Commonwealth of Australia v Human Rights & Equal Opportunity Commission

The facts 8 Prior to attaining the age of 65 years, on 19 July 1996, Mr Peacock was employed by the Commonwealth as Director of Psychology - Navy. His employment was governed by the terms of the Public Service Act 1922. Section 76V of that Act included the following provisions: "(1) Subject to subjection (2), an officer shall, by force of this subsection, be retired from the Service upon attaining the maximum retiring age. (2) Where the relevant Secretary is of the opinion that it is desirable, in the interests of the Commonwealth, that an officer who has not attained the maximum retiring age should continue, after attaining that age, in employment, and the officer is able and willing so to continue, the relevant Secretary may determine, in writing, that subsection (1) does not apply to the officer. (3) The relevant Secretary may, at the time of making, or at any time after making, a determination under subsection (2) in respect of an officer, determine that the officer shall retire from the Service upon attaining a specified age or upon the expiration of a specified period and, where such a determination is made, the relevant Secretary may, at any time before the officer attains that age or before the expiration of the period so determined, vary the determination." Subsection (4) of s76V contained a definition of "maximum retiring age", being 65 years in the case of Mr Peacock. There was also a definition of "officer". It is common ground that Mr Peacock was an "officer" within the meaning of the section. 9 Realising the imminence of his 65th birthday, in March 1996 Mr Peacock had discussions with Ms Kathy Potts of the Public Service Commission. On 11 March 1996 he sent a minute to the Deputy Secretary, Budget and Management, of the Department of Defence in the following terms: "1. Pursuant to reference A and subsequent discussions with Ms Kathy Potts of the Public Service Commission, I am writing to seek retention for a period of six months past my current retirement age of 65 years, which I will reach on the 19th of July this year. I am advised by Ms Potts, and others, that, although the legislation has been before Parliament since the last quarter of last year, it is unlikely to be enacted before July. I am sole parent and the last of my four children, my youngest daughter, will be finishing studies in November this year. The six months period will also allow me to tie up financial arrangements hanging over from my divorce settlement. 2. Opponents of removing age discrimination on employment will no doubt argue a case for providing employment opportunities for the young, and indeed I believe my current Director General (DGNM) is one who supports this philosophy. However, with the increase in population of those aged 65 years and over, under present policy, it will be the young upon whom will fall the increasing burden of providing the financial welfare of society. Certainly the current Prime Minister is aware of this and incentives for work past 65 was part of his election platform. 3. The aging of the Australian population is demonstrated by the growing numbers and proportions of the aged. Between 1981 and 2001 the proportion of the population aged 60 years and over is projected to increase from 14 to 22% and the numbers of aged from 2 to nearly 5 million persons. (Greying AustraliaH. Kendig & J. McCullum AGPS Canberra 1988). 4. Interestingly, where the removal of compulsory retirement has been implemented and widely supported in the US - only 5% of those offered the option of remaining in their jobs did so. The important issue, it seems, is that people valued the option of making the choice. Certainly US Senator Dole who at the age of 72 is seeking election to the highest position in the US seems to be one of those. 5. I mention all of the above merely to counter the ageism argument. The extra six months I seek is unlikely to cause any ruffles in the great scheme of things. 6. Although my current DG has indicated that (he) does not support retention of elderly staff as he sees it as detrimental to the progress of younger staff, it appears to be purely a philosophical issue and not based on any animosity between the two of us. Indeed I respect his views as I am sure he does mine. However I would point out that my performance appraisals under the two previous DG's CDRE Letts and CDRE Trotter were at the Superior level and respectfully request your favourable consideration to my request." 10 On 15 May 1996 Mr R H Tonkin, Deputy Secretary, Budget and Management, of the Department rejected Mr Peacock's request. Mr Tonkin said Mr Peacock's personal reasons for wishing to continue in employment and his Superior rating at his last two performance appraisals "by themselves do not provide sufficient justification for invoking subsection 76V(2) of the Public Service Act". He went on: "The discretion available to delegates to waive compulsory age retirement continues to be used sparingly and in special circumstances, such as where an employee has unique or specialist skills that cannot be easily replaced, or where a project's timely completion depends on the retention of a particular employee because of unique knowledge. Navy was consulted concerning your application and indicated that you are not involved in any special projects nor are there any known special circumstances which would give cause to use the discretion available to extend your employment. Regrettably, I cannot approve your request." 11 On 3 June 1996 Mr Peacock responded with a minute addressed to Mr Tonkin in which he intimated he intended "to take the issue of aged based retirement to the United Nations Human Rights Committee" . Mr Peacock referred to Article 26 of the International Covenant on Civil and Political Rights to which Australia is a party. He pointed out it is a requirement of the right of individuals to petition the Committee that they have first exhausted all available domestic remedies for the alleged infringement of their rights. Mr Peacock said procedures for domestic remedies might be protracted. He concluded: "On the above basis I seek your approval to remain in employment until all avenues of appeal, including direct petition to the HRC, have been exhausted. I would respectfully submit that it would be 'in the interest of the Commonwealth' for them to be seen to be meeting their obligations under an International Treaty ratified by them rather than maintaining blind adherence to a 1922 Act, enacted in a more unenlightened period of Australia's history. I await your response and will keep you advised of the progress of the matter through the legal channels." 12 On 19 June 1999 Mr Peacock forwarded a further minute to Mr Tonkin in which he submitted an appeal, under regulation 83 of the Public Service Regulations, in relation to the decision notified on 15 May. He stated three grounds of appeal. One of those grounds referred to "action pending before the HREOC" and said "natural justice determines that the outcome of this action be awaited before my termination". 