NSW Breeding & Racing Stables Pty Ltd v V & X

Court of Appeal (NSW)|2005-04-01|Before: Spigelman CJ, Handley JA, Hodgson JA, Barrett J

Background Facts 2 The Appellant owns a motel at Dorrigo. At the relevant time a man, referred to in the proceedings as Mr Z, was employed, together with his wife, in a managerial role at the motel. The First Respondent ("Mrs V") was employed on a part time basis as a housemaid in the motel from May 1994 until she resigned on 25 July 1996. The Second Respondent ("Mrs X") was employed in the motel as a waitress from March 1996 to September 1996 and again from December 1996 to January 1997. 3 Each of the Respondents alleged that Mr Z sexually harassed them. The Tribunal upheld the complaints and found that the Appellant and Mr Z, who had played no part in the proceedings, were jointly and severally liable for the unlawful acts in the nature of sexual harassment, which constituted discrimination on the grounds of sex within the meaning of the Act. 4 The procedural chronology is as follows: · 9 September 1996 the First Respondent lodged a complaint with the Anti-Discrimination Board. · 6 March 1998 the Board referred the First Respondent's complaint to the Tribunal. · 27 June 1998 the Second Respondent lodged a complaint with the Anti-Discrimination Board. · 4 March 1999 the Board referred the Second Respondent's complaint to the Tribunal. · 24 September 1999 the Tribunal made orders that the complaints be heard jointly. · 23, 24 and 25 February, 17 and 18 April, 17 and 18 May 2000 a joint hearing of the complaints occurred. · 1 September 2000 the Tribunal found that the complaints were substantiated and made orders against Mr Z and the Appellant (V v Y [2000] NSWADT 121; X v Y [2000] NSWADT 122). · 29 September 2000 the Appellant filed a summons in the Supreme Court applying for judicial review of both decisions. · 6 June 2001 the summons was heard by Barrett J. · 18 June 2001 Barrett J held that adequate provision was made for the Plaintiff to seek review by way of an appeal to an Appeal Panel and accordingly refused the application for judicial review (NSW Breeding & Racing Stables Pty Ltd v Administrative Decisions Tribunal of NSW [2001] NSWSC 494; 53 NSWLR 559). · 12 July 2001 the Appellant lodged a Notice of Appeal to the Tribunal repeating the matters raised before Barrett J. The Appellant also applied for leave to extend the appeal to a review of the merits, pursuant to s113 of the Administrative Decisions Tribunal Act 1997, and for leave to bring the appeal out of time. · 19 September 2001 the Tribunal heard an application for costs in the original first instance proceedings. · 5 February 2002 the Tribunal gave written reasons for the decision on the costs and contribution issues. · 30 May 2002 the Appeal Panel heard the Appellant's appeal. · 30 May 2002 the Panel indicated that leave to appeal out of time was refused and the appeal was dismissed. In respect of the appeal on costs and contribution, further submissions were directed to be filed. · 1 October 2003 the Panel published reasons for decision on the Appellant's appeal ([2003] NSWADTAP 44). · 29 October 2003 the Appellant filed a Notice of Appeal Without Appointment in this Court.

