Townsend v Longwarry Food Park Pty Ltd

[2011] FWA 1888

[2011] FWA 1888

FAIR WORK AUSTRALIA

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr William Townsend
v
Longwarry Food Park Pty Ltd
(U2010/5567)

COMMISSIONER GOOLEY MELBOURNE, 31 MARCH 2011

[1] Mr William Townsend made an application for an unfair dismissal remedy on 28 January 2010.

[2] Mr Townsend had been employed by Longwarry Food Park Pty Ltd (Longwarry) from 1 September 2006 until his employment was terminated on 18 January 2010.

[3] The application was conciliated on 19 February 2010 but the matter was not resolved.

[4] Directions were given for the filing and serving of submissions and witness statements. On 31 March 2010 Longwarry advised that there was a jurisdictional objection to the application and Longwarry sought a determination of the jurisdictional objection prior to the hearing of the substantive application.

[5] Longwarry’s jurisdictional objection was based on their allegation that there was no dismissal at the initiative of the employer.

[6] A hearing was conducted on 11 June 2010 and Mr Mark Ritchie of the Victorian Employers’ Chamber of Commerce and Industry appeared for Longwarry and Mr Ian Hone a legal practitioner appeared with permission for Mr Townsend.

[7] It was agreed that the jurisdictional hearing would proceed and if necessary the substantive application would be heard after the jurisdictional hearing.

[8] At the conclusion of the jurisdictional hearing I issued the following determination in transcript:

“PN478

THE COMMISSIONER: Thank you. In relation to the jurisdictional application in this matter I have determined that the tribunal has jurisdiction to hear the application, as I have found that Mr Townsend's employment was terminated at the initiative of the employer. I will publish full reasons for this decision, but I will briefly outline for you my reasons. It was Mr Townsend's uncontested evidence that he did not instruct his representative to tender his resignation. All discussions about the alleged resignation were conducted in Mr Townsend's absence. The only other witness to this conversation was Mr Howie and the employer did not call Mr Howie to give evidence in their case.

PN479

There is no evidence that Mr Townsend personally tendered his resignation. The minutes of the meeting held on 17 January 2010 - I hope I have that date correct - did not record any discussion of a resignation by Mr Townsend. The minutes disclose only that if the employer paid Mr Townsend additional moneys, he would sign a deed of release. That does not establish that Mr Townsend was going to resign. Mr Tacey and Mr Woodhouse did not in their witness statements state that Mr Townsend had offered to resign, or had resigned. There is nothing in those statements which support a conclusion that the issue of resignation was raised in Mr Townsend's presence.

PN480

The deed of release makes no mention of resignation. The deed provides that the consideration to be provided by Mr Townsend was that he would release the employer from any claims. The employer did not treat the agreement reached as a binding agreement and the separation certificate issued after Mr Townsend failed to sign the agreement, advised that Mr Townsend's employment was terminated for misconduct. In those circumstances, having found that there is jurisdiction, I now propose to deal with the substantive matters. Mr Ritchie, proposed that this matter be dealt with in a conference. Mr Hone, what is your view in relation to that?”

[9] The parties then agreed to a brief adjournment to discuss the application and I was subsequently advised that the matter had settled and the hearing did not resume.

[10] On 2 August 2010 the solicitors for Mr Townsend contacted my chambers requesting the matter be relisted for conference/arbitration on the basis that there was a failure to agree to the terms of settlement.

[11] The matter was listed for telephone directions on 9 August 2010.

[12] On 12 October 2010 the solicitors for Mr Townsend again advised that the terms of settlement were not agreed and sought a rehearing of the application.

[13] The matter was listed for a telephone conference on 26 October 2010.

[14] On 24 November 2010 Ms Sharon West on behalf of Mr Townsend sought a relisting of the matter for hearing.

[15] On 1 December 2010 an application was filed by Longwarry that Mr Townsend’s application be dismissed. Longwarry sought a determination of this preliminary application prior to the hearing and determination of Mr Townsend’s unfair dismissal application.

[16] On 13 December 2010 Ms West on behalf of Mr Townsend filed a letter opposing the application for dismissal.

[17] I determined to relist the matter and hear Longwarry’s application for dismissal prior to hearing evidence and submissions in the substantive matter.

[18] A hearing was conducted on 14 January 2011 and Ms West appeared for Mr Townsend and Mr Ritchie appeared for Longwarry.

Background

[19] Mr Townsend and Longwarry signed a Heads of Agreement on 11 June 2010. The Heads of Agreement set out the terms agreed between the parties and relevantly provided that payment was conditional on the signing of a deed of release prepared by Longwarry. The Heads of Agreement provided that a full release by Mr Townsend of all claims excluding claims under the Accident Compensation Act. The Heads of Agreement also provided that Mr Townsend would file a notice of discontinuance after receiving the settlement sum.

