Chapter 2Key issues
2.1This chapter outlines some key issues raised in evidence to the committee about the provisions of the Australian Human Rights Commission Amendment (Costs Protection) Bill 2023 (the bill).
2.2Most submitters broadly supported reforms to costs orders in federal discrimination cases. Some raised concerns about particular aspects of the bill, such as the:
bill shifting the burden of costs risk onto respondents;
appropriateness of the modified equal access costs model applying to all federal discrimination cases;
definition of unreasonable acts or omissions;
potential for offers of compromise to effectively recreate the conditions that the bill is seeking to remedy; and
possibility of the bill resulting in increased discrimination litigation.
Shifting of costs risk onto respondents
2.3Some submitters raised concerns that the equal access costs model would place the risk of incurring costs more heavily on respondents.
2.4For example, the Human Rights Law Alliance (HRLA) argued the bill:
…encourages discrimination proceedings to be brought when they never should be, including by actions motivated by prejudice and intolerance. The Bill would introduce unacceptable inequality between those making discrimination claims and those defending them.
2.5It suggested that the modified equal access costs model would deprive:
…any religious entity, such as a school or church, of being awarded costs, except against an exceptionally well-heeled individual, when justice demands that costs should be payable by the party initiating the proceedings, because of their misuse of the process.
2.6The Law Council of Australia (Law Council) pointed out that it is a general legal principle that costs orders are designed ‘to compensate the person in whose favour it is made without having a punitive effect’.
2.7The Australian Chamber of Commerce and Industry (ACCI) raised similar concerns that the bill would:
…cause a significant uptick in class action by plaintiff law firms and well‑resourced litigation funders by imposing an asymmetrical cost model on respondent businesses, including small businesses in particular, without providing an exclusion against representative action. Furthermore, the bill introduces an exceptionally high threshold for the circumstances under which costs would be awarded in favour of a respondent business or where a respondent business may be able to avoid paying an applicant’s costs.
2.8The Australian Catholic Bishops Conference (Bishops Conference) similarly submitted that the implications of the bill do not appear to have ‘been considered in any context outside of employment’. It suggested that the bill and the EM do not provide clarity on:
…how a charity, school, church, or community organisation could demonstrate that there is no significant ‘power imbalance’ in the context of the provision of services. This could preclude a court from issuing a costs order in accordance with the proper interests of justice.
2.9It pointed out that those respondents are not always well-resourced, and applicants may have the means to fund a claim. It submitted:
Respondents in discrimination litigation are incredibly varied and include private individuals of different means, small businesses, charities, churches, schools, and community organisations. It is an error to assume, as the Bill does, that respondents will typically be well-resourced. It is similarly erroneous to assume that an applicant will not have adequate funding to pursue a claim, particularly with the recommendation that representative actions be permitted.
2.10The Bishops Conference argued ‘these misplaced assumptions render the Bill fatally flawed, and unfairly impose the cost of defending unmeritorious discrimination claims upon respondents’.
2.11The HRLA suggested that the bill would ‘imperil Christian schools by making them liable for the costs of any strategic discrimination lawfare that is partially successful’. It argued that this strategy would prevent Christian schools from pursuing ‘claimants in costs for vexatious or worthless claims that are made that seek to weaponise discrimination laws’. In the HRLA’s view, the bill would ‘further erode the fundamental rights of parents to ensure the religious and moral education of their children in conformity with their own convictions’.
2.12The HRLA ‘recognise[d] that there are access-to-justice issues, but this is not an effective instrument for dealing with those. It is a very blunt instrument and should not proceed’.
2.13The Bishops Conference recommended that the bill be withdrawn. It argued the bill does not implement recommendation 25 of the Respect@Work report as it:
…is inconsistent with section 570 [of the Fair Work Act] because it treats applicants and respondents unequally by forcing a court to make a costs order against a respondent unless the respondent is successful on every single ground before the court.
2.14It noted that there were limited circumstances in which the respondent would not be ordered to pay costs, such as if ‘the applicant instituted the proceedings vexatiously or without reasonable cause or the applicant’s unreasonable act or omission caused the other part to incur the costs’. The Bishops Conference pointed out that these requirements are ‘not present in section 570 [of the Fair Work Act]’.
2.15The Australian Christian Lobby (ACL) similarly pointed out that ‘[s]ection 570 only contemplates costs orders when proceedings are instituted vexatiously’. It argued that the bill is incongruent with recommendation 25 of the Respect@Work report as that report was confined to measures designed to address workplace sexual harassment. The ACL opined ‘[t]he Bill expands extravagantly on Recommendation 25’ for the following reasons:
it would apply to all federal discrimination proceedings, not just those related to sexual discrimination;
it would apply to proceedings that involve allegations of unlawful discrimination, rather than allegations of harassment; and
it would create legislation that does not operate in a similar manner to section 570 of the Fair Work Act and would instead create a costs model that ‘is asymmetrical, disproportionate and without justification’.
