FEDERAL COURT OF AUSTRALIA

Employment Services Australia Pty Ltd v Poniatowska [2010] FCAFC 92

THE COURT ORDERS THAT:

1.                  The appeal be dismissed.

2.                  The cross-appeal be dismissed.

3.                  The appellant pay 90% of the first respondent’s costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

DOWSETT J:

1                     I have read the reasons prepared by Stone and Bennett JJ and save in one respect, am in agreement with them.  I gratefully accept their outline of the facts of the case.  I acknowledge that the primary Judge’s reasons are generally carefully reasoned and insightful, but again, I disagree with his reasoning in one respect.

2                     The area in which I disagree is the line of reasoning by which the learned primary Judge concluded that the conduct by the appellant (“Employment Services”) leading up to, and including the respondent’s dismissal from her employment constituted discrimination on the ground of her sex.  His Honour’s reasoning appears at [312] to [314] which paragraphs are set out in the joint reasons.  Fairly clearly, his Honour found that the respondent’s dismissal was “because she was a female who would not tolerate sexual harassment and the robust work environment”.  His Honour then concluded that this was different from the way in which Employment Services would have treated a male person.  This conclusion is said to be “manifestly evident in the way Mr Flynn and Mr Lotito were treated in relation to their conduct towards Ms Poniatowska”. 

3                     Employment Services has always asserted that at least part of Mr Flynn’s conduct was not associated with his employment.  To that extent his conduct was not, from its point of view, in any sense analogous to that of the respondent.  However it seems to me that there is a more fundamental defect in his Honour’s approach.  It is, in my view, not possible to infer anything about the probable treatment of a male person who complained about sexual harassment (presumably by a female) from the way in which Employment Services dealt with male persons against whom complaints had been made of such harassment.

4                     His Honour’s approach implicitly assumes that Employment Services found the respondent’s conduct disruptive of established relationships and attitudes in the workplace and therefore of its operation.  The conduct of a man in complaining about sexual harassment by a woman would be equally disruptive of established relationships and attitudes.  There is no reason to believe that he, or his complaints would have been treated differently from the way in which the respondent and her complaints were treated.  In my view the necessary inference is simply not available, either by reference to the way in which Employment Services treated Mr Flynn and Mr Lotito or otherwise from the evidence. 

5                     That view would necessarily lead to an order that the appeal be allowed in so far as concerns the existing judgment.  The matter would have to be reconsidered, having regard to the alternative causes of action pleaded by the respondent.  However, as I am in the minority, it is not necessary that I consider those matters.

Associate:

Dated:         27 July 2010

REASONS FOR JUDGMENT

stone and bennett jj:

6                     The appellant, Employment Services Australia Pty Limited (ESA), terminated the employment of the first respondent Ms Poniatowska in 2006.  The primary Judge found that ESA had contravened s 14(2) of the Sex Discrimination Act 1984 (Cth) (the SD Act) and s 46PO of the Human Rights and Equal Opportunity Commission Act 1986 (Cth) (the HREOC Act) by reason of the events leading up to and surrounding the termination of Ms Poniatowska.

7                     The second respondent, Mr Lotito, was at all material times an employee of ESA.  He was a building consultant who was the subject of some allegations made by Ms Poniatowska which will be detailed below.

ms poniatowska’s employment with ESA

8                     Ms Poniatowska worked for ESA from 30 January 2005 to 21 February 2006, including a probationary period of six months, which expired on 30 July 2005.  She was employed as a building consultant, engaged in selling house and land packages, and house packages, to members of the public on behalf of Hickinbotham Homes Pty Ltd (Homes).  She obtained employment with ESA in response to an advertisement, after being interviewed by the managing director of ESA and Homes, Mr Michael Hickinbotham (Mr Hickinbotham) and by Ms Roz Sharrad, who held the position of Team Leader in Homes.

9                     Both ESA and Homes are members of a family group of companies called the Hickinbotham Group, but the relevant employer of Ms Poniatowska was only ESA.  The parties agreed at first instance that any orders to be made against a corporate respondent should be made against ESA only.  Although Homes was a party to the proceedings at first instance, it is not a party to the present appeal.  The primary Judge seems to have used ESA & Homes interchangeably in his reasons.  It is apparent that, relevantly, the actions were the actions of ESA and of Mr Hickinbotham on its behalf.  In referring to the primary Judge’s reasons, we will adopt his Honour’s terminology.

10                  Ms Poniatowska’s employment with ESA was terminated on 21 February 2006, after she had been given formal warning notices.  The primary Judge observed that her termination was, ostensibly, for unsatisfactory performance.  The following events occurred prior to the termination of employment: 

·                    Ms Poniatowska was given a written warning by the Contracts Manager, Mr Renato Daminato by letter dated 18 November 2005 about the preparation and presentation of her files (the first warning letter). 

·                    On 13 December 2005, she was given a further warning by letter under the hand of Mr Hickinbotham, concerning her acceptance of a deposit from a client for a block of land against instructions not to proceed with that sale, and her incorrect assurances to the client (the second warning letter). 

·                    A further warning in writing was given to Ms Poniatowska on 20 December 2005, again under the hand of Mr Hickinbotham, concerning her acceptance of a deposit for a further block when she should not have done so (the third warning letter). 

·                    In early January 2006, she endeavoured to speak to Mr Hickinbotham concerning those warnings, as she regarded them as unfair, but the warnings were not withdrawn. 

·                    On 10 February 2006, she was given a further letter from Mr Hickinbotham notifying her of her immediate suspension (the suspension letter).  The letter referred to the first and second warning letters, to ‘further serious errors’ in her documentation and file preparation and presentation and to a further complaint from a client, of which no detail was specified in the letter.  The suspension letter notified her that an investigation was to be undertaken into that complaint and proposed a meeting on 15 February 2006 to ‘put the allegations to [her] and obtain [her] response’.

·                    That meeting subsequently took place on 21 February 2006, when Ms Poniatowska’s employment was terminated orally (the termination meeting).  The termination was subsequently confirmed by a letter from Mr Hickinbotham of 23 February 2006 (the termination letter). 

the proceedings

11                  On 20 August 2006, Ms Poniatowska made a complaint to the Human Rights and Equal Opportunity Commission (HREOC) alleging that she had been the victim of sexual discrimination, racial discrimination and sexual harassment during her employment with ESA.  Upon her complaint being terminated for having no reasonable prospect of being settled by conciliation, she instituted proceedings in this Court pursuant to s 46PO(1) of the HREOC Act, alleging unlawful discrimination on the part of ESA and a number of its employees.  The respondents in those proceedings were Mr Alan Hickinbotham, Mr Michael Hickinbotham, Mr Mark Flynn, Ms Sharrad, Mr Lotito, Homes and ESA.

The allegations made at first instance

12                  Ms Poniatowska alleged that she was subject to inappropriate conduct on a number of occasions during the course of her employment with ESA.  The relevant details of those allegations and the primary Judge’s findings relating to them will be considered below.  Ms Poniatowska alleged that no satisfactory response or investigation was carried out when she reported the offensive conduct to Ms Sharrad and to Mr Hickinbotham, and that she was just “left hanging”.  There was a significant contest as to how Ms Poniatowska’s complaints were received and addressed by the Hickinbotham Group, particularly through Ms Sharrad and Mr Hickinbotham.  Ms Poniatowska also alleged that, as a result of the inappropriate conduct and how it was dealt with by ESA, she came to be isolated within the office, was treated less favourably than other building consultants and had her clients transferred to other consultants without justification.  She said that over the latter months of 2005, her work performance deteriorated due to the way in which she had been treated in relation to her complaints and the change of attitude towards her by other employees.

13                  Significantly, Ms Poniatowska alleged that ESA, particularly through Mr Hickinbotham and Ms Sharrad, set on a course of action leading to her termination, by fabricating, or taking advantage of (in a way it would not otherwise have taken advantage of), deficiencies in her work performance.  She complained that there was no foundation or proper foundation for the warning letters.  She alleged that her termination was a consequence of the inappropriate conduct of which she complained, and therefore her employer should be responsible for it and for the consequences.

The causes of action

14                  As the primary Judge explained, while the factual allegations presented a series of complex issues, the causes of action were ultimately confined to claims of unlawful discrimination contrary to the HREOC Act and, more particularly, to contraventions of ss 14, 28B and 94 of the SD Act and for a breach of trust and confidence said to be implied in her contract of employment with ESA.  His Honour noted that the final submissions on behalf of Ms Poniatowska did not specifically rely upon s 94 of the SD Act and his Honour did not consider that provision further (at [94]).

the decision of the primary Judge

15                  At first instance, most of the factual allegations made by Ms Poniatowska were vigorously disputed by ESA and the other respondents.  The primary Judge made detailed factual findings before proceeding to consider the legal consequences.  In this appeal, ESA challenges a number of factual findings made by the primary Judge on the basis that the findings were not supported by the evidence and involved ‘the creation of an entirely new case with which the losing party had no testimonial or other evidentiary opportunity to deal’(Suvaal v Cessnock City Council (2003) 200 ALR 1 at [36] per Gleeson CJ and Heydon J).  Ms Poniatowska submits that ESA is seeking to challenge the inferences which the primary Judge drew from established primary facts without challenging his Honour’s findings of those primary facts.  It is therefore necessary to set out the relevant factual findings made by his Honour.

Relevant findings

16                  The factual findings made by the primary Judge were affected by his Honour’s view of the reliability of the various witnesses and from that, the reliance his Honour placed on their evidence.  His Honour was careful to explain the reasons for that view in each case and the extent to which these conclusions affected his assessment of the evidence.

The work systems and the work environment

17                  The primary Judge found that the system for the training of newly appointed building consultants was somewhat haphazard.  Ms Sharrad, as the Team Leader, was generally responsible for their training.  Her practice was to assign a new building consultant to one with some experience, for training purposes.  There was a regular Monday morning meeting of all building consultants at the head office of ESA when each was interviewed separately by Ms Sharrad to address his or her progress.  The primary Judge found that the main focus of those meetings was to discuss sales progress rather than to discuss or give instructions about more technical matters such as file preparation and presentation. 

