FEDERAL COURT OF AUSTRALIA

South Pacific Resort Hotels Pty Ltd v Trainor [2005] FCAFC 130

HUMAN RIGHTS – sexual harassment by fellow employee – whether employer vicariously liable – whether harassment was “in connection with the employment of the employee” as required by Sex Discrimination Act 1984 (Cth) s 106(1) – construction of s 106 of the Act

DAMAGES – assessment – predisposition to psychiatric injury

CONSTITUTIONAL LAW  – application of Sex Discrimination Act 1984 (Cth) to Norfolk Island

Sex Discrimination Act 1984 (Cth) ss 3, 7, 8, 9, 12, 28A, 28B(2), 106

Human Rights and Equal Opportunity Commission Act 1986 (Cth) ss 3, 46PO

Acts Interpretation Act 1901 (Cth) s 17

Norfolk Island Act 1979 (Cth) ss 5, 19(1)

Commonwealth Constitution s 51(xx)

Chief Constable of the Lincolnshire Police v Stubbs [1999] ICR 547; [1999] IRLR 81 approved

Commission for Railways (NSW) v Agalianos (1955) 92 CLR 390 cited

Joel v Morison (1834) 6 Car & P 502 cited

Jones v Tower Boot Co [1997] 2 All ER 406 approved

Leslie v Graham [2002] FCA 32 applied

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 cited

Robichaud v The Queen  (1987) 40 DLR (4^th) 577 approved, applied

Smith v Christchurch Press Co Ltd [2001] 1 NZLR 407 approved

Tame v New South Wales (2002) 211 CLR 317 distinguished

SOUTH PACIFIC RESORT HOTELS PTY LTD v DANETTE TRAINOR

Q 151 OF 2004

BLACK CJ, TAMBERLIN and KIEFEL JJ

15 JULY 2005

BRISBANE

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.  The appeal be dismissed.

2.  The cross-appeal be dismissed.

3.  The appellant pay the respondent’s costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

REASONS FOR JUDGMENT

BLACK CJ and TAMBERLIN J:

Introduction

1                     This appeal from a decision of a Federal Magistrate raises issues about the application of the Sex Discrimination Act 1984 (Cth) (‘SDA’) to the territory of Norfolk Island, the circumstances in which an employer is vicariously liable for acts of sexual harassment committed by its employee and the assessment of damages by way of compensation for loss and damage suffered because of sexual harassment.

2                     The respondent to this appeal, Ms Trainor, made an application to the Federal Magistrates Court for damages for loss and damage suffered by her as a consequence of being sexually harassed by a fellow employee of the appellant, South Pacific Resort Hotels Pty Ltd. Her application was made under s 46PO(4)(d) of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) (‘HREOC Act’) which provides that the Federal Court or the Federal Magistrates Court may, if satisfied that there has been unlawful discrimination, make an order requiring a respondent to pay damages by way of compensation for any loss or damage suffered because of the conduct of the respondent.  For the purposes of s 46PO ‘unlawful discrimination’ includes acts that are unlawful under Part II of the SDA and thus includes the sexual harassment of an employee by a fellow employee.  See: SDA s 28A (definition) and s 28B(2).

3                     The Federal Magistrate found that Ms Trainor had been sexually harassed on two occasions by a Mr Anderson, an employee of the appellant, and that the appellant was vicariously liable for his conduct.  The finding of vicarious liability was founded upon s 106 of the SDA, which applies the SDA to an employer with respect to certain acts done by an employee ‘in connection with the employment of the employee’.  His Honour awarded Ms Trainor $17,536.80 damages and costs.  He declined to make an order for an apology.

4                     The appellant appeals on essentially three grounds.  First, it contends that the SDA did not apply to the appellant’s business on Norfolk Island.  Secondly, it argues that the Federal Magistrate was in error in finding that the appellant was vicariously liable, it being contended that the evidence did not support a conclusion that the conduct in question was ‘in connection with the employment’.  Finally, it challenges the award of damages.

5                     The appellant did not contest that its employee had acted in a way that constituted sexual harassment and did not seek to maintain the position, adopted before the Federal Magistrate, that it had taken all reasonable steps to prevent its employee from doing acts of the kind complained of: see SDA s 106(2). 

6                     The respondent has cross-appealed against the award of damages, claiming that the award was inadequate. 

7                     The conduct found by the Federal Magistrate to have constituted sexual harassment occurred on two occasions, each of them at night and each in Ms Trainor’s room in staff accommodation provided by the appellant as part of its hotel complex on Norfolk Island.   The first incident occurred on 22 July 2000, beginning at about 3:00 am.  Ms Trainor was asleep in her room when Mr Anderson entered uninvited, thereby waking her, and began talking to her.  Ms Trainor’s evidence, which was accepted at least in substance by the Federal Magistrate, was that Mr Anderson remained in her room, uninvited and unwelcome, until about 3:45 am. During that time he engaged in unwelcome conduct described by the Federal Magistrate as ‘sexual advances or requests for sexual favours or conduct of a sexual nature’.

