Appeal Panel - Internal CITATION: Director General, Department of Education & Training v FP and FQ on behalf of FR (EOD) [2003] NSWADTAP 51 APPELLANT PARTIES: Director General, Department of Education and Training RESPONDENTS FP and FQ on behalf of FR FILE NUMBER: 039029 HEARING DATES: 28/07/2003 SUBMISSIONS CLOSED: 08/01/2003 DATE OF DECISION: 11/06/2003 FP and FQ on behalf of FR v Department of Education and Training; FP v Department of Education and Training [2003] NSWADT 68 DECISION UNDER APPEAL: BEFORE: Hennessy N - Magistrate (Acting President); Rees N - Judicial Member; Antonios Z - Member CATCHWORDS: procedural fairness - statutory interpretation MATTER FOR DECISION: Principal matter FILE NUMBER UNDER APPEAL: 011068 DATE OF DECISION UNDER APPEAL: 04/17/2003 Administrative Decisions Tribunal Act 1997 LEGISLATION CITED : Anti-Discrimination Act 1977 Human Rights and Equal Opportunity Commission Act 1986 (Cth) Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Australian Iron & Steel Pty Ltd v Banovic (1989) 168 CLR 165 Commissioner of Corrective Services v Aldridge [2000] NSWADTAP 5 Commissioner of Corrective Services v Maxwell [2001] NSWADTAP 21 Commissioner of Police v Russell [2002] NSWCA 272 Dutt v Central Coast Area Health Service [2002] NSWADT 133 Ebner v Official Trustee in Bankruptcy [2000] HCA 63 CASES CITED: Hall v A & A Sheiban Pty Ltd (1989) 20 FCR 17 Kioa v West (1985) 159 CLR 550 Martin v McKensey (No 2) [2003] NSWADT 126 O'Callaghan v Loder [1983] 3 NSWLR 89 Plaintiff S157/2002 v Commonwealth (2003) 77 ALJR 454 Re Minister for Immigration; ex parte Epeabaka [2001] HCA 23 Re Refugee Tribunal; ex parte Aala (2000) 75 ALJR 52 Suvaal v Cessnock City Council [2003] HCA 41 Solomons v District Court of NSW [2002] HCA 47 APPELLANT REPRESENTATION: T Lynch, counsel RESPONDENTS D Robertson, counsel ORDERS: 1 Appeal allowed; 2 Decision and order No 1 made by the Tribunal on 17 April 2003 set aside; 3 Complaint dismissed; 4 No order as to the costs of the appeal Introduction 1 FP and FQ alleged on behalf of their child, FR, that the Director-General, Department of Education and Training (the Director-General) had discriminated against her. FR is a child of Korean national origin and the alleged discrimination under the Anti-Discrimination Act 1977 (AD Act) was on the ground of her race. One of the complaints was that the Director-General had discriminated against FR when she attended Charlestown South Public School in 1997 and 1998. The alleged discrimination related to the Director-General's response to bullying among the girls in FR's class. In relation to that complaint, the Tribunal made the following order: The complaint by FP and FQ on behalf of FR having been substantiated, the respondent is to pay the sum of $10,000 by way of compensation for loss or damage. 2 The Director-General appealed to the Appeal Panel against this decision. No appeal was lodged against the second order made by the Tribunal on 17 April 2003, which was that FP and FQ, on behalf of FR, pay the Director-General's costs for 11 September 2002 and for the preparation of evidence presented by the Director-General in response to fresh evidence adduced by FR on and after 10 September 2002. Jurisdiction 3 The Appeal Panel has jurisdiction to hear and determine this appeal pursuant to s 113 of the Administrative Decisions Tribunal Act 1997 (Tribunal Act). Section 113(2) states that: (2) An appeal under this Part: (a) may be made on any question of law, and (b) with the leave of the Appeal Panel, may extend to a review of the merits of the appealable decision. Tribunal's Decision 4 The Tribunal found that the Director-General had breached s 17(2)(a) of the AD Act. That section states that: (2) It is unlawful for an educational authority to discriminate against a student on the ground of race: (a) by denying the student access, or limiting the student's access, to any benefit provided by the educational authority . . . 5 An applicant has the onus of proving not only that the alleged conduct comes within an area of activity such as that set out in s 17(2)(a), but also that the conduct constitutes discrimination as defined in s 7. Section 7(1)(a) defines what is generally referred to as "direct" discrimination, while s 7(1)(c) defines what is generally referred to as "indirect" discrimination: (1) A person ("the perpetrator") discriminates against another person ("the aggrieved person") on the ground of race if, on the ground of the aggrieved person's race or the race of a relative or associate of the aggrieved person, the perpetrator: (a) treats the aggrieved person less favourably than in the same circumstances, or in circumstances which are not materially different, the perpetrator treats or would treat a person of a different race or who has such a relative or associate of a different race, or (b) segregates the aggrieved person from persons of a different race or from persons who have such a relative or associate of a different race, or (c) requires the aggrieved person to comply with a requirement or condition with which a substantially higher proportion of persons not of that race, or who have such a relative or associate not of that race, comply or are able to comply, being a requirement which is not reasonable having regard to the circumstances of the case and with which the aggrieved person does not or is not able to comply. (2) For the purposes of subsection (1)(a) and (b), something is done on the ground of a person's race if it is done on the ground of the person's race, a characteristic that appertains generally to persons of that race or a characteristic that is generally imputed to persons of that race. 6 The Tribunal's findings, relevant to this appeal, were as follows: · FR is of Korean national origin; · FR was subject to racist bullying by other students; · the Director-General had an extensive range of measures to address bullying but none of the measures targeted racist bullying; · the Director-General provided FR and other students with a "benefit" within the meaning of s 17(2)(a), namely "access to an effective program of anti-bullying measures"; · the Director-General required FR to comply with a condition, within the meaning of that term in s 7(1)(c) that "to receive the full benefit of an effective anti-bullying program, a student's race could not be an actual or possible factor in their being subject to bullying"; · this was a requirement with which a substantially higher proportion of students in year 5 at Charlestown in 1998 who were not of the applicant's race was able to comply; and · the requirement was not reasonable. 