2.16The ACCI similarly remarked that the costs model proposed by the bill differs from that put forward by the Respect@Work report. It stated that its preference is for there to be no change to the status quo, ‘that costs should follow the event’. If reform of the costs model is required, its preference is for the adoption of ‘the model put forward in the Respect@Work report, which is recommendation 25’.
2.17The Working Women’s Centre SA Inc (Working Women’s Centre) indicated that the Respect@Work report:
…demonstrated that vulnerable workers are increasingly more likely to experience sexual harassment in the workplace. These vulnerabilities can often create a barrier for Complainants to engage in litigation, in addition to the imbalance of power dynamics and disparity of financial recourses that exist between Complainants and Respondents. The current costs model facilitates a further financial barrier for Complainants to pursue their matters in court, as the fear of adverse costs orders being made is a large deterrent in bringing forward unlawful discrimination claims.
2.18It considered that ‘to date it’s been Australian women who have been bearing the cost of pushing cultural and judicial change’. In the opinion of the Working Women’s Centre, the bill presents:
…an opportunity to balance out those power imbalances between respondents and applicants, particularly because the respondents, employers and individuals—but let’s take employers for the moment—already have an onus and already have a responsibility to provide safe workplaces, which comes from uniform work health and safety legislation across the country.
2.19According to Equality Australia the bill ‘includes important safeguards which balance the interests of complainants and respondents where there is no financial or power imbalance between them’. It stated that the equal access costs model is ‘the fairest and most appropriate costs model for federal discrimination complaints’. Equality Australia explained that the current costs regime is inappropriate as there are considerable differences between discrimination complaints and other disputes:
Discrimination complaints go to fundamental injustices and harms to dignity…the usual costs recovery approach that may work well in commercial disputes, or disputes where monetary damages are likely to be higher or more readily calculable, is not appropriate in a discrimination context and discourages meritorious complaints from people who have been discriminated against.
2.20Equality Australia argued that adopting a costs model based on section 570 of the Fair Work Act could ‘also undermine the effectiveness of discrimination protections because of imbalances between a typical complainant and a typical respondent’.
2.21The Power to Prevent Coalition ‘wholeheartedly support[ed] the adoption of key principles of the Equal Access model in the Bill’. The Coalition represents ‘a group of diverse community organisations, unions, academics, peak bodies, health professionals, lawyers and victim-survivors’ that supported the proposed costs model in the Attorney-General’s Department’s (AGD) review into an appropriate cost model for Commonwealth anti-discrimination laws. It noted that its submission to the review was supported ‘by 85 signatories, representing broad support across the sector for this model’.
2.22One of the signatories, the Australian Council of Trade Unions (ACTU), stated:
The bill before the committee is the result of a thorough and considered consultation process undertaken by the government over the last 12 months. During that process, the equal access model emerged as the model that would best achieve the policy objectives of recommendation 25 of the Respect@Work report. It was widely seen as being superior to other options.
2.23The ACTU stated the bill would help:
…to level the playing field by addressing the deep structural inequalities that exist in our society and which are all too often replicated by our legal system. The equal access model is the only model that ensures the damages awarded to successful applicants are not eaten into by their costs, and it’s the only model that doesn’t entrench and exacerbate power imbalances and barriers to justice. It solves the problems inherent in the other cost models.
2.24Equality Australia argued that the modified equal access costs model would help to alleviate the burden on those who have been discriminated against:
We’ve got to encourage those people to come forward because they set the standard for everyone else so that the next teacher doesn’t lose their job, as their employer will look to the court precedent and see this is what it means when they treat an employee poorly, treat a student poorly or refuse service to someone because of who they are or whom they love. They’re important people that set the standards for others. Unfortunately they bear the burden right now, but I’ve seen so many people with strong cases who’ve just been terrified by the prospect of taking it further, and this just gives them that certainty that they won’t lose their house or go bankrupt as well as potentially lose a case after they’ve been demeaned or had their dignity impacted.
2.25The Australian Human Rights Commission (AHRC) stated that the bill would provide applicants with greater costs certainty and remove the disincentives that deter them from pursuing claims of unlawful discrimination in the federal courts.The bill would achieve this by ensuring that ‘the costs provisions…are weighted more heavily in favour of applicants and shift the burden of costs liability to respondents’.
2.26The AHRC welcomed reform to the costs order legislation in federal discrimination cases and recognised ‘that the question of an appropriate cost model that is fair, certain and facilitates access to justice, is complex and reasonable minds may differ on the most beneficial model’.
2.27It explained that as all the other measures or recommendations from the Respect@Work report are implemented or are in the process of being implemented, the bill would implement:
…the last of the recommendations. Certainly we can see that there is a need for continuing action within this area because of the ongoing prevalence of sexual harassment and sex discrimination within our community and within our society. So this is the last piece…the equal access model provides one way of trying to address that overly heavy burden on applicants.
