DISCRIMINATION ACT 1991 - SECT 8

1. For this Act, discrimination occurs when a person discriminations either directly or indirectly, or both, against someone else.
2. For this section, a person directly discriminates against someone else if the person treats, or proposes to treat, another person unfavourably because the other person has 1 or more protected attributes.
3. ...

DISCRIMINATION ACT 1991 - SECT 7

(1) This Act applies to discrimination on the ground of any of the following attributes (a protected attribute ):

_(2) For this Act, "protected attribute" includes - _

• (a) a characteristic that people with the attribute generally have; and
• (b) a characteristic that people with the attribute are generally presumed to have; and
• (c) the attribute that a person has; and
• (d) the attribute that a person has had in the past, whether or not the person still has the attribute; and
• (e) the attribute that a person is thought to have, whether or not the person has the attribute; and
• (f) the attribute that a person is thought to have had in the past, whether or not the person has had the attribute in the past.

DISCRIMINATION ACT 1991 - SECT 28

Part 3 does not make it unlawful for a person (the first person ) to discriminate against someone else (the second person ) in relation to the terms on which an annuity or policy of insurance is offered to, or may be obtained by, the second person, if the discrimination is reasonable in the circumstances, having regard to any actuarial or statistical data on which it is reasonable for the first person to rely.

1. The applicant has a criminal record arising from a conviction for a sexual offence in December 2018. The issues for the Tribunal are:
   • (a) Has the respondent treated the applicant unfavourably?
   • (b) Was the unfavourable treatment on the ground of irrelevant criminal record (a protected attribute)?
   • (c) Is the discrimination reasonable in the circumstances, having regard to the factors set out in section 28 of the Discrimination Act 1991 (Discrimination Act)?

Has the respondent treated the applicant unfavourably?

1. The Discrimination Act does not define 'unfavourable treatment', or what is meant by 'treats, or proposes to treat, another person unfavourably'.
2. Unlike equivalent legislation is some other jurisdictions, the Discrimination Act does not invite a comparison between the way in which a person who has a particular attribute is treated compared with a person without that attribute or who has a different attribute. In other words, it does not ask: "were you treated less favourably than others?" It asks: "were you treated unfavourably?" This is an objective test. It calls for an examination of the treatment accorded to the complainant. If the consequence of the treatment is unfavourable to that person there is 'unfavourable treatment' and the question then turns to the reason for that unfavourable treatment, and whether it is because of the attributes they possess.[3]

8. So the question is: was the treatment unfavourable? Was it unfavourable to the applicant, and was the unfavourable treatment afforded to the applicant on the grounds alleged, in this case an irrelevant criminal record?[4]

1. The refusal of a good or service will generally be unfavourable treatment. The complainant has been refused public liability insurance and that refusal has been detrimental to his ability to run and expand his business of home garden maintenance. There was no contest by the respondent that the refusal of insurance amounted to unfavourable treatment of the applicant.

Was the unfavourable treatment on the ground of irrelevant criminal record (a protected attribute)?

1. The applicant alleges that he was discriminated against on the basis of an irrelevant criminal record. This is a protected attribute under section 8 of the Discrimination Act.
2. The Discrimination Act defines irrelevant criminal record in the Dictionary to the Act:

_"irrelevant criminal record", in relation to a person, means a record relating to an offence, or an alleged offence, if - _

_(a) the person has been charged with the offence but - _

1. a proceeding for the alleged offence is not finalised; or

2. the charge has lapsed, been withdrawn or discharged, or struck out; or

(b) the person has been acquitted of the alleged offence; or

(c) the person has had a conviction for the alleged offence quashed or set aside; or

(d) the person has been served with an infringement notice for the alleged offence; or

(e) the person has a conviction for the offence, but the circumstances of the offence are not directly relevant to the situation in which discrimination arises; or

(f) the person has a spent conviction or an extinguished conviction, within the meaning of the Spent Convictions Act 2000, for the offence.

1. 'Irrelevant' means "not connected with, or not relevant to something; not material to or connected with the matter being dealt with".[5] The Discrimination Act describes a criminal record as irrelevant, where the person is convicted of an offence, as one where the circumstances of the offence are not directly relevant to the situation in which discrimination arises.

