Equal Opportunity Tribunal of New South Wales CITATION: Gallagher -V- New South Wales Police Service [1998] NSWEOT COMPLAINANT: Gallagher RESPONDENT: New South Wales Police Service NUMBER: 4 of 1998 TRIBUNAL: Mr Simon Rice ( Judicial Member ) GROUNDS OF COMPLAINT: DATES OF HEARING: DATE OF JUDGMENT: 09/30/1998 Complainant: Ms J Lye, Legal Aid Commission of NSW LEGAL REPRESENTATIVES: Respondent: Ms K Kerr, Office of the Solicitor, NSW Police Service JUDGMENT IN FAVOUR OF: Complainant The application for costs 1. On 24 April 1998 the Tribunal found that the Respondent had discriminated against the Complainant. It made an order for compensation to be paid, and for certain remedial conduct to be undertaken. 2. An application has been made on behalf of the Complainant, for an order that the Respondent pay the costs of the Complainant for the hearing. 3. The application for Complainant was filed with the Tribunal on 2 June 1998. It is supported by the affidavit of Jane Lye affirmed 1 June 1998, and by a letter from Ms Lye dated 10 June 1998 attaching a document entitled "Recent Developments in Discrimination Law". 4. On 12 June 1998 the Respondent filed its submissions on the question of costs. 5. On 23 June 1998 submissions in reply to the Respondent's submissions were filed for the Complainant. 6. On 18 August 1998 the Tribunal requested from the parties submissions in relation to any offers of settlement that had been made between the parties other than in the course of conciliation at the Anti-Discrimination Board. The parties have since made the requested submissions. The power to award costs 7. The starting position on the question of costs in this jurisdiction is that "each party to a inquiry should pay their own costs": section 114(1) Anti Discrimination Act ("the Act"). That provision is expressed to be subject to sections 111(2) and 114(2). 8. Section 111(2) refers to the Tribunal dismissing a complaint under section 111 generally, and is not applicable in the current proceedings. Section 114(2) reads, relevantly: "where the Tribunal is of the opinion in a particular case that there are circumstances that justify it doing so, it may make such order as to costs as it thinks fit." 9. The Act gives the Tribunal a discretionary power to make a costs order, but the usual position under the Act is that no costs order will be made. This is the converse of the position at common law where, although a court has an unfettered discretion in making a costs order, the usual position is that costs follow the event, ie. the successful party will have a costs order. Exercising the discretion 10. Section 117 of the Family Law Act 1974 (Cwlth) was the model for section 114 of the Act (cf Squires v Qantas Airways Ltd (1985) EOC ¶ 92-455 ; Australian Postal Commissioner v Dao and Anor (No 2) (1986) 6 NSWLR 497). The Court in Dao says of the two sections: "the language is, relevantly, the same" (at page 505E per Kirby P). 11. Section 117 of the Family Law Act has been amended significantly since its language was relevantly the same as s114 of the Act. As an aid to understanding s 114, the authority on s 117 of the Family Law Act is Penfold v Penfold (1980) 144 CLR 311, referred to in both Squires and Dao . Subsequent family law cases discuss s117 in its amended form. 12.The Court in Penfold said simply that the presumption in subsection (1) against an order for costs "must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs" (per Stephen, Mason, Aikin, Wilson JJ at page 315). 13.In a separate, concurring judgement, Murphy J said: "The phrases 'in a particular case' and 'circumstances that justify it in doing so' emphasise that section 117(1) expresses the general rule, which is not to be departed from unless the court forms the opinion in a particular case that there are circumstances that justify it in doing so" (at page 317). 14.Kirby P in Dao said of Penfold that it "calls attention to the need to consider whether there are circumstances which justify the departure from the general rule laid down by the statute". 15.When considering the circumstances of the particular case, the Tribunal's discretion is "one to be exercised judicially, for the purpose of achieving the objects of the legislature which has conferred the power" ( Walton v McBride (1995) 36 NSWLR 440, per Kirby P at p448B) 16.Precisely because the decision is a discretionary one for the Tribunal in the circumstances of the particular case, there can be no authority or rule that determines whether in any case an order should be made. 17.The Tribunal in Willis v State Rail Authority of NSW ((1992) EOC ¶92-455), did "examine the sorts of circumstances which have been successfully relied on in other equal opportunity cases to justify the order for costs". The Victorian Administrative Appeals Tribunal undertook a similar exercise in Re Mafodda and Estate Agents Board (No 2) ((1986) 1 VAR 311), when it listed "factual situations" while considering a similarly worded discretionary costs power in the Administrative Appeals Tribunal Act 1984 (Vic). 