Murtagh v Taylor (EOD)

[2005] NSWADTAP 18

Appeal Panel - Internal

CITATION:	Murtagh & anor v Taylor (EOD) [2005] NSWADTAP 18
PARTIES:	FIRST APPELLANTS Tina Murtagh and Darren Fenson FIRST RESPONDENT Teresa Taylor SECOND APPELLANT Teresa Taylor SECOND RESPONDENTS Tina Murtagh and Darren Fenson
FILE NUMBER:	049052, 049051
HEARING DATES:	22/03/2005
SUBMISSIONS CLOSED:	03/22/2005
DATE OF DECISION:	05/02/2005
DECISION UNDER APPEAL:	Murtagh & Anor v Taylor [2004] NSWADT 271
BEFORE:	Chesterman M - ADCJ (Deputy President); Britton A - Judicial Member; Bolt M - Non Judicial Member
CATCHWORDS:	leave to extend to the merits - procedural fairness - statutory interpretation
MATTER FOR DECISION:	Principal matter
FILE NUMBER UNDER APPEAL:	041058
DATE OF DECISION UNDER APPEAL:	11/30/2004
LEGISLATION CITED:	Anti-Discrimination Act 1977 Property, Stock and Business Agents Regulation 2003
CASES CITED:	Carroll v Zielke [2001] NSWADT 146 Caton v Richmond Club Ltd [2003] NSWADT 202 D v Berkeley Challenge Pty Ltd [2001] NSWADT 92 Franks v Marco’s Italian Gourmet Café Pty Ltd [2004] NSWADT 87 Langley v University of New South Wales (1984) EOC 92-018 Murtagh & Anor v Taylor [2004] NSWADT 271 Shellharbour Golf Club v Wheeler [1999] NSWSC 224 Tu v University of Sydney (No 2) (EOD) [2002] NSWADTAP 25 University of New South Wales v Moorhouse (1974-75) 133 CLR 1 Webb v Newcastle Hire Cars Pty Ltd [2004] NSWADT 142 Y v V & X [2003] NSWADTAP 44
REPRESENTATION:	FIRST APPELLANTS & SECOND RESPONDENTS D Hillard, solicitor, A Davis, solicitor FIRST RESPONDENT & SECOND APPELLANT G Casey, solicitor
ORDERS:	1. Both appeals are dismissed; 2. Unless costs are applied for within 28 days of the date of these reasons, there will be no order for costs in either appeal.

1 In these reasons, we set out our decisions on two appeals. One of them, which we call ‘the principal appeal’ (file 049052), raises issues of liability under the Anti-Discrimination Act 1977. In a second appeal (file 049051), the issue raised is one of costs.

THE PRINCIPAL APPEAL

Factual aspects

2 The principal appeal concerns the circumstances in which the owner of a residential property may be liable for unlawful discrimination on the part of a real estate agent who has been retained by the owner to find tenants for the property.

3 The Appellants, Ms Tina Murtagh and Mr Darren Fenson, applied to the Tribunal for an order substantiating a complaint they had made to the Anti-Discrimination Board, to the effect that the Respondent, Ms Teresa Taylor, was vicariously liable for discriminatory conduct by Mr John Barton, a real estate agent whom she had instructed. They also sought an order that Ms Taylor should pay damages to them on account of distress that they had suffered and expenses that they had incurred.

4 In the decision under appeal (Murtagh & Anor v Taylor [2004] NSWADT 271), the Tribunal dismissed the application. Its findings, so far as relevant to the principal appeal, were as follows.

5 In May 2003, Ms Taylor asked Mr Barton to obtain tenants for her four-bedroom rental property in Young. During June 2003, Ms Murtagh and Mr Fenson, a de facto couple who have six children, asked him more than once if they could rent the property. He refused on each occasion, saying that the owner did not want tenants with children or pets. On 28 June 2003, the property was let to other tenants by another agent.

6 Ms Murtagh and Mr Fenson claimed that Mr Barton’s refusal to let it to them caused them distress and financial loss. In their application to the Tribunal, Mr Barton’s company, John R Barton Pty Limited was named as a respondent. They subsequently settled this claim with him, but proceeded with their claim against Ms Taylor.

7 The Tribunal found that Mr Barton’s refusal to let Ms Taylor’s property to Ms Murtagh and Mr Fenson on the ground that they had children was discrimination on the basis of age, as prohibited by s 49ZYA(1) and s 49ZYO(1) of the Anti-Discrimination Act 1977 (‘the AD Act’). It found also that Ms Taylor did not instruct him to refuse to let the property to families with children, and indeed that she did not know that he had refused to let it to Ms Murtagh and Mr Fenson on the ground that they had children.

