Bernard Mwango v WesTrac Pty Ltd

[2018] FWC 302

[2018] FWC 302

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Bernard Mwango
v
WesTrac Pty Ltd
(U2017/10323)

COMMISSIONER SAUNDERS NEWCASTLE, 16 JANUARY 2018

Application for an unfair dismissal remedy - whether binding settlement reached – no binding settlement found to have been reached.

[1] On 22 September 2017, Mr Bernard Mwango lodged an unfair dismissal application with the Fair Work Commission (Commission) under s.394 of the Fair Work Act 2009 (Cth) (Act). Mr Mwango claims he was unfairly dismissed by WesTrac Pty Ltd (WesTrac) on 7 September 2017.

[2] WesTrac contends that the parties made a binding settlement agreement during settlement discussions on 16 October 2017. Mr Mwango denies that any such agreement was made. This decision deals only with that issue.

Determinative conference

[3] After taking into account the views of the parties, I decided to deal with the issue raised by WesTrac by way of a determinative conference.

[4] The determinative conference took place on 20 December 2017. Mr Mwango gave evidence on his behalf. Ms Alysha Fletcher, HR Advisor, gave evidence on behalf of WesTrac. Mr Nathan Di Vito, Industrial Relations Consultant of Unfair Dismissal Experts Pty Ltd and Mr Mwango’s former representative, gave evidence in the proceedings pursuant to an order made by the Commission on 15 December 2017.

Background

[5] On 27 September 2017, the matter was listed for a conciliation conference before a conciliator of the Commission on 19 October 2017.

[6] On 16 October 2017, Mr Di Vito and Ms Fletcher engaged in pre-conciliation settlement discussions by telephone. Mr Mwango was not a party to any of the discussions between Mr Di Vito and Ms Fletcher on that day, but he did speak to Mr Di Vito on a number of occasions on 16 October 2017 during breaks in the telephone discussions between Mr Di Vito and Ms Fletcher.

[7] After the conclusion of the settlement discussions on 16 October 2017, Mr Di Vito sent the following emails:

(a) First, an email to Ms Fletcher (at 3:44pm) in the following terms:

“Dear Alysha,

Thank you for our discussion this afternoon and for the progress we made in reaching an agreement.

We will contact that Fair Work Commission and notify them that an in-principle agreement has been reached.

This notification to the Commission will allow the conciliation date to be vacated.

Please find attached the payment authority as discussed.

Can you please ensure that payment is made in line with the authority as it is often missed?”

(b) Secondly, an email to the Commission (at 3:47pm) in the following terms:

“For the purpose of this email we have also copied in the Respondent’s representative.

Both parties have reached an in principle agreement in regards to the above listed matter.

We therefore request that the conciliation conference set for Thursday 19 October 2017, be vacated.”

[8] In reliance on the communication from Mr Di Vito on 16 October 2017, the conciliation conference scheduled for 19 October 2017 was vacated.

[9] Ms Fletcher sent an email to Mr Di Vito in the following terms at 4:15pm on 16 October 2017, attaching a deed of release:

“Hi Nathan

Thank you very much for your time this afternoon and for your patience whilst we progressed this matter.

As agreed, please find attached a Deed of Release confirming WesTrac’s intent to pay 7 weeks payment, and accept Bernard’s resignation from employment. I have also included a clause to confirm that payment will be paid into your nominated banking account.

I acknowledge your email to the Commission to request cancellation of the listing – your promptness is very much appreciated.

Can you please facilitate to have the attached Deed signed by Bernard and sent back to myself as soon as possible. From there I will seek a WesTrac representative to sign, and will send you back a copy of the executed Deed.

Please feel free to contact me if you have any questions or wish to discuss.”

[10] Mr Di Vito had difficulties contacting Mr Mwango after provision of the deed of release to him. On 2 November 2017, Unfair Dismissal Experts Pty Ltd lodged a Form F54 Notice of Representative Ceasing to Act in the Commission.

[11] Mr Mwango objected to terms in the deed of release prepared by WesTrac and did not execute it. WesTrac has not made any payment to Mr Mwango in respect of his unfair dismissal application.

[12] On 6 November 2017, Mr Mwango sent an email to the Commission advising that the parties were unable to reach a resolution and he would like the matter brought to a hearing before the Commission.

[13] WesTrac objected to the matter being listed for hearing before the Commission on the basis that a binding settlement had been agreed on 16 October 2017.

