Industrial Relations Commission of New South Wales CITATION: Kerry Wildred Reid -v- Eurobodalla Shire Council [2008] NSWIRComm 1061 PARTIES: APPLICANT: Kerry Wildred Reid RESPONDENT: Eurobodalla Shire Council FILE NUMBER(S): 2179 of 2007 CORAM: Macdonald C CATCHWORDS: Unfair dismissal application- s84 of the Act- conciliation- employee represented by solicitor- Commission advised matter not settled- Hearing programmed- Commission subsequently advised matter had settled-Hearing in Moruya Court House vacated- employee wrote to Commission seeking a Hearing on his reinstatement application- Hearing programmed- employee no longer legally represented- employer became legally represented.- employer filed Notice of Motion to strike out hearing on basis that employee had reached a binding agreement to settle his unfair dismissal application, per his legal representative, during conciliation- Hearing in Moruya Court House on Notice of Motion and reinstatement application. Held: Commission found in favour of employer- Notice of Motion- employee precluded from pursuing his s84 reinstatement application. Costs application by employer considered and rejected. LEGISLATION CITED: Industrial Relations Act 1996 Attorney General v Wentworth (1998) 14 NSWLR 481 CASES CITED: Masters v Cameron (1954) CLR 353. Peden v Lake Macquarie Generation Pty Limited [2004] NSWIRComm 66. HEARING DATES: 25 June 2008 DATE OF JUDGMENT: 11 July 2008 APPLICANT: Self represented LEGAL REPRESENTATIVES: RESPONDENT: Mr D Gardner, solicitor, Maddocks Lawyers DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES CORAM: MACDONALD C 11 July 2008 Matter No IRC 2179 of 2007 In the matter of Kerry Wildred Reid v Eurobodalla Shire Council Application by Kerry Wildred Reid re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996. DECISION [2008] NSWIRComm 1061 INTRODUCTION 1 On 25 June 2008, the Commission issued an Ex Tempore Decision in favour of Eurobodalla Shire Council ("the employer") against Mr Kerry Wildred Reid ("the employee"). The Ex Tempore Decision was in respect of a Notice of Motion and Affidavit filed on behalf of the employer by its legal representative. The filed documents sought, simply put, that the Commission not arbitrate on the employee's unfair dismissal application because the employee had agreed to a binding settlement of his unfair dismissal application during negotiations between the parties. 2 The Commission sat in Moruya Court House on 25 June and took evidence and submissions on the employer's claim that the parties had settled the unfair dismissal application during the conciliation phase. The Commission then issued an Ex Tempore Decision concurring with the employer's claim and advised that a formal Decision would be issued in due course, setting out the Commission's reasoning. This Decision sets out that reasoning. BACKGROUND 3 The employee filed an unfair dismissal application on 11 December 2007 against the employer, pursuant to s84 of the Industrial Relations Act 1996 ("the Act"). 4 The matter was listed in Wollongong on 19 December 2007. The employer was represented by Mr R Clisdell, solicitor of Hozac Clisdell Lawyers Pty Limited. The employer was represented by Mr K Nolan, corporate manager and Ms C Beaver, executive manger. The parties engaged in conciliation. 5 The matter was listed on 14 January 2008 and Mr Clisdell and Messrs Nolan and Beaver represented their respective parties. Mr Clisdell and Ms Beaver concurred that conciliation was at an end and the matter was programmed for a Hearing in Moruya Court House. 6 On 5 February 2008, the Commission received correspondence from the employee's legal representative advising that the matter had settled and the terms of settlement. The Commission vacated the Hearing dates. 7 Subsequently, the Commission received correspondence of 4 April 2008, from the employee stating that he wanted to resume his "unfair dismissal action". 8 The matter was relisted on 21 April 2008. The employee represented himself. Mr Clisdell no longer appeared in the proceedings. (The Commission was informed that Mr Clisdell had been appointed as a Magistrate). The employer was represented by Messrs Nolan and Beaver. The matter was programmed for a Hearing. The employee sought reinstatement. Two days for the Hearing in Moruya Court House was set aside - 25 and 26 June. 9 On 1 May 2008, a Notice of Ceasing to Act was filed by Hozack Clisdell Lawyers Pty Limited. 10 The employee was due to file his evidentiary material on 14 May. He filed several witness statements on the next day. 11 On 26 May 2008, a Certification Under Section 347 of The Legal Profession Act 2004 and Notice of Appearance were filed by Maddocks Lawyers (per Mr Darren Gardner, solicitor for the employer). 