Grasso v Renold Australia Pty Ltd
[2014] VCC 122
•27 February 2014
| IN THE COUNTY COURT OF VICTORIA | Revised (Not) Restricted |
AT MELBOURNE
COMMERCIAL LIST
EXPEDITED CASES DIVISION
Case No. CI-13-06237
| CHARLES GRASSO | Plaintiff |
| v. | |
| RENOLD AUSTRALIA PTY LTD | Defendant |
---
JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 18 February 2014 | |
DATE OF JUDGMENT: | 27 February 2014 | |
CASE MAY BE CITED AS: | Grasso v. Renold Australia Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2014] VCC 122 | |
REASONS FOR JUDGMENT
---
Catchwords: Practice and procedure – Defendant’s summary judgment application – Termination of plaintiff’s employment by defendant – Claim for damages arising from defendant’s failure to give reasonable notice of termination – No defence filed – Defendant by letter foreshadowed reliance upon the plaintiff’s signature to a Deed of Release – Plaintiff agreed “not to make any claims” arising out of the termination of the employment – Plaintiff said he signed the document as an acknowledgement that he had returned items of the defendant’s property – Whether claim had no “real prospect of success”.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J. Ireland | Alan McDonald |
| For the Defendant | Mr J. Uljans | Hall & Wilcox |
HIS HONOUR:
1The defendant seeks summary judgment. It submits that the plaintiff’s claim has no “real prospect of success”. The plaintiff was employed with the defendant between October 2002 and June 2013, initially as the Operations Manager, and after September 2011, as its Regional Operations Manager.
2The plaintiff was employed in 2002 pursuant to a written employment contract. The contract provided for termination of the plaintiff’s employment “immediately” upon certain bases, including if the plaintiff “shall commit any breach of this Agreement” or if the defendant “shall pay to [the plaintiff] the salary due plus an amount equal to three months notice in lieu of notice”.
3When the defendant terminated the plaintiff’s employment, it paid three months remuneration in lieu of notice. The plaintiff alleges that when he was given expanded duties and an increased salary in September 2011, that this altered his terms of employment so that his employment could not be terminated unless the defendant gave “reasonable notice of the termination”. The plaintiff alleges that, in the circumstances, 12 months would constitute reasonable notice. He claims nine months salary being the sum of $129,783.69.
4The writ was filed on 3 December 2013 and the defendant’s summons seeking judgment was filed on about 23 January 2014. The defendant has not filed a defence pending the determination of the present application. The application for judgment is based solely on the defendant’s reliance upon a “Deed of Release” signed by the plaintiff on 20 June 2013, the day he left the defendant’s employment.
5The “Deed of Release” is a two page document commonly used by the defendant upon termination of the employment of its employees. It has the following features:
a.it is headed “Cessation of Employment Deed of Release”;
b.it has spaces for inserting the “name of employee” and the “date of departure”;
c.much of the first page comprises a table listing 15 items. This is basically a checklist of items the employee must return or, for item 14, administrative matters which must be completed. The table provides a column to indicate, “item completed” and requiring, “signature of employee for each item”;
d.at the foot of the first page of the document are three short paragraphs:
i.an acknowledgment about confidential information and documents;
ii.a statement, “I have read the above and confirm that I have complied with all requirements”;
iii.the critical clause relied upon by the defendant, which reads, “In consideration of receiving payment of the amounts owing to me I agree not to make any claims except for any claims under the Accident Compensation or Superannuation legislation against [the defendant] in respect of or arising directly or indirectly out of my employment or the termination of my employment with [the defendant]”.
e.at the head of the second page, the document:
i.reads, “Executed as a Deed…Signed sealed and delivered by employee”, followed by the plaintiff’s signature;
ii.has provision for the witnessing of the employee’s signature, in this case by “Warren Cutler”, and the date 20 June 2013;
f.the document then has a notation, “approved by”: with the signature of “R.R Ayers” as “Group Manager” and the date, 20 June 2013;
g.the document concludes with the notation, “(Completed form to be sent to Pay Office before release of final payment by Pay Office)”.
6The circumstances of the execution of this document and its effect are critical to the determination of the present application. The defendant filed an affidavit sworn by Mr Ayers. The plaintiff also swore an affidavit. Much of the affidavit material deals with background matters, including an extensive analysis of the events leading up to the termination. It is doubtful whether this background material will have any significance in the proceeding, the defendant having paid the plaintiff “an amount equal to three months salary in lieu of notice”.
