Margo v Mark and Kitson Corporation Pty Ltd (in Liquidation)
[2018] FCCA 266
•14 February 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MARGO v MARK & KITSON CORPORATION PTY LTD (IN LIQUIDATION) & ORS | [2018] FCCA 266 |
| Catchwords: INDUSTRIAL LAW – Proceedings instituted by applicant under the Fair Work Division of the Federal Circuit Court – applicant claims breaches of contract of employment and contraventions of the Fast Food Industry Award 2010 and the Fair Work Act 2009 (Cth) – whether deed of settlement (“the Deed”) executed by the applicant, first respondent and third respondent extinguishes applicant’s right to institute proceedings – held that the Deed extinguishes the Applicant’s right to institute proceedings. |
| Legislation: Evidence Act 1995 (Cth), s.128 Fair Work Act 2009 (Cth), ss.90, 323(1), 536(1), 545, 546, 550 Fair Work Regulations 2009 (Cth), reg.3.42(1) |
| Cases cited: Bank of Credit and Commerce International SA (in liquidation) v Ali and Others [2001] UKHL 8; [2001] 1 All ER 961 Doggett v Commonwealth Bank of Australia [2015] 47 VR 302 Grant v John Grant and Sons Pty Ltd [1954] HCA 23; (1954) 91 CLR 112 Minister for Immigration and Multicultural Affairs v Singh (2000) 98 FCR 469 Taciak v Commissioner of Australia Federal Police (1995) 59 FCR 285 Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52 |
| Applicant: | MAGGIE LIE MARGO |
| First Respondent: | MARK & KITSON CORPORATION PTY LTD (IN LIQUIDATION) |
| Second Respondent: | HON SAN CHEUK |
| Third Respondent | TRACY JEE |
| File Number: | MLG 1809 of 2016 |
| Judgment of: | Judge Jones |
| Hearing date: | 31 August 2017-1 September 2017 |
| Date of Last Submission: | 6 October 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 14 February 2018 |
REPRESENTATION
| Counsel for the Applicant: | Ms Clancy |
| Solicitors for the Applicant: | TressCox Lawyers |
| The Second Respondent appeared in person on behalf of the First and Second Respondents. |
| The Third Respondent appeared in person. |
ORDERS
The Application filed by the Applicant on 24 August 2016 is dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1809 of 2016
| MAGGIE LIE MARGO |
Applicant
And
| MARK & KITSON CORPORATION PTY LTD (IN LIQUIDATION) |
First Respondent
| HON SAN CHEUK |
Second Respondent
| TRACY JEE |
Third Respondent
REASONS FOR JUDGMENT
Introduction
By her Application filed on 24 August 2016 and Further Amended Statement of Claim filed on 11 September 2017, the Applicant claims that:
a)she was employed by Mark & Kitson Corporation Pty Ltd (“the First Respondent”) pursuant to a contract of employment in the position of Restaurant Manager from 1 July 2013 to 28 February 2016;
b)she was covered by the terms of the Fast Food Industry Award 2010 (“the Award”);
c)during her period of employment, she was not paid the amount that she was entitled to under her contract of employment; the total amount of the underpayment being $44,094.55;
d)the First Respondent failed to pay the Applicant the amount she was owed under the contract of employment in-full each month, and consequently the First Respondent contravened s.323(1)(a) of the Fair Work Act 2009 (Cth) (“the Act”);
e)the First Respondent failed to pay the Applicant the amount she was owed under the contract of employment on a monthly basis while she was employed, and consequently the First Respondent contravened s.323(1)(c) of the Act;
f)the First Respondent failed to pay her entitlement to accrued annual leave on the termination of her employment in contravention of s.90 of the Act, and by failing pay her an annual leave loading, the First Respondent contravened cl.28.3 of the Award;
g)during the period of her employment, the First Respondent failed to make superannuation contributions to a superannuation fund for the benefit of the Applicant, and thereby contravened cl.21.2 of the Award;
h)the First Respondent failed to provide the Applicant with pay slips in accordance with s.536(1) of the Act;
i)the First Respondent failed to respond to a request by the Applicant to inspect and copy all of her records, or refused to allow the Applicant to inspect and copy all of her records, and thereby contravened reg.3.42(1) of the Fair Work Regulations 2009 (Cth) (“the Regulations”); and
j)Mr Hon San Cheuk (“the Second Respondent”) and Ms Tracy Jee (“the Third Respondent”) were knowingly and intentionally involved in the breach of the contraventions of cls.21.2 and 28.3 of the Award, ss.90, 323(1)(a), 323(1)(c), and 536(1) of the Act, and reg.3.42 of the Regulations.