2.28The AGD stated:
The equal access model recognises the beneficial intent of antidiscrimination legislation and the public interest associated with having discrimination laws enforced to protect those discriminated against. An equal access model would also address power imbalances and resource disparities that can occur in discrimination proceedings. However, the equal access model has been modified to reduce that burden on respondents who are successful on all grounds but not well-resourced or at a significant power advantage relative to the applicant. The equal access model seeks to address the barrier to seeking justice that the current regime presents while balancing the interests of applicants and respondents.
2.29The AGD reported that it received 35 submissions in response to its public consultation on costs models and had permission to publish 31 of them. Of those published submissions:
…about 70 per cent—that is, 24 of the 31 published submissions—supported an equal-access model. Three per cent—one out of the 31 published submissions—supported a hard-cost neutrality model. Six per cent—two of the 31 published submissions—supported a soft-cost neutrality model.
Application to all federal anti-discrimination laws
2.30As outlined in Chapter 1, the costs protection model would apply to all federal discrimination proceedings.
2.31Freedom for Faith indicated that it would be inappropriate to apply the modified equal access costs model to all federal anti-discrimination cases.
2.32Freedom for Faith explained ‘there is a very marked difference in the power differential’ in sexual harassment cases compared to other types of discrimination. It argued that in religious discrimination cases, for example, there have been people who:
…have been activists or individuals with a grudge, who are self-funded, who are out to hurt and out to make a point, rather than people who have been specifically discriminated against by an institution. We’ve got examples of people who have trawled through the internet looking for ways to be offended. That’s the sort of power differential; it’s a different power differential.
2.33Freedom for Faith suggested that the bill should be ‘restricted to solving the problem it’s trying to solve, which is sexual harassment’. It raised concerns that there has not been enough public consultation in relation to changing the costs regime for other forms of discrimination, other than that interrogated by the Respect@Work report:
We think that the application of this regime to the broader category of claims hasn’t been through the same sort of public scrutiny, notwithstanding the work of this committee. It hasn’t been through that independent report process, so there hasn’t been an opportunity for a full ventilation of those issues. And it just has a far greater potential for unmeritorious applications.
2.34The HRLA stated:
The vexatious litigant threshold is very, very high, and there are claimants who have taken many, many cases. Courts have justifiably been loath to dismiss those claims at first instance and to not allow the matter to be heard in court. The vexatious litigant standard is very good for trying to get rid of obviously vexatious claims at an early instance in the proceedings, but it’s not a useful test for whether one is to recover their costs or not. That’s because you can have a claims that is not merited—is lacking in merit—but is not vexatious. It has some chance, and yet a litigant is motivated to take that claim, because they know they’re fully insulated from bearing the brunt of the costs.
2.35The HRLA argued ‘the test for determining the differential between two parties is not well suited to all parties who are the subject of these discrimination claims’. It stated that the bill would require a respondent to satisfy several tests if it is to avoid paying the applicants’ costs:
Firstly, it needs to satisfy the test that the applicant started the proceedings vexatiously and without reasonable cause. Now that is a very, very high bar to accept. You can have cases that are lacking in merit, and which courts say are lacking in merit, yet which meet that bar…
Secondly, there’s this idea of a significant power advantage or of financial and other resources being available. Now for a for-profit corporation, it’s going to be an entity that has a large balance sheet, large budgets and money to spend on these things, but, for your average Christian school, which may have a yearly budget of $10 million, it’s very clearly got more financial resources. It’s very clearly got more power than, say, an applicant for a job, and yet it’s not in a great financial position or even a power position when it defends a claim of discrimination, because the ultimate people who will pay if there are large claims against them and large costs incurred are going to be the everyday Australian parents who fund the school.
2.36In contrast, People with Disability Australia indicated that the risk of having to pay the respondent’s costs acts as a disincentive to pursuing justice in all discrimination matters. It submitted that disincentive is particularly felt by people with disability, as that community:
…face[s] economic disadvantage and an above-average risk of poverty. Indeed, a mere 48% of working-age people with disability are employed, compared to 80% of people without disability. Many of us simply cannot afford to fund our own legal representation, let alone that of another party.
2.37For that reason, People with Disability Australia ‘welcome[d] the Bill and its application to all federal discrimination matters’.
2.38The Community and Public Sector Union (CPSU) supported the application of the costs model to all federal discrimination matters as it would avoid ‘increased complexity in discrimination law via the implementation of differing costs models, and addresses the fundamental power imbalances that exist in all forms of discrimination’.
2.39The National Foundation for Australian Women shared the CPSU’s view and added:
…all forms of discrimination involve fundamental power imbalances and all applicants are likely to experience similar financial barriers to initiating proceedings. The intersectional nature of sex discrimination and sexual harassment means that victim-survivors will have often experienced multiple forms of discrimination. There is value in having a consistent approach to costs across all discrimination matters.
