Collinson v Paxus Australia Pty Limited (No 3)

[2022] NSWSC 438

Supreme Court

New South Wales

Medium Neutral Citation:

Collinson v Paxus Australia Pty Limited (No 3) [2022] NSWSC 438

Hearing dates:

5 – 6 April 2022

Decision date:

12 April 2022

Jurisdiction:

Common Law

Before:

Adamson J

Decision:

(1)   The separate questions be answered as follows:

1.   Did the Deed of Release entered into in May 2016 between parties including the plaintiff, the First Cross-Defendant (Transport) and the Second Cross-Defendant (Career), on its proper construction, have the effect of extinguishing any rights the plaintiff may have had to bring proceedings against Transport and/or Career for damages for psychiatric injury sustained due to bullying and verbal abuse which the plaintiff alleges he experienced at his place of work while allegedly subject to the control of Transport and/or Career?

Yes.

2.   Does the Settlement Agreement operate as a bar to the cross-claimant (Paxus) pursuing the first cross-claim as against the first cross-defendant (Transport), or otherwise disentitle the cross-claimant (Paxus) from the relief sought in the first cross-claim as against the first cross-defendant (Transport)?

Yes.

3.   Does the Settlement Agreement operate as a bar to the cross-claimant (Paxus) pursuing the first cross-claim as against the second cross-defendant (Career), or otherwise disentitle the cross-claimant (Paxus) from the relief sought in the first cross-claim as against the second cross-defendant (Career)?

Yes.

(2)   The first defendant/cross-claimant pay the first and second cross-defendants’ costs of the Settlement Agreement separate questions.

(3)   Reserve the costs of the Deed of Release separate question.

Catchwords:

CONTRACTS — Construction — Interpretation — deed of release — whether definition of “claim” should be read down — where definition narrowed by reference to subject matter — where definition not read down

CONTRACTS — Construction — Interpretation — settlement agreement — whether question of interpretation could be answered before answering question of availability of equitable relief in related deed — where questions could be answered separately

CONTRACTS — Construction — Interpretation — Natural and ordinary meaning — settlement agreement —where no ambiguity in interpretation

CONTRACTS — Unconscionable conduct — whether it would be unconscionable for a party to rely on an agreement where a counterparty did not have legal advice — where such reliance not unconscionable

Legislation Cited:

Civil Liability Act 2002 (NSW)

Fair Work Act 2009 (Cth), s 789FC

Law Reform (Miscellaneous Provisions) Act 1946 (NSW), s 5

Uniform Civil Procedure Rules 2005 (NSW), rr 28.2, 42.1

Workers Compensation Act 1987 (NSW), ss 151G, 151H, 151Z

Workplace Injury Management Act 1998 (NSW), s 234

Cases Cited:

Allied Pastoral Holdings Pty Limited v Commissioner of Taxation [1983] 1 NSWLR 1

Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; [1973] HCA 36

Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295

Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337; [1982] HCA 24

Collinson v Paxus Australia Pty Limited (No 2) [2021] NSWSC 1032

Grant v John Grant & Sons Pty Limited (1954) 91 CLR 112; [1954] HCA 23

Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407

Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45; [2002] HCA 5

South Sydney Council v Botanical Gardens [1999] NSWCA 478; (1999) 10 BPR 18,961

Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57

Toll (FGCT) Pty Ltd v Alphafarm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52

Turner v Windever [2005] NSWCA 73

Category:

Procedural rulings

Parties:

Stephen Collinson (Plaintiff)
Paxus Australia Pty Limited (First Defendant)
Malvina Park Pty Ltd trading as Firths the Superannuation Lawyers (Second Defendant)
Harmers Workplace Lawyers (Third Defendant)
Stacks Goudkamp Pty Ltd (Fourth Defendant)
David Campbell SC (Fifth Defendant)
Richard Di Michiel (Sixth Defendant)
Transport for New South Wales (First Cross Defendant)
Career Corporation Pty Ltd (Second Cross Defendant)

Representation:

Counsel:
A J McInerney SC / G Smith (Plaintiff)
L King SC / D Kelly (First Defendant)
W Fitzsimmons SC / H Grace (Second and Third Defendants)
M A Jones SC / T Harris-Roxas (Fourth Defendant)
M S White SC (Fifth Defendant)
I Griscti (Sixth Defendant)
K Andronos SC / N Hogan (First Cross Defendant)
A Ahmad (Second Cross Defendant)

Solicitors:
Lough & Wells (Plaintiff)
Turks Legal (First Defendant)
YPOL Lawyers (Second and Third Defendants)
Sparke Helmore Lawyers (Fourth Defendant)
DLA Piper Australia (Fifth Defendant)
Colin Biggers & Paisley (Sixth Defendant)
Norton Rose Fulbright Australia (First Cross Defendant)
DLA Piper Australia (Second Cross Defendant)

File Number(s):

2019/181140

Judgment

Introduction

1. In 2015, Stephen Collinson (the plaintiff), then an employee of the first defendant (Paxus), provided services to Transport for NSW (Transport), in conjunction with services also provided to Transport by Career Corporation Pty Ltd (Career). The plaintiff alleged that, while performing those services, he was bullied by employees of Career. In 2015 and 2016, he commenced three sets of proceedings in the Fair Work Commission (FWC) against Paxus, Transport and Career seeking various orders and other relief (the FWC proceedings).

2. The FWC proceedings were ultimately resolved in May 2016. Two agreements were executed: a deed of release, to which the plaintiff, Paxus, Transport and Career were parties (the Deed of Release); and a further agreement between Paxus, Transport and Career (the Settlement Agreement).

3. On 1 June 2018, the plaintiff commenced proceedings in this Court against Transport and Career, seeking damages in negligence (the first Supreme Court proceedings). He was represented by Stacks Goudkamp Pty Ltd (Stacks) who instructed David Campbell SC and Richard Di Michiel of counsel to advise and appear on behalf of the plaintiff. Ultimately, the plaintiff was given leave to discontinue the first Supreme Court proceedings and, through his then solicitor, gave an undertaking not to sue Transport or Career.

4. By statement of claim filed on 11 June 2019, the plaintiff commenced the present proceedings for damages against Paxus, the second defendant (Firths) and the third defendant (Harmers).

5. The plaintiff alleges that Paxus negligently failed to provide him with a safe system of work when Paxus made the plaintiff’s services available to Transport for the year from 5 January 2015 to 4 January 2016.

6. As against Firths and Harmers, the plaintiff alleges that they had negligently failed to advise him adequately in the settlement of the FWC proceedings. He alleges that they failed to advise him that, if he settled with Paxus, Transport and Career on the terms set out in the Deed of Release, he would lose valuable rights to sue Transport and Career for damages for negligence and that the amounts he received pursuant to the Deed of Release were inadequate to compensate him for the loss of these rights. The defences filed by Firths and Harmers to the plaintiff’s claim include the allegation that the plaintiff was protected from the legal effect of the Deed of Release by an equity in his favour to apply to set aside the Deed of Release. On this basis, Firths and Harmer argue that the plaintiff suffered no loss as a consequence of entering into the Deed of Release.

7. On 16 December 2019, Paxus filed a cross-claim against Transport, Career, Firths and Harmers claiming contribution from them for any damages for which Paxus might be found liable to pay the plaintiff (the first cross-claim). Transport and Career allege in their defences that the Settlement Agreement barred Paxus’ claim because it released each party from any claims made by the others arising out of the work performed by the plaintiff for Transport as an employee of Paxus. In reply, Paxus alleges that, if the release is legally effective to release Transport and Career from claims by the plaintiff for damages in negligence, the release ought be set aside in accordance with the principles articulated in Grant v John Grant & Sons Pty Limited (1954) 91 CLR 112; [1954] HCA 23 (Grant) or because it is otherwise unconscionable.

8. On 17 August 2021, I refused the plaintiff leave to amend his statement of claim to add Transport and Career as defendants, on the basis that it would be an abuse of process, having regard to his conduct in discontinuing the first Supreme Court proceedings, including the undertaking given by his then solicitor: Collinson v Paxus Australia Pty Limited (No 2) [2021] NSWSC 1032 at [76].

9. On 5 November 2021, the plaintiff filed a second further amended statement of claim in which he joined three further defendants: Stacks, as the fourth defendant, Mr Campbell, the fifth defendant, and Mr Di Michiel, the sixth defendant. The plaintiff alleges that the fourth, fifth and sixth defendants gave him negligent advice in relation to the settlement of the first Supreme Court proceedings in that they failed to advise him that he had a claim for equitable relief to set aside the Deed of Release, if the Deed of Release otherwise had the legal effect of barring him from suing Transport and Career.

10. On the application of the parties, I ordered that the following questions be determined separately in advance of the trial of this matter pursuant to r 28.2 of the Uniform Civil Procedure Rules 2005 (NSW):

1. Did the Deed of Release entered into in May 2016 between parties including the plaintiff, Transport and Career, on its proper construction, have the effect of extinguishing any rights the plaintiff may have had to bring proceedings against Transport and/or Career for damages for psychiatric injury sustained due to bullying and verbal abuse which the plaintiff alleges he experienced at his place of work while allegedly subject to the control of Transport and/or Career?

[Emphasis in bold added to indicate amendment to this question made on 6 April 2022 in the course of the hearing.]

(the revised Deed of Release separate question)

2. Does the Settlement Agreement operate as a bar to the cross-claimant [Paxus] pursuing the first cross-claim as against the first cross-defendant [Transport], or otherwise disentitle the cross-claimant [Paxus] from the relief sought in the first cross-claim as against the first cross-defendant [Transport]?

3. Does the Settlement Agreement operate as a bar to the cross-claimant [Paxus] pursuing the first cross-claim as against the second cross-defendant [Career], or otherwise disentitle the cross-claimant [Paxus] from the relief sought in the first cross-claim as against the second cross-defendant [Career]?

(the Settlement Agreement separate questions)

11. At the time the determination of the separate questions was ordered, it was expected that the Settlement Agreement separate questions would determine whether the first cross-claim was maintainable against Transport and Career and the answer to the Deed of Release separate question (before its amendment on 6 April 2022) would determine whether Firths and Harmers would remain as defendants or whether Stacks, Mr Campbell and Mr Di Michiel would remain as defendants. However, it was common ground, following the amendment to the Deed of Release question on 6 April 2022, that the determination of the revised Deed of Release separate question would not have that effect.

Grant

12. Because of the parties’ reliance on Grant, it is useful at the outset to summarise the decision and its effect.

13. In Grant, a company, John Grant & Sons Pty Ltd, claimed monies, which were particularised in the writ, said to be owing by an individual, Mr Grant from September 1948 to 2 June 1950. In his defence, Mr Grant pleaded a deed dated 5 December 1951 between several individuals, including Mr Grant, and the company. Clause 12 of the deed provided:

“Each of the parties hereto hereby releases the other and others of them from all sums of money and accounts and civil actions proceedings claims and demands whatsoever which any of them at any time had or has at or prior to completion against the other for or by reason or in any respect of any act, cause, matter or thing and without limiting the generality thereof the H. C. Grant family releases the defendants in the hereinbefore recited litigation from all costs in respect of the said litigation.”