18                  The Monday morning meetings were also the occasion when building consultants could work individually on files, discuss queries with others, seek advice from their peers and, generally, discuss matters.  The primary Judge found that the meetings took place in ‘a robust environment’. His Honour explained that to mean that not infrequently, the language was coarse, sometimes vulgar and sometimes sexually explicit.  His Honour found that Ms Sharrad was amongst those who participated in that style of conversation and that there was nothing to indicate that that quality of communication was disapproved of, or that (apart from Ms Poniatowska) it caused discomfort to building consultants.  It was in the context of that general work environment, including not infrequent sexually explicit language and references, that his Honour considered Ms Poniatowska’s allegations regarding the inappropriate conduct to which she was subject and the way in which her complaints about such conduct were handled by Ms Sharrad and Homes.

19                  It was common ground that the Hickinbotham Group had no formal policy for dealing with complaints of sexual harassment or sexual discrimination.  The primary Judge found that there was no evidence of any informal systems or processes in place for addressing such matters.

20                  The primary Judge also found that there was no system for the routine and formal assessment of the work of building consultants (at [87]).  His Honour noted that there was no documentary evidence adduced by ESA to the contrary and inferred that such records were not maintained.  His Honour noted that there was no evidence of any record of any consideration of the quality of Ms Poniatowska’s work leading up to the time when her probation period expired.  His Honour accepted that Ms Sharrad and Mr Daminatomay have discussed their concerns about Ms Poniatowska’s file preparation and presentation with her on a number of occasions during 2005.  However, his Honour found that they were not in any sense communicating dissatisfaction with her work standards but that concerns were expressed to encourage her to do better with her file preparation and presentation (at [88], [196] and [212]).  His Honour considered that, had they been of concern, at least some internal record of them, or of some of them, would have been maintained.  His Honour also did not accept that Mr Hickinbotham reproved Ms Poniatowska for her file preparation and presentation, either formally or informally, before the first warning letter (at [94] and [212]).

21                  Mr Daminato was responsible for reviewing and approving all building contracts submitted by sales consultants.  Mr Daminato caused the written requisitions to be entered on a general computer record.  The printouts of the requisition slips applicable to Ms Poniatowska’s files were in evidence but his Honour noted that Homes did not discover the requisition slips (or the computer records relating to them) of any other building consultants (at [90]).  The primary Judge considered it significant that, despite the information available to Homes, there was no attempt to compare in any qualitative way the extent of the requisitions generated on Ms Poniatowska’s files with those of other new sales consultants, nor any attempt to make any structured comparison of the extent of recurrent flaws in Ms Poniatowska’s file management with that of other newer sales consultants (at [69]).

22                  The primary Judge considered that the absence of records of the routine and formal assessment of the work of its building consultants, including Ms Poniatowska, was of some significance in assessing the reasons for the first warning letter and the subsequent communications leading up to Ms Poniatowska’s termination (at [92]).

23                  The primary Judge did not accept that Ms Poniatowska was uniquely inadequate among building consultants in her file preparation and presentation or in omitting the same documents repeatedly from a file or in making the same errors repeatedly in relation to a file.  His Honour did not accept Ms Sharrad and Mr Daminato’s evidence to the contrary.  His Honour referred to evidence that showed that all, or nearly all, contract proposals submitted to Mr Daminato routinely resulted in requisitions, and that building consultants not uncommonly submitted incomplete files or inadequately priced proposals (at [93]–[94]).

The May 2005 allegations

24                  The primary facts surrounding the May 2005 allegations were not in dispute.  Mr Flynn was employed as a building consultant by Homes and met with Ms Poniatowska, together with other building consultants, at the Monday morning meetings.

25                  On 8 May 2005, Ms Poniatowska received an email from Mr Flynn in which he invited her to enter into a sexual relationship with him (the first Flynn email).  The primary Judge accepted that Ms Poniatowska responded by email indicating that she did not want a sexual relationship and that Mr Flynn understood this.  Nonetheless, on 10 May 2005, Mr Flynn sent a further email to Ms Poniatowska which was quite explicit and was found by the primary Judge to contain another invitation for sexual relations (the second Flynn email).  Ms Poniatowska did not respond to the second Flynn email.  Mr Flynn then sent at least two further SMS text messages to her, which were not in evidence and the precise terms of which are not known.  The primary Judge accepted, on the evidence, that the SMS messages were not merely apologetic but to the same effect as the second Flynn email and therefore were a similar attempt to keep open the opportunity for sexual relations.  On 15 May 2005, Mr Flynn sent a third email to Ms Poniatowska, which his Honour found was not a request for sexual relations but was an attempt to avoid Ms Poniatowska reporting the matter to Homes. (together, the May 2005 allegations)

26                  At trial, ESA accepted that the three emails were sent but disputed that the May 2005 allegation had been drawn to its attention, amounted to sexual harassment or was attributable to it.  The primary Judge accepted that Ms Poniatowska was humiliated and shocked by the communications from Mr Flynn and reported those communications to Ms Sharrad.  Ms Poniatowska alleged that Ms Sharrad responded, ‘what do you expect with a face like yours’, and took no further action on the matter.  Ms Sharrad denied that Ms Poniatowska reported the matter to her at all but his Honour preferred the evidence of Ms Poniatowska.

The June 2005 allegations

27                  There was some factual dispute about the circumstances in which the June 2005 allegations took place.  Mr Lotito was a building consultant employed by ESA from the early part of 2005 to September 2005.  The primary Judge found that Ms Poniatowska was assigned to work with Mr Lotito as a matter of routine.  His Honour rejected Ms Sharrad’s evidence that Ms Poniatowska had asked to work with Mr Lotito.  His Honour accepted that Ms Poniatowska expressed a concern about working with Mr Lotito and that in that context, Ms Sharrad told Ms Poniatowska in the open office area in the presence of other staff ‘I told Remo [Mr Lotito] not to fuck my consultants’ or words to that effect (the June 2005 allegation).  Ms Sharrad did not dispute that such a communication occurred but said that she made the comment ‘as a joke’.  His Honour found that Ms Sharrad’s comment was inappropriate and caused Ms Poniatowska embarrassment and discomfort.  In particular, his Honour considered that it was not an appropriate response in such circumstances, especially in light of Ms Sharrad’s awareness of the May 2005 allegations concerning Mr Flynn.  The fact that Ms Sharrad made that comment, and did so in the office area where others could hear it, was considered by His Honour to be supportive of and consistent with a robust work environment.

28                  Ms Poniatowska complained to Mr Hickinbotham about that behaviour by Ms Sharrad prior to the commencement of the Lotito allegations discussed below.  A meeting was held between Ms Poniatowska, Mr Hickinbotham, Ms Sharrad and Mr Lotito on or about 9 August 2005 at which Ms Sharrad apologised for having made an offensive comment and gave an explanation for her comment.  Mr Hickinbotham said that he reprimanded Ms Sharrad and told her not to use offensive language in the office but the primary Judge noted that Mr Hickinbotham did not give that reprimand in writing or send any general instructions to the staff of Homes in relation to use of such language.  His Honour considered that the lack of any such instruction tended to confirm his impression of a robust work environment.

29                  His Honour found that Mr Hickinbotham’s response to this complaint was unsatisfactory for a number of reasons, including the delay of the response, the lack of any written record of the complaint or of the investigation and the lack of action taken to reassure Ms Poniatowska prior to the meeting of 9 August 2005.  His Honour found that the June 2005 allegation was apparently addressed only in the context of the Lotito allegations and that there was no satisfactory explanation for why the June 2005 allegations took so long to be addressed by Homes.

The Lotito allegations

30                  Ms Poniatowska alleged that on 8 June 2005, she received on her mobile phone an MMS photograph from Mr Lotito, which showed an act of oral sex by a woman on a man, with the text message ‘U have 2 b better’.  The primary Judge found that the MMS photograph was actually sent on 20 June 2005 but otherwise accepted Ms Poniatowska’s description of the incident (at [141]).  His Honour rejected Mr Lotito’s evidence that he had sent it to her accidentally as part of a group message.  She also alleged that in the following weeks, she received a number of phone calls from Mr Lotito asking her to have sex with him, including requests for oral sex.  His Honour noted five separate phone calls from Mr Lotito to Ms Poniatowska between 15 to 27 June. (together, the Lotito allegations)

31                  At trial ESA disputed that the Lotito allegations were offensive to Ms Poniatowska, given that Ms Poniatowska had stated to Mr Hickinbotham that she found the Lotito allegations “trivial” and did not have the intention of bringing them to the attention of ESA.  Ms Poniatowska did not formally report this matter to Mr Hickinbotham at the time but showed the MMS photograph to a female colleague some time after its receipt.  That colleague reported the matter to Ms Sharrad on about 6 or 7 August 2005.  The primary Judge accepted Ms Poniatowska’s explanation of her reluctance to report the matter and found that her failure to make a prompt complaint did not indicate that the communication was insignificant to her.

32                  Ms Sharrad reported the Lotito allegations to Mr Hickinbotham.  Mr Hickinbotham initiated the 9 August 2005 meeting with Ms Poniatowska and Ms Sharrad, where he said that the Lotito allegations would be investigated.  He then had a meeting with Ms Sharrad and Mr Lotito on 10 August 2005 at which Mr Lotito claimed he sent the offensive MMS photograph to Ms Poniatowska inadvertently and that it may have been part of a group message.  The primary Judge found that after these two meetings, no steps were taken by Ms Sharrad or Mr Hickinbotham to investigate the Lotito allegations and Ms Poniatowska was not told anything about the progress of the “investigation”.  His Honour found that Mr Hickinbotham acted on Mr Lotito’s version of events, without ultimately investigating them (at [163]).  Further, his Honour found that no real steps were taken by Mr Hickinbotham or Ms Sharrad to keep the events confidential, such that they soon became relatively common knowledge among the building consultants and within the head offices of Homes. 

33                  On 19 August 2005, Ms Poniatowska sent a letter to Mr Hickinbotham in which she indicated that she wished to put the matter to rest and had no intention of bringing the matter to anyone’s attention, as she found it trivial.  His Honour found that it was the inactivity of Mr Hickinbotham and Ms Sharrad in investigating the allegations and Ms Poniatowska’s personal embarrassment at the Lotito allegations becoming common knowledge in the office that led to her write this letter, which did not accurately reflect her view that the matter was in fact trivial.  His Honour found that no support was offered to Ms Poniatowska in the period up to 19 August 2005. 

