Sinclair v Anthony Smith and Associates Pty Ltd
[1995] IRCA 665
•19 December 1995
C A T C H W O R D S
INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - alleged UNLAWFUL TERMINATION - agreement for payment of COMPENSATION - COMPENSATION not paid - whether binding agreement for compromise of claim - application to enforce agreement - previous application arising from same alleged termination discontinued - whether abuse of process to institute further application - whether discontinuance of initial application was a bona fide compromise of applicant's claims
INDUSTRIAL RELATIONS ACT 1988 S 170EA
INDUSTRIAL RELATIONS COURT RULES, Order 22 Rule 7
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589
Belair v Curran (1939) 62 CLR 464
Henderson v Henderson (1843) HARE 100; 67 ER 313
Yat Tung Investment Pty Ltd v Dao Heng Bank Limited (1975) AC 581
Croft v Lumley (1858) 6HL Cas 672
Wigan v Edwards (1973) 47 ALJR 586
DEON CAWTHRAY -v- STINSON NOMINEES PTY LTD T/A PRINCESS ROAD TAVERN - WI 95/2023
BEFORE: BOON JR
PLACE: PERTH
DATE: 19 DECEMBER 1995
IN THE INDUSTRIAL RELATIONS )
COURT OF AUSTRALIA )
WESTERN AUSTRALIA )
DISTRICT REGISTRY ) No. WI 95/2023
BETWEEN: DEON CAWTHRAY
- Applicant
AND: STINSON NOMINEES PTY LTD
T/A PRINCESS ROAD TAVERN
- Respondent
MINUTE OF ORDERS
BEFORE: BOON JR
PLACE: PERTH
DATE: 19 DECEMBER 1995
THE COURT ORDERS THAT:
The respondent pay the applicant the sum of $7,000 within 28 days of the date of this order.
The respondent's application on notice of motion filed 19 October 1995 be dismissed.
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 95/2023
BETWEEN: DEON CAWTHRAY
- Applicant
AND: STINSON NOMINEES PTY LTD
T/A PRINCESS ROAD TAVERN
- Respondent
BEFORE: BOON JR
PLACE: PERTH
DATE: 19 DECEMBER 1995
REASONS FOR JUDGMENT
This matter concerns the hearing of two notices of motion. The first notice of motion was filed by the applicant on 6 October 1995 and seeks an order that the respondent pay the applicant $7,000 plus interest and costs. The applicant seeks to enforce an alleged settlement arrived at between the applicant's solicitor, Mr Derek Schapper, and the former representative of the respondent, Mr David Jones of the Chamber of Commerce and Industry of Western Australia, on 20 September 1995.
The second notice of motion was filed by the respondent on 19 October 1995 and seeks an order that the applicant's application be dismissed with costs. It was submitted that in a prior application (WI95/1985) the applicant had applied for the remedies of reinstatement and compensation for the alleged unlawful termination of his employment with the respondent. It was said that that matter was discontinued after the parties arrived at a settlement on 24 August 1995. The applicant then instituted the present substantive application on 28 August 1995 in which he seeks compensation for the alleged unlawful termination of his employment. It is alleged that it is an abuse of process to seek to raise in further proceedings, issues which could have and should have been litigated in earlier proceedings.
In relation to the second notice of motion, the applicant says that the alleged settlement in relation to the original proceedings cannot be enforced as there was no consideration for the agreement to settle, as the respondent's director admitted that he owed to the applicant the amount of the settlement figure allegedly arrived at. It was said that the respondent's director refused to pay the amount he acknowledged he owed unless the applicant agreed to discontinue the first proceedings. In those circumstances, the applicant alleges that there was no bona fide compromise of the first action.
The applicant further denies that the second proceedings are an abuse of the process of the Court. It was said that the first proceedings were discontinued at the insistence of the respondent's director and this was done before the first direction's hearing. The Court was referred to Order 22 Rule 7 of the Industrial Relations Court Rules. The applicant maintains that the first alleged settlement was not binding upon him and that moreover the second alleged settlement was in fact binding upon the respondent.
The respondent denies that Mr Jones, the respondent's representative, had authority to agree to a settlement of $7,000 on behalf of the respondent.
BACKGROUND
The applicant filed an affidavit in these proceedings which reads as follows:
"1. I am the Applicant in these proceedings.
