Collinson v Paxus Australia Pty Limited

76 NSWLR 603; [2009] NSWCA 407 Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45; [2002] HCA 5 South Sydney Council v Botanical Gardens [1999] NSWCA 478; (1999) 10 BPR 18,961 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315; [2003] HCA 57 Toll (FGCT) Pty Ltd v Alphafarm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 Turner v Windever [2005] NSWCA 73 Category: Procedural rulings Parties: Stephen Collinson (Plaintiff) Paxus Australia Pty Limited (First Defendant) Malvina Park Pty Ltd trading as Firths the Superannuation Lawyers (Second Defendant) Harmers Workplace Lawyers (Third Defendant) Stacks Goudkamp Pty Ltd (Fourth Defendant) David Campbell SC (Fifth Defendant) Richard Di Michiel (Sixth Defendant) Transport for New South Wales (First Cross Defendant) Career Corporation Pty Ltd (Second Cross Defendant) Representation: Counsel: A J McInerney SC / G Smith (Plaintiff) L King SC / D Kelly (First Defendant) W Fitzsimmons SC / H Grace (Second and Third Defendants) M A Jones SC / T Harris-Roxas (Fourth Defendant) M S White SC (Fifth Defendant) I Griscti (Sixth Defendant) K Andronos SC / N Hogan (First Cross Defendant) A Ahmad (Second Cross Defendant)

Solicitors: Lough & Wells (Plaintiff) Turks Legal (First Defendant) YPOL Lawyers (Second and Third Defendants) Sparke Helmore Lawyers (Fourth Defendant) DLA Piper Australia (Fifth Defendant) Colin Biggers & Paisley (Sixth Defendant) Norton Rose Fulbright Australia (First Cross Defendant) DLA Piper Australia (Second Cross Defendant) File Number(s): 2019/181140

Introduction

1. In 2015, Stephen Collinson (the plaintiff), then an employee of the first defendant (Paxus), provided services to Transport for NSW (Transport), in conjunction with services also provided to Transport by Career Corporation Pty Ltd (Career). The plaintiff alleged that, while performing those services, he was bullied by employees of Career. In 2015 and 2016, he commenced three sets of proceedings in the Fair Work Commission (FWC) against Paxus, Transport and Career seeking various orders and other relief (the FWC proceedings).
2. The FWC proceedings were ultimately resolved in May 2016. Two agreements were executed: a deed of release, to which the plaintiff, Paxus, Transport and Career were parties (the Deed of Release); and a further agreement between Paxus, Transport and Career (the Settlement Agreement).
3. On 1 June 2018, the plaintiff commenced proceedings in this Court against Transport and Career, seeking damages in negligence (the first Supreme Court proceedings). He was represented by Stacks Goudkamp Pty Ltd (Stacks) who instructed David Campbell SC and Richard Di Michiel of counsel to advise and appear on behalf of the plaintiff. Ultimately, the plaintiff was given leave to discontinue the first Supreme Court proceedings and, through his then solicitor, gave an undertaking not to sue Transport or Career.
4. By statement of claim filed on 11 June 2019, the plaintiff commenced the present proceedings for damages against Paxus, the second defendant (Firths) and the third defendant (Harmers).
5. The plaintiff alleges that Paxus negligently failed to provide him with a safe system of work when Paxus made the plaintiff's services available to Transport for the year from 5 January 2015 to 4 January 2016.
6. As against Firths and Harmers, the plaintiff alleges that they had negligently failed to advise him adequately in the settlement of the FWC proceedings. He alleges that they failed to advise him that, if he settled with Paxus, Transport and Career on the terms set out in the Deed of Release, he would lose valuable rights to sue Transport and Career for damages for negligence and that the amounts he received pursuant to the Deed of Release were inadequate to compensate him for the loss of these rights. The defences filed by Firths and Harmers to the plaintiff's claim include the allegation that the plaintiff was protected from the legal effect of the Deed of Release by an equity in his favour to apply to set aside the Deed of Release. On this basis, Firths and Harmer argue that the plaintiff suffered no loss as a consequence of entering into the Deed of Release.

