Gomma v WSP Australia Pty Ltd
[2021] FCCA 353
•25 February 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Gomma v WSP Australia Pty Ltd [2021] FCCA 353
File number(s): BRG 472 of 2020 Judgment of: JUDGE JARRETT Date of judgment: 25 February 2021 Catchwords: HIGH COURT AND FEDERAL COURT – Federal Circuit Court – procedure – ending proceedings early – summary disposal or stay.
CONTRACTS – General contractual principles – discharge, breach and defences to action for breach – accord and satisfaction.
Legislation: Dispute Resolution Centres Act 1990 (Qld) ss. 2, 36
Evidence Act 1995 (Cth), s. 131(2)
Fair Work Act 2009 (Cth), ss. 340, 344, 351, 368, 368(2), 368(3)
Federal Circuit Court of Australia Act 1999 (Cth), s. 17A
Federal Circuit Court Rules 2001 (Cth), r. 13.10
Cases cited: Australian Postal Corporation v Gorman [2011] FCA 975
Dai Zhi Zhen, Zhang Gui Ying v Alexander John Gosse Downer Minister for Foreign Affairs and Trade of the Commonwealth of Australia [2006] ACTSC 120
Hunter v Anthony Costello [2017] FWCFB 5839
Masters v Cameron (1954) 91 CLR 353
Osborn v McDermott (1998) 3 VR 1
Number of paragraphs: 37 Date of last submission/s: 30 October 2020 Date of hearing: 30 October 2020 Place: Brisbane The Applicant: Self-represented Counsel for the Respondent: Ms Coulthard Solicitor for the Respondent: HFW Australia ORDERS
BRG 472 of 2020 BETWEEN: ADAM GOMMA
Applicant
AND: WSP AUSTRALIA PTY LTD (ACN 078 004 798)
Respondent
ORDER MADE BY:
JUDGE JARRETT
DATE OF ORDER:
25 FEBRUARY 2021
THE COURT ORDERS THAT:
1.The application in a case filed on 29 September, 2020 be dismissed.
2.The application is adjourned to 19 March, 2021 at 9:30am for directions.
REASONS FOR JUDGMENT
JUDGE JARRETT:
The issue in this application is whether the applicant has compromised the claim that he now has before this Court by settling a claim that he had before the Fair Work Commission. The respondent argues that a settlement was reached between the applicant and the respondent in the Fair Work Commission and that the applicant’s cause of action has now merged in that settlement agreement. Accordingly, the respondent argues that the applicant has no reasonable prospects of successfully prosecuting his application for relief and that his application should be summarily dismissed pursuant to s.17A of the Federal Circuit Court of Australia Act 1999 (Cth), and rule 13.10 of the Federal Circuit Court Rules 2001 (Cth).
The applicant opposes the application. The applicant says that there was no settlement agreement.
The applicant’s proceeding is a general protections court application commenced pursuant to Part 3-1 of the Fair Work Act 2009 (Cth). As a necessary precursor to the present proceeding, he made a General Protections Application Involving Dismissal in the Fair Work Commission. The respondent argues that the evidence demonstrates that the applicant and respondent entered into a binding settlement agreement in full and final settlement of all current and future claims he may have against the respondent arising directly or indirectly out of his employment with the respondent, save for any claims with respect to workers’ compensation or minimum statutory superannuation contributions.
If, as a matter of fact, there was a settlement agreement in relation to the applicant’s Fair Work Commission claim, these proceedings should be summarily dismissed. That is because upon the agreement to settle the Fair Work Commission proceedings being concluded, the settlement agreement extinguished the pre-existing cause of action. “A valid and effective accord and satisfaction extinguishes the pre-existing cause of action and continued pursuit of an application based on such cause of action is clearly capable of being considered to be frivolous or vexatious or without reasonable prospects of success”: Australian Postal Corporation v Gorman [2011] FCA 975 at [31].
THE EVIDENCE
On the present application, the respondent relies upon two affidavits and the applicant relies upon one. From those affidavits, the following emerges.
