Nicole Louise Wilson v Orchard Holdings Pty Ltd trading as Supa Value Marmion
[1996] IRCA 57
•15 January 1996
DECISION NO: 57/96
C A T C H W O R D S
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - APPLICATION for enforcement of settlement agreement - disagreement as to terms of agreement - whether implied term in agreement - whether interest payable.
INDUSTRIAL RELATIONS ACT 1988 Ss 347, 482(1), 482(2), 482(3)
INDUSTRIAL RELATIONS COURT RULES, O35r8
BP Refinery Proprietary Limited v Shire of Hastings (1977) 52 ALJR 20
Codelpha Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337
Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41
NICOLE LOUISE WILSON -v- ORCHARD HOLDINGS PTY LTD TRADING AS SUPA VALU MARMION - WI 1839 of 1995
BEFORE: RITTER JR
PLACE: PERTH
DATE: 15 JANUARY 1996
IN THE INDUSTRIAL RELATIONS )
COURT OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY ) No. WI 1839 of 1995
BETWEEN: NICOLE LOUISE WILSON
- Applicant
AND: ORCHARD HOLDINGS PTY LTD TRADING AS SUPA VALU MARMION
- Respondent
BEFORE: RITTER JR
PLACE: PERTH
DATE: 15 JANUARY 1996
MINUTE OF ORDERS
THE COURT ORDERS THAT:
The respondent shall pay to the applicant the amount of $1074.88 together with interest on that sum at the rate of 5 per cent per annum from 30 November 1995 until the date the amount is paid.
The amount referred to in order 1 shall be paid to the applicant within 7 days.
There shall be no order as to costs.
NOTE: Settlement and entry of Orders is dealt with by Order 36 of the Industrial Relations Court Rules
IN THE INDUSTRIAL RELATIONS )
COURT OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY ) No. WI 1839 of 1995
BETWEEN: NICOLE LOUISE WILSON
- Applicant
AND: ORCHARD HOLDINGS PTY LTD TRADING AS SUPA VALU MARMION
- Respondent
BEFORE: RITTER JR
PLACE: PERTH
DATE: 15 JANUARY 1996
EX TEMPORE REASONS FOR JUDGMENT
(revised from transcript)
This is an application by notice of motion in which the applicant seeks an order that within 7 days the respondent pay the amount of $1074.88, plus accrued interest and costs.
The applicant gave evidence and also called Mr William Johnston. Mr Keith Anderson, representing the respondent, gave evidence as did his wife, Mrs Sue Anderson.
The background to the matter is that Ms Wilson has an application before this Court for compensation for unlawful termination, and a claim for under payment of wages. The matter was to proceed before the Court before Judicial Registrar Farrell on 24 November 1995. Before the matter proceeded before the Judicial Registrar, there were settlement discussions within the Court. The people present when the settlement discussions took place were: Ms Wilson, the applicant; Mr Johnston; Ms Catherine Cameron, who is also an industrial officer with the Union of which Ms Wilson is a member; and also Mr Anderson and Mrs Anderson.
I should mention that Ms Cameron did not give evidence before me this morning, but she was the representative of the Union which today presented the case on behalf of Ms Wilson, and therefore, it is understandable that she did not give evidence.
The applicant's case is that prior to the hearing proceeding before Judicial Registrar Farrell, an agreement was reached that the respondent would pay to the applicant an amount of $1074.88. The document which became exhibit 1 was then created. This document was drafted by Mr Johnston and was signed by Ms Wilson and Mr Anderson. The document reads:
I, Keith Anderson, agree to pay Nicole Louise Wilson, the following amounts: (1) $1000 as an ex gratia payment, and (2) $74.88 in unpaid wages. I, Nicole Louise Wilson, agree to discontinue my application for unlawful termination in matter number WI95/1839, with the Industrial Relations Court of Australia. I also agree to make no further claims against Orchard Holdings Pty Ltd, arising out of my employment with the employer during the period 24 January 1995 to 11 June 1995.
As I stated, that document was signed by Ms Wilson and by Mr Anderson.
The evidence was that this document was created and signed prior to Judicial Registrar Farrell entering the courtroom on the date in question. The evidence given on behalf of the applicant, by Mr Johnston and Ms Wilson, was that there was mention of whether Judicial Registrar Farrell would be informed as to the terms of the settlement when he entered the Court. The evidence of Mr Johnston was to the effect that just prior to Judicial Registrar Farrell entering the courtroom, Mr Anderson said something to the effect that: "we (meaning the parties) do not have to tell the Court about the matter". Mr Johnston understood that to mean not telling the Court the terms of the settlement.
