Woods v T & F.S. Woods Pty Ltd
[2021] FedCFamC2G 369
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Woods v T & F.S. Woods Pty Ltd [2021] FedCFamC2G 369
File number(s): BRG627 of 2020 Judgment of: JUDGE VASTA Date of judgment: 20 December 2021 Catchwords: FAIR WORK – claim for entitlements – previous proceedings – whether Deed from previous proceedings is a bar to the present application – application dismissed Division: Division 2 General Federal Law Number of paragraphs: 40 Date of last submission/s: 13 December 2021 Date of hearing: 13 December 2021 Place: Brisbane Counsel for the Applicant: Mr Harding Solicitor for the Applicant: M & K Lawyers Group Pty Ltd Counsel for the Respondent: Mr Rawlings Solicitor for the Respondent: Dwf (Australia) ORDERS
BRG627 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: DAVID WOODS
Applicant
AND: T & F.S. WOODS PTY LTD ACN 055 880 496
Respondent
ORDER MADE BY:
JUDGE VASTA
DATE OF ORDER:
20 DECEMBER 2021
THE COURT ORDERS THAT:
1.The Application filed on 2 December 2020 be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE VASTA
INTRODUCTION
On 2 December 2020, the Applicant filed an originating application claiming compensation for breaches of the Fair Work Act, other work-related payments and a declaration of entitlement to property or alternatively damages for conversion. The matter has had mediations that have failed to resolve the matter.
The Respondent has now asked the Court to dismiss the application because there is a Deed of Settlement and Release between the parties that covers this action.
Background
The Applicant, David Woods, launched an action in the Federal Court, in its Corporations jurisdiction, on 24 July 2019. The matter was given file number QUD 441/2019. At the time of launching the action, the Applicant was a director and shareholder of the Respondent.
In short, the Respondent was founded by the father of the Applicant, Terry Woods. The Applicant was a shareholder and director and the only other shareholder and director was the brother of the Applicant, Allan Woods. When Terry died in 2017, he left his shares to the Applicant and Allan. There was a dispute as to the class of shares that was left and the Applicant and Allan were still in dispute over this aspect when the Applicant launched the Federal Court proceedings.
Nevertheless, the business ran with Allan being in charge of the management, control and financial administration of the business whilst the Applicant had responsibilities of running the workshop, service and maintenance of vehicles and equipment and also some long-distance driving.
The Applicant said that he began to have suspicions that Allan was misappropriating funds from the business. He gave some evidence as to why he had those suspicions.
In his action in the Federal Court, the Applicant asked for:-
·a declaration that Allan and his wife had misappropriated funds owned by the Respondent
·a declaration that Allan and his wife had breached their fiduciary duties to the Respondent
·a declaration that Allan and his wife had breached their duties as directors
·an order that (a firm) be appointed to investigate and report to the Court on the financial affairs of the Respondent and the facts which give rise to the cause of action
·an order that Allan pay damages for breaching the Corporations Act
·alternatively an order that the Respondent be wound-up and that (a firm) be appointed official liquidators
The following day, 25 July 2019, the Applicant filed an interlocutory process where he asked that (a firm) be appointed as provisional liquidators of the Respondent until the making of a winding up order. He also asked that the provisional liquidators exercise their powers and carry on the business of the company.
The Deed
On 27 November 2019, the parties settled the litigation that had been launched in the Federal Court. This was done by the parties entering into a Deed of Settlement and Release. The parties to the Deed were the Applicant, Allan Woods, the Respondent and a different entity called Woods Transport Pty Ltd. Allan Woods and the Respondent executed the Deed on behalf of the Respondent and Woods Transport.
The effect of the Deed was that the Applicant would transfer to Allan all of his shares in the Respondent for the payment of $800,000. The Respondent would forgive any loan owed by the Applicant and release the Applicant from any obligations in relation thereto. The Applicant would also be released from any personal guarantees in relation to the obligations of the Respondent. There would also be a further payment of $150,000 by Allan to the Applicant by 4 pm on 29 November 2020.
There were a number of assets that would be transferred to the Applicant.
There were assets that belonged to Woods Transport that would also be transferred to Allan. However, all of Allan’s shares in Woods Transport would be transferred to the Applicant as well as four vehicles in Allan’s name that would now be transferred to Woods Transport. Any loan owing by Allan to Woods Transport would also be forgiven.