Pre-conciliation settlement discussions

[14] Ms Fletcher gave evidence that on 16 October 2017 she had a number of pre-conciliation telephone discussions with Mr Di Vito. Ms Fletcher’s recollection of her telephone conversations with Mr Di Vito is as follows:

“i. At 3:00PM on Monday 16 October 2017, the Applicant’s Representative and I held a pre-conciliation discussion via telephone. The Consultant acting on behalf of the Applicant was Mr Nathan Di Vito.

ii. At commencement of the Conference, Mr DiVito advised that the Applicant, Mr Mwango, was unable to attend the Conference, and added words to the effect of “Mr Mwango has given permission for me (Mr DiVito) to call him to discuss a proposed settlement”.

iii. At the beginning of the Conference, I told Mr DiVito words to the effect of “I have sought prior approval to settle today, provided an agreement is reached to offer compensation up to a specified amount of weeks. If Mr Mwango requests compensation above this limit, I will need to present his request to the business and seek further approval.” I also advised Mr DiVito that I would be required to enact any settlement via Deed of Release, to which Mr DiVito replied that he was happy to facilitate and get Mr Mwango to sign.

iv. Mr Di Vito and I discussed that Mr Mwango was seeking 12 weeks compensation, to which I replied to the effect of “I do not have approval to offer 12 weeks compensation, however would like to negotiate”.

v. Mr Di Vito asked words to the effect of “What is your starting point?” to which I replied “4 weeks compensation, and acceptance of Mr Mwango’s resignation to replace his termination”.

vi. Mr Di Vito responded with words to the effect of “I will need to phone Mr Mwango to discuss and will phone you back”.

vii. Mr Di Vito phoned myself within several minutes, and advised words to the effect of “Mr Mwango is not happy to settle at 4 weeks, and is requesting 12 weeks compensation”.

viii. I responded to Mr Di Vito with words to the effect of “I would really like to settle today, however do not have approval for 12 weeks compensation”. I then offered Mr Di Vito a counter off and stated words to the effect of “Can you please discuss with Mr Mwango an offer of 6 weeks compensation, and acceptance of his resignation?” Mr Di Vito stated that he would phone Mr Mwango and seek his thoughts on the offer.

ix. Mr Di Vito phoned myself soon after and advised words to the effect of “Mr Mwango has requested 8 weeks compensation and acceptance of resignation”. I replied with words to the effect of “Can you please ask Mr Mwango if he is willing to mutually negotiate a settlement of 7 weeks compensation?”. Mr Di Vito followed with words to the effect of “I will phone Mr Mwango to discuss.”

x. Mr Di Vito phoned myself back and advised words to the effect of “Mr Mwango has accepted the counter offer of 7 weeks compensation, and acceptance of his resignation”.

xi. I responded to Mr DiVito with words to the effect of “I am pleased we could reach a mutual outcome”, and advised that I would prepare a Deed of Release and send through to Mr Di Vito and ask that he forwards the document to Mr Mwango.

xii. Mr Di Vito responded that he would facilitate this process, and would send through details of the settlement payment requirements via email.

xiii. The Conference was then concluded.” 1

[15] Mr Di Vito agreed with Ms Fletcher’s recollection of their conversations on 16 October 2017 as set out in paragraph [14] above. Accordingly, I find that Mr Di Vito and Ms Fletcher engaged in those discussions.

[16] Mr Mwango gave evidence that on 16 October 2017 he had a number of telephone conversations with Mr Di Vito in which he gave him instructions in relation to the settlement discussions between Mr Di Vito and Ms Fletcher. Mr Mwango’s recollection of those conversations, as set out in his witness statement, is as follows:

“i. On Monday 16 October 2017, I was represented by Mr Nathan DiVito in a pre-conciliation telephone conference to be held between myself and the Respondent.

ii. At the beginning of the conference, I received a phone call from Mr Di Vito who stated words to the effect that “Alysha is saying she is not ready to pay 12 weeks but 4 weeks, but this is just the starting point”.

iii. I informed Mr Di Vito that the above proposal would not be sufficient because of my financial hardship. I responded with words to the effect of “Please negotiate for more”.

iv. Mr DiVito responded with words to the effect of “I will try. I will call you after”.

v. After some time, Mr Di Vito called back and with reference to the Respondent, used words to the effect of “she is ready to pay 7 weeks”.

vi. I replied to Mr Di Vito with words to the effect of “what do you think? Should we get it?”. Mr DiVito stated “It’s up to you Bernard”.

vii. I responded to Mr Di Vito with words to the effect of “ok, let’s get it and see what the terms and conditions of offer will be”.

viii. Mr DiVito replied, “I will get back to you soon”.

ix. After several minutes, Mr DiVito phoned me and advised that “Alysha will prepare a deed of release which you should take time to read and understand carefully. You need to understand the terms and conditions before signing the document in the presence of a witness”.

x. He continued and said, “once you sign it, you will be legally bound by it”, to which I replied words to the effect of “Alright, I will be waiting”.

xi. Sometime after the phone call, I received an email to which the proposed Deed of Release was attached.

xii. After careful reading and consideration, I found the Deed of Release to contain onerous and unfair terms which did not match the 7 weeks being offered over the telephone conference.

xiii. As such, I did not accept the offer and refused to sign the terms and conditions of the offer in the Deed of Release.” 2

[17] There are some disputes between Mr Mwango and Mr Di Vito in relation to Mr Mwango’s recollection of their discussions on 16 October 2017, but I do not need to make findings in relation to those disputed discussions for the reasons set out in paragraph [26] below.

