COSTS - Whether party and party or indemnity costs should be awarded - whether respondents' failure to respond to Human Rights and Equal Opportunity Commission complaint and to take part in proceedings in Federal Magistrates Court of Australia justifies award of indemnity costs.

Human Rights and Equal Opportunity Commission Act 1986

Sex Discrimination Act 1984

Federal Magistrates Court Rules 2001

Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336

O'Callaghan v Loder (1983) 3 NSWLR 89

Hall v A & A Sheiban Pty Ltd [1989] FCA 72; (1988) 20 FCR 217

Elliott v Nanda & Commonwealth (2001) FCA 418

Leslie v Graham (2002) FCA 32

Font v Paspaley Pearls (2002) FMCA 142

Wattle v Kirkland (No.2) (2002) FMCA 135

R v Equal Opportunity Board; Ex Parte Burns [1985] VicRp 31; (1985) VR 317

Aldridge v Booth [1988] FCA 170; (1988) 80 ALR 1

Mayer v Australian Nuclear Science and Technology Organisation (2003) FMCA 209

Gray v Motor Accident Commission (1998) HCA 70

Uren v John Fairfax and Sons Pty Ltd [1966] HCA 40; (1966) 117 CLR 118

Harris v Digital Pulse [2003] NSWCA 10; (2003) 197 ALR 626

Triggell v Pheeney [1951] HCA 23; (1951) 82 CLR 497

Walter v All Tools (1944) 61 TLR 39

Nye v New South Wales (2004) Aus Tort Reports 81-725

De Alwis v MIMIA (2004) FCAFC 77

Colgate-Palmolive v Cussons [1993] FCA 536; (1993) 46 FCR 225

Re: Wilcox; Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727

(1) Car Buyers Pty Ltd and Brendan Alan Wright do pay the applicant $24,623.50 within 28 days.

(2) Both Car Buyers Pty Ltd and Brendan Alan Wright do provide a written apology to the applicant within 28 days -- such apology to be in terms to be agreed between the parties or, if they cannot agree, to be approved by the Court in chambers.

(3) Car Buyers Pty Ltd and Brendan Alan Wright do pay the applicant's costs of the proceedings to be calculated pursuant to rule 21.02(2)(b) and Schedule 1 of the Federal Magistrates Court Rules 2001.

(4) The liability of Car Buyers Pty Ltd and Brendan Alan Wright pursuant to paragraphs 1 and 4 above be joint and several.

1. Ms Hughes began work with Car Buyers Pty Ltd ("Car Buyers") on 29 September 2003. She resigned on 13 October 2003. She alleges that she was sexually harassed and discriminated against during the two week period that she worked for Car Buyers.

2. Car Buyers is a company. It cannot -- itself -- sexually harass anybody. But its employees and agents can, and Car Buyers can be held responsible for their behaviour -- exactly as if it had done the acts complained of.

3. Mr Wright was the sole director and shareholder of Car Buyers when Ms Hughes worked for it. Mr Dow was employed by Car Buyers.

4. It is Ms Hughes' case that Mr Wright and Mr Dow sexually harassed and discriminated against her. It is also her case that the actions of Mr Wright and Mr Dow have profoundly affected her.

5. At the time that she was employed by Car Buyers, Ms Hughes' surname was De Jager. That was her married name. Following the breakdown of her marriage, she has reverted to her maiden name.

6. On 13 October 2003, Ms Hughes lodged a complaint against Car Buyers, Mr Wright and Mr Dow under the Human Rights and Equal Opportunity Commission Act 1986 ("HREOCA"), alleging sexual harassment in employment under the terms of the Sex Discrimination Act 1984 ("SDA").

7. An officer of the Human Rights and Equal Opportunity Commission ("HREOC") wrote to the respondents on 14 November 2003, seeking a response to the complaint. The respondents were also asked to indicate whether they would be prepared to attend a conciliation conference in an attempt to resolve the complaint.

8. No reply having been received from the respondents, the officer wrote to them again on 20 January 2004.

9. The respondents did not reply to this letter either; nor did they contact HREOC to seek an extension of time to provide a response.

10. A further attempt was made to contact the respondents on 20 February 2004, by way of a telephone call. Once again, the respondents did not reply.

11. By letter dated 15 March 2004, HREOC advised Ms Hughes' solicitor that a decision had been made to terminate the complaint pursuant to s.46PH(1)(i) of the HREOCA -- as the Commission was satisfied that there was no reasonable prospect of the matter being settled by mediation.

12. On 8 April 2004, Ms Hughes filed an application in this Court. She was entitled to do so pursuant to the provisions of s.46PO of the HREOCA. The application alleged that the respondents (being Car Buyers, Mr Wright and Mr Dow) "...breached the HREOCA and discriminated and sexually harassed (Ms Hughes) during her employment with Car Buyers".

13. The information sheet filed with the application reveals that Ms Hughes was relying upon the provisions of the SDA. She sought an apology from the respondents, and compensation.

14. None of the respondents filed a response within 14 days of being served with the application. Indeed, none of them have ever filed a response.

15. Ms Hughes eventually reached an agreement with Mr Dow. He provided her with a general apology, and paid her the sum of $4,000.00. As a result, Ms Hughes discontinued the proceeding (as it related to Mr Dow) on 21 July 2004.

16. Car Buyers and Mr Wright have ignored the proceedings in this Court. Various documents have been served on them, but they have declined to respond to them. They did not appear, and were not represented, at any of the interlocutory hearings.

17. On 2 August 2004, Ms Hughes was granted leave to proceed with her application on an undefended basis.

18. The hearing took place on 18 August 2004. The respondents did not appear.

19. The only witnesses on 18 August 2004 were Ms Hughes and her partner, Mr Cook (who gave evidence on her behalf). As Car Buyers and Mr Wright elected not to involve themselves in the proceedings, neither witness was cross-examined.