[20] A deed of release was provided by Longwarry to Mr Townsend’s solicitors on 15 June 2010 and concerns were expressed by Mr Townsend’s solicitors that the deed of release exceeded the terms agreed in the Heads of Agreement. In particular there were concerns raised by the confidentiality clause and the non disparagement clause.

[21] After the teleconference on 9 August 2010 the solicitors for Mr Townsend provided a new deed of release which in addition to the Accident Compensation Act exclusion sought to exclude the “Fair Work Ombudsman”.

[22] This was not accepted by Longwarry.

Submissions of Longwarry

[23] Longwarry submitted that Mr Townsend was in breach of the Heads of Agreement. It submitted that the Deed of Release prepared by Longwarry was in accordance with the Heads of Agreement.

[24] It was submitted that the Fair Work Act 2009 (the Act) provides at section 587 the power to dismiss an application.

[25] Section 587 provides as follows:

“587 Dismissing applications

(1) Without limiting when FWA may dismiss an application, FWA may dismiss an application if:

(a) the application is not made in accordance with this Act; or

(b) the application is frivolous or vexatious; or

(c) the application has no reasonable prospects of success.

(2) Despite paragraphs (1)(b) and (c), FWA must not dismiss an application under section 365 or 773 on the ground that the application:

(a) is frivolous or vexatious; or

(b) has no reasonable prospects of success.

(3) FWA may dismiss an application:

(a) on its own initiative; or

(b) on application.”

[26] Mr Ritchie submitted that it would be contrary to the objects of Part 3-2 of the Act namely the objective of ensuring a fair go all round is accorded to both the employee and the employer to relist the matter for hearing after the parties have agreed to settle the claim due to one party reneging on the settlement agreement.

[27] Mr Ritchie submitted that Longwarry was prepared on 11 June 2010 to conduct a hearing on the merits and would now incur additional costs if the matter proceeded to final hearing. Further the time delay would affect the witnesses’ ability to recall the facts and events leading up to the termination of Mr Townsend’s employment.

[28] Further Mr Ritchie submitted that it would be contrary to the public interest to permit Mr Townsend’s application as it would destroy parties’ confidence in the pre-hearing conference process currently in place under the Act, which may seriously undermine parties’ willingness to negotiate settlements in these matters in good faith.

[29] Mr Ritchie submitted that at the jurisdictional hearing Mr Townsend had both a barrister and solicitor present representing him and he had freely entered into a binding agreement.

Submissions of Mr Townsend

[30] Ms West submitted that she, on Mr Townsend’s behalf, had advised his lawyers on 12 June 2010 that Mr Townsend would not sign the deed of release. Ms West also submitted that Mr Townsend was unwell at the time of the jurisdictional hearing. Further she submitted that Mr Townsend was under duress when executing the Heads of Agreement. Ms West attached two medical certificates to her submissions, one dated 4 March 2009 which provided that Mr Townsend was unfit to work from 3 March 2009 to 10 March 2009. The other was dated 17 June 2010 which advised that Mr Townsend was suffering anxiety and depression and would not be in a fit state over recent weeks to be making any major decisions.

[31] In her oral submissions Ms West stated that Mr Townsend was not present in the room when the settlement negotiations were discussed. 1 She submitted that she did not know if the underpayment of wages was discussed. She further submitted that the way Longwarry conducted the hearing on 11 June 2010 put undue stress on Mr Townsend. Ms West also submitted that because she notified Mr Townsend’s lawyers within 24 hours of signing the Heads of Agreement that was “grounds on which you can renege on the settlement.”2

[32] Ms West also raised issues about the representation by Mr Townsend’s legal representatives. She submitted that his lawyers were not looking after Mr Townsend’s interests. Ms West submitted that Mr Townsend was under duress because the witness for Longwarry gave evidence at the jurisdictional hearing that Mr Townsend resigned and that was not true. 3 She submitted that these false statements should form the view that the contract was void and unenforceable.4 She further submitted that Mr James Andrews, who represented Longwarry at the jurisdictional hearing, told Mr Townsend to not bother reading the Heads of Agreement and just sign it.5 She submitted that there was pressure from both lawyers and Mr Townsend felt he had no option but to sign it.6

Submissions in reply of Longwarry

[33] Mr Ritchie, in response to my questions about the payment of the monies payable under the Heads of Agreement, submitted that Longwarry would pay the monies directly to Mr Townsend provided Mr Townsend provided a written authorisation that the payments may be made directly to him. Mr Ritchie submitted that they were not informed by Mr Townsend’s solicitors of any issue about Mr Townsend’s capacity to enter into either the Heads of Agreement or the deed of release. In fact in the period until Mr Townsend’s solicitors filed a notice of ceasing to act they were negotiating the deed with Longwarry and participating in telephone mentions on behalf of their client. 7

[34] Mr Ritchie submitted that the medical certificate was very brief and should not be relied on and in any event Mr Townsend was represented at the jurisdictional hearing.