1. In terms of the definition of 'irrelevant criminal record' - the complainant relies upon paragraph (e). He has a conviction for the offence, but says the circumstances of the offence are not directly relevant to the situation in which the public liability insurance cover was refused. The complainant sets out the following matters pointing to his criminal record being irrelevant to the situation in which the discrimination is alleged to arise:
   • (a) The public liability insurance cover he sought from the NRMA provides coverage for personal injury and property damage to third parties. The policy expressly excludes indemnity from particular circumstances, including at clause 6.5 "(17) Child Molestation: we will not pay for claims arising out of, or resulting from, the molesting of minors".[6] The complainant says that as a result of the exclusion clause, the policy would not cover him for acts or omissions, similar to those which gave rise to the conviction; the conviction can only be viewed then as entirely irrelevant in considering whether to accept or decline the insurance.[7]
   • (b) The NRMA declined insurance on the basis of their internal policies, being a document called the "Moral Code and the IAG Moral Risk Underwriting guidelines" (the Moral Guidelines). Internal policies cannot override or circumvent legislative obligations. In implementing those internal policies, the NRMA has failed to adhere to the requirements of the Discrimination Act.[8]
   • (c) The applicant responded to the respondent's letter of 20 September 2018 addressed to the ACT Human Rights Commission addressing the key considerations in the Moral Guidelines as follows:

ii. "the main issues surrounding an Insured was a criminal history can include ..."

A potential indicated that the insured has a blatant disregard for risk management and/or safety. The use of the word can indicate [s] that the criteria is not mandatory and further, there is no evidence that due to this one incident I have a blatant disregard for risk management or safety.

"a customer's application for insurance may be declined. If they disclose or have previously disclosed a criminal conviction relating to... assault."

The use of the word may demonstrates that declinature is not a mandatory requirement. In circumstances where the offending conviction and relevant conduct relates to sexual assault, which is excluded under the policy, it is unreasonable to arbitrarily apply this provision to decline coverage.

1. The respondent contends as follows:
   • (a) That there is a distinction between the decision not to issue a policy, and an exclusion of indemnity under a policy that has been issued. The former is an underwriting decision, based on a general risk assessment; the latter is a contractual term that is applicable to any holder of the type of policy in issue.[9]
   • (b) The respondent's decision not to issue the policy to the applicant is attributable to the application of the respondent's Moral Guidelines. The common thread in the guidelines is that the policy will be declined if the applicant has been convicted of a serious criminal offence within the 10 year period immediately preceding the application. It follows that a person who has been convicted of, say, drug trafficking, or an aggravated non-sexual assault would equally not be offered a policy, irrespective any of any specific exclusions in the policy and the relationship of those exclusions to the conduct for which the person was convicted.[10]
   • (c) There is a clear distinction between domestic insurance and business insurance. By contrast with the former, the latter relies upon a different form of risk assessment and underwriting. The decision is not a personal judgement on the applicant by IAL, but rather is a relevant and reasonable risk factor in the risks IAL bears in relation to insurance under a commercial liability policy.[11]
2. In a letter dated 20 September 2018, and addressed to the ACT Human Rights Commission, the IAG Manager of Legal, Insurance & Reinsurance stated:

2(a) "IAL's refusal to provide a commercial liability policy to [the complainant] is not a personal judgement on [the complainant] by IAL but rather a relevant and reasonable risk factor in the risk IAL bears in relating to insurance under a commercial liability policy".[12]

(b) "IAL's moral guidelines clearly and reasonably provide that cover under a commercial liability policy will be declined where an insured has a conviction in the last 10 years for any sexual assault, other sexual offences, or any aggravated assault, including assault causing injury or harm".[13]

3(e) IAG Moral Risks Underwriting Guidelines provides:[14]

Moral Risk or Moral Hazard refers to personal factors associated with the proposed insured which might suggest that a claim on the policy is more likely to be higher than normal, than when these personal factors are absent. They are relevant to all IAG's decisions whether to accept a risk and if so, on what terms.

Moral Risks can include a number of key areas of concern:

The main issues surrounding an Insured with a criminal history can include:

• A potential indicator that the insured has a blatant disregard for risk management and/or safety.

A customer's application for insurance may be declined if they disclose or have previously disclosed a criminal conviction relating to ... assault.

5(h) Commercial liability insurance is intended to cover the liability of a business (here [the complainant] was conducting a gardening business) for acts or omissions causing injury to another person or damage to their property. A criminal conviction of an individual, including to sexual assault or assault of another person, is particularly relevant to the risk insured by a commercial liability policy and such conviction may be an indicator that the person may have a disregard from risk management and safety. There is a clear and direct relevance between the sexual and physical nature of an offence against another person, such as an act of indecency on a person aged between 10 and 16 years and the nature of risks insured under a commercial liability policy which include physical injury by acts or omissions by the insured person. This is particularly so for an occupation, such as a gardening business where a business is conducted in and around the homes of third parties, and in public places.[15]