The Applicant seeks, pursuant to ss.545 and 550 of the Act, an order that the Second and Third Respondent are jointly and severally liable to compensate the Applicant for the loss suffered by reason of the alleged breaches, in the amount of $44,094.55 for unpaid wages, $7,626.18 for unpaid annual leave entitlements, and $13,141.66 for unpaid superannuation contributions. The Applicant also seeks the imposition of pecuniary penalties on the Second and Third Respondents pursuant to s.546 of the Act, for each and every contravention of the Act.
At all relevant times, the Second Respondent was the sole director and secretary of the First Respondent company. The Third Respondent was, at all relevant times, a shareholder in the company.
The Second and Third Respondents seek an order that the application be dismissed. They claim that, although the Applicant and the Third Respondent signed a document titled “Contract of Employment”, it was not an enforceable contract of employment as the document in question was merely created to enable the Applicant to be sponsored by the First Respondent, and thereby obtain a visa to live in Australia. The Second and Third Respondents claim that the Applicant was involved in the First Respondent’s business as a partner with the Second and Third Respondents. They argue that this is evidenced by the Applicant’s purchase of 40 shares in the First Respondent company, and by the Applicant’s conduct during the period that she was a shareholder of the company.
The Second and Third Respondents also claim that the Applicant is prevented from making any claim in relation to alleged contraventions of the Award, the Act and the Regulations because of the existence of a deed of settlement, signed and executed by the Applicant and the Second and Third Respondents on 19 January 2016 (“the Deed”).[1]
[1] The Affidavit of Hon San Cheuk filed on 26 May 2017, Annexure A.
At the hearing, the parties accepted that the first issue to be determined by the Court is whether the Applicant is precluded from proceeding with her application by reason of the Deed.
It should be noted that the dispute between the parties about the circumstances in which the contract of employment was created was the subject of oral evidence in respect of which Certificates were issued pursuant to s.128 of the Evidence Act 1995 (Cth).
Background
The Applicant is a citizen of Indonesia, and had studied and worked in Australia from at least around 2006.
A document titled “Contract of Employment” between the Applicant and the First Respondent (trading as HIBACHI Japanese Grill) was signed by the Applicant and the Second Respondent on 3 June 2013 and on 4 June 2013, respectively.[2]
[2] The Applicant’s Affidavit filed on 30 August 2017, Annexure MLM-11.
The Contract of Employment provided that the Applicant’s job title was “Restaurant Manager”, that her location of work was in King Street, Melbourne, that her direct report was the HIBACHI Managing Director (the Second Respondent), and that her gross annual salary was $52,000, payable weekly in arrears. The Applicant gave evidence that on 24 February 2014, she and the Second Respondent reached an oral agreement to vary the Contract of Employment by increasing her gross annual salary to $54,000. The Applicant deposes that the increase in gross annual salary to $54,000 was a requirement of the visa.[3] The Second Respondent denies that the parties reached such an agreement. The Contract of Employment also provided that the Applicant’s employment commenced on 1 July 2013 or “therefore upon visa confirmation.”
[3] The Applicant’s Affidavit filed on 10 May 2017 at [10].
On 18 June 2013, the Applicant applied for a Temporary Business Entry (Class UC) (subclass 457) visa (“the visa”). In her application, the Applicant nominated the First Respondent as her sponsoring employer.
On 4 October 2013, the (then) Department of Immigration and Citizenship granted the Applicant the visa.
On 20 November 2013, the Applicant purchased 40 shares from the Third Respondent, who at the time was registered as holding 120 shares in the First Respondent company. An agreement for the sale of shares between the Applicant, the Third Respondent and the First Respondent was executed on 8 November 2013 (Exhibit A6). The signatures on the agreement are those of the Applicant, the Third Respondent, and the Second Respondent in his capacity as sole director and secretary of the First Respondent company.
At the time that the Applicant purchased a 30% shareholding in the First Respondent company, the First Respondent’s only business was the HIBACHI Japanese Grill located in King Street, Melbourne. The Second Respondent gave evidence in cross-examination that the First Respondent’s second business, “Bento Station”, had not yet commenced as a business. The Second Respondent said that at that time, her plan was to open up a take-away food business (Bento Station), and in the event that it was successful, to then open up franchises based on that model.