20. Suffice it to say, however, that I was impressed by both Ms Hughes and Mr Cook. They responded to questions asked of them in a calm and measured fashion. Although Ms Hughes became upset whilst recounting events that had occurred during the period of her employment with Car Buyers, she remained focussed and responsive to all questions.

21. I have no reason to regard either witness as anything other than open and honest.

22. Ms Hughes' evidence in relation to the events at Car Buyers was as follows:

a) Ms Hughes began her employment with Car Buyers on 29 September 2003, as a personal assistant to Mr Wright and Mr Dow.

b) Ms Hughes, Mr Wright and Mr Dow all worked in a small office.

c) On or about 1 October 2003, Mr Wright and Mr Dow asked Ms Hughes why she was not wearing her wedding ring. She told them that she had separated from her husband. She then became upset. They told her not to worry, and that they would "find another man" for her.

d) When Ms Hughes told Mr Wright and Mr Dow that she was separated, they "kept asking questions (of her) over and over again".

e) After Mr Wright became aware that Ms Hughes had separated from her husband, he "kept touching her". He would "put an arm around her shoulders and come up from behind her and give her a hug". Ms Hughes would "break free of the hug, look at him and say `no'". Ms Hughes also told Mr Wright that she felt uncomfortable.

f) The behaviour described in the preceding paragraph occurred "once every couple of days" during the first week that Ms Hughes worked at Car Buyers. It occurred "every day, on more than one occasion" during the second week that she worked there.

g) During the time that she was employed at Car Buyers, Mr Wright would also make comments about female customers in the presence of Ms Hughes. He would say things such as: "I could fuck her". These sorts of comments were made "every day, on average".

h) On Friday 3 October 2003, Mr Dow paid Ms Hughes her wages and asked her if she had any problems with her work. Ms Hughes told him that she was "fine with the work", but that she found Mr Wright's hugs and his comments about female customers offensive. Mr Dow replied that he was not aware of Mr Wright's conduct or inappropriate language. Mr Dow apologised on behalf of Mr Wright and said that he would speak to Mr Wright about his behaviour.

i) On Monday 6 October 2003, Mr Wright continued to make inappropriate comments to Ms Hughes. He said things such as: "Did you get a bit last night?" "Who did you kiss?" "Who were you with?". Ms Hughes did not feel comfortable around Mr Wright and "his comments made (her) sick".

j) On 9 October 2003, Ms Hughes lost her voice. One of her tasks was to telephone potential customers and, as she was unable to perform this task, it was arranged that she could leave work early. As she was leaving, Mr Wright "pulled her in for a rough hug and said: `Stop giving blokes blow jobs!'". Ms Hughes pushed him away. She left the office "feeling dirty".

k) On 10 October 2003, Ms Hughes was working on the computer. She was alone in the office. Mr Wright entered the office and "lay down on his back on the couch". Ms Hughes felt uncomfortable being alone with Mr Wright, and told him that she was going outside to smoke a cigarette. She then asked Mr Wright for her cigarette lighter -- which he had borrowed from her a few days earlier. Mr Wright held the cigarette lighter in his hand and extended his arm towards her. As Ms Hughes reached out to take the lighter, Mr Wright grabbed her wrist with his other hand and "tried to pull her down on top of him". Ms Hughes "ripped her arm free" and left the room. She was angry and upset.

l) Ms Hughes wanted to resign from her employment immediately after the incident described in the preceding paragraph, but decided to wait until Mr Dow was present so that she would not be alone with Mr Wright.

m) When Mr Dow returned, Ms Hughes told him what had happened. He paid her her wages for the day. Mr Wright (who was present) then "told Mr Dow to give Ms Hughes a hug". Ms Hughes "shook her head to say no". She could not speak "because her voice had deserted her". According to Ms Hughes, "the look on her face conveyed the message to Mr Dow to get away from her". Notwithstanding Ms Hughes' actions, Mr Dow gave her a hug.

n) As Ms Hughes was collecting her bag to leave, Mr Wright said to Mr Dow: "I wonder what she would look like naked". Both men then "just sat there and stared at Ms Hughes". Ms Hughes "felt violated and disgusted". She left immediately, and went home.

o) On 13 October 2003, Ms Hughes telephoned her workplace and resigned over the telephone. She was not prepared to return to the office "for fear of what might happen to her".

23. Ms Hughes' evidence in relation to the financial arrangements at Car Buyers was as follows:

a) Ms Hughes was paid a weekly net wage of $500.00 -- plus bonuses for finding customers. She was not paid any superannuation.

b) In order to "find customers", Ms Hughes was required to telephone people who had advertised their motor vehicles for sale in newspapers or similar publications, and to inquire whether they would be prepared to sell their car to Car Buyers (which would then on sell the vehicle).

c) Ms Hughes was paid a bonus of $100.00 for each vehicle that she "brought in".

d) Over the two week period of her employment with Car Buyers, she earned approximately $500.00 in bonuses. In other words, she was able to induce five potential customers to sell their vehicles to Car Buyers.

24. In relation to the events following her employment at Car Buyers, Ms Hughes' evidence was as follows:

a) After resigning from Car Buyers, Ms Hughes was unemployed from 13 October 2003 to 5 January 2004.

b) On 5 January 2004, Ms Hughes began a traineeship through Melbourne East Group Training.

c) The traineeship lasted approximately seven months, during which she was paid $330.00 per week.

d) Ms Hughes commenced a new job on Monday 16 August 2004.