14. In reply, the company alleged that, at the time it entered into the deed, it did not know that it had a cause of action against Mr Grant in respect of the money. The company also alleged (in the third replication) that it did not intend by its execution of the deed to release Mr Grant from the obligation to pay money and said that Mr Grant knew that he owed money to the company and did not inform the company of his indebtedness before the deed was executed and the company was unaware that Mr Grant intended that the deed should operate in respect of the monies claimed.

15. The plurality (Dixon CJ, Fullagar, Kitto and Taylor JJ) said at 129-130:

“From the authorities which have already been cited it will be seen that equity proceeded upon the principle that a releasee must not use the general words of a release as a means of escaping the fulfilment of obligations falling outside the true purpose of the transaction as ascertained from the nature of the instrument and the surrounding circumstances including the state of knowledge of the respective parties concerning the existence, character and extent of the liability in question and the actual intention of the releasor.

The facts stated in the third replication if true would show that the plaintiff company did not know of the defendant's liability it now seeks to enforce, did not intend to release it as part of the transaction and did not know of any intention on the part of the defendant that it should be released. The allegation that the defendant knew of the obligation but did not inform the plaintiff company may be introduced as bearing upon the unconscientiousness of the defendant's reliance upon the general words of the release, but it does not seem to be essential to the application of the governing principle of equity.” 

16. The parties accepted that, for the purposes of investigating this aspect of their dispute, their subjective intention may be relevant, although such evidence could not bear on the legal construction of the Deed of Release or the Settlement Agreement, by reason of the principles articulated in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 (Codelfa) at 352 (Mason J); [1982] HCA 24.

The factual background

17. It is convenient to set out the circumstances surrounding the Deed of Release and the Settlement Agreement in narrative form. It was common ground that only the objective circumstances were relevant to the legal construction of these two agreements. However, as Paxus and the plaintiff each relied on Grant at 123-124, the inquiry into the circumstances in which the agreements came to be executed is not confined to objective circumstances. For this reason, I propose to include in the narrative both objective and subjective circumstances and draw a distinction between the two when addressing the parties’ submissions.

18. When construing the legal effect of these agreements, I shall confine myself to the objective circumstances. However, for the purposes of addressing what has been referred to as the third replication in Grant, I shall address the subjective circumstances, in so far as they form the basis for the parties’ submissions on this aspect. For the reasons given below, I will not address the effect of these circumstances on the Deed of Release, since the revised Deed of Release separate question concerns only its legal construction.

The background to the Deed of Release and Settlement Agreement

19. The evidence relied on to establish the background to the Settlement Agreement, which included the background to the Deed of Release, comprised the following. Transport relied on affidavits of Alexandra Shields, a lawyer at Norton Rose Fulbright (NRF), who acted for Transport in the FWC proceedings, subject to the supervision of Sally Woodward.

20. Paxus relied on affidavits of Bianca Witkin and Jason Trevethick, Ms Witkin’s supervisor. Ms Witkin was nominated as the contact person for Paxus in the FWC proceedings. Ms Witkin’s email signature identified her as the “Director, HR and Contractor Operations” for Paxus, which was located in Docklands, in Melbourne, Victoria.

21. Neither Ms Shields, Ms Witkin, nor Mr Trevethick was cross-examined. Documents were also tendered, including those exhibited to the affidavits of Ms Shields and Ms Witkin.

The plaintiff’s employment with Paxus

22. The plaintiff was employed by Paxus. Paxus contracted with Transport to provide the plaintiff’s services (infrastructure network services) to Transport at Transport’s premises for a fixed one-year term commencing 5 January 2015 at a salary of $1,200 per day. The contract between the plaintiff and Paxus provided:

“2   OBLIGATIONS OF CONSULTANT [PLAINTIFF]

2.1   Consultant agrees:

(a)   to perform the Services at Client’s [Transport’s] address in Contract Details or such other address agreed to by Client and Consultant and notified to Paxus;

(b)   to devote the time, attention, skill and ability required to properly perform the Services and to provide the Services with all due care and skill and in a professional, competent and timely manner;

…”

[Emphasis in original.]

23. The plaintiff was required to work with two employees of Career who were also working at Transport’s premises. The plaintiff alleges that he was subject to bullying while at the premises, including by Career’s employees. In or around June 2015, the plaintiff went on a period of sick leave which he alleged was as a result of the bullying to which he had been subjected.

The commencement of proceedings in the FWC

24. On about 15 July 2015, the plaintiff filed an application for a “stop bullying” order pursuant to s 789FC of the Fair Work Act 2009 (Cth) against Transport, Career and Paxus in the FWC in proceedings AB2015/424.

The plaintiff’s workers compensation claim

25. On 27 August 2015, the plaintiff lodged a claim for workers compensation pursuant to the Workers Compensation Act 1987 (NSW) (the 1987 Act).

The plaintiff’s claim for general protections in the FWC

26. On about 4 December 2015, the plaintiff filed a general protections application in the FWC, proceedings C2015/7511. The FWC determined that the stop bullying application and the general protection application would be heard together.

The settlement of the FWC proceedings

27. On 9 December 2015, Andrew Gay (on behalf of the plaintiff), Ms Witkin (on behalf of Paxus), Ms Shields (on behalf of Transport) and Darren McConnell (on behalf of Career) attended a Conciliation Conference in the FWC. Jonathan Brine and Ray Boulos, employees of Career who were alleged to have been either involved in the bullying or aware of its occurrence, were also in attendance. Ms Witkin and Mr Gay attended by telephone. The conference, which lasted all day but did not resolve the dispute, was adjourned to 18 December 2015.

28. On 18 December 2015, the same parties were represented by the same people as they had been on 9 December 2015. Once again, Ms Witkin and Mr Gay attended by telephone. During the day, Ms Shields spoke separately to Ms Witkin about the possibility of Paxus, Transport and Career making a joint offer to the plaintiff. By the end of 18 December 2015, an offer of settlement was made by Paxus, Transport and Career. The conference was adjourned to permit the plaintiff to consider the offer.

29. On 21 December 2015, Mr Gay, on behalf of the plaintiff, indicated that he accepted the offer subject to the execution of a deed. Paxus, Transport and Career also agreed on terms between themselves in a document entitled Settlement Agreement, which was ultimately executed in May 2016. The form of the Settlement Agreement did not change. There were, however, several iterations of the Deed of Release, which will be considered below.

The preparation of the Deed of Release

30. Both the Deed of Release (and the various drafts) and the Settlement Agreement were prepared by Ms Shields. She deposed in her affidavit of 28 February 2022 that her subjective intention in drafting these documents was as follows:

“In preparing these documents it was always my objective that, in accordance with my instructions, Transport would be protected from any future claim that may arise out of [the plaintiff]'s period of service at Transport, including the specific allegations of bullying he had made against the employees of Career, and that all liability as between Transport and the other parties, including Paxus and Career, would be finalised as a result of the parties' entry into the Deed of Release and the Settlement Agreement.”

The first draft of the Deed of Release

31. On 23 December 2015, Ms Shields circulated the first draft of the Deed of Release to Ms Witkin and Mr McConnell with a view to obtaining their agreement to it before it was provide to Mr Gay for the plaintiff to consider. She also confirmed that she would not provide the Settlement Agreement to the plaintiff since this was a matter between Paxus, Career and Transport. Ms Shields said:

“In relation to the payment to [the plaintiff], we will separately forward to you an agreement that is to sit between [Transport, Paxus and Career] which sets out that Paxus will make the payment to [the plaintiff] and that [Transport and Career] will make payments to Paxus in contribution of the payments to be made to [the plaintiff].”

32. By separate email, also sent on 23 December 2015, Ms Shields forwarded to Ms Witkin and Mr McConnell the draft Settlement Agreement and invited their comments. As the form of the Settlement Agreement did not change, its terms will be addressed later in these reasons, rather than in the narrative leading up to its execution.

33. The first draft of the Deed of Release defined “Claim” in cl 1.1(3) as follows:

“Claim means any present or future, actual or contingent, claim, cause of action, complaint, liability, cost or expense that any person (whether or not a Party to the Proceeding) has or might have, in connection with or arising in any way from:

(a)    the Complaints;

(b)    the Investigation;

(c)    the facts or matters referred to or alleged in either the Bullying Proceedings or the General Protections Proceedings;

(d)    Mr Collinson’s employment with Paxus;

(e)    Mr Collinson’s engagement to perform the Services for [Transport] under the Contract;

(f)    any Entitlements arising out of Mr Collinson’s employment with Paxus or the Contract; or

(g)    the expiry of the Contract;

whether or not the facts, matters or circumstances giving rise to that claim, cause of action, complaint, liability, cost or expense are known to that person or to any other person at the date of this Deed. A Claim:

(h)    includes, to the extent permitted by law, any Claim Mr Collinson may have against Paxus, [Transport] or a statutory workers’ compensation authority for damages for injuries sustained by Mr Collinson during the Contract; but

(i)    does not include any claim for, or right to seek, statutory workers’ compensation or statutory superannuation contributions;”

[Emphasis in italics added to indicate the portion of the definition which was subsequently changed as a result of negotiation.]

34. It is evident from the definition of “Claim” in the first draft that the only matters which the draftsperson intended to exclude from the release in cl 4 were workers compensation claims and claims for superannuation benefit, being claims which could only be made by the plaintiff against Paxus.

35. Clause 2.1 made provision for Paxus to pay the plaintiff an amount of $50,339.52, which was defined as the “Settlement Amount”.

36. The first draft of the Deed of Release also relevantly provided:

“2.2    The Settlement Amount and the reimbursement of Medical Expenses and Legal Expenses are gross amounts, and will be paid to Mr Collinson after deduction of tax as required by law.”

37. The first draft of the Deed of Release also provided for the confidentiality of the agreement (cl 6, which became cl 7 in the final version) and also that the parties were not to make disparaging comments (cl 7, which became cl 8 in the final version).

38. Clause 9 of the first draft (which became cl 10 in the final version) provided:

“9   Acknowledgment

9.1    Mr Collinson acknowledges that he:

(1)    understands the legal significance and effect of signing this Deed;

(2)    has had the opportunity to obtain professional advice, including legal and financial advice, in relation to the terms and effect of this Deed; and

(3)    has not been induced to execute this Deed by any improper pressure, coercion or undue influence.”

[Emphasis in original.]

39. It is evident from cl 2.1(1)(a) of the Deed of Release that Paxus was liable to pay the Settlement Amount to the plaintiff. However, the terms of the Settlement Agreement governed the contributions to that amount which Transport and Career agreed to pay to Paxus.

40. On 5 January 2016, Jenny Smith, another solicitor at NRF who was dealing with the matter as Ms Shields was on leave, sent drafts of the Settlement Agreement and the Deed of Release to Ms Witkin. On 6 January 2016, Ms Witkin responded to Ms Smith and said:

“Paxus is happy with the Settlement Agreement and Deed of Release. Please proceed.”