2.40The AGD explained:
The national inquiry that informed the Respect@Work report heard that the current costs regime in the Federal Court operates as a significant disincentive to applicants pursuing sexual harassment matters under the Sex Discrimination Act, and that disincentive is also relevant to applicants across federal unlawful discrimination law. The risk of being ordered to pay the costs of other parties to the proceedings, or having to bear your own costs if successful, can deter victim-survivors from commencing legal proceedings. This certainly creates access-to-justice concerns, particularly for vulnerable members of the community. The Respect@Work report considered that costs reform was required to overcome this deterrent effect and to provide greater certainty to parties as to how costs would be awarded.
2.41In relation to the test for determining the power differential between the applicant and the respondent, the AGD explained that relationship between an employer and an employee may not always constitute a power advantage in favour of the employer:
It might depend to some extent on the authority and power of the individual employee. They may be someone of significant standing or have significant personal resources of their own.
Definition of unreasonable acts or omissions
2.42Some submitters recommended the bill or the EM be amended to clearly articulate what constitutes an ‘unreasonable act or omission’.
2.43The Grata Fund and the Public Interest Advocacy Centre ‘welcome[d] the guidance that is provided in the Bill’s Explanatory Memorandum’ related to the unreasonable acts or omissions that may apply to a successful applicant.
2.44The EM states that the term ‘unreasonable acts or omissions’:
…could apply where the applicant has unreasonably caused unnecessary delays in proceedings, failed to comply with court orders and rules, or otherwise abused the processes of the court. This is intended to be a high threshold and reserved for rare cases. For example, a mere refusal of a settlement offer, refusal to participate in a conciliation, the running of novel arguments or a self-represented litigant’s lack of legal expertise are not intended to amount to an unreasonable act or omission.
2.45People with Disability Australia ‘support[ed] this interpretation of ‘unreasonable act or omission’, noting that any disability-related acts or omissions must not be considered ‘unreasonable’’. It suggested those disability-related acts could include ‘taking time to access supported decision‑making, missing deadlines or failing to attend hearings due to psychosocial disability, difficulty accessing online hearings and issues travelling to certain hearing locations’. It recommended that the bill be amended to list ‘what will and will not qualify as an ‘unreasonable act or omission’…The list should also specify that disability-related acts and omissions cannot be deemed ‘unreasonable’’.
2.46The Grata Fund and Public Interest Advocacy Centre stated that the guidance in the EM is unclear about whether this ‘also applies to the standard of an unreasonable act and omission in paragraph 46PSA(6)(b)’. It argued that the bill should be amended to include a subsection to clause 46PSA that would make it clear that ‘certain acts including the refusal of offers of compromise should not be taken to be unreasonable for the purposes of adverse costs order considerations under paragraphs 46PSA(4) and (6)(b)’.
2.47The ACTU recommended that the EM be amended to clearly state that the guidance in relation to ‘unreasonable acts and omissions’ applies to both subsections of the bill. It also recommended the bill:
…be amended so that successful respondents might be liable for costs that are incurred by applicants as a result of the respondent’s unreasonable acts or omissions. The converse already applies in the bill. If an applicant does an unreasonable act or omission they may be liable for costs to the respondent. We say that there should be an equivalent potential for applicants so that they don’t have to bear the costs of unreasonable acts or omissions by respondents, as a matter of fairness. Without that sort of protection, we’re concerned that successful respondents who, for example, unreasonably drag out or delay litigation, fail to comply with court orders or rules, or engage in abuses of process will substantially increase the cost of litigation but won’t be liable for that cost.
2.48Mr Kieran Pender pointed out that anti-discrimination litigation is:
…frequently directed at non-financial outcomes—for the conduct to cease, for workplaces to improve their approach to anti-discrimination, implement training and policies and so on, to seek an apology, an acknowledgement of hurt and so on.
2.49In his view, consideration of monetary offers of compromise is often ‘inapposite in anti-discrimination litigation’. He suggested that the bill or the EM could be amended to allow the court to form ‘a holistic consideration of settlement offers and remedies sought, including non-financial claims’.
2.50National Legal Aid similarly argued:
Because discrimination cases are about more than money, we consider that the bill should be amended to clarify that the mere refusal of a settlement offer is not intended to amount to an unreasonable act or omission for the purpose of the exceptions. This is important in a human rights jurisdiction where the litigation goals will often include restoring dignity and respect and achieving public medication and systemic change.
2.51The AGD explained that federal courts would be able to consider ‘what occurs in conciliation in their decision around awarding costs’:
…there’s some discretion for the court to consider the circumstances around the refusal [of an offer of compromise]…the very fact that an offer’s been made and been rejected is not a sufficiently high bar for an applicant to be considered unreasonable.
2.52It clarified ‘that things that are said in conciliation remain admissible in the consideration of costs. That would provide the ability for courts to be considering what occurs in conciliation in their decision around awarding costs’.
2.53The AGD stated ‘[r]efusing alone is not sufficient evidence to establish unreasonableness, although, depending on the refusal it might be’.