25. As to the consequences of the events described above, Ms Hughes' evidence was as follows:

a) Ms Hughes "felt scared and violated" at the Car Buyers workplace.

b) After leaving Car Buyers, Ms Hughes consulted a medical practitioner. She has suffered from depression, and has been prescribed antidepressants.

c) Ms Hughes has not seen a psychologist or a psychiatrist. She did not seek such specialist assistance because the cost was prohibitive. She will consider seeking such assistance when her financial position improves.

d) The events described above have put a strain on Ms Hughes' relationship with Mr Cook (which relationship commenced in or about March 2003). She "constantly flinches when he touches her".

e) Ms Hughes "confidence has been adversely affected". She finds that she cannot trust people.

f) Ms Hughes feels unable to be in a room with a group of males.

g) Although Ms Hughes could previously "take a joke", she now finds that she is unsure what is meant when certain comments are made.

h) Ms Hughes finds herself "constantly thinking about" the events that occurred during her employment at Car Buyers.

i) Ms Hughes does not feel "motivated to do anything".

j) Ms Hughes has days during which she "feels good", but if she allows her mind to wander, then she finds herself dwelling on the events at Car Buyers.

k) Ms Hughes is upset and angry that Car Buyers and Mr Wright have ignored the HREOC complaint and the proceedings in this court. She perceives that they have treated her complaint lightly.

a) He first met Ms Hughes in March or April 2003. They commenced living together in or about June 2003.

b) Ms Hughes was initially happy to get the job at Car Buyers. As far as she was concerned, it was to be well paid.

c) He noticed that, after a few days, Ms Hughes was "reluctant to go out".

d) Ms Hughes did not tell Mr Cook what had happened at Car Buyers until after she had left her employment. She told him that she "felt stupid" and that she kept asking herself "how she could have let it happen".

e) When Mr Cook first met Ms Hughes, she was outgoing and confident. She could "walk into a room and tell a joke". Now she is introverted. If she walks into a room, "she just stands in a corner".

f) Ms Hughes is now reluctant to "go anywhere by herself".

g) Following her employment at Car Buyers, Mr Cook and Ms Hughes had "problems with intimacy", and he "slept on the couch". Their relationship is now improving.

27. It is clear that the relationship between Ms Hughes and Mr Cook has endured. It is also clear that Ms Hughes remains affected by the events that occurred during her employment with Car Buyers. The wounds created during that period remain raw (as it were).

28. Section 28B of the SDA provides as follows:

(1) It is unlawful for a person to sexually harass:

(b) a person who is seeking to become an employee of the person.

(2) It is unlawful for an employee to sexually harass a fellow employee or a person who is seeking employment with the same employer.

(3) It is unlawful for a person to sexually harass:

(a) a commission agent or contract worker of the person; or

(b) a person who is seeking to become a commission agent or contract worker of the person.

(4) It is unlawful for a commission agent or contract worker to sexually harass a fellow commission agent or fellow contract worker.

(5) It is unlawful for a partner in a partnership to sexually harass another partner, or a person who is seeking to become a partner, in the same partnership.

(6) It is unlawful for a workplace participant to sexually harass another workplace participant at a place that is a workplace of both of those persons.

"workplace" means a place at which a workplace participant works or otherwise carries out functions in connection with being a workplace participant.

"workplace participant" means any of the following:

29. "Sexual Harassment" is defined in s.28A of the SDA:

(1) For the purposes of this Division, a person sexually harasses another person (the person harassed ) if:

(a) the person makes an unwelcome sexual advance, or an unwelcome request for sexual favours, to the person harassed; or

(b) engages in other unwelcome conduct of a sexual nature in relation to the person harassed;

in circumstances in which a reasonable person, having regard to all the circumstances, would have anticipated that the person harassed would be offended, humiliated or intimidated.

"conduct of a sexual nature" includes making a statement of a sexual nature to a person, or in the presence of a person, whether the statement is made orally or in writing.

30. Sections 28A and 28B of the SDA apply to Australian companies such as Car Buyers.[1]

31. Section 106 of the SDA is as follows:

(1) Subject to subsection (2), where an employee or agent of a person does, in connection with the employment of the employee or with the duties of the agent as an agent:

(a) an act that would, if it were done by the person, be unlawful under Division 1 or 2 of Part II (whether or not the act done by the employee or agent is unlawful under Division 1 or 2 of Part II); or

(b) an act that is unlawful under Division 3 of Part II;

this Act applies in relation to that person as if that person had also done the act.

(2) Subsection (1) does not apply in relation to an act of a kind referred to in paragraph (1)(a) or (b) done by an employee or agent of a person if it is established that the person took all reasonable steps to prevent the employee or agent from doing acts of the kind referred to in that paragraph.

32. Section 28A and 28B are in Division 3 of Part II of the SDA.

33. The effect of s.106 of the SDA is to render Car Buyers vicariously liable for Mr Wright's acts (where such acts amount to sexual harassment under the SDA) as if Car Buyers had also done the acts.

34. Sex discrimination is defined in s.5 of the SDA, and made unlawful in employment by s.14(2). Those provisions are as follows:

Section 5

(1) For the purposes of this Act, a person (in this subsection referred to as the discriminator ) discriminates against another person (in this subsection referred to as the aggrieved person ) on the ground of the sex of the aggrieved person if, by reason of:

(b) a characteristic that appertains generally to persons of the sex of the aggrieved person; or

(c) a characteristic that is generally imputed to persons of the sex of the aggrieved person;

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 the opposite sex.

(1A) To avoid doubt, breastfeeding (including the act of expressing milk) is a characteristic that appertains generally to women.

(2) For the purposes of this Act, a person (the discriminator) discriminates against another person (the aggrieved person) on the ground of the sex of the aggrieved person if the discriminator imposes, or proposes to impose, a condition, requirement or practice that has, or is likely to have, the effect of disadvantaging persons of the same sex as the aggrieved person.