41. Later on 6 January 2016, Ms Smith sent the draft Deed of Release by email to Mr Gay for the plaintiff’s consideration and invited his comments. Mr Gay responded by email on 1 February 2016, relevantly as follows:

“Further to my last email, [the plaintiff] and I are still in the process of finalising our legal advice, with a view to completing the agreement we reached, and settling on acceptable terms.

…

We have therefore asked Mr Paul Lorraine of [Harmers] to advise and support [the plaintiff] on the ground. We have briefed Paul on the status of the matter, including my views on the draft release. Paul will shortly be in contact with you.”

42. On 20 January 2016, on her return from leave, Ms Shields emailed Ms Witkin about the Deed of Release. Ms Shields also raised the Settlement Agreement as follows:

“In the meantime, do you have any comments on the Settlement Agreement? I have come back to you on it as obviously it will be a priority to determine whether the matter will in fact settle on the terms in the Deed, but if you do have comments or concerns that we can address now, please let me know.”

43. Once again, on 21 January 2016, Ms Witkin responded to Ms Shields’ enquiry:

“We have no concerns with the Settlement Agreement.”

44. In late January 2016, the plaintiff commenced further proceedings in the FWC for general protections, proceedings C2016/2393.

45. By letter dated 3 February 2016, Paul Lorraine, of Harmers, wrote to NRF, informing them that Harmers acted for the plaintiff in relation to the three FWC proceedings. He asked Ms Shields whether NRF acted for Paxus and Transport and also for Career, Mr Brine and Mr Boulos. Mr Lorraine summarised his understanding of the basis of the settlement of the FWC proceedings (which included that workers compensation claims be excluded from the release) and expressly reserved the plaintiff’s rights pending execution of the deed.

46. Later on 3 February 2016, Ms Shields wrote to Ms Witkin and copied in Ms Woodward as follows:

“Please see the attached correspondence from Harmers in relation to [the plaintiff].

As you will have seen, Mr Lorraine has assumed that we act for both Paxus and [Transport].

I propose to respond that we act for [Transport] only and that he should contact you directly for matters relating to Paxus. I will, however, note that in the interests of efficiency and attempting to resolve the matter for all of the respondents that I am the point of contact with respect to the Deed and to the extent that Paxus and [Transport] are in agreement in relation to the Deed, I will notify him when I am responding on behalf of both parties. Are you comfortable with this approach?

You will see that in the letter he is proposing to work through the issues in the Deed with a view to resolving them and I will confirm that the Deed is proposed to cover all proceedings against the parties, both existing and future, and this will now need to be amended to include the new application.

I will come back to you with any proposed changes that Mr Lorraine seeks to make to the Deed.”

47. Ms Witkin responded later on 3 February 2016, in part as follows:

“I agree with your approach, please advise Mr Lorraine to contact me directly for matters relating to Paxus, however in matters to the deed [sic], you can respond for both parties.

…

We have been on the same page, Ali [Ms Shields], and I continue to heed your counsel and advice in this matter, but we are disappointed with the course of action that has been taken when we agreed in good faith and Mr Gay has not had the courtesy to advise differently prior to a new application being lodged.”

48. On 8 February 2016, Ms Shields wrote to Ms Witkin, in part as follows:

“I appreciate all your comments regarding the change in circumstances for Paxus in light of the new proceedings, and also the amendments to the Deed. In addition, we will, of course, need to amend the Deed to specifically include these new proceedings now as well.

I have spoken to [Transport] and I am scheduled to speak with Mr Lorraine this morning (I attempted to contact him last week but had no luck). It is [Transport]'s view that the current proposed settlement should be given a time limit of, say, 2 weeks, such that it does not drag on. If it is not accepted and the Deed resolved within 2 weeks, [Transport] wants to withdraw the entire proposal. What are your views on this approach?

We agree with your sentiments regarding the disappointment in Mr Gay's conduct and the way in which the matter has been handled.

Please let me know if you have any concerns with me speaking to Mr Lorraine as outlined above, or if there is anything else you wish to convey. I will report back to you after our discussion.”

49. On 8 February 2016, Ms Shields wrote to representatives of Transport and Paxus, including Ms Witkin. She reported to them on her without prejudice discussions with Mr Lorraine and said:

“I informed him that we act for [Transport] only and none of the other respondents, but that in discussions on the Deed of Release I had authority to speak to him as the single point of contact, to the extent that the respondents were in agreement. I note that this email is addressed to both Paxus and [Transport] as a summary of my discussions with Paul.

…

I asked Paul to outline the issues that he had with the Deed and he said that whilst he would need to confirm this in writing, he would be seeking confirmation that statutory workers’ compensation claims were excluded from the release (which they are in the present draft I pointed out), and that the payment be made in the most tax effective way for [the plaintiff], which was for it to be a capital payment for personal injury. I said that it was my understanding that Mr Gay was going to be seeking instructions on how he proposed for the payment to be taxed and he had not yet come back to me on that matter, but that if Paul now proposed a structure I would seek instructions accordingly.

He indicated that those were the two main issues.

…”

50. By email dated 16 February 2016, Ms Shields wrote to Mr Lorraine, referring to his letter of 3 February 2016 and their discussion on 8 February 2016. She said, in part:

“We do not act for Paxus, [Career] or any of the named individuals in relation to those Applications.

However, we can further confirm that both Paxus and [Career] have agreed for us to be the single point of contact in relation to discussions with you about the proposed Deed of Release (discussed in further detail below), to the extent that the Respondents are in agreement.

At any point where we are not in a position to speak on behalf of Paxus or [Career] in relation to any matter pertaining to the Deed of Release, we will immediately identify this to you.”

51. Ms Shields attached to her email a copy of the draft Deed of Release, in word format “as requested”. On 16 February 2016, Ms Shields also forwarded to Ms Witkin her email to Mr Lorraine.

Correspondence re proposed second draft of Deed of Release and further drafts

52. By letter dated 26 February 2016, Mr Lorraine of Harmers wrote to NRF and suggested amendments to the Deed of Release. These included that the definition of “Claim” in cl 1.1(3) be amended to add the following carve-out:

“A Claim:

(h)    does not include any claim Mr Collinson may have for Work Injury Damages under the workers compensation legislation and the parties acknowledge and agree that no part of the Settlement Amount represents damages in respect of an injury arising out of, or in the course of, or to which Mr Collinson’s employment may have been a substantial contributing factor;

(i)    does not include any claim for, or right to seek, statutory workers’ compensation or statutory superannuation contributions; and

(j)    does not include assisting any Regulatory Body with its claims or investigations.”

53. Mr Lorraine also sought that the Settlement Amount (as defined) “be paid as a capital amount of general damages, as compensation for hurt, humiliation and dislocation of life.” He said that the amount, if described in this way, would not be taxable.

54. On 1 March 2016, Ms Shields forwarded Mr Lorraine’s letter of 26 February 2016 to persons at Transport (her client), Paxus and Career. In her covering email she said in part:

1. They want the payment to be made as a capital payment for general damages for hurt and humiliation. This means that it is a payment that is made without the deduction of tax. This is a matter for Paxus to determine whether it is comfortable to make the payment on this basis. We would therefore advise that you seek independent taxation advice as to whether Paxus is comfortable to make the payment without the deduction of tax.

2. They have changed the definition of claim to the following:

A claim “does not include any claim Mr Collinson may have for Work Injury Damages under the workers compensation legislation and the parties acknowledge and agree that no part of the Settlement Amount represents damages in respect of an injury arising out of, or in the course of, or to which Mr Collinson’s employment may have been a substantial contributing factor”

It is our view that it is inconsistent to say that the payment is damages for hurt and humiliation for which his employer is not required to deduct tax but at the same time suggest that ‘the parties acknowledge and agree that no part of the Settlement Amount represents damages in respect of an injury arising out of, or in the course of, or to which Mr Collinson’s employment may have been a substantial contributing factor”. Whilst we take no issue with the first part of the amendment, we propose that the second part should be deleted.

…

We would be happy to discuss the proposed changes to the Deed with you further or, subject to your additional comments, respond to Harmers on the basis set out above.”

[Emphasis in original.]

55. Later on 1 March 2016, Ms Witkins responded to Ms Shields’ email. In respect of 1. above, she said:

“Paxus is currently obtaining independent taxation advice and will advise accordingly[.]”

56. As to 2., she said:

“Paxus Agrees that this is inconsistent and should be amended with the second part deleted[.]”

57. On 7 March 2016, Ms Witkin emailed Ms Shields and said in part:

“Paxus has received independent taxation advice from [Deloitte] and Paxus is able to process a lump sum payment as a capital payment for general damages. However we should probably add any personal taxation is [the plaintiff]’s own responsibility.”

58. By email dated 15 March 2016, Ms Shields emailed Ms Witkin and Mr McConnell (from Career) and others attaching an amended Deed of Release which she had drafted to take into account Harmers’ requests and the comments made by Paxus. She sought their comments so that she could, after receipt, send the amended Deed of Release to Harmers. The definition of “Claim” in the further draft included the following:

“A Claim does not include:

(h)    any claim Mr Collinson may have for Work Injury Damages under the workers compensation legislation; and;

(i)    any claim for, or right to seek, statutory workers’ compensation or statutory superannuation contributions.”

59. Ms Witkin responded by email sent the same day, 15 March 2016:

“Thanks for this. I have reviewed and Paxus is happy with the changes.

Will there be a further time limit of this, or is it just until the other matter is relisted and heard? Just reinforcing that if the matter [in the FWC] goes to conference, then this deed becomes invalid.”

60. By email dated 30 March 2016, Ms Shields wrote to Paxus (Ms Witkin) and Career (Mr McConnell) and others (not including Mr Lorraine or the plaintiff) and said in part:

“[The plaintiff] has agreed to all of our changes subject to the following:

1) He wants the definition of ‘claim’ to be as per his drafting to ensure that his workers compensation claim is not compromised in any way. I have suggested to Mr Lorraine that our wording does not compromise the workers compensation claim but that we have concerns that the drafting as they provided is too great a carve out which may leave each of the organisations exposed to a further claim, not just a workers compensation issue. Mr Lorraine is seeking further instructions as to whether our wording is acceptable and he will come back to us on this point.

…”

61. On 31 March 2016, Ms Witkin responded to Ms Shields by email and said:

“I am happy with the attached mark-ups.”

62. On 31 March 2016, Mr Lorraine wrote to Ms Shields and Ms Woodward as follows:

“I now have advice from [the plaintiff]'s workers compensation lawyer, Julian Beale. Julian is concerned that by virtue of section 151A of the Workers Compensation Act 1987, recovering any damages in respect of an ‘injury’ extinguishes all further entitlements under the Act in respect of that injury. I do not think that is your client's intention.

According to Julian, the question from a workers compensation point of view is whether recovering damages for ‘hurt, humiliation and dislocation of life’ amounts to recovering damages for an ‘injury.’ Under common law principles, Julian does not think it does, but the risk is WorkCover could raise it as a complete defence. There is a distinction between excluding workers compensation and WID [work injury damages] claims from the settlement (ie allowing [the plaintiff] to pursue such claims), and a defence that he has recovered damages for an ‘injury’ (as a matter of fact). Julian believes both aspects need to be reflected in the terms of the Deed.