12 On 5 June 2008, the employer's legal representative filed a Notice of Motion and Affidavit. Simply put, those filed documents asserted that the employee was in breach of terms of settlement and discontinuance previously notified in writing to the Commission and that the Hearing set down for 25 and 26 June not proceed. 13 The Commission also received on 5 June, a facsimile from the employer's legal representative, Mr Gardner who wrote, inter alia, that his client (the employer) was unaware that Directions had been issued to the parties in April and that the employer was required to file and serve its evidence by 4 June 2008. Mr Gardner sought a Hearing on the Notice of Motion. 14 The matter was listed in Sydney on 6 June. The employee appeared by teleconference and Mr Gardner appeared in my court. The Commission pointed out to Mr Gardner that his client was made aware on 21 April of the Directions for the filing of material for the employee's reinstatement remedy. Mr Nolan (who subsequently left the employee of the employer) and Ms Beaver represented the employer on that day (21 April) before the Commission. 15 A threshold Hearing on the Notice of Motion was not capable of being set before the programmed two day Hearing of 25 and 26 June in respect of the employee's reinstatement Hearing. Accordingly, it was decided that the threshold Hearing on the Notice of Motion would be held on 25 June. The Commission advised that it would issue an Ex Tempore Decision at the conclusion of the threshold Hearing. Further, if that Ex Tempore Decision went against the employer, then the Commission would immediately proceed with the substantive case - that is, the employee's reinstatement application. If, however, the Ex Tempore Decision went in favour of the employer, then that would preclude the employee from pursuing his reinstatement claim. The parties agreed to confer in an attempt to settle the matter. 16 The matter was relisted for a Report Back on 11 June. The parties had conferred but the matter remained unresolved. Directions were given for the filing of material in respect of the Notice of Motion. 17 The employer also filed evidentiary material for the unfair dismissal application. 18 On 25 June, the Commission sat in Moruya Court House and, as previously advised, took evidence and submissions on the Notice of Motion. The employee gave evidence and so did Ms Beaver, executive manager for the employer. The Commission issued an Ex Tempore Decision in favour of the employer's argument that the employee had made a binding settlement of his unfair dismissal application during the conciliation phase of his application. As such, he was precluded from pursuing his claim for reinstatement. FINAL SUBMISSIONS For the Employer 19 Mr Gardner spoke to his Outline of Submissions on Notice of Motion (not marked in the proceedings), in support of the employer's case that the employee be barred from pursuing his claim that he had been unfairly dismissed. Mr Gardner's submissions were as follows: (a) Mr Reid was legally represented during negotiations to settle the employee's unfair dismissal application. (b) Mr Reid is bound by the conduct of his legal representative in respect of those negotiations. (c) The negotiations resulted in an agreement. Mr Reid was aware of and concurred with that agreement. Mr Reid is bound by that agreement. (d) The Commission was advised, in writing, of the terms of settlement and asked to vacate the hearing dates. (e) Mr Reid is estopped from re-opening these proceedings when he is the repudiating party. (f) There is a public interest in parties adhering to bargains made. It is unjust for Mr Reid be able to continue on with his litigation because he has changed his mind contrary to the advice and binding conduct of his legal representative. 20 Mr Gardner referred the Commission to various case law in support of his submission that there was a binding agreement upon Mr Reid (and the employer). 21 Mr Gardner set out the options available (under the Act) to the Commission to grant the relief (enforcement of the alleged agreement) sought by the employer. 22 Mr Gardner also submitted that Mr Reid should pay the employer's costs pursuant to s181(2)(a) and (b). The basis of this costs claim is that Mr Reid was advised that he had no prospects of success with his unfair dismissal application. For the Employee 23 Mr Reid submitted that there was no agreement because he had not signed the deed of release. Further, he would not sign the deed of release because he disagreed with some of the terms contained therein. 