The applicant commenced a General Protections Application Involving Dismissal in the Fair Work Commission on 24 April, 2020. In that application, the applicant alleged that the respondent took adverse action against him in contravention of ss. 340, 344 and 351 of the Fair Work Act.
On 17 July, 2020 there was a conciliation conference before a Fair Work Commission conciliator. The conference was held by telephone. The conciliation was attended by the applicant and his legal representative, a Mr Pejovic. The respondent had two representatives present at the conference together with two lawyers from the respondent’s solicitors.
During the conciliation conference the respondent, by one of its lawyers, made an offer to settle the proceedings. The applicant now objects to the respondent adducing evidence about the settlement discussions that took place at the conference and the offer that was made. He argues that such disclosures are prohibited by the Fair Work Act, the Evidence Act 1995 (Cth) and the Dispute Resolution Centres Act 1990 (Qld). However, these objections cannot be accepted because:
(a)whilst s.368(2) of the Fair Work Act provides that any conference conducted for the purposes of dealing with a dispute must be conducted in private, I was taken to no provision of that Act which prevented the respondent from adducing evidence of an agreement reached between the parties at or as a result of what occurred at such a conference;
(b)s.131(2) of the Evidence Act provides an exception to the general rule that evidence is not to be adduced of a communication that is made between persons in dispute in connection with an attempt to negotiate a settlement of the dispute or of a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute. The general rule is displaced where the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue. This proceeding meets the latter description; and
(c)the Dispute Resolution Centres Act 1990 (Qld) and s.36 in particular do not apply to these proceedings because that section only applies to a mediation session as defined in s.2 of that Act – that is to say a meeting in accordance with that Act between two or more parties who are in dispute on any matter. The conciliation process in the Fair Work Commission does not meet that description.
According to the evidence before me, the offer of settlement was in the following terms:
(a)the respondent would pay the applicant $19,786.84 (gross), less applicable tax, as an employment termination payment;
(b)the respondent would provide the applicant with a statement of service with details of a contact person at the respondent’s organisation;
(c)the respondent would characterise the termination of the applicant’s employment as a resignation and include a note on the applicant’s file to that effect;
(d)the respondent would release the applicant from all current and future claims, except for claims relating to fraud, dishonesty or criminal conduct;
(e)the applicant would release the respondent from all current and future claims except for claims for workers’ compensation or superannuation;
(f)the respondent would agree to keep the matter confidential;
(g)the applicant would agree to keep the matter confidential;
(h)the respondent would agree to non-disparagement obligations in respect of the applicant; and
(i)the applicant would agree to non-disparagement obligations in respect of the respondent.
The settlement offer was expressed to stay open for seven days following the conciliation conference and, if accepted, to be recorded in a formal deed of release to be prepared by the respondent’s lawyers.
The settlement offer was accepted by the applicant when on 17 July, 2020 shortly after the conciliation conference had concluded, Mr Pejovic telephoned Ms Isabella Paganin of the office of the respondent’s lawyers and told her that the applicant accepted the settlement offer and asked for the deed of release to be prepared.