In his view there should be an explicit acknowledgement and agreement that the settlement does not include damages in respect of an injury.

Additionally/ alternatively, he suggests the words ‘general damages’ should be replaced with ‘compensation.’ Of course there are no guarantees, but he considers it unlikely a court would equate ‘compensation for hurt, humiliation and dislocation of life’ with ‘damages for an injury.’

If it assists, in my experience, to prevent any confusion with personal injury damages, there is nothing wrong with describing an amount as ‘compensation’ for ‘hurt and humiliation’, or even just ‘hurt feelings’ (and the ATO [Australian Taxation Office] recognises that such a payment is a capital amount, not an ‘ETP’ [Employment Termination Payment]).

Given the firm view of [the plaintiff]’s workers compensation lawyer, the fact that this is the last remaining item to be resolved, and all we are trying to do is not inadvertently foul up [the plaintiff]’s statutory rights, please ask your client to reconsider this point.”

63. Ms Shields was on leave from 31 March 2016 and Ms Woodward took over carriage and conduct of the matter from that time.

63. On 7 April 2016, Ms Woodward wrote to Ms Witkin and Mr McConnell and said in part:

“Further to her [Ms Shields’] email below, we have heard back from Harmers in relation to the definition of ‘Claim’.

Harmers has informed us that [the plaintiff]’s workers compensation lawyer, Julian Beale is concerned that by virtue of section 151A of the Workers Compensation Act 1987, recovering any damages in respect of an ‘injury’ extinguishes all further entitlements under the Act in respect of that injury. According to Mr Beale, the question from a workers compensation point of view is whether recovering damages for ‘hurt, humiliation and dislocation of life’ amounts to recovering damages for an ‘injury.’ Whilst Mr Beale does not think that it does under common law principles, he is concerned that WorkCover could raise it as a complete defence. Mr Beale has said that there is a distinction between excluding workers compensation and WID claims from the settlement (ie allowing [the plaintiff] to pursue such claims), and a defence that he has recovered damages for an ‘injury’ (as a matter of fact). Mr Beale believes both aspects need to be reflected in the terms of the Deed. [The plaintiff] is therefore pressing for there to be an explicit acknowledgement and agreement that the settlement does not include damages in respect of an injury.

It is my understanding that it is not the intention of the Deed that the settlement of this claim impacts upon any workers compensation claim that [the plaintiff] has. On that basis, we could include the following paragraph in the Deed as an additional sub-clause to 2.2:

1.1 For the avoidance of doubt, the parties acknowledge that no part of the Settlement Amount constitutes damages in respect of an injury arising out of, or in the course of, or to which [the plaintiff] employment may have been a substantial contributing factor, in respect of which [the plaintiff] may make a claim to a statutory workers’ compensation authority for damages for injuries sustained by him during the Contract.

[Ms Witkin] – assuming that [the plaintiff]’s workers compensation claim is on foot, you may wish to run this wording past your insurer to ensure that they are comfortable with it and it does not pose any problems from your perspective.

Please let me know if there are any comments on the above.”

[Emphasis in original.]

65. On 11 April 2016, Ms Woodward emailed Ms Witkin and Mr McConnell regarding the then current draft deed and enquired whether Ms Witkin had had a chance to discuss the wording of cl 2.2 with Paxus’ workers compensation insurer. Ms Witkin responded, informing Ms Woodward that she did not agree to the proposed cl 2.2. Ms Woodward emailed Ms Witkin later on 11 April 2016 as follows:

“Thanks for your email confirming that you do not agree to the new clause 2.2.

I am happy to revert to Harmers and say that we will not agree to their requested amendment, but this is an important point to [the plaintiff] and could possibly derail the settlement discussions. As a result, I thought it might be helpful for you to see the explanation as to why they had requested the change. I attach below the email that Harmers sent on the workers compensation issue explaining their concerns about the wording. The email is pretty self-explanatory and they want confirmation that paying the amount as general damages does not mean that the amounts that are now being paid to [the plaintiff] are paid in compensation for the injury itself.

Please let me know if this changes anything from your perspective. If not, I will go back to Harmers and let them know that their position is not agreed.”

66. By email sent at 5.01pm on 11 April 2016, Ms Witkin wrote to Ms Woodward:

“It is not Paxus[’] intent to derail the settlement, but we cannot leave our selves unduly exposed.

[The plaintiff] wants the payment to be made as a capital payment for general damages for hurt and humiliation. This means that it is a payment that is made without the deduction of tax.

It is inconsistent to say that the payment is damages for hurt and humiliation for which his employer is not required to deduct tax but at the same time suggest that

“for the avoidance of doubt, the parties acknowledge that no part of the Settlement Amount constitutes damages in respect of an injury arising out of, or in the course of, or to which Mr Collinson’s employment may have been a substantial contributing factor, in respect of which Mr Collinson may make a claim to a statutory workers’ compensation authority for damages for injuries sustained by him during the Contract.”

Paxus believes the below should be sufficient:

includes, to the extent permitted by law, any Claim Mr Collinson may have against Paxus, [Transport] or a statutory workers’ compensation authority for damages for injuries sustained by Mr Collinson during the Contract; but does not include any claim for, or right to seek, statutory workers’ compensation or statutory superannuation contributions;”

[Emphasis in original.]

67. Ms Woodward responded to Ms Witkin at 5.04pm on 11 April 2016:

“I understand your position – it does seem to me that he is leaving the way open for him to double dip.

I will go back to Harmers on that basis once I receive confirmation from [Transport] on the other outstanding point.”

68. On 13 April 2016, Ms Witkin telephoned Ms Woodward to discuss matters which included, according to Ms Woodward’s file note, workers compensation, injury and unfair dismissal. The file note ended with a note that Ms Witkin would go to “w/c [workers compensation] people” and “come back to us.”

69. Following her telephone conversation with Ms Witkin, Ms Woodward reported to Transport (her client) in an email, relevantly as follows:

“I spoke to [Ms Witkin] from Paxus this morning. She is going to speak to her workers compensation provider about the proposed wording. However, [Ms Witkin] was fairly certain that they would not provide her with any particular assistance as they have been fairly non-committal in previous conversations. [Ms Witkin]’s firm view is that [the plaintiff] is attempting to push for more than he had initially bargained for. Whilst Paxus is willing to agree (as they have to) that the current settlement does not include workers compensation claims and that [the plaintiff] is free to pursue such claims, Paxus will not agree to limit the right of the insurer to defend the workers compensation claim as it sees fit and if it wants to rely on the fact that a payment has been made under the Deed to mitigate losses then it should be entitled to do so.

As you may know, [the plaintiff]’s workers compensation claim has been denied. [Ms Witkin] does not know of its current status. We agreed that before I went back to Harmers that she would speak to the workers compensation provider and would come back to me to let me know if there was any change to Paxus’ position.

I will let you know as soon as I hear back.”

70. On 14 April 2016, Ms Witkin, in response to Ms Woodward’s further inquiry, said in an email:

“No definitive answer unfortunately, I am just going around in circles.

We maintain that the settlement does not include his right to claim under any statutory workers compensation claim, but we do not agree to expressly stating the payment is not for an injury, when he is specifically asking for a capital payment of hurt and humiliation to avoid paying tax.”

71. On 21 April 2016, Mr Lorraine sent an email to Ms Woodward as follows:

“I have what I hope will be a simple and acceptable solution to the last issue, by changing some of the words used to describe the Settlement Amount in clause 2.1(1)(a) as follows:

2.1(1)(a) currently states:

‘Paxus will pay Mr Collinson an amount of $50,339.52 (Settlement Amount) as general damages for hurt, humiliation, and dislocation of life;’

We propose changing this to:

‘Paxus will pay Mr Collinson an amount of $50,339.52 (Settlement Amount) as compensation for hurt, humiliation and dislocation of life arising out of a Claim;’

On the advice of Mr Collinson's workers compensation lawyer, the concern is that without this change WorkCover may argue that Mr Collinson has received ‘damages in respect of an injury’ within the meaning of the Workers Compensation Act. While there is no guarantee, I am advised that the proposed wording should overcome any such argument, without changing the meaning of what has already been agreed.

I sincerely hope this is mutually acceptable.”

72. On 22 April 2016, Ms Woodward forwarded this email to Ms Witkin, Mr McConnell and others and said:

“I attach an email from Harmers in relation to the one outstanding issue in the Deed, that of the reference to the workers compensation claim.

This seems to me to be a reasonable proposal. [Ms Witkin] – this remaining issue is primarily a matter for Paxus. Can you please confirm whether you are comfortable with the proposal below. Assuming that you are, I will then notify Harmers that the deed is agreed and arrange for execution copies to be prepared.”

73. By email sent on 27 April 2016, Ms Witkin confirmed to Ms Woodward that the proposed change was “acceptable to Paxus”.

74. On 2 May 2016, Ms Woodward sent the final copy of the Deed of Release for execution to Ms Witkin and Mr McConnell. In a separate email, Ms Woodward sent a copy of the Settlement Agreement to Transport, Career and Paxus which she said that she understood had been “agreed by everyone before Christmas.”

75. On 3 May 2016, Ms Witkin sent to Ms Woodward the Deed of Release and the Settlement Agreement, both of which had been executed on behalf of Paxus by Mr Trevethick and witnessed by Ms Witkin.

The Deed of Release

76. The Deed of Release was executed in May 2016 and provided for payment to the plaintiff and a release of his claims against the other parties. There was a carve-out for workers compensations claims and work injury damages against Paxus.

77. The recitals to the Deed of Release provided as follows:

“Introduction

A   [Transport] engages Paxus as a contractor to provide individuals to perform services for [Transport] as required.

B   Mr Collinson was employed by Paxus to provide services to [Transport] as a Senior Network Architect on [Transport]'s ‘Next Generation Infrastructure Services’ (NGIS) Project (Services) under a contract for services for the period 5 January 2015 to 4 January 2016 (Contract).

C   Mr Collinson made a series of complaints against members of the NGIS Project, including employees of the Transport Service of New South Wales who perform services for [Transport] and employees of [Career], namely Mr Brine and Mr Boulos, who were also engaged as contractors to provide services on the NGIS Project (Complaints).

D   [Transport] engaged an independent third party investigator to conduct an investigation into the Complaints (Investigation).

E   On 7 August 2015 Mr Collinson commenced a period of leave for medical reasons and no longer performed the Services under the Contract.

F   The Contract will expire on 4 January 2016.

G   Mr Collinson has commenced the Bullying Proceedings against [Transport], Paxus, [Career], Mr Brine and Mr Boulos.

H   Mr Collinson has subsequently commenced the General Protections Proceedings against [Transport].

I   In order to avoid further cost and inconvenience and with no admission of liability, the Parties settled the Bullying Proceedings, the General Protections Proceedings and all other Claims on the terms in this Deed.”

[Emphasis in original.]

