The Oracle pronounces change in damages assessments for sexual harrassment

Back in 2011 the legal community was atwitter on hearing that Ms Fraser-Kirk settled her claim for sexual harassment against chief executive Mark McInnes and David Jones for $850,000.  Her original claim for damages was for $37 million.                 

An informed analysis of damages claims ordered by courts in previous cases indicated that the range of damages for moderate sexual harassment cases was between $5,000 and $30,000.

Even though the amount of damages sought by Ms Fraser-Kirk was far in excess of any previous claim for damages that had been sought, the fact that she settled her case for an extraordinarily high sum of $850,000 did change the landscape for damages awards.

Last year Justice Buchanan, a judge of the Federal Court, awarded damages to Ms Richardson, a manager of Oracle, of $18,000 for sexual harassment by a male colleague.

Prior to the judgments Ms Richardson had rejected an offer by Oracle to settle her claim for $55,000.  The result of rejecting that offer, and the Court making an award of $18,000 only, meant that she had to pay her own legal costs, which at the time were $224,475.80, plus a proportion of the costs of the respondents to her claim.  This was a disastrous outcome for Ms Richardson.

Ms Richardson appealed the judgment and the Full Federal Court in mid-July of this year increased the award of damages from $20,000 to $130,000, and ordered that Oracle pay some of her legal costs.

Justice Kenny, one of the appeal judges, noted that academic commentators had been critical of the Court’s cautious approach to awarding damages in sexual harassment cases. 

Justice Kenny indicated that a new approach should be taken to the assessment of damages which should not be assessed by a reference to some previously accepted range of damages in sexual harassment cases.  She considered that Justice Buchanan had made an error of law and had not taken sufficiently into account the extent of Ms Richard’s psychological injuries, as well as prevailing community standards.  This judgment will significantly increase the risks for employers embroiled in sexual harassment cases.

It is common for complainants in sexual harassment cases to bring proceedings not only against the work colleague who was sexually harassing them, but also against the employer for failing to take reasonable steps to avoid or minimise the risk of such harassment occurring. 

If employers wish to minimise the risk of becoming a party to a sexual harassment claim then they need to have properly drawn policies relating to sexual harassment, bullying and discrimination.  The wording contained in such policies is critical and it is also critical that employers have proper procedures in place to deal with complaints of sexual harassment.  

For more information contact:

Jim Rutherford
Principal
Harwood Andrews
T: 03 5226 8579
E: jrutherford@harwoodandrews.com.au

Sonia McCabe
Associate
Harwood Andrews
T: 03 5226 8558
E: smccabe@harwoodandrews.com.au