34                  Following the letter of 19 August 2005, there were two meetings concerning the Lotito allegations.  His Honour found that these meetings reflected Mr Hickinbotham’s desire to close the issue and also indicated that he realised that Ms Poniatowska may have had ongoing concerns about the Lotito allegations, notwithstanding the letter of 19 August 2005.  The purpose of the latter meeting of 26 August 2005 was for Mr Lotito to apologise to Ms Poniatowska.  His Honour found, however, that the meeting commenced with what was in effect an interrogation primarily of Ms Poniatowska by Ms Sharrad.  Mr Hickinbotham had instructed Ms Sharrad to put a series of questions, which he had prepared in advance, to Ms Poniatowska to elicit her confirmation that the incident had not affected her work performance or her sales, or personally.  Ms Sharrad was to record the answers by Ms Poniatowska and to abandon the meeting if the appropriate answers, from the point of view of the Hickinbotham group, were not given. 

35                  The primary Judge found that after Mr Lotito gave an apology, he was treated warmly and sympathetically by Ms Sharrad but Ms Poniatowska was not treated in the same way.  Mr Lotito was privately warned orally in a gentle way but no formal warning was given, nor was any formal record of any inappropriate conduct made.  His Honour also found that at no time was any notice given to the staff about the inappropriateness of Mr Lotito’s behaviour or more generally, of harassment in the workplace.  

36                  The primary Judge considered that the way the Lotito allegations were dealt with, including the way Mr Lotito was dealt with as a result of his conduct, contrasted dramatically with the way Ms Poniatowska was dealt with in the events leading up to her suspension and termination.  His Honour considered that the way the Lotito allegations were addressed and the way Ms Poniatowska was treated in that process indicated an attitude to her on the part of the Hickinbotham Group which had some relevance to his Honour’s later findings about the reasons for her termination.  His Honour found that although Ms Poniatowska was clearly the victim of Mr Lotito’s inappropriate conduct, the way she was treated suggested that she was not regarded as the victim but ‘as a problem presenter to be managed’ (at [164]).

Generally

37                  The primary Judge considered it noteworthy that, unlike the complaints concerning Ms Poniatowska’s work performance, the response of Mr Hickinbotham to the May 2005 allegations, the June 2005 allegations and the Lotito allegations did not involve any documented investigation or any documented reprimand of Mr Flynn, Ms Sharrad and Mr Lotito respectively (at [134]).

The other allegations

38                  Ms Poniatowska made a number of other allegations regarding incidents which occurred in the course of her employment with ESA, which were not accepted by the primary Judge.  His Honour stated that he took these findings into account when assessing the general reliability of Ms Poniatowska as a witness.

The first warning letter

39                  The primary Judge found that the first warning letter was prepared by Mr Daminato on the instruction of Mr Hickinbotham.  This warning letter related only to Ms Poniatowska’s file preparation and management and no particular incident was identified as prompting the first warning letter. 

40                  His Honour considered the instruction from Mr Hickinbotham to prepare the first warning letter in the context of the finding, set out above, about the relative file preparation and presentation of Ms Poniatowska compared to that of other new building consultants.  The primary Judge considered that Mr Daminato’s evidence about Ms Poniatowska’s file presentation was overstated and did not satisfy his Honour why her file management was so different from that of other new building consultants.  His Honour noted that there was no cogent evidence to explain why, if her preparation was as bad as Mr Daminato had suggested, Ms Poniatowska’s employment was not terminated after her probation period expired on 30 July 2005.   

41                  The primary Judge also considered it significant that in preparing the first warning letter, Mr Daminato made no attempt to assess the significance of any of the requisitions set out in the letter, to see whether any of the requisitions were understandable or to make any allowance for the amount of training Ms Poniatowska had received.  His Honour formed the impression that the listing of the requisition defects in the first warning letter was not carefully considered.  As mentioned above, his Honour did not accept that prior to the first warning letter, Mr Daminato, Ms Sharrad or Mr Hickinbotham had conveyed to Ms Poniatowska that her file preparation and presentation were seriously defective.  His Honour did not accept that there was a progressive accumulation of matters which reached a climax sufficient to prompt the first warning letter (at [203]).

42                  The first warning letter was given to Ms Poniatowska at a meeting, the conduct of which his Honour considered intimidating.  His Honour found that before she had any real opportunity to respond to the letter, Ms Poniatowska was given a formal warning that if her file preparation and presentation did not improve, her employment might be terminated.  His Honour noted that it was obvious that Ms Poniatowska was being treated differently to the way Mr Flynn, Ms Sharrad and Mr Lotito were treated in relation to the May 2005 allegations, the June 2005 allegations and the Lotito allegations respectively, as none of them received formal warning letters, much less formal warning letters assuming guilt, before they had the opportunity to respond to the complaint about their respective conduct.  His Honour found that the first warning letter was a step in the process of terminating Ms Poniatowska’s employment, ostensibly for work performance but actually for other reasons.

The second warning letter

43                  The second warning letter was given to Ms Poniatowska at a meeting on 13 December 2005.  It identified two aspects of unsatisfactory performance by Ms Poniatowska.  The first related to a complaint by a client that Ms Poniatowska had advised him that the area opposite a block he was purchasing would be dedicated as a reserve when the area had in fact been earmarked as a future development site.  His Honour found that at the meeting, Ms Poniatowska disputed the accuracy of this complaint and was presented with a brochure (the promotional brochure) which showed that the relevant area was marked as a future development site.  Ms Poniatowska produced another brochure (the earlier brochure) which marked the area as a reserve, with no indication of a future development site. 

44                  The primary Judge did not accept the evidence of Ms Sharrad and Mr Hickinbotham explaining why they dismissed Ms Poniatowska’s reliance on the earlier brochure.  His Honour found Ms Sharrad’s evidence on this matter most unsatisfactory and Mr Hickinbotham’s evidence unimpressive.  His Honour found that Mr Hickinbotham was resistant in an unsatisfactory way to the status of the earlier brochure and was simply dismissive of it (at [229]).  His Honour found that the evidence indicated that at the meeting, neither Ms Sharrad nor Mr Hickinbotham were prepared to tolerate a suggestion from Ms Poniatowska that she had correctly referred to a document to which she was entitled to refer (at [225]). 

45                  The second warning letter also claimed that Ms Poniatowska had accepted a deposit for the same block contrary to instructions from ESA not to proceed with the sale of that block until a roundabout issue had been resolved.  His Honour found that at the meeting, Ms Poniatowska had denied accepting the deposit and, on the evidence, found that she had not sold the block or accepted a deposit for it.  His Honour found that Mr Hickinbotham had not seen any documents to support the factual assertions in the second warning letter or spoken to particular clients about them before issuing the second warning letter, which his Honour considered to assume Ms Poniatowska’s guilt.  The primary Judge considered it a curious procedure for any employer to provide a warning on the basis of oral information provided by a client, without first checking with the employee concerned to see what that employee said about that information, particularly in the absence of documentation. 

46                  The way in which Mr Hickinbotham dealt with complaints concerning Ms Poniatowska caused the primary Judge to doubt his evidence about the meeting on 13 December 2005 and more generally (at [237]).

The third warning letter

47                  The third warning letter, given to Ms Poniatowska at a meeting on 20 December 2005, concerned her dealings with two clients who had apparently complained that she had been misleading.  The letter stated that Ms Poniatowska accepted a deposit from them for a block when she should not have done so because this block was on hold and subsequently sold by another building consultant.  Ms Poniatowska agreed that she had accepted the deposit but she claimed, and the primary Judge accepted, that Ms Sharrad had told her to accept the deposit.  His Honour found that the third warning letter was unwarranted and that Ms Poniatowska was not given the opportunity to respond to it.  His Honour noted that her explanation proffered at the meeting was neither recorded by Ms Sharrad nor investigated.

48                  On 5 January 2006, Ms Poniatowska sent Mr Hickinbotham an email in which she vigorously disputed the accusations in the second warning letter and the third warning letter and asking for an urgent meeting as she considered that her position was being ‘white anted’.  His Honour considered it significant that Mr Hickinbotham took no further steps to investigate the matter after receiving this email and found that his response showed a closed mind to her concerns and no interest in ascertaining the true facts. 

The suspension letter

49                  The suspension letter dated 10 February 2006, and the termination letter of 23 February 2006, both referred to Ms Poniatowska’s file preparation and presentation, referring to four other jobs where ‘further serious errors’were made.  The primary Judge found that Mr Hickinbotham solicited information from Mr Daminato regarding deficiencies with Ms Poniatowska’s files, not out of any awareness of such ongoing problems reported to him, but while he was drafting the suspension letter.  His Honour found it significant that that part of the suspension letter did not result from any specific concerns which Mr Daminato, unprompted, passed on to Mr Hickinbotham or Ms Sharrad (at [204]).

50                  The suspension letter also referred to a further complaint from clients who  complained, inter alia, that Ms Poniatowska had misled them to the effect that they were to receive two gables on their roof but later had them sign a quotation with only one gable without explaining this to them.  By 10 February 2006, Ms Poniatowska had provided a response to the complaint, by email to Mr Hickinbotham, claiming that the client was very demanding and that she had already accommodated several of his demands at her expense out of her own commission but could not give him the second gable at no cost.  The primary Judge found that Mr Hickinbotham did not provide any response to this email, or himself investigate her claims.

51                  The suspension was to allow an investigation to occur and this was conducted by Mr Wright, the Financial Controller of the Hickinbotham Group, between 9 and 21 February 2006.  Mr Wright concluded that Ms Poniatowska had breached Homes’ Code of Conduct and had misled the client.  The primary Judge found that, inexplicably, Mr Wright carried out an extraordinarily superficial investigation for a man charged with such responsibility, with the prospect of termination of an employee.  His Honour found that before reporting the outcome of his investigation to Mr Hickinbotham, Mr Wright did not speak to Ms Poniatowska about the complaint, did not receive her email response to Mr Hickinbotham and did not see any documentation showing two gables as alleged by the client.  His Honour found that Mr Wright had simply assumed the facts that the client had reported.  

52                  The primary Judge found that Mr Wright’s investigation was quite unsatisfactory and that he conducted a ‘slap dash report’ because he knew or understood that Mr Hickinbotham expected a conclusion to be reached by him critical of Ms Poniatowska.  His Honour found that Mr Wright’s evidence, in that light, confirmed his Honour’s impression that the process leading to Ms Poniatowska’s termination was preordained, that is, directed to a particular end.

