Ryan v Furneys Stock Feeds Pty Ltd
[1997] IRCA 247
•14 Aug 1997
DECISION NO:247/97
INDUSTRIAL RELATIONS COURT OF AUSTRALIA
EMPLOYMENT LAW - Termination of employment - Claim of unlawful termination - Issue whether proceeding settled - Agreement subject to execution of Deed of Release - Deed not executed - Whether agreement binding.
Industrial Relations Act 1988 (now Workplace Relations Act 1996) Division 3 of Part VIA.
JAMES FOREMAN RYAN v FURNEYS STOCK FEEDS PTY LTD
NI96/1411 OF 1996
JUDGE: WILCOX CJ
PACE: SYDNEY
DATED: 14 AUGUST 1997
IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NI96/1411 of 1996 ) GENERAL DIVISION )
BETWEEN: JAMES FOREMAN RYAN
AppellantAND: FURNEYS STOCK FEEDS PTY LTD
Respondent
JUDGE: WILCOX CJ PLACE: SYDNEY DATED: 14 AUGUST 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
Within 21 days, the respondent, Furneys Stock Feeds Pty Ltd, pay to the appellant, James Foreman Ryan, the sum of two thousand dollars ($2000), plus interest on that sum calculated at the rate of 8% per annum from 24 July 1996 until the date of payment.
Upon compliance by the respondent with Order 1, the proceeding be permanently stayed.
Note:Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules.
IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NI96/1411 of 1996 ) GENERAL DIVISION )
BETWEEN: JAMES FOREMAN RYAN
AppellantAND: FURNEYS STOCK FEEDS PTY LTD
Respondent
JUDGE: WILCOX CJ PLACE: SYDNEY DATED: 14 AUGUST 1997
REASONS FOR JUDGMENT
I have for disposition a Notice of Motion filed on 28 October 1996 by the respondent, Furneys Stock Feeds Pty Ltd. The Notice of Motion is brought pursuant to Order 20, rule 2(1)(a) of the Court’s rules and seeks an order that the proceedings be dismissed or, in the alternative, struck out. Order 20 rule 2(1)(a) reads:
“Where in any proceeding it appears to the Court that in relation to the proceeding generally or in relation to any claim for relief in the proceeding:
(a) no reasonable cause of action is disclosed;
...
the Court may order that the proceeding be stayed or dismissed generally or in relation to any claim for relief in the proceeding.”
Sub-rule 2(2) provides that the Court may receive evidence on the hearing of an application for an order under sub-rule (1).
The respondent argues that no reasonable cause of action is disclosed in this case because the parties have reached a binding agreement for settlement of the proceedings. I will return to the question whether an agreement for settlement attracts the Court’s power under Order 20 rule 2(1)(a).
The litigation between the parties has a lengthy history. The proceeding is currently before a Full Court, the original applicant, James Foreman Ryan, being the appellant. It is convenient to use the word “appellant” to refer to him throughout the litigation. Any reference to the “respondent” is a reference to Furneys Stock Feeds. Mr Ryan was employed by the respondent for a relatively short period in mid-1994. On 14 August 1994, according to him, he was dismissed by the respondent in breach of provisions in Division 3 of Part VIA of the Industrial Relations Act 1988 (now the Workplace Relations Act 1996). On 11 November 1994, Mr Ryan filed an application under s 170EA of the Act seeking compensation. This application came on for hearing before Judicial Registrar Patch at Dubbo on 15 May 1995. The Judicial Registrar upheld the appellant’s claim and awarded him compensation of $6,925.30.
The respondent sought review of the Judicial Registrar’s decision. That application came before Beazley J. The respondent argued the appellant was excluded from the application of Division 3 of Part VIA of the Act because he was a probationary employee at the time of his termination. This status was said to arise out of the terms of clause 20 of the Milling Industry Award 1990. Beazley J upheld that submission and, on 28 March 1996, made an order setting aside the compensation order made by the Judicial Registrar.
The appellant appealed against the decision of Beazley J. The appeal came on for hearing on 6 June 1996 before a Full Court consisting of myself, Marshall J and North J. Almost immediately, a question arose as to the correctness of an assumption made by Beazley J in holding the appellant was a probationary employee at the time of his termination. The hearing before her Honour had been conducted on the common assumption that the Milling Industry Award applied to the appellant’s employment with the respondent. However, in the Full Court, it quickly became apparent there was a question about the validity of that assumption. When this happened, Ms Dorothea Catts, solicitor for the respondent, sought an adjournment. She said she would like an opportunity to consider the matter further and, perhaps, to adduce evidence indicating the applicability of the Award to the appellant’s employment. Having regard to the fact that the question had arisen for the first time that day, we acceded to that application. We adjourned the further hearing of the appeal and granted leave to the respondent to file a Notice of Motion for leave to adduce additional evidence on the question whether the period of three months was a reasonable probationary period. We directed that any Notice of Motion be filed and served within fourteen days. In view of the fact that the appellant (who was representing himself) lived at Narromine, we further directed that all submissions in respect of the Notice of Motion be in writing.