The Employer's Liability 5 Section 25 of the Act declares it to be unlawful for an employer to discriminate against a person on the ground of sex. A corporate employer such as the Appellant can only act through human agents. Nevertheless, a corporate employer can be found to have directly breached the Act by reason of the conduct of its employees. A submission that that occurred in this case, by reason of Mr Z's managerial role, was put to the Tribunal but rejected. The only basis for the finding against the Appellant was pursuant to s53 of the Act which is sometimes referred to, albeit inaccurately, as a provision relating to "vicarious liability". 6 Section 53 provides, relevantly: "53(1) An act done by a person as the agent or employee of the person's principal or employer which if done by the principal or employer would be a contravention of this Act is taken to have been done by the principal or employer also unless the principal or employer did not, either before or after the doing of the act, authorise the agent or employee, either expressly or by implication, to do the act. (2) If both the principal or employer and the agent or employee who did the act are subject to any liability arising under this Act in respect of the doing of the act, they are jointly and severally subject to that liability." 7 In the application for judicial review, determined adversely to the Appellant on an interlocutory point by Barrett J, the Appellant sought to raise a number of challenges to the manner in which the Tribunal had applied s53 of the Act. (See NSW Breeding & Racing Stables Pty Ltd supra at [3].) 8 Following the judgment of Barrett J, the Appellant instituted proceedings in the Appeal Panel and relied on the same range of matters as constituting errors of law. In addition, in the proceedings in the Appeal Panel, the Appellant sought leave to appeal on the merits of the decision. It outlined a range of alleged errors in the fact-finding and decision-making processes of the Tribunal which went beyond matters arising under the alleged errors of law. 9 Section 113(3) of the Administrative Decisions Tribunal Act 1997 provides that an appeal in the Appeal Panel must be made within 28 days after the Tribunal furnishes written reasons, or within such further time as the Appeal Panel may allow. By the time the Appellant lodged its Notice of Appeal in the Appeal Panel, it required the Panel to extend time pursuant to this section. 10 This was a matter averted to in the judgment of Barrett J who said: "[39] … It is, to my mind, virtually certain that an Appeal Panel would extend time in the case where an Appellant had acted promptly and responsibly in pursuing an application for judicial review in the first instance and had, as it were, been sent by the Court to an Appeal Panel." 11 In its reasons for decision the Appeal Panel said of his Honour's observations: "[7] …The validity of the latter remark can hardly be doubted, but this is not an instance of prompt and responsible action on the part of the Appellant; seven months elapsed before the Appellant took any step to challenge the Tribunal's decisions, and when it did, it deliberately chose another avenue of appeal." 12 The Tribunal went on to say: "[8] No explanation was proffered to the Panel for the delay between notification of the Tribunal's decisions and commencement of proceedings in the Supreme Court." 13 The Tribunal went on to assert that the date on which proceedings had been instituted in the Supreme Court was 29 April 2001. This was an error. As noted above the Appellant had instituted proceedings in the Supreme Court on 29 September 2000, which was within the period of 28 days for which the Act made provision for appeals to the Appeal Panel. 14 Counsel appearing in this Court have been unable to identify any relevant event that happened on 29 April 2001. It is quite clear that the Appeal Panel was in error in proceeding on the basis that seven months elapsed before the Appellant took any steps in the Supreme Court. It is also apparent that this delay was a decisive consideration in the determination by the Appeal Panel that it would refuse the application for an extension of time. The exercise of the discretion by the Appeal Panel fundamentally miscarried. If this was the only issue raised on the appeal I would grant leave to appeal, allow the appeal and remit the matter to the Panel for further consideration. 15 However, the Appeal Panel proceeded to deal with the merits of the appeal, particularly the submissions made with respect to the application of s53 of the Act. This analysis indicated that the Panel would have rejected the appeal, even if it had granted an extension of time. In this Court the Respondents rely on this aspect of the decision and submit that the Court should refuse leave in the exercise of its discretion on the grounds of futility. 16 This Court should not remit the matter to the Tribunal unless it is satisfied that there is some useful purpose in doing so. I am unable to identify any such purpose.