13 On 24 June 1999 Mr Tonkin responded to both Mr Peacock's minutes. He said: "I note that your Minute of 3 June 1996 requests approval to remain in employment until all avenues of appeal, including direct appeal to the United Nations Human Rights Committee in Geneva have been exhausted. I also note that you are seeking legal advice on the available domestic remedies which must be exhausted before such an appeal can be heard. The effect of an acceptance of your request would be to extend your employment substantially beyond your required retirement date of 18 July 1996 under the provisions of Section 76V(1) of the Public Service Act 1922. As the consideration and resolution of your claims is not conditional on your continuing status as an employee under the Public Service Act. I can see no basis to alter the decision which was conveyed to you in my Minute … of 15 May 1996. I further note that your Minute of 19 June 1996 seeks an appeal under Regulation 83 of the Public Service Regulations against my decision under Section 76V(2) of the Public Service Act in the event that I did no [sic] agree to your request of 3 June. As I have not agreed to your request I have forwarded your appeal to ASPP for immediate attention." 14 The matter came to the attention of Mr A J Ayers, Secretary of the Department. On 10 July 1999 he forwarded to Mr Peacock a minute setting out his decision. Mr Ayers referred to Mr Peacock's minute of 19 June 1996, which he described as "lodging a grievance under Regulation 83" against Mr Tonkin's decision "not to invoke subsection 76V(2) of the Public Service Act to extend your employment beyond age 65". He noted a reference by Mr Peacock, in his minute of 19 June, to provisions of the Industrial Relations Act 1988 proscribing termination of employment, by an employer, for the reason of age. Mr Ayers went on: "I am advised that termination of employment under s76V(1) of the PSA is not termination at the initiative of the employer but termination resulting from the operation of an Act of Parliament. I am further advised that where termination of employment results from an Act of Parliament, that type of termination is not one to which the relevant provisions of the IR Act apply. It follows that there is no inconsistency between the two Acts and therefore the termination provisions of the IR Act do not prevail over s76V(1) of the PSA. As you are aware s76V(1) of the PSA will operate unless I form the view that it is desirable in the interests of the Commonwealth that you continue in APS employment beyond age 65 for a specific period. I have considered all the issues raised by you and have decided not to invoke subsection 76V(2) to extend your period of employment. The following paragraphs explain my reasons for this decision. Generally, the Commonwealth's interests in this matter relate to the efficient operation of the Department and compliance with the law and government policy in public administration. There is a Commonwealth interest in the maintenance of the efficient operation of government administration through the continued use of efficient and effective people. The Commonwealth interest which may be served by your continued employment is the continued utilisation of your skills in the achievement of relevant Navy program objectives. I note that you advise that you were given a rating of superior in your previous two performance appraisals. I am also advised that you remain fit for duty and suitable work is available. There is also, however, a Commonwealth interest in maintaining a balanced age profile in the Department and providing career opportunities for other suitable eligible staff, particularly at a time of significant staff reductions, and these interests would tend to militate against your continued employment. There is a Commonwealth interest in the efficient operation of its Departments of State. In Defence, the exercise of discretion by delegates in this interest has taken account of special circumstances, such as where an employee has unique or specialist skills that cannot be easily replaced or where a project's timely completion depends on the retention of a particular employee because of unique knowledge. Navy has indicated that none of these factors applies in your case. The presumption underlying the exercise of the discretion is that compulsory retirement should occur unless it is not in the interests of the Commonwealth. It appears that the efficient operation of the Department would not be affected by allowing s76V(1) to operate in this case. There is a Commonwealth interest in decision makers complying with government policy. I note that Minister Reith's office wrote to you confirming that the Government intends to implement its election commitment to abolish compulsory age retirement in the APS. The policy, however, requires a change to the current law, namely the repeal of s76V(1) of the PSA. The new Public Service Act will give effect to the Government's policy stance on age retirement for APS employees. I am advised that it will be introduced into Parliament in the next few months and therefore will not be enacted before you reach age 65. There is a Commonwealth interest in complying with the law as it stands at the time a decision is to be made. My decision not to exercise the discretion under subsection 76V(2) of the Public Service Act to defer the operation of s76V(1) for a determined period takes account of the fact that the Regulations made under the Human Rights and Equal Opportunity Commission (HREOC) Act prohibit discrimination on the basis of age. In compliance with this law, my decision not to exercise the discretion available to me is not based on your age. I am advised that you have lodged a complaint with the HREOC which will not be investigated until at least February 1997. The HREOC investigation can proceed regardless of your employment status. You may also seek a review of my decision through the MPRA as Regulation 84 grievance if you are dissatisfied with the outcome of this grievance investigation. Any application for review must be made in writing through the Assistant Secretary Personnel Policy to the Director of the MPRA, detailing the reasons for any dissatisfaction with the decision (see attached DPI 3/93 for further information). The Regulation 84 grievance can proceed regardless of your employment status. The rules of procedural fairness are built into the APS review mechanisms. At each stage you have had, and will continue to have, the opportunity to put your case, be informed as to decisions which affect you, the reason(s) for those decisions, and be informed of further appeal and review rights. In my view, a decision not to extend your employment prior to finalising either the HREOC investigation, or any possible Regulation 84 grievance, would not deprive you of procedural fairness. I trust that this minute satisfactorily explains the reasons for not extending your employment beyond 19 July this year." 15 As a result of this decision, Mr Peacock's employment with the Commonwealth came to an end on 19 July 1996. Subsequently, he made an application, in the Industrial Relations Court of Australia, alleging unlawful termination of employment. The application was heard by a Judicial Registrar of that Court, who found in favour of Mr Peacock. However, I upheld an application by the Commonwealth for review of that decision: see Peacock v Commonwealth of Australia (1998) 88 FCR 110. I noted I was not concerned with the reasonableness or legal validity of Mr Ayers' reasons. The sole question in the case was whether Mr Peacock's forced retirement was a termination of his employment by his employer by reason of his age. If so, that termination offended s170DF(1)(f) of the Industrial Relations Act 1988. If the termination was not a termination by the employer, but a termination by operation of the statute, the Court had no jurisdiction to grant relief. I concluded the termination was by operation of the statute. I said at 115: "The fact that the operation of the subsection may be excluded by a s76V(2) decision does not derogate from the proposition that, in the absence of such a decision, the subsection does its work. It is immaterial whether or not the particular employee has applied for the exercise in his favour of the s76V(2) discretion."

