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Kennedy, Des --- "Damages in the federal courts for sexual & racial harassment/discrimination" [2016] PrecedentAULA 52; (2016) 135 Precedent 57

DAMAGES IN THE FEDERAL COURTS FOR SEXUAL & RACIAL HARASSMENT/DISCRIMINATION

By Des Kennedy SC

Recently, there has been an increase in complaints made to the Australian Human Rights Commission (AHRC) in respect of unlawful sexual discrimination and harassment, and racial discrimination in the workplace. Under Commonwealth legislation, ‘unlawful acts’ can ultimately give rise to a right to bring an action for damages in the Federal Court or the Federal Circuit Court (federal courts). This article sets out how a complaint proceeds from the AHRC all the way through to an action for damages in the federal courts, and discusses both the Australian Human Rights Commission Act (Cth) 1986 (AHRCA), the Sex Discrimination Act (Cth) 1984 (SDA), the Racial Discrimination Act (Cth) 1975 (RDA), and a number of important recent decisions.

THE AUSTRALIAN HUMAN RIGHTS COMMISSON

The first step in the process is to file a complaint for unlawful discrimination under the AHRCA, which must be dealt with by the President or their delegate. There is also a compulsory conciliation procedure, and the President has the power to require the provision of information and relevant documentation on pain of criminal offence.

Any complainant should genuinely involve themselves in the AHRC procedures. The failure to do so may preclude them from pursuing the matter further. That obligation is found in the Civil Disputes Resolution Act (Cth) 2011,^[1] which requires that a ‘genuine steps’ statement be filed in respect of any application to the federal courts. The complainant’s solicitor must advise them of their obligation to do so and file the statement. There appears to be no provision for the awarding of costs or damages pursuant to the AHRCA itself.

Unlawful acts

A complaint must be filed in relation to unlawful discrimination or harassment. The matters contained in the SDA Parts I and II and the RDA Parts II and IIA outline what is unlawful and can form the subject of a complaint. There are also exemptions set out in respect of the SDA in Division 4 of Part II.

Sexual discrimination and harassment

Section 5(1) of the SDA provides:

‘(1) For the purposes of this Act, a person (in this subsection referred to as the discriminator) discriminates against another person (in this subsection referred to as the aggrieved person) on the ground of the sex of the aggrieved person if, by reason of:

(a) the sex of the aggrieved person;

(b) a characteristic that appertains generally to persons of the sex of the aggrieved person; or

(c) a characteristic that is generally imputed to persons of the sex of the aggrieved person;

the discriminator treats the aggrieved person less favourably than, in circumstances that are the same or are not materially different, the discriminator treats or would treat a person of a different sex.’^[2]

Section 14 provides that it is unlawful for an employer to discriminate against a person on the grounds of the person’s sex, sexual orientation, gender identity, intersex status, marital relationship status, pregnancy or potential pregnancy, breast feeding or family responsibilities. It is unlawful on that basis to impose conditions of employment to deny the employee access, transfers or the opportunity of promotion, training, or any other benefits associated with the employment; by dismissing the employee, or by subjecting the employee to any other detriments on that basis.

Section 28A of the SDA provides that it is unlawful to sexually harass another person. It is unlawful if:

‘(a) the person makes an unwelcome sexual advance, or an unwelcome request for sexual favours, to the person harassed; or

(b) engages in other unwelcome conduct of a sexual nature in relation to the person harassed;

in circumstances in which a reasonable person, having regard to all the circumstances, would have anticipated the possibility that the person harassed would be offended, humiliated or intimidated.’

Section 28B provides that it is unlawful for an employee to sexually harass another employee or a person seeking employment at the workplace. ‘Workplace’ is defined as ‘a place at which a workplace participant works or otherwise carries out functions in connection with being a workplace participant’.

Section 106 of the SDA provides for vicarious liability unless the employer establishes that they (that is, the employer) took all reasonable steps to prevent the employee from doing the acts referred to.

Racial discrimination

Section 9 of the RDA provides that it is unlawful for a person to do any act involving a distinction, exclusion, restriction or preference based on race, colour, descent or national or ethnic origin which has the purpose or effect of nullifying or impairing the recognition, enjoyment or exercise, on an equal footing, of any human right or fundamental freedom in the political, economic, social, cultural or any other field of public life.