78. The term “Claim” was defined in cl 1.1(3) of the Deed of Release as follows:

“Claim means any present or future, actual or contingent, claim, cause of action, complaint, liability, cost or expense that any person (whether or not a Party to the Proceeding) has or might have, in connection with or arising in any way from:

(a)    the Complaints;

(b)    the investigation;

(c)    the facts or matters referred to or alleged in either the Bullying Proceedings or the General Protections Proceedings;

(d)   Mr Collinson's employment with Paxus;

(e)    Mr Collinson's engagement to perform the Services for [Transport] under the Contract;

(f)    any Entitlements arising out of Mr Collinson's employment with Paxus or the Contract; or

(g)   the expiry of the Contract

whether or not the facts, matters or circumstances giving rise to that claim, cause of action, complaint, liability, cost or expense are known to that person or to any other person at the date of this Deed. A Claim does not include:

(h)    any claim Mr Collinson may have for Work Injury Damages under the workers compensation legislation; and

(I)    any claim for, or right to seek, statutory workers' compensation or statutory superannuation contributions.”

[Emphasis in original.]

79. Clause 2.1 of the Deed of Release provided:

“2   Settlement

2.1   Without admission of liability, and in full and final satisfaction of any and all Claims:

(1)    within 7 days of Paxus, [Career] and [Transport] receiving a copy of this Deed executed by Mr Collinson and a copy of the Deed Poll in Schedule 2 as separately executed by Mr Gay and Sir Peter

(a)    Paxus will pay Mr Collinson an amount of $50,339.52 (Settlement Amount) as compensation for hurt, humiliation, and dislocation of life arising out of a Claim; and

(b)    Paxus, [Career] and [Transport] will provide to Mr Collinson letters of acknowledgement in the form set out in Schedule 1 to this Deed whereby each of the letters will be on the respective organisation's letterhead;

(2)    within 7 days of Paxus, [Career] and [Transport] receiving confirmation from [NRF] of receipt of the relevant invoices substantiating (in a manner satisfactory to [NRF] the actual expenses incurred, Paxus will pay to Mr Collinson reimbursement of

(a)    a maximum amount of $8,000 in respect of the medical expenses he has incurred; and

(b)    pay Harmers Workplace Lawyers an amount of $7,000 in respect of Mr Collinson's legal costs.”

[Emphasis in original.]

80. The Deed of Release also provided:

“3    Discontinuance

3.1    Within 3 days of Mr Collinson receiving the Settlement Amount, Mr Collinson must take all necessary steps to discontinue the Bullying Proceedings and the General Protections Proceedings, on the basis that each party to each of those proceedings respectively bear their own costs.

3.2    Mr Collinson must then Immediately provide Paxus, [Career] and [Transport] with evidence of the discontinuance of the Bullying Proceedings and the General Protections Proceedings.

4    Release

4.1    Mr Collinson releases and discharges Paxus, [Career], [Transport], any of their Related Bodies Corporate or Associated Entities, and their respective present and former officers, employees and agents, from all Claims.

4.2    Mr Collinson must not at any time bring, institute, support or continue proceedings in any Jurisdiction, commission, court or tribunal, in relation to any Claim, whether at common law, in equity or under statute.

5    Bar to proceedings

5.1    This Deed may be relied on by Paxus, [Career], [Transport], any of their Related Bodies Corporate or Associated Entities and their respective present and former officers, employees and agents, as a complete bar to any proceeding covered by clause 4.”

[Emphasis in original.]

The Settlement Agreement

81. The recitals to the Settlement Agreement provide:

“Introduction

A    [Transport] engages Paxus and [Career] separately as contractors to provide individuals to perform services for [Transport] as required in accordance with a contract for services dated from 06.03.2013 respectively (Contracts).

B    Mr Stephen Collinson was employed by Paxus on a casual basis to provide services to [Transport] under a contract for services for the period 5 January 2015 to 4 January 2016 (Collinson Contract).

C    Mr Collinson, Paxus, [Career] and [Transport] have entered into a Deed of Release dated 03.05.2016 (Collinson Deed).

D    The Collinson Deed requires financial payments to be made to Mr Collinson from Paxus.

E    [Transport] and [Career] have agreed to contribute to the payments that Paxus is required to make under the Collinson Deed.

F    The Parties to this Agreement agree that those contribution payments will be made in accordance with this Agreement.”

[Emphasis in original.]

82. The term “Claim” is defined in the Settlement Agreement in cl 1.1(3) as follows:

“Claim includes any action, application, arbitration, cause of action, complaint, cost, expense, debt due, demand, determination, inquiry, judgment and verdict”

[Emphasis in original.]

83. Clause 2 provides:

2 Settlement with Mr Collinson

2.1    In accordance with the Collinson Deed, the Parties have agreed that Paxus will:

(1)    pay to Mr Collinson an ex gratia amount of $50,339.52 (Settlement Amount); and

(2)    reimburse Mr Collinson for medical expenses he incurred to a maximum amount of $8,000 (Medical Expenses) and legal expenses he incurred to a maximum amount of $7,000 (Legal Expenses), on the basis that he provides the appropriate invoices to substantiate those expenses.

2.2    The Parties have agreed that:

(1)    Paxus will pay 25% of the Settlement Amount and the reimbursement for Medical Expenses and Legal Expenses, being a total of $12,584.88 in respect of the Settlement Amount (Paxus Settlement Amount) and $3,750 in respect of the reimbursement for Medical Expenses and Legal Expenses (Paxus Reimbursement Amount);

(2)    [Transport] will pay 75% of the Settlement Amount, less $1,000, and 75% of the reimbursement for Medical Expenses and Legal Expenses, being a total of $36,754.64 in respect of the Settlement Amount ([Transport] Settlement Amount) and $11,250 in respect of the reimbursement for Medical Expenses and Legal Expenses ([Transport] Reimbursement Amount); and

(3)    [Career] will pay $1,000 towards the Settlement Amount.

2.3    The Parties have agreed that the Settlement Amount and reimbursement for Medical Expenses and Legal Expenses will be paid in full to Mr Collinson by Paxus, subject to clause 3 of this Agreement.”

[Emphasis in original.]

84. Clause 3 of the Settlement Agreement required Transport and Career to pay their respective amounts to Paxus within three days of receiving the Deed of Release, as executed by the plaintiff.

85. Clauses 4 and 5 provide:

“4 Release

4.1    To the extent permitted by law, each Party releases and discharges the other Party, any of their Related Bodies Corporate or Associated Entitles, and their respective present and former officers, employees and agents, from any Claim that a Party may have against the other Party arising out of the:

(1)    Collinson Contract:

(2)    facts or matters arising directly or indirectly from Mr Collinson's provision of services for [Transport] in accordance with the Collinson Contract;

(3)    any absence taken by Mr Collinson during the Collinson Contract;

4.2    Each Party must not at any time bring, institute, support or continue proceedings in any jurisdiction, commission, court or tribunal, in relation to any Claim against another Party, whether at common law, in equity or under statute

4.3    For the avoidance of doubt the release set out in this clause 4 does not pertain to any Claim that any Party may have against another Party arising out of a breach of the Collinson Deed, including any breach by Mr Collinson, or a breach of this Agreement.

5 Bar to proceedings

5.1    This Deed may be relied on by each Party, any of their Related Bodies Corporate or Associated Entities and their respective present and former officers, employees and agents, as a complete bar to any proceeding covered by clause 4.”

[Emphasis in original.]

The position of Paxus

86. Ms Witkin’s unchallenged evidence was that she neither sought nor obtained legal advice about the effect of the Deed of Release or the Settlement Agreement. Ms Witkin did not give evidence that she informed NRF of that fact or her understanding.

87. In a further affidavit dated 22 April 2021, Ms Witkin deposed:

“2   Prior to the agreement between [Paxus], [Transport] and [Career] being reached I had no notice of any intended claim by [the plaintiff] against any of those entities for damages based on negligence and no potential claim of that kind was mentioned to me.

3   I did not have any understanding of a work injury damages claim or [that] it was a claim that depended on the negligence of Paxus.

4   I assumed that any reference to workers compensation was simply a reference to any statutory non fault based workers compensation liability that [the plaintiff] may have against Paxus.”

88. In a further affidavit of 4 April 2022, Ms Witkin deposed:

“2   I have no legal training or experience and never have had. In particular I have no training or experience in the interpretation and construction of legal documents or in relation to personal injuries claims for damages in negligence or otherwise.

3   I conducted and concluded the negotiations which resulted in the execution of the Deed of Release and Settlement Agreement and once they were finalised I arranged for my superior, Mr Trevethick to sign the documents. He at no stage told me that he had opinions of his own about them [sic] documents and he did not express a view to me about what he thought was the meaning and effect of the documents.”

89. Mr Trevethick, in an affidavit of 4 April 2022, deposed that in 2015 he was the Managing Director of Paxus and was Ms Witkin’s direct supervisor. His only involvement prior to settlement was to discuss the respective contributions to be made to the settlement sum to be paid to the plaintiff. He also deposed:

“12   I did not know about any other actual or potential claims arising from the alleged bullying and it was never my intention to deal with them in any way. Specifically, I was not aware of any potential workers compensation issues and, at that time, I did not have an intimate working knowledge of workers compensation issues.

13   I relied on what Ms Witkin told me as to the nature of the agreements and although I would have read the documents before I signed them on behalf of [Paxus] as the responsible company person senior to her, I have no recollection of ever forming an independent opinion about them.”

Consideration

Whether the separate questions can be determined in advance of the determination of whether the plaintiff is entitled to equitable relief from the operation and effect of the Deed of Release

90. The Deed of Release separate question was formulated by reference to the second further amended statement of claim (which joined Stacks, Mr Campbell and Mr Di Michiel as defendants). As referred to above, among other purposes, the separate determination of this question was expected to determine whether Firths and Harmers, on the one hand, or Stacks, Mr Campbell and Mr Di Michiel on the other, were the appropriate defendants to the plaintiff’s claim.

91. However, shortly before the hearing of the separate question (which was listed on 5 and 6 April 2022), the plaintiff circulated a proposed third further amended statement of claim, which substantially changed the basis of his claim. As a consequence, the parties agreed that the Deed of Release separate question could not be determined finally, if the separate question was construed as including the plaintiff’s proposed new pleading of a right to equitable relief to resist the legal operation and effect of the terms of the Deed of Release. As referred to above this led to the revised Deed of Release separate question as follows

“Did the Deed of Release entered into in May 2016 between parties including the plaintiff, Transport and Career, on its proper construction, have the effect of extinguishing any rights the plaintiff may have had to bring proceedings against Transport and/or Career for damages for psychiatric injury sustained due to bullying and verbal abuse which the plaintiff alleges he experienced at his place of work while allegedly subject to the control of Transport and/or Career?”

92. I understood it to be accepted that the answer to this question would not determine whether the plaintiff could maintain a claim against Firths and Harmers or Stacks, Mr Campbell and Mr Di Michiel. However, it was common ground that the determination of this question would at least resolve one legal issue in the case which would bear on the liability of the respective lawyers. If the revised question were answered no, then the plaintiff’s claim against Firths and Harmers may fall away, but if the revised question were answered yes, the plaintiff may nonetheless proceed against all five legal defendants.