The Commission's decision 16 The Commission's inquiry into Mr Peacock's complaint of discrimination was conducted by Mr Chris Sidoti, Human Rights Commissioner. The inquiry was delayed by two circumstances. First, there was litigation in this Court in connection with complaints by other Department of Defence officers who were unhappy about decisions not to apply to them the discretion conferred by s76V(2) of the Public Service Act: see Secretary, Department of Defence v Human Rights and Equal Opportunity Commission (1997) 78 FCR 208 ("Burgess"). Second, there was Mr Peacock's unlawful termination of employment litigation. 17 In the result, it was not until 10 March 1999 that Commissioner Sidoti was able to conduct an oral hearing. On that day, numerous documents were tendered, including a written statement made by Mr Ayers on 25 May 1998 about his decision not to exercise the s76V(2) discretion in Mr Peacock's case. Oral evidence was given, including telephonic evidence by Mr Ayers. Submissions were made. 18 On 20 December 1999 Commissioner Sidoti published, on behalf of the Commission, a notice under s35 of the Human Rights and Equal Opportunity Commission Act. The notice set out the findings and conclusions he had reached. The section of the notice dealing with findings, section 6, commenced with a statement of the issues: "One of the functions conferred on me by the Act is to inquire into any act or practice that may constitute discrimination (s.31(b) of the Act). Discrimination is defined in s.3 of the Act as follows: 'discrimination' means: (a) any distinction, exclusion, or preference made on the basis of race, colour, sex, religion, political opinion, national extraction or social origin that has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation; and (b) any other distinction, exclusion or preference that: (i) has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation; and (ii) has been declared by the regulations to constitute discrimination for the purposes of this Act. but does not include any distinction, exclusion or preference: (c) in respect of a particular job based on the inherent requirements of the job; or (d) in connection with employment as a member of the staff of an institution that is conducted in accordance with the doctrines, tenets, beliefs or teachings of a particular religion or creed, being a distinction, exclusion or preference made in good faith in order to avoid injury to the religious susceptibilities of adherents of that religion or creed. Regulation 4(a) of the Human Rights and Equal Opportunity Commission Regulations 1989 (Cth) declares 'any distinction, exclusion or preference made on the ground of age' constitutes discrimination for the purposes of the Act. In deciding whether the matters complained of constitute discrimination within the terms of the Act, I must therefore consider five main issues: 1. whether there is an act or practice under the Act 2. whether the act or practice arises in employment or occupation 3. whether there was a distinction, exclusion or preference 'made on the basis of' age 4. whether the distinction, exclusion or preference nullified or impaired equality of opportunity or treatment and 5. whether the distinction, exclusion or preference in respect of the particular job was based on the inherent requirements of the job." 19 Commissioner Sidoti dealt with each of these issues. In relation to the first issue, Commissioner Sidoti pointed out that, in Burgess, Branson J held retirement takes effect by virtue of s76V(1) of the Public Service Act itself (subject to s76V(2)), not by reason of any "act or practice" done by, or on behalf of, the Commonwealth; accordingly, the Commissioner said, "the scope of this inquiry is limited to whether the decision not to exercise the discretion under s76V(2) of the PSA constitutes age discrimination under the Act". 20 Commissioner Sidoti noted the Commonwealth did not challenge the existence of a relevant "act or practice" in relation to s76V(2); the relevant "act" being Mr Ayers' decision of 10 July 1996. Commissioner Sidoti said he was satisfied this act "was ultimately the act of the respondent"; that is, the Commonwealth. The Commissioner was also satisfied the act arose in relation to employment or occupation. 21 The critical matter at the inquiry was the third issue in Commissioner Sidoti's list, "whether there was a distinction, exclusion or preference 'made on the basis of' age". He said: "(t)he complainant must establish that the decision of the Secretary not to exercise the discretion under s76V(2) of the PSA to extend his employment beyond the maximum retiring age was a distinction, exclusion or preference made on the basis of age". 22 Commissioner Sidoti referred to the passage in Mr Ayers' minute of 10 July 1996 in which Mr Ayers referred to "a Commonwealth interest in maintaining a balanced age profile in the Department and providing career opportunities for other suitable eligible staff, particularly at a time of significant staff reductions" as militating against Mr Peacock's continued employment. Commissioner Sidoti observed Mr Ayers had given evidence that a "balanced age profile" was not a consideration in his decision not to extend Mr Peacock's employment. But he did not accept that evidence. The Commissioner observed Mr Ayers had said he gave instructions as to what was to go into the minute. Under those circumstances, the Commissioner thought he should prefer a statement made in a contemporaneous document to evidence given some years later. In his s35 report Commissioner Sidoti said: "Mr Ayers stated in his oral evidence that he considered that there was a Commonwealth interest in maintaining a balanced age profile in the respondent, the Department of Defence, and in providing career opportunities for younger officers. He stated that the age profile of the Department of Defence was that the majority of people were 50 to 55 years plus. He expressed concerns that there were very few young people in the Department of Defence. He stated that there was a need for an age balance and he would ideally have liked there to be an age balance. I am convinced that these concerns acknowledged by Mr Ayers before me and the desire for an age balance were taken into account in his decision in relation to the complainant. The Secretary also referred in the Minute documenting his decision to other considerations, including that there was also a Commonwealth interest in complying with laws prohibiting age discrimination. I accept that he also took into consideration factors other than his desire for age balance. However, the text of the Minute shows that age was one consideration and there is no requirement in law that it be the only consideration for an act or practice to be based on age. I therefore find that in his decision not to exercise the discretion Mr Ayers took into account the need for a 'balanced age profile' and the need to provide career opportunities for younger officers." 23 Commissioner Sidoti quoted the following passage from the judgment of Branson J in Burgess (at 216): "Having regard to the terms of s76V(2), the areas in which a relevant distinction or exclusion on the basis of age could theoretically operate appear to be, first, in the process of the formation of the opinion as to whether or not it is 'desirable, in the interests of the Commonwealth, that an officer who has not attained the maximum retiring age, should continue, after attaining that age, in employment', and secondly, in the exercise of the discretion which arises once a Secretary forms such opinion. If a Secretary were to conclude, for example, that it could never be in the interests of the Commonwealth for a person over the age of 65 years to continue in employment, this would, in my view, constitute a distinction or exclusion on the basis of age. Similarly, if a Secretary were to conclude, to take another example, that it could never be in the interests of the Commonwealth for a person to continue in employment after attaining the maximum retiring age where his or her employment before attaining that age was in a senior management position, or alternatively, involved physical labour, this would, in my view, constitute a distinction on the basis of age. If a Secretary, having formed the opinion that it is desirable, in the interests of the Commonwealth, for a particular officer to continue in employment after attaining the maximum retiring age, nonetheless decided against making a determination that s76V(1) does not apply to the officer on the basis of his or her opinion that older officers ought to leave the Australian Public Service to create promotion opportunities for younger officers, this would, in my view, amount to a distinction on the basis of age. Similarly, if a Secretary, having formed the prescribed opinion, adopted a practice of only making determinations in favour of officers who sought such determinations before they attained the age of 65, this would, in my view, amount to discrimination on the basis of age." 24 The Commissioner did not think the present case fell within any of the examples given by Branson J. Mr Ayers had given uncontroverted evidence that he had exercised the discretion under s76V(2) on approximately six occasions; so it could not be said he took the view that it could never be in the interests of the Commonwealth for a person over the age of 65 years to continue in employment. In relation to the second category of examples, the Commissioner said there was: "no evidence in this case that the Secretary of the respondent department had already formed the opinion that the employment of the complainant was in the interests of the Commonwealth, before then deciding not to extend his employment on the basis of considerations of age such as the need for a balanced age profile. Rather, the Secretary took a range of matters into account as being in the interests of the Commonwealth, including the need for a balanced age profile and the need to provide career opportunities for younger officers, and then reached his decision that overall it was not in the interests of the Commonwealth to extend the complainant's employment." 