The Applicant was cross-examined about her reasons for purchasing shares in the business. The Applicant said that the proposal looked promising, that she had worked in the field, she believed she could handle being a shareholder, and believed that she would share in the profits from the business. The Applicant’s evidence was that her parents provided her with the money to purchase the shares in the company. The Applicant said that she had seen calculations regarding the valuation of the business, prepared by the Third Respondent, but had not retained a copy of the document which formed the basis for the negotiations about her investment in the business. The Applicant said that she accepted that the calculations of the valuation were prepared by the Third Respondent. The Applicant conceded that she did not conduct any due diligence in relation to these estimates, but took them on face-value. The Applicant said that she showed her parents a copy of these calculations. The Applicant’s evidence is that her parents trusted her belief that the investment would be sound. The Applicant was unable to give evidence as to how much of the valuation, prepared by the Third Respondent, was for the HIBACHI Japanese Grill business, and how much was for the proposed Bento Station take-away food business.
The Third Respondent subsequently produced a copy of the calculations that she believed she had utilised for the purpose of calculating the consideration for the purchase of the shares by the Applicant (Exhibit A5). The Third Respondent gave evidence that these calculations were those that she roughly relied on in her discussions with the Applicant. In cross-examination, the Third Respondent said that she could not confirm that Exhibit A5 was a true copy of the document that she had given to the Applicant when they were negotiating the proposed purchase of shares in the company. The Third Respondent conceded that her memory of the calculations were similar to those calculations in the document provided to the Applicant.
The valuation (Exhibit A5) is undated. The first page is on the letterhead of the First Respondent, trading as HIBACHI Japanese Grill, with a Bento Station logo in the top right-hand corner. On the first page there are various items identified under the heading “Equity of Mark and Kitson Corporation includes”. Against each item listed, there is a dollar amount representing a valuation of the item. The list of items includes an assessment of the valuation of the “Hibachi Japanese Grill”, the costs of the renovations of HIBACHI’s kitchen, and the setting up of an “adequate office space” at HIBACHI. The other items relate to the Bento Station business concept (at that stage), and includes the “goodwill of Bento Station”, current stocks, the establishment of a website and design, and purchase of the uniform, packaging and a vehicle. The total amount of the value of the company is identified as $624,800. The valuation associated with the “Hibachi Japanese Grill” is approximately $440,000, and the valuation of the Bento Station concept is approximately $186,800.
In the following pages, exhibit A5 also includes a table which sets out estimates of gross profit, expenditure and profit for the HIBACHI Japanese Grill in the period between 2010 and 2013, as well as what is described as a “3-year plan”, in the period between 2014 and 2016. These latter estimates incorporate the proposal for the Bento Station. There is also a depreciation schedule, and a profit and loss statement for the year ending 30 June 2013, for the HIBACHI Japanese Grill business.
The Applicant gave evidence that the calculations and forward estimates contained in Exhibit A5 related to the two businesses; namely the existing HIBACHI Japanese Grill, and the proposed Bento Station. The Applicant gave evidence that at the time that she agreed to purchase shares in the business, she was aware that the plan was to sell the HIBACHI Japanese Grill business, as it would be much easier for them to manage a franchise restaurant business, than to manage a single restaurant.
The Third Respondent was cross-examined by Counsel for the Applicant about how she reached a valuation $860,000 for 40 shares, which represented 30% of the First Respondent’s shareholding.
The Third Respondent said that her calculations of the forward plan were based on actual figures of various other franchise businesses, although she conceded that they were optimistic.
The Second Respondent gave evidence that the business HIBACI Japanese Grill was sold in January 2015, and that the Bento Station in Bulleen commenced operation shortly thereafter. The Applicant gave evidence that a deposit in her bank account on 18 February 2015 in the amount of $50,000[4] was her share from the sale of the HIBACHI Japanese Grill.
[4] The Applicant’s Affidavit filed on 8 May 2017, Annexure MLM-3.
It appears that the Applicant managed the Bento Station at Bulleen from around October 2015 onwards. The Third Respondent gave evidence that there were issues with the Applicant’s management of Bento Station, including her failure to pay suppliers and the landlord in a timely manner. The Second Respondent gave evidence that whilst the Applicant managed the Bento Station in Bulleen, the Applicant was unilaterally making decisions, such as changing items on the menu.
The Applicant deposes that she raised her complaints that she was being underpaid, with the Second or Third Respondents, on the following dates: March 2014,[5] May 2014,[6] October 2014,[7] February 2015,[8] April 2015,[9]and December 2015.[10] In cross-examination, the Second Respondent said that he was aware of the Applicant’s complaints of underpayment. The Third Respondent was not cross-examined about the Applicant’s evidence in relation to alleged underpayments under the Contract of Employment.