(3) This section has effect subject to sections 7B and 7D.

Section 14(2)

(2) It is unlawful for an employer to discriminate against an employee on the ground of the employee's sex, marital status, pregnancy or potential pregnancy:

(a) in the terms or conditions of employment that the employer affords the employee;

(b) by denying the employee access, or limiting the employee's access, to opportunities for promotion, transfer or training, or to any other benefits associated with employment;

(d) by subjecting the employee to any other detriment.

35. In my opinion, it is clear beyond argument that Mr Wright sexually harassed Ms Hughes during her employment at Car Buyers. The following acts (at least) amounted to "unwelcome conduct of a sexual nature":

a) Mr Wright continually touching Ms Hughes, putting his arms around her shoulders and coming up from behind her and giving her a hug.

b) Mr Wright saying such things as "I could fuck her" (in relation to female customers) in the presence of Ms Hughes.

d) Mr Wright saying to Ms Hughes: "Stop giving blokes blow jobs!".

e) Mr Wright grabbing Ms Hughes' wrist and attempting to pull her down on top of him whilst he was lying on a couch in the office.

f) Mr Wright's comment (to Mr Dow): "I wonder what she would look like naked".

36. Mr Wright's behaviour described in paragraph 35(a) and (e) above also amounts to "an unwelcome sexual advance".

37. Bearing in mind Ms Hughes' reactions to Mr Wright's comments and actions (and even if those reactions were to be ignored), a reasonable person would have anticipated that Ms Hughes would be offended, humiliated or intimidated by the relevant behaviour.

38. In other words, I am satisfied that Mr Wright's actions and statements as referred to in paragraph 35 above amounted to conduct of a sexual nature, that the conduct was unwelcome, that Ms Hughes was offended, humiliated and intimidated by the conduct and that, having regard to all the circumstances, a reasonable person would have anticipated that Ms Hughes would have felt this way.

39. To the extent that it may be necessary for me to say so, I would add that I am satisfied that Ms Hughes' (and Mr Cook's) evidence should be accepted, and that the conduct which Ms Hughes describes in fact took place. In other words, and applying the Briginshaw standard[2], Ms Hughes' allegations have been proved to my satisfaction.

40. I am satisfied that the conduct that I have found to have taken place meets all the tests required by s.28A, and constitutes sexual harassment by Mr Wright of Ms Hughes.

41. It was argued on behalf of Ms Hughes that the actions which I have found to have occurred constitute not only sexual harassment, but also sexual discrimination. That submission is clearly correct (see O'Callaghan v Loder (1983) 3 NSWLR 89, Hall v A & A Sheiban Pty Ltd [1989] FCA 72; (1988) 20 FCR 217 per French J at pp 274-277_, Elliott v Nanda & Commonwealth_ (2001) FCA 418 per Moore J at pp 125-30, Leslie v Graham (2002) FCA 32 at paragraph 73, Font v Paspaley Pearls (2002) FMCA 142 at paragraphs 136-9 and Wattle v Kirkland (No.2) (2002) FMCA 135 at paragraph 67). Mr Wright treated Ms Hughes less favourably than, in the same or substantially similar circumstances, he would have treated a male. Further, his behaviour imposed a detriment (within the meaning of s.14(2)(d) of the SDA) on Ms Hughes on the ground of her sex.

42. Although I have concluded that Car Buyers is vicariously liable for the actions of Mr Wright pursuant to s.106 of the SDA[3], it has been suggested that it may not necessarily follow that Car Buyers (itself) has unlawfully discriminated against Ms Hughes. In Leslie v Graham (2002) FCA 32, Branson J said (at paragraph 73):

...while (the SDA) renders unlawful discrimination by an employer on the ground of sex, it does not render unlawful discrimination by a fellow employee on the ground of sex. While I have found that (the employer) is vicariously liable under (the SDA) for (the respondent employee's) sexual harassment of (the applicant employee), nothing in (the SDA) deems an employer found vicariously liable for an act of sexual harassment to have itself engaged in the act of sexual harassment (cf s. 105 of [the SDA]).

43. With the greatest of respect to her Honour, I must confess to finding the above passage somewhat impenetrable. Section 106 of the SDA deals with vicarious liability.[4] Leaving aside the exemption referred to in subsection (2) -- which does not apply in the present circumstances -- the section clearly states that "where an employee or agent of a person" does a relevant unlawful act, the SDA applies "in relation to that person as if that person had also done the act". The "person" referred to in s.106(1) can only be (in the present circumstances) an employer. It follows that, if Mr Wright does an act that would, if it were done by Car Buyers, be unlawful under s.14 of the SDA (which appears in Part II of the SDA), then the SDA applies, in relation to Car Buyers, as if Car Buyers had also done the act. Thus, it seems to me that the SDA does render unlawful discrimination by a fellow employee (in this case, Mr Wright) on the ground of sex. Although it is true that Mr Wright may not himself have discriminated against Ms Hughes on the grounds of her sex within the meaning and contemplation of s.14 (because, after all, he was not her employer in his personal capacity), the effect of s.106 is that Car Buyers is deemed to have also done the relevant acts -- thereby triggering the provisions of s.14.

44. In any event, Car Buyers is, in every sense, the alter ego of Mr Wright. In my opinion, there can be no relevant distinction between Mr Wright's acts and behaviour in relation to or in connection with Ms Hughes' employment and the acts and behaviour of Car Buyers itself.

45. I find, therefore, that Car Buyers has unlawfully discriminated against Ms Hughes on the ground of her sex by subjecting her to the kind of detriment referred to in paragraphs 22 and 35 above.[5]

46. I have dealt with the financial and other consequences of the period that Ms Hughes spent in the employment of Car Buyers at paragraphs 24 to 27 above.