Grant

1. Because of the parties' reliance on Grant, it is useful at the outset to summarise the decision and its effect.
2. In Grant, a company, John Grant & Sons Pty Ltd, claimed monies, which were particularised in the writ, said to be owing by an individual, Mr Grant from September 1948 to 2 June 1950. In his defence, Mr Grant pleaded a deed dated 5 December 1951 between several individuals, including Mr Grant, and the company. Clause 12 of the deed provided: "Each of the parties hereto hereby releases the other and others of them from all sums of money and accounts and civil actions proceedings claims and demands whatsoever which any of them at any time had or has at or prior to completion against the other for or by reason or in any respect of any act, cause, matter or thing and without limiting the generality thereof the H. C. Grant family releases the defendants in the hereinbefore recited litigation from all costs in respect of the said litigation."
3. In reply, the company alleged that, at the time it entered into the deed, it did not know that it had a cause of action against Mr Grant in respect of the money. The company also alleged (in the third replication) that it did not intend by its execution of the deed to release Mr Grant from the obligation to pay money and said that Mr Grant knew that he owed money to the company and did not inform the company of his indebtedness before the deed was executed and the company was unaware that Mr Grant intended that the deed should operate in respect of the monies claimed.
4. The plurality (Dixon CJ, Fullagar, Kitto and Taylor JJ) said at 129-130: "From the authorities which have already been cited it will be seen that equity proceeded upon the principle that a releasee must not use the general words of a release as a means of escaping the fulfilment of obligations falling outside the true purpose of the transaction as ascertained from the nature of the instrument and the surrounding circumstances including the state of knowledge of the respective parties concerning the existence, character and extent of the liability in question and the actual intention of the releasor. The facts stated in the third replication if true would show that the plaintiff company did not know of the defendant's liability it now seeks to enforce, did not intend to release it as part of the transaction and did not know of any intention on the part of the defendant that it should be released. The allegation that the defendant knew of the obligation but did not inform the plaintiff company may be introduced as bearing upon the unconscientiousness of the defendant's reliance upon the general words of the release, but it does not seem to be essential to the application of the governing principle of equity."

The factual background

1. It is convenient to set out the circumstances surrounding the Deed of Release and the Settlement Agreement in narrative form. It was common ground that only the objective circumstances were relevant to the legal construction of these two agreements. However, as Paxus and the plaintiff each relied on Grant at 123-124, the inquiry into the circumstances in which the agreements came to be executed is not confined to objective circumstances. For this reason, I propose to include in the narrative both objective and subjective circumstances and draw a distinction between the two when addressing the parties' submissions.
2. When construing the legal effect of these agreements, I shall confine myself to the objective circumstances. However, for the purposes of addressing what has been referred to as the third replication in Grant, I shall address the subjective circumstances, in so far as they form the basis for the parties' submissions on this aspect. For the reasons given below, I will not address the effect of these circumstances on the Deed of Release, since the revised Deed of Release separate question concerns only its legal construction.

The background to the Deed of Release and Settlement Agreement

1. The evidence relied on to establish the background to the Settlement Agreement, which included the background to the Deed of Release, comprised the following. Transport relied on affidavits of Alexandra Shields, a lawyer at Norton Rose Fulbright (NRF), who acted for Transport in the FWC proceedings, subject to the supervision of Sally Woodward.
2. Paxus relied on affidavits of Bianca Witkin and Jason Trevethick, Ms Witkin's supervisor. Ms Witkin was nominated as the contact person for Paxus in the FWC proceedings. Ms Witkin's email signature identified her as the "Director, HR and Contractor Operations" for Paxus, which was located in Docklands, in Melbourne, Victoria.
3. Neither Ms Shields, Ms Witkin, nor Mr Trevethick was cross-examined. Documents were also tendered, including those exhibited to the affidavits of Ms Shields and Ms Witkin.

