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The Oracle decision: Full Federal Court raises the bar for damages in sexual harassment cases

Submitted By Firm: Corrs Chambers Westgarth

Contact(s): John Tuck

Author(s):

By Janine Young (Partner) & Anthony Forsyth (Consultant)

Date Published: 8/7/2014

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In Richardson v Oracle Corporation Australia Pty Ltd and Tucker [2014] FCAFC 82 (15 July 2014), a Full Court of the Federal Court awarded Ms Rebecca Richardson, a former consulting manager employed by Oracle Australia Pty Ltd (Oracle) total damages of $130,000 for sexual harassment by Mr Randol Tucker, a male sales representative. The new damages award (comprising $100,000 in general damages and $30,000 for economic loss)) was a significant increase on the previous award of $18,000 by Justice Buchanan at first instance.

In upholding Ms Richardson’s appeal, the Full Court took into account changes in the value placed by society on compensation for loss of enjoyment of life, and held that the previous award of damages by Justice Buchanan did not reflect “prevailing community standards”. Moreover, the Full Court found that the causal link between the sexual harassment and Ms Richardson’s resignation from her position at Oracle warranted an award of damages for economic loss.

In this In Brief, we discuss the Full Court’s decision and explore (in particular) its approach to the assessment of damages in sexual harassment cases.

Factual background

Ms Richardson brought a claim against Oracle and Mr Tucker, alleging breach by the latter of section 28B(2) of the Sex Discrimination Act 1984 (Cth) (SD Act). Oracle was alleged to be vicariously liable for Mr Tucker’s conduct under section 106 of the SD Act.

Ms Richardson alleged that when she worked with Mr Tucker in a project bid team in 2008, she was subjected to a “constant barrage of sexual harassment” over a six-month period. She informed her manager at the time who forwarded her complaint to the relevant HR personnel within Oracle, who subsequently carried out an investigation. Contact between Ms Richardson and Mr Tucker continued while the investigation took place.

The investigation upheld much of Ms Richardson’s complaint, which led to Mr Tucker providing an apology by email. Oracle then attempted to reposition Ms Richardson within the organisation. However by March 2009, she had resigned and ceased employment with Oracle after working out her four-week notice period. Ms Richardson took up employment with another company, EMC Australia (EMC), on 20 April 2009.

Decision at first instance

Ms Richardson’s claim under the SD Act was heard by Justice Buchanan of the Federal Court, who held that Mr Tucker had engaged in conduct towards Ms Richardson that contravened section 28B(2) of the SD Act during the period when they were both employees of Oracle.[1]

Since Oracle had failed to show that it took reasonable steps to prevent Mr Tucker from sexually harassing Ms Richardson, Justice Buchanan held that it was vicariously liable for his conduct.

His Honour ordered $18,000 as general damages (i.e. for non-economic loss and damage), but rejected a claim for economic loss as the necessary causal link between Mr Tucker’s conduct and Ms Richardson’s subsequent resignation was not made out.

Decision of Full Federal Court

Ms Richardson appealed against Justice Buchanan’s decision. Justices Kenny, Besanko and Perram of the Full Federal Court allowed the appeal, increasing Ms Richardson’s general damages to $100,000 with an additional $30,000 for economic loss.

A central issue for determination in the appeal was the interpretation of the Court’s power to make an order under section 46PO(4)(d) of the Australian Human Rights Commission Act 1986 (Cth) (AHRC Act):

... 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; ...

Although all three judges agreed on the key issues in the appeal, Justice Kenny issued a separate judgment.

Original damages award “manifestly inadequate”

Justice Kenny considered the principles for reconsidering a damages award on appeal, and found that an appellate court should only interfere with the sum of general damages fixed by a trial judge if that decision was based on an error of principle or “a wholly erroneous estimate of the damages suffered” (citing House v The King (1936) 55 CLR 499).

Her Honour determined that: “having regard to the nature and extent of Ms Richardson’s injuries and prevailing community standards, the low level of the damages awarded by the trial judge itself bespeaks error”.

A revised approach to calculating general damages

In reaching her decision, Justice Kenny confirmed the trial judge’s finding that historically, the accepted range of damages in sexual discrimination cases is generally “between $12,000 and $20,000”. However, Her Honour noted that criticisms have been raised in academic literature of the courts’ failure to accord weight or significance to the emotional loss and turmoil experienced by a victim of unlawful discrimination and harassment.