47. Ms Hughes claims both economic and non-economic loss. As Driver FM observed in Wattle v Kirkland (No.2) (2002) FMCA 135 (at para 70):

Damages should be assessed on the basis of the torts based principle of putting the applicant in the position she would have been had the wrong against her not been committed.

48. If Ms Hughes had not been harassed and discriminated against, then there is no reason why she could not have continued to work at Car Buyers.

49. The evidence reveals that Ms Hughes was unable to find employment from 13 October 2003 to 5 January 2004-- a period of approximately 12 weeks. Thereafter, she obtained a traineeship that lasted approximately 7 months, and during which she was paid $330.00 a week.

50. Ms Hughes' claim for loss of income is as follows:

a) The $500.00 (net) per week that Ms Hughes was paid at Car Buyers amounts to $624.00 per week gross.

b) As Ms Hughes was unemployed for 12 weeks, her loss of income amounted to $7,488.00 (being 12 weeks at $624.00 per week).

c) In addition to her wage, Ms Hughes was paid a bonus of $100.00 for each vehicle she "brought in". Over the two week period of her employment with Car Buyers, she earned approximately $500.00 in bonuses -- which equates to an average of $250.00 per week.

d) When regard is had to income tax considerations, Ms Hughes' average commission was in the order $300.00 gross per week for each of the two weeks that she worked at Car Buyers.

e) It follows that she lost an amount of $3,600.00 (being $300.00 per week for 12 weeks) between 13 October 2003 and 5 January 2004.

f) The total of Ms Hughes' claim for lost income -- for the 12 week period -- is $11,088.00 (being $7,488.00 plus $3,600.00).

g) Ms Hughes would also have been entitled to superannuation contributions from her employer during that period. These contributions would have been at the rate of 9% -- or $998.00 in respect of a gross income of $11,088.00.

h) It follows that Ms Hughes sustained a total loss of $12,086.00 in respect of wages, "commission" and superannuation for the 12 week period of her unemployment.

51. It could have been argued on Ms Hughes' behalf that she was also entitled to claim the difference between the income that she earned at Car Buyers and the amount that she was paid during her traineeship -- for all of the period until she started her new job shortly prior to the hearing. But no such claim was made -- although Mr Bromley (for Ms Hughes) did suggest that she should be entitled to some proportion of this "gap loss".

52. I was not provided with any information regarding the amount that Ms Hughes is currently being paid in the job that she has so recently commenced. I do not know, therefore, whether the traineeship which she underwent from January to August this year resulted in her improving her earning capacity to a significant extent. If it did, then it may not be appropriate to award Ms Hughes the whole or any part of the difference between the amount she was earning at Car Buyers and the amount she was paid during her traineeship.

53. Further, no evidence was provided as to why it was necessary for Ms Hughes to undergo a traineeship -- as opposed (for example) to seeking, obtaining and maintaining employment of a similar nature to the job that she was employed to do at Car Buyers. Ms Hughes had worked in a factory in Dandenong for one and a half to two years prior to March 2003. She was employed as a data entry clerk and earned approximately $380.00 per week gross at that time. She was unemployed and looking for work from March 2003 until September 2003, when she commenced with Car Buyers.

54. Having regard to the amount that Ms Hughes was paid prior to her employment at Car Buyers and to the fact that I am unaware of her present wage, I am not prepared to make any allowance for the notional gap between the amount that Ms Hughes earned (or should have earned) at Car Buyers and the amount that she was paid during her traineeship. It follows that, in my opinion, an appropriate allowance for loss of income is $12,086.00.

55. Ms Hughes also claimed certain "out of pocket expenses" (or special damages). She has been on anti-depressants since leaving Car Buyers, and the evidence revealed that she has had to obtain approximately 11 or 12 prescriptions for the medication in that time. Each prescription has cost her approximately $25.00. She claims, therefore, a total of something in the order of $275.00 or $300.00.

56. It was argued that it will be necessary for Ms Hughes to continue with such prescriptions for some (undefined) period in the future. It was also claimed that it will be necessary for Ms Hughes to see a psychologist on at least one occasion (at a cost of something in the order of $150.00 or $200.00).

57. The fact of the matter is that no expert medical, psychological or psychiatric evidence was presented to me regarding Ms Hughes' emotional, psychological or psychiatric condition.

58. I accept that Ms Hughes is a witness of truth, and accept that she has spent the amount that she has claimed in respect of the medication that she has been obliged to obtain. Without expert evidence as to an appropriate diagnosis, preferred treatment program and prognosis, however, I am not prepared to make any award in respect of anticipated future expenses.

59. It follows from the above that I am prepared to allow an amount of between $275.00 and $300.00 in respect of Ms Hughes' "out of pocket expenses" to date. The average of these two figures is $287.50.

60. In relation to other compensatory damages, I accept (as I have indicated) that Ms Hughes has been profoundly affected by the events that occurred during her employment at Car Buyers. I find that her adverse reaction to those events has continued through to the present -- although the severity of her reaction appears to have abated somewhat. I accept that she dwelled on the incidents in the manner she described, and that her confidence has been affected in the manner she has described. There appears to be no doubt that she has suffered depression (or a form of depression), anxiety, loss of motivation and loss of enjoyment of life. I also accept that Ms Hughes' relationship (including her sexual relationship) with Mr Cook was adversely affected by the events described in these Reasons, but that the bond between them remains strong and will remain strong.

61. Overall, I am satisfied that the conduct of Car Buyers and Mr Wright had a significant and negative impact on Ms Hughes. This impact has continued until trial.

62. Mr Bromley suggested that the cases reveal that the range of awards for such damages is between $5,000.00 and $15,000.00. The tables in the HREOC "Federal Discrimination Law 2004" summary (including the supplement for January to June 2004) seem to support Mr Bromley's submission in that regard.[6] It is not necessary, however, for me to express a concluded view on this matter.