8                     Ms Trainor was harassed on a second occasion on 28 July 2000. This incident also occurred at night in the staff accommodation.  Ms Trainor, who had good reason to be apprehensive about Mr Anderson’s conduct, found him lying on her bed. The Federal Magistrate’s finding included the following:

‘He was uninvited and had been loud and aggressive. It was submitted that there was an inescapable inference, arising from the circumstances, that his presence had a sexual purpose, directed toward the applicant and that it was therefore conduct of a sexual nature in relation to her. No other inference can properly be drawn in relation to either of the incidents.’

Ms Trainor gave evidence, which we take the Federal Magistrate to have accepted, that she was extremely scared, upset and disconcerted.

9                     Mr Anderson was subsequently arrested by the police and removed from the premises. His employment with the appellant was terminated and he was removed from the Island.  Ms Trainor resigned from her employment soon afterwards and left Norfolk Island.

10                  Having found that Ms Trainor had been sexually harassed by a fellow employee and that the employer was vicariously liable, the Federal Magistrate awarded her $17,536.80 by way of damages, made up as follows:

• General damages: $5,000.00
• Medical treatment: $1,907.50
• Past loss of income: $5,000.00
• Interest in relation to general damages and loss of income, prior to hearing: $1,564.65
• Future economic loss: $2,500.00

Whether the Sex Discrimination Act applies generally to Norfolk Island

11                  Counsel for the appellant accepted that there were circumstances in which the SDA might apply to conduct on Norfolk Island but argued that no such circumstances were present in this case and that the Act had no general application to the Island.

12                  It was accepted that the relevant provisions of the Act would, for example, have applied in terms if the appellant were a trading corporation formed within the limits of the Commonwealth or a foreign corporation (see SDA s 9(11)).  It was pointed out, however, that since ‘the Commonwealth’ is defined by s 17 of the Acts Interpretation Act 1901 (Cth) in a way that does not include Norfolk Island (subject to any contrary intention), and the appellant was a Norfolk Island corporation and thus – so it was said – outside the concept of a foreign corporation, s 9(11) of the SDA could not assist the respondent.

13                  Counsel’s starting point for his general proposition was s 18(1) of the Norfolk Island Act 1979 (Cth) which provides:

‘An Act or a provision of an Act (whether passed before or after the date of commencement of this section) is not, except as otherwise provided by that Act or by any other Act, in force as such in the Territory, unless expressed to extend to the Territory.’

14                  It was then contended that the relevant provisions of the SDA are not ‘expressed to extend to the Territory’ and so must be read as not applying in a case such as the present.  This was said to be a consequence of the way in which s 9 of the SDA is worded. 

15                  The first four subsections of s 9 read as follows:

 ‘(1) In this section:

Australia includes the external Territories.

prescribed provisions of Division 3 of Part II means the provisions of Division 3 of Part II other than sections 28D and 28L.

prescribed provisions of Part II means the provisions of Divisions 1 and 2 of Part II other than sections 19, 26 and 27.

(2)    Subject to this section, this Act applies throughout Australia.

(3)    This Act has effect in relation to acts done within a Territory.

(4) The prescribed provisions of Part II, and the prescribed provisions of Division 3 of Part II, have effect as provided by subsection (3) of this section and the following provisions of this section and not otherwise.’

The ‘prescribed provisions of Division 3 of Part II’ include the provisions (ss 28A and 28B) that, in combination, make unlawful the sexual harassment of an employee by a fellow employee.

16                  The ‘following provisions’ of s 9 comprise sixteen subsections, evidently intended to ensure that the prescribed provisions have effect in relation to matters falling within the scope of the legislative powers of the Commonwealth.  Section 9(11) provides an example sufficient for present purposes.  With an eye to s 51(xx) of the Constitution, it provides:

‘(11) The prescribed provisions of Part II have effect in relation to discrimination by a foreign corporation, or a trading or financial corporation formed within the limits of the Commonwealth, or by a person in the course of the person’s duties or purported duties as an officer or employee of such a corporation.’

