HOGAN v OLEX CABLES [1997] IRCA 140

DECISION NO:140/97 C A T C H W O R D S INDUSTRIAL LAW - TERMINATION OF EMPLOYMENT - agreement to settle - whether the consent order striking out the application with a right of reinstatement perfected the alleged compromise - whether counsel was authorised to compromise the claim - whether a binding agreement exists to compromise the claim Industrial Relations Court Rules O 29 r2, O 35 r7; O 36 Harvey v Coralie Ngarita Phillips & Anor (1956) 95 CLR 235 Purdue v Brown Hatton Rural Pty Ltd (1995) 60 IR 451 MALCOLM DENZIL HOGAN - v - OLEX CABLES No. VI 1800 of 1996 Before: Judicial Registrar Millane Place: Melbourne Date: 2 May 1997 INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1800 of 1996 B E T W E E N : MALCOLM DENZIL HOGAN Applicant A N D OLEX CABLES Respondent MINUTES OF ORDERS Judicial Registrar Millane 2 May 1997 THE COURT ORDERS THAT: 1. Proceeding No. VI 1800 of 1996 be relisted for hearing on the earliest available date. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules. INDUSTRIAL RELATIONS COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VI 1800 of 1996 B E T W E E N : MALCOLM DENZIL HOGAN Applicant A N D OLEX CABLES Respondent Before: Judicial Registrar Millane Place: Melbourne Date: 2 May 1997 REASONS FOR DECISION By a Notice of Motion filed by the respondent filed on 14 March 1997 the respondent sought the following orders: "1. That, pursuant to Rule 2 of Order 29 of the Industrial Relations Court Rules, the question of whether, by operation of an agreement made or or (sic) about 16 September 1996, the Applicant should be ordered to discontinue this proceeding (and the terms (including costs) upon which such a discontinuance be ordered) be tried separately from any other question in the proceeding and prior to trial, on a date to be fixed; 2. That, the question be decided upon evidence given by way of Affidavit in accordance with Order 14 of the Industrial Relations Court Rules; 3. That, 28 days prior to the date fixed in accordance with paragraph 1, the Respondent file and served (sic) any Affidavits upon which it seeks to rely; 4. That 21 days prior to the date fixed with paragraph 1, the Applicant file and serves any Affidavits upon which he seeks to rely; (sic) 5. That 14 days prior to the date fixed in accordance with paragraph 1, the Respondent file and serve any Affidavits in reply to the Affidavits (if any) file (sic) and served by the Applicant in accordance with paragraph 4. 6. That 7 days prior to the date fixed in accordance with paragraph 1, the parties file and serve: (a) contentions as to fact and law (if any) and a list of authorities (if any) on which the parties seek to rely in determining the question; (b) notices in accordance wiht (sic) Rule 9 of Order 14 of the Industrial Relations Court Rules requiring the attendance for cross-examination of a person making an Affidavit. 7. That the trial dates of 2 and 3 April 1997 be vacated. 8. That the time for service of the Notice of Motion be abridged." After hearing argument I vacated one of the dates for the hearing of the claim alleging the unlawful termination of the applicant's employment by the respondent and, by consent, ordered that, pursuant to Order 29, Rule 2 of the Industrial Relations Court Rules, the preliminary question of whether on 16 September 1996 the proceeding brought by the applicant was settled, be determined prior to dealing with any issues relating to the merits of the application originally filed by the applicant. Further consent orders were made to enable the hearing of the preliminary question to proceed by way of affidavit. The preliminary question was heard by me on 3 April 1997 at which time I had before me the following affidavit materials including the exhibits filed by the parties: On behalf of the respondent\applicant - a. An affidavit of Nada Delavec (Delavec), the respondent's solicitor, sworn on 14 May 1997 (Delavec's first affidavit), and her supplementary affidavit sworn on 21 March 1997 (Delavec's second affidavit); b. Three affidavits of Rodney Ian Edmund Willcox (Willcox), the barrister representing the applicant on the first hearing date on 16 September 1996; comprising an affidavit sworn on 17 March 1997 (Willcox's first affidavit), an affidavit sworn on 21 March 1997 (Willcox's second affidavit) and an affidavit sworn on 3 April 1997 (Willcox's third affidavit); and c. An affidavit of Wayne Humphrey Otter, the respondent's human resources manager, sworn on 21 March 1997 (Otter's affidavit). On behalf of the applicant/respondent - a. An affidavit of the applicant, Malcolm Denzil Hogan, sworn on 27March 1997 (the applicant's affidavit); and b. An affidavit of Patricia June Hogan, the applicant's mother who attended the Court with her son on 16 September 