The Application of s53 17 The Appellant had a number of overlapping criticisms of the approach of the Tribunal when determining the applicability of s53. One proposition turned on the formulation in s53 that the act of the person whose conduct constituted discrimination on the grounds of sex must be "an act done … as the … employee of the … employer". It does not appear to me that this matter was raised before the Appeal Panel. However, by reason of the delay in the Panel handing down its Reasons, no transcript of the argument before the Panel is available. I would not dismiss these proceedings on this basis. 18 A second ground of challenge turned on the consideration by the Tribunal and the Panel of the exculpatory clause at the end of s53(1) to the effect that the employer did not "authorise" the offending conduct. 19 The Appellant submitted that neither the Tribunal nor the Appeal Panel turned their attention to the issue of whether Mr Z's acts were done "as the employee … of the employer". The Appellant submitted, although accepting that the incidents occurred during working hours and at the place of work, that what occurred was not done for reasons connected with employment, but was done by Mr Z in a personal capacity. 20 In my opinion, on the findings of primary fact by the Tribunal there would be no point in referring this alleged error of law for further consideration by the Panel. This conclusion is subject to the application that the Appellant wishes to make to the Tribunal for leave to appeal on the merits inter alia challenging any such findings of fact. That is a matter to which I will return below. 21 The findings of primary fact in the case of Mrs V indicate that the relevant contact made by the Appellant with her was within the conduct of his duties at the motel. The Tribunal found that, although Mr Z was not employed as the sole manager, he performed a range of roles set out in the following findings ([2000] NSWADT 121): · "[H]e was appointed as Assistant Manager of the operations of the Motel." [11] · He "carried out a more general role" including "at least once … in appointing a new housemaid" and in directing housemaids to clean motel rooms on their own. "He daily supervised the work of the housemaids … His presence during the daily cleaning of Motel bedrooms was such that the housemaids understood that he was the manager." [13] · The Tribunal concluded that "Mr Z exerted daily control over the house-maids in the performance of their cleaning of motel bedrooms". [16] · Indeed, in one of the incidents which led to the complaint he directed Mrs V to go to a specific room and it was in that room that he made the improper suggestion to her. [30] · Mr Z "projected himself as a person in a position to exert authority over Mrs V and the other house-maids at the Motel and he sought to use his position to influence Mrs V to accept his overtures". [53] 22 The findings of fact in the case of Mrs X, who worked as a waitress in the restaurant, were not as comprehensively set out as in the case of Mrs V. However, there was no submission that there was any relevant differentiation between the two complainants. It is, furthermore, clear that Mr Z did perform functions with respect to the restaurant ([2000] NSWADT 122): · On occasions he would follow Mrs X into an empty part of the restaurant. [12] · When he approached her, Mrs X had the expectation that they were going to "discuss the following day's work". [15] · He passed her a number of notes making improper suggestions during the course of her work as a waitress in the restaurant. [18], [21] 23 The Tribunal found: "[33] … As he had with Mrs V, Mr Z projected himself as a person in a position to exert authority over Mrs X and the other waitresses at the motel and he sought to use his position to influence Mrs X to accept his overtures." 24 There were other approaches outside the work environment, but the approaches during the course of the employment relationship were sufficient to establish the relevant statutory connection, albeit perhaps with less force than in the case of Mrs V. 25 The Appellant accepted the authority of the judgment of Studdert J in Shellharbour Golf Club Ltd v Wheeler (1999) 46 NSWLR 253, in which his Honour considered the application of the well-known High Court judgment in Deatons Pty Ltd v Flew (1949) 79 CLR 370 on what conduct was or was not within the scope of employment. Shellharbour Golf Club was a case concerned with the application of the very Act now under consideration. 26 Studdert J emphasised that the Act must be given a purposive interpretation. His Honour said at 259: "[30] … A body corporate can only act through its servants or agents. An employer would not ordinarily employ an employee to engage in misconduct such as that committed by the Second Respondent in this case. Nor would a principal ordinarily engage his agent to do so. Hence the construction for which [the Appellant] contends … would preclude redress to an employee who has been sexually abused by another employee, or by the agent of a principal, even though the misconduct occurred in the workplace environment." 27 His Honour referred to s53(1) and particularly to the concluding words which place upon the employer an obligation to establish that it did not authorise the employee to do the particular act complained of. His Honour noted that a narrow construction of the terminology of "as an employee" would mean that this exception "would have no work to do". His Honour concluded: "[33] … As I construe s53(1) once it was established that the misconduct occurred in the workplace environment and the offender was ostensibly at the time acting in the discharge of responsibilities as agent for his principal, what he did was deemed to be done by his principal, unless the conduct was unauthorised by the principal either expressly or by implication." 28 This approach to the proper construction and application of s53 was, as I have noted, not challenged by the Appellant. Its application in the present case leads to the conclusion that, on the findings of fact made by the Tribunal, the alleged errors of law which the Appellant seeks to agitate before the Appeal Panel could not lead to a result favourable to the Appellant. On the Tribunal's findings of primary fact the relevant acts were performed "ostensibly … in the discharge of responsibilities" as an employee. 29 In his judgment in the Shellharbour Golf Club case Studdert J also turned his mind to the concluding words of s53(1) and considered what was meant by the word "authorised". His Honour referred to the judgment of the High Court in University of New South Wales v Moorehouse (1975) 133 CLR 1, specifically to the passage at 12-13 where Gibbs J said: "[T]he word 'authorize' connotes a mental element and it could not be inferred that a person had, by mere inactivity, authorized something to be done if he neither knew nor had reason to suspect that the act might be done."