[5] Ibid at [22].
[6] Ibid at [23].
[7] Ibid at [24].
[8] Ibid at [25].
[9] Ibid at [26].
[10] Ibid at [30].
The Applicant did not give any evidence-in-chief or evidence in cross-examination regarding the circumstances in which the parties decided to enter into the Deed. In her affidavits, the focus of the Applicant’s evidence was on the First Respondent’s failure to pay her wages in accordance with the Contract of Employment, and the impact of this on her visa.
In cross-examination, the Third Respondent conceded that in 2015, the Bento Station business did not realise anywhere near the sales that she estimated in Exhibit A5. The Third Respondent said that she did not recall the Applicant expressing any concerns about estimated sales figures for Bento Station.
On the evidence, it is apparent that in late December 2015, leading up to the drawing up of the Deed, there were discussions between the Applicant’s parents and the Third Respondent, via Skype videoconferencing.
The Third Respondent agreed that the issue of lack of profitability was one issue raised by the Applicant’s parents during the meeting. The Third Respondent said that the Applicant’s parents also raised the fact that the Applicant was stressed and unhappy, and that they did not like seeing her working long hours at the restaurant. During the meeting with the Applicant’s parents, the Third Respondent agreed to repay the purchase price of the shares in the company, together with a penalty payment of $1,400 due to the failure to pay the agreed amount in a timely fashion. The Third Respondent said that she agreed to what the Applicant’s parents offered her in order finish up the arrangement, to be “fair and headache free”, and to draw up the Deed. The Third Respondent said that the Deed was prepared by the Applicant’s solicitors, and that she and the Second Respondent had discussed the terms of the document before they proceeded to execute it with the Applicant.
The Deed of Settlement
The Deed was signed by the Applicant, the Second Respondent and the Third Respondent on 19 January 2016.
In the recitals of the Deed, the Second Respondent is referred to as “Mark”, and identified as the sole director and secretary of the First Respondent. The Applicant is referred to as “Maggie”, and the Third Respondent as “Tracy.” Both are identified as shareholders of the First Respondent. Recital B of the Deed states that the Applicant holds 40 ordinary shares, and the Third Respondent holds 80 ordinary shares in the First Respondent company. Recital C of the Deed states that the First Respondent “…operates a restaurant business called Bento Station…” located in Bulleen.
Recital D of the Deed provides:
D. In or around mid-December 2015, certain disputes have arisen between Maggie, Tracy and Mark in relation to the Restaurant Business, including but not limited to the following issues:
(i) Maggie claimed that she has been misrepresented by Tracy and Mark on issues such as opening of further franchise for the Restaurant Business;
(ii) Disputes as to management of the Restaurant Business.
Recital E of the Deed states that:
E. Without any admission to liability by any of the parties, the parties wish to settle all matters and/or disputes between them arising out of or in connection with the Restaurant Business, including but not limited to the Disputes as set out in Recital D above.
Clause 2 of the Deed contains the “Terms of Settlement”, and cl.2.2 of the Deed relevantly provides:
2.2 Tracy will pay Maggie a total of $187,400.00 (“Settlement Sum”) in the following manner:
(a) A deposit of $50,000 to which Maggie acknowledges having already been paid on 21 February 2015; and
(b) The balance of the Settlement Sum being $137,400.00 on or before 31 January 2016 (or any other date as mutually agreed by all parties).
(Emphasis in original)
Clauses 2.3 and 2.4 of the Deed provide for the transfer of the Applicant’s shareholding in the First Respondent company to the Third Respondent.
Clause 3 of the Deed deals with “Release and Discharge”, and cl.3.1(i) of the Deed (“the Release Clause”) relevantly provides:
3.1 Upon the performance of the items in Clause 2 above by the parties:
(i) Maggie shall release and forever discharge Tracy, Mark and Mark & Kitson Corporation Pty Ltd, their affiliates/ respective officers/ directors/ employees/ shareholders/ assigns, from and claims/ demands/ actions/ suits/ causes of actions, whether directly or indirectly, arising out of or in connection with the Restaurant Business, including but not limited to the Disputes as set out in Recital D above.
…
Principles of construction
In her Outline of Submissions, the Applicant submits that the modern approach to contractual construction can be found in Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52, where the following appears (at [40]):
40. This Court, in Pacific Carriers Ltd v BNP Paribas [(2004) 78 ALJR 1045], has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.