A deed of release was prepared by the respondent’s solicitors and sent to Mr Pejovic on 22 July, 2020. The respondent argues that the terms of the deed recited the terms of the settlement offer and did not propose any new terms. But a comparison of what is said to be the terms of the offer with the terms of the deed tendered to the applicant’s solicitor shows that is not the case. The deed contains the following matters which were not the subject of the offer of settlement:
(a)by clause 1.1.1, a time period within which payment of the agreed amount was to be made, following the receipt of “this deed properly signed by the Employee”;
(b)by clause 1.2, an acknowledgement that the applicant has either taken or been paid, including by the payment to be made under the deed, all entitlements (including statutory and contractual entitlement) arising directly or indirectly out of, concerning or in connection with his employment, the terms of the employment and the cessation of his employment;
(c)by clause 2.1, the applicant releases each member of the “Group” from “all current and future Claims which the Employee” may have. The definition of the word “Group” extends the obligations of the applicant to members of the “Group” rather than just the respondent. This appears to go beyond the term offered namely that the applicant would release the respondent from all current and future claims;
(d)by clause 2.2, the Company (defined to be the respondent in these proceedings) releases the applicant from all current and future claims. The release by the applicant of the “Group” is not coincident with the release by the respondent of the applicant;
(e)by clause 2.3, the applicant agrees to do all things necessary to give effect to the release, including signing any further documents the respondent may require;
(f)by clause 3.1.1, the applicant is obliged within two business days from receiving the payment under the deed, to discontinue his proceedings with no order as to costs;
(g)by clauses 3.1.2 – 3.1.11 the applicant is required to give certain acknowledgements, including that he has not commenced any proceedings against any member of the “Group”, none of which appeared in the offer to compromise the proceedings;
(h)by clause 4.2 the applicant agrees not to make any disparaging remarks, publicity or otherwise and including through social media, about any member of the “Group”; and
(i)by clause 5.2 of the deed, the benefit of the deed extends beyond the respondent to the proceedings but also to “each member of the Group”.
After receiving the deed, Mr Pejovic sent an email to the respondent’s lawyers in the following terms:
Thank you for sending this through. I will get this executed by our client. In the interim our client would like to ask that the contact point at WSP Australia Pty Ltd is an independent party so as to ensure impartiality in responding to queries from prospective employers.
The respondent agreed to nominate an independent party in the statement of service.
Mr Pejovic communicated the acceptance of the settlement offer to the Fair Work Commission conciliator by email on 23 July, 2020. In that email Mr Pejovic said:
Dear Paul,
Thank you for assisting in the conference in this matter last Friday and helping the parties. We appreciate the Commission’s assistance in getting the parties to a negotiated settlement.
The parties have come to an agreement and Mr Gomma will be signing the Deed in due course.
We write to advise all parties that our client will be taking this matter from here, and for that purpose we reproduced his email address above.
We note that Mr Gomma in that regard will be filing the relevant notice of discontinuance with the Commission pursuant to the deed or release agreed between the parties.
Thank you for your cooperation in this matter and do not hesitate to contact me if you have any queries with which I can assist.
The applicant did not sign the deed. On 23 July, 2020 he sent an email to the respondent’s lawyers rejecting the offer and making a counteroffer.
CONSIDERATION
The respondent submits that on an application of the relevant legal principles to the facts, a binding settlement agreement was reached when the applicant, by his legal representative, communicated his acceptance of the settlement offer to the respondent’s legal representative. The applicant argues that his solicitor had no authority to accept the respondent’s offer on his behalf. But despite him filing an affidavit in these proceedings, the applicant’s evidence is not that he withdrew his solicitor’s authority to act for him before the offer was accepted. Nor is his evidence that he did not instruct the solicitor to accept the offer. He says that the offer was not accepted at the conciliation conference conducted by the Fair Work Commission. I accept that is so because on the respondent’s case the acceptance was not communicated until after the conference on 17 July, 2020.
Although the applicant gives evidence that he ceased his solicitor’s instructions on 22 July 2020, that was well after the respondent’s offer was accepted on 17 July, 2020. In oral argument before me the applicant suggested that his solicitor did not have his authority to accept the respondent’s offer, but whether he had actual authority is beside the point. The solicitor, acting in contentious business, had ostensible authority to compromise the applicant’s claim. The position was usefully summarised by Crispin J in Dai Zhi Zhen, Zhang Gui Ying v Alexander John Gosse Downer Minister for Foreign Affairs and Trade of the Commonwealth of Australia [2006] ACTSC 120 as follows:
25. More than a century ago, Farwell J said that it was even then clear that a solicitor had a general authority to compromise an action on behalf of a client: see In re Newen; Carruthers v Newen [1903] 1 Ch 812 at 818. During the succeeding century the nature and extent of this authority has been repeatedly discussed and in Waugh and Others v H B Clifford & Sons Ltd and Another [1982] 1 Ch 374 Brightman LJ traced the history of this aspect of the law and provided (at 387) the following succinct summary:
The law thus became well established that the solicitor counsel retained in an action has an implied authority as between himself and his client to compromise the suit without reference to the client, provided that the compromise does not involve matter ‘collateral to the action’; and ostensible authority as between himself and the opposing litigant to compromise the suit without actual proof of authority, subject to the same limitation; and that a compromise does not involve ‘collateral matter’ merely because it contains terms which the court could not have ordered, by way of judgment, in the action.