The plaintiff's employment with Paxus

1. The plaintiff was employed by Paxus. Paxus contracted with Transport to provide the plaintiff's services (infrastructure network services) to Transport at Transport's premises for a fixed one-year term commencing 5 January 2015 at a salary of $1,200 per day. The contract between the plaintiff and Paxus provided: "2 OBLIGATIONS OF CONSULTANT [PLAINTIFF] 2.1 Consultant agrees: (a) to perform the Services at Client's [Transport's] address in Contract Details or such other address agreed to by Client and Consultant and notified to Paxus; (b) to devote the time, attention, skill and ability required to properly perform the Services and to provide the Services with all due care and skill and in a professional, competent and timely manner; …" [Emphasis in original.]
2. The plaintiff was required to work with two employees of Career who were also working at Transport's premises. The plaintiff alleges that he was subject to bullying while at the premises, including by Career's employees. In or around June 2015, the plaintiff went on a period of sick leave which he alleged was as a result of the bullying to which he had been subjected.

The commencement of proceedings in the FWC

1. On about 15 July 2015, the plaintiff filed an application for a "stop bullying" order pursuant to s 789FC of the Fair Work Act 2009 (Cth) against Transport, Career and Paxus in the FWC in proceedings AB2015/424.

The plaintiff's workers compensation claim

1. On 27 August 2015, the plaintiff lodged a claim for workers compensation pursuant to the Workers Compensation Act 1987 (NSW) (the 1987 Act).

The plaintiff's claim for general protections in the FWC

1. On about 4 December 2015, the plaintiff filed a general protections application in the FWC, proceedings C2015/7511. The FWC determined that the stop bullying application and the general protection application would be heard together.

The settlement of the FWC proceedings

1. On 9 December 2015, Andrew Gay (on behalf of the plaintiff), Ms Witkin (on behalf of Paxus), Ms Shields (on behalf of Transport) and Darren McConnell (on behalf of Career) attended a Conciliation Conference in the FWC. Jonathan Brine and Ray Boulos, employees of Career who were alleged to have been either involved in the bullying or aware of its occurrence, were also in attendance. Ms Witkin and Mr Gay attended by telephone. The conference, which lasted all day but did not resolve the dispute, was adjourned to 18 December 2015.
2. On 18 December 2015, the same parties were represented by the same people as they had been on 9 December 2015. Once again, Ms Witkin and Mr Gay attended by telephone. During the day, Ms Shields spoke separately to Ms Witkin about the possibility of Paxus, Transport and Career making a joint offer to the plaintiff. By the end of 18 December 2015, an offer of settlement was made by Paxus, Transport and Career. The conference was adjourned to permit the plaintiff to consider the offer.
3. On 21 December 2015, Mr Gay, on behalf of the plaintiff, indicated that he accepted the offer subject to the execution of a deed. Paxus, Transport and Career also agreed on terms between themselves in a document entitled Settlement Agreement, which was ultimately executed in May 2016. The form of the Settlement Agreement did not change. There were, however, several iterations of the Deed of Release, which will be considered below.

The preparation of the Deed of Release

1. Both the Deed of Release (and the various drafts) and the Settlement Agreement were prepared by Ms Shields. She deposed in her affidavit of 28 February 2022 that her subjective intention in drafting these documents was as follows: "In preparing these documents it was always my objective that, in accordance with my instructions, Transport would be protected from any future claim that may arise out of [the plaintiff]'s period of service at Transport, including the specific allegations of bullying he had made against the employees of Career, and that all liability as between Transport and the other parties, including Paxus and Career, would be finalised as a result of the parties' entry into the Deed of Release and the Settlement Agreement."

