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Moving with the times

Feature Articles

Cite as: August 2015 89 (8) LIJ, p.49

Courts have tended to award minimal compensation to victims of sexual harassment, but a Federal Court decision has set a new benchmark.

By Emma Starkey and Jenna Vardi

The Full Federal Court decision in Richardson v Oracle Australia Pty Ltd (Richardson)1 recognises that the historical range for compensation for sexual harassment is no longer on a par with community standards and signals a turning point in how courts calculate compensation in this jurisdiction.

Sexual harassment under s28A of the Sex Discrimination Act 1984 (Cth) (SD Act) can include unwelcome sexual advances, unwelcome requests for sexual favours, or other unwelcome conduct of a sexual nature and is assessed on what a reasonable person would consider is likely to offend or humiliate.

Where liability is established, remedies for sexual harassment aim to “compensate for the injury suffered by the person harassed”.2 Damages can be awarded for economic loss, both past and future, as well as general damages in respect of non-economic loss. Economic loss must be reasonably quantifiable and for expenses incurred or loss of income suffered because of unlawful conduct. General damages compensate victims for hurt, humiliation and distress and are not capable of precise mathematical calculation into monetary value. General damages are assessed on the facts of each case and are based on the effect that the sexual harassment has had on the person.3

Historical range

Awards for general damages in the discrimination and sexual harassment jurisdiction have been historically conservative compared to the personal injuries jurisdictions.4 Courts have awarded victims of sexual harassment general damages within the range of $12,000 to $20,000.5 This indicates that less value has been placed on the loss of enjoyment of life where the person has been sexually harassed or discriminated against, as opposed to, for example, bullied.

In Elliot v Nanda & Anor6 a 17 year old receptionist at a medical centre resigned from her employment and suffered depression, anxiety and insomnia after being subjected to sexual harassment from a doctor at the centre. Justice Moore found that the doctor’s conduct of fondling the employee’s breasts, patting her bottom, and making repeated sexual references, including references to rape, was unwelcome conduct of a sexual nature.7 Despite a finding that the unlawful conduct had a significant impact on the employee that lasted at least two years, she was awarded only $15,100 in general damages and $100 for counselling.8

In Font v Paspaley Pearls & Ors9 a shop assistant was awarded $10,000 in general damages in circumstances where it was found that her manager slapped her bottom, leaned into her body, asked her to model a pearl bikini and pushed a walking stick up between her legs.10

The courts have on occasion departed from the historical range, primarily where the employee has become incapacitated to work as a result of the unlawful conduct. These cases did not reflect a general shift in the range of damages awarded by the courts but rather an acknowledgement of the severity of the effect on the person harassed.

For example, in Poniatowska v Hickinbotham11 an employee made complaints alleging that she had been subjected to sexual harassment in the workplace. She was then issued with a number of formal warnings and subsequently terminated for alleged unsatisfactory performance.12 The sexual harassment included repeated sexual propositioning and receipt of explicit pornographic messages from a co-worker.13 Justice Mansfield found that the company response was inadequate and her termination related to the incidents rather than her performance.14 He also found that as a result of the unlawful conduct the employee suffered an adjustment disorder with mixed anxiety and severe depression and was incapacitated to work for approximately two and a half years.15 She was awarded $466,000 for economic loss and $90,000 for hurt, humiliation and distress.16

Richardson

Until Richardson there had been no consideration as to the continued appropriateness of the historical range or a comparison with other areas of relevant law.

Ms Richardson, the applicant, and Mr Tucker were employed as sales representatives of Oracle and worked closely in the same team. Over several months Mr Tucker engaged in conduct that included repeated and numerous comments, slurs and sexual advances, some of which occurred in front of clients and colleagues.

As a result of Mr Tucker’s conduct, Ms Richardson’s health suffered. She was diagnosed with a chronic adjustment disorder with anxiety and depression and experienced problems in her sexual relationship with her then partner.

Ms Richardson complained to Oracle about Mr Tucker’s conduct and Oracle conducted an investigation. Mr Tucker was permitted to remain employed. Shortly thereafter, Ms Richardson resigned. She successfully obtained a position with another company on a lesser salary.