63. In Mayer v Australian Nuclear Science and Technology Organisation (2003) FMCA 209, Driver FM said:

It is important to consider that damages for non-economic loss should not be minimal as this would tend to trivialise or diminish respect for the public policy behind anti-discrimination legislation: see Alexander v Home Office (1998) 1WLR 968 at 975; Bonella v Wollongong City Council (2001) NSWADT 194 at 121.

64. In Leslie v Graham (2002) FCA 32, Branson J awarded damages of $16,000.00 for non-economic loss. In Elliott v Nanda (2001) FCA 418, Moore J awarded damages of $15,000.00. Both were sexual harassment cases, and when I have regard to the awards in those cases, together with the other awards in HREOC's "Federal Discrimination Law 2004", I conclude that the appropriate award for (general) non-economic loss in the circumstances of this case is between $10,000.00 and $12,500.00. I am of the view that it would be intellectually dishonest of me to chose either of these two figures in preference to the other, and hence I propose to adopt the mid-point of the two -- being $11,250.00.

65. I have not overlooked the fact that Car Buyers and Mr Wright ignored the HREOC complaint and declined to take any part in the proceedings in this Court. Nor have I overlooked the fact that the respondent's attitude in this regard has upset and angered Ms Hughes in the manner she has described. I shall deal with these matters, however, when I discuss the subject of aggravated damages.

67. The basis of the court's jurisdiction to order damages is s.46PO(4) of the HREOCA:

(4) If the court concerned is satisfied that there has been unlawful discrimination by any respondent, the court may make such orders (including a declaration of right) as it thinks fit, including any of the following orders or any order to a similar effect:

(a) an order declaring that the respondent has committed unlawful discrimination and directing the respondent not to repeat or continue such unlawful discrimination;

(b) an order requiring a respondent to perform any reasonable act or course of conduct to redress any loss or damage suffered by an applicant;

(c) an order requiring a respondent to employ or re- employ an applicant;

(d) an order requiring a respondent to pay to an applicant damages by way of compensation for any loss or damage suffered because of the conduct of the respondent;

(e) an order requiring a respondent to vary the termination of a contract or agreement to redress any loss or damage suffered by an applicant;

(f) an order declaring that it would be inappropriate for any further action to be taken in the matter.

68. It is clear from s.46PO(4) that the respondent can only be ordered to pay to an applicant "damages by way of compensation for any loss or damage suffered because of the conduct of the respondent". It follows, in my opinion, that although the court has power to award aggravated damages, it does not have power to award exemplary damages.[7].

Difference Between Aggravated Damages and Exemplary Damages

69. In Gray v Motor Accident Commission (1998) HCA 70, Gleeson CJ, McHugh, Gummow and Haine JJ quoted with apparent approval a passage from the judgment of Windeyer J in Uren v John Fairfax and Sons Pty Ltd [1966] HCA 40; (1966) 117 CLR 118 at 149. In the passage, Windeyer J described the difference between aggravated damages and exemplary damages as being:

...that aggravated damages are given to compensate the plaintiff where the harm done to him by a wrongful act was aggravated by the manner in which the act was done; exemplary damages, on the other hand, are intended to punish the defendant, and presumably to serve one or more of the objects of punishment -- moral retribution or deterrence.

70. Although aggravated damages are compensatory in nature, the purposes behind an award of exemplary damages are different:

These purposes include punishment of the defendant for a high-handed disregard of the plaintiff's rights, deterrence of the defendant to prevent him or her from reaping a gain from the wrong doing, assuaging any feelings on the part of the plaintiff to seek revenge for the hurt done, and marking the condemnation of the Court for the defendant's conduct...(Exemplary damages) may be awarded when the defendant has been guilty of "conscious wrong doing in contumelious disregard of another's rights" or has committed a particularly flagrant violation of the plaintiff's rights; the High Court has also accepted that they are available if the defendant's conduct after the commission of the tort shows a cruel and reckless disregard of the plaintiff, thereby demonstrating the defendant's callousness and indifference towards the plaintiff in committing the wrong. It is not, however, necessary for the plaintiff to show that the defendant has been motivated by malice, in the sense of spite or ill-will.[8]

71. Generally speaking, compensatory damages must be approached by considering the effect of the wrongful act on the plaintiff, whereas exemplary damages (being punitive) are to be approached from a different perspective:

In considering whether to award exemplary damages, the first, if not the principal, focus of the inquiry is upon the wrong doer, not upon the party who was wronged. (The reaction of the party who was wronged to high-handed or deliberate conduct may well be a reason for awarding aggravated damages in further compensation for the wrong done. But it is not ordinarily relevant to whether exemplary damages should be allowed). The party wronged is entitled to whatever compensatory damages the law allows (including, if appropriate, aggravated damages). By hypothesis then, the party wronged will receive just compensation for the wrong that is suffered. If exemplary damages are awarded, they will be paid in addition to compensatory damages and, in that sense, will be a windfall in the hands of the party who was wronged. Nevertheless, they are awarded at the suit of that party and, although awarded to punish the wrong-doer and deter other from like conduct, they are not exacted by the State or paid to it.[9]

72. So unalike are compensatory (including aggravated damages) and exemplary damages that the very description of the latter as "damages" has been questioned. For example, Spigelman CJ in Harris v Digital Pulse [2003] NSWCA 10; (2003) 197 ALR 626 said (at page 629):

The judgment and the submissions in this case adopt the terminology of "exemplary damages". I do not find that to be appropriate. "Damages" are a remedy at common law. The issue before the Court is whether a punitive or monetary award can be made in equity. Inexact use of terminology is here, as is so often, prone to cause confusion of thought. The use of the word "damages" with respect to both compensatory damages and exemplary damages obscures the fact that a common law litigant who received an award of the latter has not in fact suffered any "damage" in the relevant respect.