25 However, Commissioner Sidoti noted that the examples given by Branson J were intended to be illustrative rather than exhaustive; they did not preclude a finding of a distinction on the basis of age upon different facts. He went on to find such a distinction was made in this case. He said: "My reasons for this finding are: · Here, in forming his opinion, the Secretary took into account the need for a balanced age profile and the need to provide career opportunities for younger officers. · In forming his opinion the Secretary also took into account other considerations, namely whether the complainant had unique skills or knowledge that should be retained. · By taking the need for a balanced age profile and the need to provide career opportunities for younger officers into account, even among other considerations, the Secretary made a distinction on the basis of age. · The distinction was made 'on the basis of age' in that the need for a balanced age profile and the need to provide career opportunities for younger officers were material factors in the formation of the Secretary's opinion. On this last point I note that the definition of discrimination in s.3(a) of the Act requires that there was a distinction, exclusion or preference made 'on the basis of' age. There appears to be no direct case law to assist in the interpretation of the words 'on the basis of' in this context. The words 'based on' in a similar definition of racial discrimination under the Racial Discrimination Act 1975 (Cth) have been held to encompass the broader, non-necessarily causative relationship expressed in the phrase 'by reference to' rather than the more limited cause and effect relationship expressed in the phrase 'by reason of': State of Victoria v Macedonian Teachers Association of Victoria [1999] FCA 1287. On the basis of this authority, it is arguable that the words 'on the basis of' in s.3(a) of the Act can be read to encompass either the broader relationship of 'by reference to' or the narrower relationship of 'by reason of'. I am satisfied that in this case a distinction was made in the formation of the Secretary's opinion in that the opinion was formed at least 'by reference to' age. I am also satisfied that a distinction was made in the formation of the Secretary's opinion in that the opinion was formed 'by reason of' age. I am satisfied that, even if the words 'on the basis of' require a relationship of cause and effect, there is a causal nexus between the proscribed characteristic and the impugned conduct. The need for a balanced age profile and the need to provide career opportunities for younger officers were material factors in the formation of the Secretary's opinion and thus in the decision not to exercise the discretion under s.76V(2) of the PSA. The appropriate way for the Secretary to have formed his opinion as to what was in the interests of the Commonwealth was to consider whether 'special circumstances' existed, namely whether the complainant had unique skills or knowledge that justified his retention in the respondent's employment, without regard to the need for a balanced age profile and the need to provide career opportunities for younger officers in the respondent department. Had the Secretary formed his opinion without regard to these considerations, the Secretary may still have formed the opinion that it was not in the interests of the Commonwealth to extend the complainant's employment. In forming that opinion and in the consequent exercise of the discretion, this would not have constituted an unlawful distinction on the basis of age." 26 Commissioner Sidoti then turned to the other issues. In relation to the fourth issue, he noted it was not disputed that Mr Peacock genuinely desired and intended to continue working at the time of his compulsory retirement or that Mr Ayers' decision nullified his ability to do so. In relation to the fifth, he said there was no suggestion Mr Peacock was unable to fulfil the inherent requirements of the job. 27 Commissioner Sidoti then discussed recommendations as to remedies. He noted the HREOC Act does not make it unlawful to discriminate on the basis of age, but the Division of the Act under which he was conducting his inquiry "is directed to the elimination of discrimination in employment and occupation". He also noted Mr Peacock had sought reinstatement without loss, and with restoration of full benefits, as well as "compensation for pain and suffering". The Commonwealth had argued reinstatement would be inappropriate. The Commonwealth observed that Mr Peacock initially applied only for a six month extension; reinstatement now, without loss and with full benefits, "would not restore him to the position he was denied". However, Commissioner Sidoti noted, Mr Peacock had pointed out, in reply, that, although he initially applied for a six month extension, he subsequently sought an indefinite extension pending the outcome of all appeals against his retirement, including to the United Nations Human Rights Committee. 28 Commissioner Sidoti then set out his recommendations on compensation: "I do not consider it appropriate that I make the recommendation proposed by the complainant for reinstatement without loss and with full benefits. Over three years have passed and reinstatement of the complainant is no longer a viable option. I consider it appropriate to make recommendations in relation to compensation instead. However I have had some difficulty in assessing the appropriate amount of compensation to recommend. The complainant first sought continued employment for six months. Had the discretion been exercised at the outset in his favour that is the maximum period he would have continued to work. I consider, therefore, that an amount equal to six months' salary the maximum loss he could have suffered. That does not resolve this question, however. There is no way to determine with any certainty that, even if the respondent had considered the complainant's application to extend his employment beyond the maximum retiring age in a non-discriminatory way, the complainant would ultimately have been successful on that application. The discretion of the Secretary under s.76V(2) could have been exercised against him for some other reason. In the circumstances I do not consider it appropriate to make a recommendation for damages based on actual economic loss, that is, damages calculated on the position the complainant would have been in if he had been successful in his application to extend his employment. I am of the view that the appropriate measure of damages in this matter is one of general damages. The principles of assessment of damages in discrimination cases are flexible, although based generally on the principles applied when assessing damages in tort: Hall v A&A Sheiban Pty Ltd (1989) 85 ALR 502 at 503. However, any damages are statute based and the wording of the statute is the principal basis for assessment for this head of damage: Stephenson v Human Rights and Equal Opportunity Commission (1995) 61 FLR 134 at 142-3. Here, s.35(2)(c) refers to compensation to a person who has suffered loss or damage 'as a result of the act or practice'. Overall, awards of damage must be fair and reasonable in the circumstances of each case: Ritossa v Gray & Anor (1992) EOC 92-452. I have concluded that the complainant's loss is the loss of the opportunity to have his application to extend his employment considered in a non-discriminatory way. The complainant was not in the same position as a potential applicant for employment who has to compete for a particular job. He was already employed in the position and there is no evidence that his performance was other than satisfactory in all respects. Indeed, Mr Ayers said in his Minute of 10 July 1996, 'I note that you advise that you were given a rating of superior in your previous two performance appraisals. I am also advised that you remain fit for duty and suitable work is available'. The complainant's loss of opportunity, therefore, was more certain and substantial than in cases of applicants not considered for a position. The compensation should reflect this. Having taken all of these matters into account, I recommend that the complainant be awarded compensation for his loss as a consequence of the discrimination in the sum of $20,000."