The respondent did not file a Notice of Motion pursuant to this grant of leave. It chose another course, the details of which are disclosed by the affidavit of Ms Catts filed in support of the Notice of Motion for dismissal or striking out. In that affidavit Ms Catts deposes to a telephone conversation between herself and the appellant on 24 June 1996. The terms of that conversation are of some importance and I set them out in full:
“[Ms Catts]:I have received instructions from Lindsay Watson to attempt settlement of the proceedings.
Mr Ryan:Yes, this is dragging on and I would like to put it behind me.
[Ms Catts]:Mr Watson has instructed me to offer to you $2,000 in full and final settlement of the proceedings on the basis that the settlement is to remain confidential to the parties, that is, that you agree not to disclose the terms to any third person, except in certain circumstances. We will need you to sign a Deed of Release which will include the formalities. Formalities will include things like definitions used in the deed, the jurisdiction governing the deed, that sort of thing. You will have to sign a Notice of Discontinuance to discontinue the proceedings.
Mr Ryan:I could use the money now and I want to put the case behind me. I accept your offer of settlement on those terms.
[Ms Catts]:As you know, the Court has given directions in relation to the case. We will need to let the Court know that the matter has settled because compliance with the Court’s directions is no longer necessary. Will you inform the Court or would you like me to do it?
Mr Ryan: Could you do it?
[Ms Catts]:Yes, I will phone the court and let it know. We will file a Notice of Discontinuance when the Deed is signed. I will write to you and confirm the settlement. Good luck for the future.
I then hung up.”
Ms Catts annexed to her affidavit a copy of a file note reading as follows:
“24/6/96 Spoke to James Ryan Will accept settlement of $2000.00 Send Deed of Release in next couple of days. I will let Court know”
Two days later, on 26 June, Ms Catts faxed a letter to Mr Ryan as follows:
“We confirm that the parties to the above proceedings have settled the matter for the sum of $2000.00 gross on the basis that you agree to enter into a Deed of Release which will include terms relating to non-disclosure, confidentiality and each party to bear their own costs.
We will forward to you a draft form Deed for your consideration in the next couple of days. If you require further information please contact Ms. Dorothea Catts on (02) 250 3466.”
On the following day Mr Ryan faxed a letter to Ms Catts in the following terms:
“I confirm receipt of notification of terms of settlement in the above matter on 26 June 1996. Being for agreed amount as stated in same letter and understand the terms relating to non-disclosure, and confidentiality and each party to bear their own costs, being inclusionary terms of settlement relating to the deed of release.
It would be of assistance to me, in regard to payment of agreed amount, if your office could make remittance to L.E. Stanley Pty Ltd ACN 000 775 342 of the full amount of said settlement.
I would be pleased, if an irrevocable Authority could be sent to L.E. Stanley ref Ross Stanley, to satisfy the terms of my arrangement with this proprietor with settlement monies to follow.”
On the following day, Friday 28 June, Ms Catts advised my Associate that the matter had been settled on terms confidential to the parties and formal notification would come in due course.
On Monday 1 July, Ms Catts received by facsimile transmission from Mr Ryan a letter dated 27 June. Omitting formal parts, it read:
“In reflection of the amount on offer to settle the above matter I have assessed the merits of accepting this sum as unsatisfactory, and hereby request that your client be informed of such, being that the figure does not appropriately satisfy the overall implications that have arisen during this now lengthy issue.
In relation to finalising this matter I submit that a more realistic figure of $5000.00 would satisfy the requirements within the deed of release.
I submit that the terms of settlement hereon are not-Negotiable [sic].
I look forward to your reply.”
Ms Catts took the view it was not open to Mr Ryan to change his position at this stage. On 3 July she wrote in the following terms:
“We refer to your letter dated 1 July 1996.
The terms of your letter under reply purport to seek to renegotiate terms of settlement already agreed between the parties.
Our letter to you dated 26 June 1996 and your reply dated 27 June 1996 respectively constitute so far as our client is concerned a binding agreement, subject only to formalisation of the terms of settlement. As you are aware, the Industrial Relations Court of Australia has been advised as a result of that agreement that the proceedings have been settled.
Our client does not intend to re-open settlement negotiations and will oppose any attempt by you to do so.
