Non-economic loss: Courts re-evaluate damages awards
A trend is emerging a year on from the landmark Richardson v Oracle Corporation Australia Pty Ltd  FCAFC 82 (Oracle) decision. Courts and tribunals appear willing to consider more substantial awards for noneconomic loss in discrimination cases. The principles set down in Oracle are also flowing into the calculation of damages for other types of claims where non-economic loss is relevant.
In mid-2014, the Full Federal Court handed down the Oracle decision and made a clear statement, that the previous approaches taken by courts and tribunals for calculating noneconomic loss awards in sexual harassment and sex discrimination cases needed to be re-evaluated.
What is non-economic loss?
Non-economic loss, also referred to as general damages, is a head of damage generally awarded for the pain, suffering, disability and loss of amenity/enjoyment of life (past and future) suffered by a person as a result of somebody else's conduct.
Previously, courts had developed an accepted range for non-economic loss awards. More serious matters were awarded damages at the top of the range (around $20,000) and less serious matters at the lower end (approximately $12,000 or less).
Departure from this range was usually limited to particularly serious circumstances.
Oracle involved a claim made by Ms Rebecca Richardson, a senior employee of Oracle Australia Pty Ltd (Oracle), under the Sex Discrimination Act 1984 (Cth). Her claim relied on a number of serious allegations of sexual harassment made by her against a male colleague, Mr Randol Tucker.
In its submissions on damages, Oracle argued that there was a generally accepted range for general damages in sexual harassment cases, falling between $12,000 and $20,000.
Considering the approach developed over the past 15 years, Oracle submitted that an award of $18,000 was appropriate. The Court agreed.
However, on appeal, the Full Federal Court held an award of general damages should not be determined based on the accepted range. Rather, the Full Federal Court determined that a general damages award of $100,000 was more appropriate and in doing so, observed:
- community standards now accord a higher value to compensation for pain and suffering and loss of enjoyment of life than before
- academic commentary had indicated that a conservative approach to assessing damages awards in discrimination cases impeded the "deep social reform" that antidiscrimination legislation was designed to implement, and
- awards for general damages in discrimination matters should be consistent in comparable personal injury and workplace bullying matters.
The Oracle decision was lauded by unions and employee groups for recognising changing views toward sexual harassment and acknowledging its long-term impact on victims.
Twelve months on—where are we now?
For employers, the Oracle decision raised concerns about an increase in sexual harassment claims due to the prospect of significantly increased damages. In addition, Justice Kenny noted that the Full Federal Court's approach to general damages in Oracle had a "broader application". This was interpreted to mean that the approach in Oracle to assessing general damages could also apply to other discrimination claims and even general protection claims for discrimination under the Fair Work Act 2009 (Cth).
While the feared avalanche of sexual harassment claims did not eventuate, a trend has emerged in the approach taken by courts and tribunals in assessing awards of general damages. It seems the broad approach espoused by Justice Kenny has rung true, with Oracle being applied in various jurisdictions and other types of discrimination claims. For example:
- In Dziurbas v Mondelez Australia Pty Ltd (Human Rights)  VCAT 1432, the Victorian Civil and Administrative Tribunal (VCAT), considered a claim for disability discrimination involving a worker's return to work following an injury. The Oracle approach to the assessment of damages was applied for distress, upset and humiliation for a claim made under the Equal Opportunity Act 2010 (Vic.). In awarding the Applicant $20,000 in general damages, VCAT quoted the judgment in Oracle: "compared to the past, modern society places a higher value on the loss of enjoyment of life and the compensation of pain and suffering".
- In Huntley v State of NSW, Department of Police and Justice (Corrective Services NSW)  FCCA 1827, the Court determined—in the context of the Disability Discrimination Act 1992 (Cth)—the Respondent's discriminatory conduct had "contributed to" the trauma, pain and suffering experienced by Ms Huntley and awarded her $75,000 in general damages.
- In Power v Bouvy and Bouvy v Power  TASADT 2, the Anti-Discrimination Tribunal of Tasmania awarded the Applicant $25,000 in a claim for sexual harassment under the Anti-Discrimination Act 1998 (Tas.) and stated: "[Oracle] has radically affected the quantum of compensation that is appropriate in anti-discrimination matters and brought it into closer alignment with that awarded in breach of confidence matters not involving psychiatric injury... All in all, the aggravating factors in this matter are of greater gravity than the conduct in Houston v Burton and deserving of a greater award of compensation adjusted appropriately in light of Richardson v Oracle."
Where to from here?
These decisions demonstrate a changing approach to general damages in discrimination cases. State jurisdictions may not be as
affected, as some jurisdictions (such as NSW) are capping awards that can be made.
However, it remains to be seen whether the general damages award of $100,000, as made in Oracle, sets a new benchmark. In any event, employers should be wary that the decision in Oracle may not represent the upper limit of general damages awards, with the Court acknowledging Ms Richardson's complaint was not an example of the worst conduct brought before the Court.
Oracle's reach has extended beyond sex discrimination and harassment cases, with other courts and tribunals appearing open to making higher awards for general damages for "distress, hurt and humiliation" arising from discrimination. It is also possible Oracle will be considered in adverse action/ general protections or victimisation claims, should other courts and tribunals share the view that previous approaches to general damages are "out of step" with modern community expectations.
What to do next?
Oracle and its impact suggests the stakes may be getting higher for discrimination and employment-related claims. Employers should be conscious of the potential for substantial general damages being ordered for "distress, hurt and humiliation" in addition to other heads of damage (such as economic loss).
As ever, prevention is better than cure and employers should focus on ensuring standards of workplace behaviour are clearly articulated to employees. This includes updating policies and providing regular training to employees.
Employees with management responsibilities should also be trained in how to respond to complaints about workplace behaviour. This includes understanding the importance of sound investigations, fairness and managing risks of victimisation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.