Conclusion

[35] Central to this application is whether a binding agreement was made on 11 June 2010. In Masters v Cameron 8the High Court held that when parties reach agreement on terms of a contractual nature and agree that the negotiations will be dealt with by a formal contract, that the case may belong to any of three classes:

(1) the parties have agreed on all terms and intend to be immediately bound to perform those terms “but at the same time propose to have the terms of their bargain restated in a form which will be fuller or more precise but not different in effect; or

(2) the parties have agreed on all terms and intend no departure from or addition to that which there 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

(3) the parties do not intend to make a concluded bargain at all unless and until they execute a formal contract. 9

[36] In the first two classes the High Court held that there was a binding contract.

[37] I find in this case that the parties made an agreement as described by the High Court in example (2) above. The parties intended and did settle Mr Townsend’s claim for unfair dismissal at the jurisdictional hearing on the terms set out in the Heads of Agreement.

[38] I do not accept the submissions that Mr Townsend was ill and not capable of understanding the advice given by his legal representatives at the jurisdictional hearing. I also do not accept that Mr Townsend was not capable of giving instructions to his legal representatives. I do not accept that Mr Townsend suffered duress in relation to the execution of the Heads of Agreement.

[39] I also do not accept that Mr Townsend was under duress because conflicting evidence was given at the jurisdictional hearing about Mr Townsend’s alleged resignation. By the time Mr Townsend signed the Heads of Agreement this conflict had been resolved in Mr Townsend’s favour.

[40] This was not the first time Mr Townsend was presented with a document designed to settle his claim. In this matter Mr Townsend had previously refused to sign a deed of release. He can be assumed to have understood the binding character of signing an agreement. In this case he was legally represented. That Mr Townsend subsequently changed his mind is not a sufficient reason to set aside the agreement reached.

[41] In this matter Longwarry has indicated that it is willing to abide by its obligations under the Heads of Agreement. Further upon receipt of a written authorisation from Mr Townsend it is willing to pay the monies directly to him rather than his legal representatives. 10

[42] The Full Bench of the Australian Industrial Relations Commission in Zoiti-Licastro v Australian Taxation Office  11 upheld a decision of Senior Deputy President Kaufman to dismiss an unfair dismissal application where a settlement agreement had been reached. The Full Bench had to determine if there was a general power to dismiss an application under the legislative regime then applying. At that time there were competing views in the Commission as to whether the Commission had a general power to dismiss an application in those circumstances.12 The Full Bench held that there was power under section 111(1)(t). The Full Bench said:

“[20]Where the Commission finds that there is a complete answer to the applicant’s claim and dismisses the claim, there is no substance in any suggestion that the Commission has breached its duty to hear the application. And subject to the observance of the rules of natural justice, it is highly undesirable that the parties should be put to the expense of a full hearing when it is clear at the outset that the claim cannot succeed. Take a case in which there is a duly executed settlement agreement in evidence. Subject to the resolution of any argument about the binding nature of the agreement, the settlement would provide a complete answer to the claim and there would be no point in hearing the other evidence.”

[43] Section 587 gives Fair Work Australia the power to dismiss a matter. Section 587(a), (b) and (c) do not limit Fair Work Australia’s power to dismiss for other reasons.

[44] In determining unfair dismissal applications Fair Work Australia is required to afford a fair go all round to both employers and employees 13. Further Fair Work Australia must perform its functions and exercise its powers in a manner that is fair and just and must take into account equity14, good conscience and the merits of the matter.15

[45] In this matter I find that section 587 empowers Fair Work Australia to dismiss an application for relief in circumstances where the parties have reached a binding agreement settling a claim and one party reneges on that agreement and seeks to have their claim determined.

[46] Given the indication by the Longwarry in this matter that it is prepared to comply with its obligations under the Heads of Agreement subject to receiving authorisation from Mr Townsend that the monies be paid directly to him, I will adjourn this matter for two weeks to give Mr Townsend the opportunity to provide such an authorisation to Longwarry.

[47] If Mr Townsend provides the authorisation, and subject to advice that the monies have been paid to Mr Townsend, I will dismiss the application.

[48] If Mr Townsend does not provide such an authorisation and subject to advice from Longwarry that they have paid the monies due under the heads of agreement in accordance with its terms I will issue an order dismissing the application by Mr Townsend.

COMMISSIONER

 1   Transcript PN 135

 2   Ibid PN 136

 3   Ibid PN 164

 4   Ibid PN 175

 5   Ibid PN 168

 6   Ibid PN 168

 7   Ibid PN 207

 8 91 CLR 353

 9   Ibid at 360

 10   Transcript at PN 198

 11   PR967544

 12   Print S6175, PR949408, PR957868

 13   Section 381(2)

 14   Section 577(a)

 15   Section 578 (b)

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