Justice Kenny attributed the cautious approach of the courts towards the fixation of damages in sex discrimination cases to a level of uncertainty in the earlier decisions, which has not been corrected subsequently. However, Her Honour stated that it would be “dangerous to rely too heavily” on the accepted range of damages awards, because the community has generally gained “a deeper appreciation of the experience of hurt and humiliation that victims of sexual harassment experience and the value of loss of enjoyment of life occasioned by mental illness or distress caused by such conduct”.

Justice Kenny held that in making an award of damages, general standards prevailing in the community as well as damages awards for injury similar to that suffered by Ms Richardson would provide guidance on the appropriate level of compensation.

In considering case law in the spheres of workplace bullying and personal injuries, Her Honour noted that the award of damages in such cases indicated a greater value being placed on the loss of enjoyment of life. For example, she referred to the decisions in Swan v Monash Law Book Co-operative [2013] VSC 326 and Willett v Victoria [2013] VSCA 76 where awards of $300,000 and $250,000 respectively were made as damages for pain and suffering and enjoyment of life arising from workplace bullying.

Justice Kenny held that this comparison with other cases “demonstrates that the award for general damages in this case was disproportionately low and failed adequately to compensate Ms Richardson for the loss and damage she suffered because of Mr Tucker’s conduct.”

Taking into account the injuries suffered by Ms Richardson caused by Mr Tucker’s conduct, which included changes in her demeanour, her physical condition and a decline in sexual intimacy between her and her partner, Justice Kenny allowed the appeal and increased the award of general damages from $18,000 to $100,000.

Damages for economic loss

At first instance, Justice Buchanan rejected Ms Richardson’s claim for economic loss resulting from her resignation from her position with Oracle and her subsequent employment with EMC. The Full Court overturned this aspect of His Honour’s decision on appeal, finding that there was a sufficient causal link between Mr Tucker’s unlawful conduct and Ms Richardson’s decision to leave Oracle.

Considering whether the necessary element of causation existed (as required by section 46PO(4)(d) of the AHRC Act)), Justices Besanko and Perram held that where there is an intervening act - such as an applicant’s decision to retire early or seek alternative employment - the relevant test is whether the:

... defendant’s wrongful act or omission is, as between the plaintiff and the defendant and as a matter of commonsense and experience, properly to be seen as having caused the relevant loss or damage.

In Ms Richardson’s case, Justices Besanko and Perram found that there was a causal link between Mr Tucker’s unlawful conduct and her decision to leave Oracle, given that she began considering her future employment during the relevant period of Mr Tucker’s unlawful conduct; had adjusted “very quickly” in finding an alternative job; and displayed a lack of trust in Oracle.

Justices Besanko and Perram referred to Justice Buchanan’s reasoning that (if he were to award damages for economic loss) Ms Richardson’s loss would have been $10,000 per year for the period between 2009 and 2012. Their Honours took into account the difference between her new salary at EMC and her prior earning capacity at Oracle (although it disregarded her claim that the damages award should also reflect bonuses to which she may have been entitled at Oracle).

The Full Court did not interfere with Justice Buchanan’s calculation of Ms Richardson’s total economic loss and awarded $30,000 as compensation for the three-year period, but (unlike the trial judge) found that that amount should actually be awarded.

Their Honours rejected Ms Richardson’s claim for damages allegedly arising from:

 

  • the way in which Oracle carried out the investigation into Mr Tucker’s conduct (including the failure to prevent contact between the complainant and respondent during this period); and
  • Mr Tucker’s false denials of the unlawful conduct alleged against him.

What does the Oracle decision mean for employers?

The decision highlights an increased emphasis placed by the courts on the deprivation of the enjoyment of life and the experience of pain and suffering by victims of sexual harassment.

The decision suggests that damages that may be awarded in such cases will no longer conform to a pre-existing range and will depend on the loss of enjoyment, psychological distress and pain experienced by the complainant.

Employers should be mindful of this shift in the courts’ approach to assessing damages in sexual discrimination and harassment cases.

Given the potential for higher damages awards, the decision reinforces the need for employers to have clear policies in place regarding appropriate conduct in the workplace; and to ensure employees and managers receive regular training on these issues.


[1] Richardson v Oracle Corporation Australia Pty Ltd [2013] FCA 102.

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