26. His Lordship also suggested that a liberal approach should be taken to the scope of the ostensible authority that arises from the retainer, explaining at 398 that:
I think it would be regrettable if this court were to place too restrictive a limitation on the ostensible authority of solicitors to bind their clients to a compromise. I do not think we should decide that matter is “collateral” to the action unless it really involves extraneous subject matter ... So many compromises are made in court, or in counsel’s chambers, in the presence of the solicitor but not the client. This is almost inevitable where a corporation is involved. It is highly undesirable that the court should place any unnecessary impediments in the way of that convenient procedure. A party on one side of the record and his solicitor ought usually to be able to rely without question on the existence of the authority of the solicitor on the other side of the record, without demanding that the seal of the corporation be affixed; or that a director should sign who can show that the articles confer the requisite power upon him; or that the solicitor’s correspondence with his client be produced to prove the authority of the solicitor. Only in the exceptional case, where the compromise introduces extraneous subject matter, should the solicitor retained in the action be put to proof of his authority. Of course it is incumbent on the solicitor to make certain that he is in fact authorised by his corporate or individual client to bind his client to a compromise. In a proper case he can agree without specific reference to his client. But in the great majority of cases and certainly in all cases of magnitude, he will in practice take great care to consult his client, and I think that his client would be much aggrieved if in an important case involving large sums of money he relied on his implied authority. But that does not effect his ostensible authority vis-à-vis the opposing litigant.
27. On the other hand, it has long been clear that a court may set aside a compromise agreement that has been entered under a mistake by counsel for one party and before judgment has been perfected: Hickman v. Berens [1895] 2 Ch 638. This power is said to be derived from the court’s “general authority over justice between the parties”: Neale v Gordon Lennox [1902] AC 465, at 470. See also Shepherd v. Robinson [1919] 1 KB 474 at 477.
28. In Emily Joan Harvey v Coralie Ngarita Phillips and Another (1956) 95 CLR 235 the High Court of Australia explained, at 243-244, that in contracts for the compromise of legal proceedings the possibility of successfully alleging ostensible authority had been much restricted by earlier authorities and that courts will not feel bound to enforce a compromise made by counsel contrary to any restriction that had been placed upon his or her authority, even though the lack of actual authority was not known to the other party. At least until any judgment or order embodying the compromise has been perfected, the courts have power to set aside such a contract and that power will be exercised as a matter of discretion when in the circumstances of the case it would be unjust to allow the compromise to stand in view of the restriction on counsel's authority. Their Honours added, however, that:
… in the case of a compromise which is made within the actual as well as apparent authority of counsel a court does not appear to possess a discretion to rescind it or set it aside. The question whether the compromise is to be set aside depends upon the existence of a ground which would suffice to render a simple contract void or voidable or to entitle the party to equitable relief against it, grounds for example such as illegality, misrepresentation, non-disclosure of a material fact where disclosure is required, duress, mistake, undue influence, abuse of confidence or the like.
Here, the applicant gives no evidence about the nature or extent of the instructions given by him to his solicitor. There is no basis here to conclude that there was a mistake about the extent of the solicitor’s authority. On the material before me, Mr Pejovic had ostensible authority to accept the offer of settlement made by the respondent at the Fair Work Commission conference on 17 July, 2020.
