Federal Court of Australia

Kelly v Commonwealth of Australia as represented by Services Australia (formerly the Department of Human Services) (No 3) [2026] FCA 735

ORDERS

THE COURT ORDERS THAT:

1.    The question whether the second respondent is liable to orders under s 46PO(4) of the Australian Human Rights Commission Act 1986 (Cth), by reason of having contravened s 28B(2) of the Sex Discrimination Act 1984 (Cth), be answered “yes”.

2.    Costs as between the applicant and the second respondent be reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

KENNETT J:

1    The background to this proceeding and its long and troubled history are discussed in Kelly v Commonwealth of Australia as represented by Services Australia (formerly the Department of Human Services) (No 2) [2025] FCA 736.

2    On 10 September 2024, I made an order pursuant to r 30.01 of the Federal Court Rules 2011 (Cth) (the Rules) that the Court hear and determine the issues as to contravention and liability separately from (and before) any issues as to remedy and penalty. The proceeding was listed for final hearing on issues of liability, for seven days commencing on 1 June 2026.

3    At the time the hearing was scheduled to commence, the legal teams for the applicant (Mr Kelly) and the first and third respondents (the Commonwealth and Mr Kowal) were in discussions seeking to settle the proceedings as between those parties. Upon commencing at around 11.45 am, I was informed that the matter had settled in principle as between these parties and the terms of settlement were being drafted.

4    The second respondent (Ms Stone) was not a party to those discussions. She did not appear on 1 June 2026. Ms Stone was previously represented by the solicitors acting for the Commonwealth and Mr Kowal but they lost contact with her in late 2025. The solicitors sent Ms Stone a notice of intention to cease acting on 1 April 2026 and formally ceased to act for her on 22 May 2026. In the lead-up to the hearing, several attempts were made to locate and contact Ms Stone by various methods in an attempt either to obtain her evidence or to make earlier statements by her admissible under exceptions to the hearsay rule. On 21 May 2026 I granted leave for a subpoena to give evidence to issue to Ms Stone at the request of the Commonwealth and Mr Kowal.

5    When the hearing commenced, senior counsel for the Commonwealth and Mr Kowal read an affidavit by her instructing solicitor, deposing to the attempts that had been made to serve the subpoena on Ms Stone, and formally called on the subpoena. Ms Stone was not present.

6    Counsel for Mr Kelly then sought to continue the hearing as to liability against Ms Stone pursuant to r 30.21(1)(b)(i) of the Rules. Being satisfied that thorough attempts had been made to inform Ms Stone of the hearing date and obtain her attendance, I considered it appropriate to proceed in this way.

7    Ms Stone is a former work colleague of Mr Kelly. The relief sought against her in Mr Kelly’s amended originating application is that she be made jointly and severally liable for, or pay such contribution as the Court considers appropriate towards, damages that are sought against the Commonwealth under s 46PO(4) of the Australian Human Rights Commission Act 1986 (Cth) (the AHRC Act). However, Mr Kelly’s amended statement of claim identifies the relief sought at [229] as including:

a declaration that Kathleen Stone committed unlawful discrimination within the meaning of section 3(1) of the AHRC Act by reason of the contraventions pleaded in paragraph 217.

8    The reference to [217] is a typographical error: that paragraph relates to Mr Kowal and not Ms Stone. It is alleged at [219] that Ms Stone committed unlawful discrimination by reason of contraventions of the Sex Discrimination Act 1984 (Cth) (SDA) and the Disability Discrimination Act 1992 (Cth) (DDA) that are pleaded at [151]. However, [151] (which in turn refers back to several other paragraphs), alleges breaches only of the SDA.

9    The points that were pressed against Ms Stone in the written and oral submissions of Mr Kelly arose from her sending approximately 15 images to his mobile phone. This was alleged to constitute sexual harassment of Mr Kelly within the meaning of s 28A(1) of the SDA and therefore a contravention of s 28B(2) of that Act. The allegation of sexual harassment against Ms Stone was raised in Mr Kelly’s complaint to the Australian Human Rights Commission dated 7 November 2018 and therefore comes within the unlawful discrimination that Mr Kelly can allege in this Court under s 46PO(3) of the AHRC Act.

10    Counsel read the affidavit of Mr Kelly affirmed 23 September 2025 in order to establish the conduct alleged. Relevantly, Mr Kelly deposed that, around 21 July 2016, he observed Ms Stone and another colleague laughing while looking at a computer screen. Mr Kelly looked at the image on the screen and did not understand it but chuckled in order not to seem awkward. Ms Stone asked if she could send Mr Kelly the image and he “reluctantly agreed”. A short time later Mr Kelly received 15 text messages from Ms Stone annexing a series of images, most of which comprised a photograph (sometimes digitally altered) with a short accompanying text (the images). The meaning of some of the images was unclear to Mr Kelly and he asked Ms Stone what one of them meant, whereupon she suggested that he consult the Urban Dictionary. He followed that advice in order to find out what some of the images were supposed to mean. Mr Kelly deposed to feeling “disgusted” after he viewed the images sent by Ms Stone and finding them to be “confronting, distressing and offensive”. This evidence was unchallenged and not contradicted. It is not inherently implausible and should be accepted.