The first draft of the Deed of Release

1. On 23 December 2015, Ms Shields circulated the first draft of the Deed of Release to Ms Witkin and Mr McConnell with a view to obtaining their agreement to it before it was provide to Mr Gay for the plaintiff to consider. She also confirmed that she would not provide the Settlement Agreement to the plaintiff since this was a matter between Paxus, Career and Transport. Ms Shields said: "In relation to the payment to [the plaintiff], we will separately forward to you an agreement that is to sit between [Transport, Paxus and Career] which sets out that Paxus will make the payment to [the plaintiff] and that [Transport and Career] will make payments to Paxus in contribution of the payments to be made to [the plaintiff]."
2. By separate email, also sent on 23 December 2015, Ms Shields forwarded to Ms Witkin and Mr McConnell the draft Settlement Agreement and invited their comments. As the form of the Settlement Agreement did not change, its terms will be addressed later in these reasons, rather than in the narrative leading up to its execution.
3. The first draft of the Deed of Release defined "Claim" in cl 1.1(3) as follows: "Claim means any present or future, actual or contingent, claim, cause of action, complaint, liability, cost or expense that any person (whether or not a Party to the Proceeding) has or might have, in connection with or arising in any way from: (a) the Complaints; (b) the Investigation; (c) the facts or matters referred to or alleged in either the Bullying Proceedings or the General Protections Proceedings; (d) Mr Collinson's employment with Paxus; (e) Mr Collinson's engagement to perform the Services for [Transport] under the Contract; (f) any Entitlements arising out of Mr Collinson's employment with Paxus or the Contract; or (g) the expiry of the Contract; whether or not the facts, matters or circumstances giving rise to that claim, cause of action, complaint, liability, cost or expense are known to that person or to any other person at the date of this Deed. A Claim: (h) includes, to the extent permitted by law, any Claim Mr Collinson may have against Paxus, [Transport] or a statutory workers' compensation authority for damages for injuries sustained by Mr Collinson during the Contract; but (i) does not include any claim for, or right to seek, statutory workers' compensation or statutory superannuation contributions;" [Emphasis in italics added to indicate the portion of the definition which was subsequently changed as a result of negotiation.]

Correspondence re proposed second draft of Deed of Release and further drafts

1. By letter dated 26 February 2016, Mr Lorraine of Harmers wrote to NRF and suggested amendments to the Deed of Release. These included that the definition of "Claim" in cl 1.1(3) be amended to add the following carve-out: "A Claim: (h) does not include any claim Mr Collinson may have for Work Injury Damages under the workers compensation legislation and the parties acknowledge and agree that no part of the Settlement Amount represents damages in respect of an injury arising out of, or in the course of, or to which Mr Collinson's employment may have been a substantial contributing factor; (i) does not include any claim for, or right to seek, statutory workers' compensation or statutory superannuation contributions; and (j) does not include assisting any Regulatory Body with its claims or investigations."
2. Mr Lorraine also sought that the Settlement Amount (as defined) "be paid as a capital amount of general damages, as compensation for hurt, humiliation and dislocation of life." He said that the amount, if described in this way, would not be taxable.
3. On 1 March 2016, Ms Shields forwarded Mr Lorraine's letter of 26 February 2016 to persons at Transport (her client), Paxus and Career. In her covering email she said in part: 1. They want the payment to be made as a capital payment for general damages for hurt and humiliation. This means that it is a payment that is made without the deduction of tax. This is a matter for Paxus to determine whether it is comfortable to make the payment on this basis. We would therefore advise that you seek independent taxation advice as to whether Paxus is comfortable to make the payment without the deduction of tax. 2. They have changed the definition of claim to the following: A claim "does not include any claim Mr Collinson may have for Work Injury Damages under the workers compensation legislation and the parties acknowledge and agree that no part of the Settlement Amount represents damages in respect of an injury arising out of, or in the course of, or to which Mr Collinson's employment may have been a substantial contributing factor" It is our view that it is inconsistent to say that the payment is damages for hurt and humiliation for which his employer is not required to deduct tax but at the same time suggest that 'the parties acknowledge and agree that no part of the Settlement Amount represents damages in respect of an injury arising out of, or in the course of, or to which Mr Collinson's employment may have been a substantial contributing factor". Whilst we take no issue with the first part of the amendment, we propose that the second part should be deleted. … We would be happy to discuss the proposed changes to the Deed with you further or, subject to your additional comments, respond to Harmers on the basis set out above." [Emphasis in original.]