Offers of compromise
2.54Some submitters raised concerns about the potential for offers of compromise or Calderbank offers to effectively recreate the conditions that the bill is seeking to remedy.
2.55The Australian Discrimination Law Experts Group (ADLEG) referred to Calderbank offers, which are a specific type of offer of compromise that do not comply with the Federal Court Rules 2011. It explained that a Calderbank offer is made when:
…one party offers to settle a legal dispute on the basis that, if their offer is not accepted and the proceedings result in a verdict that is less than the sum that had been offered, the offeror will be entitled to their legal costs from the time of the rejected offer.
2.56The Grata Fund and Public Interest Advocacy Centre explained that an applicant who refuses a Calderbank offer may obtain a less favourable outcome:
Calderbank offers are used by respondent employers in discrimination matters as ‘part of the litigation game’ to force settlement. An applicant who refuses a Calderbank offer risks an adverse costs order for indemnity costs if they proceed to litigation and ultimately receive a less favourable outcome. Similar ‘offer of compromise’ and costs rules are formalised under Part 25 of the Federal Court Rules 2011 (Cth) (FCR).
2.57They explained that Calderbank offers risk recreating the disincentives that potential applicants have in deciding to launch a discrimination case:
By pressuring applicants to settle under the threat of indemnity costs, these respondent strategies effectively recreate the costs risk and chilling effects that the Bill seeks to address. We are concerned that the Bill itself does not make any provision for how the equal access model is supposed to interact with Calderbank offer principles or the FCR regime.
2.58ADLEG suggested that offers of compromise are inappropriate in discrimination cases as they often involve ‘a substantial inequality of both power and resources’ between the applicant and the respondent. In discrimination cases, the respondent may:
…leverage its resources and emotional detachment to impose fear and uncertainty on a complainant in order to deter them from continuing with their claim or to accept a low offer of settlement.
2.59ADLEG recommended:
…the Bill be amended to expressly exclude consideration of offers of compromise in relation to any discretion to award costs. For example, section 46PSA(5) of the Bill could be qualified by a phrase such as ‘notwithstanding FCR 25.14 and any offer of compromise that was made’.
2.60The ACTU suggested that claimants generally prefer to avoid litigating their discrimination claims and highlighted:
They have conciliation processes that are confidential available to them, which can be a positive experience if done well because it allows applicants to speak about the impact of conduct on them. Conciliation also offers an opportunity to negotiate tailored, meaningful and creative outcomes that a court can't order such as changes an organisation may commit to to [sic] prevent future conduct and change its culture or by providing an apology or a reference. We say applicants have significant incentives to consider offers of settlement and take genuine steps to resolve a complaint.
2.61The ACTU recommended:
…the bill expressly exclude the consideration of formal and informal settlement offers, including Calderbanks and offers of compromise, in relation to any discretion to award costs against an applicant. The reason that we think this is so important is that settlement offers are used every day of the week and exploited as part of a litigation strategy to put pressure on applicants to settle and to make sure respondents can recoup their costs, so even in cases where applicants are successful, because they don't beat the offer that was put in the Calderbank or the offer of comp, they're the ones who have to pay the costs, and it has little to do with the merits or circumstances of the claim. That has a chilling effect on workers proceeding with litigation even where they're seeking really important non-monetary outcomes like declarations or penalties. We also think that there's going to be an increasing issue in light of the Respect@Work guidelines on confidentiality clauses, because we think that it's both likely and desirable that increasing numbers of applicants won't want to agree to confidentiality clauses as part of a settlement, and therefore they'll be knocking back more settlement offers that potentially involve those clauses.
2.62The AHRC expressed concern that the proposed costs model:
…may have unintended consequences on the efficacy of alternative dispute resolution options, including early offers of settlement and conciliation processes, and the processes of the Commission as a filter for complaints proceeding to court.
2.63The Law Council stated:
The whole process of the Human Rights Commission is to try to assist the parties to reach a resolution themselves, and in the course of that there may be settlement offers. Some of those settlement offers may include financial components, but some may include a whole range of other types of outcomes. One difficulty for an applicant is that, if she or he doesn’t receive a settlement offer during the course of the commission’s processes and has to commence their proceeding in the Federal Court, then the absence of a respondent making a settlement offer is an important factor to take into account.
The corollary is that, if a respondent makes an offer in the course of an AHRC conciliation proceeding that might meet what the applicant may then think, ‘Look, that’s a pretty good offer, but I’m going to reject this, because I might be able to try my chances in the Federal Court or the Federal Circuit Court to achieve something more.’ Or it may be that the offer that the respondent puts to the applicant doesn’t succeed at the same level in the court. In those circumstances, the court should be able to take into account the fact that an applicant has rejected a reasonable settlement offer in terms of any assessment of costs at the end of the day. So the current section is taking into account the settlement offers on both sides. It’s not a one-way provision at the present time. So that’s an example of how it would be taken into account.
