Barry McCormick v Actech International Pty Ltd

[2021] FWC 9

[2021] FWC 9

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Barry McCormick
v
Actech International Pty Ltd
(U2020/12269)

COMMISSIONER BISSETT MELBOURNE, 5 JANUARY 2021

Application for an unfair dismissal remedy.

[1] On 11 September 2020 Mr Barry McCormick (Applicant) made an application to the Commission seeking relief from unfair dismissal pursuant to s.394 of the Fair Work Act 2009 (FW Act) in relation to the termination of his employment from Actech International Pty Ltd.

[2] The application was subject to conciliation before a Fair Work Commission staff conciliator on 29 September 2020. The Commission’s records indicate that the matter was settled at conciliation and a letter to that effect was sent to parties the same day.

[3] On 16 November 2020 the Commission received the following email from the Applicant’s representative. In that email the Applicant’s representative said:

Dear Unfair Dismissals Team,

The parties in the matter below participated in a conciliation conference on 29 September 2020. An agreement was reached in the conciliation conference, however the respondent has continued to refuse to fulfil the agreement reached in the conciliation conference, including to sign the settlement terms and to pay the applicant the agreed payment sum.

As the matter continues to be unresolved, could you advise if there is an equivalent of the section 368 certificate (general protections claims) for unfair dismissal applications?

[4] On 24 November 2020 the Commission received a further email from the Applicant’s representative who sought to have the application for relief from unfair dismissal listed for hearing.

[5] On 24 November 2020 my Chambers sent correspondence to the parties indicating that it was understood the Applicant sought to have his unfair dismissal application heard by the Commission and sought submissions as to whether a binding settlement agreement had been reached.

[6] Submissions were subsequently received from the Applicant dated 25 November 2020, 1 December 2020 and 2 December 2020. Submissions were received from the Respondent dated 1 December 2020 and 3 December 2020.

[7] The Commission sought the views of the parties as to whether they sought to be heard or the Commission could determine the matter on the basis of the written material filed. Neither party indicated that it wished to be heard. The request to list the application for unfair dismissal for hearing has therefore been determined on the basis of the written submissions of the parties.

Legal Principles

[8] The legal principles relevant to whether a binding settlement agreement has been reached was considered by the Full Bench of the Commission in Singh v Sydney Trains. 1 In that decision the Full Bench said:

[46] Chief Justice Bathurst of the New South Wales Supreme Court explained the relevant principles concerning intention to create legal relations in the following way in Pavlovic v Universal Music Australia Pty Limited: 2

“It is well established that the question of whether the parties intended to bind themselves to a contract is to be determined objectively, having regard to the intention disclosed by the language the parties have employed: Masters v Cameron [1954] HCA 72; 91 CLR 353 at 362. In cases such as the present, which do not depend on the construction of a single document, what is involved is the objective determination of the question from the communications between the parties in their context and the parties’ dealings over the time leading up to the making of the alleged contract. This involves consideration of the subject matter of the communications: Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 550. As was said by Mahoney JA and McHugh JA in Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309, that includes consideration of what the parties said or wrote (at 334, 337).”

…

[51] Conduct of the parties after the making of the supposed agreement is relevant. Such conduct may be considered in order to determine whether the prior dealings between the parties gave rise to a binding contract. 3

[52] The phrase “‘in principle’ agreement” or similar is often used when negotiating the settlement of litigation and generally indicates that there is no intention yet to enter into a binding contract. 4 However, such words must be construed in the context in which they appear and the commercial setting in which the parties were operating.5 In each case, “much will depend upon the individual circumstances of each case as to whether those words demonstrate that the parties had or had not reached a consensus on the essential terms of their bargain and whether they intended to be immediately bound by them”.6

[9] In Masters v Cameron 7the High Court said:

9. Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three cases. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract. (at p360).

10. In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. Of these two cases the first is the more common…

Submissions

[10] The Respondent submits that a binding settlement agreement was reached at the conciliation. Mr Leonard Samuel for the Respondent says that he made a without prejudice offer to the Applicant to settle the matter and that this was made on the basis that the Applicant would “comply with his post-employment obligation.”

