New heights for awards of damages in sexual harassment and bullying cases

The days of relatively low awards of damages in sexual harassment and bullying cases are definitely over. As two recent decisions of the Federal Court of Australia and the NSW District Court indicate, where appropriate the Court will make awards of damages that far exceed the previous "range" in federal law of between $12,000 and $20,000. These new awards are said to better reflect community standards that place a significant value on the loss of enjoyment of life, and the experience of pain and suffering.

TROLAN V WD GELLE INSURANCE AND FINANCE BROKERS PTY LTD 

Background

On 4 November 2014, NSW District Court Judge Leonard Levy, awarded a victim of systematic sexual harassment and bullying, $733,723 including for past economic loss, past loss of superannuation, future economic loss and future loss of superannuation.

The relevant conduct included the offender:

• pressing and rubbing up against the victim;

• placing his hand under the victim's shirt and grabbing her breast; and

• squeezing the victim's bottom.

The central question in the case (Trolan v WD Gelle Insurance and Finance Brokers Pty Ltd [2014] NSW DC 185) was whether the plaintiff's employer was negligent. Beyond statute, an employer owes its employees a non-delegable duty to take reasonable care to avoid exposing its employees to risk of injury in the workplace. 

In this case, the scope and content of the duty required the defendant to ensure the plaintiff was not bullied, intimidated or sexually harassed in the workplace. The question of whether the defendant was negligent requires an assessment of a reasonable response to a foreseeable risk.

Decision

The Court held that the employer had breached the duty of care it owed the plaintiff by:

• failing to provide the plaintiff with a safe place of work;

• failing to take reasonable steps to care for the plaintiff's psychological wellbeing; and

• exposing the plaintiff to peril in the form of continuing and repeated sexual harassment, bullying and intimidation.

The Court determined that the remedial steps required to avoid the plaintiff suffering harm were quite simple and non-problematic and should have included:

• counselling of the offender to desist;

• as the offender was the controlling will and embodiment of the defendant company, he ought to have reasonably foreseen from the plaintiff's firm rebuffs that his conduct was likely to be detrimental to her wellbeing and he should desist from his unwelcome conduct;

• the defendant company should have arranged for the offender to receive appropriate remedial counselling from a skilled professional person I order to help him realise his behaviour was wrong, inappropriate and should cease; and

• at the very least, a facilitated workplace conciliation or a mediation should have been convened, with appropriate support being provided to the plaintiff.

RICHARDSON V ORACLE CORPORATION AUSTRALIA PTY LTD

Background

On 15 July 2014, the Full Federal Court of Australia considered on appeal, the sexual harassment engaged in by an employee (Mr Tucker) against his supervisor (Ms Richardson) whilst working for Oracle. 

The Full Court overturned the decision at first instance where Ms Richardson was awarded $18,000 in compensation, and awarded $100,000 in general damages and another $30,000 for future economic loss. 

Over a nine month period, Mr Tucker engaged in eleven incidents of sexual advances and inappropriate comments and behaviour against Ms Richardson in the course of their work, including Mr Tucker making comments such as:

• "Gosh, it’s a good thing you didn’t come out because I think if I were drinking with you I would wind up in the corner with my arms around you kissing you".

• “I love your legs in that skirt. I’m going to be thinking about them wrapped around me all day long.” 

• "We should go away for a dirty weekend sometime."

• "Oh, you know you love me, you know you want me.”

• "I love it when you’re mean to me. It just makes me think how hot you would be in bed.”

Decision at first instance

The decision in the first instance found that six of the incidents amounted to sexual harassment, however, when looked at overall, it was apparent that Mr Tucker "…embarked on a systematic course of conduct that is fairly described as sexual harassment."

Further, "…there can be no criticism of Oracle for taking Ms Richardson’s complaints seriously, requiring them to be stated precisely, investigating them and taking formal action in relation to them…"

The Court also found it appropriate for the Company to deal with the complaint formally despite Ms Richardson requesting her complaint be dealt with informally.

Despite this, Oracle was found vicariously liable for the conduct of Mr Tucker. Although Oracle had taken action once it had become aware of the allegations against Mr Tucker, it's company policy and training let it down as it failed to highlight in clear terms:

• that sexual harassment is unlawful; 

• the source of the relevant legal standard; and

• that an employer might also be liable for sexual harassment by an employee, which would emphasise the lively and real interest that an employer will have in scrupulous adherence to its warnings.

The Court awarded Ms Richardson $18,000 in compensation but found that there was no forced resignation as alleged as "…Ms Richardson left her employment with Oracle essentially because it suited her to do so in the circumstances at the time."  Consequently, no compensation for economic loss was ordered, despite Ms Richardson being $30,000 worse off over three years in her new job. 

On appeal

There were a number of appeal grounds. However, the most significant related to the amount of compensation that should be awarded.  

The Full Court found that although the decision in the first instance followed appropriate principles when determining the amount of compensation, the assessment had not changed for 30 years and "…having regard to the nature and extent of Ms Richardson's injuries and prevailing community standards the low level of the damages awarded by the trial judge itself bespeaks error."

Further "…community standards now accord a higher value to compensation for pain and suffering and loss of enjoyment of life than before" in personal injury cases arising from bullying and it should be the same in sexual harassment claims. 

In the circumstances it determined that $100,000 was an appropriate award for general damages. Further, the sexual harassment caused Ms Richardson to leave Oracle and she was awarded a further $30,000 for the reduction in income that she suffered in the new job over the first three years. 

Lessons

These decisions amongst other recent decisions, indicate a general shift in the amount of compensation the Court may be willing to award, in sexual harassment and bullying matters. 

It also provides a timely reminder to employers to review their current systems and practices and take preventative actions to minimise the risks faced by such claims, including asking the following questions:

1.  Are your workplace policies including your policies on discrimination, harassment and bullying up to date?

2.  Have you been conducting training of staff and managers?

3.  Do you have effective processes to deal with claims of sexual harassment, discrimination and bullying?

If not the risks are now much higher than they were previously.  

If you would like more information about the case or discrimination related matters generally, please contact National Workplace Lawyers on +61 2 9233 3989. 

National Workplace Lawyers

Note — this is for information purposes only and does not purport to be comprehensive or to render legal advice.