8 The Tribunal summarised in the following paragraphs of its decision ([11, 12, 42, 43, 46]) its findings as to when and how Ms Taylor found out about Mr Barton’s rejection of Ms Murtagh and Mr Fenson’s application to rent the property, and what she then did:-

11 In her evidence, Ms Taylor says that she was only made aware of Ms Murtagh and Mr Femsom’s interest in her property in September 2003. Mr Barton had phoned Ms Taylor and forwarded a letter to her with suggested answers to questions being asked by the Anti-Discrimination Board. The letter, dated 17 September 2003, included the following:
Q3. Did you provide instructions to Mr. Barton that he was to rent the property at 12 (sic) Normoyle Crescent Young to a qualify (sic) tenant with no children or pets?

A. I advised Mrs. Elizabeth Barton (one principal of the Barton Agency) I required a good tenant with no children or pets as I had only purchased the house a year ago and recently repainted and recarpeted the house, I required good tenants with references.

12 Ms Taylor attests that she was concerned about this proposed response because at no time had she spoken to Elizabeth Barton about the lease of the property. She forwarded the correspondence to her solicitor….

42 Ms Taylor’s position was complicated by the correspondence she received from Mr Barton where he suggested answers to her that she provide to the questions the Anti-Discrimination Board was asking as part of their inquiry. His suggested answers to Ms Taylor would have seen her say that she had directed the age discrimination. This was not the case and she sought independent legal advice upon receiving the letter from Mr Barton.

43 By the time Ms Taylor had found out about Mr Barton’s conduct, the property had been rented. This does not sever her liability (see Y v V and X (EOD) [2003] NSWADTAP 44 where the Appeal Panel rejected the proposition that the operation of s.53(1) was dependant upon a continuing relationship) but it meant that she could not take the step of withdrawing it from being listed with Mr Barton….

46 Again, Ms Taylor only became aware of Mr Barton’s behaviour after the Anti-Discrimination Board began investigating the complaint by Ms Murtagh and Mr Fenson. At that time, Ms Taylor received a letter from Mr Barton suggesting that she answer the questions of the Anti-Discrimination Board that would have clearly implicated her as responsible for issuing those directions. She found herself in a situation where she felt that she could not trust the agent and immediately sought legal advice….

9 During the hearing of the appeal, Mr Casey, who appeared for Ms Taylor, drew our attention to a statement in her written evidence that, on subsequently receiving a telephone call from Mr Barton, she simply said to him that she had put his letter into the hands of her solicitors. She was not cross-examined in the hearing at first instance.

10 Mr Hillard, who with Ms Davis appeared for Ms Murtagh and Mr Fenson, drew our attention to a letter dated 7 October 2003 from Ms Taylor’s solicitors to the Anti-Discrimination Board. It was claimed in this letter that the complaint against Ms Taylor made to the Board by Ms Murtagh and Mr Fenson was ‘vexatious’ and that costs would be applied for.

11 None of the matters outlined in the two preceding paragraphs was mentioned in the Tribunal’s judgment.

The Tribunal’s decision

12 Ms Murtagh and Mr Fenson argued to the Tribunal that Ms Taylor should be held vicariously liable for Mr Barton’s discriminatory conduct by virtue of s 53(1) and s 109 of the AD Act. These provisions are as follows:-

53 Liability of principals and employers

(1) An act done by a person as the agent or employee of the person’s principal or employer which if done by the principal or employer would be a contravention of this Act is taken to have been done by the principal or employer also unless the principal or employer did not, either before or after the doing of the act, authorise the agent or employee, either expressly or by implication, to do the act….

109 Proof of exceptions

Where by any provision of this Act or the regulations, conduct is excepted from conduct that is unlawful under this Act or the regulations or that is a contravention of this Act or the regulations, the onus of proving the exception in any inquiry lies upon the respondent.

13 Ms Murtagh and Mr Fenson also argued that Ms Taylor could not rely on s 53(3) of the AD Act as a defence. This subsection states:-

(3) Despite subsection (1), a principal or an employer is not liable under that subsection if the principal or employer took all reasonable steps to prevent the agent or employee from contravening the Act.

14 The Tribunal held, at [31], that the relationship between Ms Taylor and Mr Barton was a relationship of principal and agent for the purposes of s 53(1).