2.64The AHRC recommended an amendment to the bill ‘to enable the court to have regard to settlement offers made prior to, and during, the proceedings in the determination of costs’. If that amendment is not made, the AHRC recommended the EM:
…be amended to include the unreasonable rejection of a settlement offer as an example of a possible ‘unreasonable act or omission’ under proposed ss 46PSA (4) and (6)(b).
2.65The AHRC clarified that it does not:
…necessarily support the use of Calderbank offers or offers of compromise as they are traditionally used, where they can be used as a tool, and in an oppressive way, against an applicant.
2.66It was in favour of the court:
…retain[ing] the discretion to be able to consider settlement offers that were made and that perhaps the EM could be clear about also saying that when the court does so, it should have regard also to the circumstances of the offer and the ability of the applicant to assess its reasonableness. That might include things like whether the applicant is represented, has legal advice, or whether there’s sufficient jurisprudence for them to be able to determine what’s reasonable or not. That also goes to the fact that, particularly with what we see coming out of the commission, not all settlements are financial settlements. There are a number of ways that parties can reach agreement.
Increased litigation
2.67Freedom for Faith opposed the bill as it would ‘undermine important checks and balances necessary to discourage low-value litigation and waste valuable court time and resources’.
2.68The HRLA supported that argument and suggested:
Even in those cases which are not unmeritorious, but where serious public interest and other legitimate issues are in contention, the effect of the Bill would be to compromise the proper defence of claims, by establishing an environment in which the financial risks from adverse costs awards are excessive from the outset.
2.69The ACTU shared statistics that highlight the ‘shockingly low’ number of sexual harassment cases that proceed to court:
Despite nearly three million Australians experiencing sexual harassment each year, only 11 cases are brought to court each year on average. This is a shockingly low figure. This is because the barriers to bringing claims are enormous, and many women make the very rational decision to not risk their financial future by pursuing a case in the courts.
2.70National Legal Aid reinforced that evidence:
Over the past 10 years, we’ve provided over 12,500 legal advices about discrimination matters. We’ve run over a thousand cases, and just four of our clients have proceeded to hearing and final judgement—no sexual harassment cases.
2.71The Shop, Distributive and Allied Employees’ Association (SDA) echoed the view that reporting of sexual harassment at work is low and stated:
We've been doing a lot of work to try to encourage our members to report sexual harassment when it does occur, and we've been working with employers on doing that as well, but it remains very low. We're talking about making reports to an employer, let alone that young person, if they're not able to resolve it, taking the next step of going to an external jurisdiction and making a complaint. It's very difficult to get a young person to do that. But we think that improvements to the way the legislation works—the access to justice, for example, through the proposition in this bill to change the costs model—will at least allow a young person or anyone else in the workplace who is discriminated against or sexually harassed to seek justice fully through the system and not be stifled if they're unable to resolve it at the workplace level or through conciliation through an antidiscrimination tribunal or through the Fair Work Commission. We think it's really important that the options are available but, also, in terms of a preventive measure, because this isn't just about seeking justice for people who've already been discriminated against or sexually harassed; this is about looking at the whole system and making sure that it provides a preventive measure and a deterrent to sexual harassment and discrimination. We need to make sure that people who are discriminated against or sexually harassed have access to each stage of the justice system so that employers understand that and can make sure that they're doing what they can to prevent those sorts of things happening in workplaces in the first instance.
2.72The ALA was not concerned about the prospect of the modified equal access model resulting in increased litigation. It stated:
…it is in the public interest for instances of sexual harassment and discrimination to progress to litigation; for victim survivors to access justice and compensation; for there to be increased awareness of workplace discrimination; and for societal norms and practices to shift as a result.
2.73The Working Women’s Centre drew a similar connection between case law and societal norms. It suggested that the risk of adverse costs orders has resulted in limited legal precedent and that increased litigation would assist in the development of the law:
Should conciliation be unsuccessful, and to proceed with unlawful discrimination cases past conciliation, it is essential for complainants and/or their legal representatives to have recent legal precedent that reflects society’s changing standards in respect to unlawful discrimination.
Even if there were to be an initial increase in litigation as a result of this model, development of case law in the area of unlawful discrimination will facilitate earlier settlements in due course, as Judicial consideration and decisions on relevant legal tests are crucial to enable accurate interpretations of the law.
This current deficiency of comprehensive case law in unlawful discrimination matters makes it difficult for complainants to weigh up the stressful nature of litigation against likely outcomes of their case. This lack of case law disempowers complainants in their decision making on whether they want to persevere through stressful litigation and what the risk verses [sic] reward may be in pursuing their matters.
2.74The ACTU argued:
…applicants are acting in the public interest when they bring a claim if they are seeking to vindicate legal rights that ultimately contribute to wider social change. Our system still relies heavily on individuals who have experienced this conduct bearing the burden of bringing complaints forward. They should have an equivalent cost protection to whistleblowers if they act to rectify both an individual and a social wrong. This reform is crucial to ensuring that respect at work is effectively implemented in practice and is a necessary step to address and prevent discrimination and harassment in the future.