In the recital to the Deed, the following is noted at paragraph G:-
The Parties wish to settle all disputes between them arising out of the issues of the proceedings and all disputes that have or may have arisen as a consequence of the entire dealings between Allan and David as directors and shareholders of (the Respondent) and (Allan’s wife) as director and employee of (the Respondent), howsoever arising (the Disputes).
The term “Claim” was defined as:-
any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, offsets, recruitments, controversies, judgements, orders, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and expenses (including, without limitation, all legal fees and costs) of every kind and nature, whatsoever, in law or equity, direct or contingent, liquidated or unliquidated, known or unknown and whether present or which may occur at any time in the future arising from the Proceedings
The term “Deed” was defined as:-
This Deed including the background, any schedules and any annexures
The term “Proceedings” was defined as:-
Proceedings filed in the Federal Court of Australia under proceeding number QUD441/2019
The Deed describes the Release entered into by the Parties as follows:-
3. Release
3.1 In consideration of the Parties entering into this Deed, each party hereby releases and forever discharges each other party and Mary Hawker from all Claims which, but for the execution of this Deed, they might have had against each other in the proceedings or otherwise. (“Release”)
3.2 The parties agree that the release is conditional upon the performance of the obligations in paragraph 2.
3.3 The parties agree that the Release shall be continuing and that this Deed may be pleaded as a bar to any proceedings, which are inconsistent with the provisions of this Deed, commenced or maintained by any of the parties after the date of this Deed.
3.4 Upon payment of sum in paragraph 2.2(a)(1) the parties will immediately take steps to discontinue the Proceedings.
Clause 10 of the Deed makes it very clear that the Deed is the entire agreement among all the parties. It reads:-
10. Entire Agreement
10.1 This Deed constitutes the full and complete understanding between the Parties with respect to the subject matter of this Deed. There is no other oral understanding, agreement, warranty or representation whether express or implied in any way extending, defining or otherwise relating to the provisions hereof or binding on the Parties with respect to any of the matters to which this Deed relates.
10.2 Each of the Parties hereby covenants and irrevocably acknowledges that it has not been induced to enter into this Deed by any statement, warranty, representation, understanding, act, omission, fact, matter, thing or conduct by or on behalf of any person including the other party, other than as expressly recorded in this Deed.
10.3 The provisions of clauses 10.1 and 10.2 shall operate and remain in full force and effect, except in the case of fraud by another party to this Deed. No other fact, matter or circumstance including breach of the provisions of The Australian Consumer Law or of Part 2 of the Australian Securities and Investments Commission Act 2001 (Cth) or of Part 7.10 of the Corporations Act 2001 (Cth) by a party to this Deed shall interfere with or in any way derogate from the operation and effect of clauses 10.1 and 10.2.
The Present Proceeding
The premise of the present proceeding is that the Applicant was also an employee of the Respondent and had not been paid entitlements and has also not had certain tools returned to him. Notwithstanding that the Respondent does not agree with the premise of the present proceedings, the true issue for determination by the Court is whether the provisions of this Deed are a bar to the present proceeding.
Whilst there has been voluminous material submitted to the Court, and there have been arguments as to what evidence is admissible, it seems to me that the only relevant material is:-
·the original application before the Federal Court
·the interlocutory process before the Federal Court
·the affidavit of the Applicant before the Federal Court
·the Deed
·the originating application before this Court in the present proceeding
All other material is quite extraneous to the question before the Court. To that end, issues such as the coincidence of the filing date of this application, the negotiations that led up to the final execution of the Deed and the correspondence between the legal representatives of the Applicant and Allan Woods are all irrelevant matters to the consideration that the Court must now undertake.
The real question before the Court is whether the present proceeding is a matter that fits the definition of “Claim” in the Deed. If it fits that definition, then there is a bar to the Applicant proceeding with the present application. If it does not fit that definition, then the matter should continue according to law.
The Issues in the Previous Litigation
As already noted, the genesis of the previous litigation was a claim by the Applicant that Allan Woods had misappropriated money of the Respondent. Whilst that may be the central claim of the previous litigation, what arose from that was a request by the Applicant for liquidators to assume control of all operations of the company and to carry on the company’s business.
The employer/employee relationship between the Respondent and the Applicant was certainly part of the day-to-day running of the business of the Respondent. The correct and proper payment to be made to any employee of the Respondent was a part of the day-to-day running of the business. Any claims that an employee had against the Respondent were part of the day-to-day running of the business of the Respondent. The rights of any employee against the Respondent as employer was certainly part of carrying on the business of the Respondent. The Court must decide whether those claims or rights are matters that “arose from the proceedings”.