15 Having reviewed various cases interpreting s 53(1), the Tribunal held however at [48] that Ms Taylor was not liable under this provision, having satisfied the onus imposed on her by s 109 to prove the relevant matters. Under the heading ‘Conclusions’, it recorded its finding in the following terms:-

Ms Taylor did not either expressly or impliedly authorise Mr Barton to refuse to provide accommodation to Ms Murtagh and Mr Fenson on the basis that they had children either before or after his actions.

16 At [48], the Tribunal also held that Ms Taylor had satisfied the requirements of s 53(3). It said: ‘In the circumstances of this case, the Tribunal would also find that Ms Taylor took all reasonable steps to prevent Mr Barton from contravening the Act.’

The interpretation and application of s 53(1) of the AD Act

17 On behalf of the Appellants, Ms Murtagh and Mr Fenson, Mr Hillard challenged the Tribunal’s interpretation and application of s 53(1) of the AD Act. He relied on the following statement of principle in the judgment of Studdert J in Shellharbour Golf Club v Wheeler [1999] NSWSC 224 at [33]:-

However, as I construe s 53(1) once it was established that the misconduct occurred in the workplace environment and the offender was ostensibly at the time acting in the discharge of responsibilities as agent for his principal, what he did was deemed to be done by his principal, unless the conduct was unauthorised by the principal either expressly or by implication.

18 As formulated in his written submissions, Mr Hillard’s contention was that this passage required a principal such as Ms Taylor ‘to have unauthorised the discriminatory conduct of her agent in order to avoid vicarious liability’. But although the Tribunal, he said, had referred at [30] to this test, citing the relevant paragraph in the judgment of Studdert J, it had gone on to state and apply a different test, which was whether or not Ms Taylor had authorised this conduct of Mr Barton. This change of approach was apparent in several passages in its judgment – Mr Hillard cited paragraphs [29], [34], [38] and [39] – and from the conclusion that it set out at [48] (which we have quoted above at [15]).

19 To support his contention that this statement by Studdert J must be treated as authoritative, Mr Hillard pointed to four decisions of the Tribunal in which it had been adopted. These were D v Berkeley Challenge Pty Ltd [2001] NSWADT 92 at [75]; Caton v Richmond Club Ltd [2003] NSWADT 202 at [135]; Franks v Marco’s Italian Gourmet Café Pty Ltd [2004] NSWADT 87 at [32]; and Webb v Newcastle Hire Cars Pty Ltd [2004] NSWADT 142 at [128]. He referred also to a passage in the first of these cases (at [78]), where the Tribunal stated that discriminatory conduct by an employee, in breach of the AD Act, will be taken to have been done by his/her employer unless ‘it can be established, that the conduct was unauthorized either expressly or by implication’.

20 Mr Hillard drew our attention also to paragraphs [56 – 58] in the judgment in Shellharbour, which contain further elaboration of the term ‘authorise’:-

58… The meaning may differ depending upon the statutory provision in which it is found. Thus in University of New South Wales v Moorhouse (1974-75) 133 CLR 1 the High Court had occasion to consider the word “authorise” in the setting of s 36 of the Copyright Act , 1968. In this context Gibbs J said at 12-13:
“The word ‘authorize’, in legislation of similar intendment to s 36 of the Act, has been held judicially to have its dictionary meaning of ‘sanction, approve, countenance’: Falcon v Famous Players Film Co. [1926] 2 KB 474 at 491’ Adelaide Corporation v Australasian Performing Right Association Ltd (1928) 40 CLR 481 at 489, 497.. It can also mean ‘permit’, and in Adelaide Corporation v Australasian Performing Right Association Ltd (1928) 40 CLR 481 ‘authorize’ and ‘permit’ appear to have been treated as synonymous. A person cannot be said to authorize an infringement of copyright unless he has some power to prevent it: Adelaide Corporation v Australasian Performing Right Association Ltd (1928) 40 CLR at 497-498, 503. Express or formal permission or sanction, or active conduct indicating approval, is not essential to constitute an authorization; ‘Inactivity or “indifference, exhibited by acts of commission or omission, may reach a degree from which an authorization or permission may be inferred”’: Adelaide Corporation v Australasian Performing Right Association Ltd (1928) 40 CLR at 504. However, the word ‘authorize’ connotes a mental element and it could not be inferred that a person had, by mere inactivity, authorized something to be done if he neither knew nor had reason to suspect that the act might be done. Knox CJ and Isaacs J referred to this mental element in their dissenting judgments in Adelaide Corporation v Australasian Performing Right Association Ltd. Knox CJ (1928) 40 CLR at 487 held that indifference or omission is ‘permission’ where the party charged (amongst other things) ‘knows or has reason to anticipate or suspect that the particular act is to be or is likely to be done’. Isaacs J apparently considered that it is enough if the person sought to be made liable ‘knows or has reason to know or believe’ that the particular act of infringement ‘will or may’ be done.”
57 Jacobs J, with whose judgment McTiernan A-CJ agreed, gave to the word authorise, at p 20-21, an equally broad interpretation.