2.I was employed by the Respondent as a full time sales attendant at its bottle shop from 4 May 1994 to 12 August 1995. My boss was Gerry Gastevski.
3.On Tuesday 25 August 1995 Gerry rang me at home about an hour before I was due to start work. He told me that a policeman had been in to see him and had told him that I had been dealing drugs at work. He told me not to bother coming in and that I was sacked. He told me to pick up my pay the following Monday which was the normal pay day.
4.On Monday 21 August I went to work to collect my pay. The only money was the money that I had already earned and one extra day's pay. I asked Gerry where was my 2 week's (sic) pay. He said I wasn't entitled to 2 weeks pay and that I was only entitled to one day because that was the Hotel Association's rules. He said I could go and see a union or whoever I wanted to see whether I was entitled to anything more. He said he would pay 3 weeks if I was entitled to 2 weeks.
5.That day I went to the WA Industrial Commission in the National Mutual Building in Perth and spoke to a clerk at the counter. I told the clerk what had happened and was told I was entitled to 2 weeks pay but I would be better off going through the Federal Court. The clerk told me where the court was and I went there. I went to the front counter and explained my problem to the clerk. I was given a form to fill out which I did. I was told the form would be registered and I would then be informed what was happening.
6.A few days later Gerry rang me. He had received the Court form and he abused me. I told him he owed me 2 weeks pay. He abused me again and hung up. About 2 hours later he rang again and apologised to me. He said he had rung the Hotels Association and he did owe me 2 weeks notice but he would only pay me if I cancelled the court action. As I was desperate for the money I said OK. I told him I would come to the hotel to fix it up. I then rang the Industrial Relations Court and asked them how I could go about cancelling the Court case. The person I spoke to said they could fax through a notice of discontinuance which could be signed and faxed back.
I then went to the hotel and saw Gerry. He told me he was sorry and that the rules had changed and he did owe me the 2 weeks pay. He said he was only joking about paying 3 weeks if I was owed for 2 weeks and that he was only going to pay me 2 weeks. He said I had to organise cancelling the Court and he would pay me. I rang the Industrial Relations Court again from the hotel and asked for the discontinuance notice to be faxed through. It came through and both Gerry and I signed it and Gerry faxed it back to the Court. He then wrote out a cheque for 2 weeks wages and gave it to me. I then told Gerry that I wasn't happy about what had happened. We discussed the situation and he said he would believe what the police said over what I said. He said my work standard was good but with the police saying I was selling drugs he wasn't going to believe me whatever I said and I wasn't going to get my job back. I told him I wasn't happy and I was going to seek compensation. I then left.
7.A day or so later I saw a friend of mine and explained the situation to him. He told me to go and see my solicitor Derek Schapper. I did this and he issued these proceedings. Derek Schapper was and is my solicitor at all material times and was authorised (sic) settle my claim against the respondent for $7,000.00.
8.I refer to paragraph 4 of the affidavit of Kire Gastevski sworn 19 October 1995. At no time did he offer to pay me $611.56 in settlement of my claims. He admitted he owed me 2 weeks pay and said he would only pay it to me if I cancelled the Court case. I agreed to that because I was desperate for the money because I owed money on my car. I had borrowed approximately $13,000 to buy a car about 6 months before being dismissed. I only borrowed this money as I thought my job was secure.
9.Some time later after the Respondent received the application in these proceedings Gerry rang me at home. He asked what the hell was this application about. I said that I had told him that as I wasn't getting my job back I was going to go for compensation. He said he thought we were mates and perhaps he could give me some casual work in the future but not at the moment because of the police. I told him that was no good for me and I wasn't interested. He said he was doing me a favour. I told him that sacking me was no favour."
During cross examination, Mr Cawthray adopted the contents of his affidavit and maintained that they were correct. He also said that he had a car loan for $13,000. At the time of his termination he lived with his ex-girlfriend's grandmother. He did not pay rent but he paid for groceries, food and his share of the bills. He also had an amount of about $800 in outstanding traffic fines.
Mr Cawthray did not agree that Mr Gastevski, the director of the respondent, offered to pay the two weeks' pay because he did not want the fuss of the courts. Mr Cawthray said that Mr Gastevski had said that he had found out that he owed the money to Mr Cawthray through the Hotels Association, and that he would pay Mr Cawthray only after the Court case was cancelled. The $611.56 was not payment of compensation in settlement of his unlawful termination claim. It represented two weeks' pay in lieu of notice. Mr Cawthray said that when he issued his application in this Court he had no idea how much compensation he was entitled to. He told Mr Gastevski on 24 August, the date of the first alleged settlement, that he was not happy with the situation and that he was going to seek further compensation.
