be materially less than the headline figure.