1996, sworn on 27 March 1997 (Patricia Hogan's affidavit). By an application filed with the Australian Industrial Relations Commission on 29 May 1996 the applicant alleges that his employment with the respondent as a fork lift driver was unlawfully terminated on 27 May 1996. This application was defended by the respondent and fixed for hearing in the Industrial Relations Court of Australia on 16 September 1996 before Judicial Registrar Ryan, who on that date made the following order by consent: "That the matter be struck out with a right of reinstatement." The Court file indicates that the abovementioned consent order has not been entered at any time in accordance with Order 36 of the Industrial Relations Court Rules. On the first return date the respondent was represented by counsel, Stuart Wood (Wood), and its solicitor, Delavec. The applicant on that date attended Court accompanied by his mother and was represented by Willcox and the applicant's solicitor, Jay Pilai (Pilai). Neither Wood nor Pilai swore any affidavit material in this proceeding; although Wood did appear for the respondent on the return of the Notice of Motion on 18 March 1997. On the return date for the hearing of the preliminary question, the respondent sought to file Willcox's third and last affidavit. On that occasion I queried how it came to pass that the applicant's former counsel and authorised legal representative at the hearing before Judicial Registrar Ryan was, apparently at the request of the respondent, prepared to swear three affidavits against the interests of his former client, which disclose, amongst other things, instructions he alleges he received from the applicant to settle the principal proceeding. The applicant's affidavit indicates that on 29 October 1996 he made written complaint to the Law Institute of Victoria concerning the conduct of his barrister and his solicitor in relation to the proceeding originally fixed for hearing on 16 September 1996. After raising my query with the respondent's counsel on 3 April 1997 I was informed by the respondent's counsel that on each occasion that Willcox swore an affidavit he had the prior approval of the Victorian Bar Council's Ethics Committee. I note that none of Willcox's affidavits make reference to this approval. Indeed, Delavec's first affidavit indicates that she telephoned Willcox on 14 October 1996 on which occasion he confirmed that he had express verbal instructions to settle from both the applicant and his solicitor. It was common ground that on 16 September 1996 Willcox was the applicant's authorised representative and, at the very least, from the respondent's point of view, had ostensible authority to enter into an agreement to settle the applicant's claim. The applicant and his mother assert that there was no actual authority to do this because when the applicant was approached by Willcox (and Pilai) with an offer of settlement made by the respondent through its counsel, Wood, the applicant instructed Willcox to reject that offer consisting, as it did, of an offer to pay the applicant $1,000, provide him with a reference (or a statement of service) and pay to him the equivalent of twenty-five hours of unpaid rostered days off payments. Essentially, whilst it was common ground that an offer of settlement was discussed between counsel broadly in the terms suggested above, it was disputed by the applicant that Willcox had actual authority to proceed to settle his claim. Alternatively, the applicant argued that if there was a settlement of his claim on 16 September 1996, the respondent failed to comply with the terms of that settlement, entitling the applicant to reinstatement the proceeding before the Court, which he did by November 1996. For its part, the respondent asserts that on 16 September 1996 the proceeding was settled and the terms of that settlement entered into by counsel representing each party were contained in a hand written and signed document as follows (Exhibit "ND1" referred to in Delavec's first affidavit): "16 Sep 1996 INDUSTRIAL RELATIONS COURT; VI96/1800 HOGAN v OLEX CABLES The parties through their respective counsel agree to settle this matter on the following terms: 1) The respondent will pay within 14 days the sum of $1,000; 2) The respondent will pay within 14 days an amount of 25 hours pay in respect of unpaid R.D.O.'s 3) The respondent will give the applicant a Statement of Service 4) The applicant will discontinue the proceeding. 