Mr Gastevski filed an affidavit in this Court on 19 October 1995. That affidavit reads in part as follows:-
"3.On or about 22 or 23 August 1995 I received the applicant's claim of unlawful termination of employment and application for remedy dated 21 August 1995 which had file number WI95/1985. .......
4.After I received the applicant's application WI95/1985 I had a discussion with the applicant during which I offered to pay to him $611.56 in settlement of his claims. The applicant accepted the offer which I made on behalf of the respondent and on 24 August 1995 I paid to him the sum of $611.56 and on 24 August 1995 I on behalf of the respondent and the applicant filed a notice of discontinuance a true copy of which is annexed hereto and marked with the letter B.
5.On or about 29 or 30 August 1995 I received a copy of the applicant's claim and application in this matter.
6.Annexed hereto and marked with the letter C is a copy of the letter which I am informed by the respondent's solicitors and verily believe is a true copy of a letter dated 13 October 1995 which they forwarded to the applicant's solicitor on or about that date."
The Annexure C referred to in Mr Gastevski's affidavit was a letter from his solicitors to Mr Schapper, the solicitor for the applicant. That letter reads in parts as follows:
"We note that the above application is the second application made by your client following the termination of his employment.
By application WI95/1985 your client sought both reinstatement and compensation.
On a without prejudice basis and without any admission of liability our client paid to your client a sum equal to two weeks' pay in full and final satisfaction of your client's claim, which sum is accepted by your client, and upon which our respective clients signed a notice of discontinuance in application WI95/1985.
Copies of the application and the notice of discontinuance are enclosed.
Issue estoppel precludes your client from attempting to raise in this application matters which were or, if not, could have been raised in application WI95/1985. Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 597; Belair v Curran (1939) 62 CLR 464 at 531.
This application constitutes an abuse of the process of the Court. You are no doubt aware that it is an abusive process to seek to raise in further proceedings issues which could have and should have been litigated in earlier proceedings. Henderson v Henderson (1843) HARE 100; 67 ER 313; Yat Tung Investment Pty Ltd v Dao Heng Bank Limited (1975) AC 581 at 590. ........ "
Mr Gastevski swore a further affidavit on 9 November 1995 which states in part "......I deny that I or anyone else on behalf of the respondent instructed David Jones to settle this matter for $7,000". Mr Gastevski gave evidence that he is the licensee of the Princess Road Tavern. He said that on Monday 14 August he was in the bottle shop and the paper boy aged 13 or 14 came in looking for Deon Cawthray. Mr Cawthray was not there and the paper boy said "I bought some foils off him and I want to know if he has some more". On the Tuesday morning Mr Gastevski rang Mr Cawthray and told him not to bother coming in as he had had enough of his drug dealing. Mr Gastevski said that he had warned Mr Cawthray three or four times before and he said to Mr Cawthray that even the police knew about it. The matter of the alleged drug dealing was not admitted by the applicant.
Mr Gastevski's evidence was that Mr Cawthray came in and said he wanted two weeks' pay. Mr Gastevski told Mr Cawthray that he was not entitled to two weeks' pay. Then Mr Cawthray came in with the fax from the Industrial Relations Court. Mr Gastevski said that he told Mr Cawthray that he would pay him only if he cancelled the Industrial Relations Court proceedings and that is what happened. He said that it was a friendly meeting and no discussion of compensation took place.
During cross examination, Mr Gastevski said that the reason he wanted to pay Mr Cawthray the $611 was because he did not want to see him again. When asked whether the $611.56 paid to Mr Cawthray represented two weeks' pay Mr Gastevski was extremely evasive. He finally said that he paid him two weeks' pay not to see his face again. He said that he went to the Hotel Industries' Association but that he knew the rules before he went there. He said that there was no way in the world that Mr Cawthray should be paid the two weeks in lieu of notice. During cross examination, Mr Gastevski in effect admitted that he may have said to Mr Cawthray that he was sorry the rule had changed and that he did owe him two weeks' pay in lieu of notice. Mr Gastevski also said in cross examination that he does not know what the term "without prejudice" means or what "without admission of liability" means. According to Mr Gastevski, all he said was that he would pay Mr Cawthray the two weeks only if he cancelled the court case.