The termination letter

53                  Mr Hickinbotham terminated Ms Poniatowska’s employment immediately with no notice at a meeting on 21 February 2006 and the termination was confirmed by the termination letter of 23 February 2006.  The termination letter was relevantly in the following terms:

We discussed with you a very serious complaint from one of our clients, the client claimed that you had deliberately misled them in negotiations leading into their contracts being signed.  They have been so unhappy with the level of service that they have received from you that they refuse to deal with you in the future.

Your response to this issue was that the clients were very demanding, wanted things for free and you disputed the facts generally.  We do not accept your approach or attitude towards this serious issue.  Our reputation and the manner in which our sales consultants represent themselves to our clients are critical in our industry.  This conduct breaches our Code of Conduct and directions about conduct towards our clients.

We also put to you the allegations that on four jobs on which you were working, you have made further serious errors including failing to provide for specific measurements, details, costing and submitting files without the appropriate signed documentation.  These errors are precisely the same type of errors that you have been extensively counselled about and the subject of the warning letters of 18 November, 2005, and 13 December, 2005.  These errors could seriously compromise our relationship with our clients, our reputation and our standing within the building community.

Your response to these issues was that you were the subject of a conspiracy, had inadequate training, and were under pressure.  We do not accept these responses as we have provided you with training, and provided you with full support to assist you to succeed in your position.

After considering all the matters you and your representative put to me, I considered that your conduct in misleading the client was a serious breach of our directions to you and Code of Conduct, and amounts to serious and wilful misconduct.  I also took into account the further instances of poor performance and our past warnings to you.  I determined in the circumstances that your employment should be terminated immediately with no notice.

54                  The primary Judge noted that significant weight was place upon Mr Wright’s investigation but considered the investigation grossly inadequate, as clear answers to the complaint were discoverable on the barest of efforts. His Honour found that Mr Hickinbotham was aware that in his report, Mr Wright did not follow a genuine investigation of the complaint.

The reason for termination

55                  The primary Judge’s conclusion regarding the reason for the termination of Ms Poniatowska’s employment is set out in [282] and [283]:

In my judgment, Ms Poniatowska was not dismissed for the reasons stated in the termination letter.  I also find, for the reasons indicated, that none of the first warning letter, the second warning letter, the third warning letter or the suspension letter set out accurately matters about which her employer was satisfied that she had conducted herself in her employment so as to warrant the giving of those letters.  Put bluntly, I find that none of those warning letters, or the suspension or termination of her employment, were for her poor work performance.

I find that there was a different, but consistent, motivation for those communications.  It was to set the scene for the termination of, and ultimately to terminate, Ms Poniatowska’s employment because she had, over a period of time, revealed by what she had done in relation to the May 2005 allegations, the June 2005 allegations and the Lotito allegations, a sensitivity to the conduct of the type to which those allegations related.

56                  In stating his conclusions, the primary Judge referred to the fact that at the time of the first warning letter, there was no evidence of a structured ongoing assessment of Ms Poniatowska’s file preparation and presentation, which re-emerged only when Mr Hickinbotham later asked about it.  His Honour considered that if the topic were important, one would have expected some ongoing structured review of her performance.  His Honour found that the client complaints referred to in the second and third warning letters and the suspension letter were adopted opportunistically.  His Honour found that although the complaints required some investigation, that did not occur except for Mr Wright’s investigation, which His Honour found quite inadequate.  His Honour found that Mr Hickinbotham demonstrated a closed mind to Ms Poniatowska’s response to the complaints.

Sexual harassment

57                  Section 28B of the SD Act relevantly provides:

28B  Employment, partnerships etc.

(1)       It is unlawful for a person to sexually harass:

            (a)        an employee of the person; or

            (b)        a person who is seeking to become an employee of the person.

(2)       It is unlawful for an employee to sexually harass a fellow employee or a person who is seeking employment with the same employer.

…

(6)       It is unlawful for a workplace participant to sexually harass another workplace participant at a place that is a workplace of both of those persons.

(7)       In this section:

…

workplace means a place at which a workplace participant works or otherwise carries out functions in connection with being a workplace participant.

workplace participant means any of the following:

            (a)        an employer or employee;

            (b)        a commission agent or contract worker;

            …

58                  The primary Judge found that by reason of the conduct constituting the May 2005 allegations, Mr Flynn engaged in sexual harassment contrary to s 28B of the SD Act. 

59                  His Honour also considered it clear that the conduct constituting the Lotito allegations amounted to sexual harassment.  This finding is not disputed by ESA in the appeal.

60                  Section 28A(1)(b) provides:

28A  Meaning of sexual harassment

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

…

            (b)       [the person] 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 that the person harassed would be offended, humiliated or intimidated.

61                  His Honour did not consider that Ms Sharrad’s remarks in relation to the June 2005 allegations amounted to sexual harassment because it was not conduct of a sexual natureunder s 28A(1)(b) of the SD Act.  His Honour found that Ms Sharrad was conveying to Ms Poniatowska an ad hoc policy or instruction, given to another employee not to engage in sexual harassment.  His Honour considered that such a policy and the communication of such a policy or instruction did not constitute conduct of a sexual nature, even if the message was conveyed, as by Ms Sharrad, in coarse and sexually explicit language.

62                  Section 106(1)(b) of the SD Act relevantly provides:

106  Vicarious liability etc.

(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:

…

            (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.

…

63                  The primary Judge made it clear that Ms Poniatowska did not contend, and his Honour did not find, that the instances of sexual harassment by Mr Flynn and Mr Lotito directly caused the termination of her employment (at [299]).  His Honour noted that under s 106(1)(b) of the SD Act, the conduct of Mr Flynn and Mr Lotito becomes the conduct of ESA if their respective conduct was ‘in connection with’ their employment. 

64                  Ms Poniatowska submitted that the sexual harassment included the ‘failure by the employer to act to prevent its occurrence, the suffering of a sexually hostile working environment, and the failure to quash it once it commenced’.   His Honour rejected that contention by Ms Poniatowska.  His Honour found that if the failure to act referred to a failure to have a formal policy against sexual harassment, such a failure was not “conduct of a sexual nature” within s 28A(1)(b) and (2) and was not specific conduct in relation to the specific person or persons harassed, as contemplated by these subsections.  His Honour did not accept the general contention that the work environment was “sexually hostile” except to the extent of the particular allegations he had found to have been made out and the way in which Homes responded to those allegations.  His Honour did not consider that the failure to quash the conduct in relation to the May 2005 allegations and the Lotito allegations was a relevant causative factor, as the conduct had ceased by the time Homes learnt of the conduct.  Further, his Honour found that the way Homes responded to the reports of the May 2005 allegations, the June 2005 allegations and the Lotito allegations did not itself amount to sexual harassment, inadequate as that response was, because it was not conduct of a sexual nature. 

65                  His Honour did not find that Homes (or ESA) had engaged in sexual harassment contrary to s 28B of the SD Act.

Sex discrimination

66                  Section 14(2)(c) of the SD Act relevantly provides:

14  Discrimination in employment or in superannuation

…

(2)       It is unlawful for an employer to discriminate against an employee on the ground of the employee’s sex, marital status, pregnancy or potential pregnancy:

…

            (c)        by dismissing the employee;

            …

…

67                  The primary Judge found that ESA had discriminated against Ms Poniatowska on the ground of her sex because, by reason of her sex, she was treated less favourably than ESA would have treated a male person in the same or not materially different circumstances.  His Honour found that ESA had further contravened s 14(2)(c) of the SD Act by so discriminating against her by dismissing her.

68                  His Honour found that Homes was confronted with a female who would not accept the behaviour of Mr Flynn and Mr Lotito, which behaviour constituted sexual harassment, and the robust work environment, as evidenced by the June 2005 allegations concerning Ms Sharrad.  His Honour found that the employer did not address Ms Poniatowska’s legitimate concerns.  His Honour made the following findings:

[312] In my judgment, the employer then determined that she was a person who did not “fit” its work environment because she was a female who would not tolerate sexual harassment and the robust work environment.  I have found that the employer then gave her the three warning letters and the suspension letter as a means of setting the scene for the termination of her employment.  In those processes, as my findings indicate, she was treated differently from the way the employer would have treated a male person.  It is manifestly evident in the way Mr Flynn and Mr Lotito were treated in relation to their conduct towards Ms Poniatowska.  Again, I shall not repeat my earlier findings.  I find that the way Ms Poniatowska was treated was less favourable than, in circumstances that are the same or not materially different, her employer would have treated male persons.

[313] It is perhaps possible that some other female persons may have been exposed to sexual harassment in the workplace at Homes, and have tolerated it without complaint.  That is not to the point.  Ms Poniatowska was exposed to sexual harassment, and to sexually explicit language in circumstances she found quite discomforting.  She complained.  Instead of her complaints being addressed sympathetically, they were treated dismissively in two instances, and in the case of the Lotito allegations they were only superficially addressed and not sympathetically to the victim.  The legitimate complainant was, as I have found, then identified as a person who it was desirable to terminate because she had confronted ESA with her complaints.

[314] Whilst no male persons are shown to have complained of sexual harassment or of exposure to discomforting sexually explicit language, clearly those engaging in the sexual harassment or the sexually explicit language were treated differently than Ms Poniatowska.  If a male employee had complained of sexual harassment or of discomforting sexually explicit language, how would ESA have treated that employee?  Necessarily, that question must be answered on a theoretical basis because there is no evidence of any such complaint by a male employee having been made.  I am satisfied quite firmly that, in that event, a male complainant would have been treated differently.  I reach that view partly based upon how the males who had engaged in sexual harassment were treated.  I also reach that view because I consider that the evidence overall shows ESA, through Mr M Hickinbotham, was unsympathetic to Ms Poniatowska’s complaints but was prepared to be much more sympathetic to the situation of Mr Lotito, and through Ms Sharrad was much more sympathetic to the situation both of Mr Flynn and Mr Lotito.  There is an underlying sense, and a strong one, that Ms Poniatowska as a complainant female was a potential ongoing impediment to the smooth functioning of the business of Homes and the better solution to her circumstances was that her employment should not continue; I do not consider on the whole of the evidence and my sense of the views of Mr M Hickinbotham in particular that ESA would have taken the same approach to a male employee complaining of such conduct.