24 As to costs, he said that his union ("the USU") had said that costs would be awarded against him but that his union was not siding with him. 25 Mr Reid said he needed a job and the monetary component to the alleged agreement did not interest him. 26 Mr Reid addressed the Commission on the circumstances surrounding his dismissal. He alleged, amongst other things, that the officer of the employer who dismissed him, did so in the presence of "an armed ranger". CONSIDERATION 27 The employer has sought relief of two kinds: (a) That the Commission determine that the employee is bound by an agreement, reached on his behalf by his legal representative, to settle his unfair dismissal application (and therefore cannot proceed with that unfair dismissal application; and (b) That the Commission grant an order for costs against the employee. 28 The Commission will now consider the relief sought. A Binding Agreement? 29 The employee was not present during the negotiations that gave rise to the alleged binding agreement. The employee was represented at those negotiations by his legal representative, Mr Roger Clisdell of Hozack Clisdell Lawyers Pty Ltd. 30 Mr Clisdell advised the Commission at a sitting on 14 January 2008, that the matter was not settled, despite negotiations, and sought the programming of a Hearing. This was granted. 31 Subsequently, my office received correspondence from Hozack Clisdell Lawyers Pty Limited, dated 5 February 2008. That correspondence advised of settlement of the unfair dismissal application and reads as follows: "We refer to the writer's discussions with Commissioner McDonald's Associate on Monday 4th February 2008. We confirm that the proceedings between Mr Reid and Eurobodalla Shire Council have been settled on the following terms: 1. Payment to the Employee of twelve weeks salary. 2. Terms not to be disclosed. 3. The Employee to submit a letter of resignation to the Council and Council to provide the Employee with a letter confirming that his employment ended upon resignation and setting out the length of service. Accordingly, we would be grateful if you could vacate the hearing dates of 1st and 2nd April. We will prepare terms of settlement and a Deed of Release followed by a Notice of Discontinuance. Yours faithfully Hozack Clisdell Lawyers Per: (Signature provided - Macdonald C) ROGER JAMES CLISDELL cc. Eurobodalla Shire Council - Ken Nolan" (Ex1 - Annex. A) 32 It is to be noted that that correspondence had also been copied to the employer. 33 The concluding paragraph of that correspondence states that the legal representative will prepare (a) terms of settlement; (b) Deed of Release; and (c) Notice of Discontinuance. 34 The employee's legal representative wrote to the employer by correspondence of 12 February 2008, enclosing the Terms of Settlement: "PARTIES: Applicant/Employee KERRY WILFRED REID Respondent/Employer EUROBODALLA SHIRE COUNCIL (1) That the Applicant discontinue these proceedings upon payment to him by the Respondent of a sum equivalent to twelve weeks salary at the salary he was earning prior to his dismissal. (2) That the employee be afforded the opportunity to resign with effect from 28th November 2007. (3) That the employer provide the employee with a statement of service indicating the period of service and the fact that his service ended with a resignation. (4) Terms not to be disclosed." (Ex 1 - Annex. B) 35 For the record, Mr Nolan, representing the employer, sent an email to the employee's legal representative on 26 February 2008. The email asks as to when and where this matter can be finalised. Mr Nolan advised that he can arrange a direct transfer of funds to Mr Reid's account once the release is signed by all parties. (Ex 1 - Annex. C). Again for the record, the Commission received correspondence from Mr Reid on 4 April 2008, stating that he wanted to resume his unfair dismissal application. Thus, the Deed of Release had not been signed by the parties. 36 The employer's case is that the employee is bound by the Terms of Settlement, whereas the employee denies he is bound. 37 Mr Gardner referred to case law as to what contractual circumstances constituted a binding agreement: Masters v Cameron (1954) 9 CLR 353 at 361. In that decision, the High Court of Australia set out three classes (scenarios) of negotiations between parties, which have resulted in an agreement upon terms of a contractual nature, and which are to be dealt with by way of a formal contract. 38 The three contractual scenarios are: a) the parties intend to be immediately bound by their agreement to the performance of the terms of that agreement, and propose to have the terms restated in a form which will be fuller or more precise, but not different in effect. b) the parties intend to be bound by their agreement but the obligation of the parties to perform in accordance with that agreement, is postponed until a formal document has been signed. c) the parties intend not to have a concluded bargain, until the parties sign a formal contract. 