Mr Gastevski was emphatic that he never authorised Mr Jones of the Chamber of Commerce and Industry to settle the case on his behalf. He did, however, say that he authorised Mr Jones to give Mr Cawthray his job back. He said that he did this so that he could then sack Mr Cawthray again the next day.
Mr Jones gave evidence that prior to 20 September 1995 the Chamber of Commerce and Industry had received instructions only by telephone. There was a conference at the Commission on the morning of 29 September and he met Mr Gastevski there before the time allotted for the conference. He took further instructions from Mr Gastevski.
The evidence of Mr Jones was that at the Commission conference Mr Schapper, the solicitor for the applicant, brought some matters to his attention which seemed to conflict with certain aspects of the instructions given to him by Mr Gastevski. Mr Jones sought an adjournment of the conciliation conference and had further discussions with Mr Gastevski. Mr Jones recommended that Mr Gastevski make an offer to settle the matter. Mr Gastevski was not happy with his advice and Mr Jones arranged for him to see a colleague of his at the Chamber of Commerce and Industry for a second opinion. The colleague confirmed the advice given by Mr Jones. Mr Gastevski was still unsure about what to do so Mr Jones suggested he think it over for a while. Later that day, Mr Jones telephoned Mr Gastevski and received instructions to settle the matter. Mr Jones telephoned Mr Schapper and a settlement of $7,000 was eventually arrived at. Mr Jones was emphatic that he was authorised by Mr Gastevski to settle in this manner.
Mr Jones gave his evidence in a forthright manner and it clearly caused him some pain to give evidence against his former client.
Mr Gastevski did not tell Mr Jones that there had been any prior proceedings issued by the applicant. Mr Schapper was unaware of the prior proceedings when he prepared the substantive application in this matter. Further, at no time did Mr Gastevski tell Mr Jones that there had been any settlement of the original action.
THE CREDIBILITY OF THE WITNESSES
I have carefully considered the evidence and the demeanour of the witnesses in this matter. I had little hesitation in accepting the evidence of Mr Cawthray and Mr Jones over that of Mr Gastevski. Mr Gastevski appeared to me to be evasive and to tailor his evidence according to what he understood the issues to be based after hearing the submissions of counsel in Court before he gave evidence. On balance, I find that the version of events given by Mr Cawthray and Mr Jones, as set out above, to be what really took place.
WAS THERE A BONA FIDE COMPROMISE OF THE APPLICANT'S CLAIMS ON 24 AUGUST 1995?
In my view, the events of 24 August 1995 did not amount to a bona fide compromise of Mr Cawthray's claims against the respondent within the meaning of the authorities referred to me by counsel for the respondent. Those authorities were based on the rule in Croft v Lumley (1858) 6HL Cas 672, to the effect that if parties agree to the payment of money subject to a condition in order to settle a claim, the party accepting the money is bound to also accept the condition. In this case, there was no mention made of any full and final settlement of Mr Cawthray's claim. It was merely agreed that he sign a notice of discontinuance in relation to the first action. Mr Gastevski at the time admitted that he owed the money to Mr Cawthray and said that he would only pay it if he agreed to discontinue the action. Mr Cawthray did not agree not to pursue the balance of his claim.
If I am wrong in this, then I consider that the respondent cannot in any event hold the applicant to the terms of any compromise on the basis of dicta in the case of Wigan v Edwards (1973) 47 ALJR 586, to which this Court was referred by counsel for the applicant. In that case, Mason J said at pages 594-595:
"The first question which arises is whether there was valuable consideration for the appellant's promise of 22nd April, 1969. The general rule is that a promise to perform an existing duty is no consideration, at least when the promise is made by a party to a pre-existing contract, when it is made to the promisee under that contract, and it is to do no more than the promisor is bound to do under that contract. The rule expresses the concept that the new promise, indistinguishable from the old, is an illusory consideration. And it gives no comfort to a party who by merely threatening a breach of contract seeks to secure an additional contractual benefit from the other party on the footing that the first party's new promise of performance will provide sufficient consideration for that benefit.
