The Federal Court awards increased damages on appeal for employee discriminated against due to his age.

Mr Gutierrez v MUR Shipping Australia Pty Limited [2023] FCA 399 

Summary

Alex Gutierrez successfully brought proceedings against MUR Shipping (‘MUR’) for breaches of the Age Discrimination Act 2004 (Cth). On 4 May 2023, the Australian Federal Court allowed an appeal challenging the damages awarded to Mr Gutierrez by the Federal Circuit and Family Court. The Court found in favour of Mr Gutierrez, substantially increasing his general damages and awarding him damages for economic loss. 

Facts

Mr Gutierrez commenced employment with MUR (then known as SSM Shipping) on 1 August 2003, and signed an employment contract on 13 February 2004.1 His position was Chief Accountant. 

In February 2018, MUR’s Managing Director, Brian Getty, told Mr Gutierrez, then 68, that MUR had a retirement age of 65 and asked him when he would retire. Mr Gutierrez replied that Australia does not have a mandatory retirement age, making him retire based on age was unlawful and that he would give three months’ notice of his retirement. 

In March 2018, Mr Gutierrez had a conversation with Mr Getty, Jason Smith (who would replace Mr Getty as Managing Director in July 2018) and Dorin Fernandes of MUR’s affiliated office in Dubai. Mr Gutierrez was asked to explain his role to Ms Fernandes and later in March, was informed that Ms Fernandes would assume his role. As such, Mr Gutierrez felt compelled to give a retirement date of July 2019. 

On 19 July 2018, Mr Smith informed Mr Gutierrez that his employment contract would end on 31 December 2018. From 1 January 2019, he would be on a new contract to train Ms Fernandes. Mr Gutierrez informed Mr Smith his actions were illegal and left the meeting in distress.  

On 1 August 2018, Mr Gutierrez’s solicitors sent MRU a letter informing them they had repudiated Mr Gutierrez’s employment contract by advising Mr Gutierrez of the 31 December 2018 date and that Mr Gutierrez accepted the repudiation.  

On 1 November 2019, Mr Gutierrez commenced proceedings against MUR in the Federal Circuit and Family Court for breaches of the Age Discrimination Act 2004 (Cth) (‘AD Act’), namely, that he had been discriminated against on the basis of his age, had been constructively dismissed and had suffered a psychiatric injury on the basis of that discrimination. 

At first instance, Judge Driver found, among other matters, that MUR did unlawfully discriminate against Mr Gutierrez and ordered that, inter alia, MUR: 

(1) issue an apology to Mr Gutierrez pursuant to Australian Human Rights Commission Act 1986 (Cth) (‘AHRC Act’) s 46PO(4)(b); and 

 (2) pay Mr Gutierrez general damages of $20,000 pursuant to AHRC Act s 46PO(4)(d). 

Mr Gutierrez appealed Judge Driver’s decision in respect of damages to the Federal Court. He was successful on two grounds: 

(1) incorrect assessment of harm. MUR was ordered to pay Mr Gutierrez general damages of $90,000; and 

 (2) damages were available for economic loss. MUR was ordered to pay Mr Gutierrez damages for economic loss. 

Decision 

Decision of the Lower Court 

The Federal Circuit and Family Court found that MUR unlawfully discriminated against Mr Gutierrez because of his age. Judge Driver found that Mr Gutierrez’s terms of employment were changed to his detriment, contravening s 18(2)(a) of the AD Act, with his employment contract being replaced by a fixed term contract. Further, the Court found that Mr Gutierre had been treated disrespectfully by MUR and was demeaned by being made to train Ms Fernandes. Despite this, Judge Driver found Mr Gutierrez has not suffered any economic loss caused by the discrimination as he chose to resign his employment when there was no need to do so. His Honour awarded $20,000 in general damages for Mr Gutierrez’s hurt feelings, and a mild adjustment disorder that did not prevent him from working. 

Appeal 

Mr Gutierrez did not challenge Judge Driver’s finding of age discrimination. Rather, he appealed the decision in respect of the damages awarded on the following five grounds: 

(1) the award of general damages of $20,000 was manifestly inadequate and affected by errors of fact and law (grounds 1 and 2); 

(2) the primary judge erred in failing to make an award of damages for economic loss (grounds 3 and 4); and 

(3) the primary judge erred in failing to find that MUR had brought about Mr Gutierrez’s termination from his employment because of his age by reference to s 18(2)(c) of the AD Act, either by constructive dismissal or a breach of a work health and safety term in his contract with MUR (ground 5). Mr Gutierrez eventually abandoned this ground. `

Mr Gutierrez sought $300,000 in general damages to compensate for significant psychiatric injury resulting from the discriminatory treatment and $142, 215.56 for economic loss. He was successful on two bases. 

Grounds 1 and 2 

Mr Gutierrez appealed on the basis that the award of $20,000 in general damages was manifestly inadequate and was awarded on the basis of errors of fact and law, including that Mr Gutierrez could continue working despite the discrimination, that he was only suffering from a ‘mild’ adjustment disorder and Judge Driver failed to order MUR to pay damages for economic loss. Additionally, the primary judge erred in considering the seriousness of MRU’s conduct rather than the impact of conduct upon Mr Gutierrez himself.  

In respect of the adjustment disorder, the Federal Court reviewed the medical evidence provided and found that Judge Driver’s finding that Mr Gutierrez could work despite the adjustment disorder, and its characterisation as ‘mild’, was unsupported by the evidence. Rather, the Court found that the adjustment disorder arose entirely from Mr Gutierrez’s termination from MUR, irrespective of who terminated the employment. Ultimately, the Court found that it was the age discrimination which resulted in Mr Gutierrez’s psychiatric illness and inability to work. 

Grounds 3 and 4 

Further, Mr Gutierrez appealed on the basis that the primary judge erred by not awarding damages for economic loss. He submitted that Judge Driver incorrectly concluded no such damages were available due to Mr Gutierrez terminating his own employment. Rather, Mr Gutierrez submitted that he was unable to work due to the discrimination and was therefore entitled to economic loss damages flowing from the harm caused.  

The Court found that the primary judge should have considered that Mr Gutierrez was unable to work because of the age discrimination. The analysis of economic loss arose as a matter of causation from the discrimination and not the termination of his contract, either by Mr Gutierrez or MUR. Accordingly, the Court found that Mr Gutierrez was entitled to damages from economic loss flowing from the age discrimination. The Court also rejected MUR’s submission that Mr Gutierrez failed to mitigate his loss by not continuing work with MUR nor working with his daughter. Mr Gutierrez could do neither due to his condition. 

The Court allowed the appeal and awarded $90,000 in general damages and took the initial view that Mr Gutierrez should be awarded $142,215.56 plus interest for economic loss. 

Commentary

This decision is consistent with recent cases which show an increase in damages being awarded in respect discrimination on the basis of age. The decision serves as a reminder to employers that an employee’s employment can only be terminated for lawful reasons such as an organisational restructure or the employee’s performance. The decision also highlights the fact that Courts are becoming increasingly more willing to recognise the significant harm caused by discrimination. 

This summary was prepared by Catherine O’Keefe and Jordan Bova of Wotton + Kearney.