Discrimination: submissions for the Commonwealth 29 Counsel for the Commonwealth, Ms R Henderson and Mr D Godwin, attack Commissioner Sidoti's methodology. They note he was exercising the Commission's function, under s31(b) of the HREOC Act, "to inquire into any act or practice that may constitute discrimination" and, where the Commission "is of the opinion that the act or practice constitutes discrimination", to report to the Minister in relation to the inquiry. In their written submissions, counsel say: "Determining whether the act or practice constituted discrimination involved the following steps: (a) identifying a distinction, exclusion, or preference; (b) determining whether that distinction, exclusion or preference has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation; (c) determining whether that distinction, exclusion or preference had been declared by the regulations to constitute discrimination for the purposes of the Act, i.e., determining whether the distinction, exclusion or preference was made on the ground of age." 30 Counsel argue Commissioner Sidoti "failed to appreciate that the identification of a distinction, exclusion or preference is the essential preliminary step in the above process". They seek to make good this criticism by analysing the s35 notice and noting it dealt with the terms of Mr Ayers' minute, Mr Ayers' oral evidence and the reasons of Branson J before announcing that "… a distinction on the basis of age was made in this case". According to the written submissions: "The Commissioner's approach deprived the phrase 'distinction, exclusion or preference' of any meaning. It is reduced to a mere item of terminology to be adopted when declaring that an act or practice amounts to discrimination. The applicant submits that the words 'distinction, exclusion or preference' have a meaning which must be recognised and addressed: each of them connotes dealing with one person in a different way to the way one deals with some other person in comparable circumstances." 31 Counsel also say the Commission failed to recognise that "distinction, exclusion or preference" is qualified by the words "that has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation". The distinction, exclusion or preference must have this effect; it was not sufficient to consider only whether Mr Peacock would have continued to be employed by the Commonwealth. In considering equality of opportunity or treatment in employment or occupation, it was not appropriate to compare Mr Peacock's position to that of Commonwealth employees who had not yet attained the age of 65 years; s76V(2) did not apply to them. The appropriate comparison, according to counsel for the Commonwealth, was with those Commonwealth employees who had attained the age of 65 years and sought the exercise, in their favour, of the discretion provided by s76V(2). Counsel claim this argument is supported by a passage in the reasons of Branson J in Burgess (at 215-216): "In reaching a conclusion as to whether any of the acts of the Secretary in failing in respect of each of the complainants to make determinations under s76V(2) of the Public Service Act constituted a distinction or exclusion on the basis of age, it was not open to HREOC to find such distinction or exclusion by comparing the positions of the complainants with the positions of persons in respect of whom s76V(2) has no relevant operation." Counsel comment: "When it was in force, section 76V(2) had application only to 65 year old public servants. The potential class of persons falling within its scope were all of the same age. It is logically impossible to postulate that there could be a distinction, exclusion or preference made between two or more of them on the ground of age." 32 Consistently with their proposition that the appropriate comparison is only with other 65 year olds, counsel for the Commonwealth submit Branson J erred in suggesting that there would be a relevant distinction or exclusion on the basis of age if a Secretary were to conclude it "could never be in the interests of the Commonwealth for a person over the age of 65 years to continue in employment". Counsel say this would amount to a refusal to exercise the discretion at all, but not a distinction, exclusion or preference on the ground of age.

Discrimination: submissions for Mr Peacock 33 Ms C Ronald and Mr S Beckett, counsel for Mr Peacock, support Commissioner Sidoti's reasoning on the matter of discrimination. They say the Commonwealth's argument repeats the error identified by the then President of the Commission, Sir Ronald Wilson, in Dopking. The decision of the Full Court of this Court, on judicial review of the President's decision in that case, is reported as Commonwealth of Australia v Human Rights and Equal Opportunity Commission (1993) 46 FCR 191. In his reasons for decision, Sir Ronald discussed the definition of what might be called "direct discrimination" in s6(1) of the Sex Discrimination Act 1984. That definition says a person discriminates against another person on the ground of marital status if, by reason of any one of the matters stated in paras (a), (b) or (c) of the definition, "the discriminator treats the aggrieved person less favourably than, in circumstances that are the same or are not materially different, the discriminator treats or would treat a person of a different marital status". In a passage from his reasons that I quoted at 209 and emphasised, the President said: "The more immediate question is the meaning to be attributed on its proper construction to the phrase 'in circumstances that are the same or are not materially different'. It would fatally frustrate the purposes of the Act if the matters which it expressly identifies as constituting unacceptable bases for differential treatment (ie s6(1)(a)(b) and (c)) could be seized upon as rendering the overall circumstances materially different, with the result that the treatment could never be discriminatory within the meaning of the Act. I reject such a construction." Counsel for Mr Peacock stress the emphasised words. I commented in Dopking (at 209) that this part of the President's reasoning "must be correct". No other member of the Court expressed a different view. 34 The argument put by Ms Ronald and Mr Beckett is that the Commonwealth argument seizes on age - that is, the fact of having reached 65 years - as an acceptable basis for differential treatment; the people with whom Mr Peacock is to be compared, in considering whether a distinction or exclusion has been made on the ground of age, are people defined by age. Counsel say that the concept of a "pool" or "base group" is pertinent to a claim of indirect discrimination. They cite, by way of example, Australian Iron & Steel Proprietary Limited v Banovic (1989) 168 CLR 165 and Commonwealth Bank of Australia v Human Rights and Equal Opportunity Commission (1997) 150 ALR 1 at 40-43. However, counsel claim, the concept is inapplicable to a claim of direct discrimination; in the present case, it is not necessary to make a comparison between the position of Mr Peacock and anybody else; it is enough that Mr Ayers took age into account in making his decision. In doing that, say counsel, Mr Ayers made a "distinction or exclusion", on the ground of age, that had the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation. 35 During the course of argument, I observed the notions of "equality of opportunity" and "equality of treatment" seem to require comparison to be made between the position of the affected person and somebody else. I inquired how this could be done if the "pool" concept was inapplicable. In reply, counsel said the proper comparison was between the treatment afforded Mr Peacock and the position of other people who might be candidates for his position; perhaps described as "all psychologists currently employed by the Department of Defence", or all qualified psychologists (whether or not presently employed by the Department) who might seek employment as Director of Psychology - Navy.