58 The decision in University of New South Wales v Moorhouse has been much followed in copyright cases and the broad concept of “authorise” reflected in the above passage has been frequently applied for the purposes of statutory construction under the copyright legislation. For present purposes, bearing in mind the nature of the Anti-Discrimination Act, I consider that the word “authorise” should be given an equally broad meaning to that given to the word in the copyright cases. Accordingly, it seems to me that for the purposes of s 53 the word “authorise” embraces “sanction, approve, countenance and permit”. Permission may be inferred from inactivity and indifference where the person sought to be made liable is aware that some particular behaviour may occur.

21 Mr Hillard also relied on paragraph [74], which is as follows:-

74 In my opinion the sub-section imposes the requirement upon the principal to prove that it did not authorise the agent at any time. It does not necessarily suffice for the principal to prove, after the event, conduct on its part inconsistent with the conferring of authority on the agent to do what he had done. For example, in a case where a principal permitted sexual harassment of a type the subject of a subsequent complaint to be committed by its agent, it could not escape liability under s 53(1) by the device of a decision made only after the event that such conduct was not authorised.

22 At the hearing, in response to questions from the Appeal Panel, Mr Hillard explained that this requirement that a principal or employer must ‘unauthorise’ the relevant discriminatory conduct by his or her agent or employee called for positive steps to be taken. A principal or employer endeavouring to prove that the conduct had been ‘unauthorised’ by him or her after it had occurred must show that he/she had made it clear that the conduct was not authorised.

23 Mr Hillard implicitly conceded that nothing done by Ms Taylor before Mr Barton’s discriminatory conduct could be said to have amounted to authorisation of it. But he claimed that she could and should have ‘unauthorised’ the conduct of Mr Barton after the event by, for example, indicating to Mr Barton himself, or to the Anti-Discrimination Board, that it was unauthorised conduct, which she condemned. She could have conveyed this message, with an apology, to Ms Murtagh and Mr Fenson. In fact, she did none of these things.

24 On behalf of Ms Taylor, Mr Casey argued that her actions (a) in obtaining advice from her solicitor regarding the letter of 17 September 2003 that Mr Barton sent to her and (b) informing Mr Barton of this did in fact constitute positive steps by which she ‘unauthorised’ his conduct. She showed in these ways that she did not accept the version of events that he had set out in the letter.

25 Mr Casey submitted also that in determining whether Ms Taylor had established absence of authorisation as required by s 53(1) it was essential to bear in mind the differences between the relationships of principal-agent and employer-employee. Employers, he said, had continuing control over their employees whereas principals did not have control of this nature over their agents.

26 In our opinion, the interpretation of s 53(1) urged upon us by Mr Hillard is incorrect, in so far it maintains that a principal or employer must prove that he or she took positive steps to ‘unauthorise’ the discriminatory conduct in question after it occurred.

27 We agree that paragraph [33] of the judgment in Shellharbour, read in isolation, might seem to convey this meaning, even though its use of ‘unauthorise’ as a transitive verb is unusual, to say the least. On a cursory examination, this usage is not authorised by any dictionary. But the important consideration is that the judgment contains several other indications that Studdert J did not intend to impose on a principal or employer the obligation of proving that he or she had taken positive steps by way of ‘unauthorisation’ of the conduct after it had occurred.

28 The clearest of these indications is a statement by his Honour at [51]:-

51 In considering this ground however it is important to bear in mind that the onus was upon the respondent to prove a negative and as the present case illustrates this was not an easy task. The appellant was required to satisfy the Tribunal by evidence that it had not authorised the second respondent to do and say what he did, either expressly or by implication.

29 The interpretation of s 53(1) advocated by Mr Hillard does not require a respondent principal or employer to ‘prove a negative’. It requires proof of one or more positive steps constituting the act of ‘unauthorising’.