We enclose a Deed of Release formalising the terms of settlement agreed upon. Please execute the document where indicated and return to us. Upon receipt of the Deed duly executed we will arrange to forward to you our client’s cheque for the settlement sum.”
Ms Catts annexed to her affidavit a copy of the Deed of Release referred to in the last paragraph of this letter. It provides, without admission of liability, that the releasee (Furneys Stock Feeds Pty Ltd) shall pay to the releasor (Mr Ryan) in “full and final settlement of the proceedings” the sum of $2,000 less taxation, that the releasor shall discontinue forthwith the proceedings and that the releasor releases the releasee from any action etc arising from, or relating to, the termination of his employment, the proceedings or any other matter. There were other formal clauses in the document.
Mr Ryan responded with a letter dated 16 July as follows:
“In regard to recent correspondence RE: Deed of Release, dated 27 June, It is my intention as previously stated not to accept the provisions of settlement within the deed of release. I stand firm in regard to these writings, and further submit that the terms of settlement thereon are Not Negotiable.
It is also my Understanding that the court is not aware that this matter has settled as the listing has not been changed, and I have not released in writing my intent to finalise this matter.
My offer to settle remains open.”
Upon receipt of this letter, Ms Catts advised the Court there was a dispute between the parties as to whether the matter was settled. She said she hoped the dispute could be resolved. She also wrote a letter, dated 19 July, to Mr Ryan in the following terms:
“We refer to your letter dated 16 July 1996.
As we previously advised you by our letter dated 3 July 1996, the proceedings have been settled pursuant to agreed terms expressed in our exchange of letters dated 26 June and 27 June respectively.
The proceedings are not currently listed in light of the advice to the Court pursuant to the agreement reached between the parties.
Should you seek to re-list the proceedings our client will take such action as is necessary in order to enforce the settlement agreement.
We enclose copy of correspondence forwarded to the Industrial Relations Court of Australia.”
Mr Ryan responded on 24 July as follows:
“As previously stated in correspondence on 1 July 1996 It is not my intention to settle the above matter (the proceedings) on the basis of said figure outlined within the deed of release, as yet unsigned.
As of today 24 July 1996 a letter requesting that a date for reapearance [sic] before the Court has in turn been issued, for the proceedings to be judged at law.
My offer to settle remains open, as perscribed [sic] in previous correspondence dated 1 July 1996.
Please note the date shown on the letter of 1 July 1996 was incorrectly stated as 27 June 1996.”
Having been told that the dispute was not resolved, I directed the matter be listed for a telephone directions hearing before me on 6 September 1996. Ms Catts and Mr Ryan participated in that hearing. At its conclusion, I directed as follows:
“I grant leave to the respondent to apply by Notice of Motion for such orders as it may wish in respect of the determination of the appeal, having regard to events that have occurred since the hearing. Any such motion to be filed by 27 September 1996 with a supporting affidavit and a written submission as to why the proposed order should be made. Any affidavit in reply to be filed and served by 14 October 1996 together with any submissions as to why orders should not be made”.
As indicated, the present Notice of Motion was filed on 28 October 1996, i.e. outside the time limit specified by me on 6 September. However, no objection was taken to this irregularity. At a subsequent telephone directions hearing on 14 November 1996, I extended the time for Mr Ryan’s submissions until 28 November. In fact, submissions were still slightly out of time, being filed on 2 December.
Mr Ryan did not dispute any part of the evidence given by Ms Catts. He confined himself to a submission that there are no grounds for the proceeding to be struck out or dismissed because there was no concluded agreement between the parties. The first question I have to determine, therefore, is whether there was an agreement for settlement of the proceeding for the sum of $2000, as submitted on behalf of the respondent, or whether the parties were still in a state of negotiation at the time it became clear Mr Ryan was seeking $5000 compared to the respondent’s offer of $2000.
I think the evidence clearly establishes an agreement between Ms Catts and Mr Ryan for settlement of the proceeding for the sum of $2000, subject to execution of an appropriate Deed of Release. Ms Catts has deposed to a conversation to that effect on 24 June 1996 and her evidence is not challenged. Moreover, her account is supported by a contemporaneous note and by subsequent correspondence. I have in mind, first, the letter she wrote to Mr Ryan on 26 June 1996 which purports to confirm that the parties to the above proceedings “have settled the matter for the sum of $2000 gross on the basis that you enter into a Deed of Release” etc. Second, and significantly, Mr Ryan replied on 27 June in a letter that referred to “agreed amount as stated in same letter”, i.e. $2000. He was so certain the matter was settled that he gave a direction as to payment of the money. Having regard to this evidence, it appears to me that the parties reached a consensus that the sum to be paid in respect of the settlement would be $2000.