(Footnotes omitted)
There can be no dispute that this decision encapsulates the proper approach to the construction of contracts.
In Bank of Credit and Commerce International SA (in liquidation) v Ali and Others [2001] UKHL 8; [2001] 1 All ER 961 (“Bank of Credit”), the Court was required to consider whether a deed of settlement between the bank and an employee barred the employee from bringing a stigma claim.
The deed of settlement in Bank of Credit relevantly contained a term that, upon receipt of valuable consideration, the employee agreed to full and final settlement of:[11]
…all or any claims whether under statute, Common law or in Equity of whatsoever nature that exist or may exist and, in particular, all or any claims rights or applications of whatsoever nature that the [employee] has or may have or has made or could make in or to the industrial tribunal.
[11] Bank of Credit and Commerce International SA (in liquidation) v Ali and Others [2001] UKHL 8; [2002] 1 All ER 961 at 961.
The facts of Bank of Credit were that, subsequent to the making of the settlement and following the collapse of the bank, it became generally known that a significant part of the bank’s business had been carried out in a corrupt and dishonest manner (see headnote to Bank of Credit).
The majority of the House of Lords held that although in a compromise agreement supported by valuable consideration, a party could agree to release claims or rights of which that person was not, and could not, be aware, the Court would be slow to infer that the person has done so in the absence of clear language to that effect.
In his decision, Lord Bingham of Cornhill said (Bank of Credit at [8]-[9]):
8. …In construing this provision, as any other contractual provision, the object of the court is to give effect to what the contracting parties intended. To ascertain the intention of the parties the court reads the terms of the contract as a whole, giving the words used their natural and ordinary meaning in the context of the agreement, the parties’ relationship and all the relevant facts surrounding the transaction so far as known to the parties. To ascertain the parties’ intentions the court does not of course inquire into the parties’ subjective states of mind but makes an objective judgment based on the materials already identified. The general principles summarised by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society, Investors Compensation Scheme Ltd v Hopkin & Sons (a firm), Alford v West Bromwich Building Society, Armitage v West Bromwich Building Society [1998] 1 All ER 98 at 114–115, [1998] 1 WLR 896 at 912–913 apply in a case such as this.
9. A party may, at any rate in a compromise agreement supported by valuable consideration, agree to release claims or rights of which he is unaware and of which he could not be aware, even claims which could not on the facts known to the parties have been imagined, if appropriate language is used to make plain that that is his intention. This proposition was asserted by Lord Keeper Henley in Salkeld v Vernon (1758) 1 Eden 64, 28 ER 608, in a passage quoted in [11] below. It was endorsed by the High Court of Australia in Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112 at 129 where Dixon CJ (speaking for himself and Fullagar, Kitto and Taylor JJ) said:
No doubt it is possible a priori that the release was framed in general terms in the hope of blotting out, so to speak, all conceivable grounds of further disputes or claims between all or any two or more parties to the deed, whether in respect of matters disclosed by a party against whom a claim might be made or undisclosed, of matters within the knowledge of a party by whom a claim might be made or outside it. If so the case would fall within the exception which, in the passage already cited, Lord Northington [Lord Keeper Henley] made from his proposition that a release ex vi termini imports a knowledge in the releasor of what he releases, namely the exception expressed by the words “unless upon a particular and solemn composition for peace persons expressly agree to release uncertain demands” (Salkeld v. Vernon).
…
Lord Bingham of Cornhill concluded (Bank of Credit at [19]):
19. What, then, of the claim for stigma damages which lies at the heart of this appeal? The bank [the employer], through its senior employees, is fixed with knowledge of the bank’s insolvency and nefarious practices, although it seems unlikely that those negotiating with the employees were alert to these facts, very carefully concealed from the world. [The employee] had no such knowledge. Neither the bank, even when fixed with such knowledge, nor [the employee] could realistically have supposed that such a claim lay within the realm of practical possibility. On a fair construction of this document I cannot conclude that the parties intended to provide for the release of rights and the surrender of claims which they could never have had in contemplation at all. If the parties had sought to achieve so extravagant a result they should in my opinion have used language which left no room for doubt and which might at least have alerted [the employee] to the true effect of what (on that hypothesis) he was agreeing.
In her Outline of Submissions, the Applicant referred to passages from Grant v John Grant and Sons Pty Ltd [1954] HCA 23; (1954) 91 CLR 112 (“John Grant”) and a subsequent authority citing John Grant, as follows:[12]
[12] The Applicant’s Outline of Submissions filed on 22 September 2017 at [24]-[25].