30 In addition, the judgment in Shellharbour contains quotations from two earlier cases, in both of which the test to be satisfied under s 53(1) is said to be that the principal or employer must not have authorised the discriminatory conduct, either or before it occurred, not that he or she must have taken steps to ‘unauthorise’ it.

31 The first of these is at paragraph [37]:-

Mr Neil referred to the decision of the Court of Appeal in Langley v University of New South Wales (1984) EOC 92-018. This was a case in which P complained of discrimination against her by O, the university being the employer of both P and O. There was no evidence that the university authorised O to do that which was the subject of the complaint. Hope JA, with whose judgment Hutley JA and Glass JA agreed, said at 75-466:

“I may say that the respondent is the University, the employer both of Mr O’Neill and of Ms Langley, and as such may be liable for any discriminatory acts in breach of the Act by Mr O’Neill in respect of Ms Langley, but only if the University either before or after the doing of the relevant acts authorised Mr O’Neill, either expressly or by implication, to do those acts: see sec. 53. I will deal with the matter disregarding the provisions of that section, but I may say there is no evidence which, in my opinion, establishes that the University at any time, expressly or by implication, authorised Mr O’Neill to use the appellation ‘Mrs’ to Ms Langley.”

32 Secondly, at [53], Studdert J noted that in Samuels Real Estate v Lamb (1998) EOC 92-923, James J had upheld a submission (at 78,148) in the following terms:-

… that the question which arises under s 53…is whether an employer or principal has expressly or impliedly authorised the doing of the act by its agent or employee which contravenes the act, not whether the employer or principal has put in place an effective Anti-Discrimination policy.

33 Furthermore, at [67], Studdert J defined the issue to be resolved in the case before him as whether the appellant employer had proved that the discriminatory conduct of its employee, the second respondent, ‘was not authorised either expressly or by implication’. At [70], he said that ‘it was for the appellant to prove that it had not authorised the second respondent to say and to do what he did’.

34 None of these formulations that Studdert J quoted from earlier cases or provided in his own terms incorporates a requirement that, after the event, a principal or employer must ‘unauthorise’ the discriminatory conduct through positive action of the type that, in Mr Hillard’s submission, Ms Taylor should have taken. These formulations in fact follow very closely the language of s 53(1).

35 We have examined the four Tribunal decisions, listed above at [19], in which the Tribunal quoted the passage in Shellharbour at [33] which incorporates the phrase on which Mr Hillard relied – viz ‘unless the conduct was unauthorised by the principal either expressly or by implication’. In none of them did the Tribunal expressly interpret this phrase as requiring employers or principals to prove that they had taken positive action by way of ‘unauthorisation’ after the event.

36 Instead, three of these four decisions contain dicta to the effect that the task placed on employers and principals is to prove only that they did not authorise the relevant conduct, either before or after it occurred. The relevant passages are as follows: D v Berkeley Challenge Pty Ltd [2001] NSWADT 92 at [89]; Caton v Richmond Club Ltd [2003] NSWADT 202 at [117], [136] and [140]; and Webb v Newcastle Hire Cars Pty Ltd [2004] NSWADT 142 at [127]. We would refer also to Y v V & X [2003] NSWADTAP 44 at [17].

37 In the present case, the statements of principle to be found in the Tribunal’s judgment convey the same meaning, and are in virtually the same terms, as the statements that, in our opinion, reflect the true intent of the Shellharbour judgment.

38 For this reason, we reject Mr Hillard’s contention that the Tribunal erred in law in its interpretation of s 53(1) of the AD Act.

39 Mr Hillard’s submission that Ms Taylor could and should have conveyed her disapproval of Mr Barton’s conduct to one or more relevant parties, such as Mr Barton himself, the Anti-Discrimination Board, Ms Murtagh and Mr Fenson, was based on his contention that in order to avoid liability she was required to ‘unauthorise’ this conduct. As we understood his argument, he did not claim that steps such as these would be required of her if the Tribunal’s interpretation of s 53(1), which we have endorsed, was correct.