The Deed of Release

1. The Deed of Release was executed in May 2016 and provided for payment to the plaintiff and a release of his claims against the other parties. There was a carve-out for workers compensations claims and work injury damages against Paxus.
2. The recitals to the Deed of Release provided as follows: "Introduction A [Transport] engages Paxus as a contractor to provide individuals to perform services for [Transport] as required. B Mr Collinson was employed by Paxus to provide services to [Transport] as a Senior Network Architect on [Transport]'s 'Next Generation Infrastructure Services' (NGIS) Project (Services) under a contract for services for the period 5 January 2015 to 4 January 2016 (Contract). C Mr Collinson made a series of complaints against members of the NGIS Project, including employees of the Transport Service of New South Wales who perform services for [Transport] and employees of [Career], namely Mr Brine and Mr Boulos, who were also engaged as contractors to provide services on the NGIS Project (Complaints). D [Transport] engaged an independent third party investigator to conduct an investigation into the Complaints (Investigation). E On 7 August 2015 Mr Collinson commenced a period of leave for medical reasons and no longer performed the Services under the Contract. F The Contract will expire on 4 January 2016. G Mr Collinson has commenced the Bullying Proceedings against [Transport], Paxus, [Career], Mr Brine and Mr Boulos. H Mr Collinson has subsequently commenced the General Protections Proceedings against [Transport]. I In order to avoid further cost and inconvenience and with no admission of liability, the Parties settled the Bullying Proceedings, the General Protections Proceedings and all other Claims on the terms in this Deed." [Emphasis in original.]
3. The term "Claim" was defined in cl 1.1(3) of the Deed of Release as follows: "Claim means any present or future, actual or contingent, claim, cause of action, complaint, liability, cost or expense that any person (whether or not a Party to the Proceeding) has or might have, in connection with or arising in any way from: (a) the Complaints; (b) the investigation; (c) the facts or matters referred to or alleged in either the Bullying Proceedings or the General Protections Proceedings; (d) Mr Collinson's employment with Paxus; (e) Mr Collinson's engagement to perform the Services for [Transport] under the Contract; (f) any Entitlements arising out of Mr Collinson's employment with Paxus or the Contract; or (g) the expiry of the Contract whether or not the facts, matters or circumstances giving rise to that claim, cause of action, complaint, liability, cost or expense are known to that person or to any other person at the date of this Deed. A Claim does not include: (h) any claim Mr Collinson may have for Work Injury Damages under the workers compensation legislation; and (I) any claim for, or right to seek, statutory workers' compensation or statutory superannuation contributions." [Emphasis in original.]

The Settlement Agreement

1. The recitals to the Settlement Agreement provide: "Introduction A [Transport] engages Paxus and [Career] separately as contractors to provide individuals to perform services for [Transport] as required in accordance with a contract for services dated from 06.03.2013 respectively (Contracts). B Mr Stephen Collinson was employed by Paxus on a casual basis to provide services to [Transport] under a contract for services for the period 5 January 2015 to 4 January 2016 (Collinson Contract). C Mr Collinson, Paxus, [Career] and [Transport] have entered into a Deed of Release dated 03.05.2016 (Collinson Deed). D The Collinson Deed requires financial payments to be made to Mr Collinson from Paxus. E [Transport] and [Career] have agreed to contribute to the payments that Paxus is required to make under the Collinson Deed. F The Parties to this Agreement agree that those contribution payments will be made in accordance with this Agreement." [Emphasis in original.]
2. The term "Claim" is defined in the Settlement Agreement in cl 1.1(3) as follows: "Claim includes any action, application, arbitration, cause of action, complaint, cost, expense, debt due, demand, determination, inquiry, judgment and verdict" [Emphasis in original.]
3. Clause 2 provides: 2 Settlement with Mr Collinson 2.1 In accordance with the Collinson Deed, the Parties have agreed that Paxus will: (1) pay to Mr Collinson an ex gratia amount of $50,339.52 (Settlement Amount); and (2) reimburse Mr Collinson for medical expenses he incurred to a maximum amount of $8,000 (Medical Expenses) and legal expenses he incurred to a maximum amount of $7,000 (Legal Expenses), on the basis that he provides the appropriate invoices to substantiate those expenses. 2.2 The Parties have agreed that: (1) Paxus will pay 25% of the Settlement Amount and the reimbursement for Medical Expenses and Legal Expenses, being a total of $12,584.88 in respect of the Settlement Amount (Paxus Settlement Amount) and $3,750 in respect of the reimbursement for Medical Expenses and Legal Expenses (Paxus Reimbursement Amount); (2) [Transport] will pay 75% of the Settlement Amount, less $1,000, and 75% of the reimbursement for Medical Expenses and Legal Expenses, being a total of $36,754.64 in respect of the Settlement Amount ([Transport] Settlement Amount) and $11,250 in respect of the reimbursement for Medical Expenses and Legal Expenses ([Transport] Reimbursement Amount); and (3) [Career] will pay $1,000 towards the Settlement Amount. 2.3 The Parties have agreed that the Settlement Amount and reimbursement for Medical Expenses and Legal Expenses will be paid in full to Mr Collinson by Paxus, subject to clause 3 of this Agreement." [Emphasis in original.]