7 On the basis of these findings, the Tribunal ordered the Director-General to pay FR $10,000 by way of compensation for loss or damage. Grounds of Appeal and Reply 8 The Grounds of Appeal fall into three main categories, namely: denial of procedural fairness; misconstruction of the terms "benefit provided" and "access" in s 17(2)(a); and errors relating to the interpretation of "indirect" discrimination in s 7(1)(c). FR's legal representative responded by saying that none of the grounds of appeal raises any question of law and that the appeal should be dismissed with costs. Procedural Fairness 9 Director-General's submissions. According to the Director-General, it is apparent from the terms of the decision that the complaint was substantiated on the basis that there had been a breach of s 17(2)(a) and that the discrimination was found to be "indirect" discrimination as defined in s 7(1)(c). According to the Director-General, there was no mention of s 7(1)(c) or "indirect discrimination" in the original complaint to the President of the Anti-Discrimination Board, in the Amended Points of Claim filed by FR or in any oral or written submissions made on behalf of FR. The whole case had been conducted on the basis that the Director-General had directly discriminated against FR as proscribed by s 7(1)(a) of the AD Act. The Director-General had no notice that their conduct allegedly constituted "indirect" discrimination. 10 The Director-General pointed out that the Tribunal's function under s 96 of the AD Act is to "hold an inquiry into each complaint or matter referred" to it and that the pleadings limit the scope of that inquiry. According to the Director-General, the Tribunal cannot decide a complaint on the basis of an issue which has not been notified to a respondent in the Points of Claim. Consequently the Tribunal acted contrary to the requirements of s 73(2) of the Tribunal Act which provides that the Tribunal is bound by the rules of natural justice. 11 FR's submission. FR's counsel said that indirect discrimination is encompassed within the complaint to the Anti-Discrimination Board and the Amended Points of Claim. The complaint refers to the "systematic failure of the Department of Education, principals and classroom teachers . . .to deal effectively with a pattern of racial discrimination, bullying and vilification by reason of race which [FR] has experienced." The Amended Points of Claim allege racial discrimination pursuant to s 7 and s 17 of the AD Act and specifically refer to the absence of action or effective action in response to reported incidents of racial harassment and taunting. Because the issues of fact determined by the Tribunal were placed in issue during the hearing, the Director-General cannot say that it was denied an opportunity to be heard in relation to those factual issues. The Tribunal did no more than apply the law to the facts as found. Appeal Panel's decision on procedural fairness 12 Section 73(2) of the Tribunal Act provides that while the Tribunal is not bound by the rules of evidence and may inform itself in any manner it sees fit, it must abide by the rules of natural justice. As Brennan J noted in Kioa v West (1985) 159 CLR 550 at 629, the precise content of the rules of natural justice depends on the circumstances in which the body subject to those rules is to exercise its powers. Our task is to determine the content of the rules of natural justice in light of the Tribunal's jurisdiction, the statutory requirements about how that jurisdiction is to be exercised, any statutory amplification of the requirement that the Tribunal comply with the rules of natural justice and judicial statements concerning the meaning of the obligation to abide by the rules of natural justice. 13 Section 96 of the AD Act is the relevant grant of jurisdiction to the Equal Opportunity Division of the Tribunal. That section requires it to conduct "an inquiry" into each complaint referred to the Tribunal by the President of the ADB. Numerous sections in both the AD Act and the Tribunal Act govern the type of inquiry which the Tribunal is required to undertake and the manner in which it is directed to conduct an inquiry. In Commissioner of Corrective Services v Maxwell [2001] NSWADTAP 21 at [120] an Appeal Panel identified some of the key provisions: The Equal Opportunity Division of the Tribunal conducts inquiries and it determines rights and obligations under the Act in relation to past events ( see section 96 of the Act). The Tribunal is specifically empowered to determine questions of law (section 78(2) of the Tribunal Act) and it must be chaired by a "judicial member" (Part 2 of Schedule 2 to the Tribunal Act) who must be a judicial officer or a legal practitioner of at least seven years standing (section 17(2) of the Tribunal Act). The Tribunal has the power to make final and binding orders which are enforceable in courts of competent jurisdiction (section 82 of the Tribunal Act). The Tribunal has the power to award damages and to make injunctive style orders (section 113 of the Act). It is an offence to fail to comply with an order of the Tribunal (section 116 of the Act). The Appeal Panel is specifically empowered to determine questions of law (section 114 of the Tribunal Act) and it is given powers of disposition which are similar to those exercised by appellate courts. Appeals to the Appeal Panel from a decision of the Equal Opportunity Division of the Tribunal have replaced appeals to the Supreme Court from the former Equal Opportunity Tribunal ( see the former section 118 of the Act). 14 After making these observations the Appeal Panel concluded [at 121]: "It may be that this Tribunal, at least in relation to some of the functions given to some of its divisions, exercises something akin to judicial power…". While the courts have found it notoriously difficult to formulate a definitive description of judicial power, there have been numerous consistent statements about that which lies at the core of judicial power. As McHugh J observed recently in Solomons v District Court of NSW [2002] HCA 47 at [49]: The paradigm case of an exercise of judicial power involves the making of binding declarations of rights in the course of adjudicating disputes about rights and obligations as a result of the operation of the law upon events or conduct that have or has occurred. 