18.This is a different exercise from looking for comparable circumstances as precedent. The exercise undertaken in Willis leads to an understanding only of "the sorts of circumstances" (emphasis added) which might justify an order for costs: whether and how those circumstances arise will differ in the particular case. Circumstances justify order for costs in this case 19.Submissions for the Complainant bring the Tribunal's attention to over a dozen circumstances of the case. The Tribunal is of the view that two of these circumstances, when taken together, justify the making of an order that the Respondent pay the costs of the Complainant. 20.In the opinion of the Tribunal the remaining circumstances do not, alone or in any combination, justify the making of a costs order. Circumstances such as the poor health of the complainant, the manner in which the proceedings were conducted, and the extent to which the case added to an understanding of terms used in the Anti-Discrimination Act, are in the opinion of the Tribunal unremarkable. 21.While the Court in Penfold said (at page 315) that the analogous subsection 117(2) "does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order", the Tribunal believes it is in the interests of the parties and of the public to make clear the grounds on which its discretion is exercised, particularly when it is a reviewable decision. A decision of broader relevance 22.The first of two circumstances is the import of the case. 23.It is submitted for the Complainant that the Complainant's situation was representative of that of many others, and that resolution of the complaint has settled a similar question of rights and entitlements for a number of other people. The Respondent has submitted that the case was confined to its facts, and "cannot be regarded as settling the question of anything other than aspects of the complaint made by Gordon Gallagher". 24.The Tribunal in Willis said of that case that: "it cannot be said that the case has settled the question of liability for other applicants who may have been rejected for employment by the respondent", because what was decided there was the particular complainant's ability to carry out the work in question (p 79,282). In contrast, the Tribunal in Squires , in Holdaway v Qantas Airways Limited ((1992) EOC ¶92-430), in which a costs order was made, had made a finding as to a standard that was applied to people other than the complainant in the case. 25.In the present case, as in Squires, the Tribunal's finding was not as to the Complainant's ability, but as to the lawfulness of a standard to which the Complainant and other rejoinee applicants were subject. It is clear from the evidence of Dr McGinty and Inspectors Gray and Choat that there were rejoinee applicants other than the Complainant who were subject to the same, unlawfully discriminatory test. 26.The present case would be highly relevant to, if not determinative of, the question of liability for those other applicants who were rejected by the Respondent on the same basis. The amount of legal costs 27.The further relevant circumstance is the size of the award of damages compared to the amount of legal costs. 28.It is submitted for the Complainant that the making of a costs order is justified because the Complainant was successful in establishing liability, and his legal costs are greater than the amount of damages awarded. 29.Subject to the particular circumstances of the case, it is fair to say generally that the Tribunal would be seriously concerned if a successful complainant's legal costs were to use up the whole of the damages award and still leave the complainant indebted for the balance. 30.The prospect of such a result will clearly deter people who claim to have been unlawfully discriminated against from pursuing that claim. 31.In Duggan v Shore Inn ((1992) EOC ¶92-457) the Tribunal was "particularly concerned that (complainants) will become increasingly alienated from the Tribunal's jurisdiction because of the likelihood of not recovering their costs and, even worse, of being out–of-pocket" (p 79,492). 32.In Holdaway the complainant had the support of a union. The Tribunal was concerned to record that without that assistance "it seems unlikely that this complainant would have been able to afford the litigation . . . the Tribunal (draws) attention to the risk that parties will be denied their rights under this Act in circumstances where they are unable to draw upon the resources of an organisation" (at p 79,054). The Tribunal in 1992 said it was "disturbed to see the cost which litigation in this tribunal is generating . . . any litigation of these issues would have been an expensive proposition" (at p 79,054). 