69                  In summary, the primary Judge found that the general allegations of the conduct of Homes, and the way in which it addressed each of the three allegations, did not amount to Homes engaging in sexual harassment so as to contravene s 28B of the SD Act (at [306]-[307]).  His Honour then turned to s 5 and s 14(2) of the SD Act and sex discrimination.  His Honour said that, in his judgment, ESA had discriminated against Ms Poniatowska on the ground of her sex in accordance with the section and that ESA has contravened s 14(2)(c) by so discriminating against her by dismissing her. His Honour elaborated his reasoning this way at [311]–[315]:

·                    From about May 2005 to August 2005, ESA was confronted with a female who would not accept the behaviour of Mr Flynn and Mr Lotito, whose conduct amounted to sexual harassment, and of the robust work environment.

·                    The employer did not address her legitimate concerns.

·                    Ms Poniatowska was not treated as the victim of sexual harassment but as a problem to be dealt with.

·                    The employer then determined that she was a person who did not “fit” its work environment because she was a female who would not tolerate sexual harassment and the robust work environment.

·                    The employer then gave her the three warning letters and the suspension letter as a means of setting the scene for the termination of her employment.

·                    In those processes she was treated differently from the way the employer would have treated a male person.

·                    The way Ms Poniatowska was treated was less favourable than, in circumstances that were the same or not materially different, her employer would have treated male persons.

·                    Some other female persons might have been exposed to sexual harassment in that workplace and tolerated it without complaint but that was not to the point.

·                    Ms Poniatowska complained. Her complaints were treated dismissively or superficially addressed.

·                    The legitimate complainant was then identified as a person who it was desirable to terminate.

·                    No male persons complained.  However, those engaging in the sexual harassment or the sexually explicit language were treated differently.

·                    How would a male employee who complained have been treated?  The answer is theoretical but his Honour was satisfied “quite firmly” that such a male would have been treated differently.

·                    ESA viewed that Ms Poniatowska, as a complainant female, was a potential ongoing impediment and that the better solution was that her employment should not continue.

·                    ESA would not have taken the same approach to a male employee.

·                    Consequently, ESA acted unlawfully in discriminating against her on the ground of sex by dismissing her.

Implied term of trust and confidence

70                  Ms Poniatowska also asserted that her contract of employment contained a term implied by law that ESA and Homes would not, without reasonable and proper cause, conduct themselves in a manner calculated or likely to destroy or seriously damage the relationship of confidence between them and Ms Poniatowska (the implied term).  She said that either individually or in conjunction, the conduct the subject of the May 2005 allegations, the June 2005 allegations, the Lotito allegations and the other allegations which the primary Judge did not accept, together with her suspension on 9 February 2006, breached the implied term.  She alleged that as a consequence of those breaches, she lost her employment and suffered loss and injury, including the development of a psychiatric condition, had been unable to return to gainful employment for a short period and subsequently remained incapacitated for work.

71                  As the primary Judge had already found that ESA discriminated against Ms Poniatowska on the ground of her sex and had contravened s 14(2)(c) of the SD Act, his Honour did not decide whether a term of mutual trust and confidence ought be implied into Ms Poniatowska’s employment contract.  His Honour considered that such a finding would not have added to the range of remedies or the extent of the compensation awarded.  His Honour simply noted the observations of Tracey J in Van Efferen v CMA Corporations Limited (2009) 183 IR 319; [2009] FCA 597, which highlighted that the implication of such terms in contracts of employment remained one of controversy on which the High Court has yet to make a definitive pronouncement.

Assessment of damages

72                  The primary Judge noted that no proposition was put forward that compensation should be awarded separately against Mr Flynn concerning the May 2005 allegations or against Mr Lotito concerning the Lotito allegations.  His Honour also noted that none of the medical evidence adduced by Ms Poniatowska specifically focused upon the particular consequences of the May 2005 allegations or of the Lotito allegations.  Consequently, his Honour did not separately determine the nature and extent of any relief which might otherwise have been granted by way of compensation for their particular conduct (at [330]).  His Honour noted that, had specific submissions been directed to the appropriate form of relief for that particular conduct, he would have granted compensatory relief.

73                  The primary Judge found that from around late 2005, Ms Poniatowska developed depression and anxiety, from which she had continued to suffer quite significant symptoms, and that the unlawful discrimination by ESA had caused those conditions and their consequences.  His Honour found that since early 2006 Ms Poniatowska suffered, at least, from an adjustment order with mixed anxiety and depression and that those conditions were caused by the unlawful discrimination of ESA.  His Honour found that, to a large measure, Ms Poniatowska had been unable to work for the period from September 2006 to the time of his Honour’s judgment.  His Honour found that upon resolution of the proceedings, she was likely to improve her condition progressively to the point where, at the expiration of about one to two years, she would be likely to be able to return to work.

74                  His Honour awarded a total of $433,000, not including interest, in compensation to Ms Poniatowska, which comprised:

·                    $90,000 for the past and the future disadvantage for pain and suffering which she had experienced and would experience until her recovery.  His Honour considered that, allowing for what was by then some years of quite considerable personal distress and unhappiness caused by her psychiatric condition brought on by the circumstances which his Honour had referred to, namely the unlawful discrimination by ESA, it was appropriate to make a not insignificant award of damages by way of compensation. (at [353])

·                    $200,000 for past loss of earning capacity.  His Honour considered Ms Poniatowska’s earnings with ESA and the fact that had she maintained employment with ESA, a steady stream of not insignificant income would have been maintained as she became a more experienced building consultant.  His Honour stated that he made a reduction for the expenses she would have incurred in earning that income and to reflect the fact that she may have been able to undertaken some part-time work over the last few years had she chosen to do so instead of studying;

·                    $140,000 for future loss of earning capacity; and

·                    $3,000 for future medical expenses.

75                  His Honour did not make an order for exemplary or aggravated damages.  His Honour considered that although the conduct found to have contravened the SD Act was partly as a result of the inadequacy of ESA’s systems for managing complaints of sex discrimination or sexual harassment and, perhaps, an inappropriately robust work environment, it was only at the point of finding reasons for Ms Poniatowska’s termination that deliberately inappropriate conduct was undertaken by ESA.  His Honour was not prepared to determine an appropriate amount for exemplary damages in those circumstances without the benefit of detailed submissions seeking to refine the basis upon which such damages might be quantified and isolated from other forms of conduct which underlaid and gave rise to the desired termination.

The Appeal  

ESA’s grounds of appeal

76                  ESA’s grounds of appeal challenge a number of the primary Judge’s factual findings as well as his Honour’s legal findings.  The grounds of appeal, in summary, assert that the primary Judge erred in:

1.                  To the extent his Honour did so, implicitly attributing the sexual harassment by Mr Flynn, being the subject of the May 2005 allegations, to ESA pursuant to s 106 of the SD Act and ordering that ESA pay Ms Poniatowska a sum which included compensation for such sexual harassment.  (This ground as expressed in the notice of appeal was modified in ESA’s written submissions.)  That is, ESA does not dispute that the first Flynn email and the second Flynn email amounted to sexual harassment by Mr Flynn but submits that the sending of such emails was not undertaken in connection with his employment and so such sexual harassment should not be attributed to ESA. 

2.                  Finding that ESA was confronted by a female who would not accept the behaviour of Mr Flynn (reflected in the May 2005 allegations) and of Mr Lotito (reflected in the Lotito allegations) and finding that ESA treated Ms Poniatowska as a problem to be addressed.

3.                  Finding that the real motivation of ESA (by Mr Hickinbotham) for the three warning letters, the suspension of Ms Poniatowska and the termination of her employment was that she did not fit the work environment owing to her complaints about Mr Flynn, Ms Sharrad and Mr Lotito.

4.                  Finding that ESA treated Mr Flynn differently from Ms Poniatowska by reference to their conduct and complaints respectively.

5.                  Finding that ESA treated Mr Lotito differently from Ms Poniatowska by reference to their conduct and complaints respectively.

6.                  Finding that there was a robust work environment.

7.                  Finding that Ms Poniatowska was treated less favourably than a male consultant would have been treated in respect of equivalent matters the subject of the warning letters.

8.                  Finding that the warning letters and the suspension were a means to set the scene for termination of the employment of Ms Poniatowska.

9.                  Developing an underlying sense (which, in any event, does not amount to a judicial finding) that ESA saw Ms Poniatowska as a complainant female and a potential impediment to the smooth function of its business, and that it should terminate her employment as a result.

10.              Finding that, if his Honour did so find, that the first warning letter was not motivated by the concerns of Mr Daminato over the file presentation of Ms Poniatowska.

11.              Finding that, if his Honour did so find, that Mr Hickinbotham did not have a justifiable concern over the file preparation and presentation of Ms Poniatowska.

12.              Making an award for pain and suffering that was manifestly excessive.

77                  ESA also challenges his Honour’s award of damages for future economic loss by seeking to introduce new evidence on appeal of a supervening independent event said to be likely to cause a complete or substantial loss of Ms Poniatowska’s earning capacity over the period of two years form June 2009 (ground 13).  ESA does not press ground 14 in its notice of appeal relating to failure to mitigate economic loss.  We shall only deal with the grounds as pressed at the hearing of the appeal.

78                  The grounds of appeal in the notice of appeal amount to little more than a recitation that the primary Judge erred in making a number of findings of fact.  The main bases put by ESA for challenging the primary Judge’s factual findings in grounds 2 to 10 are that they are not supported by the evidence and/or involved the creation of an entirely newcase with which ESA had no testimonial or other evidentiary opportunity to deal.  We will, as appropriate, deal with them compendiously.  The other bases relied upon for the grounds of appeal will be addressed below.

Ground 1 – Damages for the vicarious liability of ESA for the May 2005 allegations

79                  ESA submits that the primary Judge erred in finding that Mr Flynn’s conduct in sending the emails to Ms Poniatowska was action in connection with his employment.  ESA submits that the emails were sent outside of work hours, were not the continuation of work correspondence and had no connection with employment.  However, the primary Judge did not expressly make a finding of whether or not the conduct of Mr Flynn was in connection with his employment so as to make the employer vicariously liable for his actions.  The primary Judge did not base his conclusion of sex discrimination by ESA on the basis of its liability for Mr Flynn.