Discrimination: discussion 36 The fundamental problem about the present case is that it involves the attempted application of legislation proscribing age discrimination to a statutory provision that directly relates to a discrimination based on age. Section 76V(1) of the Public Service Act terminates a person's employment on the ground of age, and age alone, unless a particular decision is made by the relevant Secretary. The necessity for that decision arises only in connection with Commonwealth employees imminently approaching their 65th birthdays. 37 However repugnant it may have become to contemporary ideas about age discrimination, s76V(1) existed when Mr Ayers came to make his decision. I agree with the following comment of Branson J, in Burgess at 215: "Although many would now contend that sound personnel management practices involve an absence of discrimination on grounds, including age, irrelevant to work performance, the Public Service Act cannot be construed without regard being had to the terms of s76V(1). It would not be a lawful exercise of the discretionary powers of a Secretary under s76V(2) for such powers to be used for the purpose of undermining the intention of Parliament as disclosed by the terms of s76V(1). That intention appears plainly enough to be to ensure that in the ordinary course an officer of the Australian Public Service is to retire upon attaining the maximum retiring age." 38 It follows that the discretion committed to a Secretary under s76V(2) was closely confined. The relevant questions were these: (i) given the general rule that Commonwealth officers are to retire at age 65, is it desirable, in the interests of the Commonwealth, that this particular officer continue in employment after attaining that age? (ii) if so, should I determine that s76V(1) does not apply to that officer? 39 The first question might require consideration of many factors. I agree with Branson J that they must include the subject matter, scope and purpose of the Public Service Act. They must also include the needs of the relevant Department and the skills and relevant attributes of the particular officer. Whatever scope there may be for the application to the Secretary's decision of the definition of "discrimination" in s3 of the Human Rights and Equal Opportunity Commission Act, as augmented by the 1989 regulation, the officer's age cannot be disregarded; it creates the necessity to make the decision. The question only arises for determination by the Secretary because the officer is approaching the age of 65 years; the Secretary is considering whether, despite that fact, it is desirable, in the interests of the Commonwealth, for the officer to continue in the Commonwealth's employment. So I do not think that mere advertence to age can amount to "discrimination" within the statutory definition. 40 Given the nature of the Secretary's task, I agree with the comment of Branson J, in Burgess, that "it was not open to HREOC to find such distinction or exclusion by comparing the position of the complainants with the positions of persons in respect of whom s76V(2) has no relevant operation". The distinction between the position of an officer approaching age 65, who needs a favourable exercise of a particular statutory discretion in order to remain in Commonwealth employment, and a younger officer, who does not, is a distinction imposed by s76V itself. 41 Notwithstanding this, I accept the theoretical possibility that a decision under s76V(2) of the Public Service Act might involve an act or practice constituting discrimination within the meaning of the HREOC Act. I admit to difficulty in envisaging cases where this would be so. The examples offered by Branson J are certainly cases where the Secretary has made a distinction on the basis of age, as her Honour said. But are they cases where the distinction had the effect of nullifying or impairing equality of opportunity or treatment in employment? Equality with whom? Once it be accepted that it is inappropriate, because of the terms of s76V(1), to compare the position of the 65 year old applicant with sub-65 year old candidates for the applicant's position, it is difficult to see how the definition's requirement of nullification or impairment of equality can be met. 42 In the present case, Commissioner Sidoti found Mr Ayers took into account, amongst other matters, "the need for a balanced age profile and the need to provide career opportunities for younger officers". It is not suggested these needs were irrelevant to determination of "the interests of the Commonwealth". It is suggested, and Commissioner Sidoti found, that, in taking into account these needs, Mr Ayers "made a distinction on the basis of age". Commissioner Sidoti also found that distinction was material in the formation of Mr Ayers' opinion about "the interests of the Commonwealth". 43 It follows from these factual findings that the decision made by Mr Ayers was materially affected by a distinction made by him on the basis of age: the need to provide a balanced age profile and to provide career opportunities for younger officers. But how did that distinction affect equality of opportunity or treatment in employment? As between Mr Peacock and younger officers, at material times there was never relevant equality. Mr Peacock's previously equal right to continue in the Commonwealth's employment had been swept onto the rock called s76V(1). He was not in competition with any other officers who might have been approaching the age of 65 years and seeking extensions. There was no question of Mr Ayers denying Mr Peacock's equality with such persons. 44 In the last paragraph of his reasoning concerning discrimination (quoted at para 25 above), Commissioner Sidoti set out his view about the "appropriate way" for Mr Ayers to have formed his opinion as to what was in the interests of the Commonwealth. If s76V was to be retained at all, it may have been desirable, although I suspect there would be divergent views on the subject, to draft s76V(2) in such a way as to proscribe consideration of such matters as the departmental age profile and the provision of career opportunities for younger officers. But this was not done. There is a difference between a provision proscribing, on public policy grounds, consideration of a particular subject in the making of a statutory decision and legislation designed to ensure the decision makes no distinction, exclusion or preference (on a specified basis) that affects equality, as between individuals, of opportunity or treatment. With respect to the Commissioner, I think he lost sight of this distinction; he treated Mr Ayers' consideration of age as a distinction based on age, without considering how it might affect equality of treatment between individuals. 45 In my opinion, the Commission's reasoning exhibits error of law. The s35 notice should be set aside and the matter remitted to the Commission for further consideration and redetermination according to law.