17                  The second reading speech for the Sex Discrimination Bill 1983 (Cth) confirms the policy behind these provisions.  The Hon Michael Young, the Special Minister of State, having explained the objects of the Bill, its background and its general area of operation, said:

‘The Bill is to apply throughout Australia and in this regard relies on all available and appropriate heads of Commonwealth constitutional power.  Thus, for example, the provisions of the Bill prohibiting discrimination will apply to the Commonwealth and all its instrumentalities, to discrimination by a foreign corporation, or a trading or financial corporation formed within the limits of the Commonwealth; to discrimination in the carrying on of the business of banking…’ (Hansard, House of Representatives, 28 February 1984, 67)

18                  The appellant nevertheless contended that although s 9(3) provides expressly that the SDA has effect in relation to acts done within a Territory, and although the expression ‘Territory’ includes the external Territories such as Norfolk Island, the necessary effect of s 9(4) – presumably read in the light of s 18(1) of the Norfolk Island Act – is that the operation of the SDA is limited in relation to conduct within a Territory by the provisions of ss 9(5) to 9(20) ‘and not otherwise’.  Thus, it was argued, whilst the SDA might have effect in relation to conduct on Norfolk Island, the reference in s 9(4) to the prescribed provisions having effect ‘as provided by subsection 3 of this section and the following provisions of this section’ meant that there was a cumulative requirement for the application of the Act in relation to a Territory.  That is to say, for the Act to have effect in relation to acts done within a Territory, it must also have effect as provided by the ‘following provisions’ of s 9.  Thus, if acts done within a Territory were outside the scope of ss 9(5) to 9(20), they were outside the scope of the SDA. 

19                  The Federal Magistrate rightly rejected this submission.  There is no reason to narrow the effect of the SDA in the manner suggested.  Section 9(3) is unqualified in its terms and it deals with the application of the Act generally.  Section 9(4), on the other hand, deals with the application only of the prescribed provisions of Part II and of the prescribed provisions of Division 3 of Part II. Other than subsections (7) and (8), which apply the prescribed provisions to the exercise of governmental powers by the Commonwealth and the Administration of a Territory (ss 7(a), 8(a)) and by statutory authorities of the Commonwealth and a Territory (ss 7(b), 8(b)), the ‘following provisions’ do not explicitly deal with the application of the SDA within a Territory. The fact that subsection (3) precedes those parts of s 9 that deal only with the ‘prescribed provisions’, and indeed precedes subsection (4) itself, demonstrates that subsection (4) is not the starting point for a consideration of the applicability of the ‘prescribed provisions’ in a Territory. Rather, subsection (4) operates structurally to separate the limitations on the applicability of the prescribed provisions throughout the remainder of the Commonwealth from the unqualified operation of the SDA, including the prescribed provisions, ‘in relation to acts done within a Territory’.

20                  An object of s 9(4), as revealed by the text and confirmed by the second reading speech is to extend the operation of the prescribed provisions of the Act throughout Australia to the extent that the legislative powers of the Commonwealth Parliament may allow.  Since the powers of the Parliament in relation to the Territories are relevantly plenary, it cannot have been intended that the prescribed provisions should have a very limited operation in relation to the Territories when the intention in relation to Australia generally was to give the provisions as wide an operation as possible.  The two ideas are simply inconsistent.  (There was no suggestion that any express or implied restrictions on Commonwealth legislative power deriving from other features of the Constitution were relevant here: see Newcrest Mining (WA) Ltd v Commonwealth (1997) 190 CLR 513; Capital Duplicators Pty Ltd v Australian Capital Territory (1992) 177 CLR 248).

21                  This conclusion is reinforced by the circumstance that s 12(1) of the SDAexplicitly provides that the Act ‘binds the Crown in right of the Commonwealth and of Norfolk Island’.  This provision has the effect of binding at least the Administrator, and probably also the Administration, of Norfolk Island: cf Norfolk Island Act, s 5(1), (2).  It would be counterintuitive, if not absurd, if the government of Norfolk Island were bound, but an Act of this nature did not have general effect on the Island. 

22                  The appellant also argued that on no view was s 106 of the SDA expressed to apply to the Territory of Norfolk Island at all, since it is not one of the prescribed provisions of Part II or of the prescribed provisions of Div 3 of Part II, and that it therefore fell entirely outside the limits described in s 9. As discussed already, however, s 9(3) provides that ‘[t]his Act’ has effect in relation to acts done in a Territory. It does not merely provide that ‘the prescribed provisions’ have effect in relation to acts done within a Territory. Plainly, s 106 is included in the provisions with which s 9(3) is concerned. The ‘following provisions’ of s 9 are, in that context, irrelevant.

23                  It follows that the first ground of appeal must be rejected. 

WHETHER THE EMPLOYER WAS VICARIOUSLY LIABLE

24                  We now turn to the appellant’s contention that even if the SDA applied to the conduct in issue, it was not vicariously liable for the unlawful acts of its employee, Mr Anderson. 

25                  Vicarious liability is provided for by s 106 of the Act, which is in the following terms:

(1)   Subject to subsection (2), where an employee or agent of a person does, in connection with the employment of the employee or with the duties of the agent as an agent:

(a)   an act that would, if it were done by the person, be unlawful under Division 1 or 2 of Part II (whether or not the act done by the employee or agent is unlawful under Division 1 or 2 of Part II); or

(b)   an act that is unlawful under Division 3 of Part II;

this Act applies in relation to that person as if that person had also done the act.

