Kevin Leyden v Trollope Silverwood & Beck Pty Ltd [1995] IRCA 240

INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 2754 of 1994 B E T W E E N KEVIN LEYDEN Applicant A N D TROLLOPE SILVERWOOD & BECK PTY LTD Respondent Before: Judicial Registrar Murphy Place: Melbourne Date: 29 May 1995 REASONS FOR JUDGMENT (EX TEMPORE) Revised from Draft Transcript In these proceedings under subdivision C of Part VIA of the Industrial Relations Act the respondent has raised as a preliminary issue an argument that the proceedings have been compromised by agreement between the parties prior to the issue of these proceedings. The Court determined to decide this issue prior to hearing full evidence in the proceedings. The Court heard evidence from Mr Bride, the Group General Manager, and Mr Francis, the Company Secretary of the respondent, The applicant also gave evidence on the preliminary point. The chronology of this matter is that on 21 November 1994 the applicant had a discussion with Mr Bride who informed him that the respondent intended to make redundant his position as Project Manager, Retail, with the respondent. Mr Bride proffered to the applicant a cheque and a discussion ensued between the parties. The applicant indicated to Mr Bride that he wished to remain employed with the respondent and was unhappy about being made redundant. The applicant advised Mr Bride that he was embarrassed by the termination of his employment because he and his wife had recently made application for a loan for a property that they were purchasing, that loan application had not been processed and his not being employed would jeopardise his ability to obtain that loan. Mr Bride withdrew the cheque and agreed that there would be further discussions between them. These discussions did not come to any agreement. In the first discussions on 21 November, Mr Bride gave evidence that after he indicated to the applicant that the respondent wished to make him redundant, the applicant proposed to him, Mr Bride, that he wished to resign rather than be made redundant. The applicant's evidence on this point was that it was Mr Bride who suggested to the applicant that he should resign. Mr Bride denied this and on this point, I accept his evidence. On 1 December 1994 the applicant wrote to Mr Bride indicating his view that the proposed termination of his employment would be harsh, unjust and unreasonable and stating that: I remain optimistic we can achieve a mutually satisfactory settlement by negotiation although at this point we have not achieved agreement that satisfies my requirements. He then put in that letter a proposal to the respondent which was that he remained employed by the respondent until 15 December 1994 and he be paid his normal salary and allowances until the end of December. The proposal also provided that the respondent was to pay him his normal salary and allowances for a further 3 months and to provide him with a reference. He then ended the letter with the statement: In consideration of your agreement with the above, I confirm I will comply with your request for my resignation, except that it would not be effective until 30 December 1994 and on 15 December 1994, I will leave on the basis that I would be on leave until 30 December 1994. He also offered to sign a confidentiality agreement in relation to the arrangements. In addition, he made a statement about the proper taxation treatment of the termination payments to be made to him. On 6 December, there was a discussion between the parties. Mr Bride gave evidence that he and the applicant agreed that the terms of the offer made in the letter of 1 December 1994 would be met by the respondent except that the respondent would only pay him 2 months salary after 31 December 1994, the date of his resignation. Mr Bride gave evidence that he put this proposal to him on that date, and that soon after the applicant came back to him and confirmed his acceptance of the proposal. After that Mr Bride confirmed the proposal in a letter dated 6 December 1994 to the applicant. The applicant gave evidence that his spouse is a qualified lawyer and that in the course of his negotiations with the respondent, he had obtained legal advice from his spouse. On 6 December, and also prior to 6 December, Mr Bride had provided to the applicant a proposed letter of resignation. That letter of resignation was first provided some time prior to 6 December and related that the applicant was resigning from his employment and confirming the agreement to pay monies by the respondent. Mr Bride gave evidence that this was proffered to the applicant as a draft which was not at any stage signed by the applicant. A further letter was proffered to the applicant on 6 December. That confirmed his resignation effective 31 December and also contained a statement that upon compliance with the agreement, the applicant would release the respondent from any further claims. In the letter of 8 December by the applicant to the respondent, there is no reference to the release. The letter reads: I refer to your letter dated 6 December 1994 and confirm that I will comply with your request for my resignation, in writing, on 15 December 1994, effective 31 December 1994 upon receipt of the payments referred to in points 1, 2 and 3 of your letter and the reference you have agreed to provide. On 12 December 1994, Mr Bride provided to the applicant a letter of reference and on 15 December 1994 the applicant provided to the respondent a letter of resignation effective 31 December 1994. He also provided a separate letter, referring to the letters of 6 and 8 December, and stating that the Company Secretary, Mr Francis, had refused to provide him with a statement of the pay-out due to him until he, Mr Bride, received a letter "confirming my resignation and a release". He enclosed his letter of resignation but indicated "that until such time as I receive payment in full it is premature and inappropriate for you (Mr Bride) to insist upon a release." Mr Francis gave evidence that the applicant's usual salary for December was paid into the bank on 15 December by way of funds transfer. On 16 December, he wrote to the applicant with details of his final pay-out, together with a cheque for the balance that had not been deposited to the bank account. That