39 The High Court held that there is a binding contract for scenarios (a) and (b) above. There is no binding contract for scenario (c) unless and until a formal contract is signed. 40 In the present case, there was no formal contract signed by the parties as in scenario (c). 41 Mr Gardner submitted that the circumstances of the present case, fell within scenario (b), for the following reasons: a) The employee's legal representative corresponded by facsimile on 5 February 2008 expressly stating that: "We confirm that the proceedings between Mr Reid and Eurobodalla Shire Council have been settled..." (emphasis added: Macdonald C), b) The same correspondence states that the Terms of Settlement will be set in a Deed of Release. c) Performance of the term, to pay Mr Reid 12 weeks' salary, was conditional upon the execution of the Deed. 42 Mr Reid denied that there was an agreement to settle. 43 Mr Reid gave evidence in the proceedings and stated his reasoning for there being no binding agreement. Mr Reid said that it was correct that he had told his legal representative to settle his unfair dismissal application on certain terms but when Mr Reid saw those terms in writing, then he knew that those written terms did not reflect his instruction to his solicitor. 44 Mr Reid said he agreed that item 1 in the Terms of Settlement (see paragraph 34 above) was an agreed term: payment of twelve weeks salary. 45 Mr Reid disagreed with item 2. The Commission will return to this matter below. 46 Mr Reid agreed with item 3, being a provision of a statement of service which had ended with a resignation. 47 Mr Reid agreed with item 4, being that the terms of settlement not be disclosed. Under cross-examination, however, he said that this non-disclosure was now a problem for him because "I've had people coming up saying I'm an abusive person to me, so somebody's talking." (Tr 29, line 17 to 21). The Commission will return to this matter later in this Decision. 48 The thrust of Mr Reid's claim that there was no binding agreement was item 2: "That the employee be afforded the opportunity to resign with effect from 28th November 2007." This was not what, he said, he had agreed to in settling. He said in his Reply Statement to the Notice of Motion, that his legal representative advised that the employer's offer to settle was: twelve weeks pay, "reinstatement then I was to resign" and a certificate of service (Ex 7) (emphasis added). The same Reply Statement has a sense of Mr Reid being reluctant to accept this offer. But his legal representative, he alleged, was insistent he accept this employer offer and so Mr Reid records that acceptance as: "I will have to accept it." (Ex 7). 49 However, according to Mr Reid, when he saw the Terms of Settlement, he noticed that item 2 did not reflect his understanding and acceptance. Item 2 did not say "reinstatement then I was to resign", but instead: "That the employee be afforded the the opportunity to resign ...." 50 During cross-examination, he maintained that claim as to what he had agreed to for settling the matter, except that he repeatedly said the agreed deal was "re-employment", rather than resignation. 51 Ms Beaver, executive manager, also gave evidence in the proceedings and said that the agreement reached between Mr Reid's legal representative and the employer, was that reflected in the Terms of Settlement. (see para 34 above). In other words, she disputed Mr Reid's claim about the content of item 2. 52 The Commission then has to decide on the competing claims as to item 2: the Terms of Settlement as advised in writing to the Commission by Mr Reid's legal representative (and supported by the employer) or Mr Reid's claim as to what he alleges was the content of item 2, as told to him he said, by his legal representative. As to the latter point, Mr Reid was not present during the negotiations and hence he claims that his legal told him that the employer had offered "reinstatement then I was to resign." 53 The Commission finds, on balance, that the wording content of item 2, was that as stated by the employer and as set out in the Terms of Settlement: "That the employee be afforded the opportunity to resign ..." 54 The Commission's reasoning for the above, on balance, finding is based on the following observations. 55 Firstly, Mr Reid's claim of reinstatement (or re-employment) and thence resignation, created a legal problem for the employer. If the employer agreed to reinstatement, then Mr Reid would be "back on the books" as an employee. The employer would then ask Mr Reid to tender his resignation. 