In this regard the reference to "might" is of significance. 30 Studdert J went on in Shellharbour Golf Club to say: "[58] The decision in University of New South Wales v Moorehouse has been much followed in copyright cases and the broad concept of 'authorise' reflected in the above passage has been frequently applied for the purposes of statutory construction under the copyright legislation. For present purposes, bearing in mind the nature of the Anti-Discrimination Act , I consider that the word 'authorise' should be given an equally broad meaning to that given to the word in the copyright cases. Accordingly, it seems to me that for the purposes of s53 the word 'authorise' embraces 'sanction, approve, countenance and permit'. Permission may be inferred from inactivity and indifference where the person sought to be made liable is aware that some particular behaviour may occur." 31 Again, the second last word of this passage is "may", and that should be emphasised. 32 The Tribunal in each of the cases before it found that the Appellant had not discharged the onus on it to establish that it had not "authorised" Mr Z to do the acts. This was a finding of fact. The Appeal Panel, when dealing with the merits of the Appellant's appeal, concluded that the Tribunal had not misapplied the principles established by the Shellharbour Golf Club case. In particular the Panel drew attention to the fact that the company was aware of prior complaints by another female member of staff other than Mrs V or Mrs X. Furthermore, the lack of an appropriate response on the part of the company after it became aware of the complaints of the Respondents was a proper basis for a factual inference which would prevent the Appellant discharging its onus of establishing that it did not authorise the relevant acts "either before or after" the impugned conduct. (Appeal Panel judgment at [17].) 33 I can see no legal error in this ultimate conclusion of the Appeal Panel. It would not, accordingly, be appropriate to remit the matter to the Panel for further consideration on this basis.

Application for Merits Review 34 The above analysis does not address the fact that the Appellant seeks the Appeal Panel's leave to challenge the Tribunal decision on the merits. This was not a matter capable of being agitated in the Supreme Court in the proceedings before Barrett J. Nevertheless, by instituting those proceedings the Appellant made a choice. It did not lodge a holding appeal with the Appeal Panel, seeking leave to pursue a merits appeal before the Panel. It decided to pursue judicial review alone. 35 In the event no attempt to expose the Tribunal decisions to merits review in the Panel was made until after the determination of the proceedings before Barrett J. There was a delay of over 10 months between the decisions of the Tribunal and the institution of proceedings in the Panel seeking leave to appeal on the merits. 36 This aspect of the application to the Panel is not, accordingly, affected by the fundamental error of fact which the Panel made when rejecting the Appellant's application for leave to appeal to the Panel out of time. This was not a matter which fell within the expression of Barrett J's expectation as to the likely outcome of any such application before the Panel. Further, the analysis by the Panel, which led it to conclude that it would not extend time, is applicable to this aspect of the Appellant's case. I can see no reason why the Panel would now agree to extend time with respect to the application to agitate the issue of leave to appeal on the merits and, accordingly, there is no point in remitting the matter to the Tribunal. 37 The position would be otherwise if I could detect any aspect of the Appeal Panel's reasoning which may indicate the possibility of leave being granted. It would also be different if I could detect any proper basis in the submissions in this Court which would suggest that the Appellant had any significant basis for overturning the primary findings of fact made by the Tribunal in either case. The awards of compensation by the Tribunal are considerably less than the legal costs that have already been incurred in the conduct of the proceedings. It is not appropriate for this Court to remit the matters in a way which would add further to the legal costs already incurred, when there are no reasonable prospects of the Appellant achieving a successful outcome.

The Contribution Issue 38 It is not necessary to decide whether or not the Appellant is entitled, as it asserts, to appeal as of right on this issue or whether it needs leave. The ground of appeal must be dismissed. 39 The issue which the Appellant sought to agitate before the Appeal Panel was identified in its Notice of Appeal to that Panel as follows: "The Tribunal erred in law in failing to give proper reasons for its decision on contribution between the Respondents. The First Respondent had a legitimate expectation that the Tribunal would explain: (a) What it had in mind when it provided that the Respondents could apply to it for it to 'assess the respective contributions to be made between the Respondents' and; (b) What order/s the Tribunal would have made in the event that it concluded it had power to assess contributions." 40 The issue of contribution was a matter that arose between the Appellant and its former employee, Mr Z. It was not a matter that concerned the successful complainants. Mr Z was never made a party to the proceedings in the Appeal Panel or to the proceedings in this Court. There is no proper basis on which the Court would entertain this application. 41 In any event the Tribunal, in the course of giving its reasons on the issue of contribution, held that the Tribunal had no power to make any order. The Appellant does not seek, and has never sought, to challenge this conclusion. Indeed it argued in favour of such a conclusion before the Tribunal. In the absence of any challenge to the finding of absence of power, there is no proper basis on which the Appellant can complain to either the Appeal Panel or to this Court about the failure of the Tribunal to engage in the irrelevant exercise of determining a contribution.