Was a binding settlement reached?

[18] When considering whether there was a binding settlement reached, it is often “of assistance to distinguish between three questions: did the parties arrive at a consensus?; (if they did) was it such a consensus as was capable of forming a binding contract?; and (if it was) did the parties intend that the consensus at which they arrived should constitute a binding contract?” 3

[19] A Full Bench of the Commission considered these issues in Singh v Sydney Trains 4 [references omitted]:

“[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:

“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 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 at 550. As was said by Mahoney JA and McHugh JA in Air Great Lakes Pty Ltd v KS Easter (Holdings) Pty Ltd, 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.

[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. However, such words must be construed in the context in which they appear and the commercial setting in which the parties were operating. 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”.

[53] If parties who have been in negotiations reach agreement on terms of a contractual nature and also agree that those terms will be dealt with by subsequent formal documentation, there are several categories into which such negotiations fall. First, the parties reach finality, intend to be immediately bound, and propose restatement of the terms of settlement in a fuller or more precise form but not different in effect. Secondly, the parties have completely agreed all terms but performance of one or more terms is conditional on execution of a formal document. Thirdly, the parties did not intend to make a concluded bargain at all, unless and until they execute a formal contract. Fourthly, the parties intended to be bound immediately and exclusively by agreed terms while expecting to make a further contract in substitution containing, by concept, additional terms.

[54] When parties do reach an agreement of the first or fourth category referred to in Masters v Cameron and Baulkham Hills, they will be bound by the terms of their bargain, notwithstanding a later disagreement between the parties about the terms to be included in a deed or written agreement between them.”

[20] In Geebung Investments v Varga Group Investments (No 8) Pty Ltd, 5 Kirby P (as his Honour then was) observed:

“The existence of matters of importance in which the parties have not reached consensus in their informal agreement will render it the less likely that they intended immediately to be bound before the execution of a formal document. Even where the parties have agreed on the ‘major matters’, their subsequent conduct may indicate that they did not intend to be bound until the other issues between them were resolved in a formal document…

Depending upon the size, importance and complexity of the subject matter, the less formal the initial agreement, the less likely it will be that it was intended to be legally binding and enforceable. Thus, an oral discussion which contemplates a subsequent formal written agreement is less likely to have been intended to have been immediately binding.

It is necessary in every case to consider the nature and importance of the transaction which the parties contemplate. Where the agreement concerns a large sum, or concerns a significant transaction, it is less likely to have been intended to be presently binding.

...

In Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 548, Gleeson CJ (Hope JA and Mahoney JA agreeing) said it was “commonsense” that the “more numerous and significant” the areas to be agreed upon, the less likely the conclusion could be drawn that they had intended to be bound.”

[21] In Australia Postal Corporation v Gorman 6, Besanko J held that the existence of a binding settlement or “accord and satisfaction” extinguishes the existing cause of action and replaces it with a new cause of action based on the agreement.7 His Honour stated:

“[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.” 8

Consideration

[22] There is no doubt on the evidence that the parties arrived at a consensus in the settlement discussions on 16 October 2017 as to the amount of compensation to be paid to Mr Mwango (seven weeks) and WesTrac’s acceptance of Mr Mwango’s resignation. The parties are in dispute, however, as to whether they objectively intended that the consensus at which they arrived on 16 October 2017 constituted a binding contract or, alternatively, whether they objectively did not intend to make a concluded bargain at all, unless and until they executed a deed of release.

[23] WesTrac contends that a binding contract was made on 16 October 2017, whereas Mr Mwango submits that no binding contract has been made because the parties have not executed a deed of release.

[24] Evidence was given as to the subjective intentions of each of the parties concerning the disputed settlement. Such evidence is not relevant to my determination of the question at hand. The task is to review what the parties said and did and from that material to infer whether the parties’ objective intentions as expressed to each other were to enter into a mutually binding contract during the settlement discussions. 9 The alternative conclusion may be that the parties did not objectively intend to enter into a mutually binding contract until they agreed on and executed a deed of release.