56 But there is uncertainty for the employer about this scenario as put by Mr Reid. Because Mr Reid was back on the books as an employee, does this mean he would be back on the worksite as an employee in order to tender his resignation? Where would he be on the worsite? 57 Would he just invite himself as an employee back on the worksite (in a park; at a tip)? 58 Apart from that uncertainty, why would the employer put the employee back on the books, as an employee, in circumstances where Mr Reid had been dismissed for assaulting an employee? 59 Secondly, there is the notification to the Commission by his legal representative, that the matter has settled. That correspondence is dated 5 February 2008. Again on 12 February 2008, the legal representative sent correspondence, enclosing the Terms of Settlement. In both pieces of correspondence, they say nothing about Mr Reid being able to be "reinstated." 60 The legal representative was Mr Roger Clisdell. Why would he inform the Commission that there was a settlement, when on Mr Reid's account, there was not? 61 The Commission viewed the New South Wales Law Almanac, which lists amongst other things the names of solicitors and the date of their admission as a solicitor. For Mr Clisdell, it was 19 December 1979. That makes for just under 30 years service as a solicitor. 62 During proceedings, it came to the attention of the Commission, that Mr Clisdell had been appointed recently as a Magistrate. To be given such an appointment would require that Mr Clisdell was, at least, competent in his role as a solicitor. It is difficult for this member of the Commission to conceive that he would be appointed "to the bench", if there had been a series of complaints about his performance and/or his conduct as a solicitor. 63 Accordingly, this member of the Commission is entitled to rely upon by Mr Clisdell's advice that the matter has settled and that Mr Reid agreed to item 2 as it appears in the Terms of Settlement: "That the employee be afforded the opportunity to resign..." 64 In drawing that conclusion about the wording of item 2, as advised in the Terms of Settlement, the Commission is aware that the word "employee" appears and that this creates an impression favourable to Mr Reid's account of the alleged agreement as to item 2. However, Mr Reid did not argue that way in the proceedings and the context of the evidence before the Commission was that "employee" meant "the Applicant." 65 Finally in my own decades of experience in the field of industrial relations, I have not come across the situation where an employer agrees to place the dismissed employee back on the books as an employee, in order, and only for the purpose, that the dismissed employee may then hand in a resignation letter. 66 For the reasoning set out above, the Commission finds on balance, that the employer had not agreed to a term of the settlement whereby Mr Reid would be reinstated and then subsequently would submit his resignation. 67 There was an issue raised by Mr Reid about item 4 which required that the terms of settlement could not be disclosed. He now had a difficulty with that because he was being approached in the street, he said, and being queried about a rumour that he had abused some former employee. It was quite clear from the evidence and the demeanour of Mr Reid, that he wanted his day in court in order to clear his name about the incident that led to his dismissal. He was emotional about this issue during proceedings and broke down twice whilst giving his final submissions to the Court. 68 The Commission has formed the view that Mr Reid agreed to the Terms of Settlement, including the non-disclosure of the Terms of Settlement. Belatedly he sees a problem with the non-disclosure because, he says, he has been approached on the street about his former employment. Be that as it may, he is bound by the non-disclosure term. 69 Despite what the Commission has just recorded, it may be the case that Mr Reid is under a misapprehension as to the extent of the non-disclosure. The non-disclosure prevents Mr Reid from disclosing that the employer afforded the opportunity to Mr Reid to resign. He can't disclose that the employer had agreed to convert a dismissal into a resignation. Mr Reid can, however, publicly advise that he resigned his employment. Costs Application 70 Mr Gardner made a costs application in his written Outline of Submissions on Notice of Motion, which made the only following reference to the costs claim: "The Applicant's own evidence clearly establishes that he was advised that he had no prospects of success and therefore costs are proven to arise pursuant to sub-sections 181(2)(a) and (b)." 