Tunbridge v Linde Material Handling Pty Ltd [1997] IRCA 40

DECISION NO:40/97 CATCHWORDS

INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - APPLICANT signed deed giving up his rights to take legal proceedings - APPLICATION DISMISSED. CONTRACT - APPLICANT signed deed giving up rights to take legal proceedings - Claimed his agreement induced by DURESS - Meaning of DURESS - Not necessary that the will be overborne - UNCONSCIONABLE pressure must be such that the "victim" had no reasonable or practicable alternative but to submit to the demand made.

Universe Tank Ships Incorporated -v- International Transport Workers Federation (1983) 1 AC 366 at 400 Equiticorp Financial Services Limited (NSW) -v- Equiticorp Financial Services Limited (NZ) and Others (1992) 29 NSWLR 260 Crescendo Pty Limited -v- Westpac Banking Corporation (1988) 19 NSWLR 40 Magnacrete Limited -v- Douglas-Hill 1988 48 SASR 565 Mohazab -v- Dick Smith Electronics Pty Limited 2 (1995) 62 IR 200

TUNBRIDGE -V- LINDE MATERIAL HANDLING PTY LIMITED NI 2011 of 1996

Before: PATCH JR Place: SYDNEY Dates of hearing: 30 & 31 JANUARY 1997 Date of judgment: 31 JANUARY 1997

IN THE INDUSTRIAL RELATIONS COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY

NI 2011 of 1996

BETWEEN:

KERRY CHARLES TUNBRIDGE Applicant

AND

LINDE MATERIAL HANDLING PTY LIMITED Respondent

MINUTES OF ORDERS

31 January 1997 PATCH JR

THE COURT ORDERS THAT: 1. The application 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 NEW SOUTH WALES DISTRICT REGISTRY

NI 2011 of 1996

BETWEEN:

KERRY CHARLES TUNBRIDGE Applicant

AND

LINDE MATERIAL HANDLING PTY LIMITED Respondent

REASONS FOR DECISION

Delivered ex tempore - revised from the transcript

31 January 1997 PATCH JR

The applicant contends that the termination of his employment was unlawful and seeks compensation. The applicant also claimed that he was underpaid by one week in the amount he received for pay in lieu of notice. That claim was compromised yesterday during the course of the hearing and I will, therefore, say nothing further about that aspect of the matter. Yesterday the respondent raised, as a preliminary matter, the question of whether the applicant had signed a Deed of Release, which is exhibit 12 in these proceedings, and had thereby compromised his rights to proceed in this Court. The respondent sought to have that question determined immediately and sought the summary dismissal of the application. I refused to entertain the motion, pointing out that the Rules of the Court require that such an order be sought by a motion upon notice. The hearing of the matter then commenced. At the re-commencement of the proceedings this morning, whilst the applicant was still under cross-examination from yesterday, Mr Moses, counsel for the respondent, placed a notice of motion supported by an affidavit before the Court. He sought, again, to rely on the Deed of Release and sought leave to move instanter on the motion. During the course of his evidence the applicant had stated that he had signed the Deed of Release and a letter of resignation. He asserted, however, that he had signed those documents "under duress", and because, "there was a gun at my head." I refused to entertain the motion for summary dismissal this morning, as, in order to determine it, it would have been necessary to decide whether or not the applicant's assertion that his signature had been induced by duress was to be accepted. The applicant's evidence was not complete. He had been cross-examined to some extent on that aspect of the case but had not yet had the opportunity to say what he wished or might have wished in re-examination. To proceed to determine the motion for summary dismissal in those circumstances would have been unjust. I add, for the sake of clarity, that in my opinion a motion for summary dismissal must be, unless leave is given to the contrary, be sought by motion upon notice. See Order 20 Rule 5. After I had refused to determine the motion for summary dismissal, Mr Moses sought a short adjournment to, "obtain instructions", which was granted. When the Court reconvened, Mr Moses announced that he would not be cross-examining the applicant further and would not be calling any evidence. The announcement of such a decision was entirely proper. However, Mr Moses then went on to say that he was adopting that course because it was the respondent's intention to have my decision reviewed by a Judge of the Court. Whilst it is every party's right to have decisions of Judicial Registrars reviewed by a Judge, it was intemperate and rude of Mr Moses to announce, before I had determined the matter, that that course of action was to be adopted in this case. WAS THE APPLICANT'S AGREEMENT TO THE DEED OBTAINED BY DURESS? A contract (or a deed) obtained by duress is voidable at the option of the victim. In the circumstances of this case, if the Deed of Release was obtained by duress the applicant can resist it being enforced against him. The Facts As a result of the decision not to call any evidence in the respondent's case, only the applicant's version of the events is before the Court. There is nothing inherently unbelievable in what the applicant had said. Nor were there any internal inconsistencies of note. I therefore accept what the applicant says as the facts of the matter upon which I will base my judgment. On 18 July 1996 the applicant, who worked for the respondent as the Technical Services Manager for New South Wales, was asked by his immediate superior, Mr Rakesh Raj, at about 5 pm in the afternoon, to attend the conference room. A meeting between the applicant, Mr Raj, and Mr Bruce Lorking then followed. Mr Lorking was the General Manager, Finance and Administration. On the applicant's evidence, in the conference room a brief meeting took place. The applicant said that a conversation took place between himself and Mr Raj and Mr Lorking but he was not certain as to which of Mr Raj or Mr Lorking did the talking. He tended to think that Mr Lorking had done most of the pertinent talking, although Mr Raj had done most of the talking generally speaking. It does not matter who did the talking. It was either Mr Raj or Mr Lorking. The applicant gave evidence that during that meeting he was offered the option of resigning or being dismissed. I will return to exactly what the applicant said occurred at that meeting later in this judgment. The applicant said that he had resigned and signed the Deed of Release as a result of what occurred at that meeting. He said that he had signed under duress. In response to a question from the Court, the applicant said that he was under duress because of a combination of circumstances. These were, he said, as follows: 1. He was not well and had been to the doctor that day. 2. All the staff immediately under him (I take this to be a reference to three persons who had been dismissed for misconduct in the weeks immediately prior to 18 July) had been dismissed. 3. He had a young wife and two children under the age of three to consider. 4. He owed money on his home. 5. He was almost 54. 6. He considered that his prospects of re-employment were grim. 7. He had been told by Mr Raj or Mr Lorking that he would be dismissed or he could resign and sign a letter of resignation and the Deed. This was in the context, he said, of him having seen other people dismissed from the company and them having to leave immediately. The Deed of Release reads as follows: NOW THE DEED WITNESSETH as follows: 1. I consideration of the payment of the settlement sum paid by Linde to the Employee, the Employee releases and indemnifies Linde, its servants and agents from all claims, causes of action and proceedings which the Employee may have against any of them by reason of, arising out of, or in any way connected with the Employee's employment with Linde and the resignation therefrom. 