The next question is whether the agreement for a Deed of Release meant there was no present agreement for settlement of the proceeding. An agreement in principle subject to performance of a condition often causes difficulties. The leading relevant authority is the decision of the High Court of Australia in Masters v Cameron (1954) 91 CLR 353. In that case Dixon CJ, McTiernan and Kitto JJ said at 360:
“Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three classes. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution.”
This authority was applied by the New South Wales Court of Appeal in Geebung Investments Pty Ltd v Varga Group Investments No.8 Pty Ltd (1995) Australian Contract Law Reporter 90-059, a case similar to the present one in that it concerned the issue whether pending litigation had been finally settled. At 90,321 Kirby P commented that it followed from the principles enunciated by the High Court in Masters v Cameron “that the mere fact that it is agreed that a formal agreement is to be prepared later does not, by itself, show that the parties continue in negotiation". In order to resolve that question, it is necessary to ascertain the intention of the parties.
In this case, it seems to me clear that the parties intended the agreement reached during the telephone conversation of 24 June 1996 to be immediately operative and binding. I say this because of the tenor of the letter written by Ms Catts to Mr Ryan on that same day, when she used the past tense in saying “the parties to the above proceedings have settled the matter”; because of the terms of Mr Ryan’s response, particularly his direction as to payment; and because of Ms Catts’ action, with Mr Ryan’s agreement, in informing the Court that the matter had settled. Although the parties had agreed a Deed of Release should be executed, that was not intended to derogate from the immediate operation of the agreement for settlement. I think the case falls within the second category identified in Masters v Cameron, namely “a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document". They agreed to payment of the sum of $2000 in full settlement of the proceeding, but made performance of the obligation to pay that sum conditional upon the execution of a Deed of Release containing agreed terms.
The respondent does not seek an order requiring Mr Ryan to execute the Deed of Release. Its present attitude is that the matter is settled and, upon that basis, the proceeding should be dismissed or struck out. That attitude is consistent only with a readiness to waive performance of the condition concerning execution of the Deed of Release. I think the respondent is entitled to waive the condition and, if the matter is otherwise settled, to obtain suitable relief from the Court. The relief must, of course, be made conditional upon the respondent carrying out its obligation to pay the agreed $2000.
I return to the question whether relief is available under Order 20 rule 2(1)(a). I do not think it is. The failure of a proceeding to disclose a cause of action is a different concept to that of settlement of the proceeding. Most compromised actions are actions in which the applicant's pleadings disclose a cause of action; that is why the respondent is prepared to pay something by way of settlement. If the proceeding is settled, the cause of action does not cease to be apparent on the face of the record; although it may merge in a consent judgment or agreement between the parties, or be released.
In La Roche v Cormack (1991) 33 FCR 414, Olney J of the Federal Court considered the appropriate course where the passage of time had rendered an application for judicial review pointless. He was reluctant to stigmatise the continued prosecution of the proceeding as an ”abuse of process of the Court", within the meaning of Order 20, rule 2(1)(c) of the Federal Court Rules (corresponding to the same paragraph in the Rules of the Industrial Relations Court). But he thought the Court had power to decline to proceed further with the hearing of the proceeding. After considering various alternatives, he ordered the proceeding be permanently stayed.
I think I should take a similar course in this case. On the view I take, the matter has been settled. Subject to implementation of the parties' agreement, no useful purpose will be served by its receiving any further attention by the Court. I propose to make a stay order, but subject to a condition about payment of moneys. The condition will require payment of the agreed sum of $2000. It should also, I think, require payment of interest on that sum. I say this because of the delay that has occurred in resolution of the matter and payment of the agreed sum. Having regard to my conclusion, it cannot be said this delay was the fault of the respondent; if Mr Ryan had promptly executed and returned the Deed of Release, he would probably have received payment in July 1996. However, the respondent has had the benefit of retaining the money since that time. In recognition of that fact, I think interest should be paid on the agreed sum until the date of payment, but this should be calculated at a commercial rate rather than the rate of 12% per annum specified in Order 35 rule 8 of the Court's Rules for a judgment debt; that rate includes an element of penalty. Having regard to interest rate levels since July 1996, it would be reasonable to require interest at 8% per annum.
I propose to order that, within 21 days, the respondent pay to the appellant the sum of $2000 together with interest on $2000 at the rate of 8% per annum from 24 July 1996 until the date of payment. Upon payment of that amount, the subject proceeding is to be permanently stayed.
I certify that this and the preceding thirteen (13) pages are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Wilcox
Associate:
Dated: 14 August 1997
The Applicant appeared in person Solicitor for the Respondent: Mallesons Stephen Jaques The matter was dealt with by way of written submissions filed by the parties Date of Judgment: 14 August 1997
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