33.Whether litigation is "expensive", and so expensive as to deter claimants from prosecuting their rights under the Act, must be considered in context. A case involving legal representatives and expert witnesses, and running for three days, is unremarkable in this tribunal, even if, as was observed in Holdaway, the tribunal "was clearly intended by the legislature to be a tribunal which would be able to proceed expeditiously and inexpensively" (at p 79,054). But the cost of success for a complainant (the situation with which the Tribunal is concerned in this case), may certainly be 'expensive', and perhaps prohibitively so, in this context: in this jurisdiction the most that can be recovered is $40,000. 34.In Willis the Tribunal said: "where the damages award is approximately half of the legal costs, the complainant is highly likely to have his damages award either completely or very substantially swallowed up by his legal expenses. When taken in combination with (other factors) this is a persuasive factor justifying an order for costs". (p 79,283). 35.In Nowland v TNT Skypak & Anor ( (1994) EOC ¶92-560) the complainant was be out-of-pocket because the amount of damages was less than her legal costs. Nevertheless, in the circumstances of that particular case, one of which was that the complainant was successful in only one of four complaints, the Tribunal was of the view that a costs order was not justified. The jurisdictional limit 36.It might be said that a Complainant, in a jurisdiction where there is a presumption against costs, is on notice: if they anticipate receiving an award less than the likely level of legal costs then that is a choice they make. But that choice is whether or not to seek the protection of the Anti-Discrimination Act ; as a matter of public policy it is desirable that a person is not be forced to that choice at all, but in particular not because the jurisdictional limit has not been increased with the passing of time. 37.While the cost of living generally, including the cost of legal representation, has increased in the 21 years since the Anti-Discrimination Act was enacted, the jurisdictional limit has increased only once, 16 years ago. 38.The limit when the Tribunal was established in 1977 was the equivalent of the District Court jurisdiction limit: in his second reading speech the then Premier Mr Wran said "the sum of $20,000 is the maximum amount within the jurisdiction of the District Court, and it appeared appropriate that the same sum should be set as the maximum for this tribunal" (Hansard 18 November 1976 page 3345). 39.In 1982 the figure was increased to $40,000, reflecting a change in the limit of the District Court. It has not been changed since. The District Court jurisdiction has increased in stages to $250,000 for non-motor vehicle personal injury matters; the Tribunal's jurisdiction remains at $40,000, the same as the current limit of the Local Court. 40.The amount of damages awarded in this Tribunal is in part a function of the jurisdictional limit. That limit has remained static since 1982. Over the same period, legal costs as a proportion of the jurisdiction limit are now considerably higher. The combined effect of legal costs and the jurisdictional limit 41.The clear consequence of this is an increasing likelihood that the damages awarded to a Complainant will be exceeded by the legal costs. In the not unusual event of a case involving expert witnesses running for, say, four days, the maximum amount that can be awarded by the Tribunal is likely to be exceeded by the Complainant's costs. 42.Thus when a complainant has an obligation to pay legal costs, the passing of time and the static limit on the jurisdiction have made it increasingly likely that damages will be lost to costs. This was a significant concern for the Tribunal in Willis and Duggan seven years ago, and becomes more significant as time passes. Until the jurisdiction is indexed the problem will only worsen. 43.Perhaps the point has already passed where, in many cases, justice can be done to a successful complainant in the absence of a costs order. However, the Tribunal in Willis was careful to say that it did not consider that "in the absence of other factors, this factor alone will generally justify an order for costs" (p 79,283). Similarly the Tribunal in Duggan considered the 'out-of-pocket' issue "in combination with the other factors" (p 79,492). The Tribunal in Nowland said of the decision in Duggan that the 'out-of-pocket' issue alone "appears not to have been sufficient justification for the order being made" (p 77,077). 