(i) [Although] the complainant has a number of other domestic (for example, home and motor) policies with IAL, due to the different nature of the risk being insured under these policies, IAL does not ask for disclosure of criminal convictions for such domestic policies and would not consider the conviction is relevant to the risk of such domestic policies. On this basis, the complainant's existing domestic policies are not affected by the conviction.[16]

(j) Home building and contents and motor insurance policies insure against damage to the insured home building, contents or motor vehicle caused by accident or specified events. Such risk relates to physical damage to the insured property. It is therefore a different risk to a commercial liability policy that covers liability of an individual/business per injury to or property damage of a third party due to an act or omission of the individual/business. It is this distinct difference that means an individual's criminal conviction for an offence such as the offence is relevant to whether an insurer will accept a risk for a commercial liability policy but it is not relevant to a domestic policy.[17]

1. The NRMA made submissions that they were entitled to look at the record, and make a decision based only on the fact of the record, that they are not required to look behind the conviction, or, to the circumstances of the conviction. The respondent in their written submission contends that "the applicant's criminal record (the conviction for a sexual offence against a child) is not irrelevant. On the contrary, it is centrally relevant to the decision in relation to his application for the business insurance policy, he sought".[18]
2. In summary, the respondent asserts that the complainant's criminal record is relevant (that is, it is not irrelevant) because they have determined that a person with a conviction for a serious criminal offence lacks judgement and therefore constitutes a greater insurance risk than a person who does not have a conviction for a serious criminal offence. The respondent submitted that the refusal of insurance was based on an underwriting assessment of the risk and that people with serious criminal convictions were perceived as constituting a so great a risk that they could not be insured. The respondent, however, was not able to provide any research, information or actuarial data to support that assertion. When pressed by the Tribunal, the respondent confirmed that they did not have that data:

... you asked me before, 'What's the data?' and we say why we don't have data about what the risk is to us when we issue policies to people with criminal records because we don't have that data.[19]

1. The respondent, in oral submissions, appeared to conflate the nature of the offence (sexual offence against a child), the working with vulnerable people legislation, the fact that the complainant would be working in homes where children might be present, and the risk of further offending (a liability specifically excluded by the policy). However, it was not able to demonstrate that any of these were directly related to the decision to refuse insurance. Rather, the respondent simply asserted that the refusal to insure the applicant was based on the Moral Guidelines.
2. The respondent was unable to provide any evidence in support of the assertions in the Moral Guidelines that a criminal record is a potential indicator that the insured has a blatant disregard for risk management and/or safety or that the insured is otherwise a higher liability risk in a commercial context. The respondent conceded that it has made no assessment of the applicant's actual circumstances or the circumstances of the offence. The respondent also submitted that the particular conviction was not directly relevant to the risk excluded, that is claims arising out of, or resulting from, the molesting of minors, and that any applicant for insurance who had a conviction for a serious offence would be refused insurance.
3. However the respondent also argued that:

There is a clear and direct relevance between the sexual and physical nature of an offence against another person, such as an act of indecency on a person aged between 10 and 16 years and the nature of risks insured under a commercial liability policy which include physical injury by acts or omissions by the insured person. This is particularly so for an occupation, such as a gardening business with a business is conducted in and around the homes of third parties, and in public places.[20]

1. This seems to confuse the risk generally arising from the fact of a serious criminal conviction and the risk of harm to a child by sexual assault (excluded by the policy) and risk generally. This submission appears to be that the nature of the offence was directly relevant to the decision to refuse insurance. Given the exclusion to the policy of liability for molestation of minors, the nature and circumstances of the offence are not directly relevant to the decision to refuse insurance.
2. Accordingly, the Tribunal is satisfied on the evidence before it that the respondent has refused the service of insurance to the complainant on the basis of a moral assessment, guided by the Moral Guidelines, and not on the basis of any relevant actuarial considerations.
3. The Discrimination Act is to be interpreted in a beneficial and not in a narrow way. Section 4AA of the Act provides that the Act must be interpreted in a way that is beneficial to a person who has a protected attribute. In introducing this provision as an amendment to the Discrimination Act in 2016, the Attorney-General stated:[21]

The bill includes a new explicit requirement that the act be interpreted in a way that is beneficial to people who have protected attributes to the degree that the interpretation is consistent with the objects of the act, the Human Rights Act and other rules of legislative interpretation.

This provision will encourage people applying the act, including the ACT Civil and Administrative Tribunal, to do so in keeping with its spirit - that is, to support vulnerable or marginalised members of society to enforce their rights not to be arbitrarily excluded from society because of discrimination. The act should not be interpreted narrowly or in a way that restricts the exercise of the rights in it.

The bill contains several amendments to recognise that discrimination is often complex and multifaceted in that it can occur on more than one ground, or over a series of acts, which may be impossible to isolate, or to clearly distinguish as either direct or indirect discrimination.