The position of Paxus

1. Ms Witkin's unchallenged evidence was that she neither sought nor obtained legal advice about the effect of the Deed of Release or the Settlement Agreement. Ms Witkin did not give evidence that she informed NRF of that fact or her understanding.
2. In a further affidavit dated 22 April 2021, Ms Witkin deposed: "2 Prior to the agreement between [Paxus], [Transport] and [Career] being reached I had no notice of any intended claim by [the plaintiff] against any of those entities for damages based on negligence and no potential claim of that kind was mentioned to me. 3 I did not have any understanding of a work injury damages claim or [that] it was a claim that depended on the negligence of Paxus. 4 I assumed that any reference to workers compensation was simply a reference to any statutory non fault based workers compensation liability that [the plaintiff] may have against Paxus."
3. In a further affidavit of 4 April 2022, Ms Witkin deposed: "2 I have no legal training or experience and never have had. In particular I have no training or experience in the interpretation and construction of legal documents or in relation to personal injuries claims for damages in negligence or otherwise. 3 I conducted and concluded the negotiations which resulted in the execution of the Deed of Release and Settlement Agreement and once they were finalised I arranged for my superior, Mr Trevethick to sign the documents. He at no stage told me that he had opinions of his own about them [sic] documents and he did not express a view to me about what he thought was the meaning and effect of the documents."
4. Mr Trevethick, in an affidavit of 4 April 2022, deposed that in 2015 he was the Managing Director of Paxus and was Ms Witkin's direct supervisor. His only involvement prior to settlement was to discuss the respective contributions to be made to the settlement sum to be paid to the plaintiff. He also deposed: "12 I did not know about any other actual or potential claims arising from the alleged bullying and it was never my intention to deal with them in any way. Specifically, I was not aware of any potential workers compensation issues and, at that time, I did not have an intimate working knowledge of workers compensation issues. 13 I relied on what Ms Witkin told me as to the nature of the agreements and although I would have read the documents before I signed them on behalf of [Paxus] as the responsible company person senior to her, I have no recollection of ever forming an independent opinion about them."

Whether the separate questions can be determined in advance of the determination of whether the plaintiff is entitled to equitable relief from the operation and effect of the Deed of Release