[11] Mr Samuel says that on 30 September 2020 he received correspondence from the Applicant’s representative who indicated a typographical error in the draft document and attached a marked-up version of the terms of settlement. Whilst Mr Samuel was asked to confirm acceptance of the change he was “busy at work” and did not have a chance to review the document until 6 October 2020 when he discovered the terms did not reflect what he believed had been agreed. He wrote to the Applicant representative that day indicating his concern with the changes and advising he could not sign the document in those [amended] terms.

[12] The Respondent’s submissions indicate that the disagreement on the written terms went to the question of the Applicant’s post-employment obligations under his employment contract and a view held by the Respondent (mentioned in an email of 7 October 2020) that the Applicant continued to breach those terms.

[13] On 26 October 2020 the Respondent had its representative write to the Applicant in relation to his activities which it considered breached his obligations under his employment contract.

[14] Mr Samuel stated in his submissions that:

Based on the inconsistency of the written terms of settlement with the ‘in principle’ agreement reached at the conciliation conference, and the Applicant’s breach of his post-employment obligations in bad faith, I did not consider it was appropriate to continue discussions regarding the rectification of the written terms of settlement. I was not prepared to waive the post-employment obligations which applied to the Applicant, either during or after the conciliation conference, particularly in light of my understanding that the Applicant has sought to compete with my business.

[15] Mr Samuel also says that the Applicant entered into a binding agreement at the conciliation and that the Applicant appears to agree that a binding agreement was reached. Further, he says that he understood that the agreement having been reached, it was merely intended to be recorded in writing. For this reason he submits that the agreement was made and the Applicant’s request to have the matter heard should be dismissed and his application for relief from unfair dismissal should also be dismissed.

[16] In reply to the Applicant’s submissions that the “template” agreement provided by the conciliator for the parties use did not override his post-employment obligations, Mr Samuel suggested that the Applicant and his representative were wrong and the “full release” clause would have just that effect.

[17] In his submissions of 25 November 2020 the Applicant says that he “felt a suggested agreement had been made between both parties at the conciliation hearing which required the signatures of both parties to the agreement before a payment was made by Actech.”

[18] The Applicant says that he signed his copy of the agreement [as amended] but has not received a signed copy of the agreement from the Respondent.

[19] In reply to the Respondent’s submissions of 1 December 2020 the Applicant submits that his post-employment obligations specified in his contract of employment were discussed privately with the conciliator. It was said in that discussion that those obligations would remain in place and would not be disturbed by the standard terms of the settlement. The Applicant says however that it was not agreed that the terms of the settlement would include a term that he would uphold his post-employment obligations.

[20] In his submissions of 2 December 2020, the Applicant canvasses issues associated with his conduct (and that of his wife) post termination of his employment and alleged breaches of his obligations under his employment contract. I do not need to set those submissions out here.

[21] The Applicant submits that the changes sought to the agreement by the Respondent would mean that he could not have contact with anyone who had been a supplier to the Respondent and that this would extend to Coles, Woolworths and Aldi as they had supplied groceries (milk and sugar) to the Respondent’s canteen etc. The Applicant further made submissions in relation to the content of his employment contract, the non-compete clause in that contract and as to why he considers the employment contract null and void.

Consideration

[22] Whilst some post agreement conduct of the parties may be relevant to the determination of whether a binding agreement has been reached, there is a limit as to how much of that conduct is relevant. I have not had regard to the submissions of the Applicant or the Respondent that go to the Applicant’s conduct or representations from the Respondent as to what the Applicant may or may not have done following the cessation of his employment. These submissions do not assist in determining if agreement was reached on 29 September 2020 and neither party suggests they reveal a lack of agreement on 29 September 2020 or an intention not to be bound by the agreement said to have been made. Any dispute about the contract of employment or a potential breach thereof is just that and can be resolved by the Courts.