80                  The primary Judge noted at [330] that neither Ms Poniatowska nor the respondents (other than Mr Lotito) suggested that separate compensatory relief should be awarded against Mr Flynn or Mr Lotito.  His Honour said ‘I do not propose separately to determine the nature and extent of any relief which I might otherwise have granted by way of compensation for their particular conduct’ [emphasis added].  His Honour continued to say that had submissions been directed to compensation for Mr Flynn’s conduct which his Honour had found to constitute sexual harassment, he would have granted compensatory relief.  However, his Honour did not do so.  Although the primary Judge noted at [300] that s 106(1)(d) of the SD Act makes the conduct of Mr Flynn the conduct of ESA if his conduct was “in connection with” his employment, his Honour, for the reasons stated at [330], did not proceed to consider that question.  

81                  ESA contends that the primary Judge may have allowed, in the compensation awarded, general damages for pain and suffering for the sexual harassment by Mr Flynn.  We do not accept this to be the case in the light of his Honour’s clear statement to the contrary.  The appellant has not demonstrated any error by the primary Judge as to this ground of appeal.

Grounds 2 to 11 - Challenges to findings of fact

82                  The primary Judge set out his findings of fact and the reasons for those findings in meticulous detail.  His Honour explained how his conclusions were drawn based upon those findings of fact.  We reject the attempt by ESA to challenge his Honour’s conclusions where it has not challenged any of the primary facts upon which those conclusions of fact were based.  Those primary unchallenged findings formed the basis for his Honour’s conclusions of fact or formed the basis for clear inferences that were drawn and which have not been shown to be in error.

Was the case as found advanced at trial?

83                  ESA contends that his Honour made findings that constituted a case that was not pleaded or opened at trial by Ms Poniatowska, or addressed in opening or closing submissions, or in the evidence.  In particular, they point to the following findings by the primary Judge as constituting a new case:

·                    ESA (in particular, Mr Hickinbotham) was confronted with a female who would not accept the behaviour of Mr Flynn and Mr Lotito (at [313]).

·                    ESA was confronted with a female who would not accept the robust work environment (at [313]).

·                    Ms Poniatowska was not treated as a victim of sexual harassment but as a problem to be dealt with (at [313]).

·                    Ms Poniatowska did not “fit” the work environment due to her complaints (at [312]).

84                  ESA submits that the case for an ulterior motive for the warning letters, suspension and termination was opened in the barest fashion by Ms Poniatowska at trial.  ESA contends that it was never advanced at trial that the true reason for the warning letters, suspension and termination rested on a motive to deal with Ms Poniatowska because she was ‘a complainer who did not fit in’.  They point to the fact that, while Ms Poniatowska alleged unlawful discrimination in her Form 5 Application and Form 167 commencing the present proceedings (the Process), it was not particularised in the Process or in opening submissions.

85                  It may well be the case that Ms Poniatowska expressed her complaint in different ways, or used terms different to those used by the primary Judge.  Ms Poniatowska alleged discrimination by reason of s 5 of the SD Act.  She may not have set out specifically the tests in s 5 but she clearly invoked the application of that section.  Her case was that she was terminated in her employment because of unlawful discrimination constituting specific acts or conduct and the failure of the company to support her in the face of it.  The alleged discrimination included the inadequate response of ESA to her complaints.  She alleged a causal connection between the sexual discrimination resulting from ESA’s failure properly to address the sexual harassment to which she was subjected and the termination of her employment. 

86                  ESA contends that while Ms Poniatowska had alleged that the termination was the culmination of a course of conduct and that there was discrimination because of the inadequacy of ESA’s handling of the complaints, this was not the same case as that stated by the primary Judge, which was to the effect that the termination was because ESA saw her as a complaining woman.  Ms Poniatowska, as counsel for ESA seems to accept, did contend that ESA was seeking to terminate her because of her previous complaints.  However, ESA says that this is different to saying, as the primary Judge held, that she was a woman who complained and was therefore seen as a problem.

87                  We are of the view that Ms Poniatowska did contend that the inadequate response on the part of the ESA constituted sex discrimination and that her termination of employment was the culmination of ESA’s course of conduct after she made the complaints of sexual harassment.  It was part of her case that she was terminated because she had made the complaints.  This is essentially what the primary Judge found.  His Honour then turned to the application of s 5 of the SD Act, which was the basis of Ms Poniatowska’s application to this Court, and applied that section to the facts as found and to inferences reasonably drawn from those facts.  The primary Judge dealt with the case that was presented by Ms Poniatowska.  ESA has not established that the primary Judge did other than make findings in respect of a case that was advanced before him. 

The cross-examination of Mr Hickinbotham

88                  ESA raises a further matter as the basis of its grounds of appeal.  It contends that certain matters which formed the basis of the primary Judge’s findings should properly have been put to Mr Hickinbotham in cross-examination and were not put, contrary to the rule in Browne v Dunn (1893) 6 R 67.  They were:

·                    that he or Ms Poniatowska considered ESA a robust work environment;

·                    in summary, that he saw her as a disruptive complainer and was motivated to dismiss her by the fact that she was a problem; 

·                    that he had Ms Poniatowska’s previous complaints in mind when issuing the warning letters; and

·                    that he would have treated a male in the same circumstances differently to Ms Poniatowska.

89                  ESA says that the most that was put to Mr Hickinbotham in cross-examination was the following question:

I want to suggest to you, Mr Hickinbotham, that this letter of 18 November [the first warning letter] was simply a beat-up.  It was your way of finding some reason to dismiss Ms Poniatowska? ---  Totally untrue

90                  ESA submits that even if, subjectively, Mr Hickinbotham did not believe that the warning letters were justified, that is different from a finding that he thought that Ms Poniatowska was a problem to be dealt with and a complainer, and that that was the reason why he terminated her employment.  That is, ESA contends that it was never put to Mr Hickinbotham that this was the “real reason” for terminating Ms Poniatowska’s employment.  Rather, ESA says the evidence was that, in the period leading up to the termination, Mr Hickinbotham did not know about the complaints concerning Mr Flynn and considered that the complaints concerning Mr Lotito and Ms Sharrad had been “closed” and “finished”. 

91                  ESA submits that Ms Poniatowska’s counsel failed to put to Mr Hickinbotham crucial questions necessary to enable him to deal with the primary Judge’s conclusion as to his real reason for terminating Ms Poniatowska’s employment.  ESA points to the observations by Kirby P in Ghazal v Government Insurance Office of NSW (1992) 29 NSWLR 336 where his Honour considered that the crucial question in that case, in context, was ‘equivocal’ in putting the relevant contention to the witness.  His Honour observed that when what is being suggested is fraud and false testimony on the part of a witness, such contentions must be clearly identified and not raised ‘accidentally, peripherally and nonchalantly’ in the course of litigation.  President Kirby also endorsed what Mahoney JA had said in Fabre v Arenales (1992) 27 NSWLR 437as applicable to the rule in Browne v Dunn, that the fact finding process not be over-formalised.  President Kirby said at 346 that it was vital that a fact crucial to the primary Judge’s conclusions had to be put ‘directly to the [witness], in unequivocal terms, so that he could have his opportunity to answer it’.

92                  Ms Poniatowska points out that in addition to the question in cross-examination set out above, Mr Hickinbotham was asked the following questions in examination in chief:

There is a suggestion in this case that [the first warning letter]… was responsive to the previous complaints that the applicant had made over sexual harassment.  What do you say to that? ---  Absolutely not true

There’s a suggestion that [the second warning letter]… was prepared in response to complaints by the applicant that she had made over sexual harassment.  What do you say to that suggestion? …  Absolutely untrue.

There is a suggestion that… [the third warning letter] was prepared in response to complaints that the applicant had made over sexual harassment.  What do you say to that suggestion? …  Reject it completely.

Ms Poniatowska says that there was no obligation to continue to put these matters to Mr Hickinbotham.  Further, Ms Poniatowska points to the fact that her case was that the stated reasons in the warning and suspension letters were not the true reasons for dismissing her.

93                  It was not directly put to Mr Hickinbotham in cross-examination that the real reason for termination was because Ms Poniatowska was a complainer or that there was a direct link between the earlier complaints and the termination.  However, the cross-examination included questions to him directed to the following:

·                    The first warning letter was a beat-up, and Mr Hickinbotham was finding some reasons to dismiss Ms Poniatowska by focusing on errors which he would not otherwise have considered significant.

·                    The investigations were not properly handled.

·                    Ms Poniatowska was not given adequate opportunity to respond to the warnings.

94                  Ms Sharrad was also questioned as to whether she was ‘just scratching up reasons for termination’ and had already determined to terminate Ms Poniatowska and, accordingly, did not give her an opportunity to respond to the allegations against her.  While questions to Ms Sharrad do not equate to questions to Mr Hickinbotham, the issue of the reasons for Ms Poniatowska’s termination was raised in that cross-examination.

95                  In our view the subject matter of the reasons for Mr Hickinbotham’s termination of Ms Poniatowska’s employment was raised in the case as presented.  That issue was sufficiently raised in the examination in chief and cross-examination of Mr Hickinbotham to give him an opportunity to respond.  Mr Hickinbotham was asked about his reasons for terminating Ms Poniatowska’s employment and it was put to him that he was finding a reason to dismiss her because of her complaints.  It was not necessary to take it further and put to him directly that he saw her as “disruptive” or as “a problem”.  The questions asked in chief were directed to the issue of whether he had Ms Poniatowska’s complaints in mind when he issued the warning letters.  That supports Ms Poniatowska’s submission that ESA was aware of the case being advanced by Ms Poniatowska.  The facts from which the primary Judge drew his conclusions were directly put in unequivocal terms.  Mr Hickinbotham was asked what he had to say in response to the questions concerning his reasons for issuing the warning letters which preceded the dismissal.  Mr Hickinbotham had an opportunity to answer them and to explain his reasons.  That was sufficient.  There was a basis for the inferences from the established facts drawn by the primary Judge and that conclusion was reasonably able to be drawn (Holloway v McFeeters (1956) 94 CLR 470 at 476 - 477 per Dixon J).