It is therefore unlawful for a person to require another person to comply with certain requirements which nullify or impair the recognition, enjoyment or exercise, on an equal footing, by persons of the same race, colour, descent or national or ethnic origin of the other person.

Section 9(1) of the RDA has been dealt with recently by the Full Federal Court in Vater-Meyer v Commonwealth of Australia & Ors.^[3] The issues in dispute related to a claim of racial discrimination by an indigenous woman at her place of work where another employee referred to ‘eating black babies’ while in the lunch room (a reference to eating choco lollies). There was also a further reference to ‘Coon’ cheese. The trial judge dismissed the application. He considered in his decision that the defendant did not understand that his comments might cause offence. The Court found that the judge had erred and a new trial was required. The relevant section required the judge to take into account the plaintiff’s sense of injustice and to determine whether that stemmed from the relevant events or not.^[4]

Section 18C of the Act provides for offensive behaviour, otherwise than in private, because of race, colour or national or ethnic origin and makes it unlawful for a person to do an act that is reasonably likely, in all the circumstances, to offend, insult, humiliate or intimidate another person or group of people and which is done because of race, colour or national or ethnic origin of the other person or some or all of the people in the group. ‘Public place’ is defined extensively in the section and can include a workplace.

Exemptions

Two important exemptions are contained in ss18D and 18E of the RDA. Section 18D provides an exemption where something is done reasonably and in good faith and refers to the performance of artistic works; statements made in connection with genuine academic and scientific purposes and the making or publishing of a fair and accurate report of an event or matter of public interest; or a fair comment on any event or matter of public interest if the comment is an expression of a genuine belief held by the person making the comments. A s18D defence under the RDA, raised by Mr Eatock in Eatock v Bolt,^[5] failed because the trial judge found that the subject articles contained errors of fact and distortion, and inflammatory language, such as ‘it’s so hip to be black’ and ‘white fellas in the black‘.

Section 18E of the SDA provides that in relation to vicarious liability, an employer’s conduct will not be unlawful if the employer took all reasonable steps to prevent the employee or agent from doing the act.

PROCEDURE IN THE AUSTRALIAN HUMAN RIGHTS COMMISSION

If a complaint is terminated by the President, any person affected by that termination can make an application to the federal courts alleging unlawful discrimination in respect of the complaint.^[6] The application must be made within 60 days of receiving written notice of the termination,^[7] or such further time as the courts permit. Howells v Owners Corporation Strata Plan 33149^[8] dealt with the discretion permitted in granting extensions and sets out the relevant criteria to be considered, namely:

• an explanation for delay;

• any prejudice to the respondent; and/or

• whether the applicant has an arguable case.

There are several grounds for termination, including but not limited to:

• the discrimination was not unlawful; or

• the complaint was lodged more than 12 months after the act; or

• it lacked substance or was already adequately dealt with; or

• a more appropriate remedy is available; or

• the complaint would be better dealt with by the Federal Court or Federal Circuit Court; or

• there is no prospect of conciliation.^[9]

A complaint must be lodged within 12 months, though the President has discretion to accept a complaint outside that period (but the discretion must be exercised in accordance with accepted legal principles).^[10]

PONIATOWSKA v HICKINBOTHAM & ORS^[11]

This important early decision demonstrates the potential for common law damages in sexual and racial discrimination cases. A complaint of sexual harassment made to the AHRC was terminated on the basis that it could not be resolved by the conciliation process.

The complaint by Ms Poniatowska was of sexual harassment, in the following terms:

(a) Mr Hickinbotham made reference to her breasts as being ‘two good assets,’ while staring at her breasts;

(b) another employee sent her an SMS message on her mobile depicting a woman giving a man oral sex and a text message which said ‘U have 2 b better’;

(c) another employee sought to have her enter into a sexual relationship with a man from another building company so that the Hickinbotham Group could secure a land deal; and

(d) Mr Hickinbotham kissed her on the mouth at an employer’s dance function.

Following her complaint, Ms Poniatowska’s employment was terminated, on the basis of alleged poor work performance. At first instance, she was found to have been terminated for matters relating to her complaints. She developed depression and anxiety and as a result of the harassment and discrimination she was unable to work for a significant period of time. His Honour awarded compensatory damages in the total sum of $433,000 but there was no award in respect of aggravated or exemplary damages. She was awarded the sum of $90,000 for compensation for general damages, which was considered by the judge to be a sufficient response to any punitive element. The damages were awarded against the employer, which was responsible for the actions of its employees.