(2)   Subsection (1) does not apply in relation to an act of a kind referred to in paragraph (1)(a) or (b) done by an employee or agent of a person if it is established that the person took all reasonable steps to prevent the employee or agent from doing acts of the kind referred to in that paragraph.

26                  As noted, the appellant challenged the finding of the Federal Magistrate that Anderson’s conduct was ‘in connection with [his] employment’ and so challenged the conclusion that, by virtue of s 106(1) of the SDA, the Act applied in relation to the appellant ‘as if that person had also done the act’.

27                  The evidence before the Federal Magistrate included a staff handbook, which set out what were described as ‘company polices’.  These policies concerned, amongst other matters, the staff accommodation, known as ‘Staffies’, provided by the appellant in a building forming part of the hotel complex.  The building in which the staff accommodation was provided contained some twelve separate rooms located on either side of a common corridor.  Shower and toilet facilities were also provided and the evidence suggests that there was a common room as well.  Mr Anderson’s room was almost opposite Ms Trainor’s, on the common corridor. 

28                  Staff were not required to stay in the staff accommodation, it being a matter for them to choose whether they stayed there or made their own arrangements for accommodation elsewhere on the Island.  For staff who chose to stay at Staffies a charge was deducted from their pay.

29                  The section of the handbook about Staffies contains a prohibition on visitors in these terms:

‘NO Visitors are permitted at any time in staffies.  This may seem a little harsh but it prevents any complications that may arise if visitors were permitted into the premises, eg who would feel comfortable accusing a workmate’s girlfriend/boyfriend of stealing money!’ (Sic.)

30                  The Federal Magistrate found that the degree of control exercised by the employer in relation to the staff accommodation and to staff behaviour on its property was a key part of the employment relationship.  He placed particular emphasis upon the fact that failure to comply with these requirements had in fact led to the instant dismissal of Mr Anderson.  He said that he was satisfied that, in all the circumstances, the two incidents were acts of sexual harassment and that they were committed by Mr Anderson ‘in connection with his employment’ such that s 106(1) of the STA applied to the employer, which was liable for Anderson’s conduct.

31                  The appellant’s primary submission on the appeal was that, other than the undoubted fact that the respondent and Mr Anderson were fellow employees, there was no evidence that it was by reason of their employment that they came into contact.  The only connection demonstrated in the evidence, it was said, was that the incident occurred on the appellant’s land in a building in which some – but not all – of the staff resided.  Moreover, the acts of harassment occurred whilst both were off-duty and whilst they were not performing any function related to their employment.  It was also said that the incident was quite different in character from an incident that might occur in a staff canteen during working hours.  In contrast, the incidents here occurred whilst both people concerned were off-duty.

32                  The counsel for the appellant also challenged the emphasis that the Federal Magistrate had placed upon the appellant’s control over its staff quarters, arguing that control was not determinative of whether particular conduct had been ‘in connection with’ employment.  Rather than look to control, counsel said, the focus should have been upon the act in question to determine whether there was a sufficient connection with employment.

33                  Counsel for the respondent took issue with all these points, arguing that the situation in the staff accommodation was analogous to that in a staff lunchroom.  The central connecting fact was that the respondent and Mr Anderson were co-workers who met during their employment and the incidents happened on the appellant’s property on which they both resided.

34                  The operation of s 106 of the SDA was considered briefly by Branson J in Leslie v Graham [2002] FCA 32, to which both parties referred, but has otherwise received little judicial consideration.

35                  In Leslie v Graham sexual harassment was found to have occurred in the early hours of the morning in a serviced apartment that the complainant and another employee were sharing whilst attending a work-related conference. In considering whether the conduct constituted sexual harassment of one employee by a fellow employee, Branson J noted that when the harassment occurred the employment relationship of the two people involved was a continuing one, that they were sharing the apartment in the course of their common employment and that the apartment was accommodation provided to them by their employer for the purpose of attending a conference: see at [71]. Her Honour observed that it could not be suggested that their common employment was unrelated or merely incidental, to the conduct in question and referred to Smith v Christchurch Press Co Ltd  [2001] 1 NZLR 407.

36                  Her Honour went on to conclude, at [72], that the employer was vicariously liable, pursuant to s 106(1) of the SDA, for the acts of the employee who engaged in the conduct.  Branson J did not give further reasons for this conclusion, which we take to have been based on the observations she had earlier made on the question whether the harassment was to be characterised, for the purposes of s 28B(2) of the SDA, as harassment by an employee of a fellow employee. 

