A former contestant who was portrayed as a “villain” on reality reno show House Rules has won a workers’ compensation case against Channel 7 for “psychological” injury.

The landmark ruling by the NSW Workers Compensation Commission found Nicole Prince was legally an employee of Seven, despite her contract with the network explicitly stating there was no employment relationship.

It is not clear how much money she will make from the ruling, which was first reported by the TV Blackbox website, because the level of compensation is yet to be decided.

Regardless, the decision is likely to have far-reaching ramifications for reality TV shows filmed in Australia, with broadcasters and production companies open to similar workers compensation claims, and potentially liable for superannuation and payroll tax.

Ms Prince and her friend Fiona Taylor were the second team voted off the 2017 season of House Rules, hosted by Johanna Griggs.

The women were each paid $500 per week plus a $500 allowance during filming, which took place in November and December 2016.

In her statement, Ms Prince said after filming their renovation scenes in Stawell, Victoria, the pair arrived at the Sydney set with the other teams where she immediately felt “harassed and bullied”.

“As soon as Fiona and I entered the studio for the scoring of the teams’ work we could see and feel the hatred from the other teams,” she said.

“We did not understand where all of it was coming from. We discovered months later that the ‘reveal footage’ that was shown to the other teams only contained our negative comments about their renovation work and none of the positive things that we had said. They later told us that they had felt hurt and upset that we didn’t seem to care how hard they had worked, and they thought we were the nastiest people on the planet.”

Ms Prince said the bullying was “not only condoned by the producer, but it was aggravated even encouraged by them”, with the pair deliberately isolated from the other contestants.

“During every camera interview both myself and Fiona complained on film that we were being subjected to isolation, bullying and harassment by the other teams,” she said. “On one occasion, I witnessed Fiona be physically assaulted.”

Ms Prince said when she complained to Channel 7, “I was then threatened that Fiona and I would be portrayed negatively”.

“True to their threatening words, Channel 7 portrayed Fiona and I as bullies in the episode featuring our team,” she said.

“After our episode was aired I was subjected to online abuse on the Channel 7 Facebook page, including receiving threats of serious physical assault. I have been fearful for my safety ever since.”

Ms Prince said since their episode of the program aired she had not been able to obtain work and “have been informed this was due to how I was portrayed as a bully”.

“I am no longer offered interviews for jobs and work, which before my work injury I did not have any trouble obtaining interviews and successfully getting the work and job,” she said.

“I feel devastated and worthless about the loss of my career and working life. After my episode aired I wanted to kill myself and I started drinking more alcohol in an attempt to self-medicate my injury.”

She added that she felt anxious about leaving her home for fear of being recognised, has regular incidents of “negative reactions from complete strangers” and feels “nauseous when faced with reminders of the show”.

Ms Prince submitted a workers compensation claim in May 2017, stating she had suffered adjustment disorder, anxiety disorder, depression and post-traumatic stress disorder as a result of injury caused by Seven’s “systematic isolation of myself and encouragement of bullying by co-competitors”.

Seven’s insurer denied liability on the basis that Ms Prince was technically “not a worker”. A review of the insurer’s decision was requested in November 2018, and the following month it again denied liability.

In May this year, Ms Prince’s lawyers filed an application to resolve the dispute with the NSW Workers Compensation Commission.

Her lawyers argued that it could not be “seriously suggested” Ms Prince was an independent contractor as she had no skills in renovation or reality TV, but rather that she was providing a service to Seven by appearing on the show.

They highlighted the extreme level of control Seven had over the relationship, submitting a list of rules for contestants the breaking of which could result in disqualification.

The rules stipulated that “you may only socialise with other contestants when on site or in the presence of producers and/or camera crews” and “private socialising under any circumstance is strictly prohibited”.

Contestants were only allowed to use “communication devices such as phones, tablets and laptops provided to them by the production team”. They were forbidden from removing their microphones “at any time and if a contestant wished to go to the toilet they should inform their sound recordist”.

Seven required Ms Prince to sign a contact stating she acknowledged that “your participation in the program is not employment, does not create an employer/employee relationship between Seven and you and is not subject to any award or collective bargaining or workplace agreement and does not entitle you to any wages, salary, corporate benefits, superannuation, workers compensation benefits or any other compensation”.

Her lawyers argued this was an attempt by Seven to “oust any rights as a worker which the applicant may have had”.

Lawyers for Seven argued the concept of a contestant “comes nowhere near that of worker” and questioned what service she performed.

They conceded Seven obtained some benefit from the show’s advertising revenue, but argued Ms Prince’s participation did not constitute a service. Rather they argued she had applied with Ms Taylor to be on the show in the hope of winning $200,000.

In a scathing 27-page decision, arbitrator Cameron Burge rejected Seven’s argument that no service was provided by Ms Prince.

“The respondent derived benefit from the applicant giving her time and engaging in the home renovations for the television show,” he said. “Without the contestants, the production would not take place.”

Mr Burge accepted Seven had a “great deal of control” over Ms Prince’s activities, and that the relationship was “appropriately categorised as that of employee and employer”.

With that relationship established, he said there was “little doubt” she was placed in a “hostile and adversarial environment in the course of her employment”. He accepted Ms Prince’s evidence that Seven selectively edited the footage to “portray them in a certain negative light”.

He slammed Seven for not removing abusive comments from its Facebook page.

“I find it extraordinary, in circumstances where the respondent was made aware by the applicant of hateful comments posted on its social media platforms, that it did not take steps to either remove those comments or to close the comments on its own posts,” he said.

“The breakdown in the applicant’s relationship with other contestants, together with the impact of her portrayal on television and social media, in my view explains the onset of her psychological injury.”

Mr Burge ordered Seven to pay compensation to Ms Prince, who has been referred to a medical specialist to determine the level of permanent impairment arising from the injury.

Seven has been contacted for comment.

If you or someone you know needs help, call Lifeline on 13 11 14

frank.chung@news.com.au