Mr Johnston thought that the reason this was said to him by Mr Anderson was that Mr Anderson did not want a Court order made against the respondent. Mr Johnston thought that for two reasons: firstly, that no one, as he said, likes to have a Court order against them; and secondly, that the respondent in this particular case did not want an order made against it because if it breached the order then they could be in contempt of Court.
Whilst Ms Wilson's evidence was not as specific as Mr Johnston's on this matter, it was generally supportive of it. The applicant's case is that after the matter had concluded at Court, the parties went away and on 29 November the Union of the applicant received a letter with which was enclosed a cheque, signed on behalf of the respondent, for the amount of $1074.88. This amount, as stated in the letter, referred to the amounts which were agreed at the settlement before the Court proceedings was commenced. The cheque for $1074.88 was subsequently cancelled. The applicant claims that the respondent has breached the settlement agreement by the non payment of $1,074.88.
From the evidence it is clear that the cheque was cancelled after Mr Anderson became aware that other members of his staff knew of the amount that had been paid, or was going to be paid to Ms Wilson. In telephone conversations with Ms Cameron and Mr Johnston, Mr Anderson raised the question of the terms of the settlement being kept confidential. Mr Johnston and Ms Cameron told him they were of the view that there was no term of the agreement which specified any confidentiality, and accordingly, they had relied on what they considered to be the agreement, which was that the amount would be paid and there was no condition of confidentiality.
There has been no subsequent payment of the amount referred to in the settlement and that is what brings the parties to Court today. In essence, the applicant seeks the enforcement of the agreement, which they allege was made. The respondent's case was that there was a term in the agreement that the applicant would keep the terms of the settlement confidential, such that the applicant would not inform anybody of the fact of the settlement or of the amount that was to be paid.
When I first asked him about the matter, Mr Anderson informed me that the respondent's case was that it was an implied term of the agreement that the amount to be paid would be kept confidential. However, as the hearing progressed, it became clear that Mr Anderson was referring to an oral term of the agreement, which was not included in the written agreement, which was to that effect. Both he and Mrs Anderson gave evidence that whilst the agreement was being drafted, and/or signed, that there was mention by Mr Anderson, which seems to have been directed at Mr Johnson, to the effect that the matters agreed upon were to be kept within the four walls of the Court.
Mr Johnston's evidence, and the evidence of Ms Wilson, were at odds with this, as neither of them accepted that any such comment was made. I am satisfied, however, that Mr and Mrs Anderson did believe that the terms of the settlement reached were going to be kept confidential. However, that is a different question to the question which I need to decide, which is: whether or not confidentiality was agreed upon. Having heard all of the parties give evidence, I am not satisfied that Mr Anderson's comment to Mr Johnston was as specific as Mr Anderson said that it was.
Whilst I do not think that Mr Anderson was in any way attempting to give false evidence, it is always difficult to give evidence about conversations that occurred some time ago, and that is particularly the case, in an instance like this, where as all seemed to agree, there was some pressure in the situation at hand. I do not mean untoward pressure in any way, but simply the pressure that comes about when parties are involved in settlement negotiations just prior to litigation commencing.
In my view the comment that Mr Anderson made to Mr Johnston was not as specific as Mr Anderson's recollection of it. In my view, Mr Anderson said something to Mr Johnston to the effect that the Court did not need to be told of the settlement and that once the matter had been concluded that that would be the end of it; or that once the matter had been concluded within the Court that would be the end of the matter. Mr Anderson may have understood that to mean something beyond what it actually means. But I construe the comment by him to mean that: once the matters were settled before the Court there would be no further legal claims able to be made by or on behalf of the applicant.
This construction of what was said is supported by exhibit 1, where exhibit 1 refers to Ms Wilson agreeing to make no further claims against the respondent, arising out of her employment. Mr Anderson has raised for my consideration, the issue as to what is meant by "no further claims". In my view, that expression means that there are to be no further claims made in a Court or an Industrial Commission in relation to her employment, and it does not refer to matters as broad as publicising or telling a third party about the terms of the settlement that was made.