First decision

At first instance, Justice Buchanan found that Ms Richardson had been sexually harassed by Mr Tucker and that, as the employer, Oracle was responsible for his conduct.17 Justice Buchanan was satisfied that Ms Richardson had been “disaffected by Mr Tucker’s conduct and the events that followed”,18 leading to her resignation. However, he found that the decision to resign was voluntary and she was not entitled to compensation for any economic loss.19 Oracle was ordered to pay $18,000 by way of pain and suffering to Ms Richardson.

Appeal

Ms Richardson appealed the decision on multiple grounds, including that:

  • the compensation was manifestly inadequate;
  • the Court had made a mistake in not finding that Mr Tucker’s conduct had affected Ms Richardson’s sexual relationship with her partner; and
  • she should have been awarded compensation for economic loss.
  • A number of Ms Richardson’s other appeal grounds were dismissed by the Full Court.

    The Full Court found that:

  • damages for sexual harassment had largely not changed since 2000. This contrasted with other areas of the law where compensation had increased based on community recognition of the effect that unlawful conduct could have on an individual’s enjoyment of life;20
  • to ascertain prevailing community standards the Court should look at compensation awarded in personal injury claims. In those cases, the courts had placed significant emphasis on the pain and suffering and loss of enjoyment of life suffered by the victim. The Court considered personal injury cases where compensation for pain and suffering and loss of enjoyment of life ranged from $250,00021 to $730,000.22 The Court also considered compensation awarded in misleading and deceptive conduct claims under the Trade Practices Act 1974 (Cth);23
  • Ms Richardson should have been compensated for the damage the conduct caused to her sexual relationship with her then partner;24 and
  • although $18,000 was within the historical range of $12,000 to $20,000 it was “disproportionately low having regard to the loss and damage Ms Richardson suffered”25 and “prevailing community standards”.26
  • Having regard to the psychological impact and the impact on Ms Richardson’s relationship, the Full Court awarded Ms Richardson $100,000 for non-economic loss.

    The Full Court also awarded Ms Richardson $30,000 for economic loss. It found that although Ms Richardson was not forced to leave Oracle, there was a sufficient causal connection between the sexual harassment and Ms Richardson’s resignation to justify an order for economic loss.

    Significance of decision

    The decision represents a significant turning point for sexual harassment and anti-discrimination law.

    First, it recognises that community views regarding the impact of sexual harassment have changed. There is now an increased recognition of the long-lasting and devastating impact that sexual harassment can have, ranging from the loss of a job, damage to reputation, psychological illnesses with varying prognoses, through to loss of a career. Sometimes the victim is unable to work at all or their relationships with friends and family break down. As with workplace bullying, the effects of sexual harassment can continue long after the person has left the workplace.

    Second, the Court has accepted that, when determining appropriate compensation, there is no credible reason why people who are sexually harassed should be treated any differently than people who have been bullied at work. Ultimately, what must be determined is the loss of enjoyment suffered by the person, and not the cause of that loss.

    Third, it acknowledges that a person who has been sexually harassed does not need to be incapacitated to justify a substantial compensation payment. It is likely that, if someone has suffered a diagnosable condition and there has been a substantial impact on their enjoyment of life, irrespective of whether they can continue to work or not, we will see similar awards of damages.

    Fourth, it suggests that provided there is a sufficient connection between an employee’s departure from a particular employer and the unlawful conduct, including how the employer deals with the conduct, a court is likely to award compensation for any resulting economic loss.

    Finally, the principles in Richardson are likely to be adopted in other areas of discrimination law. The historical range in sexual harassment cases has been similar to the historical range applied in other areas of discrimination law, such as direct and indirect unlawful discrimination.27 Applying the Court’s approach, there is no discernible difference why compensation for those claims, which are also designed to compensate for loss of enjoyment of life, should be treated any differently than sexual harassment.