73. In the same case, Heydon JA characterised the award of exemplary damages as, in effect, a "criminal sanction".[10] Spigelman CJ did not agree with his Honour's characterisation in that regard, and preferred the use of the term "punitive monetary award".

74. I have not overlooked the fact that Ms Hughes did not seek exemplary damages (however characterised). As I have explained above, however, it seems clear that the court does not have power to make an award for exemplary damages in any event -- and I respectfully disagree with Raphael FM's conclusion in Font v Paspaley Pearls (2002) FMCA 142 that such a power exists.[11]

75. Aggravated damages are clearly compensatory in nature:

The notion of aggravated damages is one that is by no means clear, and refers to two aspects of compensation. On the one hand, the term is used to denote an award which is increased, beyond what might otherwise have been available, to take account of the defendant's conduct in the commission of the tort and thereafter up to the date of the action. Use in this sense, aggravated damages are "compensatory in nature, being awarded for injury to the plaintiff's feelings caused by insult, humiliation and the like". They are available in respect to those torts which protect a plaintiff's reputation, feelings or liberty...

In recent years the compensation of the plaintiff's injured feelings has extended also to those torts which protect economic interests, or physical or bodily integrity. In this case, court's generally refer simply to damages for mental distress.[12]

76. Elliott v Nanda & Commonwealth (2001) FCA 418 is clearly authority for the proposition that aggravated damages can be awarded where the resolution of an applicant's complaint has been delayed by the conduct of the respondent (including a respondent's failure to participate in proceedings before HREOC) -- provided that the applicant has suffered additional mental distress because of the delay. Similarly, Triggell v Pheeney [1951] HCA 23; (1951) 82 CLR 497 suggests that aggravated damages may be appropriate where a defendant conducts his or her case in a manner which is unjustifiable, improper or lacking in bona fides. Aggravated damages may also be awarded where the defendant does not express regret for wrongs done (see Walter v All Tools (1944) 61 TLR 39 at 40, cited in Nye v New South Wales (2004) Aus Tort Reports 81-725 at para 249).

77. In the context of defamation cases, it has been held that aggravated damages may be awarded --

...when the conduct of the defendant between the publication of the libel and the trial has been such as to increase the hurt suffered by the plaintiff. Although that conduct need not be malicious, it must, to justify such an award, be in some way unjustifiable, improper or lacking in bona fides. [13]

78. In Leslie v Graham (2002) FCA 32, Branson J said:[14]

I consider it appropriate to place weight on the fact that the respondents did not take part in the hearing before (HREOC) and exercised their right not to comply with the determination of (HREOC). It may be that if the respondents had cooperated with (HREOC) when it conducted its inquiry, its finding may have in part been different. It may also have been that a hearing before this Court would have proved unnecessary. That is, I am satisfied that there is a real possibility that, had the respondents cooperated with (HREOC), an earlier resolution of the matter would have been achieved.

79. Although her Honour did not specifically deal with the above matter in the context of a claim for aggravated damages, the relevance of behaviour similar to that of the respondents in the present case is clearly recognised as a relevant consideration.

80. During the course of her evidence, Ms Hughes said that she was upset and angry that Car Buyers and Mr Wright had failed to respond to HREOC's correspondence, and had failed to involve themselves in the proceedings in this Court. Ms Hughes was of the view that they are "treating (the harassment) lightly".

81. I am satisfied that the resolution of Ms Hughes' complaint to HREOC has been delayed -- and significantly so -- by the refusal of Car Buyers and Mr Wright to involve themselves in the relevant processes in any way. I am also satisfied that Ms Hughes has suffered additional mental distress because of the delay, and because of her perception they considered that her complaint (which I have found to have been justified) was not even worthy of acknowledgment, let alone a formal response or an apology.

82. In my view, the decision of Mr Wright and Car Buyers to completely ignore Ms Hughes' complaint, and all subsequent proceedings, demonstrates an indifference to Ms Hughes and the mental distress that she was clearly suffering, together with a degree of arrogance that borders on defiance. The attitude they have displayed has clearly injured Ms Hughes' feelings, and insulted, humiliated and angered her. Whether or not Mr Wright and Car Buyers intended their conduct in ignoring the HREOC complaint and these proceedings to be malicious, they clearly intended it to be a reflection of their indifference to the complaint and to the distress suffered by Ms Hughes. Their conduct, in that sense, was clearly unjustified, improper and lacking in bona fides.

83. I also take into account the fact that, if Car Buyers and Mr Wright had cooperated with HREOC, then it may well have been that a hearing in this Court would have proved unnecessary. In other words, I am satisfied that there is a real possibility that had the respondent's cooperated with HREOC, an earlier resolution of this matter could have been achieved. I have no doubt that such an early resolution would have assisted Ms Hughes to put behind her the harassment and discrimination that she suffered.

84. In my opinion, an award of aggravated damages is appropriate. The prolongation of the proceedings, the additional mental distress caused to Ms Hughes and the frustration, humiliation and anger that she has felt as a result of her complaint being effectively treated with contempt warrants an award in no less an amount than that fixed by Moore J in Elliott v Nanda & Commonwealth (2001) FCA 418. I propose to order that Car Buyers and Mr Wright pay Ms Hughes a further sum of $5,000.00 as aggravated damages.

85. I have concluded that, in my opinion, Ms Hughes should receive a total award of $16,250.00 -- being $11,250.00 in respect of general damages and $5,000.00 in respect of aggravated damages.

86. Ms Hughes should also be paid the amounts to which I have referred in respect of loss of income and out of pocket expenses.