15 This is what the Equal Opportunity Division of the Tribunal does when it conducts an inquiry into complaints referred to it by the President of the ADB. The jurisdiction exercised by the Tribunal is remarkably similar to that exercised by two federal courts – the Federal Court of Australia and the Federal Magistrates Court – under Commonwealth anti-discrimination law (see Division 2, Part IIB Human Rights and Equal Opportunity Commission Act 1986 (Cth)). For constitutional reasons, the jurisdiction vested in those federal courts must be judicial power. 16 While the characterisation of the Tribunal's jurisdiction as the exercise of judicial power, or at the very least something akin to judicial power, is an important first step in determining the content of the rules of natural justice which must be observed when the Tribunal is conducting an inquiry, there are other matters to consider before the precise content of those rules can be formulated. 17 The relevant legislation contains important statements concerning the manner in which the Equal Opportunity Division of the Tribunal is to exercise its jurisdiction. The Tribunal is to conduct an inquiry into each complaint (s 96 AD Act). Proceedings before the Tribunal are not intended to mirror adversarial litigation in the courts. There are many provisions in both the AD Act and the Tribunal Act which, when coupled with the directive that the Tribunal conduct an inquiry into each complaint, indicate that it was the intention of parliament that the Tribunal should not operate like a court. For example: · s 73(2) provides that the Tribunal "is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit" · s 73(5)(b) of the Tribunal Act provides that the Tribunal "is to ensure that all relevant material is disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in any proceedings" · s 81(1) provides that the Tribunal may "make any amendments to the proceedings that the Tribunal considers to be necessary in the interests of justice" · s 83(1)(a) provides that the Tribunal may "call any witnesses of its own motion in any proceedings" · s 76 provides that the Tribunal may determine proceedings without a hearing and by considering documents alone "if it appears to the Tribunal that the issues for determination can be adequately determined in the absence of the parties" · s 101A of the AD Act permits the Tribunal to make arrangements with the ADB for an officer of the Board to appear at an inquiry to assist the Board, with that officer being subject to the control and direction of the Tribunal. 18 These are powers not usually associated with adversarial proceedings in the courts. 19 As Aronson and Dyer have noted in Judicial Review of Administrative Action (2nd ed., LBC Information Services: Sydney, 2000) at p 403: The adversarial notion of a contest between opposing parties before a detached and essentially passive decision-maker places great emphasis on the responsibility of the parties to establish their claims, and on the need to allow them liberal opportunity to do so… Adversarial adjudication also gives great importance to oral testimony, which is regulated by the rules of evidence and tested by cross-examination, and the related need for a trial or hearing which is, as far as practicable, continuous. Preparation for that hearing requires a distinct pre-trial phase, in which the decision-maker, to preserve neutrality, does not participate. 20 While the courts are becoming actively involved in pre-trial preparation through case management procedures, and while in some aspects of their jurisdiction they are moving away from the traditional hearing presided over by a passive decision-maker, courts do not conduct inquiries. Aronson and Dyer (at pp 403-404) describe inquisitorial adjudication in the following terms: The essence of inquisitorial adjudication lies in the active participation of an impartial investigator from the earliest stages of the proceedings. The investigator has primary responsibility for defining the issues and is able to supervise the gathering of evidence… In recent times Australian legislatures appear to have drawn increasingly on the inquisitorial tradition. Where that is the case in a particular statute it is clearly appropriate for the courts to recognise that fact, and take it into account in determining what procedural fairness requires. 21 Gleeson CJ spoke generally about the obligation to comply with the rules of natural justice in Plaintiff S157/2002 v Commonwealth (2003) 77 ALJR 454 at 460-461: In Australian Broadcasting Tribunal v Bond , ((1990) 170 CLR 321 at 365-367) Deane J explained that, in the past, it was customary to refer to the duty to observe common law requirements of fairness as a duty "to act judicially". In a passage from Hickman quoted above, Dixon J can be seen using that expression. Later, the duty came to be referred to as a duty to observe the requirements of "natural justice". Later again, it became common to speak of "procedural fairness". The precise content of the requirements so described may vary according to the statutory context; and may be governed by express statutory provision. Subject to any such statutory regulation, and relevantly for present purposes, the essential elements involved include fairness and detachment. Fairness and detachment involve "the absence of the actuality or the appearance of disqualifying bias and the according of an appropriate opportunity of being heard". ((1990) 170 CLR 321 at 367) A statute may regulate and govern what is required of a tribunal or other decision-maker in these respects, and prescribe the consequences, in terms of validity or invalidity, of any departure. ( Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82 at 142 [166] per Hayne J.) Subject to any such statutory provision, denial of natural justice or procedural fairness will ordinarily involve failure to comply with a condition of the exercise of decision-making power, and jurisdictional error. 