37                  An attempt was made by the appellant to distinguish Leslie v Graham on its facts and on the footing, as we understood the submission, that the complainant in that case and her fellow employee were in the apartment so that they could attend a specific work-related conference and were not living in it as their regular habitation. Because the weekend conference was work-related there was a sufficient connection between the employment and the acts of harassment to found vicarious liability.

38                  The attempt to distinguish Leslie v Graham must fail. It is true that in this area of the law each case is likely to turn very much on its own facts, but within a framework of consistent principle developed over time by the cases.

39                  As in Leslie v Graham,the conduct here occurred in accommodation occupied (albeit in separate rooms) by the complaint and her fellow employee because of, and for the purposes of, their common employment. The accommodation provided for the weekend conference in Leslie v Graham equates with the accommodation provided for employees who might need it whilst working on a remote island. As in Leslie v Graham, it could not be said here that the common employment was unrelated or merely incidental to the sexual harassment of one by the other.

40                  In the present case the connection between the employment and the acts in question was even closer since the prohibition on staff having visitors in the staff accommodation meant that, absent any special arrangements by the employer, only staff were permitted there.  It was only by virtue of their being staff that Mr Anderson and Ms Trainor were in the Staffies premises where the acts of sexual harassment occurred.

41                  The expression ‘in connection with’ in its context in s 106(1) of the SDA is a broad one of practical application and, as in Leslie v Graham, the facts here point readily to the conclusion that Mr Anderson’s conduct in the staff accommodation was ‘in connection with’ his employment within the meaning of s 106(1) of the SDA. The Federal Magistrate was correct in coming to the conclusion that he did.

42                  We would add that the expression chosen by the Parliament to impose vicarious liability for sexual harassment would seem, on its face, to be somewhat wider than the familiar expression ‘in the course of’ used with reference to employment in cases about vicarious liability at common law or in the distinctive context of workers compensation statutes.  Nevertheless cases decided in these other fields can have, at best, only limited value in the quite different context of the SDA.

43                  As noted earlier, the appellant did not seek to challenge the Federal Magistrate’s rejection of a defence under s 106(2) of the SDA.

Damages

44                  The Federal Magistrate accepted that Ms Trainor had a pre-existing condition, which the psychiatrist called on her behalf assessed as involving a significant psychological vulnerability.  The psychiatrist agreed with a proposition put to him by counsel for South Pacific Hotels that Ms Trainor could not properly be described as a person of ‘normal fortitude’.   From this unfirm foundation South Pacific argued at first instance that since Ms Trainor was not a person of ‘normal fortitude’ she had not made out any entitlement to damages because, as a threshold matter, the events relied upon must have been such as would have affected a person of ‘normal fortitude’. Support was said to be found in the decision of the High Court in Tame v New South Wales (2002) 211 CLR 317. A submission to the same or similar effect was made before this Court on the appeal.  It was said to be reinforced by the circumstance that Ms Trainor’s vulnerability was not disclosed to the employer at the time she was employed so that it would be quite unfair, and contrary to the policy of the SDA, to impose liability for the unforeseen consequences of Anderson’s acts.

45                  It was also argued that the notion of what a reasonable person would have anticipated, which forms an element of the statutory definition of sexual harassment in s 28A of the SDA, carries through into the assessment of damages.  It was said that if the overall reaction of a victim could not have been anticipated by a reasonable person any damage suffered by such a person would be altogether outside the contemplation of the statute and thus not recoverable. (We pause to note that such a characterisation of Ms Trainor’s reaction was not established, and could not have been established merely by the psychiatrist’s conclusion that Ms Trainor was not a person of reasonable fortitude.)

46                  These submissions must be rejected. They fail to take account of the sharp distinction that the legislative scheme draws between, on the one hand, the definition of sexual harassment in the SDA and the operation of that Act in making sexual harassment unlawful in certain circumstances and, on the other hand, the power conferred by the HREOC Act, to make an order for damages by way of compensation if the court is satisfied that there has been unlawful discrimination. (Sexual harassment is brought within the scope of unlawful discrimination for these purposes by the definition of ‘unlawful discrimination’ in s 3 of the HREOC Act.)

47                  Section 28A of the SDA defines ‘sexual harassment’.  Subsection (1) provides:

For the purposes of this Division, a person sexually harasses another person (the person harassed) if:

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

engages in other unwelcome conduct of a sexual nature in relation to the person harassed; or

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

48                  Damages for sexual harassment and for other forms of unlawful discrimination fall to be determined by reference to s 46PO(4)(d) of the HREOC Act, which provides, relevantly:

(4) If the court concerned is satisfied that there has been unlawful discrimination by any respondent, the court may make such orders (including a declaration of right) as it thinks fit, including any of the following orders or any order to a similar effect:

…

(d) an order requiring a respondent to pay to an applicant damages by way of compensation for any loss or damage suffered because of the conduct of the respondent;

49                  Moreover, the circumstance that the standard of a reasonable person is an element in the definition of sexual harassment points strongly against any unstated limitation on the entitlement to damages under the HREOC Act.