7Only two of the eight pages of Mr Ayers’ affidavit deal with the issues directly relevant to the “execution by the plaintiff of a deed of release”. The part of the affidavit relating to the execution of the document is sworn from information and belief and no direct evidence is presented from Mr Cutler. No response was made by the defendant to the matters raised by the plaintiff’s affidavit. About four pages of the 13 pages of the plaintiff’s affidavit deal with the circumstances in which he executed the document on 20 June 2013 and his meetings with Mr Ayers on 14 and 17 June 2013.
8The principal submission of defendant’s counsel, Mr Uljans, relied upon the statement of the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 185 (“Toll”), that, “the general rule which applies in the present case, is that where there is no suggested vitiating element, and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms, and it is immaterial that the person has not read the document” (paragraph 57).
9Plaintiff’s counsel, Mr Ireland, relied upon a range of matters in response to Mr Uljan’s submissions, including the qualifications and exceptions referred to by the High Court in the passage quoted from Toll. The plaintiff has not yet had the opportunity to file an appropriate pleading which would relate the material facts to the legal issues relied upon.
Meetings between the plaintiff and Mr Ayers on 14 and 17 June
10 Mr Ayers referred to the following aspects of the meeting on 14 June:
a.the meeting took approximately an hour and a half;
b.Mr Ayers outlined to the plaintiff the findings of the investigation into allegations against him and that the investigator had found “each of the allegations were verified”;
c.Mr Ayers told the plaintiff “that this behaviour was inappropriate”;
d.Mr Ayers said that the options available to the defendant were for the plaintiff “to attend additional training” or for termination of the plaintiff’s employment;
e.the plaintiff disputed the findings and said he “would not change his behaviour”;
f.Mr Ayers said that they should “both take the weekend to reflect on this discussion”.
11The plaintiff responded to the following matters in Mr Ayer’s account of the meeting on 14 June:
a.Mr Ayers told him that the investigator’s report concluded “that the allegations made against me were found to be true”, although Mr Ayers “had not read the report”;
b.the plaintiff queried the process adopted by the investigator and ”informed Ayers that I would challenge the accuracy of the report”;
c.Ayers told him that there were “two courses of action available. One was counselling and the other was termination”;
d.Ayers “asked if I was prepared to undertake counselling to which I replied that I was”;
e.Ayers “proposed that we both think about the matter over the weekend and then meet again on 17 June 2013”.
12 Mr Ayers’ version of the 17 June 2013 meeting was as follows:
a.he and the plaintiff disagreed as to whether the plaintiff’s behaviour was acceptable or unacceptable;
b.Mr Ayers told the plaintiff “that the likely result would be termination” of the plaintiff’s employment.
13The plaintiff made the following statements about the meeting with Mr Ayers on 17 June 2013:
a.during the meeting, “Ayers never said that the termination of my employment was likely”;
b.Mr Ayers had raised “previous issues of alleged conflict” which they discussed;
c.they referred to the plaintiff’s complaints about the investigation and the fact that Mr Ayers had accepted the report’s finding without having read it;
d.Mr Ayers said that he would speak to the defendant’s Chief Executive Officer “to determine what action to take”;
14On 20 June 2013, a written notice of termination was provided to the plaintiff by Mr Ayers. The letter contained the following statements:
a.the plaintiff’s conduct both in relation to the investigated matters and earlier instances was regarded as “unacceptable behaviour”:
b.the plaintiff’s employment was being terminated due to this behaviour;
c.at the meeting on 17 June, the plaintiff had “repeated the comment you made to me on the previous Friday that you believed your behaviour was satisfactory”;
d.Mr Ayers had discussed the investigation and “wider issues surrounding your behaviour” with the defendant’s CEO and Group HR Manager;
e.the plaintiff’s employment with the defendant would terminate “immediately”;
f.the plaintiff would “not be required to work out your notice period and we will pay you in lieu of notice”;
g.the plaintiff’s “severance payment will consist of your outstanding entitlements and 2 months notice”;
15Although the letter referred to “2 months notice in accordance with your employment contract”, in fact the plaintiff was paid “an amount equal to three months salary”. The letter did not specifically foreshadow a further meeting with Mr Cutler or that the plaintiff would be asked to sign a “Deed of Release”.
