Employers must pay for hurt and distress of workplace sexual harrasment
Richardson v Oracle Corporation Australia Pty Ltd  FCAFC 82 (15 July 2014)
In February 2013, Ms Richardson, a senior manager of the software giant, Oracle, was initially awarded the modest sum of $18,000 damages when it was found that a male colleague had sexually harassed her in the workplace from April to November 2008.
The harassment, which did not involve any touching, consisted of inappropriate comments on 11 occasions to her alone or in front of other colleagues. Comments included: “Gosh, you and I fight so much. I think we must have been married in our last life” and “So, how do you think our marriage was? I bet the sex was hot”.
The Full Bench of the Federal Court composed of Justices Kenny, Besanko and Perram, has now handed down its decision on the manager’s appeal. It upheld her challenge to the amount of general damages originally awarded by Justice Buchanan.
Oracle had argued that awards of general damages in federal sexual harassment litigation had generally fallen in the range of $12,000 to $20,000. Also, it argued that higher amounts like the $90,000 in the Poniatowska v Hickinbotham decision should be reserved for truly egregious circumstances.
Justice Kenny, while acknowledging that $18,000 fell within the currently accepted range, stated that community standards:
… now accord a higher value to compensation for pain and suffering and loss of enjoyment of life than before …
and that the assessment was:
… not to be determined here by reference to some previously accepted ‘range’ in sexual harassment cases.
Justice Buchanan’s original decision was overturned and she was awarded $100,000 general damages and an additional $30,000 because it was acknowledged that the harassment contributed to her decision to resign and take a lower paid job with another employer.
This decision opens the gates for more generous awards for general damages in sexual harassment cases.
Lessons for Employers
All Anti-discrimination policies should state that sexual harassment is against the law. Justice Buchanan in his (original) decision noted:
In my view, advice in clear terms that sexual harassment is against the law, and identification of the source of the relevant legal standard, is a significant additional element to bring to the attention of employees in addition to a statement that sexual harassment is against company policy, no matter how firmly the consequences for breach of company policy might be stated. … The omission of these important and easily included aspects from Oracle’s statements of its own policies is a sufficient indication that Oracle had not, before November 2008 at least, taken all reasonable steps to prevent sexual harassment. … It follows that Oracle did not make out its defence under section 106 of the SD Act and is vicariously liable for [the sales representative’s] conduct.
With the increased risk of significant general damages awards in future sexual harassment cases, employers should review their policies and procedures in dealing with sexual harassment in the workplace.
There will be an increased focus on community standards in determining damages. While the original claim of $37m in the David Jones Case was excessive, this case opens the door to larger claims being made and accepted by the Courts, which means that employers should continue to train and re-train their staff in these policies to reduce risks of large payouts.
… AND THE COSTS CONTINUE …
The Full Federal Court also ordered Oracle to pay the manager’s appeal costs, and asked the parties for further submissions on the costs incurred in the original trial.
At first instance, Justice Buchanan found that, because the Plaintiff rejected a genuine offer to settle in September 2010, she should pay the company’s costs, as well as her own from that date.
Justice Buchanan said he was disturbed by Ms Richardson’s evidence that she rejected a further offer in December 2011 largely because, by that stage, she would have remained in significant debt to her legal representatives. Her representatives, Harmers Workplace Lawyers, provided an affidavit which showed that her legal costs up until that time had already reached $224,475.80. He said in reference to this:
That picture is a very disturbing one. At this point, whatever the merits of [Ms Richardson’s] claims, the proceedings would have been conducted solely for the financial benefit of her lawyers.
As a result of Justice Buchanan’s comments Harmers Workplace Lawyers’ chair Mr Michael Harmer, put in a novel third-party application to challenge Justice Buchanan’s comments because they were prejudicial to his firm. The Full Bench dismissed the application.
As the Full Federal Court increased the quantum of damages to Ms Richardson, the previous settlement offers are no longer more than the damages awarded. Therefore, the Court will not consider them in deciding who will pay costs in the proceedings. Oracle may now have to bear its own costs as well as those of Ms Richardson.