22 In this case we are concerned with that aspect of the rules of natural justice often referred to as the 'fair hearing' rule, or what Gleeson CJ described in Plaintiff S157/2002 as fairness or "the according of an appropriate opportunity of being heard". (Gleeson CJ's quote comes from Deane J in Bond.) 23 McHugh J spoke generally of this concept in Re Refugee Tribunal; ex parte Aala (2000) 75 ALJR 52 at 73: One of the fundamental rules of the fair hearing doctrine is that a decision-maker should not make an adverse finding relevant to a person's rights, interests or legitimate expectations unless the decision-maker has warned that person of the risk of that finding being made or unless the risk necessarily inheres in the issues to be decided . It is a corollary of the warning rule that a person who might be affected by the finding should also be given the opportunity to adduce evidence or make submissions rebutting the potential adverse finding ( Mahon v Air New Zealand Ltd [1984] AC 808 at 820-821.) [emphasis added] 24 Various provisions in the Tribunal Act amplify the content of the fair hearing rule. Section 73(4) of the Tribunal Act requires the Tribunal to "take such measures as are reasonably practicable" to ensure that the parties understand the assertions or allegations against them. It also directs the Tribunal to ensure that the parties have the fullest opportunity practicable to be heard or otherwise have their submissions considered. Thus, the ordinary operation of the "fair hearing" rule is amplified, first, in terms of the Tribunal's obligation to ensure that notice or warning of an adverse finding is coupled with understanding of the case against that party and, secondly, in terms of the extent of the opportunity which the Tribunal must give to a party to be heard in opposition to an adverse finding. 25 In court proceedings the aspect of the 'fair hearing' rule concerned with adequate notice of adverse findings is usually met through the adversarial tool of formal written pleadings. The pleadings, which are generally governed by Court rules, define the limits of the dispute and put the parties on notice of the adverse findings sought against them. In the Administrative Decisions Tribunal, there are no rules concerning pleadings. The practice in the Equal Opportunity Division is for the judicial member to direct legally represented parties to file pleadings. However, the consequences of attempting to rely on matters not pleaded have not been spelt out. As in court-based litigation, it is quite common for litigants in complaints before the Tribunal to seek to amend their pleadings in the course of a hearing or to argue matters that have not been pleaded. While it is up to the Tribunal in each case to determine whether any amendment to the pleadings should be allowed, the interests of justice will usually require that amendment be permitted. Costs may prove the appropriate sanction when an amendment causes additional expense to the opposing party. 26 No amendment to the pleadings was sought or granted in this case to add a claim of indirect discrimination. Because s 73(3) of the Tribunal Act excuses the Tribunal from compliance with legal technicalities and forms, failure to amend pleadings cannot be fatal in itself. Nevertheless, if a party proposes to conduct a case which falls outside its pleadings, or if the Tribunal determines to decide a case on a basis which has not been pleaded, the Tribunal is not excused from its obligation, derived from the requirement to observe the rules of natural justice, to warn the respondent that it is at risk of an adverse finding "unless the risk necessarily inheres in the issues to be decided." What this statement by McHugh J in Re Refugee Tribunal; ex parte Aala means is that the respondent is effectively and fairly, if not explicitly, put on notice of a possible adverse finding by the nature of the proceedings. The fact that the Tribunal conducts inquiries, rather than adversarial litigation of the type conducted in courts, does not alter this general requirement that a party be placed on notice of a possible adverse finding. 27 The consequences of a failure to provide a party to civil litigation in the courts with adequate notice of a possible adverse finding against that party were considered by the High Court in Suvaal v Cessnock City Council [2003] HCA 41. McHugh and Kirby JJ stated [at 102] that: If a party participates in a trial to meet a particular case which that party has pleaded and presented in only one way, it would be unfair to the other party to decide the case on a different basis of which the losing party had no fair notice and which it had no proper opportunity to defend. (cf Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (In Liq) (1916) 22 CLR 490 at 517 ; Mummery v Irvings Pty Ltd (1956) 96 CLR 99 at 110; Oceanic Crest Shipping Co v Pilbara Harbour Services Pty Ltd (1986) 160 CLR 626 at 659; Water Board v Moustakas (1988) 180 CLR 491 at 497; Banque Commerciale SA (In Liq) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286-287.). Although rigid adherence to pleadings is no longer uniformly practised and not a few cases stray from the pleadings without consequential amendment, ( Queensland v J L Holdings Pty Ltd (1997) 189 CLR 146 at 154, 164-167; see also Jackamarra v Krakouer (1998) 195 CLR 516 at 521 [7], 541-542 [66]) such practices cannot excuse procedural injustice. It is elementary that a party is entitled to know the issues of fact that are to be decided in a trial where these are determinative of its success or failure (cf Coulton v Holcombe (1986) 162 CLR 1 at 7-8; cf at 16-17.) 28 While McHugh and Kirby JJ dissented in Suvaal, it was not on this point. Gleeson CJ and Heydon J, who together with Callinan J constituted the majority, made the same point in different language: A trier of fact, confronted with divergent cases being advanced by the parties, may decline to accept either case and may proceed to make findings not exactly representing what either party said ( Williams v Smith (1960) 103 CLR 539 at 545). But that does not justify the creation of an entirely new case with which the losing party had no testimonial or other evidentiary opportunity to deal. 29 These statements from Suvaal describe what happened in this case. The case was decided in accordance with a distinct element of the statutory concept of 'discrimination on the ground of race', namely indirect discrimination. Indirect discrimination was not pleaded and was not otherwise drawn to the attention of the Director-General. Concluding that the Director-General had engaged in indirect discrimination involved the Tribunal making findings of fact which were quite different from those needed to reach a conclusion that the Director-General had engaged direct discrimination. These findings include the identification of the requirement or condition, whether a higher proportion of people from one group compared with another group can comply with the requirement and the reasonableness of the requirement. The Director-General did not have the opportunity to lead evidence in relation to these factual issues and to make submissions concerning the findings of fact which should be made by the Tribunal. Further, the concept of indirect discrimination is legally complex. Because the Director-General was not put on notice that he was at risk of a finding of indirect discrimination being made against him he did not have the opportunity to make submissions concerning the legal rules which should be applied by the Tribunal. 