11    The images were annexed to Mr Kelly’s affidavit. It is not necessary to reproduce them here or describe them in any detail. They all appear to be intended to be humorous (and Mr Kelly deposes to Ms Stone having said, later, that they were “sent in good humour”). Most are very vulgar and some can readily be interpreted as homophobic. Viewed as a collection (which is how Mr Kelly received them), they have a focus on sex organs and sexual acts or practices with often demeaning commentary.

12    Section 28B(2) of the SDA makes it unlawful for an “employee” to “sexually harass … a fellow employee”. It is not in doubt that, relevantly here, Ms Stone was an “employee” and Mr Kelly was a “fellow employee”. “Sexual harassment” is defined by s 28A, which at the relevant time provided as follows.

28A Meaning of sexual harassment

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

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

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

(1A)    For the purposes of subsection (1), the circumstances to be taken into account include, but are not limited to, the following:

(a)    the sex, age, sexual orientation, gender identity, intersex status, marital or relationship status, religious belief, race, colour, or national or ethnic origin, of the person harassed;

(b)    the relationship between the person harassed and the person who made the advance or request or who engaged in the conduct;

(c)    any disability of the person harassed;

(d)    any other relevant circumstance.

(2)    In this section:

conduct of a sexual nature includes making a statement of a sexual nature to a person, or in the presence of a person, whether the statement is made orally or in writing.

13    Given the content of the images, sending them to Mr Kelly was “conduct of a sexual nature”. Whether such conduct was “unwelcome” is a question of fact which turns on the state of mind of the allegedly harassed person at the time of the conduct: Hughes trading as Beesley and Hughes Lawyers v Hill [2020] FCAFC 126; 277 FCR 511 at [23] (Perram J, with whom Collier and Reeves JJ agreed) (Hughes). I am satisfied that the conduct in question here was “unwelcome”, in that Mr Kelly agreed only to receive one of the 15 images and that agreement was, according to the evidence, “reluctant”.

14    The question is therefore whether a “reasonable person, having regard to all the circumstances, would have anticipated the possibility that [Mr Kelly] would be offended, humiliated or intimidated” (SDA s 28A(1)). This is an objective question (Hughes at [24]-[25]), addressed from the standpoint of a reasonable person who “is assumed by the provision to have some knowledge of the personal qualities of the person harassed” (Hughes at [26]).

15    Section 28A(1A) sets out a non-exhaustive list of circumstances that may be relevant for this purpose. Three of these factors should be mentioned.

(a)    As to s 28A(1A)(a), according to his evidence, Mr Kelly is sexually oriented towards men. I infer that Ms Stone knew this, because the two of them had worked together for a period and Mr Kelly deposes to her having made adverse remarks about his “sexuality”. However, that is probably unnecessary because, according to Hughes, for the purposes of s 28A(1) the “reasonable person” would be assumed to know facts of this kind. At least, a “reasonable person” would anticipate a “possibility” that a man to whom they were sending vulgar and largely homophobic images might be homosexual.

(b)    Mr Kelly tendered an expert report in order to demonstrate that he suffered from Attention Deficit Hyperactivity Disorder (ADHD) (s 28A(1A)(c)). “Disability” is defined in s 4(1) of the SDA as having the same meaning as in the DDA, where it is defined (in s 4(1)) to include “a disorder, illness or disease that affects a person’s thought processes, perception of reality, emotions or judgment or that results in disturbed behaviour”. It appears from Mr Kelly’s affidavit that he disclosed to Mr Kowal that he was on medication for ADHD but that he was cautious about doing this, and he does not depose to having disclosed this fact to Ms Stone. However, the fact that Mr Kelly suffered from a condition that might affect his reaction to material of the kind contained in the images is something which a “reasonable person” would be assumed to know (or at least a possibility that a reasonable person would be aware of).

(c)    The relationship between Ms Stone and Mr Kelly (s 28A(1A)(b)) was that of work colleagues. According to the evidence, they worked in the same office and at the same level; however, Mr Kelly had previously been Ms Stone’s supervisor and had to “performance manage” her. The exact nature of their relationship is difficult to assess. However, there was a history between Ms Stone and Mr Kelly that could well have given rise to unease on his part; and the sense that emerges from his affidavit is that their relationship was not a comfortable one. In any event, on any view, some of the images were such that receiving them from a work colleague (especially while in the workplace) would have been very uncomfortable.

16    I am therefore satisfied that, in the circumstances in which the images were sent to Mr Kelly, a reasonable person, having regard to those circumstances, would have “anticipated the possibility” that Mr Kelly would be offended, humiliated or intimidated. Ms Stone’s conduct constituted “sexual harassment” as defined and contravened s 28B(2) of the SDA.

17    I have treated the order for separate determination of the “issues as to contravention and liability” referred to above as stating for separate determination the question whether Ms Stone is liable to orders under s 46PO(4) of the AHRC Act by reason of having contravened s 28B(2) of the SDA. That question will be answered in the affirmative.

18    Counsel did not expressly press for the grant of declaratory relief at this stage, and it would be preferable to receive submissions on the utility of a declaration and the appropriate form of words. I will therefore not make any other order at present, other than to reserve the question of costs.

Associate:

Dated:    12 June 2026