50                  Tame v New South Wales provides no support for the appellant’s argument.  That case was about the existence or otherwise of a duty of care to avoid psychiatric injury.  It was in that context and in that context only that the members of the High Court considered the place of ‘normal fortitude’ in the law of negligence.  McHugh J, who was in the minority on that question, emphasised the distinction between the issue of normal fortitude and the issue of damages. He said  (at 359, [117]):

“Counsel for Mrs Tame also submitted that injecting the normal fortitude test into the question of foreseeability conflicts with the accepted principle in negligence of talem qualem — the "egg-shell skull" rule. That submission cannot be accepted. The normal fortitude test is an issue going to liability; the egg-shell skull rule goes to quantification of damages once duty, breach and some damage are established. In White v Chief Constable of South Yorkshire Police, Lord Goff of Chieveley pointed out that the egg-shell skull rule "is a principle of compensation, not of liability". It operates in the field of nervous shock in the same way that it operates in other areas of the law. Once the plaintiff establishes that a person of normal fortitude would have suffered psychiatric illness as the result of the defendant's action, the defendant must take the plaintiff as he or she is. The defendant's liability extends to all the psychiatric damage suffered by the plaintiff even though its extent is greater than that which would be sustained by a person of normal fortitude.” (Footnotes omitted.)

51                  Care should be taken to avoid the introduction of the notion of ‘normal fortitude’ into discrimination law and particularly into the law relating to sexual harassment.  It is a potentially dangerous irrelevancy in this context, readily capable of misuse in support of the false idea – perhaps hinted at rather than stated bluntly – that some degree of sexual harassment (or some other form of unlawful discrimination) would and should be accepted by persons of normal fortitude.  With respect to sexual harassment the true and only standard is that prescribed by the statutory definition. 

52                  The submission that Ms Trainor was in some way disqualified from an award of damages because she did not disclose her particular vulnerability to her employer seems to have been based on no more than a general notion of unfairness.  In any case, there was no evidence that Ms Trainor knew that she suffered from a psychiatric condition that should have been disclosed to the employer. Nor, indeed, was there any evidence to suggest that she was (or thought she was) unable to cope with normal working conditions – conditions that she was entitled to expect would not involve acts of sexual harassment by another employee in the accommodation provided for her by the employer.

53                  In its written submissions the appellant criticised the Magistrate’s award of damages on various factual grounds including that the evidence showed that there was, at most, only a temporary aggravation of a pre-existing condition. The Federal Magistrate’s reasons show that he carefully and properly considered these and other matters bearing upon the quantum of damages. 

54                  The appeal against the award of damages must, for these reasons, fail.

The cross appeal

55                  The respondent cross-appealed against the award of damages, contending that the award was inadequate and ‘against the weight of the evidence’.  Although the award of $5000 for general damages could be seen as modest in the circumstances, it was not outside the permissible range and we see no error in principle in the way in which the Federal Magistrate approached his task – a difficult one in the circumstances. 

The outcome

56                  It follows that the appeal and the cross-appeal should be dismissed. The respondent should have the costs of the appeal. There should be no order as to the costs of the cross- appeal.  The argument on the cross appeal was short. Much of the ground had already been covered on the appeal, most of which was concerned with the other aspects of the case anyway. 

Associate:

Dated:              15 July 2005

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

REASONS FOR JUDGMENT

KIEFEL J:

57                  I have had the advantage of reading the reasons of the Chief Justice and Tamberlin J in draft.  I agree with them and the orders proposed.  I wish only to add some observations concerning the application of s 106 of the Sex Discrimination Act 1984 (Cth) (‘the SDA’).

58                  The conduct of the appellant’s employee Mr Anderson, of which the respondent complained, clearly constituted sexual harassment.  The question raised by the appellant is whether it could be said to be conduct done ‘in connection with the employment’ of Mr Anderson, as s 106(1) requires.  Essentially it is argued that when one considers the nature of the conduct, the place at which it occurred and, in the case of the first incident, the time at which it occurred, it will be seen that it does not have a sufficiently strong connexion with Mr Anderson’s employment.  I take this to refer to his duties as an employee and also to aspects of employment about which the appellant would ordinarily be concerned as an employer.

59                  Section 106 renders employers and principals liable for the unlawful conduct of their employees or agents.  Subsection (1) of the section provides:

‘(1)      Subject to subsection (2), where an employee or agent of a person does, in connection with the employment of the employee or with the duties of the agent as an agent:

(a)       an act that would, if it were done by the person, be unlawful under Division 1 or 2 of Part II (whether or not the act done by the employee or agent is unlawful under Division 1 or 2 of Part II); or

(b)       an act that is unlawful under Division 3 of Part II;

            this Act applies in relation to that person as if that person had also done the act.’