2. This Deed may be pleaded as an absolute defence to any actions or claims in connection with any of the matters referred to in this Deed. 3. The terms of this Deed will be kept confidential unless required by law. The schedule to the Deed is of some significance. It lists the monetary amounts which the applicant was to be paid. The schedule reads as follows: 1. Accrued annual leave entitlements $9277.40 2. Without admission of obligation an amount equivalent to two months normal pay - one month in lieu of notice $4991.67 - one month $4991.67 3. Accrued pro rata long service leave $6204.13 4. Amount for hire of motor vehicle in lieu of company vehicle supplied $1500 Total amount is $26,964.87 The payment of the "two month's normal pay" in item 2 of the schedule was for an amount in excess of the applicant's statutory entitlements. It follows that the Deed was supported by consideration flowing from the respondent. It is therefore not necessary to consider the question of whether consideration is necessary at all in the case of a Deed. On its face the Deed would cover an action in this Court for the alleged unlawful termination of the applicant's employment - see clauses "C" and "1" and "2". If the Deed is enforceable, the application must be dismissed. The Concept of "Duress" A contract is voidable at common law if made under duress. The concept of duress has evolved over the years and is still apparently evolving. The most recent cases illustrate that it is not necessary that the will of the "victim" be "overborne". The basis for relief on the ground of economic duress is that the pressure exerted on the "victim" is such that he or she had no reasonable or practicable alternative but to submit to the demand made. The pressure applied must, in the circumstances, be unconscionable. In Universe Tank Ships Incorporated -v- International Transport Workers Federation (1983) 1 AC 366, Lord Scarman said, at 400, that to constitute economic duress: There must be pressure the practical effect of which is compulsion or the absence of choice. Compulsion is variously described in the authorities as coercion or the vitiation of consent. The classic case of duress is, however, not the lack of will to submit but the victim's intentional submission arising from the realisation that there is no other practical choice open to him. See also the decision of the New South Wales Supreme Court in Equiticorp Financial Services Limited (NSW) -v- Equiticorp Financial Services Limited (NZ) and Others (1992) 29 NSWLR 260, particularly at page 296. In Crescendo Pty Limited -v- Westpac Banking Corporation (1988) 19 NSW LR 40, at 46, McHugh J in the New South Wales Court of Appeal (as he then was) said: The proper approach in my opinion is to ask whether any applied pressure induced the victim to enter into the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate. Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct but the categories are not closed. Even overwhelming pressure not amounting to unconscionable or unlawful conduct, however, will not necessarily constitute economic duress. The fact that the "victim" feels that he or she has no practicable or reasonable alternative other than to submit must be a product of the unconscionable conduct of the other party. This is illustrated by the case of Magnacrete Limited -v- Douglas-Hill (1988) 48 SASR 565. At page 593 Perry J said: If the defendants felt that they had no alternative but to enter into the contracts in question with the plaintiff, this was a product of wider economic circumstances largely of their own making which were not produced by any conduct on the part of the plaintiff. The applicant has a strong argument that, despite his signed letter of resignation, (which is not in evidence) his employment was terminated at the initiative of the respondent employer. See Mohazab -v- Dick Smith Electronics Pty Limited (1995) 62 IR 200. However, an employee whose employment has been unlawfully terminated by his or her employer (whether that be by way of constructive dismissal or otherwise) can still compromise his or her rights to take legal action. At the meeting on 18 July 1996 Mr Raj or Mr Lorking (the applicant was not sure) had offered the applicant the choice between resigning or being dismissed. This was after a reference to material that the respondent allegedly had in its possession which allegedly showed that the applicant had condoned the purchase of vehicle parts for private use without reimbursement by the company by subordinates of his (namely, the three persons who had been dismissed in the weeks leading up to 18 July). After being offered the choice between resigning and being dismissed, the applicant had then asked something like: What course would provide the best financial benefit? Mr Raj (or Mr Lorking) had then said something like, "You'd be much better off if you'd resign" and "If you resign it's conditional on you signing the Deed." The applicant was then shown the Deed of Release. He then quickly read it. (He said, in evidence, that his main concern had been that there was no admission of liability on his part in the Deed). The applicant gave evidence that Mr Lorking (or Mr Raj) went on to tell him what he would receive if he resigned. The applicant said that he was concerned that if he did not resign he would just be shown the door. The applicant did say, on his evidence, which I accept, that he considered the approach to be intimidatory. As I said, an employee whose employment has been unlawfully terminated can still compromise his or her rights to proceed. That compromise can be entered into during the same meeting as that at which the dismissal occurs. On analysis, in my opinion, the conduct of Mr Raj and/or Mr Lorking at the meeting on 18 July 1996 was not such that the pressure they exerted on the applicant to sign the Deed was unconscionable. No doubt the applicant did feel under pressure to sign. However, in my opinion, a lot of that pressure was not on him as a result of what Mr Raj or Mr Lorking had said or done. Rather, it was the product of his personal circumstances. It cannot, therefore, be said that the pressure on the applicant was substantially of the making of the respondent. On the evidence as it stands before me now I would be prepared to find that the applicant's employment had been terminated at the initiative of the respondent employer (see Mohazab -v- Dick Smith Electronics Pty Limited (1995) 62 IR 200). That is to say the "resignation" was nothing more than an acceptance by the applicant of the fait accompli that the respondent had decided to terminate his employment. However, it does not necessarily follow that he had no practical alternative but to sign the Deed of Release. He did have a practicable or reasonable alternative of which he was aware. This was to refuse to sign it and to thereby maintain his rights to take legal action. But in order to achieve the better financial result, the applicant chose to sign the Deed of Release and to accept an extra month's salary in return. It may not have been a good deal for him - but a deal it was. The applicant's signature on the Deed of Release was not obtained by duress. The Deed, therefore, binds him and he has compromised his rights to take these proceedings. The order that the Court makes is that the application be dismissed. COSTS In my opinion, Mr Tunbridge had an arguable case that the Deed was induced by duress. I have found against him on that matter, but only after considerable thought. In those circumstances, in my opinion, it cannot be said that he initiated the proceedings without reasonable cause. I therefore decline to order the applicant to pay the respondent's costs.