93. Transport and Career submitted that the Settlement Agreement separate questions could be determined even if only the revised Deed of Release question was determined. However, Paxus, for whom Mr King SC appeared with Mr Kelly, submitted that the Settlement Agreement and the Deed of Release were cognate agreements and that the Settlement Agreement separate questions ought not be determined until not only the legal construction of the Deed of Release had been determined but also the availability of equitable relief to the plaintiff in respect of the Deed of Release.

94. I accept that the Deed of Release and the Settlement Agreement can be regarded, in a sense, as forming part of the same transaction. Thus, in accordance with what Mason J said in Codelfa at 352, at least if there is any ambiguity in the terms of the Settlement Agreement, regard can be had to the terms and legal effect of the Deed of Release as part of the surrounding circumstances: see also South Sydney Council v Botanical Gardens [1999] NSWCA 478; (1999) 10 BPR 18,961 at [35] (Spigelman CJ, Beazley JA agreeing), affirmed in Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45; [2002] HCA 5.

95. However, I am not persuaded that the construction and effect of the Settlement Agreement could turn on whether the plaintiff is entitled to equitable relief from the legal effect of the Deed of Release. Whether equitable relief is available to the plaintiff to ameliorate the effect of the legal construction of the Deed of Release depends on matters which do not bear on the bargain struck between Paxus, Career and Transport which culminated in the Settlement Agreement.

96. For these reasons, I reject Mr King’s submission that I ought defer answering the Settlement Agreement separate questions and the revised Deed of Release question until the question whether the plaintiff is entitled to be relieved by equity from the legal effect of the Deed of Release is also determined.

The Deed of Release separate question

97. The parties who contend that the revised Deed of Release separate question ought be answered “yes” are the plaintiff, Firths and Harmers, Mr Campbell, Stacks, Mr Di Michiel, Transport and Career. Paxus contended that it should be answered “no”.

Paxus’ submissions on the interpretation of the Deed of Release

98. Mr King emphasised the relationship between the Settlement Agreement and the Deed of Release. He submitted in writing that:

“The Settlement Agreement must be read congruently with the Deed of Release, as was the intention of Transport, Paxus and Career. If the Plaintiff is entitled to pursue a claim for work injury damages against Paxus, it is entitled to pursue a claim for contribution against Transport and Career.”

99. Mr King’s primary submission was, however, that the Deed of Release, properly construed did not have the effect of releasing Career and Transport from their potential liability to the plaintiff in negligence. Mr King submitted that the only thing that was “on the table” at the time of negotiating and signing the Deed of Release was the FWC proceedings. He argued that it would be erroneous to construe the release as covering the plaintiff’s potentially valuable rights to recover common law damages against Transport and Career in circumstances where the consideration he received in return for the settlement and release was disproportionately small relative to the potential benefit if such claims were prosecuted.

100. Mr King further submitted that it would be anomalous for the plaintiff to retain the rights to claim workers compensation payments and to sue Paxus for work injury damages (which, being “modified common law damages” would be confined to past and future economic loss and subject to a threshold for permanent impairment: ss 151G and 151H of the 1987 Act) in circumstances where he released Career and Transport from potentially more valuable rights to common law damages. Mr King submitted that, in light of these anomalies in the Deed of Release, it should be construed narrowly so as to release Transport and Career only from their potential liability for the various claims the plaintiff made against them in the FWC proceedings.

101. Mr King submitted that the Settlement Agreement could be used as an aid to construction of the Deed of Release and vice versa. He submitted that, properly understood, the Settlement Agreement was intended to create a symmetry between the three parties to it: namely, that none could sue either of the others in respect of any claims. He submitted that this symmetry only made sense if the plaintiff could sue none of them for any amount in respect of which the party sued could obtain contribution from the others. Thus, he contended that the Deed of Release ought be read as releasing Paxus, Transport and Career only in respect of claims the plaintiff had brought (or could, potentially, bring) in the FWC. He submitted that the carve-out in the definition of “Claim” in the Deed of Release, which provided specifically for the plaintiff to be entitled to sue Paxus for workers compensation or work injury damages, was, in substance, for the avoidance of doubt and that it did not follow that there was any release in respect of claims for common law damages against Transport or Career.

102. Mr King submitted that this argument was bolstered by the evident unreasonableness of Paxus, the plaintiff’s employer, releasing Transport and Career, who ought properly be seen as being more responsible for the harm the plaintiff suffered, since it was alleged to have been sustained on premises controlled by Transport and inflicted by employees of Career who were also on those premises. He submitted that the effect of construing the Deed of Release as releasing Transport and Career from claims by the plaintiff and the Settlement Agreement as barring claims between Paxus, Transport and Career was to prevent Paxus obtaining any contribution for its liability to the plaintiff (for workers compensation payments or work injury damages) from Transport or Career, who might be considered to be the principal wrong-doers.

Consideration

103. The process of construction commences with the actual words of an agreement. Recitals in a deed, which form part of the agreement, can be considered as part of the surrounding circumstances, even in the absence of ambiguity: Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 at [29] (Allsop P); [90], [379]-[390] (Campbell JA, Giles JA agreeing).

104. The recitals in the Deed of Release refer, in C, G and H to the FWC proceedings. Recital I, however, has a much broader range and provides, as set out above:

“I   In order to avoid further cost and inconvenience and with no admission of liability, the Parties settled the Bullying Proceedings, the General Protections Proceedings and all other Claims on the terms in this Deed.”

[Emphasis added.]

105. The definition of “Claim” is at once broad and narrow. It is defined as meaning “any present or future, actual or contingent, claim, cause of action, complaint, liability, cost or expense that any person (whether or not a Party to the Proceeding) has or might have”. However, the claim is relevantly limited because it must be:

“in connection with or arising in any way from:

(a)    the Complaints;

(b)    the Investigation;

(c)    the facts or matters referred to or alleged in either the Bullying Proceedings or the General Protections Proceedings;

(d)    Mr Collinson’s employment with Paxus;

(e)    Mr Collinson’s engagement to perform the Services for [Transport] under the Contract;

(f)    any Entitlements arising out of Mr Collinson’s employment with Paxus or the Contract; or

(g)    the expiry of the Contract;

whether or not the facts, matters or circumstances giving rise to that claim, cause of action, complaint, liability, cost or expense are known to that person or to any other person at the date of this Deed.”

[Emphasis added.]

106. Thus, to be a claim within the meaning of the definition, the claim must have a connection with the matters listed in the clause: that is, the claim must arise from one or more of these matters. The definition of “Claim” includes a negative aspect: that is, it excludes from the definition of “Claim”, the following:

“(h)    any claim Mr Collinson may have for Work Injury Damages under the workers compensation legislation; and;

(i)    any claim for, or right to seek, statutory workers’ compensation or statutory superannuation contributions.”

107. The effect of the carve-out in the definition is that “Work Injury Damages under the workers compensation legislation” and “statutory workers’ compensation or statutory superannuation contributions” are excluded from the definition (within which they would otherwise fall). The carve-out in (i) was superfluous as s 234 of the Workplace Injury Management Act 1998 (NSW) (the 1998 Act) provides that the 1998 Act and the 1987 Act “apply despite any contract to the contrary.” However, the carve-out in (h) had the important effect of excepting from the release any claim the plaintiff might have for work injury damages against Paxus (being a claim under Part 5 of the 1987 Act and Ch 7 of the 1998 Act).

108. This amendment to the carve-out was proposed by the plaintiff (through his solicitors) on 26 February 2016, communicated to Paxus by NRF on 1 March 2016 and expressly approved by Ms Witkin on behalf of Paxus on 1 March 2016. The carve-out related only to claims which could be brought by the plaintiff against Paxus. NRF had no relevant interest in its wording and, since NRF did not act other than as a conduit for Paxus, had no duty to advise Paxus as to how the wording affected Paxus’ interests or how it would relate to the Settlement Agreement (as to which see below).

109. Clause 2.1 of the Deed of Release provides for the payment by Paxus which is to be “in full and final satisfaction of any and all Claims”. The release in cl 4.1 is a release granted by the plaintiff to Paxus, Career and Transport “from all Claims”. Clause 4.2 prohibits the plaintiff from instituting or continuing proceedings “in relation to any Claim”. Clause 5 provides that the Deed of Release can be relied on as a “complete bar to any proceeding covered by [cl] 4.” Clause 10 of the Deed of Release contained an acknowledgement that the plaintiff understood the legal significance of the Deed and had had the opportunity of obtaining legal advice.

110. I reject the submission that the release is “general”. It is closely tethered to the facts and circumstances in which the dispute between the parties had its genesis. It relates squarely to the plaintiff’s employment with Paxus and the work he performed for Transport, on the premises of Transport, with persons who were employed by Career. The present case is far removed from the numerous debts and statements of account between several family members which were said to be the subject of a release in Grant.

111. The release in cl 4.1 plainly extends beyond the claims made by the plaintiff in the FWC. It extends, for example, to future or contingent claims “arising from” the plaintiff’s employment with Paxus. The recitals do not indicate an intention to constrain the express terms of the release to the particular claims made in the FWC proceedings. Further, the express connection between the operation of the release and the making of the payment and the wording of recital I favour the construction that the release covers an action by the plaintiff against Career or Transport for damages for negligence. This construction is supported by the wording of the prohibition in cl 4.2 in which the plaintiff agrees not to commence proceedings at any time, “in relation to any Claim, whether at common law, in equity or under statute”.

112. I am not persuaded that there is any reason, when construing the Deed of Release as a matter of law, to read down the express words of the release or the definition of Claim. Potential common law claims for damages against Transport and Career are plainly contemplated within the wording of the Deed of Release, including in recital I, the definition of “Claim” and the words of the prohibition in cl 4.2. The express words of the Deed of Release make it plain that the plaintiff intended to release Transport and Career from any liability to the plaintiff, including for claims for damages in negligence and to extinguish the plaintiff’s anterior entitlement to pursue such claims. There is no warrant for re-writing the Deed of Release, when construing it as a matter of law, to provide otherwise: see Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 105-107 (Barwick CJ), 109-110 (Gibbs J) and 114-115 (Stephen J); [1973] HCA 36.

113. For these reasons, the revised Deed of Release separate question, which is limited to its legal construction, ought be answered in the affirmative.

The Settlement Agreement separate questions

114. It was common ground that the Settlement Agreement separate questions required a determination of the legal construction of the Settlement Agreement, as well as whether Paxus has an equitable right to be relieved of the consequence of its legal construction (if it is found to have the legal effect of releasing Transport and Career from, and barring, Paxus’ claim for contribution in the first cross-claim).

115. The issues between the parties, which are to be determined by the answers to the Settlement Agreement separate questions, are apparent from the pleadings to the first cross-claim. In the first cross-claim, Paxus relevantly claims contribution from Transport and Career in respect of any damages for which Paxus becomes liable to pay the plaintiff. In their defences, Transport and Career have pleaded cll 4 and 5 of the Settlement Agreement. Paxus has filed a reply in which it alleged, first, that, on its proper construction, the Settlement Agreement does not constitute a release from, or bar to, Paxus’ cross-claim; and, in the alternative, that, in all the circumstances, it would be unconscionable for Transport and Career to rely on the releases and/or the bars in the Settlement Agreement.