Relief: Mr Peacock's claim 46 The Application filed by Mr Peacock seeks review of the Commissioner's decision to recommend the Commonwealth pay him the sum of $20,000 by way of compensation. Five grounds are stated: "(a) The First Respondent erred in law by failing to take into account the prospects of the Applicant returning to work with the Second Respondent; (b) The First Respondent failed to provide adequate reasons for not recommending the reinstatement of the Applicant's employment with the Second Respondent; (c) The First Respondent erred at law as there was no evidence upon which it could base its decision that the reinstatement of the Applicant to his position of employment with the Second Respondent was unviable; (d) The First Respondent erred in law by failing to take into account the Applicant's economic loss resulting, either partly or wholly, from the Second Respondent's discriminatory acts; and (e) The First Respondent erred in law in finding that the Second Respondent's discriminatory act was not, either partly or wholly, causative of damage to the Applicant and compensable by an award of damages for economic loss". 47 Counsel for Mr Peacock argue Mr Ayers had before him an application by their client for an indefinite extension of time; so the Commission erred in concluding that six months was the maximum period he could have worked. Counsel also complain of the Commission's failure to explain its opinion that reinstatement was "no longer a viable option". They say there was no evidence before the Commission of any problem about reinstatement. They argue the Commission should have considered the practicability of reinstatement in the same way as used to be done by the Industrial Relations Court of Australia in dealing with unlawful termination of employment cases under the Industrial Relations Act. They cite my decision in Nicholson v Heaven and Earth Gallery Pty Ltd (1994) 57 IR 50 at 61. Counsel argue that, once it is demonstrated the decision not to apply s76V(2) is legally flawed, the Commission ought to have recommended reinstatement, unless this was shown to be impracticable. 48 Counsel for Mr Peacock say it was erroneous for Commissioner Sidoti to quantify damages on the basis that their client suffered loss of an opportunity for extension of his employment; he ought to have recommended such compensation as was necessary to restore Mr Peacock to the position he would have been in if the discriminatory conduct had not occurred. They refer to Hall v A & A Sheiban Pty Ltd (1988) 20 FCR 217 at 239 where Lockhart J likened an award of damages under the Sex Discrimination Act 1984 to an award of damages in tort. Counsel say an assessment of damages that takes account only of the possibility of the Secretary exercising his discretion in Mr Peacock's favour fails to restore him to the position he would have enjoyed, absent the discriminatory conduct.

Relief: the Commonwealth's contention 49 Counsel for the Commonwealth dispute each element in their opponents' argument. They say Mr Ayers was concerned only with an application for a six months' extension; this was all Mr Peacock sought and this was what Mr Tonkin considered; Mr Ayers was reviewing the decision of Mr Tonkin. It follows, according to counsel, that Commissioner Sidoti was correct in declining to recommend reinstatement. If such a recommendation were implemented, Mr Peacock would find himself restored to his position at a point of time long after the expiry of the six months he had sought. 50 Another consequence of the fact that Mr Ayers had to consider only a request for a six months' extension, say counsel, is that Commissioner Sidoti was correct in saying that six months was the maximum period for which Mr Peacock would have worked, if the s76V(2) discretion had been exercised in his favour. Further, counsel say, there was no guarantee that, absent the discriminatory element, Mr Ayers would have decided to accede to Mr Peacock's request; so Commissioner Sidoti was correct in saying that Mr Peacock suffered only the loss of a chance of extension. Counsel for the Commonwealth say that, if Mr Peacock is successful on the issue of discrimination, the Commission's recommendations concerning relief ought not be disturbed.

Relief: discussion 51 In considering relief, the first step is to resolve the contest between the parties as to whether Mr Ayers had before him an application for an unlimited extension of Mr Peacock's employment or only an application for a six months extension. Subsection (3) of s76V would have empowered Mr Ayers to limit any extension to six months, if he had thought that appropriate; although, within the six month period, he could have granted a further extension. In paras 9 to 13 above, I set out the correspondence relating to Mr Peacock's request for extension of his employment. Mr Peacock's first minute (11 March 1996) clearly sought a period of only six months. That request was refused by Mr Tonkin on 15 May 1996. Mr Tonkin's reasons were stated in terms of general principle, no comment being made on the fact that Mr Peacock sought only six months. Mr Peacock responded on 3 June 1996, intimating he intended to approach the United Nations Human Rights Committee, referring to the need first to exhaust all domestic remedies and seeking Mr Tonkin's "approval to remain in employment until all avenues of appeal, including direct petition to the HRC, have been exhausted". That must be read as an application for an indefinite extension of employment; plainly, Mr Peacock was not expecting all avenues of appeal to be exhausted within six months of 18 July 1996. If there was any doubt about that matter, it would have been resolved by Mr Peacock's minute of 19 June 1996 in which he referred to information that the Commission would take eight months to complete its investigation and stated he would have to await that action before proceeding to the United Nations Committee. On 24 June 1996 Mr Tonkin acknowledged receipt of both these minutes. He also acknowledged that the effect of acceptance of Mr Peacock's request "would be to extend your employment substantially beyond your required retirement date of 18 July 1996". Clearly, Mr Tonkin appreciated Mr Peacock was seeking an indefinite extension of his employment, rather than the six months extension he had initially sought. 52 Mr Tonkin forwarded this correspondence to Mr Ayers. In his minute of 10 July 1996, Mr Ayers mentioned Mr Peacock's minute of 19June. He had obviously read it. Mr Ayers dealt with Mr Peacock's request in terms of general policy and principle. There is nothing in his minute to suggest he was under the apprehension that Mr Peacock sought only a six month extension. Nor did Mr Ayers make that suggestion in evidence before Commissioner Sidoti. 53 Under these circumstances, I uphold the submission of counsel for Mr Peacock that the Commission's recommendations concerning relief needed to reflect a claim, upheld by the Commission, that the Commonwealth's discriminatory act denied Mr Peacock the opportunity of an indefinite extension of his employment. As we now know, if Mr Peacock had survived in employment until 5 December 1999, he would then have been able to continue indefinitely. 54 However, I do not accept the submission of counsel for Mr Peacock that Commissioner Sidoti erred in assessing damages on the basis of loss of a chance. Even if Mr Ayers had not taken into consideration the matters of balanced age profile in the Department and career opportunities for younger officers, he may not have directed that s76V(1) was not to apply to Mr Peacock. And, if he did make such a direction, it might well have been subject to a relatively short time limit, perhaps the period of six months initially sought by Mr Peacock. So it cannot be said the effect of the discriminatory act identified by the Commission was to deprive Mr Peacock of the certainty of an extension of his employment. Still less can it be said that the effect was to deprive him of the certainty of retaining his employment until the repeal of s76V in December 1999. 