Costs 42 In its reasons for decision on the subject of costs, the Appeal Panel noted that one of the considerations relevant to the exercise of the discretion to award costs pursuant to s114 of the Act which weighed in the balance in favour of making an award as to costs was whether or not the Respondents' costs exceed or are disproportionate to the amount of damages awarded. In the course of its reasons the Panel said: "[43] … The amount of legal costs incurred in pursuing any claim of discrimination is considerable and does not need to be established by evidence, before a Tribunal may take it into account." 43 The Appellant contends that in these observations, the Appeal Panel erred. In contrast to the practice sometimes adopted before the Tribunal there was in this case no evidence before either the Tribunal or the Panel as to the costs actually incurred by the successful complainants. Nor was there evidence that, in the circumstances of the particular cases, the Legal Aid Commission, which funded the proceedings, would exercise its discretion under the Legal Aid Commission Act 1979 to require legal costs to be deducted from the award. 44 In an affidavit filed in this Court the solicitor for the Respondents said: "The Tribunal was informed by Ms Byrne that the total costs to date were marginally higher than the amount of damages awarded. I have spoken to Ms Byrne in relation to this matter and she has indicated that she would not have made that submission unless she was instructed to do so by Ms Catherine McKimm who had at that stage made an estimation of the costs to date in comparison with the award of damages made. She does not now recall the detail of these figures." 45 The solicitor went on to indicate that costs incurred up to the date of the costs application on 19 September 2001 were in fact in excess of $48,000. The Tribunal had awarded amounts of just under $17,000 to each Respondent. 46 In the written submissions to the Tribunal counsel appearing for the Respondents had said: "The total costs are marginally higher than the award. Both complainants are on legal aid but this will require reimbursement as 'legal aid is not free' therefore the complainant is out of pocket." 47 Furthermore, an offer to settle on costs had been made in writing by the Respondents. That letter was tendered before the Tribunal. It indicated that the Respondents were prepared to settle for a payment of $10,000 by way of costs. As a settlement offer, the inference is that the actual amount of costs was higher than that amount. 48 The evidence as to the practice of the Legal Aid Commission and the amount of actual costs was less precise than it ought to have been. Nevertheless it is clear that there was evidence that the costs were substantial and it was not contested in any way that they were a substantial proportion of the amounts awarded. 49 Nor was there any contest about Ms Byrne's submission that "legal aid is not free". The implicit submission that there was reason to believe that the Legal Aid Commission would seek to recoup a substantial proportion, if not all, of the damages awarded to the two complainants was not directly contested. Indeed, to the contrary of any such contest, the submission actually made by counsel for the Appellant to the Tribunal was: "There is no evidence on this point which would enable a meaningful response but it is axiomatic that each party bears the burden of the high cost of legal representation." 50 Whilst it was not correct to say that there was "no evidence" with respect to this matter, the evidence was not as precise as it ought to have been. However, the reference by counsel for the Appellant to the fact that it was "axiomatic that each party bears the burden of the high cost of legal representation" was clearly a concession, properly made in the context of proceedings that had been conducted over a period of seven days and had involved a considerable amount of preparation prior to the hearing and had also involved significant expenditure on matters such as expert witnesses. Furthermore, the complainants would only "bear the burden" if the Legal Aid Commission sought to recoup costs from the award. 51 In my opinion, the Appeal Panel was entitled to proceed on the basis that costs would substantially eat into, if not entirely consume, the awards paid to the two complainants. I would refuse leave to appeal on this ground.

Conclusion 52 The proceeding should be dismissed with costs. 53 HANDLEY JA: I agree with Spigelman CJ. 54 HODGSON JA: I agree with Spigelman CJ. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

CITATION: NSW Breeding & Racing Stables Pty Ltd v V & X [2005] NSWCA 114

Deatons Pty Ltd v Flew (1949) 79 CLR 370 NSW Breeding & Racing Stables Pty Ltd v Administrative Decisions Tribunal of NSW [2001] NSWSC 494; 53 NSWLR 559 CASES CITED: Shellharbour Golf Club Limited v Wheeler (1999) 46 NSWLR 253 University of New South Wales v Moorehouse (1975) 133 CLR 1

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Cases Cited (5)

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