MADSON v Fandanstic Pty Ltd - [2019] FCCA 3388

FEDERAL CIRCUIT COURT OF AUSTRALIA

MADSON v FANDANSTIC PTY LTD

[2019] FCCA 3388

Catchwords:
INDUSTRIAL LAW – Fair Work – counterclaim by respondent for overpayment of wages – application for summary dismissal by applicant – where parties had previously signed a release at conciliation conference conducted by Fair Work Commission – where respondent agreed to pay applicant for underpayment of wages – whether the subject of the counterclaim, i.e. overpayment of wages to the applicant, was in contemplation of the parties at the time of the signing of the release – application dismissed.

Legislation:

Federal Circuit Court Rules 2011 (Cth)

Fair Work Act 2009 (Cth)

Cases cited:

Grant v John Grant and Sons Pty Ltd (1954) 91 CLR 112

Wichmann v Dormway Pty Ltd [2019] QCA 31

Applicant:

DEBBIE MADSON

Respondent:

FANDANSTIC PTY LTD

File Number:

DNG 40 of 2018

Judgment of:

Judge Young

Hearing date:

5 November 2019

Date of Last Submission:

5 November 2019

Delivered at:

Darwin

Delivered on:

5 November 2019

REPRESENTATION

Counsel for the Applicant:

In person

Solicitors for the Applicant:

In person

Counsel for the Respondent:

Ms McLaren

Solicitors for the Respondent:

Direct brief

ORDERS

The evidence-in-chief of the respondent for its counterclaim is to be given by affidavit filed and served no later than 90 days before trial.
Any evidence-in-chief of the applicant in response is to be filed no later than 28 days before trial.
This matter is adjourned for trial allowing for two days on 3 & 4 September 2020 at 10:30 am.
The matter will be listed for a check mention on 11 August 2020 at 9:30 am. The parties may appear by telephone.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DARWIN

DNG 40 of 2018

DEBBIE MADSON

Applicant

And

FANDANSTIC PTY LTD

Respondent

REASONS FOR JUDGMENT

Ex-Tempore

These reasons for judgment were delivered orally. They have been corrected from the transcript. Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.
This is an oral interlocutory application pursuant to rule 13.10 of the Federal Circuit Court Rules to summarily dismiss the respondent’s counterclaim. The counterclaim of the respondent $36,000 odd which it alleges was an overpayment of wages to the applicant. The applicant has set up, as a bar to that claim, a deed of release that was signed by the parties following a conciliation conference at the Fair Work Commission. The terms of the release are relevantly set out in clause 3.7:
The respondent [Fandanstic Pty Ltd] releases and forever discharges the applicant from any liability past, present or future from all claims, suits, demands, action or proceedings arising out of or connected with the applicant’s employment with the respondent, including but not limited to the cessation of the employment.
The recitals to that deed, which are described as “Terms of Settlement”, say relevantly:
(1)The Applicant has made an application to the Fair Work Commission for a remedy alleging the Applicant was protected from unfair dismissal and was unfairly dismissed.
(2)The Respondent denies the allegations.
(3)The Applicant and the Respondent agree to fully and finally settle the matter on the following bases:
Payment
3.1 The Respondent will pay to the Applicant the amount of $2,500 gross, taxed as applicable, in addition to any other moneys previously paid to the Applicant by the Respondent.
…
The terms of the release go on to provide machinery provisions for the execution of the release and the payment of moneys under that release. The release, apart from the reference to an unfair dismissal claim in paragraph 1 refers to some other subject matter at paragraph 3.6.1 which reads as follows:
The release in subclause 3.6, does not prevent the Applicant from directly or indirectly pursuing claims, suits, demands, actions or proceedings in relation to the payment of wages and/or entitlements arising under statute, an industrial instrument or common law.
It is not in issue that the applicant employee at that time alleged that she had been underpaid wages in the region of $15,000. On a construction of the terms of the release I am satisfied that the subject matter of the release was:
a)The applicant employee’s claim for compensation arising out of an unfair dismissal under the Fair Work Act.
b)A claim by the applicant employee that she had been underpaid wages.
The first matter was compromised and the respondent agreed to pay the applicant $2,500 in respect of that. The second matter, that is, the applicant’s entitlement to pursue a claim for underpayment of wages was not compromised and was preserved by the terms of the release. No other subject matter is referred to or implied in the terms of the release. The respondent, it appears, did not comply with the terms of the release and failed to pay the applicant employee the $2,500 it had promised to pay her. The applicant was forced to commence a proceeding in this court to recover her $2,500. In that proceeding she re-litigated her underpayment of wages claim and alleged she had been underpaid.
As I understand her schedule of claims she alleged an underpayment of $15,957.30. The applicant was paid $2,500 eventually by the respondent but the respondent instituted by an amended response a counterclaim suing the applicant for $36,000 odd which the respondent alleges was an overpayment of wages. The affidavit of the director of the respondent asserts, at least by implication, that she was unaware of any overpayment. There is no particular information about how the overpayment occurred or anything else but I am satisfied there is at least an assertion, and it doesn’t rise much above a bare assertion, that there has been an overpayment. Some particulars of the amounts allegedly overpaid are given in the response but really nothing more.
The applicant was assisted with some pro bono legal advice and she had submissions drafted on her behalf which deal with the matter. I have the benefit of legally drafted submissions on behalf of the applicant but she was otherwise unrepresented. I have also had the benefit of submissions from counsel appearing for the respondent.
The point the respondent takes is that the general terms of the release do not bar the counterclaim because the subject of the counterclaim, that is, an overpayment of wages, was not in the contemplation of the parties at the time of the signing of the release and, according to well-established legal and equitable principles, general words of a release are not to be construed as barring a claim that was not in the contemplation of the parties at the time the release was signed.
The leading authority for that is Grant v John Grant and Sons Pty Ltd (1954) 91 CLR 112. I was taken, in some detail and length, to that case by counsel for the respondent. Although I do not propose to quote at length from it, I am satisfied that it is still good law.
I was also referred to a 2004 case from the New South Wales Industrial Relations Commission, which was said to be authority for the fact that Grant v John Grant and Sons is still good law. I think that is a rather stale authority for that proposition. More to the point, the Court of Appeal of the Supreme Court of Queensland in Wichmann v Dormway Pty Ltd [2019] QCA 31 also makes it clear that Grant v John Grant and Sons is still good law.
In my view, the primary evidence of what was in the contemplation of the parties is to be inferred from the terms of the release itself and the nature of the formal claims made by the parties at the time. The claim made by the applicant was, as I say, for compensation for an unfair dismissal and for unpaid wages.
The response of the employer filed in the Fair Work Commission is a pro forma document and simply sheds no light on the existence of any other issue. An officer of the respondent company has also said that this matter was not in its contemplation at the time of signing the release. I give that evidence some weight but, bearing in mind that it is ex post facto evidence of a subjective intention, I do not find that evidence of much assistance. I give it some weight but not much.
However, I am satisfied, from looking at the terms of the release and also the extrinsic circumstances at the time that there is no evidence that the claim for overpayment of wages was in the contemplation of the parties at the time the release was signed. In my view, it is not unarguable that the respondent’s claim is not barred by the release.
Though this is an interlocutory application, I am satisfied that the release is probably ineffective to meet the respondent’s claims and therefore the respondent’s counterclaim is not amenable to summary dismissal pursuant to Rule 13.10 of the Federal Circuit Court Rules.
Whether or not there has been an overpayment will have to be a matter for trial. Therefore I dismiss the application of the applicant for summary dismissal of the counterclaim.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Judge Young.

Associate:

Date: 21 November 2019