44.Awarding costs on this factor alone would, effectively, reverse the presumption in the legislation; it "would be tantamount to applying the rule (that costs) follow the event" ( Willis at p 79,283). 45.The Tribunal makes the point that it is increasingly difficult for to give effect to the intention of the legislature that, generally speaking, each party will pay their own costs , and at the same time to the intention that a successful complainant be compensated for loss and damage caused by unlawful discriminatory conduct. It is the limitation on the jurisdiction in s113 of the Act that leads to very serious questions being raised about the continuing sense of the costs rule in s114 of the Act; as the number of cases in which the complainant is out of pocket in this way increases, the tension can only be resolved on a case by case basis. The Complainant's situation 46.Whether damages will be lost to costs in the present case depends on whether in fact the Complainant does face a legal bill. If the Complainant does not have to pay costs then the issue does not arise. 47.It is certainly the situation in this case that the Complainant's "damages award (will be) either completely or very substantially swallowed up by his legal expenses" (per Willis) . The Complainant was awarded $2,000 in damages and it is estimated for him that legal costs will be approximately $10,000. While there has been no assessment of costs at this stage, some figure in the order of $10,000, and certainly considerably greater than $2,000, is likely to be reasonable considering necessary preparation time and that counsel was briefed for a 3 day hearing. 48.The affidavit of Ms Lye, affirmed 1 June 1998, makes it clear that the Complainant does have a liability to pay costs: repayment to the Legal Aid Commission of the assistance extended to him was a condition of the grant of legal aid. A grant of legal aid is, in these circumstances, no more than an advance to an assisted person. The Complainant is liable to the Legal Aid Commission, and faces therefore the likelihood of losing his damages and, effectively, the compensation for having been discriminated against unlawfully. 49.The Complainant was awarded damages in recognition of the wrong that was done to him, specifically "as compensation for distress caused to him by the unlawful discriminatory conduct". In the absence of a costs order he is not compensated at all, but actually the worse off financially for having proved unlawful discrimination. 50.As is discussed above, this circumstance cannot, as a matter of policy, be the basis alone for an award of costs in the face of the legislative presumption, even though the passing of time may have led to that presumption resulting, on occasions, in an unfair result for a successful party. But this is not the only relevant circumstance: this case has direct application to people other than the complainant because the Tribunal has found as to the lawfulness of a standard to all rejoinee applicants were subject. 51.In the opinion of the Tribunal these factors, when taken in combination, are persuasive in justifying an order for costs. Publishing an apology 52.It has been drawn to the Tribunal's attention that, at least at the time of the submissions for the Complainant on 2 June 1998, an apology had not yet been published. By that date the Complainant had died. 53.The terms of the Tribunal's order on 24 April 1998 were that the apology was to be published "forthwith"; the time that had passed between the making of that order and the Complainant's observation that the apology had not been published was over 5 weeks. 54.The Tribunal is unaware of the reasons why the apology was not published sooner, and is of the opinion that it need not inquire further in the course of this costs application. Provision is made in Section 116 of the Act for dealing with the circumstance when an order of the Tribunal is not complied with; the Tribunal is of the opinion that this the appropriate way for the particular circumstance to be addressed, rather than by way of an order for costs. Orders 55. Accordingly, the Tribunal orders: That the Respondent pay the costs of the Complainant: i. relating to the conduct of the hearing on 2, 3 and 11 March 1998 ii. on a party-party basis iii. in a sum to be agreed between the parties within 60 days of the making of these Orders, iv. failing which agreement either party has liberty to approach the Tribunal for an order pursuant to s202(1) of the Legal Profession Act to have the matter referred to the Supreme Court for assessment of costs. 30 September 1998 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.