[25] There is some evidence in support of WesTrac’s contention that the parties objectively intended to conclude a contract in their discussions on 16 October 2017. For example, Ms Fletcher said to Mr Di Vito on at least two occasions on 16 October 2017 that she wanted to “settle today” and had approval to settle up to a certain amount of compensation, and Mr Di Vito did not take issue with those statements. In addition, Mr Di Vito informed Ms Fletcher of Mr Mwango’s agreement to accept “the counter offer of 7 weeks compensation and acceptance of his resignation” 10, in response to which Ms Fletcher expressed that she was “pleased we could reach a mutual outcome”.11 However, considering the whole of the communications between Ms Fletcher and Mr Di Vito, I find, on balance, that the parties did not objectively intend to be immediately legally bound to the consensus they reached on 16 October 2017, for the following reasons:

(a) Although Ms Fletcher and Mr Di Vito discussed at a general level the need for a deed of release, there was no discussion between them about a range of matters, including:

● The terms or scope of any releases to be given and whether they would be mutual. This was plainly an important aspect of any settlement. It is not to the point that Mr Di Vito says he discussed the general nature of a release with Mr Mwango. Given that Mr Di Vito and Ms Fletcher did not discuss the terms or scope of any releases to be given and whether they would be mutual, 12 there was no consensus between the parties in relation to those matters and any explanation given by Mr Di Vito to Mr Mwango about the general effect of a standard or usual release could not have altered that fact;

● Time for payment of the seven weeks’ compensation; 13

● Non-disparagement/no adverse comment; 14 or

● Confidentiality. 15

(b) The number and significance (particularly in relation to releases) of these matters which were not discussed, let alone the subject of agreement, render it less likely that the parties objectively intended immediately to be bound before the execution of a formal document; 16

(c) The use of the expression “in-principle agreement” in the email from Mr Di Vito to both Ms Fletcher and the Commission immediately following the settlement discussions on 16 October 2017 generally indicates that there is no intention yet to enter into a binding contract. The individual circumstances of this case do not, in my view, warrant or give rise to a different indication or conclusion concerning the objective intention of the parties;

(d) Ms Fletcher’s email to Mr Di Vito later on 16 October 2017 did not take issue with his description of an “in-principle agreement” being reached. Further, the reference in Ms Fletcher’s email to how the parties “progressed this matter” in their settlement discussions and “WesTrac’s intent to pay 7 weeks payment, and accept Bernard’s resignation from employment” [emphasis added] is suggestive of a proposal or intention to do those things, if a binding settlement agreement is made, as distinct from a promise or agreement to make the payment pursuant to the bargain struck in the settlement discussions. The reference in Ms Fletcher’s email to “as agreed, please find attached a Deed of Release” would be construed by a reasonable person in the position of Mr Di Vito or Mr Mwango as the agreement for Ms Fletcher to provide Mr Di Vito with a deed of release following their settlement discussion, rather than a binding settlement agreement reached during the earlier discussions; and

(e) Ms Fletcher informed Mr Di Vito at the commencement of the settlement discussions on 16 October 2017 that she “would be required to enact any settlement via Deed of Release”. The use of the word “enact” in this context provides some support for the contention that a further authoritative step would be required to bring about the settlement, namely the execution of a deed of release.

[26] There were no settlement discussions directly between Mr Mwango and WesTrac; all such discussions were held by Mr Di Vito and WesTrac (Ms Fletcher). There is no dispute as to the oral and written communications between Mr Di Vito and Ms Fletcher concerning settlement. In light of my conclusion that the oral and written communications between Mr Di Vito and Ms Fletcher did not demonstrate an objective intention to be immediately legally bound to a settlement agreement prior to the execution of a deed of release, there is no need in this case to deal with any questions concerning actual or ostensible authority for Mr Di Vito to enter into a settlement agreement on behalf of Mr Mwango with WesTrac, nor is there a need to resolve the conflicts in the evidence concerning what was said between Mr Di Vito and Mr Mwango on 16 October 2017.

Conclusion

[27] For the reasons set out above, I reject WesTrac’s contention that the parties reached a binding settlement on 16 October 2017. The matter will be listed for directions shortly.

COMMISSIONER

Appearances:

Mr B Mwango, Applicant

Mr D Debijl, on behalf of the Respondent

Hearing details:

2017.

Newcastle:

December 20.

 1   Exhibit R1

 2   Exhibit A1

 3   Air Great Lakes Pty Ltd v K S Easter (Holdings) Pty Ltd (1985) 2 NSWLR 309 at 326

 4   [2017] FWCFB 4562

 5 (1995) 7 BPR 14,551 at 14,569

 6 [2011] FCA 975

 7   Ibid at [31]

 8   Ibid at [33]

 9   Stephenson v Dwyer [2006] NSWSC 1439 at [33], applying Pagnan SPA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601 at 611

 10   PN310-316 and Exhibit R1 at [x]

 11   Exhibit R1 at [xi]

 12   PN156 & PN281

 13   PN162 & PN279

 14   PN164 & PN280

 15   PN160 & PN278

 16   Geebung Investments v Varga Group Investments (No 8) Pty Ltd (1995) 7 BPR 14,551 at 14,569

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