Courts and Tribunals will order significant general damages awards in sexual harassment claims
Workers compensation legislation in Victoria does not restrict personal injury type damages
Collins v Smith (Human Rights)  VCAT 1992
The Victorian Civil and Administrative Tribunal (the Tribunal) recently handed down a significant decision on compensation and costs, which:
- confirms the trend of Courts and Tribunals ordering substantial general damages awards in sexual harassment claims, and
- held that the statutory workers compensation scheme in Victoria does not limit the Tribunal, in such cases, to only awarding compensation for hurt, humiliation and distress.
For insurers of respondents in sexual harassment claims, an awareness of this position will assist in setting practical claim reserves, which may now need to be substantial, particularly where the complainant can establish serious psychiatric harm.
Ms Collins (the Employee) claimed against David Smith (the Respondent) under the Equal Opportunity Act 2010 (Vic) (the EO Act).
Section 93(1)(b) of the EO Act makes it unlawful for an employer to sexually harass an employee. Sexual harassment is defined in section 92 of the EO Act to include unwelcome sexual advances and conduct.
The Employee alleged the Respondent had sexually harassed her over a fourth month period while the Employee worked in the Respondent’s Geelong West Licensed Post Office in Victoria, which he managed and owned with his wife.
At the hearing on liability, the Employee established that the Respondent’s conduct included physical contact, such as touching of the Employee’s crotch, bottom and breasts; verbal comment, including repeated propositioning for sex; and written communications of a sexual nature, including a card, note and numerous explicit text messages.
As a result of this conduct, the Employee suffered significant a severe psychiatric injury, loss of enjoyment of life, pain and suffering, and considerable economic loss.
In the Tribunal’s decision on liability , Judge Jenkins was scathing of the Respondent’s conduct:
“the Respondent embarked on a relentless course of sexual harassment … blatantly disregarding the Applicant’s happy marital relationship” in “incidents [which] constituted a grave example of sexual harassment”
Judge Jenkins found that the Respondent had subjected the Employee to persistent and unwelcome conduct of a sexual nature, and consequently sexually harassed her in contravention of the EO Act.
In a later decision on compensation , Judge Jenkins ordered the Respondent pay to the Applicant $332,280 in compensation for the injury, loss and damage suffered as a consequence of the Respondent’s contraventions of the EO Act, including general damages of $180,000.
The remaining damages comprised aggravated damages of $20,000, past loss of net earnings and superannuation of $60,000, future loss of net earnings and superannuation of $60,000, and out of pocket expenses of $12,280. The Tribunal also ordered that the Respondent pay the Employee’s costs.
The stated reasons for the award of $180,000 for general damages included that:
- the Courts and Tribunals have recently taken a more equitable and expansive approach to damages awards in sexual harassment claims, which accords with prevailing community standards;
- the impact of even one serious incident of sexual harassment can have a devastating effect, both personally and professionally, upon a victim;
- as a consequence of the Respondent’s sexual harassment, in addition to her economic losses, the Employee had suffered a severe psychological disorder, pain and suffering, loss of enjoyment of life, and loss of intimacy with her husband; and
- awards for loss of enjoyment of life and pain and suffering outside the anti-discrimination field (e.g. workplace bullying personal injuries claims) have been significantly higher, even though the injuries and distress are of a comparable kind.
Resolving tension between workers compensation legislation and damages under the EO Act
As you may be aware, workers compensation legislation in Victoria restricts the ability of a worker to obtain damages in respect of a workplace injury. Relevant provisions of the legislation impose a bar on the recovery of damages for workplace injuries other than in accordance with the relevant sections.
At the hearing on compensation, the Respondent argued that the Employee’s claim was for personal injury and fell within the provisions of the workers compensation legislation. He submitted that the Tribunal’s powers were therefore limited to loss or damage suffered other than by way of an injury, and it could not award compensation for pecuniary or non-pecuniary loss arising from the injury.
This would have limited the Tribunal to awarding compensation only for hurt, humiliation and distress.
The Employee and the Victorian Equal Opportunity and Human Rights Commission (the Commission) intervened at the hearing on compensation. The Commission submitted that claims to which the workers’ compensation provisions apply do not relate to the special statutory regime under the EO Act.
The Tribunal agreed with the Commission. Accordingly, the Victorian workers compensation legislation does not limit compensation for damages under the EO Act, even where part of a claim for compensation arises from a personal injury.
This decision demonstrates that the days of nominal general damages awards in sexual harassment claims are well and truly over. This is likely to extend to other discrimination claims as long as an applicant can prove loss of enjoyment of life and pain and suffering.
The decision also shows that a cumulative and sustained pattern of sexual harassment can result in significant damages awards, particularly if the complainant has suffered serious psychological distress as a result of the unlawful conduct.
As a result of this decision, respondents to sexual harassment claims, and their insurers, should assume they will be exposed to considerable damages awards if they are unable to successfully defend a claim. As such, insurers would be well advised to set significant reserves in matters where a liability exposure is clear or likely.
Date: 23 February 2016