That matter came before the Full Federal Court on appeal and was rejected by the Court. In addition, the respondent made an application for special leave to appeal to the High Court, which was refused.

CAUSATION

Section 8 of the SDA provides for causation in the following terms:

‘A reference in subsection 5(1), 5A(1), 5B(1), 5C(1), 6(1), 7(1) or 7AA(1) or section 7A to the doing of an act by reason of a particular matter includes the reference to the doing of an act by reason of two or more matters that include the particular matter, whether or not the particular matter is the dominant or substantial reason for the doing of the act.’

There are similar provisions in ss18 and 18B of the RDA.

A number of decisions have endeavoured to grapple with the overall concept of causation in respect of the Commonwealth discrimination legislation. The most recent High Court case in relation to causation and direct discrimination is Purvis v New South Wales.^[12] The majority of the Court did not reach any final conclusions about the issue because there was no need for them to do so. The matter of causation, however, was dealt with by the minority and also by Gleeson CJ of the majority. Gleeson CJ did support the concept of the ‘true basis’ or ‘real reason’ approach to the issue, which was the basis of the decision of Deane J and Gaudron J in Australian Iron and Steel Pty Limited v Banovic.^[13]

These decisions related to the Disability Discrimination Act (Cth) 1992, which does not appear to have a multiple causes provision, as found in both the SDA and RDA.^[14] A multiple causes provision provides that where there is more than one reason in relation to a particular matter relating to sexual or racial discrimination, it is taken to be done for that discriminatory reason, whether or not any other reason was the dominant or substantial reason in relation to what had occurred. As far as the RDA is concerned, there are no limits on its operation.

As far as the decision of Adeels Palace Pty Ltd v Moubarak (2009) 239 CLR 48 is concerned, it seems unlikely to have application to causation issues in the area of the SDA or RDA. First, the decision related to the specific interpretation of s5D of the Civil Liability Act (NSW) 2002 (CLA), which dealt with a factual issue and the scope of the relevant tortious duty. Further, the multiple purpose provisions are not suggestive of the operation of a ‘but for test.’ In addition, the cases referred to above would also be relevant.

In March v Stramare (E&MH) Pty Limited [1991] HCA 12; (1991) 171 CLR 506, the High Court determined that in an action for negligence there needed to be a material contribution from the alleged breach. The ‘but for test’ was criticised in relation to where there was more than one event which could be sufficient to bring about the injury (para 22). The overall approach to material contribution can be established by reference to the ‘common sense test’: Chappel v Hart (1998) 195 CLR 232.

The multiple purpose provisions seem to be very helpful to a claimant in relation to any causation issue that may arise in any claim to the federal courts.

Statute of limitations

The Limitation Act (NSW) 1969 and similar limitations in other jurisdictions do not apply. The cause of action lies when the President of the AHRC terminates the complaint. The relevant limitation period is the 60 days allowed for the filing of the application after a termination, or such further time as is allowed.

INTENTION

The precise state of mind which must be established to prove direct discrimination has not been clearly identified in the statutes or by the High Court. The meaning of ‘by reason of’ or ‘because of’ was referred to by Kiefel J in Creek v Cairns Post Pty Ltd,^[15] who favoured the view expressed by McHugh J in Waters v Public Transport Corporation,^[16] that ‘on the ground of’ and ‘by reason of’ require a causal connection between the act of the discriminator which treats a person less favourably and the intention.

In some cases, the expression ‘by reason of’ may include unconscious reasons for acting. In Sharma v Legal Aid (QLD)^[17] it was said:

‘there may be cases in which the proper inference to be drawn from the evidence is that: whether or not the employer realised it at the time or not, race was the reason it acted as it did: Nagarajan v London Regional Transport [1999] UKHL 36; [1999] 3 WLR 425 at 433.’

In their reasons for judgment in Purvis v New South Wales, McHugh and Kirby JJ refer to the sufficiency of unconscious reasons for discrimination. They relied upon the following passage of Lord Nichols in Chief Constable of West Yorkshire Police v Khan,^[18] where his Lordship explained:

‘The phrases “on racial grounds” and “by reason that” denote a different exercise: why did the alleged discriminator act as he did? What, consciously or unconsciously, was his reason? Unlike causation, this is a subjective test. Causation is a legal conclusion. The reason why a person acted as he did is a question of fact.’