2.75The ACTU argued that having more matters proceed to court would test ‘the awards of damages, which are currently very low…against community standards’. It suggested that an increase in the quantum of damages would:
…contribute to broader cultural change. We’ll start to recognise the real harm in these behaviours of discrimination and harassment, and that will be recognised in public decisions. All of that is going to make both workers and employers become more and more educated and more and more aware of the laws that exist and the obligations and rights that they have, and that will lead to cultural change in workplaces and make workplaces safer.
2.76The ACTU also recognised that there have been concerns that the bill would ‘clog up courts with unmeritorious claims’. It suggested that those concerns are misplaced as:
There are already sufficient protections in place to deter unmeritorious complaints—a fact recognised by the Australian Human Rights Commission. There are also protections built into the equal access model itself. Respondents can recover costs where proceedings are instituted vexatiously, or without reasonable cause, or where the applicant has engaged in unreasonable conduct. We’ve seen the equal access model applied to whistleblowers and there’s no evidence that this has led to a significant increase in unmeritorious claims. Given that less than three per cent of finalised complaints proceed to court, the risk of an increase in unmeritorious claims in real numbers is very low. The real problem is that the high costs and risks of litigation stop many meritorious claims from proceeding. This bill aims to take just one of those risks away.
2.77The SDA observed that it ‘regularly represents and supports members when they have workplace issues involving discrimination or when they have been sexually harassed’. In doing so it seeks to ensure:
All available options to resolve a complaint are exhausted before any form of litigation is considered. We engage directly with employers and participating companies’ internal complaints processes, which can often take weeks into months. Only if a matter is not resolved are external options such as antidiscrimination tribunals or the Fair Work Commission considered, and only then if the member is willing and able to pursue the complaint.
2.78The SDA indicated that in its experience:
…workers who have been harassed or discriminated against will engage in any available option to resolve their complaint, including internal external options, before they consider going to court. The proposed changes to the costs provisions will not impact on this.
2.79The Working Women’s Centre similarly stated that, in its experience:
…workers who come to us, predominantly women, are not going to skip over that dispute resolution stage to run a long, arduous, time-intensive litigation process which is likely to make them sicker, in lieu of going to a dispute resolution process where all parties come to the table, recognise the seriousness and have risk in that situation.
2.80It opined that those making the argument that claimants are unlikely to accept reasonable offers are:
…moving into territory where we’re thinking about the applicants or complainants, who are predominantly women, being unreasonable…We’re moving into these stereotypes of women being unreasonable and irrational and not making good decisions for themselves, on the basis that they might be able to get a little bit more money. When? Down the track. When we say ‘down the track’, we’re talking six months, sometimes, just to get the first directions hearing the Federal Court. Really, if you’re moving through to a hearing, we’re telling our clients, ‘You’re in this for about a year and a half to two years.’ There is no reasonable, sensible person who would turn down a reasonable offer in order to enter into that litigation.
2.81Kingsford Legal Centre supported the view that very few rational people would pursue a case in a federal court. It stated that in its experience:
…from working with applicants for many years, people will not run to court. People want to vomit at the thought of going to court. That’s the normal human reaction and exactly the evidence. It takes years. Litigation is horrible; it’s stressful, and ordinary people don’t want to do that. We really value the Human Rights Commission’s trauma informed expertise and processes. But taking a matter of sexual harassment and discrimination to court, which is a human right, shouldn’t bankrupt ordinary Australians.
2.82National Legal Aid argued that, even if the bill is passed, most people are not going to pursue their claim in federal court:
Even if it’s enacted, the vast majority of people who experience unlawful discrimination will choose not to make a legal claim, let alone litigate their case to final hearing. Litigation involves enormous personal cost and risk for complainants in discrimination cases and is often a retraumatising event that prolongs psychological recovery from the incident and can contribute to further stress and distress. For many people, there’s also the significant financial risk of being left out of pocket if unsuccessful. These social, emotional and financial costs of litigation create an enormous incentive for applicants to consider reasonable offers of settlement.
2.83Equality Australia echoed those views:
The last thing they want is to go to court. They have been traumatised, they’ve been demeaned and they’ve felt that their identity has been questioned. These are teachers who’ve been fired from schools because they’re gay, and trans kids—we’re talking year 7 age—have been refused enrolment at a school. These are not people that are rushing to court. Most of the time they’re barely thinking about what the next job that they can get might be and whether, if they do take action, it will be taken against them so they will be victimised for standing up. And they don’t know how other people have been treated. When one person goes forward, they go forward for 100 people who will never have that courage, that ability or those resources.