[23] By 26 October 2020 – when the Respondent’s representative wrote to the Applicant with respect to his post-employment activities – the dispute between the parties was not centred on the terms of the agreement reached between the Applicant and Respondent in conciliation but rather on the activities of the Applicant and whether these breached any obligations which remained with him arising from the employment contract. This does not go to the question before me of whether a binding settlement agreement was reached.

[24] Much of the material between the parties goes to this issue or the validity of certain clauses in the contract of employment which again is not the controversy I need to resolve. I do not intend to make any observations about these matters. Nor do I consider it necessary to comment on the Applicant’s slightly absurd contention that shopping at Coles, Woolworths and Aldi would be a breach of his post-employment obligations.

[25] It is abundantly clear to me, viewed objectively, that the parties entered into a binding agreement during the conciliation. That agreement contained a range of terms and it was clear to both parties and is apparent in the submissions before me that it was not to override any post-employment obligations contained in the Applicant’s contract of employment. The dispute post the conciliation goes to how this obligation would be expressed and if it needed to be written into the agreement and/or would survive the agreement proposed by the Applicant.

[26] There is nothing in the material presented by the parties to suggest that it was not intended to make a concluded bargain unless and until a formal contract was finalised. The Applicant was clear (on his submissions) as to what he agreed to and the Respondent was clear (on his submissions) what he agreed to. Both, importantly, agreed the Applicant would continue to be bound by his post-employment obligations.

[27] That there may be a dispute now as to the Applicant’s post-employment conduct does not abrogate the agreement reached.

[28] The conclusion I have reached in this matter is supported by the email from the Applicant’s representative to the Commission of 16 November 2020 in which she said that an agreement was reached in the conciliation conference. That they have been unable to conclude the written contract does not detract from the fact that an agreement was reached.

Conclusion

[29] For these reasons I am satisfied that the Applicant and Respondent entered into an agreement of either the first of second class as identified by the High Court in Masters v Cameron.

[30] In Australia Postal Corporation v Gorman 8 Besanko J said:

31 An accord and satisfaction extinguishes the existing cause of action and replaces it with a new cause of action based on the agreement. A valid accord and satisfaction is not a discretionary factor relevant to the subsequent litigation of the original claim; it is an answer to the claim.

…

33 There is nothing in the Act which suggests that an accord and satisfaction should not be recognised. At a general level the object of Chapter 3 Part 3-2 and the general statements of the manner in which FWA is to perform its functions and the matters to which it is to have regard are consistent with the recognition of an accord and satisfaction. Furthermore, the words of subsection 587(1) are wide enough to include the recognition of an accord and satisfaction. As I have said, a valid and effective accord and satisfaction extinguishes the pre-existing cause of action and continued pursuit of an application based on such cause of action is clearly capable of being considered to be frivolous or vexatious or without reasonable prospects of success.

[31] In this case, being satisfied that agreement was reached, the agreement is a complete answer to the claim for relief from unfair dismissal. The application is settled and, for this reason, pursuit of it has no reasonable prospects of success. Any dispute as to performance of the agreement reached between the parties is not a matter for the Commission.

[32] I have determined in these circumstances to dismiss the application pursuant to s.587(1)(a) of the FW Act on the grounds that the application for relief from unfair dismissal has no reasonable prospects of success.

[33] An Order 9 to this effect will be issued in conjunction with this decision.

COMMISSIONER

Final written submissions:

2020.
3 December.

Printed by authority of the Commonwealth Government Printer

<PR725944>

 1   [2017] FWCFB 4562.

 2 [2015] NSWCA 313 (Pavlovic) at [15].

 3   Saliba at [53]-[54], applying B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147 at 9149 per Glass JA.

 4   Stephenson v Dwyer [2006] NSWSC 1439 at [37].

 5   Donaldson Coal Pty Ltd v Pacific National (NSW) Pty Ltd [2007] NSWSC 1446 (Donaldson Coal) at [91].

 6   Donaldson Coal at [91].

 7 [1954] HCA 72; (1954) 91 CLR 353.

 8 [2011] FCA 975

 9   PR725958