71 The Commission advises firstly, that ss181(2)(a) and (b) do not ground a costs application in respect of an unfair dismissal application. The only sub-section available for a costs application in respect of an unfair dismissal application is s181(2)(c): Peden v Lake Macquarie Refrigeration Pty Limited [2004] NSWIRComm66 at para 14 (Wright J. President, Walton J. Vice President, Macdonald C), ("Peden's Case"). 72 Despite the foregoing, Mr Gardner gave submissions as to why the costs application was being made. He recited that Mr Reid had been told by Mr Clisdell that the unfair dismissal application had no prospects of success. He also said that the unfair dismissal application had been instituted vexatiously or without reasonable cause or for a purpose that is improper and an abuse of process. 73 Section 181(2)(c) sets out the only grounds for claiming costs under Part6 of Chapter 2 (unfair dismissals). Those grounds are where the Commission has the opinion that a party unreasonably failed to settle an unfair dismissal application or where the application was frivolous or vexatious. Given that Mr Gardner referred to the ground of "vexatious", the Commission will now deal with that ground as the basis for the costs claim. 74 The Full Bench Decision in Peden's Case, refers to a definition of "vexatious" in Attorney General v Wentworth (1998) 14 NSWLR481 per Roden J. That definition sets out three grounds for the testing of a claim that an application was vexatious. Those grounds are: a) Proceedings are vexatious if they are instituted with the intention of annoying or embarrassing the person against whom they are brought. b) They are vexatious if they are brought for collateral purposes, and not for the purpose of having the court adjudicate on the issues for which they give rise. c) They are also properly to be regarded as vexatious if, irrespective of a motive of a litigant they are so obviously untenable or manifestly groundless as to be utterly hopeless. 75 Mr Gardner did not take the Commission to the above case law and its three grounds. He did not define the terminologies contained in his submission: "instituted vexatiously"; "or (instituted) without reasonable cause" or "for a purpose that is improper and an abuse of process." The Commission was not taken to any evidence that came under any of these terminologies. All that the Commission had put to it was that Mr Clisdell had told Mr Reid that his unfair dismissal application had no prospects of success. 76 The Commission finds that that comment, without more, does not meet any of the grounds set out above for the test of "vexatious". What was meant by Mr Clisdell's comment? It is a one sentence hearsay comment offerred up to the Court but without any context. Accordingly for the above reasons, the Commission rejects the claim for costs against Mr Reid. CONCLUSION For the reasons set out in this Decision, the Commission finds, on balance, that Mr Reid agreed to settle his unfair dismissal application, as set out in the Terms of Settlement. Accordingly the Commission will make the appropriate orders that enforces those Terms of Settlement and dismisses the unfair dismissal application. The Commission has also determined that the costs application by the employer is to be rejected. ORDERS In consequence of the above I make the following orders pursuant to s174 of the Industrial Relations Act 1996. 1. The proceedings in IRC2179/07 were settled between the parties in Conciliation and as advised to my office by Mr Clisdell, the solicitor for Mr Reid, by correspondence of 5 and 12 February 2008. 2. The terms of that settlement were: a) That the Applicant discontinue these proceedings upon payment to him by the Respondent of a sum equivalent to twelve weeks salary at the salary he was earning prior to his dismissal. b) That the employee be afforded the opportunity to resign with effect from 28th November 2007. c) That the employer provide the employee with a statement of service indicating the period of service and the fact that his service ended with a resignation. d) Terms not to be disclosed. 3. In accordance with those terms of settlement, the Eurobodalla Shire Council will pay to Kerry Wilfred Reid within 21 days of the date of this decision twelve (12) week's pay. 4. The Eurobodalla Shire Council will notify the Commission when this payment has been made to Kerry Wildred Reid. 5. The Commission will close the file in IRC 2179/07 after receiving the notification on Order 4 from the Eurobodalla Shire Council. 6. The proceedings in IRC2179/07 are concluded on that basis and Mr Reid's unfair dismissal application is dismissed. A Macdonald Commissioner DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.