So, I do not accept that there was a clearly expressed term of the agreement that the terms of the settlement were to be kept confidential. Mr Anderson has pointed out to me, and I accept, that there could have been oral terms of the agreement in addition to the written agreement. But the real question is whether in this case, the oral term of the agreement was entered into. And I am not satisfied that it was. As I have said, I do accept that Mr and Mrs Anderson, when the issue later arose, did think that the terms of the agreement were to be kept confidential. And as Mr Anderson has pointed out to me, that is consistent with him not wanting the Judicial Registrar to be informed as to the terms of settlement, and it is also consistent with his subsequent behaviour, in cancelling the cheque when he heard that others had been informed about the terms of settlement.
But my job is to decide objectively what the terms of the agreement were, and to objectively decide whether there has been a breach of that agreement. In determining that matter, in terms of what was communicated between the parties and agreed to, as I said a little earlier, I am not satisfied that there was a term of the agreement, agreed to by both parties, as to the confidentiality of the terms of settlement. In particular, Ms Wilson has said to me this morning that she did not understand there to be any confidentiality agreement in place, or confidentiality term in place, and I accept that evidence.
I have some sympathy for the position of Mr and Mrs Anderson, in that they, as I have found, honestly believed that there was a confidentiality term. My finding relates to the fact that, looking at the matter objectively, and as to what was communicated between the parties, that there was no term in place. In my view then, the agreement is accurately reflected by the document which has become Exhibit 1.
I have also considered the question of whether there was an implied term in the settlement agreement that the matter would be kept confidential. By an implied term I mean a term that was not expressly communicated between the parties, but which ought to be implied as a matter of law. In considering this question, the courts have in the past said that it maybe appropriate to imply such a term when a number of criteria are satisfied. Those criteria are that:
(a) the term is reasonable and equitable;
(b) it is necessary to give business efficacy to the contract;
(c) it is so obvious that it goes without saying;
(d) it is capable of clear expression; and
(e) it does not contradict any express term of the contract.
These requirements were initially set out by the Privy Council in BP Refinery Proprietary Limited v Shire of Hastings (1977) 52 ALJR 20 at 26. They have subsequently been approved by members of the High Court in a number of cases, including Codelpha Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347 and 404, and also Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 at 65, 117 and 121.
In considering those criteria, I find that they have not been met in this particular case. This is at least because of the third criteria, that the term of the contract must be so obvious that it goes without saying. This is sometimes known as the "officious bystander test". This is where one assumes that if an innocent bystander were in the presence of the parties making the contract and that person were to say: What about so-and-so? The parties would say something to the effect of: Oh, of course that is right: see Greig and Davis, The Law of Contract, Law Book Company, 1987, page 554.
In this particular instance I do not find that the suggested confidentiality term in the contract is of that type. It is something which may or may not have been agreed to by the parties. It was not something so obvious that it need not be said.
Further, in relation to the second criteria, it must be doubted as to whether such a term would be necessary to give business efficacy to the contract. The contract could be wholly effective without the implication of such a term. So to conclude on that matter, I do not find that the term of the contract urged by the respondent can be implied as a matter of law.
I find that an agreement was entered into between the parties in terms consistent with exhibit 1. I do not find that there was a term of that agreement that the terms of the agreement be kept confidential. Whilst Mr and Mrs Anderson may have had that in their minds, particularly when they found out about others knowing of the terms of the settlement agreement, I am not satisfied in considering all of the evidence that that was a matter which was specifically agreed to between the applicant and the respondent on 25 November 1994. Accordingly, I find that there was an agreement reached in which the respondent should pay to the applicant an amount of $1074.88. I do not find that the applicant has breached the agreement. I do find, in the circumstances as I have outlined, that the respondent breached the agreement by failing to pay the applicant $1074.88. Therefore the Court will make an order enforcing that agreement.
The second matter that was raised for me to consider was whether interest should be awarded in favour of the applicant. The applicant's representative was not able to point me to any particular section of the Industrial Relations Act which would permit me to make such an award of interest. However I refer the parties to section 482 of the Industrial Relations Act which reads:
In proceedings for the recovery of money, including a debt or damages in respect of a cause of action that arose after 21 November 1984, the Court or a judge must, on application, unless good cause is shown to the contrary, either: (a) order that there shall be included in the sum for which judgment is given, interest at such rate as the Court or judge thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date as of which judgment is entered; or (b) without proceeding to calculate interest in accordance with paragraph (a), order that there shall be included in the sum for which judgment is given a lump sum instead of any such interest.
There are some qualifications to section 482(1) in sections 482(2) and (3), but I am not satisfied that any of those qualifications apply to this case. Therefore I am satisfied that I have the legal authority to make an award of interest, and I think it is appropriate that I do so.