Where parties reach agreement as to the terms of a contract but also agree that a formal document will the executed, it is well settled that whether the parties are immediately bound depends upon the category into which their negotiations fall. In Masters v Cameron (1954) 91 CLR 353 at 360 the High Court identified three categories of cases in which parties reach agreement and also agree that the agreement is to be recorded in a formal document:
Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
In the first two categories, the High Court held that the parties are immediately bound. In the third, they were not.
The respondent here argues that it is clear on an objective analysis of the facts that the parties reached a binding agreement in the nature of the second category identified in Masters v Cameron when the applicant accepted the settlement offer on 17 July, 2020 because:
(a)the settlement offer was accepted unequivocally;
(b)the offer and acceptance corresponded precisely;
(c)there were no qualifications or conditions attached to the applicant’s acceptance of the settlement offer. Only after acceptance of the offer did the applicant ask that the person nominated in the statement of service be an independent party in circumstances where no person had been particularised in the offer; and
(d)settlement was not made conditional on the signing of a deed, rather the parties had agreed upon all of the terms and that performance would be conditional upon the execution of the deed.
However, I cannot accept this submission that on the evidence performance of the terms of the agreement “would be conditional upon the execution of the deed”. The evidence of the respondent’s solicitor is not to that effect. Rather, her evidence is that the terms of settlement, if accepted, were to be recorded in a formal deed of release. That is something different than the proposition that performance would be conditional upon the execution of the deed. There was no such suggestion in the terms of the offer.
In my view, on the material before me in this application, there was an agreement reached between the parties. The agreement is a contract. There was offer and acceptance and the contract is supported by mutual promises. Objectively, they intended to be bound by it. The contract was, however, within the first category of contracts in Masters v Cameron rather than the second as the respondent argues. Here, the parties reached finality as to the essential terms of their bargain. The request for the tender of a deed by the applicant’s solicitor evinces an intention to be immediately bound by the terms of the offer which included that the terms of the offer would be recorded in a deed of release. Notwithstanding the intention to be immediately bound by the agreement, the parties nonetheless proposed and agreed to have the terms restated in a form which would be fuller or more precise, but not different in effect. Some of the terms proposed by the respondent and accepted by the applicant were general in nature (for example the non-disparagement obligations) and, no doubt, some greater precision would be put to those general terms in the deed of release.
However, in the event that I am wrong about my categorisation of the contract and it is in truth a contract with which falls within the second category described in Masters v Cameron, for reasons I have set out below, the outcome in this interlocutory application will be the same.
The terms of the deed of release tendered by the respondent were not in accordance with the parties’ agreement in that they went beyond the terms that had been agreed between them. It went beyond the provision of greater precision and fulsomeness to the terms already agreed. The reference to parties beyond those who were parties to the Fair Work Commission application is the best example of that.
My conclusion that the parties reached a binding agreement is consistent with the conduct of the parties after the conference and in particular the conduct of Mr Pejovic as the applicant’s solicitor and his communication with the conciliator.
Having reached the conclusion that there is a binding contract between these parties, the next task is to construe the contract for its true meaning. In the context of agreements to compromise proceedings such as the present, in Osborn v McDermott (1998) 3 VR 1, Phillips JA described three categories of compromises in the following way (at 10 – 11):
First, there is the mere accord executory which, on the authorities, does not constitute a contract and which is altogether unenforceable, giving rise to no new rights and obligations pending performance and under which, when there is performance (but only when there is performance), the plaintiff's existing cause of action is discharged. Secondly, at the other end of the scale is the accord and satisfaction, under which there is an immediate and enforceable agreement once the compromise is agreed upon, the parties agreeing that the plaintiff takes in satisfaction of his existing claim against the defendant the new promise by the defendant in substitution for any existing obligation. Somewhere between the two, there is the accord and conditional satisfaction, which exists where the compromise amounts to an existing and enforceable agreement between the parties for performance according to its tenor but which does not operate to discharge any existing cause of action unless and until there has been performance.