40 In any event, there was in our view sufficient evidence to support the Tribunal’s finding, pursuant to this interpretation, that she did in fact establish lack of authorisation. As the Tribunal indicated at [40], Ms Murtagh and Mr Fenson did not allege that Ms Taylor’s behaviour before Mr Barton’s discriminatory conduct occurred amounted to authorisation of it. If, having found out about it afterwards, she had given the answers that he suggested to the Anti-Discrimination Board (see [8] above), she could not deny having authorised his conduct. But she took legal advice on how she should respond to his letter, and at no time did she suggest to Mr Barton or the Board, or indeed to anyone else, that she endorsed what he had written. The later assertion by her solicitors that the complaint made to the Board by Ms Murtagh and Mr Fenson was ‘vexatious’ did not, as we view it, bear at all on the issue of authorisation.

41 In its judgment (Murtagh & Anor v Taylor [2004] NSWADT 271 at [38], [41] and [44]), the Tribunal made some observations, with which we generally agree, on the differences between principals and employers so far as the application of s 53(1) is concerned. We would add that the important features of the principal-agent relationship with which this case is concerned are that it was confined to the single exercise of finding tenants for Ms Taylor’s house in Young and that it had ceased before she found out about Mr Barton’s misconduct. At this point, she no longer had any capacity to regulate his professional behaviour. In these circumstances, it was evidently open to the Tribunal to find that her decision not to convey disapproval to him, nor indeed to anyone else, fell outside the scope of Studdert J’s proposition in Shellharbour at [58] that ‘Permission may be inferred from inactivity and indifference…’.

42 By contrast, an employer, or indeed a principal who maintains some degree of continuing control over the behaviour of an agent, may be held to ‘authorise’ past discriminatory behaviour merely through raising no objection to it. In this context, ‘inactivity and indifference’ can legitimately be held to convey the implicit message that this behaviour was, and any future behaviour of a similar kind would be, within the range of conduct that was ‘authorised’ by the employer or principal.

43 For these reasons, the Tribunal’s decision on the application and interpretation of s 53(1) of the AD Act contains, in our view, no error of law and is not otherwise susceptible to challenge.

44 This ruling is sufficient to dispose of the principal appeal in Ms Taylor’s favour. But since the correctness of the Tribunal’s ruling that she could also claim the benefit of s 53(3) was canvassed at length in this appeal, we will briefly state our views on this matter.

The interpretation and application of s 53(3) of the AD Act

45 As we have said, s 53(3) provides a defence for principals or employers who would otherwise be liable under s 53(1) if they can prove that they ‘took all reasonable steps to prevent the agent or employee from contravening the Act’.

46 At [46], the Tribunal characterised as ‘reasonable’ Ms Taylor’s decision not to apologise, or to condemn Mr Barton’s conduct, after she received his letter containing his suggested answers to the Anti-Discrimination Board’s questions. It made this ruling in the course of determining whether s 53(3) provided her with a defence. We would observe, however, that s 53(3) is only concerned with steps taken by an employer or principal before the discriminatory conduct in question, with a view to preventing it.

47 At [47], the Tribunal considered this issue of the steps that should have been taken, and that in this case were taken, by way of prevention:-

47 Nor does the Tribunal think it is reasonable that before a principal gives their business to a real estate agent, they should have to specifically check that the agent follows codes of conduct that bind them to act lawfully, train their staff on how to act lawfully or specifically instruct the agent to follow anti-discrimination law (and indeed any other laws they are legally required to follow). In the Tribunal’s view, unless there is specific evidence before the principal at the time of engaging the real estate agent that shows or implies to the principal that a particular agent does not, or will not, act lawfully, a principal should be able to presume that the real estate agent will at all times act lawfully on their behalf, in much the same way that one would assume that a solicitor engaged to act on one’s behalf would act lawfully. A principal hires a real estate agent for the agent’s expertise – this should include a presumption that the real estate agent acts within the laws that govern their profession. In this case, there was no evidence before Ms Taylor or the Tribunal that Mr Barton had a tendency to, or would on her behalf, act unlawfully.

48 In the paragraph immediately following, the Tribunal recorded its finding that Ms Taylor took ‘all reasonable steps to prevent Mr Barton from contravening the Act’.

49 Mr Hillard argued that in both of these paragraphs, which provided the basis for the Tribunal’s ruling on s 53(3), it failed to address the precise question required by the subsection, which is whether the employer or principal has taken ‘all reasonable steps’ (our emphasis) to prevent contravention of the Act. Instead, he said, the Tribunal simply considered whether Ms Taylor had acted reasonably.

50 In support of his submission that employers or principals claiming the benefit of s 53(3) must show that they took all reasonable steps, Mr Hillard referred us to various authorities. We need only cite one of them. In Carroll v Zielke [2001] NSWADT 146 at [183], the Tribunal said: ‘The test in s 53(3) is not only that the steps which were taken were reasonable; it is that all reasonable steps which could have been taken were taken.’