24. In Grant v John Grant the Court considered the principles to be applied in construing the ambit of a deed of release. The majority stated [(1954) 91 CLR 112 at 131-132]:
The question is whether upon a proper interpretation of the deed the general release clause should be restrained to matters in dispute within the meaning of these recitals. The question depends primarily on the application of the prima facie canon of construction qualifying the general words of a release by reference to particular matters which recitals show to be the occasion of the instrument. But it is also affected by the general tenor of the deed. It is unnecessary to say more about the canon of construction or to discuss further the contents of the deed.
As to the first all that remains is to apply the principle that prima facie the release should be read as confined to the matters forming the subject of the disputes which the deed recites. As to the second, such indications as can be found in the provisions of the deed point rather in the same direction. The detailed character of the terms of settlement, the careful readjustment of rights, the specific reference to the debt of H. C. Grant and his wife and its discharge and the particularity of the allocation of things and contracts between the companies do not favour the view that a general release was intended going outside the actual area of dispute.
25. The principles in Grant were summarised in Qantas Airways Ltd v Gubbins, Gleeson CJ and Handley JA referred to Grant and said that it:
...sets out the principles by reference to which a court will decide whether a general release will be held to cover a particular dispute. The rule is that the general words of a release will, in an appropriate case, be read down to conform to the contemplation of the parties at the time the release was executed.
(Footnotes omitted)
In Doggett v Commonwealth Bank of Australia [2015] 47 VR 302 (“Doggett”)at [63], Whelan JA (with whom McLeish JA and Garde AJA agreed) endorsed the observation by Pembroke J in The Owners Corporation of Strata Plan 61390 v Multiplex Corporate Agency Pty Ltd (No 2) [2012] NSWSC 322 at [22] that the principle for which John Grant stands is sometimes described more widely than is justified, and that John Grant is not authority for the proposition that a release can only ever apply to matters then-known to the parties. His Honour continued (Doggett at [63]):
63. It is possible to enter into an arrangement which does settle ‘all conceivable further disputes’. The equitable principles articulated in Grant v John Grant restrain a party from unconscientious reliance on legal rights. Particular circumstances may reveal that it would be unconscientious to allow the general words of a release to be relied upon. Grant v John Grant was such a case. But there will be no room for the application of those equitable principles if it is clear that the parties intended the general words of a release to encompass all conceivable further disputes.
(Footnotes omitted)
Submissions
The Applicant’s submissions are, in summary:
a)the phrase “arising out of or in connection with the Restaurant Business” contained in the Release Clause of the Deed limits the release to disputes arising out of the business relationship that was brought about by the Applicant’s purchase of shares in the First Respondent company. The Applicant submits that this argument is reinforced when regard is had to the Deed in its entirety, as well as the surrounding circumstances at the time that the Deed was executed;
b)the plain reading of the recitals of the Deed support a construction that the Release Clause is limited to disputes arising out of the business relationship created by the purchase of shares by the Applicant in the company. The Applicant argues that this is because she and the Second Respondent are described as “shareholders” of the First Respondent at Recital B of the Deed, and nowhere in the Deed is the Applicant described as an employee;
c)the undisputed evidence is that the Applicant had raised the alleged underpayments with the Second and Third Respondents on many occasions. The Applicant submits that, if the Deed was intended to deal with this dispute, it would be expected that there be an express reference to this dispute in the recitals. Instead, the recitals refer to the Applicant’s claim of misrepresentation by the Second and Third Respondents, and disputes as to the management of the HIBACHI business;
d)the Applicant contends that the settlement sum of $187,400, which correlates with the price paid by the Applicant to purchase shares in the company (excluding the penalty amount), supports a contention that the release contained in the Deed related only to the Applicant’s shareholding in the business; and
e)the Applicant’s desire that she be paid properly to enable her to complete her documentation for permanent residency, and her evidence that she continued to work in the role of Restaurant Manager after the Deed was executed, lends further weight to the conclusion that the Deed was not intended to include the dispute in relation to the Applicant’s underpayments.
The Second and Third Respondent’s submissions are, in summary:
a)the words used in the Release Clause are very wide. A reasonable interpretation of the Release Clause would cover and encompass all areas arising out of, or in connection with, the HIBACHI business; and
b)there were a number of claims by the Applicant in relation to underpayment prior to the settlement of the Deed. It would be unreasonable to conclude that such broad terms in the Release Clause would only cover one aspect of the entire relationship between the Applicant and the Respondents. Furthermore, the fact that Recital D of the Deed provides that the disputes between the parties include, “but is not limited to”, reveals an intention that the Deed covers other aspects arising out of, or in connection with, the HIBACHI business.