The parties’ submissions

116. Although greater detail appears from the particulars to the reply to the defences to the first cross-claim, Mr King’s principal submission was that, as a matter of construction, the broad definition of “Claims” in cl 1.3 of the Settlement Agreement, did not include liability for personal injury, as alleged in the first cross-claim and that the Settlement Agreement was limited to the FWC claims and their resolution. In support of this submission, he contended as follows:

1. The Deed of Release and the Settlement Agreement were entered into for the purposes of resolving the FWC proceedings;

2. The only claims which involved all three of Paxus, Transport and Career, were the plaintiff’s FWC claims;

3. The monetary amounts involved in the settlement with the plaintiff (the parties’ respective contributions to which were governed by the Settlement Agreement) were modest and “incompatible with the likely quantum of any personal injury claim for damages”; and

4. An objective apportionment of liability for fault would attribute the bulk of the liability to Transport and Career.

117. Further, and in the alternative, Mr King submitted that, if the Settlement Agreement was construed as a mutual release of claims in negligence, equity would refuse to permit Transport and Career to rely on such a release because such reliance would be unconscionable in the following circumstances:

1. The parties, including Paxus, did not contemplate that result when the settlement was reached in principle in December 2015;

1. Paxus’ exposure to a claim by the plaintiff for damages arose solely because of an amendment proposed by the plaintiff to the definition of “Claim” in the Deed of Release to exclude work injury damages;

2. Any release in the Settlement Agreement was intended to apply in conjunction, and congruently, with the release in the Deed of Release: that is, that Transport, Paxus and Career could not make any claims for contribution against each other but only when the plaintiff could not make any claim for damages against any of them;

3. The settlement amount and contributions were based on each of Transport, Paxus and Career having the same exposure to any claim by the plaintiff;

4. Transport was negotiating on behalf of Paxus with respect to the Deed of Release which meant that Paxus was not in a position to gauge the plaintiff’s intentions with respect to negligence claims;

5. Transport and Career were aware, as was the case, that Paxus was not legally represented in the FWC proceedings or in the negotiations between the parties;

6. Ms Witkin, Paxus’ representative, had no understanding of what “work injury damages” meant other than that it formed part of the preserved right to claim workers compensation under the workers compensation legislation and Transport and Career had no basis for thinking that she had any greater understanding or that she was legally qualified;

7. As Paxus was based in Victoria, it could not be expected to understand the value of a claim pursuant to the Civil Liability Act 2002 (NSW) and what heads of damage would be recoverable if such a claim were brought;

8. Paxus was entitled to assume that it did not need legal advice unless and until NRF advised it that it did;

9. Although Ms Shields recommended that Ms Witkin obtain independent taxation advice on a comparatively minor matter, she did not recommend that Ms Witkin obtain independent legal advice, including with respect to the proposed amendment to exclude from the definition of “Claim” in the Deed of Release any claim for work injury damages;

10. The releases and bars in the Settlement Agreement were wider than necessary to protect Transport or Career, having regard to the genesis of the Settlement Agreement;

11. At no time did Transport or Career draw to Paxus’ attention, the meaning and effect of releases in the Settlement Agreement, having regard to the amendments to the Deed of Release;

12. Transport is obliged to comply with the Model Litigant Policy; and

13. Because Career got the benefit of Transport’s conduct, it would be unconscionable for it to rely on Paxus’ release in its favour under the Settlement Agreement.

118. Mr Andronos SC, who appeared with Mr Hogan on behalf of Transport, and Mr Ahmad, who appeared on behalf of Career, submitted that the text of the Settlement Agreement made it clear that the matters which the parties intended to be the subject of the release comprised any allegations of harm or liability between the parties to the agreement inter se arising out of the facts or matters arising directly or indirectly from the provision of services by the plaintiff to Transport while an employee of Paxus for the twelve months from 5 January 2015.

119. They submitted that cl 4.1(2) of the Settlement Agreement was sufficiently narrow as not to enliven the Grant principle but sufficiently broad to exclude the claim for contribution sought to be maintained against them by Paxus in the first cross-claim. They submitted that the object of the Settlement Agreement was to bring to an end the disputes between the parties in the FWC. Further, they submitted that the changes to the Deed of Release, which had the effect of carving out from the releases any claim the plaintiff might have brought or wished to bring for workers compensation or work injury damages (which could only by their nature be brought against Paxus), had no corresponding provision in the Settlement Agreement and that this was intentional.

120. Mr Andronos and Mr Ahmad submitted that, although the Deed of Release formed part of the background matrix to the Settlement Agreement, the agreements ought not be read in such a way as to impose a symmetry between them which was not warranted by their terms. They argued that the provenance of the carve-out was a matter which was negotiated by the plaintiff, who was a party to the Deed of Release but not to the Settlement Agreement, with Paxus and affected the ambit of the release in favour of Paxus but neither affected, nor was intended to affect, what the parties to the Settlement Agreement had agreed between themselves. Further, Paxus had the opportunity to seek a corresponding carve-out in the Settlement Agreement but ought be taken to have chosen not to do so.

Consideration

The legal construction of the Settlement Agreement

121. As referred to above, the wording of the Settlement Agreement did not change. A draft was circulated by Ms Shields in December 2015 and Paxus and Career indicated that they were content with its terms. It was not executed until about May 2016. Neither Paxus nor Career indicated that its terms were no longer acceptable. It was executed without material amendment.

122. Ultimately, the terms of the Deed of Release, in the context of the objective circumstances, govern the legal relationship between the parties. The parties’ common intention is to be assessed by reference to what a reasonable person would understand by the language chosen by the parties: Toll (FGCT) Pty Ltd v Alphafarm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). That the plaintiff or Paxus might have done a better deal does not make the bargain they struck any less enforceable or its terms any less susceptible of interpretation by reference to the plain meaning of the Deed of Release. Further, no assumption can be made about the value of the plaintiff’s common law right to damages which requires proof on the balance of probabilities of damage caused by negligence whereas the claim for workers compensation payments requires only that there be a work injury which causes incapacity for work.

123. The common intention of the parties to the Settlement Agreement was that, when Transport and Career paid Paxus their contributions to the Settlement Amount, Paxus would pay the Settlement Amount to the plaintiff and Paxus, Transport and Career would release each other from any “Claim” the party may have against any other party arising out of any of the matters listed in (1)-(3) of cl 4.1. The drafting convention used in the Settlement Agreement (to define “Claim” extremely broadly but to limit the release to certain subject matters) is different from that used in the Deed of Release (which defines “Claim” by reference to subject matter and provides for a release in general terms) but it is nonetheless effective.

124. The cause of action alleged by Paxus in the first cross-claim against Transport and Career arises exclusively from the events that occurred between January 2015 and January 2016 while the plaintiff, as an employee of Paxus, provided services to Transport and had contact with employees from Career. As a matter of legal construction, it falls squarely within cl 4.1 of the release, which is circumscribed by reference to subject matter, in the Settlement Agreement. Clause 4.2 prohibits the commencement and maintenance of such proceedings. I do not regard the Settlement Agreement as ambiguous, having regard to its terms, the terms of the Deed of Release and the other objective circumstances. In my view, it clearly releases Transport and Career from liability for the claim presently sought to be prosecuted by Paxus in the first cross-claim. I am not persuaded that there is any “constructional choice”: Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 at [76] (Leeming JA, Gleeson JA agreeing).

Whether enforcement of the Settlement Agreement by Transport and Career is unconscionable in the circumstances

125. The further question arises whether the application of equitable principles, including those considered in Grant, produce the result that Transport and Career are not entitled to rely on their strict legal rights under the Settlement Agreement. This inquiry requires consideration of the evidence summarised above as to the way in which the terms of the Deed of Release came about and their interaction, if any, with the Settlement Agreement.

126. I am not persuaded that the terms of the Deed of Release attract the principles in Grant, because the effect of the deed is that the releases are limited to claims arising from the plaintiff’s employment with Paxus pursuant to which he provided services to Transport and had contact with employees of Career. However, as the primary judge, I am obliged to make findings on all relevant issues. Accordingly, I will address Mr King’s alternative argument in the reasons set out below.

127. As summarised above, Mr King submitted, on behalf of Paxus, that, it would be unconscionable for Transport and Career to rely on the release in the Settlement Agreement and that equity would restrain such reliance. In order to address this argument, it is necessary to turn to the matters raised by Mr King which are listed above, which will be considered individually and cumulatively.

The parties did not contemplate the result when the settlement was reached

128. The evidence summarised above demonstrates that the operative effect of the Settlement Agreement changed during the period from December 2015 until its execution in about May 2016, although its terms did not.

129. Initially, the only matter to be excepted from the release granted by the plaintiff was the plaintiff’s right to claim workers compensation payments. In circumstances where an employer becomes liable to pay workers compensation payments to an employee, the employer has, subject to a release, a right to recover such payments from a negligent tort-feasor pursuant to the statutory indemnity in s 151Z(1)(d) of the 1987 Act. It would appear that Paxus was prepared to relinquish any potential right to indemnity which it had against Transport or Career when it agreed to the terms of the Settlement Agreement in December 2015.

130. Subsequently, the plaintiff sought to have his right to claim work injury damages (being common law damages in an action for negligence against Paxus) excepted from the definition of “Claim”. Objectively, it can be inferred from Paxus’ agreement to this course that it was prepared to accept that risk (and not seek to off-set it by proposing that the Deed of Release and Settlement Agreement be amended to allow the plaintiff to sue Transport and Career in negligence and allow Paxus to seek contribution from Transport and Career, if it was sued, pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW)).

131. Thus, although it is true that the parties may not have contemplated that the plaintiff would still be permitted to bring an action against Paxus for work injury damages when they settled the FWC proceedings in 2015 in principle, the settlement was expressed to be subject to a deed, the terms of which remained to be drafted and negotiated in order to reach agreement.

The genesis of Paxus’ exposure to a claim for work injury damages

132. The narrative set out above indicates that, as Mr King submitted, the reason why the plaintiff’s right to sue Paxus for work injury damages was excepted from the definition of “Claim” in the Deed of Release was that the plaintiff insisted on it.

The role played by NRF

133. Mr King submitted that Transport, through its solicitors, NRF, was negotiating with the plaintiff on its own behalf and also on behalf of Paxus. The narrative referred to above shows that NRF acted as the conduit between Transport (for which it acted), Paxus and Career (for which it did not act) on the one hand and the plaintiff on the other. NRF made it clear to the plaintiff’s solicitors (and to Career and Paxus) that it did not act for Paxus or Career. NRF forwarded correspondence with the plaintiff to Paxus and Career and reverted to them whenever required to formulate a response to the plaintiff.

134. In matters which solely concerned Paxus, such as the wording of the carve-out in the definition of “Claim” in the Deed of Release, NRF told Ms Witkin that Ms Witkin would have to let NRF know of Paxus’ position so that NRF (Ms Shields) could inform the plaintiff. I do not accept that NRF assumed any duty or responsibility to Paxus to provide it with legal advice or to tell Ms Witkin to obtain legal advice.