51 Mr Hillard argued further that there was no evidence of any steps taken by Ms Taylor to prevent Mr Barton’s discriminatory conduct, and that at [49] the Tribunal itself identified ‘reasonable steps’ that Ms Taylor could have taken but did not take:-

49 There are more and more people finding themselves in a situation where they make additional income from rental properties. Although Ms Taylor was able to avoid liability in this case, her experience is a timely reminder of the responsibility of landlords to ensure that their agents comply with the Anti-Discrimination Act 1977 . None of the standard management contracts that were submitted by the agents Ms Taylor had approached contained provision that the agent be bound by the principles of anti-discrimination. The Property, Stock and Business Agents Regulation 2003 , which only came into force in September 2003 now allows landlords to assume that agents are not likely to discriminate. Even so, given the rise in number of small property investors, the fact that their relationship with the person renting their property on their behalf attracts vicarious liability, should be cause for caution when selecting an agent and should be cause for standard management contracts to be amended to include a provision that assures the principal that the agent will at all times act lawfully.

52 Under Clause 11 and Schedule 1, Clause 1 of the Property, Stock and Business Agents Regulation 2003, estate agents, along with other agents defined in the Regulation, are required to have ‘a knowledge and understanding’ of such laws as are necessary to enable them to exercise their functions lawfully. Anti-discrimination laws are included in a list of types of law that may fall within these provisions.

53 The principal argument made by Mr Casey in response was that it was entirely reasonable for Ms Taylor to assume that a licensed real estate agent would comply with the law. He pointed out that since Ms Taylor had not been cross-examined it was never put to her that she had not taken ‘all reasonable steps’.

54 With regard to the paragraph just quoted from the Tribunal’s judgment (paragraph [49]), he submitted that the Tribunal’s comments on ‘standard management contracts’ were addressed to the agencies responsible for drafting such contracts and did not mean that individual property owners should insist on the insertion of clauses requiring compliance with the AD Act. He submitted also that the Property, Stock and Business Agents Regulation 2003 simply codified the common law regarding compliance by agents, and reflected ‘common sense’.

55 In our judgment, the Tribunal’s formulations (at [45] and [48]) of the requirements of s 53(3) are not open to criticism. But in considering, at [47] and [48], whether Ms Taylor did in fact comply with the subsection, the Tribunal appears not to have taken sufficient account of the specific requirement that all reasonable steps must have been taken. As Mr Hillard contended, the test that it appears to have applied was a different one; namely whether Ms Taylor’s conduct was in all the circumstances reasonable. We agree with Mr Hillard that the terms of [49] lend some support to this reading of the Tribunal’s judgment.

56 On this basis, we conclude that in its application of the test set out in s 53(3) the Tribunal appears to have erred in law. But we do not grant leave to Ms Murtagh and Mr Fenson, pursuant to s 113(2)(b) of the Administrative Decisions Tribunal Act 1997, for the principal appeal to extend to a review of the merits. The reason is that, as we have already indicated, any conclusion that we reached regarding Ms Taylor’s claim to be protected by s 53(3) would not alter the outcome of the principal appeal, which must be dismissed.

THE COSTS APPEAL

The Tribunal’s decision on costs

57 This was an appeal by Ms Taylor against the Tribunal’s rulings, at [50], that there were no ‘special circumstances warranting an award of costs’ within the meaning of s 88 of the Administrative Decisions Tribunal Act and that ‘given the public interest in ensuring test cases be brought to explore the parameters of anti-discrimination law, this is a case in which it would be inappropriate for the Tribunal to award costs’.

58 The Notice of Appeal stated that at the hearing at first instance Mr Casey gave notice of an intention to apply for costs on Ms Taylor’s behalf if she were successful. These rulings on costs by the Tribunal were made, however, without an opportunity being provided her to make such an application or to advance submissions. Mr Hillard did not dispute this account of what happened.

59 We accept Mr Casey’s argument that the Tribunal denied procedural fairness to Ms Taylor through determining that no costs should be awarded without providing this opportunity to her. In a number of cases (for example, in Tu v University of Sydney (No 2) (EOD) [2002] NSWADTAP 25 at [35]), the Tribunal has stated that such an opportunity must be provided.

60 On account of this error of law, we grant leave under s 113(2)(b) of the Administrative Decisions Tribunal Act for this appeal on costs to extend to a review of the merits.