This statement of Lord Nichols supports the sufficiency of subconscious reasoning. In the decision in Hussein v Commonwealth of Australia Department of Human Services Centrelink,^[19] a case where there was a dispute at a Centrelink office and allegations of racial discrimination were made, his Honour concluded:

‘all that can be said is that a person will act for the prohibited reason if, at the time he or she engaged in the relevant conduct, that person had in his or her mind that the person in relation to whom the conduct was engaged was of a particular race or ethnic origin’.^[20]

It seems questions of the relevance of objective and subjective actions, as well as conscious or subconscious discrimination, will need to be considered by reference to relevant case law, the relevant provision being considered and the evidence involved in relation to the action that is the subject of the proceedings.

VICARIOUS LIABILITY OR ATTRIBUTED LIABILITY

Issues of vicarious liability are of great concern for employers. Legislation provides that an employer can be held responsible for their employees in relation to unlawful acts.^[21] An employer can avoid liability if they establish that they took all reasonable steps to prevent the employee from doing the acts complained of.

An employer can try to establish a basis for a potential defence by developing guidelines encouraging and insisting on practices in accordance with the guidelines laid down by the then Human Rights and Equal Opportunity Commission (HREOC). In addition to establishing appropriate policies and practices, policies should be actively and vigilantly enforced. In Oysten v St Patrick’s College (No. 2),^[22] there was a very sophisticated school policy laid down in relation to anti-bullying practices. However, the plaintiff in that case was successful in recovering damages for psychological injury because the policies were not being implemented.

WORKPLACE TEST – SDA

In Ewin v Vergara (No. 3),^[23] Bromberg J held that there had been sexual discrimination and harassment at the workplace pursuant to s28B(6), even though some of the conduct occurred in a public place close by the physical place of work. His Honour referred to the decision of Leslie v Graham,^[24] where Branson J indicated that a workplace can extend beyond the physical place of work. Section 28B(7) of the SDA is to be interpreted in wide terms.

In Ewin, the conduct involved Mr Vergara touching Ms Ewin’s hand, attempting to kiss her and sexually propositioning her in explicit and offensive language. She felt shocked and frightened and he accepted that she had sustained psychological injury.^[25]

Ms Ewin resigned and the court awarded her $293,000 by way of past economic loss and $63,000 for future loss of earnings. As far as general damages were concerned, she was awarded $100,000. Aggravated and exemplary damages were not considered relevant by reason of the conclusion of the trial judge that the compensatory damages was sufficient to punish the offender.^[26]

On appeal, the majority of the Court rejected the submission that because the harassment took place at a hotel across the road from the actual physical place of work, this precluded her recovery.^[27] The majority were of the view that what had occurred at the hotel was within the definition of ‘the workplace’ as per the SDA.

BURDEN OF PROOF

The Court determined that as far as the standard of proof was concerned, the test laid down in Bringinshaw v Bringinshaw^[28] was to be applied. The issue was dealt with in detail by Branson J and would also be relevant to an SDA claim.

TWO RECENT CASES IN RESPECT OF QUANTUM OF DAMAGES

Demo v Scenic Rim Regional Council^[29] is a recent decision of the Federal Circuit Court, in which the plaintiff alleged that a supervisor had described him as a ‘dumb wog’ during a dispute. His Honour found that while there had been an intense argument, these words were not used and dismissed the application. His Honour did hold that if the words were used, it would have amounted to racial discrimination, and he would have awarded $4,000 in general damages for humiliation and the like.^[30]

The second case was Haider v Hawaiian Punch Pty Ltd,^[31] where Mansfield J made a declaration that the plaintiff had been the subject of unlawful discrimination under s18C(1) of the RDA. He ordered the employer to pay Mr Haider damages of $9,000 as compensation for the loss and damage he had suffered. Mr Haider (who was of Indian or Pakistani appearance) was at a nightclub when a heated exchange occurred between him and the nightclub bouncer. The bouncer yelled at Mr Haider that he should go back to his own country, that Australia is a white people’s country. The case was a little unusual in that Mr Haider appeared for himself and the defendant employer did not appear. Mr Haider complained of his public embarrassment and severe emotional distress and some absences from work. He did not provide any medical material to support his claim and consequentially the judge limited his damages.^[32] It seems clear that if Mr Haider had been represented, he would have recovered a much more substantial sum by way of damages. The employer’s failure to provide the requested apology was considered relevant to the quantum of damages.