5) Solicitors to prepare release agreement. ............................................. .................................... RODNEY WILLCOX STUART WOOD 16 September 1996." The respondent also sought to argue, by relying on Willcox's affidavits, that on 16 September 1996 Willcox not only had ostensible authority to make the settlement it is conceded he entered into, but he, in fact, had actual authority to act as he did. On this lastmentioned matter there is clearly conflict between the applicant, his mother and Willcox as to the instructions given to Willcox on that date, the applicant asserting in his affidavit that he made a statement to Willcox indicating that he did not accept the offer made. Apart from alleging in his affidavits that he was authorised by the applicant and separately by the solicitors to enter into the settlement agreement set out above, Willcox states that on 16 September 1996 the applicant indicated acceptance of the settlement by saying directly to him "Alright then". He specifically denies being told that the applicant did not accept the offer communicated to him. At the hearing of the preliminary question the applicant's counsel conceded that whatever dispute there may be between the applicant and his former counsel and former solicitor about Willcox's actual authority on 16 September 1996, the applicant faced some difficulty on the preliminary question because there was a good argument for saying that Willcox had ostensible or apparent authority to represent and act on the applicant's behalf; there being no evidence to suggest that the respondent or its representatives were notified of or aware of the instructions the applicant alleges he gave to Willcox to reject the offer made and limit his authority to settle. Bearing the abovementioned matters in mind I proceeded to hear the application on the basis that the applicant maintained his denial of any actual authority for Willcox to enter into the settlement but conceded that the real question for the Court to determine was, if there was a binding agreement to settle on 16 September 1996, were the terms of that agreement breached by the respondent, thereby entitling the applicant to elect to treat the agreement as at an end? The conduct of the parties subsequent to the execution of the written agreement to settle is relevant to the lastmentioned question. The applicant claims that on 16 September 1996 he was not shown the written terms of settlement, nor was he present in Court when the consent order was made by the Judicial Registrar. I note that many of the factual matters relied on in the applicant's affidavit are not challenged by Willcox or the respondent. In fact, the applicant alleges that he was not aware of the order made by the Court until he attended the Court registry on 18 September 1996 and was informed that the case had been struck out. This led to a telephone conversation with Willcox on 19 September 1996 during which call it was suggested to the applicant that he contact his solicitor. Meanwhile, Delavec's evidence indicates that on 17 September 1996 she and the applicant's solicitor, Pilai, agreed that the $1,000 settlement sum referred to in clause one of the settlement agreement was to be paid to Pilai for his legal costs. On or about 20 September 1996 Delavec forwarded to Pilai, apparently whilst he remained the applicant's solicitor on the record, a copy of a document she drafted entitled "Settlement Release Agreement" (see Exhibit "ND4" forming part of Delavec's second affidavit). In the section of the abovementioned document under the title "Recitals", it says that: "E. The parties have agreed to settle the action and the differences between them on the terms set out in this Agreement." The document then proceeds to set out the following agreement: "THE PARTIES AGREE that in consideration of, among other things, the mutual promises contained in this Agreement: 1. On delivery to Freehill Hollingdale & Page of a copy of this Agreement duly executed by Hogan, Olex Cable will within 14 days: (a) forward to Mr Pilai the sum of $1000, for legal costs incurred by Hogan (the "settlement moneys"); (b) forward to Hogan payment for 25 hours unpaid rostered days off (less the appropriate tax deductions as required by law); and (c) forward to Hogan a statement of employment, stating Hogan's period of employment and positions held at Olex Cables. 2. The settlement moneys are paid in full and final settlement of any and all claims Hogan may have now or in the future, or would but for this Agreement have had, against Olex Cables arising out of his employment with Olex Cables or any other matter. 