60                  Mr Anderson’s conduct was rendered unlawful by s 28B(2) of Part II, Division 3 which provides that it is unlawful for an employee to sexually harass a fellow employee.  Subsection (6) contains a limitation where there is sexual harassment of a ‘workplace participant’ which is widely defined.  The conduct is to occur at a ‘workplace’, which is also defined.  It is not necessary to further consider the subsection.  The appellant does not dispute the application of s 28B(2) and it contains no such limitation.

61                  Subsection (2) of s 106 limits the application of subs 106(1) by providing employers with a defence.  Liability under the SDA, which might be described as a type of vicarious liability, may be avoided if the employer or principal can show that they took ‘all reasonable steps’ to prevent the sexual harassment or discrimination.  It is in these terms:

‘(2)      Subsection (1) does not apply in relation to an act of a kind referred to in paragraph (1) (a) or (b) done by an employee or agent of a person if it is established that the person took all reasonable steps to prevent the employee or agent from doing acts of the kind referred to in that paragraph.’

62                  The context, the general purpose and the policy of a statutory provision are amongst the best guides to its meaning:  Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381 [69], referring to Commission for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397.  The objects of the SDA are stated by s 3 to be as follows:

‘(a)      to give effect to certain provisions of the Convention on the Elimination of All Forms of Discrimination Against Women; and

(b)       to eliminate, so far as possible, discrimination against persons on the ground of sex, marital status, pregnancy or potential pregnancy in the areas of work, accommodation, education, the provisions of goods, facilities and services, the disposal of land, the activities of clubs and the administration of Commonwealth laws and programs; and

(ba)     to eliminate, so far as possible, discrimination involving dismissal of employees on the ground of family responsibilities; and

(c)        to eliminate, so far as possible, discrimination involving sexual harassment in the workplace, in educational institutions and in other areas of public activity; and

(d)       to promote recognition and acceptance within the community of the principle of the equality of men and women.’

(Emphasis added)

63                  The need for the practice of sexual harassment to be eliminated in the workplace and for employers to take steps towards that end were referred to in the second reading speech addressing the amendments to the Sex Discrimination Bill 1983.  In relation to clause 106, which became s 106, Senator Ryan said (Senate, Parliamentary Debates, vol S101, 1983, p 2914):

‘Clause 106 deals with the vicarious liability of employers and principals.  The Bill had already provided for employer and principal liability where the employee or agent does an act that would be discrimination on the ground of sex, marital status or pregnancy if done by employer or principal.  The new provision makes it clear that this is so whether or not it would be unlawful for the employee or agent to do that act.  Clause 106 also covers employer and principal liability for acts of employees and agents that constitute sexual harassment – these must be acts in connection with employment or duties as an agent.  The practice of sexual harassment can be eliminated only when employers take positive steps to eliminate it from the workplace and make clear to their staff that it cannot be tolerated.  Clause 106 makes it clear that an employer or principal who has taken reasonable steps to prevent employees and agents from engaging in any form of discrimination will not be liable.’

(Emphasis added). 

64                  These aims require a wide operation to be given to s 106(1) and to the words ‘in connection with the employment of the employee’, as the Chief Justice has observed.  In my view the appellant’s approach would unduly restrict the operation of the SDA and in a way which could not have been intended.

65                  The appellant’s argument that there should be a sufficiently strong nexus between the conduct and the employment for it to be liable, seeks to import the doctrine of vicarious liability in tort into the SDA.  The question which arises in tort is whether the employee, for whose actions it is sought to make the employer liable, was acting in the course of their employment when they committed the tort:  see generallyF Trindade & P Cane The Law of Torts in Australia, 3^rd edn, Oxford University Press, Oxford, 1999, p 735. As the authors there point, it is sometimes said that an employee was on ‘a frolic of his own’ to describe actions outside the course of employment:  also see Joel v Morison (1834) 6 Car & P 502, 503.  Vicarious liability in this context requires a much stronger connexion than an Act such as the SDA would require.

66                  A similar question arose in Robichaud v The Queen  (1987) 40 DLR (4^th) 577.  The Supreme Court of Canada was there dealing with s 7 of the Canadian Human Rights Act 1976-77 (Can), c 33, which provided:

‘7.        It is a discriminatory practice, directly or indirectly,

(a)        to refuse to employ or continue to employ any individual, or

(b)        in the course of employment, to differentiate adversely in relation to an employee

on a prohibited ground of discrimination.’

67                  There the words under consideration (‘in the course of employment’) might be thought to suggest a closer analogy to tort law than those of the SDA (‘in connection with the employment’), but I do not think anything turns upon the difference in language.  The provisions are directed to the same purposes and should be construed accordingly.  There seems no reason to regard them as stating a different requirement in relation to the conduct.