30 As we have noted at [12]-[25], the relevant statutory provisions in the Tribunal Act and in the AD Act, when viewed together, make it clear that the Equal Opportunity Division of the Tribunal is not required to conduct an adversarial hearing in the sense that the parties define the issues to be determined and the pleadings set the limits of the dispute. Because the Tribunal is statutorily obliged to conduct an inquiry into each complaint properly referred to it, the Tribunal may direct the attention of a party to issues fairly arising from the evidence but not raised by him or her. If that party is legally represented the Tribunal should ordinarily allow the party's legal representative an opportunity to amend the pleadings or otherwise put the opposing party on notice that it seeks to rely on an issue raised by the Tribunal. If the party's legal representative chooses not to advance arguments which the Tribunal considers may be open on the evidence, then, ordinarily, the Tribunal should not rely on those matters in its decision. It certainly should not do so in the absence of adequate notice to the party who is at risk of an adverse finding. If a person is not legally represented the Tribunal, ordinarily, should give that person the opportunity to accept, or decline to rely on, the arguments raised by the Tribunal. If the person accepts those arguments, but is not able to articulate them in such a way that the opposing party is given proper notice of the issue, the Tribunal itself should articulate the issue so that the opposing party may fairly respond to it. Ultimately, whether the parties are represented or not, the 'fair hearing rule' requires that no finding be made against a party in the absence of proper notice of the risk of that finding being made. 31 The lengths to which the Tribunal may go in alerting a party, whether represented or not, to possible arguments open to that party must be tempered by the other key element of the rules of natural justice which was described by Gleeson CJ in Plaintiff S157/2002 as "detachment". As the Chief Justice said, detachment involves "the absence of the actuality or the appearance of disqualifying bias". The Tribunal must not act in a way that would cause a fair-minded observer to reasonably apprehend that the Tribunal might not bring an impartial mind to the resolution of the complaint (Ebner v Official Trustee in Bankruptcy [2000] HCA 63). However, as Gleeson CJ, McHugh, Gummow and Hayne JJ observed in Re Minister for Immigration; ex parte Epeabaka [2001] HCA 23 at [27]: The kind of conduct on the part of the Tribunal that might give rise to a reasonable apprehension of bias needs to be considered in the light of the Tribunal's statutory functions and procedures. Conduct which, on the part of a judge in adversarial litigation, might result in such an apprehension, might not have the same result when engaged in by the Tribunal. 32 While those comments were made about a merits review tribunal, the Refugee Review Tribunal, and while the Equal Opportunity Division of this Tribunal exercises something akin to judicial power, it does not follow that this Tribunal is precluded from engaging in conduct which may create a reasonable apprehension of bias if engaged in by a court. The Tribunal has been directed by the Parliament to take a far more interventionist role in proceedings before it than a court. It is also worthy of note that Spigelman CJ has recently observed that primary purposes of the AD Act are "denunciation, punishment and deterrence" (Commissioner of Police v Russell [2002] NSWCA 272 at [76]). The AD Act is complex. Few people who complain of unlawful discrimination are experienced litigants. Unlawful discrimination should not escape denunciation merely because the victim finds it difficult to understand the complexities of the law. 33 In this case the decision and order which were based on a finding of indirect discrimination cannot stand because the Director-General was not given adequate notice that he was at risk of such a finding. Indirect discrimination was not pleaded or raised by FR's counsel in any of his submissions to the Tribunal. While the section in the AD Act which defines both direct and indirect discrimination on the ground of race - s 7 - was referred to in the Amended Points of Claim, mere reference to that definition section conveys insufficient detail of the claims to be answered. Further, a finding of indirect discrimination, when the only allegations actually made against the respondent concerned direct discrimination, could not be said to be a risk which necessarily inhered in the issues to be decided in this case. In the absence of other reasons to dispose of the matter at the Appeal Panel level, a finding that a party was denied natural justice in circumstances where that denial may have affected the outcome of the proceedings would ordinarily result in an order that the matter be remitted to the Tribunal to be re-determined in accordance with these reasons. However, for the reasons which follow, that course is not necessary as the decision actually made by the Tribunal involved a number of errors of law and must be set aside. Further, a finding of indirect discrimination was not open to the Tribunal on the evidence in this case. Meaning of access to any "benefit provided by the educational authority" 34 Director-General's submissions. Under s 17(2)(a) of the AD Act: It is unlawful for an educational authority to discriminate against a student on the ground of race: (a) by denying the student access, or limiting the student's access, to any benefit provided by the educational authority. 35 The Director-General submitted that the Tribunal misdirected itself when concluding that FR did not have access to a benefit provided by the Director-General, namely "an effective program of anti-bullying measures". According to the Director-General, by formulating the benefit in this way, the Tribunal was concluding that the school ought to have provided other or additional anti-bullying measures to FR. The Director-General submitted that the Tribunal cannot impose an obligation to confer a benefit on FR. Furthermore the Director-General submitted that the word "access" in s 17(2)(a) is not directed to consequences or outcomes. Consequences or outcomes are not part of the benefit "provided" by the educational authority and a failure to produce an outcome is not a denial or limitation of "access." 