An important qualification to the general principle is that a promise to do precisely what the promisor is already bound to do is a sufficient consideration, when it is given by way of a bona fide compromise of a disputed claim, the promisor having asserted that he is not bound to perform the obligation under the pre-existing contract or that he has that cause of action under that contract. The qualification recognises that for the Court itself to examine and determine the correctness of the promisor's claim would be a pointless exercise when the new bargain indicates that the promisee regarded the fresh promise as a benefit, presumably viewing the promise of performance as more advantageous than the remedies available to him for breach of contract. But the law, by insisting that the claim in dispute is one which was honestly or bona fide made, prevents the qualification from assisting the party who would seek to gain an unfair advantage by threatening unscrupulously to withhold performance under a contract".
In this case, there was of course no pre-existing contract. However, there was an acknowledged pre-existing statutory duty to pay two weeks' pay in lieu of notice. The qualification to the general rule does not assist the respondent because in this case Mr Gastevski sought to gain an unfair advantage by threatening to withhold performance under an existing obligation unless there was an agreement to discontinue the initial action.
It is my view that the applicant is not bound by the terms of the alleged agreement reached on 24 August 1995. In saying this I wish to stress that in my view this is not a case in which the parties agreed to a full and final settlement of the claims between them. The balance of the claims by Mr Cawthray against the respondent was not discussed. There was merely an agreement to discontinue the initial court action at a time when the parties could do so without leave of the Court, as there had been no directions hearing to that date. Order 22 of the Industrial Relations Court Rules allowed the parties to discontinue the action. There was no bona fide compromise of the first action.
WERE THE SECOND PROCEEDINGS AN ABUSE OF THE PROCESS OF THE COURT?
It is argued on behalf of the respondent that the second proceedings issued by the applicant in this Court were an abuse of the process of the Court. It was said that as the applicant was in the first proceedings seeking compensation generally and that in the second proceedings he was seeking compensation other than the $611 already paid, the second action is for relief in basically the same terms as the first action. It was argued that as there was a compromise of the first action, the applicant cannot now bring the second proceedings. Counsel for the respondent relied on dicta from Sir James Wigram VC in Henderson v Henderson (1843) 3 HARE at page 115 where the Vice Chancellor stated:
"Where a given matter becomes a subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of a matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."
This case was cited with approval in Port of Melbourne Authority v Anshun Pty Ltd (1980-1981) 147 CLR 589.
I agree with counsel for the applicant that Henderson's case does not apply in this instance. There was no adjudication by the Court in relation to the first proceedings. There was merely a discontinuance of the first action for which leave of the Court was not necessary as it occurred prior to any directions hearing. Further, Order 22 Rule 7 of the Industrial Relations Court Rules states:
"7.A discontinuance under this order as to any cause of action shall not, subject to the terms of any leave to discontinue, be a defence to a proceeding for the same, or substantially the same, cause of action.”
It is my view that Order 22 Rule 7 applies in this instance and the applicant's present proceedings do not constitute an abuse of the process of the Court.
WAS THERE A BINDING SETTLEMENT REACHED ON 20 SEPTEMBER 1995?
Mr Gastevski's evidence is that he did not authorise Mr Jones to settle the applicant's claim on his behalf. Mr Jones was clear that he did have authority to settle the matter. I have already indicated that I accept the evidence of Mr Jones in preference to the evidence of Mr Gastevski. Counsel for the respondent strongly argued that as the applicant was in the respondent's view a drug dealer he was not entitled to any payment whatsoever. The question of whether or not the applicant was a drug dealer was not relevant to the issues before this Court. I should state, however, that there was no evidence before me that the applicant was a drug dealer.
I find, on balance, that the respondent did authorise Mr Jones to settle the matter on its behalf. A settlement in the sum of $7,000 was arrived at and agreed upon between Mr Schapper and Mr Jones on 20 September 1995. That settlement was binding upon the respondent. In the circumstances, however, I am not prepared to make an order for payment of interest and costs. I make the following orders:
The respondent pay the applicant the sum of $7,000 within 28 days of the date of this order.
The respondent's application on notice of motion filed 19 October 1995 be dismissed.
I certify that this and the preceding 13 pages are a true copy of the Reasons for Judgment of Judicial Registrar Boon.
Associate
Date
Counsel for the applicant: Mr D H Schapper
Solicitors for the respondent: D H Schapper
Counsel for the respondent: Mr C McIntosh
Solicitors for the respondent: Murie & Edward
Date of Hearing: 24 November 1995
Date of Judgment: 19 December 1995
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