55 I accept the view of Lockhart J, expressed in Hall, that compensation for discrimination under the Sex Discrimination Act (and, I would say, under the HREOC Act as well) should be assessed in the same way as damages in tort. So far as this is possible by an award of compensation, the object should be to place the injured party in the same position as if the wrong had not occurred. However, the application of that principle to the present case does not mean compensation ought to be assessed on the basis that, absent the alleged discriminatory conduct, Mr Ayers would have extended Mr Peacock's employment. The evidence did not permit the Commission to reach that conclusion. The evidence did enable the Commission to say the alleged discriminatory conduct cost Mr Peacock the chance of an extension; that is the loss for which he ought to be compensated, that and no more. The factual situation is unlike that in Hall, where compensation had to be assessed for acts of sexual harassment that had already occurred. 56 As Commissioner Sidoti appreciated, in this case all that can be said is that the alleged discrimination deprived Mr Peacock of a chance. But a chance of what? Commissioner Sidoti referred to the initial request for a six month extension and said that, if the discretion had been exercised at the outset in his favour, "that is the maximum period he would have continued to work. I consider, therefore, that an amount equal to six months' salary (is) the maximum loss he could have suffered". 57 With respect, there are two difficulties about this reasoning. It may be agreed that, if Mr Tonkin had acceded to Mr Peacock's request of 11 March 1996, Mr Peacock's employment would have then been extended for only six months, until 18 January 1997. It does not follow this is the maximum period he would have continued to work; he may have obtained a further extension (under s76V(3) of the Public Service Act)before that date. That extension might have been of indefinite duration. More probably, perhaps, a further extension would have been for a fixed term; but that term, also, might have been extended. Theoretically, at least, Mr Peacock might have obtained a series of extensions sufficient to enable his employment to survive until the 1999 Act came into operation, after which there would have been no fixed limit.

58 Secondly, by the time the matter reached Mr Ayers, Mr Peacock's position had changed. He then sought an indefinite extension. If Mr Ayers had considered his request without reference to the two age-related needs identified by Commissioner Sidoti, he might have acceded to that request; or, once again, he might have granted an extension for a period that might itself have been further extended. 59 Having regard to these considerations, it was erroneous for Commissioner Sidoti to say that six months' salary was the maximum loss Mr Peacock could have suffered. I think the Commissioner should have assessed compensation on the basis there was a chance - how great a chance was for him to determine - that the loss of salary would have been greater than that. 60 Mr Peacock made clear to the Commission that his preferred relief was reinstatement. Commissioner Sidoti dismissed that possibility in one sentence: "Over three years have passed and reinstatement of the complainant is no longer a viable option". He did not say why reinstatement was no longer a viable option. Presumably, the reason was that three years had passed, but the Commissioner did not say why the effluxion of that time made reinstatement unviable. No evidence was put before him as to the then position in the Department. Had Mr Peacock's position been filled by someone else? If so, were there other available positions in the Department of Defence for which he is qualified? Has Mr Peacock lost the skills needed for the position? None of these matters was investigated. If the Commonwealth sought to resist reinstatement by reference to matters such as these, it ought to have put appropriate material before the Commission. Given the philosophy embodied in the 1999 Act, which was in force by the time the Commission made its decision, the fact that Mr Peacock had now reached the age of 68 years was surely not enough to render his reinstatement unviable. So what was the problem? The Commission did not say. 61 Of course, it would have been open to Commissioner Sidoti to take the view that he should not recommend reinstatement unless he was satisfied that, absent his consideration of the age-based matters, Mr Ayers would have granted a substantial extension of Mr Peacock's employment. If the Commissioner was not satisfied about that, he would have been justified in refusing reinstatement on that ground. But that is not what he did. He apparently based himself entirely on the fact that three years had elapsed. 62 It will be apparent I do not accept the submission, made on behalf of Mr Peacock, that the Commission was required to approach the matter in the same way as was necessary in unlawful termination cases under the Industrial Relations Act. In both an unlawful termination case and a case of discrimination under s76V(2) of the Public Service Act, the effect of the employer's breach of the law is to invalidate the employer's act; but there is a major difference in the nature of the employer's act. In the case of an unlawful termination, the invalid act is the act of termination; so a reinstatement order does no more than restore the previous situation. This is not so, in the case of an invalid exercise of the discretion conferred by s76V(2) of the Public Service Act. In that case, s76V(1) applies to terminate the employee's employment. What has been lost is the possibility of the termination being excluded. Unless it was first found that, absent the discriminatory conduct, the discretion conferred on the Secretary by s76V(2) would certainly have been exercised, reinstatement would do more than restore the previous position; it would convert the employee's chance of an extension into a certainty. 63 I am of the opinion that Commissioner Sidoti fell into error of law in relation to the matter of relief. For that reason, also, the s35 notice must be set aside.

Disposition 64 The effect of my views is that the Commission erred both in respect of its determination about discrimination (as the Commonwealth argues) and in regard to relief (as Mr Peacock suggests). In each proceeding, the applicant is entitled to succeed. The appropriate course is to set aside the Commission's notice and to remit the matter to the Commission for further inquiry and determination according to law. I will take that course. 65 In deference to a request made by the solicitor for the Commonwealth, I will reserve the question of costs. Having regard to the outcome of the two matters, the appropriate course might be to make no order for costs. However, I will consider on its merits any application that may be made. If either party seeks costs, that party should notify my associate to that effect within 21 days and forward a submission setting out reasons supporting the application. The opposing party should forward any response within a further 21 days. I certify that the preceding sixty-five (65) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Wilcox.

Associate: Dated: Counsel for the Applicant: C Ronald & S Beckett

Counsel for the Respondent: R M Henderson & D Godwin

Solicitor for the Respondent: Australian Government Solicitor