3. In consideration of the payment by Olex Cables of the settlement moneys, Hogan: (a) acknowledges that he receives that payment in full and final settlement of all claims as set out in clause 2 above; (b) agrees not to reinstate the action, which was struck out by Judicial Registrar Ryan on 17 September 1996; (c) releases absolutely and forever discharges Olex Cables from all actions, suits, causes of action, demands, liability, damages and costs whatsoever (whether at common law, in equity or, to the extent permitted, under any statute), past, present, and future and howsoever arising which he may have had, may now have or but for this Agreement may have had at any future time against Olex Cables arising out of or in relation to this employment by Olex Cables, its termination or any other matter; and (d) covenants not to bring or commence or seek to enforce any action, suit, cause of action, claim, demand or right or any proceeding whatsoever, in any court, commission, tribunal or body against Olex Cables arising out of or in relation to his employment by Olex Cables, its termination or any other matters. 4. If Hogan fails to comply with any undertaking or covenant in this Agreement, or to carry out any act required to be carried out pursuant to this Agreement: (a) the settlement moneys referred to in clause 1 will become immediately repayable to Olex Cables upon demand; and (b) Olex Cables may produce this Agreement to any court, commission, tribunal, body or person as evidence of the irrevocable consent of Hogan to the discontinuance of the act, and Hogan hereby acknowledges his consent to such discontinuance. 5. Hogan covenants that he shall not, without the consent in writing of Olex Cables being first obtained, divulge to any person firm or company, any Confidential Information concerning the business accounts affairs or finances of Olex Cables and its subsidiaries or any of their secrets dealings or transactions which may have come to his knowledge during his employment or otherwise. "Confidential Information" shall include information relating to the business, products and affairs of Olex Cables (including without limitation marketing information) for the time being confidential to Olex Cables or treated by Olex Cables as such and trade secrets (including without limitation formula, process, methods, inventions, technical data and know how) relating to the business of Olex Cables. 6. If any provision of this Agreement is declared or determined by any court to be invalid or unenforceable at law, that provision is hereby severed from and deemed not to be part of this Agreement, and the validity of the remaining provisions is not affected by the invalidity or unenforceability of that provision. 7. In this Agreement, references to Hogan and Olex Cables shall be read as references to, and including, as appropriate, their respective successors, transferees and assigns as well as directors, officers, employees, agents and related bodies corporate." As a document purporting to set out the agreed terms of settlement, the document drafted by the respondent's solicitors is remarkable because of its lack of precision, its failure to adhere to the spirit and perimeters of the terms of settlement signed by counsel, and the extent to which it goes to release the respondent from liability for all claims arising out of the applicant's employment with the respondent "... or any other matter". The Settlement and Release Agreement was sent to the applicant's solicitor under cover of a letter noting that it was sent "... for your consideration" and asking the solicitor to contact Delavec "... to confirm that the terms of settlement are acceptable". I infer from these comments that when the Settlement and Release Agreement was sent to the applicant's solicitor, it was then understood by Delavec that that document sought to introduce terms of settlement additional to those agreed upon by counsel on 16 September 1996. Not surprisingly, the applicant, who alleges he then had an outstanding Workcover claim against the respondent, when he received the letter and the Settlement and Release Agreement from his solicitor under cover of a further letter dated 1 October 1996 (see Exhibit "MDH1" forming part of the applicant's affidavit), declined to execute that document. The letter from the applicant's former solicitor to him indicates that by the date of writing that letter on 1 October 1996 the applicant's solicitor was then aware that the applicant had consulted other solicitors in this matter. The applicant did retain other solicitors and it is apparent from Delavec's first affidavit that by 14 October 1996 she had been informed by the new solicitors that the applicant alleged he gave no instructions to settle his claim and was then seeking to reinstate the proceeding. Steps were subsequently taken by the applicant's new solicitors to place the proceeding in the directions list for call-over on 26 November 1996. However, prior to that directions date another firm of solicitors was appointed by the applicant. At the directions hearing the matter was fixed for hearing in April 1997, with the respondent informing the Court that it would argue that the proceeding had been settled on the last hearing date. Insofar as the written settlement