Meeting between the plaintiff and Mr Cutler on 20 June
16Mr Cutler was the Regional Finance Director of the defendant. Mr Ayers said that, “The purpose of that meeting was to ensure that the requirements relating to the return of Company property were met and to obtain a signed Deed of Release from the plaintiff”.
17Mr Ayers’ description of the meeting had been obtained from Mr Cutler. Mr Cutler had informed him of the following matters:
a.“the plaintiff was provided with a document titled; Cessation of Employment – Deed of Release…dated 20 June 2013”;
b.“the 15 items on the Deed of Release were discussed for about 20-30 minutes”;
c.Mr Cutler agreed to the plaintiff’s request that he “be allowed to retain possession of a company-owed mobile phone and laptop computer”;
d.this was an “addition to the other benefits [the plaintiff] was to receive on cessation of his employment”;
e.one of these benefits was a “payment in lieu of notice that [Mr Ayers] had decided to pay to the plaintiff”.
18Mr Ayers stated that from his “own knowledge” and a “preliminary review of the defendant’s records concerning termination of the employment of its employees”, that:
a.the plaintiff, “as a member of the defendant’s management team” had been involved in “the termination of the employment of a number of the defendant’s staff”;
b.the plaintiff had “personally carried out the termination of the employment of several former employees”;
c.this had “involved the plaintiff working through the Deed of Release with each of these employees and witnessing the signing of the Deed of Release by them”;
d.the defendant’s files contained “at least 4 Deed of Release forms…with the plaintiff’s signature on them as witness”.
19The plaintiff said that initially on 20 June 2013, he attended a meeting with both Mr Ayers and Mr Cutler. During that meeting:
a.“Ayers advised me that he had consulted with the Chief Executive Officer and Group Human Resources Manager and had made a decision to terminate my employment effective immediately and that I was not required to work out my notice period of two months”;
b.Mr Ayers handed the plaintiff the termination letter;
c.Mr Ayers asked the plaintiff “if I had anything to say”;
d.before the plaintiff could answer, Mr Ayers “stated that he was aware that I would be taking legal action”;
e.Mr Ayers told the plaintiff that “Cutler would go through the process of retrieving company property and finalise my entitlements”;
f.there was a discussion about the plaintiff’s request to “maintain possession of my company mobile phone” and “the laptop computer”. This was agreed. Mr Ayers then left the meeting.
20The plaintiff gave the following details of the discussion with Mr Cutler which followed Mr Ayers’ departure from the meeting:
a.there was discussion about the plaintiff’s performance as Operations Manager and the plaintiff’s meeting with Mr Ayers on 17 June;
b.“Cutler then commenced discussing my return of company property with reference to a one page document in front of him”;
c.Mr Cutler asked for specific items to be returned and “after discussing each item of property [Mr Cutler] would mark the checklist on the document”;
d.the plaintiff “was unable to see the details on the document, however it appeared to be the normal checklist used by the defendant regarding the return of company property”;
e.after completing the checklist, Mr Cutler turned the one page double-sided document “over to the side that he had not marked”;
f.Mr Cutler then handed the document to the plaintiff with the “signature page” uppermost. The plaintiff said that he “was unable to read what was on the other side of the document” and, “on Cutler’s direction, I signed the document”;
g.the plaintiff and Mr Cutler discussed the final termination payment and “agreed that it would be paid by instalments over time”.
21 The plaintiff made the following further comments about the meeting:
a.the plaintiff believed at the time that his signature “merely indicated confirmation that I was returning all company property that needed to be returned”;
b.the plaintiff “did not question Cutler’s request for me to sign the document without reading the other side of the document”, because he “was distressed and anxious and unable to think clearly” as his “employment had just been terminated”;
c.neither Ayers nor Cutler advised the plaintiff during the meeting that, “by signing the document I was forfeiting my right to take legal action against the defendant with respect to my dismissal”;
d.Mr Ayers “was well aware that I intended to take legal action and expressly mentioned this during the meeting itself”;
e.the plaintiff signed the document “in good faith believing it was confirmation that I had returned all materials and items belonging to the defendant”;
f.the plaintiff “would not have signed” the document had he “been aware of its intended effect”;
g.the plaintiff was not offered any additional payment “in exchange for signing the document”;
h.the plaintiff was not advised that he “should seek legal advice about the document”;
i.the plaintiff was “not given a copy of the document”;
j.the plaintiff “did not see Cutler or Ayers sign the document”;
k.the plaintiff was “not notified prior to the meeting that the meeting would result in my termination, the return of company property, or the execution of any documents”;
l.the document was discussed between the plaintiff and Mr Cutler “for only 5-10 minutes”.
