Victorian Supreme Court awards damages for business-related losses "in consequence of" racial discrimination

Obudho v Patty Malones Bar Pty Ltd [2017] VSC 28 (9 February 2017)

Summary

In the recent appeal decision of Obudho v Patty Malones Bar Pty Ltd [2017] VSC 28 (9 February 2017), the Victorian Supreme Court clarified the meaning of "direct discrimination" and "indirect discrimination" under the Equal Opportunity Act 2010 (Vic) (the EO Act) and outlined the correct approach for assessment of damages under the EO Act. The Court held that for "direct discrimination" to be established there is no requirement fora nexus in the form of some direct contact between the discriminator and the victim of discrimination. Accordingly, the cancellation by Patty Malones Bar of an African music themed event on the basis of the race of prospective patrons constituted direct discrimination in breach of the EO Act, despite the fact that Patty Malones did not know the identities of individual attendees or have any direct contact with them. In its assessment of damages under the EO Act, the Court held that the phrase "in consequence of the contravention" should be interpreted according to its ordinary meaning. On that basis, the Court awarded compensation to Antony Obudho for his economic and non-economic losses as the organiser of the event, despite the fact that Patty Malones had not had any direct dealings with Mr Obudho and did not have any information about his race or ethnicity.

Facts

The Appellant, Mr Obudho, is a man of African origin who performs under the name "DJ Kwenda" and operates a business that organises and promotes African-themed events. In 2011, Mr Obudho's wife and business partner, Kylie Steponavicius, made a booking with Patty Malones Bar Pty Ltd (Patty Malones) to hire a room at Inflation Nightclub in Melbourne (Inflation) for an event.

Five days before the event was to be held, an employee of Patty Malones contacted Ms Steponavicius to cancel the booking, after learning that the event had an African music theme and would be called "Africa Fest". Patty Malones asserted that the event was cancelled because guidelines developed by the Melbourne Licensees' Forum (a voluntary group of licensees and representatives from the City of Melbourne and Victoria Police) suggested that police should be notified and additional security should be arranged where "culturally specific" events were to be held.

Mr Obudho and three prospective patrons of the event, who are all of African ethnicity, brought an application in the Victorian Civil Administrative Tribunal under the EO Act on the basis that Patty Malones had cancelled the booking because most people who would attend the "Africa Fest" were of African origin. They alleged that this treatment amounted to direct discrimination by refusing to provide services on the basis of race, in breach of section 44 of the EO Act. Mr Obudho sought compensation for economic loss in the form of lost profits for the event, and non-economic loss for stress, personal upset and humiliation. The other applicant's did not seek any compensation.

Decision at first instance

Before the Tribunal, Patty Malones asserted that it was protected from any adverse findings of discrimination because its decision to cancel the event was authorised by the Liquor Control Reform Act 1998 (the LCR Act), which provides that a person may discriminate if the discrimination is necessary to comply with, or is authorised by, an Act other than the EO Act. The Tribunal rejected this, finding that it was not a requirement of the LCR Act that the guidelines be complied with and the LCR Act did not authorise discrimination on the basis of race. In any case, the Tribunal found that when Patty Malones discovered that the event would be African music themed, it still would have had time to make the notifications recommended by the guidelines in advance of the event.

The Tribunal found that Patty Malones had directly discriminated against the applicants. The Tribunal held that the contravention was the refusal of services to the applicants as prospective patrons of the event because of their race. The Tribunal characterised the relevant services that would have been provided as, among other things, entry to Inflation, access to the Africa Fest and enjoyment of music, the bar, and related facilities.

However, Mr Obudho was the only applicant who made a claim for compensation before the Tribunal, for economic and non-economic losses he sustained as the organiser of the cancelled event. The Tribunal held that Mr Obudho had failed to demonstrate that Patty Malones had discriminated against him as the organiser of the event on the basis of his race. Relevantly, the parties agreed that at the time of the booking and its cancellation, Patty Malones had only dealt with Ms Steponavicius and did not know that Mr Obudho was of African origin. As a result, Mr Obudho could not claim compensation for losses he suffered as the organiser of that event.

Decision on appeal

Mr Obudho appealed to the Supreme Court of Victoria. Patty Malones cross-appealed on various grounds, including that it did not know or personally deal with any of the potential patrons of Africa Fest, and therefore could not have engaged in direct discrimination against them.

Justice Emerton upheld Mr Obudho's appeal, dismissed the cross-appeal and awarded Mr Obudho compensation of $6,000 for his lost profits from the cancelled event and $6,000 for his non-economic loss.

Justice Emerton held that the Tribunal had misidentified the relevant contravention of the EO Act. The relevant discriminatory conduct was not the denial of services by Patty Malones to prospective attendees. Had Mr Obudho or any of the other applicants attended a generic event at Inflation, there was no evidence that they would have been denied entry or use of Inflation's facilities. Rather, the discriminatory conduct was the cancellation of the Africa Fest, and it was this contravention for which the applicants should have been compensated.

Justice Emerton also held that the Tribunal had misconstrued the test for determining whether Mr Obudho should be compensated for his economic losses flowing from the cancellation of the event, by focussing on the capacity in which Patty Malones had discriminated against him (organiser or prospective patron), rather than asking whether Mr Obudho had suffered loss as a result of the cancellation of the event. The measure of damages is to be governed by the language of the EO Act. Section 125(a)(ii) of the EO Act provides that the Tribunal may order compensation "for loss, damage or injury suffered in consequence of the contravention". Justice Emerton interpreted those words according to their ordinary dictionary meaning and concluded that nothing other than the cancellation of the event contributed to Mr Obudho's loss. Since that cancellation contravened the EO Act, it logically followed that Mr Obudho should be compensated for all of the consequences of that contravention, including his lost profits as organiser of the event.

Her Honour dismissed Patty Malones' cross-appeal, finding that the grounds advanced were generally without merit. In relation to Patty Malones' claim that it could not have directly discriminated against the Appellants because it did not know anything about them as individuals and did not have any direct contact with them, her Honour rejected the suggestion that direct discrimination requires unfavourable treatment be directed at a particular person, or that there must be a direct contact or 'nexus' between the discriminator and the victim. Under the EO Act, it was sufficient that Patty Malones knew that many people who attended the Africa Fest would share a similar attribute (race) and that it had discriminated against that group on the basis of their race. Justice Emerton noted that acceptance of the argument advanced by Patty Malones would have led to an absurd result in which direct discrimination would occur if a patron was personally told "You can't come into my club because you're African", but would not occur if a sign was displayed to the world at large saying "No Africans admitted".

Commentary

This case confirms the requirements for "direct" and "indirect" discrimination and highlights that those who engage in discriminatory conduct may be exposed to claims for compensation by a wide range of people affected by the discrimination, and for a wide range of losses suffered as a consequence of the discrimination. Ordinarily, compliance with industry guidelines and conventions will provide no protection from the consequences of a contravention of the EO Act. The decision provides a reminder to businesses that the EO Act is wide in scope and highlights that where discriminatory conduct is directed at a group of people with a similar attribute, the number of people affected and the scope of their potential losses may be unknowable by the discriminator at the time of the conduct.

The full text of the decision can be found here.

Philip Marquet is a lawyer at Allens.

Jaime McKenzie is a Senior Associate at Allens.