Indecent exposure: Law changes may reduce the cost of pursuing a discrimination claim

Last month, the federal government passed long-awaited reforms to federal discrimination laws that will limit a person’s exposure to paying the other side’s legal costs if they lose their discrimination claim.

For years, people have avoided the federal system due to the risk of having to pay costs, which is unfortunate, because in many cases, the federal protections are stronger, and when a case succeeds, it applies nationally.

Now a complainant will only have to pay costs if they acted vexatiously or without reasonable cause, or their unreasonable act or omission caused the respondent to incur costs, or if the respondent was successful and does not have a significant power advantage over them and they don’t have significant financial or other resources relative to the complainant.

A strong disincentive

The risk of having to pay the other side’s cost has long been identified as a powerful disincentive to litigating a discrimination claim.

Interviews I conducted with lawyers in NSW, Queensland and Victoria revealed that the possibility of having to pay the other side’s costs is the factor that carries the most weight in deciding which jurisdiction to use, and that the risk of costs is driving people away from the federal system.

Recent analysis by Thornton, Pender and Castles found that unsuccessful complainants in federal sex discrimination and sexual harassment claims have been ordered to pay costs 34% of the time.

I analysed disability discrimination cases heard in NSW, Victoria and federally between 2014 and 2018. Costs were awarded in 10 of the 16 unsuccessful claims, but not in any unsuccessful claims in NSW or Victoria. Those claims were heard in civil tribunals that are “no-cost”, and often the forum of choice for complainants.

Read more: Anti-discrimination law: Forty years on, how far have we come?

A case brought by the then Disability Discrimination Commissioner, Graeme Innes, in his personal capacity against RailCorp NSW illustrates the problem with costs.

Innes, who has been blind since birth, regularly travelled on Sydney trains, but often there were no audible stop announcements, so he didn’t know where he was located on the network.

After lodging complaints under both federal and NSW disability discrimination laws, and trying to negotiate a settlement with RailCorp NSW, Innes ultimately took his claim to the Federal Magistrates Court and was awarded $10,000 compensation for the stress and anxiety RailCorp NSW caused him by not telling him where he was on the train network.

However, Innes said he was at risk of losing his home if he lost and had to pay costs. It was later revealed that RailCorp NSW, a statutory authority, spent $420,000 defending the claim.

High cost on several levels

Cost is a factor for everyone contemplating litigation. In a discrimination claim, there’s the cost of legal advice (which often includes a barrister and a solicitor), paying for expert medical and psychological reports, and preparing court documents in anticipation of litigation. Then there’s the time away from work during the hearing. Not to mention the emotional cost and stress of dealing with a trial, and the overall impact it has on life that can’t be quantified.

These factors are compounded in discrimination claims in two distinct ways. Discrimination claims are notoriously difficult to prove and are often unsuccessful (which is why most complainants settle or withdraw their claim before it gets to court).

Compensation awards are low and often don’t cover legal fees. A complainant can be left out of pocket, even if they win. Complainants in Western Australia and NSW are faced with caps on damages awards of $40,000 and $100,000, respectively.

I interviewed a barrister many years ago who recalled a client who was awarded $2500 in compensation and $3500 for costs because the respondent had unnecessarily prolonged the trial. The barrister said that since their client received both amounts, they “broke even” because they then had enough money to cover their legal fees. Another barrister had clients who had mortgaged their home or borrowed money to fund their case.

Additional modifications needed

The government's decision to change the way costs are awarded in all federal discrimination claims is a long-awaited positive step towards reforming discrimination laws, but it’s not the end of the story.

The federal courts are still an intimidating place for someone to find themselves in, especially compared to the Fair Work Commission or state and territory civil tribunals that are designed to be less technical and formal, and more “user-friendly” than traditional courts.

Read more: Women employees should expect more from the law when they’re pregnant

In its reform proposal for federal anti-discrimination laws, the Australian Human Rights Commission recommended introducing an intermediate process between conciliation (which the commission provides as a compulsory first step) and litigating in the federal courts. This could be in the form of a tribunal, or the commission itself could assume a hearing function.

The next stage of the reform process should be to consider additional modifications that would improve the process for both complainants and respondents, strengthening the protections from discrimination.