SDA AND RDA (NSW)

In proceedings in NSW, relevant state SDA legislation caps any award at $100,000. Moreover, there is no compulsory conciliation process provided for such matters and damages are determined by the relevant state tribunal. Additionally, if the litigant brings proceedings in another state or territory for sexual or racial discrimination, they cannot bring the matter in the AHRC and in the Federal Court or Federal Circuit Court.

TEST FOR DAMAGES

Recent decisions have emphasised that damages are to be assessed as analogous to a tortious breach; that is, the judge is required to put the plaintiff in the same position, as far as money can, that they would have been in, had the breach not occurred.

This test was accepted and applied in Richardson v Oracle Corporation Australia Pty Ltd.^[33] The Court considered an appeal of an award for $18,000 for pain and suffering and the loss of the amenities of life because of sexual discrimination/harassment. The claim arose out of the conduct of Mr Tucker, the company manager, who worked with the plaintiff in a bid team seeking a substantial contract. The plaintiff alleged that at the first meeting she was subjected to a humiliating series of slurs, alternating with sexual advances, which became a constant barrage of sexual harassment. She alleged 11 separate incidents. She also alleged that Mr Tucker’s conduct had led to a reticence between herself and her partner to engage in sexual intimacy.

The Court found that harassment had occurred and that the plaintiff had established that she had suffered a psychological injury involving anxiety, which had diminished sexual activity with her partner.^[34]

The trial judge awarded $18,000 for pain and suffering and loss of amenities of life. Miss Richardson appealed on the basis that this amount was manifestly inadequate. The court found that it was, and considered the following relevant matters:

(a) the danger of damages being assessed by reference to ranges referred to in earlier cases;

(b) that community standards now afforded a higher level of compensation for damages for pain and suffering and any loss of amenities of life in such cases;

(c) that the recent decision of Amaca Pty Limited (under NSW administered winding up) v King,^[35] where the plaintiff had been awarded the sum of $750,000 for pain and suffering and loss of the amenities of life in respect of mesothelioma, was an indication of these changed community standards. (The award was made by a jury and Amaca’s appeal on the issue failed.) The judge referred to amounts of $250,000 awarded in Willett v State of Victoria;^[36] and $300,000 in Walker v Citigroup Global Markets Australia Pty Limited;^[37] and

(d) that, having regard to the findings of fact in respect of the harassment and the effects upon the plaintiff, and also to the changed community standards, an appropriate award of general damages was $100,000.

Further, the CLA or workplace damages are in no way relevant to the assessment of damages.^[38] The damages that can be awarded are at large and can include past interest and Griffiths v Kerkemeyer damages.

As regards exemplary damages, it seems that in NSW and in the federal courts, there has recently been a reluctance to award such damages, and even when awarded they have tended to be low-level. As mentioned above, it is necessary for trial judges to determine whether the general damages award acts as a form of punishment and deterrence for similar future conduct. In relation to determining this issue, the damages to be considered are both a combination of the general damages and any aggravated damages that may also have been awarded: State of New South Wales v Zrieka.^[39] A court is to avoid any doubling up of damages in these areas.

Des Kennedy SC, formerly of Jack Shand Chambers, has practised extensively in a variety of areas including defamation, equity, crime and intentional torts. He has recently developed an interest in discrimination cases and is presently running a racial discrimination case in the Federal Court. PHONE (04) 1924 9379 EMAIL desmondkennedy@outlook.com.au.

^[1] Civil Disputes Resolution Act (Cth) 2011.

^[2] Sex Discrimination Act (Cth) 1984.

^[3] [2015] FCAFC 139 (22 September 2015).

^[4] Ibid, at [98]-[99].

^[5] [2011] FCA 1103 (28 September 2011).

^[6] Australian Human Rights Commission Act (Cth) 1986, s46PO.

^[7] Ibid, at s46PH(2).

^[8] [2015] FCCA 1920 (17 July 2015).

^[9] Australian Human Rights Commission Act (Cth) 1986, s46PH.

^[10] Buderim Ginger Ltd v Booth [2002] QCA 177; McAuliffe v Puplick (1996) EOC 92-800.

^[11] [2009] FCA 680 (23 June 2009).

^[12] [2003] HCA 62; (2003) 217 CLR 92.