36 FR's submission. FR submitted that the Tribunal did not find that the Director-General should have provided additional measures to her. Anti-bullying measures include measures addressed to the perpetrators as well as victims. All potential victims receive the benefit of such measures, insofar as the relevant causes of bullying are addressed. Tribunal's decision on meaning of "benefit provided" 37 This ground of appeal involves an interpretation of the terms "benefit provided by the educational authority" and "access" to that benefit in s 17(2)(a) of the AD Act. The Tribunal found that a benefit provided to students at Charlestown South Public School in 1998 was "an effective program of anti-bullying measures". In our view, there are two problems with this characterisation. The first is that a benefit should be defined in terms of its content, not its outcome. Section 17(2)(a) relates to any benefit "provided" by the educational authority. To characterise the benefit as an "effective" program focuses on its outcome rather than on the benefit actually provided. Secondly, a program of anti-bullying measures is not a "benefit" but merely a mechanism to prevent students from suffering the detriment of being exposed to an environment contaminated by bullying or other harassment. 38 While the characterisation of the benefit as "a program of anti-bullying measures" is a finding of fact, the definition of the benefit by reference to its outcome involves an error of law for the reason outlined above. Even if we accept that "a program of anti-bullying measures" is a "benefit" as defined in s 17(2), the next question is whether the respondent has denied or limited FR's access to that benefit. The Tribunal found at [56] that the benefit, as it defined it, was conferred in the same way in relation to all the girls but that the program was potentially "less available" to FR. The reason it was "less available" to FR was that race was not addressed as a possible ground for bullying in any of the anti-bullying programs that were undertaken. The Tribunal concluded that "To the extent that there was the prospect of race-based bullying, the measures would be of limited or no effect – a person who faced the possibility of race-based bullying would have limited or no access to the benefit of an effective anti-bullying program." 39 With respect, we do not agree with that reasoning. Section 17(2) relates to any "benefit provided" by the educational authority. If the benefit that is actually provided is a program of anti-bullying measures, then it cannot be said that FR's access to that benefit is limited or restricted in any way, because the benefit is not as effective in relation to her as it is in relation to other students. FR has the same access to the benefit as provided, as every other student. It is not unlawful to provide a benefit that is less effective in relation to some students than others. The students access to that benefit must be denied or limited in some way to come within s 17(2). Even if FR was not assisted by the anti-bullying measures to the same extent as other girls, that does not mean that her access to the anti-bullying program as provided, was limited or denied. We find that the Tribunal erred in its interpretation of the word "access" in s 17(2)(a). Indirect discrimination 40 The Tribunal also fell into error in its application of the statutory definition of indirect discrimination in s 7(1)(c) of the AD Act to the facts which it had found. The Tribunal identified the requirement as "to receive the full benefit of an effective anti-bullying program, a student's race could not be an actual or possible factor in their being subject to bullying". A requirement or condition must be neutral on its face and must be one with which the entire group to which it is directed must comply (see e.g. Australian Iron & Steel Pty Ltd v Banovic (1989) 168 CLR 165 at 185-191 (per Dawson J)). The requirement formulated by the Tribunal divides students between those actually or possibly subject to racist bullying and those not subject to such bullying. In other words it splits the group on the basis of race. Presumably, all those students who are members of a minority racial group cannot comply with the requirement, while all those students who are members of the majority racial group can comply. A facially neutral requirement would not generally exclude all the members of a minority group. It would merely have a disproportionate impact on those members as compared with people who are not members of the minority group. For these reasons, the Tribunal has not identified a valid "requirement or condition" for the purposes of s 7(1)(c). Consequences of Appeal Panel's findings 41 Section 114 of the Tribunal Act sets out the orders the Appeal Panel may make: (1) If an appeal under this Part is restricted to questions of law, the Appeal Panel is to determine the appeal and may make such orders as it thinks appropriate in light of its decision. (2) The orders that may be made by the Appeal Panel on any such appeal include, but are not limited to, any of the following: (a) an order affirming or setting aside the decision of the Tribunal (as originally constituted), (b) an order remitting the case to be heard and decided again by the Tribunal (as originally or similarly constituted), either with or without the hearing of further evidence, in accordance with the directions of the Appeal Panel, (c) an order made in substitution for an order made by the Tribunal. 42 In this case we have found that the Tribunal made three errors of law: it denied the Director-General natural justice, it misconstrued the terms "benefit provided" and "access" in s 17(2)(a), and it failed to identify a valid requirement for the purposes of the indirect discrimination analysis required by s 7(1)(c) of the AD Act. As we have already observed, if the Tribunal's only error had been a breach of the 'fair hearing' rule, it may have been appropriate to set aside the Tribunal's order and remit the case to be heard and decided again. However, because the Tribunal erred in its interpretation of s 17(2)(a) and s 7(1)(c), the Appeal Panel is obliged to set aside the Tribunal's decision and the order for the payment of damages. Remaining issue 43 One issue remains and that is whether the Tribunal failed to consider FR's complaint of direct race discrimination as it was put to the Tribunal. While it was not asserted in a written notice, as required by Practice Note 5, that the Tribunal should have found the complaint substantiated on the arguments presented to the Tribunal, the justice of the case demands that we consider whether FR could have succeeded on the case which was arguably presented to the Tribunal. 