1. The Deed of Release separate question was formulated by reference to the second further amended statement of claim (which joined Stacks, Mr Campbell and Mr Di Michiel as defendants). As referred to above, among other purposes, the separate determination of this question was expected to determine whether Firths and Harmers, on the one hand, or Stacks, Mr Campbell and Mr Di Michiel on the other, were the appropriate defendants to the plaintiff's claim.
2. However, shortly before the hearing of the separate question (which was listed on 5 and 6 April 2022), the plaintiff circulated a proposed third further amended statement of claim, which substantially changed the basis of his claim. As a consequence, the parties agreed that the Deed of Release separate question could not be determined finally, if the separate question was construed as including the plaintiff's proposed new pleading of a right to equitable relief to resist the legal operation and effect of the terms of the Deed of Release. As referred to above this led to the revised Deed of Release separate question as follows "Did the Deed of Release entered into in May 2016 between parties including the plaintiff, Transport and Career, on its proper construction, have the effect of extinguishing any rights the plaintiff may have had to bring proceedings against Transport and/or Career for damages for psychiatric injury sustained due to bullying and verbal abuse which the plaintiff alleges he experienced at his place of work while allegedly subject to the control of Transport and/or Career?"
3. I understood it to be accepted that the answer to this question would not determine whether the plaintiff could maintain a claim against Firths and Harmers or Stacks, Mr Campbell and Mr Di Michiel. However, it was common ground that the determination of this question would at least resolve one legal issue in the case which would bear on the liability of the respective lawyers. If the revised question were answered no, then the plaintiff's claim against Firths and Harmers may fall away, but if the revised question were answered yes, the plaintiff may nonetheless proceed against all five legal defendants.
4. Transport and Career submitted that the Settlement Agreement separate questions could be determined even if only the revised Deed of Release question was determined. However, Paxus, for whom Mr King SC appeared with Mr Kelly, submitted that the Settlement Agreement and the Deed of Release were cognate agreements and that the Settlement Agreement separate questions ought not be determined until not only the legal construction of the Deed of Release had been determined but also the availability of equitable relief to the plaintiff in respect of the Deed of Release.

The Deed of Release separate question

1. The parties who contend that the revised Deed of Release separate question ought be answered "yes" are the plaintiff, Firths and Harmers, Mr Campbell, Stacks, Mr Di Michiel, Transport and Career. Paxus contended that it should be answered "no".

Paxus' submissions on the interpretation of the Deed of Release

1. Mr King emphasised the relationship between the Settlement Agreement and the Deed of Release. He submitted in writing that: "The Settlement Agreement must be read congruently with the Deed of Release, as was the intention of Transport, Paxus and Career. If the Plaintiff is entitled to pursue a claim for work injury damages against Paxus, it is entitled to pursue a claim for contribution against Transport and Career."
2. Mr King's primary submission was, however, that the Deed of Release, properly construed did not have the effect of releasing Career and Transport from their potential liability to the plaintiff in negligence. Mr King submitted that the only thing that was "on the table" at the time of negotiating and signing the Deed of Release was the FWC proceedings. He argued that it would be erroneous to construe the release as covering the plaintiff's potentially valuable rights to recover common law damages against Transport and Career in circumstances where the consideration he received in return for the settlement and release was disproportionately small relative to the potential benefit if such claims were prosecuted.
3. Mr King further submitted that it would be anomalous for the plaintiff to retain the rights to claim workers compensation payments and to sue Paxus for work injury damages (which, being "modified common law damages" would be confined to past and future economic loss and subject to a threshold for permanent impairment: ss 151G and 151H of the 1987 Act) in circumstances where he released Career and Transport from potentially more valuable rights to common law damages. Mr King submitted that, in light of these anomalies in the Deed of Release, it should be construed narrowly so as to release Transport and Career only from their potential liability for the various claims the plaintiff made against them in the FWC proceedings.
4. Mr King submitted that the Settlement Agreement could be used as an aid to construction of the Deed of Release and vice versa. He submitted that, properly understood, the Settlement Agreement was intended to create a symmetry between the three parties to it: namely, that none could sue either of the others in respect of any claims. He submitted that this symmetry only made sense if the plaintiff could sue none of them for any amount in respect of which the party sued could obtain contribution from the others. Thus, he contended that the Deed of Release ought be read as releasing Paxus, Transport and Career only in respect of claims the plaintiff had brought (or could, potentially, bring) in the FWC. He submitted that the carve-out in the definition of "Claim" in the Deed of Release, which provided specifically for the plaintiff to be entitled to sue Paxus for workers compensation or work injury damages, was, in substance, for the avoidance of doubt and that it did not follow that there was any release in respect of claims for common law damages against Transport or Career.