agreement is concerned, by the date upon which the proceeding was reinstated by the applicant's representatives in the Court's lists, and further by the date upon which at directions the proceeding was again fixed for hearing, there being oral notice that the respondent would rely on an alleged settlement agreement, clauses one to four inclusive of the settlement agreement had not been satisfied. So far as clause five is concerned the solicitors for the respondent had prepared a Settlement and Release Agreement, however, in view of my observations above it could hardly be suggested that that Settlement and Release Agreement faithfully recorded the terms of settlement and confined itself to releasing the respondent from liability in respect to the matters the subject of the proceedings before the Court and the subject of the settlement agreement. What it did was open up for further consideration additional terms of settlement. The question of accord and satisfaction was raised at the directions hearing and on 19 December 1996 Otter, after receiving instructions from Delavec on 16 December 1996, on behalf of the respondent communicated with the applicant directly; rather than through either firm of solicitors. That communication took the following form (see Exhibit "WHO1" forming part of Otter's affidavit): "Please find enclosed a cheque for $1309.50 being: a. $1000 settlement monies b. $ 309.50 - for 25 accrued rostered day off hours c. Statement of Employment as full and final settlement of your claim for unlawful termination as agreed on the 16th September 1996 at the Industrial Relations Court of Australia." It seems from the abovementioned correspondence that the respondent by December 1996 had decided to attempt to satisfy the terms contained in clauses one, two and three of the signed settlement agreement. I infer from Delavec's conduct in instructing the respondent to directly communicate with and pay monies to the applicant that it was then hoped, as it turns out in vain, that the applicant would accept the sums tendered in this way. He returned the unpresented cheque and the other documents forwarded to him. A preliminary argument raised by the respondent was that the compromise agreed to by counsel was perfected by the order of this Court made by Judicial Registrar Ryan on 16 September 1996. If Willcox was not authorised to act as he did it was said that the order of the Court perfected the compromise and as a result of the decision of the High Court in Harvey v Coralie Ngarita Phillips & Anor (1956) 95 CLR 235 the Industrial Relations Court of Australia could not refuse to give effect to the compromise. In my view, the argument as put by the respondent is, on the facts of the case before me, misconceived. First, there has been no order of this Court on any compromise. By consent the parties obtained an order striking out the proceeding and preserving a right of reinstatement to both parties. Secondly, the order made by the Court has never been entered. In Harvey's case the consent terms of settlement were handed to the Judge in open Court and the Court was adjourned. Those terms included an agreement that there be a verdict for the plaintiff of Ł4,000. That judgment was never signed or entered before the plaintiff brought her action. In deciding that the plaintiff was bound by the consent given to her counsel to settle, the Justices of the High Court noted at page 242 of their joint decision that they doubted that it would have been open to the plaintiff to attack the judgment and seek to set it and the compromise aside, had judgment been signed. Harvey's case was decided, not on the basis that a judgment had been perfected, but on the basis that there was clear evidence of actual authority given to the plaintiff's counsel to compromise the action. I understand their Honours' observations at page 243 of the decision to the effect that "... until the judgment or order embodying the compromise has been perfected, an authority exists in the court to refuse to give affect to or act upon the compromise and perhaps to set it aside :" to mean that until the judgment or order is entered a Court may decline to act on it or set it aside. Order 35, Rule 7 of the Industrial Relations Court Rules permits the Industrial Relations Court of Australia to vary or set aside a judgment or order before it is entered and I imagine, because of this, that had Judicial Registrar Ryan made orders in accordance with the settlement agreement, I would have still have power to vary or set aside such orders if I was satisfied, for example, the counsel appearing on 16 September 1996 for the applicant did not have actual authority to compromise the action it the way that he did. It is not necessary for me to address this question further because there is no order