44 The Tribunal did not find that the complaint of direct discrimination on the ground of race in relation to benefits provided by an educational authority had been substantiated. The basis for rejecting this complaint was that FR was not denied the "benefit" of having her bullying complaints investigated. The Tribunal said, at [54] that it cannot impose on the respondent an obligation to confer such a benefit on FR and then fault it for not having provided that benefit. We can detect no error in the Tribunal's reasoning or conclusion on this issue. 45 The Tribunal did not specifically address the issue of whether FR was subjected to a detriment pursuant to s 17(2)(b). FR's representatives characterised that detriment as the bullying suffered by FR. While the complaint that FR was subjected to a detriment was not clearly articulated by FR's legal representative, the possibility of being subjected to a detriment, rather than being denied a benefit, was an alternative basis for the complaint. 46 The focus of FR's representative in the course of the proceedings was the allegation that the respondent, through its teachers, did not acknowledge the possibility that at least some of the bullying FR was subjected to was race based and consequently did not address the bullying with that in mind. The Tribunal found that the respondent did provide access to a wide-ranging response to bullying but that the teachers should have investigated the bullying against FR to determine whether it had a racist component. 47 There was only one instance of FR being called racist names at Charlestown South Public School. There were other instances where FR's mother put teachers on notice that she was concerned that some of the bullying directed to FR may have been racially motivated. Despite the lack of evidence of any pattern of racist bullying, FR's complaint, as set out in the Amended Points of Claim, was that: Between April 1997 and December 1998 at Charlestown South Public School [FR] was subjected to harassment and taunting by students including derogatory references to Asian facial features reported by [FP] to appropriate teachers but no or no effective action taken; 48 The Tribunal attempted to clarify the scope of the complaint on the final day of the hearing. The transcript of 15 November 2002, at page 3, makes it clear that the complaint was not that the respondent was vicariously liable for the conduct of students in relation to the alleged racist bullying. In explaining FR's case, her representative said, at page 4 of the transcript dated 15 November 2002, " . . . if [FR] was suffering a detriment in the bullying – for example which was part on the grounds of race, then she continued to suffer that detriment because the school failed to investigate because had they investigated they may have found that it was on the grounds of race." 49 When the complaint is expressed in that way, there are similarities with the manner in which some forms of sexual harassment, such as when an employer tolerates or condones what is often referred to as a 'poisoned work environment', have been found to constitute unlawful discrimination on the ground of sex. In the leading case, O'Callaghan v Loder [1983] 3 NSWLR 89, Mathews DCJ found that sexual harassment in the workplace, which the employer knew or ought to have known about, could be regarded as a "detriment" or as a "term or condition" of employment, thereby falling within relevant substantive provisions or prohibitions in the Act. Such conduct, in the typical case, constituted discrimination on the ground of sex because it was directed to women only and occurred because the intended recipient was a woman. On the basis of the reasoning in O'Callaghan v Loder and other leading decisions such as Hall v A & A Sheiban Pty Ltd (1989) 20 FCR 17, an employer could be held to have contravened sex discrimination laws by failing to respond appropriately to a work environment poisoned by sexual harassment or innuendo. The actual discrimination on the ground of sex for which the employer is liable is the employer's inadequate response to the work environment which the female employee is forced to endure. It is necessary to find that male employees would not have been required to endure such a sex-based poisoned work environment. The employer's liability flows from its own omission to act, rather than as a consequence of being vicariously responsible for the actual conduct of other employees which created the poisoned work environment. 50 Similarly, racial harassment of a student by fellow students at a school, which the teachers knew about or ought to have known about and took inadequate steps to eradicate, may constitute unlawful discrimination on the ground of race. Being in a school environment poisoned by racial harassment may constitute a "detriment" for the purposes of s 17(2)(b) of the AD Act. It may also constitute denial or limitation of a "benefit" associated with education if the benefit is cast as being the opportunity to enjoy the educational and social functions of a school free from harassment, whether racially based or otherwise. It is necessary to establish, however, that the detriment, or the denial or limitation of the benefit, occurred because of discrimination on the ground of the person's race. In other words, the race of the victim must be a factor which influenced the inadequate response on the part of the school authorities to the harassment. 