22The plaintiff said that in relation to his previous involvement in the termination of a number of the defendant’s employees:
a.the plaintiff “would have been involved in other employees executing similar documents regarding the return of company property”;
b.he “was never trained by anyone from the defendant’s management team with respect to the full meaning and intended limitations of the document”;
c.he “was never briefed on the legal ramifications of the document”;
d.he “always understood it to merely be a return of company property document”;
e.he was “never aware that the defendant desired its former employees to execute the document in order to forfeit their rights against the defendant”.
23The critical matters relied on by the plaintiff in response to the executed Deed of Release are as follows:
a.Mistake: he signed the document without being aware that it affected his right to bring an action against the defendant;
b.Misrepresentation: the defendant had misled him, by the actions of Mr Ayers and Mr Cutler leading up to the execution of the document;
c.Enforceability of the document: the document did not have the features or language of a deed, and no consideration was provided.
Mistake
24The following facts are relied upon:
a.the plaintiff believed the document was simply confirmation of the return of company property;
b.before Mr Ayers left the meeting on 20 June, he told the plaintiff that “Cutler would go through the process of retrieving company property and finalise my entitlements”;
c.Mr Ayers was informed by Mr Cutler that “the 15 items on the Deed of Release were discussed for about 20-30 minutes”. These items list the property to be returned;
d.Mr Ayers did not refer to any discussion by either himself or Mr Cutler with the plaintiff about the release clause;
e.the plaintiff was not given the opportunity to read the first page of the document. He was simply presented with the document turned to the reverse page and requested to sign it;
f.the plaintiff “would not have signed” the document had he “been aware of its intended effect”;
g.the plaintiff at the time he signed the document was” distressed and anxious and unable to think clearly”.
25The defendant relies upon other facts:
a.the plaintiff signed the document without taking the opportunity to read it;
b.the document contained the words “deed of release” in the heading;
c.the plaintiff was aware of the pro-forma document having himself gone through the process with at least four employees of obtaining their signatures to the document.
26In response to the allegation by the defendant that he had specific prior knowledge of the document, the plaintiff said:
a.he “was never briefed on the legal ramifications of the document” or received training about the document’s full “meaning and intended limitations”;
b.he was never aware that the document was intended to have the consequence that employees “forfeit their rights against the defendant”;
c.he “always understood it to be merely a return of company property document”.
Misrepresentation
27The plaintiff relies upon the following matters:
a.he was not notified prior to the meeting on 20 June that “the meeting would result in my termination, the return of company property, or the execution of any documents”;
b.when Mr Ayers handed the plaintiff the letter of termination on 20 June, he asked the plaintiff if he had anything to say, but before he could answer, Mr Ayers “stated that he was aware that I would be taking legal action”;
c.Mr Ayers said that the purpose of the meeting which followed with Mr Cutler “was to ensure that the requirements relating to the return of Company property were met and to obtain a signed Deed of Release from the plaintiff”;
d.however, the plaintiff said that before Mr Ayers left that meeting, he told the plaintiff that “Cutler would go through the process of retrieving company property and finalise my entitlements”;
e.although Mr Ayers said that the plaintiff was given the document by Mr Cutler, the plaintiff says that apart from being offered the reverse side to sign, he was not given the document to read or a copy of the signed document;
f.the “15 items” relating to the return of company property “were discussed for about 20-30 minutes”, according to Mr Ayers. There is no suggestion that the release clause was discussed at all by Mr Cutler, or Mr Ayers, with the plaintiff;
g.there was no discussion with Mr Ayers or Mr Cutler that “by signing the document I was forfeiting my right to take legal action against the defendant with respect to my dismissal”.
Enforceability
28The defendant purported to “immediately” terminate the plaintiff’s employment on the basis of conduct which had been the subject of the investigation, and earlier instances. This conduct was regarded as “inacceptable behaviour”.
29Although the written employment contract gave the defendant a number of bases upon which it could immediately terminate the plaintiff’s employment, it purported to do so upon the basis that it offered the plaintiff and his entitlements plus an amount equal to a period in lieu of notice. The termination letter referred to a period of two months, although the employment contract referred to three months. In fact, an additional three months salary was paid.