Do the Current Issues “arise from the proceedings”?
The Applicant argues that the proceedings in the Federal Court were directed at restitution and compensation for losses suffered by the Respondent. The proceedings in the Federal Court did not set the Respondent against the Applicant; rather it was that the Applicant was the first plaintiff and the Respondent was the second plaintiff - in other words, their goals in the Federal Court proceedings were one and the same.
The Applicant argues that, in order for the Deed to act as a bar, the present proceedings must arise from the proceedings in the Federal Court which connotes that there is some causal element between the proceedings in the Federal Court and the present proceedings. In this way, a matter that “arises from the proceedings” is different to a matter that “relates to the proceedings”.
The Applicant argues that there is no causal relationship whatsoever between the claims in the present proceeding and the claims in the Federal Court proceedings.
The Applicant points to the wording of Paragraph G (reproduced earlier) in that it refers to the entire dealings between “Allan and David as directors and shareholders” but then refers to “and Julie as director and employee of the Respondent”. The Applicant claims that the recital of the dealings between Allan Woods and the Applicant does not refer to the Applicant status as an employee as distinct from referring to Julie as an employee which would mean that any claims between Allan and the Applicant, as an employee of the Respondent, was not in the contemplation of the Deed.
In the course of submissions to me, Counsel for the Applicant posited, as an example, that if the Respondent, in looking through its accounts, found evidence that the Applicant had behaved incorrectly as a director, the Deed would not act as a bar to the Respondent taking action against the Applicant.
In short, the Applicant submits that unless the subject of further proceedings arises from an allegation that Allan Woods had misappropriated money of the Respondent, the Deed has no application.
I cannot accept this submission. The Deed goes much farther than the allegation of misappropriation. All of the disputes between the Applicant and Allan (including their dispute over their late father’s will) arose out of the proceedings and were quite beyond the narrow approach now contended for by the Applicant and settled by the Deed.
Discussion
As can be seen when one looks at the Federal Court proceedings, the corporate entity known as Woods Transport was not a party to those proceedings nor was it mentioned in the affidavit of the Applicant in the Federal Court proceedings. It can be easily inferred that this entity became part of the Deed so that Allan Woods and the Applicant could sever their relationship and that they (and their corporate identities) would never need to darken each other’s doorstep again.
This means that the whole issue of how the corporate entities, owned and directed by Allan Woods and the Applicant, were being operated on a day-to-day basis was an issue that “arose from the proceedings” and therefore became the subject of the Deed.
A corollary of the submission made by the Applicant would mean that any litigation that Allan Woods may wish to instigate against the corporate entity, Woods Transport, would not be barred by the operation of the Deed because such would not arise from an allegation of misappropriation by Allan Woods of money owned by the Respondent. Such a result would be an absurdity given the way that the Deed has been executed.
It is clear, from the affidavit of the Applicant which was filed in the Federal Court proceedings, the Applicant requested wage records of the company and ledger accounts showing all payments made to directors having regard to wages, dividends and payment of personal expenses. He also wanted the scope of audit to include “all payments made by the company….to any person with the surname Woods (including but not limited to wage records, entitlements and superannuation)”.
This leads inexorably to the conclusion that the Federal Court proceedings involved the payment of wages, entitlements and superannuation to the Applicant and the records thereof. This means that a future claim by the Applicant for wages, entitlements and superannuation clearly arises from the Federal Court proceedings.
The same principle applies to the tools that the Applicant claims are his that have been taken by the Respondent. It would seem to me that the tools are part and parcel of the transfer of property and assets between the Applicant, Allan Woods and their respective corporate entities. While the Applicant argues that these tools were not specifically identified in the Deed, one has to look at the Deed as a whole. When it is noted that the consideration for the transfer of shares to the Applicant was the sum of $950,000, it is somewhat petty to be arguing about tools that, even on the best estimate of the Applicant, would be worth no more than $12,000.
The claim to the tools is clearly a matter that arose from the Federal Court proceedings.
Conclusion
The present application (BRG627/2020) is a claim as that term is understood in the Deed. It is a claim that “arises from the (Federal Court) proceedings”. Pursuant to that Deed, the present application is barred by operation of the Deed.
I dismiss the application BRG627/2020.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Vasta. Dated: 20 December 2021
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