Where there is a mere accord executory, no suit can be maintained upon the compromise unless and until there has been performance, and then suit is ordinarily unnecessary. Upon default in performance, the plaintiff's existing cause of action continues unaffected. With accord and satisfaction, either party may sue upon the compromise, but only on the compromise and for nothing else: the original cause of action has gone. Where there is accord and conditional satisfaction, the plaintiff is bound to await performance and accept it if tendered, but if there be no performance, then the plaintiff may proceed according to general principles called into play when any agreement is repudiated: the plaintiff may either treat the agreement (the accord) as at an end and proceed on his original cause of action; or he may, at his option, sue on the compromise agreement, in place of the original cause of action.
In my view, the agreement between the parties here is not properly categorised as an accord executory but a contract intended to create new obligations. However, the contract effects no absolute discharge of the applicant’s cause of action. A discharge would only arise if the respondent performed its part of the bargain – payment of the settlement sum. So much can be seen in the terms of the deed of release tendered by the respondent to the applicant. By clause 3.1.1, the applicant was obliged within two business days of receiving the payment and the benefit provided under the deed to discontinue the proceedings. The corollary of that is that in the absence of payment, he was not obliged to discontinue the proceedings. That is a strong indication, in my view, that objectively the terms of the parties’ compromise did not put an end to the applicant’s cause of action when the compromise was made.
The evidence demonstrates that the respondent has failed to perform its promise because the agreed sum to be paid to the applicant has not yet been paid and the terms of the deed of release which the respondent undertook to prepare, departs from the parties’ agreement in the ways I have set out above. Those actions represent a repudiation of the agreement by the respondent. The applicant, therefore could sue on the compromise agreement or accept the respondent’s repudiation of the compromise agreement and proceed on the original cause of action. The commencement of the present proceedings might represent an election by the applicant to accept the repudiation and sue on his original cause of action. I have not heard any argument about that and so do not make any finding in respect of it.
That conclusion, however, is sufficient to dispose of the respondent’s summary dismissal application. I cannot be satisfied that the applicant has no reasonable prospects of successfully prosecuting his application in the circumstances I have described above.
However, in the event that I am wrong about that and the correct conclusion is that the proceedings have been compromised and the cause of action has merged in the compromise agreement, it is necessary to consider one further argument advanced by the applicant to demonstrate that his principal proceedings should not be summarily dismissed.
THE FAIR WORK COMMISSION CERTIFICATE
After dispute arose between the parties about the existence of the compromise agreement, the respondent sought that the application then before the Fair Work Commission be listed before a member of the Commission for a determination that a settlement agreement had been reached. It sought that the application be heard before the Commission determined whether to issue a certificate pursuant to s. 368 of the Fair Work Act.
The Commission declined to determine whether a settlement had been reached on the basis that it did not have jurisdiction to make that determination. The Commission relied upon the decision of a Full Bench in Hunter v Anthony Costello [2017] FWCFB 5839 at [34] – [36] as authority for the proposition that the Fair Work Commission does not have jurisdiction to deal with substantive matters in conciliating a general protections dismissal application.
Accordingly, the Fair Work Commission did not consider whether a binding settlement agreement had been reached by reason of the offer made at the conference and its subsequent acceptance. On 11 August, 2020 the Fair Work Commission issued a certificate pursuant to s.368(3) in which it certified that it was satisfied that all reasonable attempts to resolve the dispute (other than by arbitration) have been, or are likely to be, unsuccessful.
The applicant argues that the existence of the certificate demonstrates that there was no compromise of the proceedings. However, I reject that submission because at best the certificate is evidence of the opinion of the Fair Work Commission, or a member thereof, about the matters set out in the certificate. Its significance lies in the requirement for such a certificate to be issued before an applicant can commence a general protections court application in this court. In my view, it has no greater significance than that and cannot operate as a bar to a finding that the parties have compromised a matter before the Commission in circumstances such as those present in this case.
DISPOSITION
For the reasons set out above, the application for summary dismissal must, itself be dismissed.
I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jarrett delivered on 25 February, 2021. Associate:
Dated: 25 February 2021
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