The application by Ms Taylor for an award of costs

61 The application made by Ms Taylor was that her costs at first instance should be paid, not by Ms Murtagh and Mr Fenson, but by Clayton Utz, their solicitors.

62 The grounds that Mr Casey advanced in support of this application were these. The amount paid by Mr Barton to Ms Murtagh and Mr Fenson on settlement of their claim against him was $6,000. Before the hearing at first instance, Ms Davis, on their behalf, indicated to Mr Casey in a ‘without prejudice’ telephone conversation that they would be prepared to settle their claim against Ms Taylor for $2,000. Mr Casey rejected this offer of settlement. At the hearing, which took place at Young, it was submitted on behalf of Ms Murtagh and Mr Fenson that the appropriate range of compensation was $6,000-$8,000. This meant, in Mr Casey’s submission, that the total amount that could actually be ordered against Ms Taylor could not exceed $2,000. Yet Clayton Utz persisted with the claim, which he described as ‘dubious’. Moreover, they incurred travel and accommodation expenses for two solicitors to go from Sydney to Young for the hearing. In a letter to Mr Casey’s firm dated 24 August 2004 (about one month before the hearing), Clayton Utz, who had resisted the choice of Young as the venue, said that these expenses would be included in a claim of costs if their clients were successful. They quoted a figure of $1,222.41. It followed, Mr Casey argued, that if these expenses were charged to their own clients, the maximum net amount that the clients could gain from the hearing would only be $777.59. The outcome, in his submission was that even though Clayton Utz were acting pro bono in the case, they were maximising the costs of hearing the case in Young by persisting in sending two solicitors there from Sydney. An order for costs should, he said, be made against them on account of this unprofessional conduct on their part.

63 In response, Mr Hillard strongly denied that the conduct of Clayton Utz had been unprofessional or that they had tried to maximise costs, given particularly that they had represented their clients pro bono and had not sent them any bill of costs. The travel expenses were, he said, the subject of an application to the Law Society of NSW’s Pro Bono Disbursement Fund. He submitted that the fact that a settlement offer of $2,000 had been made did not in any way signify that Ms Murtagh and Mr Fenson valued their claim at such a low figure. He pointed out that there had been no counter-offer from Ms Taylor. He indicated that the submission made to the Tribunal regarding compensation had been for an amount within the range $6,000-$10,000 for each of his clients, not, as Mr Casey had said, within the range $6,000-8,000 for the two of them together. He pointed out that Clayton Utz had endeavoured to have the case determined on the papers, in order to reduce costs, but had acknowledged that since Ms Murtagh and Mr Fenson had been required for cross-examination a hearing had been necessary.

64 In our judgment, there is no basis for making a costs order against Clayton Utz. Our reasons are as follows.

65 We note first that, contrary to what the Tribunal said in its judgment, the statutory provision governing costs in this case (at least at first instance) is s 114 of the AD Act, not s 88 of the Administrative Decisions Tribunal Act. With one exception that is not relevant here, s 114 provides for each party to pay his or her own costs unless ‘in a particular case’ there are ‘circumstances’ that ‘justify’ a costs order.

66 Mr Casey’s claim of unprofessional conduct by Clayton Utz is of a serious nature and therefore must be proved to a high degree of satisfaction. The evidence and submissions that he put forward fall well short of this standard. Once it was evident that a hearing was required, travel and accommodation costs were unavoidable in the circumstances. The amount potentially recoverable from Ms Taylor was not unduly low. It was not clearly established to us that the settlement amount of $6,000 had in fact been paid by Mr Barton at this stage.

67 Furthermore, we do not see why an assertion that travel expenses are excessive provides a ground for Ms Taylor to claim an order for costs when, as matters have turned out, these expenses will be either paid out of the Law Society’s Pro Bono Disbursement Fund or charged to Ms Murtagh and Mr Fenson.

68 Mr Casey’s arguments included an assertion that the claim against Ms Taylor was ‘dubious’. We take this to imply that it lacked merit. We reject this assertion. As the present judgment has shown, the question whether she was vicariously liable for the discriminatory conduct by Mr Barton was far from straightforward.

69 For these reasons, we dismiss the appeal by Ms Taylor against the Tribunal’s decision that no costs should be awarded.

ORDERS

1. Both appeals are dismissed.

2. Unless costs are applied for within 28 days of the date of these reasons, there will be no order for costs in either appeal.