51 Under the AD Act an educational authority may only be held legally responsible for its own conduct and for that of its employees and agents. It is not legally responsible for the conduct of students at a school because students are clearly not agents of an educational authority for the purposes of s 53 of the Act. If the Director-General is to be held legally responsible for the environment which FR endured at Charlestown South Public School, it is necessary to establish that the teachers at that school, the employees of the Director-General, discriminated against FR on the ground of race in their response to what was found by the Tribunal to be an environment in which FR was subjected to at least one racial taunt by another student. The response must be analysed to determine whether there was any direct discrimination against FR on the ground of race. 52 In order to do this it is necessary to engage in the two stage process described by the Appeal Panel in Commissioner of Corrective Services v Aldridge [2000] NSWADTAP 5. In broad terms the law requires that there be a comparison of the way in which people were treated, followed by an examination of the reasons for any difference in that treatment. The first part of that process, described in Aldridge as 'differential treatment', requires a comparison to be made of the treatment afforded to the alleged victim with the treatment afforded to another person of a different race. The object of this comparison is to determine whether the treatment of the alleged victim was objectively less favourable than the treatment of another person of a different race. If it is not possible to identify an actual person of a different race who was the subject of 'treatment' by the respondent in the same or similar circumstances as the alleged victim, it is necessary to undertake the rather difficult artificial exercise of comparing the treatment of the alleged victim with the treatment which would have been afforded to a hypothetical person of a different race to the alleged victim. If the comparison produces the conclusion that the alleged victim was treated objectively less favourably than a person of another race it is then necessary to consider the reasons for that different treatment. This was described in Aldridge as 'causation'. 53 The Tribunal must determine whether race was a ground or reason which caused the respondent to treat the alleged victim less favourably than a person of a different race. As some Tribunal panels have pointed out on earlier occasions, when the evidence in a particular case does not permit the treatment of the alleged victim to be compared with the treatment of another actual person of a different race, the differential treatment and causation enquiries merge because the Tribunal could only reach the conclusion that the respondent treated the alleged victim less favourably than a hypothetical person of another race would have been treated by determining that race was a reason for that different treatment (see e.g. Dutt v Central Coast Area Health Service [2002] NSWADT 133; Martin v McKensey (No 2) [2003] NSWADT 126). 54 While the Tribunal found that the response of the teachers at the Charlestown South Public School to the bullying directed to FR was inadequate, and while the Tribunal found that "the teachers were uncomfortable with having to deal with race as an issue, and were uncertain as to how to do so", there were no findings that would support a conclusion of direct discrimination on the ground of race. Nor, in our opinion, was there evidence that could have supported such a finding. A finding of discrimination on the ground of race is one of significantly different magnitude to one of an inadequate response to racial harassment carried out by others. 55 In this case, FR is of Korean national origin. It also appears to have been argued that some students taunted her because she is "Asian". Whether being "Asian" is a grouping encompassed by the statutory definition of "race" does not appear to have been conclusively determined, but we are prepared to assume for present purposes that the definition of race includes being both Asian and of Korean national origin. Consequently, it is necessary to compare the treatment afforded to FR by her teachers, when responding to evidence that she was racially taunted and harassed, with the treatment afforded to other students who were not Asian or of Korean national origin. As there was no evidence of another actual student of a different race and national origin with whom the treatment of FR could be compared, it is necessary to engage in the hypothetical comparison exercise referred to in paragraph [52]. For the reasons given there, the comparison and the search for reasons for any difference in treatment revealed by the comparison are conflated or joined. This is so because if the comparison of the actual treatment of FR by her teachers with the treatment which would have been afforded to another hypothetical student who was neither Asian nor of Korean national origin produced the conclusion that FR was treated less favourably, then the reason for that difference in treatment must be her race. 56 There was no evidence presented to the Tribunal that could have caused it to conclude that the teachers would have responded differently when the student who was being racially taunted and harassed was not Asian, nor of Korean national origin. The Tribunal found that the teachers' response to the bullying of pupils was generally inadequate because not enough was done to seek to alleviate racial taunts and harassment. It did not find, and on the evidence it could not have found, that the teachers' inadequate response was in any way caused by FR's race, or that the response would have been any different had she been a person of a different race. Thus, the Tribunal could not have found FR's complaint of race discrimination substantiated on the case which was arguably presented. Having reached this conclusion, and having also determined that a finding of indirect discrimination was not open to the Tribunal, the complaint must be dismissed. Costs 57 The Director-General did not seek an order for costs. FR's representatives applied for costs under s 88 of the Tribunal Act on the basis that no question of law had been raised by the appeal. Section 88 provides that the Tribunal "may award costs in relation to proceedings before it, but only if it is satisfied that there are special circumstances warranting an award of costs." Since we have found that the Director-General raised several questions of law, some of which were established, there is no basis for FR's submission about the existence of special circumstances and we make no order for costs. Orders 58 We make the following orders: 1. Appeal allowed. 2. Decision and order No 1 made by the Tribunal on 17 April 2003 set aside. 3. Complaint dismissed. 4. No order as to the costs of the appeal. 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.