87. From this overall award should be deducted the amount of $4,000.00 already received from Mr Dow. I propose to deduct this figure from the award for "general" damages -- to reflect the fact that the award for aggravated damages properly adheres to Car Buyers and Mr Wright.

88. I propose to make orders to the following effect:

1. Car Buyers and Mr Wright do pay to Ms Hughes damages by way of compensation in the sum of $24,623.50, comprising:

(a) general damages: $7,250.00 (being $11,250.00 less the amount of $4,000.00 paid by Mr Dow);

(c) special damages $ 12,373.50 (being $12,086.00 for loss of income and $287.50 for "out of pocket expenses).

2. Car Buyers and Mr Wright be jointly and severally liable to pay Ms Hughes the said damages (totalling $24,623.50 damages) within 28 days.

3. Both Car Buyers and Mr Wright do provide a written apology to Ms Hughes within 28 days -- such apology to be in terms to be agreed between the parties or, if they cannot agree, to be approved by the Court in chambers.

89. As Ms Hughes succeeded against Car Buyers and Mr Wright in these proceedings, she is entitled to her costs.

90. Mr Bromley argued that Ms Hughes should be entitled to her costs on an indemnity basis.

91. In De Alwis v MIMIA (2004) FCAFC 77, the Full Court of the Federal Court said:

The purpose of an order for costs is to indemnify or compensate the person in whose favour it is made, not to punish the person against whom it is made: see Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534; Ohn v Waltob (1995) 36 NSWLR 77 at 79 per Glesson CJ. The usual rule is that costs should be on a party-party basis, but that the court has a wide and unfettered discretion to award costs on an indemnity basis in appropriate cases in particular circumstances: see Colgate-Palmolive v Cussons [1993] FCA 536; (1993) 46 FCR 225 at 231-234. [15]

92. In Colgate-Palmolive v Cussons, Sheppard J summarised the relevant principles as follows:

(a) The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis... In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.

(b) This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia...

(c) In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course...

(d) Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud... evidence of particular misconduct that causes loss of time to the Court and to other parties... the fact that the proceedings were commenced or continued for some ulterior motive ... or in wilful disregard of known facts or clearly established law..., the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions ... an imprudent refusal of an offer to compromise ... and an award of costs on an indemnity basis against a contemnor). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

(e) It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.

93. It is clear from the above authorities that, unless the justice of a particular case requires, or some special or unusual feature arises, the ordinary rule in favour of party-party costs should not be departed from.

94. My Bromley argued that the failure of Mr Wright and Car Buyers to respond to HREOC and to take part in the proceedings in this Court demonstrates their contempt for the entire process. He argued that, on that basis, an order for indemnity costs is appropriate.

95. I have taken the respondents' behaviour in this regard into account when determining the question of aggravated damages -- in the context of the effect of such behaviour on Ms Hughes. Beyond that, the behaviour does not appear to fall within any of the categories recognised by Sheppard J in Colgate-Palmolive v Cussons. Whilst I recognise that those categories are not closed, it seems to me that the refusal of the respondents to participate in proceedings in this Court would not warrant the making for an order for payment of costs on other than a party-party basis.

96. In my opinion, to award costs on an indemnity basis in the present circumstances would be to inappropriately punish the respondents. It seems to me that the attitude that they adopted to the HREOC complaint is irrelevant insofar as costs in this court are concerned -- although I recognise that the application in this court may not have had to be filed at all if the respondents had responded to the HREOC complaint. Whilst the respondents' refusal to participate in the proceedings in this Court has obviously upset and frustrated Ms Hughes, the fact of the matter is that the respondents have not sought to justify their actions or made inappropriate or unfounded allegations against Ms Hughes. They did not prolong the proceedings by making groundless contentions or filing unmeritorious applications. They simply let the proceedings run their course.

97. I propose to order that the respondents do pay Ms Hughes' costs of the proceedings to be calculated pursuant to rule 21.02(2)(b) and Schedule 1 of the Federal Magistrates Court Rule 2001. I shall also certify that this is a case that is suitable for an advocacy loading.

I, Paul O'Halloran, certify that the preceding ninety-seven (97) paragraphs are a true copy of the reasons for judgment of Walters FM

[1] See, SDA s.9.

[2] See Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336.

[4] Section 106 is reproduced in paragraph 31 of these Reasons.

[5] See also the passages from R v Equal Opportunity Board; Ex Parte Burns [1985] VicRp 31; (1985) VR 317 at 323 and Aldridge v Booth [1988] FCA 170; (1988) 80 ALR 1 at [17], referred to in Font v Paspaley Pearls (2002) FMCA 142 at paras 137-138.

[6] See the tables at chapters 5.2.3 and 5.2.4

[7] See Hall v A & A Sheiban Pty Ltd [1989] FCA 72; (1989) 20 FCR 217 at pp 240-1 (per Lockhart J) and p 282 (per French J); Cf the decision of Raphael FM in Font v Paspaley Pearls (2002) FMCA 142 at paras 158 to 167.

[8] See Law of Torts (3rd edition) by Balkin & Davis, at [27.10].

[9] See Gray v Motor Accident Commission (1998) HCA 70 at para 15.

[10] Harris v Digital Pulse [2003] NSWCA 10; (2003) 197 ALR 626 at p.708.

[11] See Hall v A & A Sheiban Pty Ltd [1989] FCA 72; (1989) 20 FCR 217 at pp 240-1 (per Lockhart J) and p 282 (per French J).

[12] See Law of Torts (3rd edition) by Balkin & Davis, at [27.7].

[13] See Law of Torts (3rd edition) by Balkin & Davis, at [19.80], and the cases there cited.

[15] See also Re: Wilcox; Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727.