68                  La Forest J pointed out in Robichaud that any analogy of provisions such as s 7 with tort law would seem to be inappropriate for the reason that legislation of this type is directed to removing certain anti-social conditions (at p 582).  I would respectfully agree and add that this is so regardless of the fact that a victim of sexual harassment may be compensated.  Moreover, as his Honour further observed, a limitation such as that recognised in tort cannot meaningfully be applied to a statutory scheme with that purpose.  In tort law, his Honour explained:  ‘what is aimed at are activities somehow done within the confines of the job a person is engaged to do, not something, like sexual harassment, that is not really referable to what he or she was employed to do’.  His Honour concluded (at p 584):

‘Hence, I would conclude that the statute contemplates the imposition of liability on employers for all acts of their employees “in the course of employment”, interpreted in the purposive fashion outlined earlier as being in some way related or associated with the employment. It is unnecessary to attach any label to this type of liability; it is purely statutory. However, it serves a purpose somewhat similar to that of vicarious liability in tort, by placing responsibility for an organization on those who control it and are in a position to take effective remedial action to remove undesirable conditions.’

69                  In Jones v Tower Boot Co [1997] 2 All ER 406 the Court of Appeal was concerned with the vicarious liability of an employer for acts of an employee that were done ‘in the course of employment’ in connexion with the Race Relations Act 1976 (UK) s 32(1).  The need for a wide interpretation to be given to this and the corresponding provision in the Sex Discrimination Act 1975 (UK) was recognised by Waite LJ (at p 413-4).  His Lordship also observed that to construe the words in accordance with the common law doctrine of tortious liability of an employer would mean that the more heinous the act of discrimination, the less likely it would be that the employee would be liable (at p 415).

70                  In my view no narrow approach to the operation of s 106(1) is warranted.  It is consonant with its purpose to read the words ‘in connection with the employment of the employee’ as requiring that the unlawful acts in question be in some way related to or associated with the employment.  Once this is established it is for the employer to show that all reasonable steps were taken to prevent the conduct occurring, if they are to escape liability under s 106(2).  In this way the aim of the Act, to eliminate sexual harassment in the workplace, might be achieved.  This will require that employers take steps to ensure that it does not occur.  The Act encourages that approach.  Whilst I am not suggesting that the employer takes on proof about the steps taken at the outset, the operation of s 106(1) is wide and an employer must be vigilant of the possibility of such practices in the workplace.

71                  The question which remains is whether the conduct here could be said to have the necessary connection with Mr Anderson’s employment with the appellant. 

72                  Leslie v Graham [2002] FCA 32 was a case similar to the present.  The conduct in question occurred in an apartment made available to two employees while they attended a work-related conference.  The conclusion of Branson J, that the employer was vicariously liable, is in my respectful view clearly correct when regard is had to s 106(1).  The situation in which they were placed, which provided the opportunity for the conduct, arose in connexion with work-related activities.

73                  In relation to conduct which occurs in a location away from the actual workplace, two further cases are instructive of the approach which should be taken.  In Smith v The Christchurch Press Company Limited [2001] 1 NZLR 407, the conduct occurred at lunchtime away from the workplace.  The Court of Appeal held that the sexual harassment was ‘in the course of employment’ because it was between two present employees, arose out of the work situation and had the potential to adversely affect the working environment.  The latter observation is of particular interest.  It would seem logical to say that if it could be seen to have this effect, the necessary connection was present.  Further, in Chief Constable of the Lincolnshire Police v Stubbs [1999] ICR 547; [1999] IRLR 81 the Employment Appeal Tribunal held that a police officer was acting in the course of his employment, within the meaning of s 41(1) of the Sex Discrimination Act 1975 (UK), when he subjected a colleague to sexual harassment although the incidents occurred at social events away from the police station.  They were regarded as extensions of the workplace.  Morrison J(P) observed that it would have been different if the acts had occurred during a chance meeting between the two police officers at a supermarket, but these were social gatherings of work colleagues.

74                  Each case will turn on its facts and it may be that it is difficult to draw the line in some cases.  This is not such a case.  The conduct in question occurred between two employees in accommodation provided by the employer as an incident of employment.  The employees’ rooms were in close proximity to each other and they were accessible.  These conditions in part created an opportunity in which the conduct could occur.  It does not assist the appellant that the first occasion occurred in the early hours of the morning.  The conditions created in connection with the employment allowed for it to occur at any time.  The second incident additionally followed upon a staff function, at which Mr Anderson consumed alcohol.  The conduct in these circumstances on each occasion occurred in connection with Mr Anderson’s employment.

Associate:

Dated:              15 July 2005