of this Court relating to any compromise and to say that the order made in some way perfected the terms of settlement deprives the order made of any sensible meaning or effect because neither party would be entitled to seek reinstatement, even though the case has never been decided on its merits. Whilst the applicant's counsel appeared to acknowledge that the Settlement and Release Agreement exceeded the matters raised in the settlement agreement, it was said by the respondent that the execution of a release was a condition of the settlement agreement rather than a warranty and, although the applicant by his conduct breached this condition, by December 1996 when the respondent tendered to the applicant the settlement sums, it had elected not to rely on this breach to rescind the agreement. In making its submission to the Court the respondent further argued that: (a) clauses one and two of the settlement agreement, providing as they do for the payment of the monetary sums within fourteen days, were not conditions but warranties and, as a result, the failure to pay the sums on or before 30 September 1996 did not entitle the applicant to treat this failure as a breach upon which he could rescind the settlement agreement; and (b) the Court should interpret the settlement agreement as meaning that the fourteen day period for the payment of the monies referred to in clauses one and two of the settlement agreement did not commence to run until a release was executed. Having read the clauses of the settlement agreement, in my view a reasonable and proper interpretation of that agreement is that time was of the essence and the payment of the monetary sums were conditions of the agreement. If no time for payment had been agreed upon it is a well understood proposition that any payment agreed upon would need to be paid within a reasonable time (see Purdue v Brown Hatton Rural Pty Ltd (1995) 60 IR 451). In this case I am not satisfied that the tender of the monies on 19 December 1996 amounted to an attempt to meet the settlement within a reasonable time. On the question of whether the execution of a release was a trigger for the payment of the monetary sums within fourteen days, Willcox in his second affidavit says, without setting out the grounds for this assertion, that: "... I understood that the terms of settlement thereof meant that the money was not to be paid until the release had been signed by, or on behalf, of Mr Hogan." As I have already noted, Wood, the respondent's counsel on 16 September 1996, filed no affidavit in this proceeding. I would expect that if counsel intended to impose a time limit on the drafting and execution of an appropriate release or sought to make the payments conditional upon the execution of a release, then this should have been addressed in the agreement as drafted. There was no attempt by the respondent to pay the monies within the fourteen day period provided for in the settlement agreement. In the latter part of September it took steps to try and negotiate much wider terms of settlement than those reflected in the written settlement agreement and by 14 October 1996 could have been under no misapprehension about the applicant's position on the alleged settlement and his decision to reinstate the proceeding. Its failure to meet the conditions contained in clauses one and two of the settlement agreement on or before 30 September 1996 gave rise to an entitlement to rescind the settlement agreement and through his new solicitors the decision to reinstate the proceeding was notified to the respondent. In view of the abovementioned circumstances, I am not satisfied that there was compliance on the respondent's part with any settlement agreement entered into on 16 September 1996, whether the terms of that agreement were agreed to by the applicant's counsel acting with or without the applicant's actual authority to compromise his action. This being so, no binding agreement to compromise the claim exists and the applicant is entitled to litigate his original claim on its merits. Accordingly, I propose to make an order that the proceeding is relisted for hearing on the earliest available date. MINUTES OF ORDERS THE COURT ORDERS THAT: 1. Proceeding No. VI 1800 of 1996 be relisted for hearing on the earliest available date. NOTE: Settlement and entry of orders is dealt with by Order 36 of the Industrial Relations Court Rules. I certify that this and the preceding fourteen (14) pages are a true copy of the reasons for decision of Judicial Registrar Millane. Associate: Dated: 2 May 1997 Solicitors for the Applicant: John Preat Counsel for the Applicant: Ms R. Doyle Solicitors for the Respondent: Freehill Hollingdale & Page Counsel for the Respondent: Mr F. Turner Date of hearing: 3 April 1997 Date of judgment: 2 May 1997