96                  It was not necessary to put to Mr Hickinbotham the conclusions drawn by the primary Judge from the facts for the purposes of s 5 of the SD Act as to how, hypothetically, he would have treated a male in the same circumstances.  Further, it was not necessary to cross-examine Mr Hickinbotham or Ms Sharrad as to whether they considered the work environment to be “robust”.  That description was a characterisation by the primary Judge of the work environment based on undisputed facts.

97                  The grounds of appeal based upon these assertions are not made out.

Mr Hickinbotham’s knowledge of the May 2005 allegations

98                  ESA also points out that Mr Hickinbotham did not know about the May 2005 allegations until after Ms Poniatowska’s termination.  Therefore, it says, there could be no basis to conclude that Mr Hickinbotham regarded Ms Poniatowska as a complainer on the basis of her complaints about the May 2005 allegations, or that he treated her differently from the way he would have treated Mr Flynn in the same or similar circumstances (Ground 4). 

99                  This is another attack upon his Honour’s findings about Mr Hickinbotham’s motives and, through him, ESA’s motives in terminating Ms Poniatowska’s employment.  The primary Judge treated Mr Hickinbotham as the controlling mind of ESA for the purposes of determining the motivation for that termination.  He made the decision to terminate.  However, Mr Hickinbotham, in turn, also received information from other employees such as Ms Sharrad about Ms Poniatowska’s complaints, although not about the May 2005 allegations prior to the decision to terminate.  The working environment of ESA and the attitude to Ms Poniatowska, Mr Flynn and Mr Lotito, as noted by the primary Judge at [314], was in part determined by other employees such as Ms Sharrad.

100               If Mr Hickinbotham did not know of the Flynn allegations at the time that he wrote the warning letter and the suspension letter and terminated Ms Poniatowska’s employment, the complaints about those allegations would have formed no part of his reasons for the termination.  That does not effect his Honour’s conclusion that, from Mr Hickinbotham’s knowledge of Ms Poniatowska’s complaints regarding the June 2005 allegations and the Lotito allegations, he dismissed her, not because of her performance as a building consultant, but because he determined that she did not “fit” the ESA work environment because she was a female who would not tolerate sexual harassment or the robust work environment (at [312]).  Although the primary Judge did refer to the May 2005 allegations at [283] as relevant to ESA’s motivation to terminate, it is apparent that his Honour’s view was that the motivation was sufficiently activated for Mr Hickinbotham by reason of the June 2005 allegations and the Lotito allegations.  

101               Further, his Honour did not err in comparing ESA’s treatment of Mr Flynn and Mr Lotito with the treatment of Ms Poniatowska, even though Mr Hickinbotham was not aware of May 2005 allegations concerning Mr Flynn at the relevant time.  His Honour considered how ESA, through Mr Hickinbotham, was much more sympathetic to Mr Lotito’s situation than to Ms Poniatowska’s complaints, and through Ms Sharrad was much more sympathetic to Mr Flynn and Mr Lotito (at [314]).  It is apparent from [314] that His Honour was aware that it was through Ms Sharrad that ESA dealt sympathetically with Mr Flynn in relation to the May 2005 allegations and such treatment can be relevant to his Honour’s analysis even though Mr Hickinbotham was not directly involved.  In any event, as noted above, his Honour did not take the May 2005 allegations into account in granting compensatory relief.

102               To the extent that ESA submits that there was “unchallenged evidence” of Mr Hickinbotham and others who gave evidence on behalf of ESA, which was inconsistent with the primary Judge’s findings, it is clear that his Honour considered all of the evidence and did not accept, for the detailed reasons that his Honour gave, some of the evidence of Mr Hickinbotham and Ms Sharrad.  The primary Judge was careful in setting out his conclusions as to the evidence and explained why he did not accept particular evidence given by those witnesses and, indeed, some of the evidence given by Ms Poniatowska.

Grounds 5 and 6 – further challenges to factual findings

103               Ground 5 asserts error on the part of the primary Judge in the way his Honour compared ESA’s treatment of Ms Poniatowska with the treatment of Mr Lotito.  ESA submits that the comparison with the treatment of Mr Lotito is misplaced because the circumstances involving the Lotito allegations were materially different to the circumstances the subject of the warning letters issued to Ms Poniatowska.  In effect, ESA relies upon various factual circumstances, upon which they had relied before the primary Judge, to justify its treatment of Mr Lotito and Ms Poniatowska.  However, his Honour explained in detail his view about each of those factual matters, made relevant findings and drew conclusions, based upon the whole of the evidence.  No error has been established, including in the way his Honour made comparisons between ESA’s treatment of Mr Lotito and Ms Poniatowska.  In any event many of those specific circumstances were not essential to his Honour’s conclusions of sex discrimination.

104               The same can be said for ground 6, which asserts error in the finding that there was what his Honour referred to as “a robust work environment”.  Contrary to the assertions in the ground of appeal, the primary Judge gave reasons why he came to that conclusion based upon the evidence before him.  ESA complains of his Honour’s use of the word “robust” and says that Ms Poniatowska did not present a case that the work environment was “robust” or involved the regular use of coarse, sometimes vulgar and sometimes sexually explicit language.  This amounts to a ground of appeal based upon a word used by the primary Judge to describe a work environment of which there was evidence and could clearly be called, “robust”.  In any case, the primary Judge described the workplace as a “robust environment” merely to explain the context in which his Honour considered the way ESA responded to Ms Poniatowska’s complaints, which was alleged by her to be inadequate (at [85]).  We do not see this as a serious ground of appeal and it is rejected.

Ground 7 – finding of sex discrimination

105               Ground 7 asserts that the primary Judge erred in finding that Ms Poniatowska was treated less favourably then a male consultant would have been treated in circumstances where he complained of sexual harassment or sexually explicit language.  ESA submits that this finding never rose above conjecture and speculation and was not a proper judicial finding.  ESA says that there was no evidence to that effect and that it was not part of Ms Poniatowska’s case at trial.  His Honour acknowledged that there was no evidence that any male employee had made any such complaint.  However, his Honour noted, s 5 of the SD Act requires the application of a theoretical test in the absence of such evidence.  The only relevant evidence would have required Mr Hickinbotham to speculate in circumstances where, as his Honour noted, no male had complained.  The primary Judge was entitled to draw inferences and conclusions from the evidence in order to apply the test in s 5. 

106               ESA submits that the primary Judge’s finding was one of conjecture because his Honour’s analysis of the evidence gave rise to no more than equal possibilities.  ESA relies on the comments of the majority of the High Court in Luxton v Vines (1952) 85 CLR 352 at 358 per Dixon, Fullagar and Kitto JJ:

In questions of this sort, where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture. 

ESA says the inference was equally open on the evidence, and his Honour’s findings on the evidence, that Ms Poniatowska was treated less favourably not because she was a female but because she had complained of sexual harassment and exposure to discomforting sexually explicit language.  It contends that if the reason for the less favourable treatment was because of ESA’s attitude toward those who complained, a male complainant would have been treated in the same way as Ms Poniatowska.

107               ESA submits that it was illogical for the primary Judge to compare the treatment of Mr Flynn and Mr Lotito, as perpetrators of sexual harassment, with the treatment of Ms Poniatowska, as a victim of sexual harassment, as a basis for reaching the conclusion that a male would have been treated differently to Ms Poniatowska in the same circumstances.  ESA says that such comparison is illogical conceptually because of the difference between a perpetrator and a victim and on the facts as found, because his Honour had found that ESA treated those who complained not as victims but as the “problem”, suggesting that a male who complained would also have been treated unsympathetically.   

108              It is necessary to turn to his Honour’s treatment of the requirement in s 5 that in order for there to have been sex discrimination, Ms Poniatowska needed to show that the discriminator treated her less favourably than it treated a man or would have treated a man in circumstances that were the same or not materially different.  His Honour’s consideration on that aspect is set out in [312] to [315].

109               The reasoning of the primary Judge as to the application of s 5 of the SD Act is not immediately clear.  The conclusion was expressed at [312] that Ms Poniatowska was a person who did not “fit” the work environment because she was a female who would not tolerate sexual harassment and the robust work environment.  In the processes undertaken by ESA to terminate her employment, she was treated differently and less favourably than the way ESA would have treated a male in the same or similar circumstances.

110               His Honour made the following findings and observations:

·                    Male perpetrators, Mr Flynn and Mr Lotito, were treated sympathetically.

·                    Some females might have been exposed to sexual harassment and not complained but that was not the point.

·                    No male had complained.

·                    Males engaging in sexual harassment were treated differently, indeed sympathetically.

·                    Males who engaged in sexually explicit language were treated differently.  (The primary Judge did not mention at this stage of his reasoning that a female, Ms Sharrad, used sexually explicit language and was also treated differently.)

111               The primary Judge, having found that Ms Poniatowska was dismissed as a complainant female, considered a male complainant as the relevant comparator.  His Honour expressed a firm view.  He was ‘satisfied quite firmly’ that a male complainant would have been treated differently to Ms Poniatowska (at [314]).  His Honour said that it was ‘manifestly evident’ from the way Mr Flynn and Mr Lotito were treated in relation to their conduct towards her (at [312]). 

112               The primary Judge did not err in his choice of comparator, based upon his factual findings.  His Honour appreciated that the question posed by s 5 was necessarily to be answered on a theoretical basis.  His Honour considered that, if male perpetrators were sympathetically treated, male complainants would not have been terminated.  That is not, however, the complete answer to the question.  It is apparent from the primary Judge’s description of this particular working environment that, on the evidence, his Honour concluded that it was an environment in which women would be targeted and be uncomfortable and, accordingly, more likely to complain than would men.  That would lead to the situation that a male employee of this company would not have been sexually harassed in the first place or have found the work environment intolerable.  He would not then have become a complainant.  That is, Ms Poniatowska became a complainant because of her sex.  It follows that the fact that Ms Poniatowska became a perceived problem as a complainant was because of her sex.  While there may have been female employees who were not sexually harassed and did not complain and female employees who were sexually harassed and did not complain, that is not to the point.

113               The characteristics of Ms Poniatowska were that she was a female:

·                    who was sexually harassed; and

·                    subjected to a robust work environment that she could not tolerate; and

·                    had complained of each such treatment;

·                    such that she was considered an impediment to the smooth running of ESA’s business.