letter made reference to the calculations for the payment including the car allowance, petrol allowance and holiday pay. The letter also provided that the petrol allowance for the months of January and February, would be calculated on a pro rata basis of 1/12th of the $2000 per annum Shell Card provided in the letter confirming the details of his employment. The calculations also make reference to a deduction of $400 for a telephone and payment of some $330 in telephone bills due. On 16 December, the applicant wrote to the respondent noting that the calculations in the letter of 16 December were wrong and stating that he had not received the amounts referred to in the letter. He further stated that, in view of the above, he was unable to finalise discussions regarding his termination until: Such time as all money due as per your letter dated 6 December 1994 has been paid into my account and cleared by the bank and I have received a pay advice slip for that proportion paid directly into my bank account. On 19 December, he wrote a further letter to Mr Bride querying the method of calculation of the tax on the termination pay-out. He stated that, as a result of the treatment that the respondent had accorded to the payments, he had been overtaxed by the sum of $427.58. He also raised the fact that he was entitled to a petrol allowance of $2000 per annum as part of his salary package and stated that in the year to November 1994, he had only incurred expenditure of $1601.07. He said that he was entitled therefore to the difference between that amount and $2000, namely $398.93. He also raised with Mr Bride that he believed he was entitled to a statement of his superannuation payments and sought a cheque for $826.51. Mr Francis replied in a letter of the same date stating that the respondent had sought a ruling from the Tax Office in relation to the treatment of the termination payment and stating that the applicant had received his pay advice which he had earlier requested. A further letter from the applicant was sent to Mr Francis on 20 December 1994 suggesting again that the earlier calculations dated 16 December 1994, were "full of inaccuracies and gratuitous language". He also contested the proposal of obtaining a ruling from the Tax Office and the question of the Shell Card entitlements. Mr Francis wrote again to the applicant on 21 December 1994 confirming that they were awaiting a Tax Office ruling in relation to the redundancy amounts and outlining the position of the respondent in relation to payment of the petrol allowance. He also gave details of the superannuation payments made on behalf of the applicant and stated that the balance of the payments due would be made as they became due. On 21 December 1994 the applicant wrote to Mr Francis of the respondent stating: In view of the fact that I have not even been paid in the manner set out in the letter from Jack Bride dated 6 December 1994 and that you have now become intractable with regard to finalisation of the financial arrangements for my termination I hereby advise you that any previous offers by me to settle this matter are now withdrawn. Subsequently, the respondent obtained the ATO tax ruling which indicated that it had indeed deducted too much taxation. In late December it wrote again to the applicant and enclosed a cheque for the additional taxation deducted of $426.58. The Competing Arguments The respondent's argument was that the letters of 6 and 8 December showed that the question of the applicant's employment with the respondent had been compromised in an agreement contained in those two letters. The respondent argued that it had complied with that agreement, and that it was not competent for the applicant to bring these proceedings. The applicant argued on the other hand that there had never been any finality in the agreement between them. He said that he had never signed the release, which accompanied the letter of 6 December 1994. He further claimed that he had signed his letter of resignation under duress. In addition, he said that there had been no finality of agreement between the parties because the question of the treatment of the Shell Card had not been resolved, and the superannuation had not been treated correctly. The question of his mobile phone had also not been resolved between the parties. He said that all these matters all indicated that there was no agreement between the parties. Was there an agreement to compromise the matter of the applicant's employment with the respondent? The law of contract requires that an objective test be applied to statements of parties to any agreement. Unstated reservations or assumptions by one party have no place in the determination of the issue as to whether there is an agreement between them. Here the applicant, by his letter of 1 December 1994 to the respondent, has made an offer. The respondent's Mr McBride gave evidence that the reply was orally accepted by the applicant on 6 December. The acceptance was confirmed by letter of the respondent on that date. Two days later the applicant wrote and confirmed his acceptance of the respondent's letter of 6 December 1994. I am satisfied that there was an agreement between the parties struck on 6 December to compromise the matter of the applicant's employment with the respondent. That agreement required payment of the balance of the applicant's December salary and allowances. It required him to be permitted to continue to be employed by the respondent until 15 December, and to submit a letter of resignation effective at the end of December. It also required the respondent to provide him with a letter of reference, and to pay him the balance of his salary and allowances for December and his salary and allowances for January and February. The evidence of the actions of the parties subsequent to that agreement is not admissible on the issue of the contents of the agreement. The actions of the parties, however, until the applicant purported to withdraw his previous offers in his letter of 21 December 1994, are consistent with the agreement struck on 6 December. I am satisfied that there was no uncertainty associated with the agreement. I am further satisfied that the respondent has complied with the agreement. The respondent admitted that it had failed