2.84National Legal Aid agreed:
The rare individuals who pursue meritorious discrimination claims to hearing are performing an important public service and critical role in our discrimination law system. Their cases clarify the law, educate the community about equality rights and responsibilities and encourage greater efforts to prevent unlawful conduct. Case law also helps lawyers to advise their clients with greater certainty and streamline future legal pleadings. These amendments create an equitable cost model that supports all individuals to enforce their right to nondiscrimination, irrespective of how much money they earn. The amendments also recognise the public interest in supporting people to speak up about discrimination and deterring unlawful conduct and are therefore critical to reducing discrimination and harassment in our community.
2.85The Working Women’s Centre argued that the bill would allow a wider range of people to access the legal system and pursue justice:
…what we need is for the courts to see the full spectrum of people that are being discriminated against and harassed. Presently what we’ve got is only quite wealthy people who tend to be in quite high-up professional jobs being able to and having the capacity to move through the courts through to a hearing. Therefore, we have a set of jurisprudence which only really talks about a particular set of workers or persons in Australia. It doesn’t reflect the people who are widely being harassed because of their age, race or cultural background or because they are low paid or on a visa. And so I think increasing the amount of jurisprudence we have across the line and including people across the spectrum is really important. The only way that we can do that is if we remove that financial barrier to people who don’t have enough money to litigate, and that’s a huge proportion of Australians.
2.86It suggested that broadening this jurisprudence would assist in bringing discrimination matters to an early resolution:
We need cases that talk about what happened, that make orders and that set out the parameters of what is acceptable and not acceptable in workplaces, from the Working Women’s Centre’s perspective, and then we need to be able to use those cases to then have a reasonable early resolution at the dispute resolution process. What often happens for us is that we go to a conciliation conference and we try to draw connections between the cases which have been handed down and our clients. Our clients look very different, and their harassment and discrimination look very different to maybe the senior lawyer or the senior corporate woman who has gone through the judicial process.
2.87The Grata Fund supported the view that increased case law:
…would probably lead to more and better conciliated outcomes, because you are adjusting what is currently an unequal status quo to provide a fairer negotiating balance. What that means is you’re probably actually going to see an increase in conciliated outcomes because people aren’t going to feel the need that they actually have to proceed to court, because they’re feeling that they’re getting fair and reasonable offers in the conciliation process, because there is that extra pressure on the respondents to actually offer decent conciliated outcomes.
2.88The AHRC indicated:
…the absence of jurisprudence is a problem because the conciliation is conducted in the shadow of the law. And when the law is limited or deficient because of, sometimes, lack of expertise et cetera there’s a certain element of guessing. The absence of jurisprudence is a clear issue…If this generates more jurisprudence in the Federal Court, that will address that particular concern, to some extent.
Committee view
2.89The Australian Human Rights Commission Amendment (Costs Protection) Bill 2023 would repeal the existing costs provisions in the Australian Human Rights Commission Act 1984 and replace them with ‘equal access’ costs protection provisions. Those provisions would apply to all unlawful discrimination proceedings commenced in the federal courts. The amendment would implement recommendation 25 of the Respect@Work report.
2.90The committee acknowledges that people who have experienced discrimination are often reluctant to pursue litigation due to the risk of incurring costs. It is of the view that this reluctance causes significant harm to individuals and the public good.
2.91The committee recognises that the equal access model was subject to extensive community consultation through the Attorney-General’s Department’s review into an appropriate cost model for Commonwealth anti-discrimination laws. That consultation process found there was significant community support for the equal access model.
2.92The committee agrees that the modified equal access model is the most appropriate model to adopt in the awarding of costs in federal anti‑discrimination cases. That model grants the courts the ability to award costs against the applicant if the respondent is: successful on all grounds; does not have a significant power advantage over the applicant; and does not have significant financial or other resources, relative to the applicant. It balances the interests of applicants and respondents, and achieves the policy objective of recommendation 25 of the Respect@Work report.
2.93The committee therefore supports the modified equal access costs model as it addresses the power imbalances and resource disparities that often exist in discrimination cases. The model reduces the burden on respondents who are successful on all grounds but are not well-resourced or at a significant power advantage relative to the applicant.
2.94The committee considers that the bill would bring conciliation out of the shadow of the law and, over the long term, assist in bringing discrimination matters to a more rapid conclusion without necessarily requiring judicial involvement.
2.95The committee notes that the explanatory memorandum provides guidance in relation to what constitutes the ‘unreasonable acts and omissions’ of the applicant that the court may consider in making the respondent liable for costs. The explanatory memorandum does not similarly outline what constitutes the ‘unreasonable acts and omissions’ of the applicant when the court considers making the applicant liable for costs.
2.96The committee received evidence from multiple stakeholders on this issue and considers that greater clarity is required to properly explain what constitutes the ‘unreasonable acts and omissions’ of the applicant when the court considers making the applicant liable for costs.
2.97The committee recommends that the bill or the explanatory memorandum be amended to clarify what constitutes the ‘unreasonable acts or omissions’ of the applicant when the court considers making the applicant liable for costs.
2.98Subject to the preceding recommendation, the committee recommends that the Senate pass the bill.
Senator Nita Green
Chair
Labor Senator for Queensland