135. Paxus presented as a sophisticated labour-hire company, based in Melbourne but which also operated in Sydney, which had an “HR and Contractor Operations” Department of which Ms Witkin was the Director. There was nothing about Paxus which could have put NRF (or through them, Transport or Career) on notice that Ms Witkin did not appreciate the meaning of the terms which were used (see below). Ms Witkin had informed NRF that she was proposing to communicate with Paxus’ workers compensation insurer, which indicated to NRF that Paxus had access to (or the capacity to access) external expert sources. NRF had neither a right nor a duty to interrogate Ms Witkin as to her legal expertise or whether she was seeking legal, or other, advice externally, in-house or not at all. The negotiations concerning the Deed of Release occurred over a period of about six months. Thus, each party, including Paxus, had considerable opportunity to seek and obtain legal advice about the terms of the Deed of Release, as they evolved, and the effect of the Settlement Agreement.

136. I do not regard the line in Ms Witkin’s email to Ms Shields of 3 February 2016, “I continue to heed your counsel and advice in this matter”, as displacing this conclusion. It was said in the context of the further application which the plaintiff had filed in the FWC a few days earlier and Ms Shields statement in her email, sent earlier on 3 February 2016, that the Deed would cover “all proceedings against the parties, both existing and future”, including the most recent of the plaintiff’s applications in the FWC. In substance, Ms Shields had communicated to Ms Witkin that they should include the most recent proceedings in the Deed of Release and Ms Witkin was communicating her agreement with this approach.

137. Mr King relied on Ms Shields’ suggestion that Ms Witkin obtain taxation advice as an indication that Ms Shields assumed the obligation of advising Paxus to obtain legal advice. I do not regard the suggestion of independent taxation advice as carrying with it that inference. I accept Mr Andronos’ submission that tax advice is a matter that is generally outside the expertise of general litigation practice. I regard Ms Shields’ suggestion that Paxus obtain independent tax advice as doing no more than reinforcing her status as a mere conduit between the plaintiff and Paxus and refuting any impression that she could advise Paxus on anything.

Ms Witkin’s ignorance of the meaning of “work injury damages”

138. It is plain from Ms Witkin’s unchallenged evidence that, despite her apparent expertise in the FWC proceedings, she did not understand that there was a distinction between workers compensation payments and work injury damages and, indeed, did not understand what work injury damages were. Thus, I infer, she had no appreciation of the difference it would make to Paxus that the plaintiff would be permitted to sue Paxus for work injury damages.

139. It was not suggested that her ignorance was ever communicated to Transport or NRF, either expressly or by implication. The assessment by one party of the risk of proceedings being brought against it will turn on a number of factors. I am not persuaded that the circumstances were such that NRF could reasonably have appreciated that Paxus did not understand a fundamental distinction between workers compensation payments on the one hand and work injury damages on the other. Further, the fact that Paxus obtained tax advice from Deloitte would tend to indicate that it was in a position to pay for expert professional advice, as and when required.

The assumed symmetry between the Deed of Release and the Settlement Agreement

140. Mr King submitted that Transport, Career and Paxus contracted on the footing that the plaintiff would not be able to make any claims for damages against any of them (by reason of the Deed of Release in its original form) and that, accordingly, they would not be able to make claims against each other (as reflected in the terms of the Settlement Agreement). He submitted that this foundation was displaced when the carve-out for work injury damages was inserted into the definition of “Claim” in the Deed of Release and that the Settlement Agreement ought be adjusted accordingly to preserve the symmetry of exposure.

141. I am not persuaded that the evidentiary foundation supports this submission. The negotiations regarding the Deed of Release took place over a period of about six months. There was ample time for each party to consider its position under the Deed of Release and the effect any changes to that deed would have on the arrangement provided for under the Settlement Agreement. That one party, Paxus, failed to appreciate that its exposure had increased (by the larger carve-out in the definition of “Claim” in the Deed of Release) but that it would, if it signed the Settlement Agreement in its original form, contract out of its capacity to seek recompense from Transport and Career, does not make it unconscionable, without more, for the other parties not to point out Paxus’ error, even had they appreciated that Paxus was labouring under a misapprehension.

Transport’s status as a model litigant

142. Mr King included this matter in his written submissions but did not develop it in oral argument. Government instrumentalities, including Transport, are required to act as “model litigants”. It does not follow from this that Transport is not entitled to act in its own interests in commercial transactions.

The matters regarded as a whole

143. I am not persuaded that any of the matters raised by Mr King, taken individually or cumulatively, amount to unconscionability, or are sufficient to bring the present case within Grant or cases concerning special disadvantage. The releases in the Deed of Release and the Settlement Agreement are factually circumscribed and connected, in terms of subject matter and time, with the matters raised in the FWC proceedings. Even if Ms Witkin herself did not envisage that the plaintiff might bring a claim for damages in negligence, the Deed of Release and Settlement Agreement plainly, in express terms, contemplated that possibility.

144. I understood Mr King to submit, in effect, that the unconscionability against which equity would provide relief, arose from the improvidence of the transactions as far as Paxus was concerned. He said, orally, that Paxus had been “hung out to dry” by Transport and Career, by continuing to bear any liability to the plaintiff for damages in negligence, when there was no prospect of recoupment from the other, more responsible, parties. I do not accept that NRF was conscious, much less took advantage, of Paxus’ ignorance of the effect of the increased carve-out. NRF had no obligation to point out to, or explain the consequences of these agreements to Paxus and, had it done so, it may have been in breach of its fiduciary duties to their client, Transport.

145. Mr King chose not to cross-examine Ms Shields on her affidavit evidence. Accordingly, Ms Shields had no opportunity to respond to the allegation that, through her actions and those of others at NRF, Paxus had been “hung out to dry”: Allied Pastoral Holdings Pty Limited v Commissioner of Taxation [1983] 1 NSWLR 1 at 16C-E (Hunt J). Nor was she given the opportunity to respond to Mr King’s submission that “[she] and Ms Woodward must have appreciated that these nuances and changes [to the Deed of Release] weren’t going to be picked up by Ms Witkin”.

143. It is not productive to speculate what Ms Shields might have responded had these allegations been put to her. It is possible that Ms Shields gave no thought to the ambit of the carve-out in the definition of “Claim” since it did not affect her client, Transport. I reject any suggestion that Ms Shields, or anyone from NRF or Transport took advantage of Ms Witkin’s ignorance. There is no suggestion that Ms Shields was aware that Ms Witkin was not a lawyer, had not sought legal advice or was labouring under a basic misapprehension about what work injury damages meant. Indeed, having regard to the prominence of this concept in the Deed of Release (and its being different from workers compensation payments), Ms Shields would have had no reason to suspect that Ms Witkin, much less Paxus, did not understand the distinction. Paxus presented itself as a competent commercial entity, well able to act in and protect its own interests. Like Career, it had chosen not to engage external lawyers to represent it in the FWC and had chosen to use NRF as its conduit in communications with the plaintiff about the Deed of Release

144. The unconscionability and special disadvantage on the basis of which equity will intervene do not extend to cover every bargain struck or transaction entered into which could have been bettered, had a party realised the true position.

145. In Turner v Windever [2005] NSWCA 73, Giles JA at [72] said:

“Mere unawareness of a matter material to the interests of a party to a transaction is not a special disadvantage. That is a commonplace of commercial and other negotiations, and good conscience does not require the other party to guard against the party inadequately informing himself any more than it requires the forfeiture of a superior bargaining position (see Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (2003) 214 CLR 51 at [10], [15]-[17], [56], [185]).”

149. The equitable doctrine of unconscionability is concerned, in part, to protect weaker parties from exploitative conduct. Its purpose is not to save a party (whether weaker or not) from the consequences of disregarding its own interests or providing relief from a bargain which, on reflection, did not prove to be as beneficial for the party as had been appreciated at the time of its conclusion: Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 at [26] (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ).

150. I am not persuaded that the words of the Settlement Agreement ought be interpreted other than in accordance with their plain meaning or that equitable relief ought be granted to relieve Paxus from the effect of its provisions. Paxus must bear the consequences of failing to obtain legal advice, conferring the responsibility for negotiating the agreement on its behalf on Ms Witkin, who (despite contemporaneous appearances to the contrary) did not understand the relevant concepts, and authorising Mr Trevethick to sign the Deed of Release and Settlement Agreement on its behalf, notwithstanding that he was, despite their clear provisions which he deposed that he read, not alert to the legal effect of these documents.

151. Mr King also argued that Career was tainted by Transport’s unconscionable conduct because it took the benefit of it. As I do not consider Transport’s conduct or the circumstances generally to make it unconscionable for Transport to rely on its rights under the Settlement Agreement, it is not necessary to determine whether Career would be tainted by any unconscionability by Transport. It is sufficient to say that it is difficult to see how this could be the case, including in circumstances where Career was not legally represented and did not play an active role in the negotiations between December 2015 and May 2016.

152. For these reasons, the answer to each of the Settlement Agreement separate questions is yes. It follows that there should be judgment for the cross-defendants on the first cross-claim. However, as I have not heard the parties on this order or the appropriate costs order, I shall defer making such an order.

Costs

153. The parties to the Settlement Agreement separate questions, Paxus, Transport and Career, agreed that costs ought follow the event in accordance with the general rule: Uniform Civil Procedure Rules, r 42.1.

154. The parties to the Deed of Release separate question asked that costs be reserved, pending determination of the plaintiff’s application for leave to amend his statement of claim. While, as is apparent from his notice of motion, the plaintiff accepts that he must pay the costs of the other parties thrown away by the amendment, there is an issue about the extent to which the costs associated with the Deed of Release separate question ought be borne by the plaintiff.

Orders

155. For the reasons given above, I make the following orders:

1. The separate questions be answered as follows:

1.   Did the Deed of Release entered into in May 2016 between parties including the plaintiff, the First Cross-Defendant (Transport) and the Second Cross-Defendant (Career), on its proper construction, have the effect of extinguishing any rights the plaintiff may have had to bring proceedings against Transport and/or Career for damages for psychiatric injury sustained due to bullying and verbal abuse which the plaintiff alleges he experienced at his place of work while allegedly subject to the control of Transport and/or Career?

Yes.

2.   Does the Settlement Agreement operate as a bar to the cross-claimant (Paxus) pursuing the first cross-claim as against the first cross-defendant (Transport), or otherwise disentitle the cross-claimant (Paxus) from the relief sought in the first cross-claim as against the first cross-defendant (Transport)?

Yes.

3.   Does the Settlement Agreement operate as a bar to the cross-claimant (Paxus) pursuing the first cross-claim as against the second cross-defendant (Career), or otherwise disentitle the cross-claimant (Paxus) from the relief sought in the first cross-claim as against the second cross-defendant (Career)?

Yes.

2. The first defendant/cross-claimant pay the first and second cross-defendants’ costs of the Settlement Agreement separate questions.

3. Reserve the costs of the Deed of Release separate question.

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Decision last updated: 12 April 2022