1. The ACT Law Reform Commission[22] in its review of the Discrimination Act, noted that the substitution of irrelevant criminal conviction for spent conviction was an important issue in the ACT, and, formed the view that amending this attribute to refer to "irrelevant criminal conviction" would provide "fairer and more consistent protection" to people who are attempting to rehabilitate, and would give effect to the guarantee in the Human Rights Act of equal and effective protection against discrimination.

25. A beneficial interpretation of the Discrimination Act, in relation to irrelevant criminal convictions, must have regard to the intention of the legislature to provide for effective protection against discrimination and provide consistent protection to people who are attempting to rehabilitate after conviction. ACAT notes in particular, the importance of gainful employment, and notes the Legislative Assembly debate of the 2016 amendments and the reference to the principle that a person's criminal conviction should not "hound" them for their whole life, keep them out of employment and cause them to be subject to discrimination, disconnected from employment and the chance to earn money.[23]

1. Section 28 of the Discrimination Act provides that it is not unlawful for a person (the first person) to discriminate against someone else (the second person) in relation to the terms on which an annuity or policy of insurance is offered to, or may be obtained by, the second person, if the discrimination is reasonable in the circumstances, having regard to any actuarial or statistical data on which it is reasonable for the first person to rely. As outlined above the respondent was not able to provide any actuarial or statistical data to support the assertion that it was reasonable for them to rely on the Moral Guidelines to refuse insurance.
2. In this matter, the Tribunal is satisfied that the respondent has refused insurance to the complainant on the basis of the Moral Guidelines, based upon a conviction that is irrelevant. Where there is no demonstrable actuarial data or research to support the insurance company's contention that the insurance was refused on the basis of an unacceptable risk to the insurance company; and where in all the circumstances, the insurance company's explanation is that the refusal is based upon their Moral Guidelines, the Tribunal finds that the respondent has treated the applicant unfavourably on the basis of a protected attribute, that is the refusal of insurance by the respondent is discrimination on the grounds of an irrelevant conviction.
3. We note in closing that, under the definition of 'irrelevant criminal record', a conviction will also be 'irrelevant' if the circumstances of the offence are not directly relevant to the circumstances of the possible discrimination. The respondent does not appear to have undertaken an assessment of this nature in this case, and indeed asserted throughout that it did not need to consider the nature of the offence or the circumstances behind it. Although we have decided this matter on other grounds, it is apparent that the respondent must consider whether the 'circumstances' of any offence are relevant to an insurance policy before declining insurance on the basis of the conviction. This legislation may well mean it cannot continue to 'business as usual' approach it conducted prior to the introduction of the amendments in 2016.

1. The Tribunal is satisfied that the respondent has discriminated against the applicant by refusing to supply him with commercial insurance because of an irrelevant criminal record.
2. The matter is relisted on Friday 26 July 2019 at 10:00am for submissions on remedy.

Insurance Australia Group Limited ACN 090 739 923 trading as NRMA

[1] The agreed statement of facts had this date as 29 June 2017 which seems to be a typographical error.

[2] Respondent's written response to the ACT Human Rights Commission dated 20 September 2018, page 3

[3] Prezzi, Patricia Anne and Discrimination Commissioner [1996] ACTAAT 132 at [22]

[4] See Bell & De Castella and Rob De Castella's Smartstart For Kids Limited [2013] ACAT 27 at [45]- [50]

[6] NRMA Business Insurance Product disclosure statement and policy booklet dated 20 March 2007, page 37

[7] Applicant's submissions dated 19 December 2018 at paragraphs 23-24

[8] Applicant's submissions dated 19 December 2018 at paragraphs 34-37

[9] Respondent's outline of written submissions dated 23 January 2019 at paragraph 21

[10] Respondent's outline of written submissions dated 23 January 2019 at paragraph 22

[11] Respondent's outline of written submissions dated 23 January 2019 at paragraph 23

[18] Respondent's outline of written submissions dated 23 January 2019 at paragraph 8.1

[19] Transcript of proceedings 31 January 2019 page 31 at lines 23-25

[21] Australian Capital Territory, Presentation Speech Discrimination Amendment Bill 2016, Legislative Assembly for the ACT, 8 June 2016, 1870 (Simon Corbell, Attorney-General)

[22] ACT Law Reform Advisory Council, Review of the Discrimination Act 1991, Final Report ACTLRAC3, pages 69-71

[23] Australian Capital Territory, Debate Discrimination Amendment Bill 2016, Legislative Assembly for the ACT, 4 August 2016, 2351 (Shane Rattenbury)