30The release clause in the document headed “Cessation of Employment Deed of Release” stated that the release for claims against the defendant arising from the termination of employment was to be provided “in consideration of receiving payment of the amounts owing to me”.
31The notice of termination dated 20 June 2013, referred to these payments as a “severance payment” which would “consist of your outstanding entitlements and 2 months notice”. It appears therefore that the plaintiff was offered no more than the plaintiff’s “outstanding entitlements” and the payment in lieu of notice, which was the basis upon which his employment was terminated “immediately”.
32It may be that the defendant would have been entitled to rely upon other bases to terminate the employment immediately. It is not clear, however, whether that fact would be sufficient to constitute consideration for the release by the plaintiff of potential claims against the defendant.
33The plaintiff signed the document beside the words, “Executed as a Deed…Signed sealed and delivered by employee”. The defendant did not purport to execute the document whether as a deed or otherwise. The document contained the notation “approved by”, with Mr Ayers’ signature, his title and the date. A copy of the document was not provided or “delivered” to the plaintiff.
Legal Submissions
34Plaintiff’s counsel, Mr Ireland, referred to a number of legal bases upon which he submitted the plaintiff’s claim had a “real prospect of success”, in response to the proposed reliance by the defendant on the release clause contained in the document. They were:
a.the document was not a deed because it did not contain the language of a deed, and because of the lack of consideration and the document’s informality;
b.the document was not a binding contract because it was not intended to have legal relations, the plaintiff’s signature acknowledging each of the 15 items was not given although this, it was alleged, was an essential precondition, there had been “no meeting of the minds” as to the nature of the document, and no consideration had been given for the release;
c.the document, if a deed or an enforceable agreement was void or voidable because of:
i.the undue influence by the defendant as employer upon the plaintiff as the employee;
ii.misrepresentation as to the nature of the document;
iii.unconscionability on the part of the defendant in the circumstances in which the defendant obtained the plaintiff’s signature to the document;
iv.non est factum, as the plaintiff had no understanding of the document;
v.mistake;
vi.economic duress by the defendant by the suggestion that the plaintiff would not receive his employment entitlements unless he signed the document;
vii.the release clause constituted a penalty.
35Further, Mr Ireland submitted that it was appropriate that the action proceed to trial because:
a.no affidavit had been filed from Mr Cutler;
b.the facts could not be ascertained without cross-examination of the relevant witnesses;
c.no pleadings had presently been filed which addressed the issue of the release clause in the document.
36Mr Ireland, and Mr Uljans in reply, referred to extensive authority, including:
a.400 George Street (QLD) Pty Ltd v BG International Ltd [2010] QCA 245 at paragraphs 7-11 and 31-35;
b.Ermogenous v Greek Orthodox Community of South Australia Inc (2002) 209 CLR 95, particularly at paragraphs 24 and 25;
c.Johnson v Buttress (1936) 56 CLR 113;
d.Smith v William Charlick Ltd (1924) 34 CLR 38;
e.Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447;
f.Petelin v Cullen (1975) 132 CLR 355;
g.Andrews v ANZ Banking Group Ltd [2012] HCA 30.
37I do not intend to traverse these decisions. I consider that if the facts which are contained in the affidavits filed in the application were established at trial, that the plaintiff would have a “‘real’ as opposed to ‘fanciful’ chance of success” (Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd [2013] VSCA 158 at paragraph 29).
38The defendant has brought its application at the earliest time after the proceeding was issued. It relied upon a matter which has not yet been pleaded. It is possible that other matters it raises in the defence may affect the way in which certain matters, for example, the facts surrounding the termination of the employment, should be considered.
39The plaintiff will be required to file a reply, and perhaps if he seeks declaratory relief, an amended statement of claim. At that time, the issues between the parties will become clearer.
40It is likely that, apart from the effect of the release clause, the other critical issue in the case will be the plaintiff’s allegation that the parties entered into a further employment contract when he was appointed to the position of Regional Operations Manager, or as Mr Ayers asserts, there was simply an extension to the plaintiff’s role and responsibilities. The plaintiff alleges that the further employment contract could only be terminated upon 12 months notice.
41The preparation of the further pleadings will be an important step in defining the issues in dispute. The Court will, however, set the matter down for trial and fix a timetable for the interlocutory steps.
- - -
Certificate
I certify that these 15 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 27 February 2014.
Dated: 27 February 2014
Philippa Gilkes
Associate to His Honour Judge Anderson
0
13
0