    Determining appropriate compensation will continue to depend on a case by case assessment of the seriousness of the conduct and the effect on the victim. At the time of writing, there has been no decision in which Richardson has been considered. But as a Full Court decision, the principles enunciated will be binding on single judges of the Federal and Federal Circuit Courts. While we are unlikely to see the continued application of the historical range, it remains to be seen as to how the courts will calculate the quantum of non-economic loss.

    Whether a new range is developed by the courts, or $100,000 becomes the benchmark from which other cases are applied, is difficult to predict. It is unlikely that the amount of $100,000 will be a cap. Indeed, the Court found that although serious, the conduct and effect of the conduct on Ms Richardson was not the worst case to come before the courts.28 Based on the principles in Richardson, it is likely that where there has been serious physical conduct of a sexual nature, and/or the person suffers long term and debilitating psychological illnesses or an inability to work, the award of $100,000 compensation may be exceeded.

    Conclusion

    Richardson is an important decision and, in the authors’ opinions, a welcome decision, particularly for people who have been subjected to sexual harassment and individuals who have been discriminated against more broadly. Employers who fail to take proactive steps to eliminate sexual harassment and discrimination in the workplace now face the real prospect of a compensation order well in excess of what has previously been considered appropriate. Although no amount of money will fully compensate people for the loss of enjoyment of life, awards of damages in this quantum will go some way to enabling them to move forward with their lives.

    Snapshot
  • The Full Federal Court has established a new approach for calculating compensation in sexual harassment cases.
  • Richardson found that damages historically awarded in sexual harassment cases did not accord with community standards and that compensation should reflect the impact that the unlawful conduct has on the person.
  • The increased range of compensation is, in the authors’ opinions, welcomed. It will assist people subjected to sexual harassment to move forward with their lives.
  • Sexual harassmentThe NSW Law Society developed guidelines to assist lawyers who form the suspicion that a client may not be competent to give proper instructions. Legal costsThe general position of many practitioners when providing an estimate of costs is “how long is a piece of string?”.
    Emma Starkey is a senior associate at Maurice Blackburn Lawyers. Jenna Vardi is an associate at Maurice Blackburn Lawyers. 1. Richardson v Oracle Australia Pty Ltd (2014) 223 FCR 334 at [89]. 2. Note 1 above, at [95]. 3. Hall v A & A Sheiban Pty Ltd (1989) 20 FCR 217 at 570. 4. See Amaca Pty Ltd v King [2011] VSCA 447 where an award of $730,000 for general damages for pain and suffering and loss of enjoyment of life was awarded. 5. Note 1 above, at [89]. 6. Elliot v Nanda & Anor [2001] FCA 418. 7. Note 6 above, at [107]. 8. Note 6 above, at [176] and [196]. 9. Font v Paspaley Pearls & Ors [2002] FMCA 142. 10. Note 9 above, at [122], [133], [135], [157]. 11. Poniatowska v Hickinbotham [2009] FCA 680. 12. Note 11 above, at [10]-[17]. 13. Note 11 above, at [21], [181]. 14. Note 11 above, at [282]-[286]. 15. Note 11 above, at [350]-[351]. 16. Note 11 above, at [353], [363]. 17. Richardson v Oracle Corporation Australia Pty Limited [2013] FCA 102 at [149] and [164]. 18. Note 17 above, at [202]. 19. Note 17 above, at [203]. 20. Note 1 above, at [89]. 21. Note 1 above, at [99]. See Willett v Victoria [2013] VSCA 76. 22. Note 1 above, at [97]. See Amaca Pty Ltd v King [2011] VSCA 447. 23. Note 1 above, at [105]. See the decision of Walker v Citigroup Global Markets Australia Pty Ltd (2006) 233 ALR 687 where $100,000 was awarded for “a considerable dislocation of his life with serious long term effects”. 24. Note 1 above, at [64], [118]. 25. Note 1 above, at [117]. 26. Note 1 above, at [81]. 27. Chris Ronalds, Discrimination Law & Practice (3rd edn), 2008, 223 comments that awards of $8000 to $20,000 for hurt, distress and humiliation were common. 28. Note 1 above, at [79].

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