Consideration
For the following reasons, I am satisfied that the Deed extinguished the Applicant’s claims or causes of action contained in her Application and Statement of Claim in these proceedings.
Having regard to the evidence, I am satisfied that at the time leading up to the discussions between the Applicant’s parents and Third Respondent at the end of 2015, the relationship between the Applicant and the Second and Third Respondents had broken down, and that there existed disagreement about a range of issues. I am satisfied that the disputes between the parties included disputes about the future direction of the business, the Applicant’s management of Bento Station, and the Applicant’s complaints about alleged underpayments. The issue of underpayments was a significant issue for the Applicant because, according to her evidence, the rectification of her payments impacted on her capacity to obtain a permanent visa. The Applicant’s unchallenged evidence is that she raised the issue about the underpayments as late as December 2015.
Recital D of the Deed does, as the Applicant argues, identify disputes which had emerged in mid-December 2015 in relation to the Applicant’s claim that the Respondents had misrepresented to her the future direction of the business, and what is described as disputes as to “management of the Restaurant Business”. However, the opening words to the identification of those particular issues expressly state, “including but not limited to the following issues”. Recital E of the Deed supports the approach adopted in Recital D, that the identified issues are inclusive (not exclusive) by stating that the parties, without any admission as to liability, wish to settle all matters and/or disputes, “including but not limited to the Disputes as set out in Recital D...”
Significantly, both the Release Clause and Recital E of the Deed do not (as is submitted by the Applicant) limit the issues in dispute, or the release to issues arising out of the “business relationship”. In both the Release Clause and Recital E, the phrase “arising out of or in connection with the Restaurant Business” is used. This is a phrase of wide import (see discussion below). The broad construction to be attributed to the Release Clause is further emphasised in circumstances where, after referring to “any claims/ demands/ actions/ suits/ causes of actions”, the Release Clause contains the phrase “whether directly or indirectly”.
The plain meaning of the Release Clause and Recital E of the Deed is that it applies in relation to disputes, and any future causes of action arising out of or in connection with the restaurant business; not (as the Applicant would have it) arising out of the business relationship. The concept of “the Restaurant Business” is a wider one than “business relationship.” In my opinion, the phrase “the Restaurant Business” includes both the operation and management of the business, the business relationship between shareholders and directors, and without doubt, persons employed by the Restaurant business.
There are decisions of superior courts dealing with the construction of “in connection with” contained in legislation. In my opinion, these decisions are of assistance in construing the phrase “in connection with” as found in the Deed.
In Taciak v Commissioner of Australia Federal Police (1995) 59 FCR 285, Sackville J said as follows (at 295):
“Connected with”
In the course of oral argument, Mr Robberds contended that, even if a decision not to reappoint a member of the AFP is not within the terms “investigation” and “inquiry”, as employed in par (b)(i) of the definition, the use of intercept material to support such a decision is a purpose “connected with” the investigation or inquiry.
In Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 288, the Full Court said this:
The words ‘connected with’ are capable of describing a spectrum of relationships ranging from the direct and immediate to the tenuous and remote. As Sheppard and Burchett JJ observed in Australian National Railways Commission v Collector of Customs (SA) (1985) 8 FCR 264 at 275 the meaning of the word ‘connection’ is wide and imprecise, one of its common meanings being ‘relation between things one of which is bound up with, or involved in, another’: Shorter Oxford English Dictionary.
(In the Australian National Railways case, Sheppard and Burchett JJ were quoting the comments of the Court in Collector of Customs v Cliffs Robe River Iron Associates (1985) 7 FCR 271 at 275.) The question remains in a particular case what kind of relationship will suffice to establish the connection contemplated by the statute. This requires, to use the language in Pozzolanic at 289, a “value judgment about the range of the Act”.
The value judgment required is more likely to depend on the statutory context than on dictionary definitions.
In Minister for Immigration and Multicultural Affairs v Singh (2000) 98 FCR 469,[13] the majority said (at [28]-[29]):
28. The case law on the phrase “in connection with” indicates that it is an expression of wide connotation that merely requires a relation between one thing and another: for example, Perrett v Commissioner for Superannuation (1991) 29 FCR 581; Burswood Management Ltd v Attorney-General (Cth) (1990) 23 FCR 144; Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280. But in Burswood at 146 the Full Court quoted with approval a statement made by Davies J as follows:
Expressions such as ‘relating to’, ‘in relation to’, ‘in connection with’ and ‘in respect of’ are commonly found in legislation but invariably raise problems of statutory interpretation. They are terms which fluctuate in operation from statute to statute… The terms may have a very wide operation but they do not usually carry the widest possible ambit, for they are subject to the context in which they are used, to the words with which they are associated and to the object or purpose of the statutory provision in which they appear.