to strictly comply with the agreement in one aspect, namely payment of the moneys due on 15 December, but it says that it paid those moneys on 16 December. I am satisfied that time was not of the essence of the agreement, as neither of the parties had purported to make time of the essence, and thus the respondent has substantially complied with the agreement. I reject the applicant's argument that there has been non-compliance with the agreement in relation to the Shell Card or superannuation. The applicant's argument in relation to the Shell Card was that the letter confirming the details of his employment, which refers to his being paid a salary package of $67,250 per annum, made up of salary, superannuation and car allowance, and also "the use of a Shell Card to an amount of $2000 per annum" was such that he was entitled to be paid in cash the amounts in excess of those amounts which he had claimed throughout the year. He quantified those amounts in the correspondence at $398.93. Both witnesses for the respondent gave evidence that that was not their understanding of the agreement, and they had never known of the use of a petrol card to carry that interpretation. I accept their evidence on that point. I find that there was no entitlement of the applicant to any amount in excess of the amounts which he had claimed for petrol throughout the year. The maximum amount that he was entitled to claim was $2000 per annum. If he claimed anything less, then the difference was not payable to him in cash at any time. In relation to the superannuation the applicant claimed that he should have been entitled to be paid the superannuation component of his salary for January and February 1995 on 15 December 1994 pursuant to the agreement. The respondent gave evidence that the superannuation component of his salary was pursuant to a statutory scheme under which the moneys were not due to be paid until July 1995. I find that a proper characterisation of the agreement of 6 December is that the superannuation component of the applicant's salary package would be paid when it was due pursuant to the statutory superannuation scheme and that the agreement did not require that it be paid to the applicant on 15 December. The applicant argued that the agreement was vitiated by duress. He claimed that his resignation had been procured by duress on the basis of a statement by Mr Bride that if he did not accept the offer of 6 December he would get nothing. That matter was not put to Mr Bride. Mr Bride denied any duress. I accept Mr Bride's evidence. He was an impressive witness. Further, the applicant gave evidence that he had obtained legal advice in relation to these negotiations from his spouse, who is a lawyer. The applicant had adequate opportunity to consider the proposals which were being discussed and he chose to comply with his side of the agreement by accepting the money and tendering the letter of resignation. I reject his argument that the agreement is vitiated for duress. The applicant also raised the issue of the mobile phone as indicating that no agreement had been reached. I accept the evidence of Mr Francis and Mr Bride that the issue of the mobile phone, which he had originally owned and was listed in his name, was not part of any agreement in relation to the applicant's employment. I further accept Mr Francis' evidence that the respondent had met all its obligations under a separate arrangement with the applicant that the mobile phone would be transferred back to the applicant at the end of his employment with the respondent. The applicant also argued that his failure to sign a release meant that the agreement was not in full and final settlement. Any release between the parties would only formalise the agreement between them to compromise the issue between them. The applicant chose to submit his resignation on 15 December. The respondent paid him the amounts previously agreed between them. The respondent may have been entitled to obtain a release, but it chose to pay the moneys regardless. I reject the argument that because the applicant never intended to compromise fully his rights he is entitled to proceed with this action, even though he has accepted the money. The position may have been different had he accepted the reference and the moneys under protest, or failed to tender his resignation. He failed to do this. On the contrary, he tendered his resignation. The resignation is only consistent with the agreement of 6 December. It operates according to its terms and the applicant, having been paid in accordance with this agreement, is bound by it. He has compromised his rights associated with the ending of his employment and I propose to dismiss the proceeding. COSTS The respondent seeks costs on the basis that the proceedings have been issued without reasonable cause pursuant to Section 347 of the Act. I am not disposed to award costs against the applicant. The question of costs has been the subject of consideration in a number of cases, but it is clear from the decision of Northrop J in Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 that the protection of a party against a costs order against them constituted by Section 347 is a substantive one, and that the discretion contained therein is to be exercised only rarely. Here the applicant has given evidence that he believed that his failure to sign the release which was contained with the letter of 6 December was an indication that he had not compromised his claim that his redundancy was unfair. He further in his evidence claimed that in relation to the Shell Card, the superannuation allowance and the mobile phone, that there had been no agreement struck between the parties. In relation to each of these matters, I reject his interpretation of them, but I am not satisfied that the claims were so without foundation as to be characterised as having been instituted vexatiously or without reasonable cause, and I do not propose to order costs against him. THE COURT ORDERS THAT: The proceeding is dismissed. I certify that this and the preceding ten (10) pages are a true copy of the reasons for judgment of Judicial Registrar Murphy. Associate: Dated: 6 June 1995 Applicant in person Mr J Bourke for the Respondent Date of hearing: 29 May 1995 Date of judgment: 29 May 1995