114               It is apparent from the primary Judge’s reasoning that he did not consider that a male would be considered by ESA to have those characteristics.  It was necessarily because she was a female that she was in that position.  His Honour found that Mr Hickinbotham, and therefore ESA, would not have taken the same approach to a male who was sexually harassed and had complained.  That is, he would not have considered that male to be an impediment to the smooth running of the business.  It was all of those factors that resulted in the termination of her employment.  The primary Judge found that she was dismissed by reason of those factors, all of which followed from her sex.

115               A further answer to ESA’s submissions is that the primary Judge did not ask the wrong question.  His Honour recognised, correctly, that s 5 raised a hypothetical question.  There was no evidence to assist his Honour in answering the question by reference to the correct male comparator.  While ESA says that his Honour could have drawn different inferences from the evidence, that is not to the point.  Nor is it to the point that we may have answered the question differently.  ESA has not established appellable error in the way in which the primary Judge answered the question posed by s 5 of the SD Act.

Grounds 10 and 11

116               ESA said at the hearing of the appeal that it was not challenging the “negative findings” that, objectively, the warning letters and the termination were not justified for the reasons given or on the objective facts.  Grounds 10 and 11 appear to address such findings.  No submissions were directed to grounds 10 and 11 and we regard them as not pressed.  In any event, no basis was demonstrated for the assertion that the primary Judge erred in making the factual findings there referred to.

Ground 12 - excessive damages

117               ESA submits that the primary Judge failed to take certain material considerations into account and submits that the award of general damages was unreasonable and unjust.  His Honour awarded the amount of $90,000 to reflect past and future disadvantage for pain and suffering which Ms Poniatowska had experienced and would experience until her recovery.  His Honour said that he made an allowance for the risk of ongoing but diminishing symptoms for some time after the expiration of two years.  In awarding that amount his Honour allowed for what he described as ‘some years of quite considerable personal distress and unhappiness caused by her underlying psychiatric condition brought on by the circumstances’.

118               ESA submits that in assessing the amount of damages, certain factual matters or material which related to the history of the allegations, the fact that they were not repeated and that there had been an apology made and accepted should have all been taken into account.  We see no reason why his Honour needed specifically to take these into account in determining the amount for pain and suffering.  Those matters had been set out in great detail earlier in his Honour’s reasons and there was no necessity for him to repeat them.  Nor has it been demonstrated that his Honour failed to take into account all of the matters that he had earlier set out in such detail in his reasons.

119               ESA has failed to demonstrate that the exercise of his Honour’s discretion miscarried.

Ground 13, as pressed - ESA’s application to adduce new evidence relevant to the award of compensation for future economic loss

120               The orders made by the primary Judge were made on 23 June 2009.  His Honour allowed $140,000 for future loss of earning capacity.  His Honour found that Ms Poniatowska was likely to recover significantly over the next two years from the date of his judgment to the point where she would be able to work in an unrestricted way, albeit with some risk of ongoing impairment after that time (at [356]).  His Honour noted that there was a prospect of her being able to return to work in an earning capacity significantly prior to that date, as well as the prospect of her recovery being somewhat delayed to a full recovery.

121               ESA seeks to adduce new evidence in the appeal of a supervening independent event, the conviction of Ms Poniatowska of social security fraud on 6 July 2009.  It submits that that conviction was and is likely to cause a complete or substantial loss of Ms Poniatowska’s earning capacity over the period of two years from June 2009 for which the primary Judge awarded $140,000 in damages for future economic loss.  The evidence did not exist before or at the trial, as conviction occurred after his Honour had delivered judgment.  The offences that gave rise to the conviction took place while Ms Poniatowska was employed by ESA but the charges were laid after the termination of her employment.  ESA seeks to have the matter remitted to the primary Judge for further hearing as to future economic loss in the event that its appeal is unsuccessful.  ESA says that it would lead further evidence before the primary Judge as to the effect that a record of fraud has on the decision of employers to employ a potential candidate.  While no such evidence was sought to be adduced in the appeal, ESA points to the fact of the conviction, which it submits would itself have that consequence.

122               Ms Poniatowska submits that ESA was aware prior to the hearing before the primary Judge that Centrelink was seeking information from ESA about Ms Poniatowska’s income.  Even if that were the case, it is not relevant.  There is a deal of difference between knowledge that Centrelink was seeking some information and the fact of a conviction for fraud.  To the extent that Ms Poniatowska asserts that she would be able to rely on psychiatric evidence of a link between the actions that led to her conviction and ESA’s conduct, that supports the matter being referred to the primary Judge.

123               We accept that a conviction for social security fraud would be likely to affect the prospects of obtaining some kinds of employment which might be sought by Ms Poniatowska.  However, the primary Judge did not award full future loss of prospective earnings.  Even accepting that some employers might not wish to employ a person convicted of social security fraud, it does not necessarily follow that Ms Poniatowska would, for that reason alone, have been unable to obtain employment were it not for the impact of the sexual harassment experienced at ESA and its sequelae, whether or not she could have sought other employment.  The fact is that his Honour concluded that she was unable to work by reason of the effect on her of the actions of ESA and its employees. 

124               In our view, the significance of the new evidence and its likely effect on his Honour’s finding as to the amount to be awarded for future loss of earning capacity is not sufficiently demonstrated to require remittal back to the primary Judge to conduct a fresh hearing on this aspect of his Honour’s orders.

Ms Poniatowska’s alternative contentions

125               Ms Poniatowska contends that: 

1.                  The primary Judge should have found that the June 2005 allegations concerning Ms Sharrad constituted sexual harassment.

2.                  She was entitled to damages for loss of employment consequent upon the sexual harassment by Mr Flynn and Mr Lotito.

3.                  The inadequate response by ESA constituted sexual harassment and discrimination in itself.

126               At first instance (and in the present appeal), Ms Poniatowska only sought compensatory relief against ESA and not against Mr Flynn, Mr Lotito or Ms Sharrad.  The primary Judge found that Ms Poniatowska had been subjected to sex discrimination by ESA in treating her less favourably than a male, and that such discrimination caused her to develop psychiatric conditions which left her unable to work for some time.  His Honour awarded damages against ESA, including for loss of employment consequent upon its sex discrimination.  The second and third contentions by Ms Poniatowska are, in essence, alternative bases by which ESA can be found liable for the loss arising out of the psychiatric conditions suffered by Ms Poniatowska.  As ESA is unsuccessful in the appeal, the primary Judge’s basis for finding liability against ESA stands and there is no need to deal with the second and third contentions.  Similarly, it is not necessary to deal with the first contention.  No further damages would flow from a finding of sexual harassment by Ms Sharrad in circumstances where ESA has been found liable for Ms Poniatowska’s loss on another basis and no separate relief is sought against Ms Sharrad.

127               Ms Poniatowska also contends that she was entitled to an award of damages for breach of the implied term of mutual trust and confidence owed by employers to employees.  The damages awarded by the primary Judge dealt with past loss of earning capacity after making a reduction for expenses that Ms Poniatowska would have incurred, future loss of earning capacity, future medical expenses and past and future disadvantage for pain and suffering.  No further damages would flow from the alleged breach of the implied terms said to exist.  There is no need to deal with this contention. 

CROSS-APPEAL

Ground 1 – the calculation of economic loss

128               Ground 1 of Ms Poniatowska’s cross-appeal is that the primary Judge erred in the assessment of both past and future economic loss in his Honour’s assessment to an appropriate likely level of income over the relevant period and including Ms Poniatowska’s entitlement to industry superannuation at the rate of 9% on commissions earned.

129               Ms Poniatowska submits that the primary Judge erred in assessing past economic loss and future economic loss.  She points to her earnings in the three months before the warning letters were issued and as comparators, the earnings of Mr Flynn and a Ms Hopko, who was another building consultant who commenced working at ESA at the same time as Ms Poniatowska.  She submits that the primary Judge erred in assessing damages based on her first year of income rather than her earnings immediately prior to termination.  Ms Poniatowska also submits that his Honour did not take into account industry superannuation.  That can be dealt with immediately:  his Honour specifically referred to the superannuation at [354].

130               It is apparent from his Honour’s reasons, and facts that are not challenged, that there was a real question of Ms Poniatowska’s skill and earning capacity, compared with that of other employees, that was not shown to be related to the consequences of sexual harassment.  Ms Poniatowska was not experienced as a building consultant prior to her employment by ESA.  His Honour accepted that she made mistakes, as demonstrated on the evidence, but concluded that this was due to her inexperience and was not unexpected in view of her length of employment with the company.  There is no basis for the assertion that Mr Flynn was an appropriate comparator.  The primary Judge explained his calculation of economic loss at [354] which included taking account of Ms Poniatowska’s actual earnings as well as consideration of Ms Hopko’s earnings as she became a more experienced building consultant.

131               Ms Poniatowska has not demonstrated any error on the part of the primary Judge in the calculation of economic loss.

Ground 2 – exemplary damages

132               Ground 2 of the cross-appeal is that the primary Judge erred in not awarding a sum for exemplary damages and/or aggravated damages against ESA.  She submits that such damages are appropriate because of his Honour’s findings as to the motivation of ESA’s conduct.  The primary Judge pointed out at [361] that neither a claim for exemplary damages nor aggravated damages was made in the application itself.  The submission that exemplary damages were appropriate was only raised before the primary Judge in final addresses and his Honour said that he did not have detailed submissions refining the basis for quantifying such damages.  His Honour said that it was only at the point of the reasons for Ms Poniatowska’s termination that, in his view, deliberately inappropriate conduct was undertaken by ESA.  His Honour said that without the benefit of detailed submissions as to how that conduct could be isolated from the other forms of conduct which underlaid and gave rise to the termination of employment, he was not prepared to make a determination of the appropriate quantum of exemplary damages.

133               Section 46PO(4) of the HREOC Act providedthat the Court may make such orders as it thinks fit, including an order as specified in s 46PO(4)(d), namely 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.  ESA contends that there is no power on the part of the Court to make an order for exemplary damages under s 46PO(4).  We note that, while s 46PO(4) refers only to orders for damages of a compensatory nature, there is no exclusion of other orders that may be made.  However, we do not need to determine whether or not there is power to make such an award under this section as, in our view, his Honour’s approach was reasonable in the circumstances. 

CONCLUSION

134               It follows that the appeal should be dismissed with costs and the cross-appeal should be dismissed with costs.  The appropriate order as to costs is that the appellant pay 90% of the first respondent’s costs.

Associate:

Dated:         27 July 2010