The Court of Appeal agreed with the NSWSC's conclusion that the college had failed to take reasonable steps to bring the harmful conduct to an end -
It is true, as the College submitted, that it was not required to ensure or guarantee that the appellant was not bullied. However, as her Honour recognised at  of her reasons, the College was obligated, in performing its duty of care towards the appellant, to take reasonable steps to ensure that the appellant was protected from bullying, including taking reasonable steps to ascertain the identity of the perpetrators and to take such action as was reasonable to prevent repetition by those persons of such conduct. That the College recognised that the scope of its duty of care so extended is to be found first, in its policies as set out at  above, and secondly, in Mrs Ibbett's statement to be read out by the roll-call teachers as recorded at  above. The latter, which occurred in June 2004, constituted plain evidence, coming shortly after the rumour incident, that Mrs Ibbett was well aware that bullying was a serious ongoing problem to eradicate which it was necessary to take active steps.
Furthermore, the College was aware from February 2004 that the appellant was vulnerable in that she suffered from anxiety and panic attacks. Whether or not those attacks were brought on in whole or in part by bullying, it should have been clear to the College that the appellant was likely to be susceptible to psychological harm caused by such conduct. Indeed, as referred to at  above, Mrs Ibbett acknowledged that bullying, if unaddressed, could occasion a depressive condition in some people suffering from anxiety. The risk of psychological harm to the appellant was both foreseeable and not insignificant within the meaning of s 5B of the Civil Liability Act. The College was clearly required to take such active steps as were reasonable in order to prevent that risk from eventuating. Those steps were recorded in its own policies.
In my view, the steps, such as they were, taken by Mrs Ibbett during 2004, did not provide a reasonable response to the not insignificant risk of harm to students such as the appellant if the bullying of them continued. In accordance with the College's own policies, it was insufficient merely to request teachers to keep an eye out for bullying; once a complaint of bullying was received, it required investigation and, if substantiated, action against the perpetrator. So far as the appellant was concerned, the evidence established that she was regularly bullied by JP and LM and to a lesser extent, AM. Reasonable steps should have been taken by Mrs Ibbett to carefully investigate the appellant's allegations and to act on them if she was satisfied that they were justified.
In August 2004, LM was required to enter into a behaviour contract and was threatened with expulsion by the Principal if she reoffended. She did, but nothing was done about it. There could be no doubt, and Mrs Ibbett and Mrs Carroll-Fajarda accepted, that the failure to take action in accordance with the College's policies against known perpetrators would send the wrong message to others who might be considering similar behaviour. Steps ought to have been taken which would have brought home to perpetrators such as LM the unacceptability of their conduct. If that required the threat of expulsion to be carried out, so be it. The message which expulsion would have conveyed to other actual or potential bullies was that bullying would not be tolerated in any form, and that is exactly what the College's policy clearly stated. Empty threats were of no use.
For the foregoing reasons, in my opinion, the primary judge was correct to find that the College was in breach of its duty of care to the appellant during 2004. Her conclusion at  of her reasons that the appellant was subject to ongoing bullying in 2004, that the College was aware that that was so, and that it failed to take reasonable steps to bring that conduct to an end, was amply justified by the evidence.
It would be inappropriate at this point to comment upon whether the steps which ought to have been taken (short of expulsion) would have brought the bullying of the appellant to an end and, if so, when. Expulsion would obviously have brought to an end bullying by the individual student who was expelled, but what effect it would have had on that student's friends is another matter.