I think that for this reason. If the respondent had not breached the agreement, the applicant would have been in possession of the money owed to her as of 30 November 1995. However, because of the breach of the agreement, the applicant has not been in possession of such money and has been unable to earn interest upon it. I accept that the reason that the cheque was cancelled was in a sense in good faith by the respondent, because they believed the applicant had breached the agreement.
However, as I have found, there was no term of the agreement that required the applicant to keep the terms of settlement confidential. Therefore, on the question of interest, I find that because the applicant has been kept out of her money for a period of time by the breach by the respondent of the agreement, it is appropriate to award interest.
In respect of the quantum of interest, my inclination was to order that the interest be at the rate as is given to judgments ordered by the Court. Section 483 of the Industrial Relations Act refers to judgment debts under a judgment of the Court carrying interest as from the date of which the judgment is entered. The Court rules then specify the rate of interest. Order 35, rule 8 refers to:
A judgment debt carries interest at the rate of 12 per cent per annum unless, in a particular case, the Court determines that justice requires that a lower rate should be applicable.
That rate of interest applies to a judgment debt. My first thought was that interest in this case should be given at the same rate, but on reflection I do not think it appropriate to order that interest should apply at the rate of 12 per cent per annum. My reason for saying this is that it is unlikely that the applicant would have been able to invest the money that she would have received from the respondent if the agreement had not been breached so that she could have achieved an interest rate of 12 per cent per annum. In all the circumstances, I consider that a more appropriate interest rate would be 5 per cent per annum. That will be calculated on a simple interest basis. There is no basis on which the Court could order a compound interest rate in this particular case.
The other matter that the applicant applied for was costs. Section 347 of the Act says:
A party to a proceeding including an appeal in a matter arising under this Act shall not be ordered to pay costs incurred by any other party to the proceeding unless the first mentioned party instituted the proceeding vexatiously or without reasonable cause.
In this particular instance there is no pary who has instituted a proceeding vexatiously or without reasonable cause, and therefore the Court has no jurisdiction to award costs.
I will come to the formal orders that I think should be made in a moment, but firstly I want to say something else about whether the terms of the settlement that I find were reached between the applicant and the respondent ought to be made further use of, whether there ought to be any further publication of the matter. Whilst I do not think it appropriate to make any particular order on that matter, it should be very plain to the parties that I have found that Mr and Mrs Anderson believed that the terms of the settlement would remain confidential. That has not occurred, and I have found that there was no term of the agreement that that should occur.
But now the applicant and the Union, which represents her, are aware that Mr and Mrs Anderson, honestly, as I have found, held that view. I think it would be highly appropriate for the Union and Ms Wilson to take note of that and in my view it would be appropriate for them not to further publish the terms of the settlement. I make no further observation as to that, and as I say, the Court does not make any order in that respect but the parties are aware of my views in relation to that.
Finally there was some suggestion by the respondent that there had been some deceit practised upon them by the Union. I do not consider that there is sufficient evidence to make any finding against the Union in that way. As I understand the matter there was a breakdown or a mistake in the communication between the parties on the day in question. Mr Anderson used words in the conversation which were to the effect that once the matters were completed with they would not be taken any further. I have found that objectively construed those words are consistent with the document that was produced which refers to no further claims being made.
I do not consider that the Union were being deceitful in then publishing the terms of the settlement because I do not think the Union had any basis for understanding that Mr and Mrs Anderson were mistaken as to what they considered the agreement to be. If I considered that the Union had deliberately deceived Mr and Mrs Anderson, particular if Ms Wilson was a party to that as well, there may have been some remedy open to Mr and Mrs Anderson, but I do not find that there was any such deliberate deceit practised on Mr and Mrs Anderson.
The orders that I make are firstly, that the respondent shall pay to the applicant the amount of $1074.88 together with interest on that sum at the rate of 5 per cent per annum from 30 November 1995 until the date the amount is paid. Secondly, I order that that amount be paid within 7 days. Thirdly, I order that there shall be no order as to costs.
I certify that this and the preceding 12 pages are a true copy of the Reasons for Judgment of Judicial Registrar Ritter.
Associate
Date:
Representative for the applicant: Ms K Cameron
Shop, Distributive and Allied
Employees' Association
Western Australian Branch
The respondent was represented by Mr K Anderson
Hearing date: 15 January 1996
Judgment date: 15 January 1996
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