29. The phrase “in connection with” does not necessarily require a causal relationship between the matters said to be connected: Perrett, and phrases such as “having to do with” are sometimes referred to as a useful synonym: Re Nanaimo Community Hotel Ltd v British Columbia [1944] 4 DLR 638. But so too are phrases such as “in the course of”, or “forming part of”: Dawson v Hojjman Brick & Potteries Ltd [1924] VLR 208. As the Full Court emphasised in Burswood at 146 reference to reported cases is of little assistance, because the nature of the relationship between one thing and another which is encompassed by the phrase “in connection with” depends so much upon the statutory context in which the words appear.
[13] This decision was disapproved of by the High Court in Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323, but not in respect of the Full Court’s consideration of the phrase “in connection with.”
The reference to disputes between the parties and the release of both parties identified in Recitals D and E of the Deed, and the release of the parties from claims or causes of action as contained in the Release Clause, can be construed by reference to an objective assessment of the circumstances applicable at the time. In my opinion, the evidence establishes that the disputes were in relation to the future direction of the restaurant business, the management by the Applicant of the restaurant business, and her claims that she was underpaid by the First Respondent as an employee working for the business.
In my opinion, the purpose of the Deed was to settle the various disputes that had arisen between the parties, by the release of both parties from “claims/ demands/ actions / suits/ causes of actions”, both direct and indirect, arising out of or in connection with the Restaurant business.
The context of the Deed is the transfer the Applicant’s shareholding in the First Respondent to the Third Respondent upon the payment of the settlement sum: cl.2.3 of the Deed. Therefore, it is not surprising that Recital B of the Deed describes the Applicant and the Third Respondent as shareholders. In these circumstances, I do not find the fact that the Applicant and the Third Respondent are described as shareholders persuasive in supporting the Applicant’s contention that the Deed does not cover disputes arising from her status of employee of the First Respondent.
Nor do I find the fact that the consideration in the Deed correlates with the purchase price paid by the Applicant in acquiring shares in the business to be persuasive. Parties are free to decide what consideration they wish to include in a deed of release. The consideration may or may not reflect all the monetary claims that the parties allege against each other. There was no evidence given by the Applicant’s parents about the figure that they chose to settle matters. The gist of the Third Respondent’s evidence is that she essentially wanted to “draw a line in the sand” in relation to the various disputes, and accepted the Applicant’s parent’s nomination of the consideration because it was fair.
There are special circumstances in this case, one of which is that the agreement by the First Respondent to sponsor the Applicant in order for her to obtain a visa, the making of the Contract of Employment, and the investment in the company by way of acquisition of shares by the Applicant (paid for by her parents), were interrelated. Each of these events would not have happened without the other occurring. The Applicant has made it perfectly clear that the Contract of Employment was a necessary condition for her to obtain the visa, and to ultimately acquire permanent residency. I found the Applicant’s evidence as to why she invested in the company to be not particularly convincing.
Having considered the evidence carefully, I am not satisfied that the Applicant cared particularly much about the basis upon which the Third Respondent had calculated the value of the purchase price for the shares that the Applicant acquired. There is no evidence that the Applicant engaged in any form of due diligence to ascertain whether the investment was a sound one. The Applicant’s evidence was that it would be a nice thing to involve herself in the investment of a business, in an industry in which she saw herself being involved into the future. The evidence is that, although her parents were privy to the calculations (Exhibit A5) provided by the Third Respondent to the Applicant regarding the valuation of the Applicant’s purchase of the shareholding in the company, they trusted the Applicant’s judgement.
I find that, upon the proper construction of the Deed any future “claims/ demands/ actions / suits/ causes of actions”, whether direct and indirect, by the Applicant in relation to the Contract of Employment and employment relationship with the First Respondent, were extinguished. Whilst the Applicant alleged contraventions of the Act and the Regulations, these complaints arose from or were in connection with the Applicant’s claim that she was an employee of the First Respondent.
Conclusion
For the reasons set out in this judgment, I will make an order that the Applicant’s Application filed on 24 August 2016 be dismissed.
I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of Judge Jones
Date: 14 February 2018
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