Consideration

1. The process of construction commences with the actual words of an agreement. Recitals in a deed, which form part of the agreement, can be considered as part of the surrounding circumstances, even in the absence of ambiguity: Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407 at [29] (Allsop P); [90], [379]-[390] (Campbell JA, Giles JA agreeing).
2. The recitals in the Deed of Release refer, in C, G and H to the FWC proceedings. Recital I, however, has a much broader range and provides, as set out above: "I In order to avoid further cost and inconvenience and with no admission of liability, the Parties settled the Bullying Proceedings, the General Protections Proceedings and all other Claims on the terms in this Deed." [Emphasis added.]
3. The definition of "Claim" is at once broad and narrow. It is defined as meaning "any present or future, actual or contingent, claim, cause of action, complaint, liability, cost or expense that any person (whether or not a Party to the Proceeding) has or might have". However, the claim is relevantly limited because it must be: "in connection with or arising in any way from: (a) the Complaints; (b) the Investigation; (c) the facts or matters referred to or alleged in either the Bullying Proceedings or the General Protections Proceedings; (d) Mr Collinson's employment with Paxus; (e) Mr Collinson's engagement to perform the Services for [Transport] under the Contract; (f) any Entitlements arising out of Mr Collinson's employment with Paxus or the Contract; or (g) the expiry of the Contract; whether or not the facts, matters or circumstances giving rise to that claim, cause of action, complaint, liability, cost or expense are known to that person or to any other person at the date of this Deed." [Emphasis added.]
4. Thus, to be a claim within the meaning of the definition, the claim must have a connection with the matters listed in the clause: that is, the claim must arise from one or more of these matters. The definition of "Claim" includes a negative aspect: that is, it excludes from the definition of "Claim", the following: "(h) any claim Mr Collinson may have for Work Injury Damages under the workers compensation legislation; and; (i) any claim for, or right to seek, statutory workers' compensation or statutory superannuation contributions."
5. The effect of the carve-out in the definition is that "Work Injury Damages under the workers compensation legislation" and "statutory workers' compensation or statutory superannuation contributions" are excluded from the definition (within which they would otherwise fall). The carve-out in (i) was superfluous as s 234 of the Workplace Injury Management Act 1998 (NSW) (the 1998 Act) provides that the 1998 Act and the 1987 Act "apply despite any contract to the contrary." However, the carve-out in (h) had the important effect of excepting from the release any claim the plaintiff might have for work injury damages against Paxus (being a claim under Part 5 of the 1987 Act and Ch 7 of the 1998 Act).

The Settlement Agreement separate questions

1. It was common ground that the Settlement Agreement separate questions required a determination of the legal construction of the Settlement Agreement, as well as whether Paxus has an equitable right to be relieved of the consequence of its legal construction (if it is found to have the legal effect of releasing Transport and Career from, and barring, Paxus' claim for contribution in the first cross-claim).
2. The issues between the parties, which are to be determined by the answers to the Settlement Agreement separate questions, are apparent from the pleadings to the first cross-claim. In the first cross-claim, Paxus relevantly claims contribution from Transport and Career in respect of any damages for which Paxus becomes liable to pay the plaintiff. In their defences, Transport and Career have pleaded cll 4 and 5 of the Settlement Agreement. Paxus has filed a reply in which it alleged, first, that, on its proper construction, the Settlement Agreement does not constitute a release from, or bar to, Paxus' cross-claim; and, in the alternative, that, in all the circumstances, it would be unconscionable for Transport and Career to rely on the releases and/or the bars in the Settlement Agreement.

The parties' submissions

1. Although greater detail appears from the particulars to the reply to the defences to the first cross-claim, Mr King's principal submission was that, as a matter of construction, the broad definition of "Claims" in cl 1.3 of the Settlement Agreement, did not include liability for personal injury, as alleged in the first cross-claim and that the Settlement Agreement was limited to the FWC claims and their resolution. In support of this submission, he contended as follows: 1. The Deed of Release and the Settlement Agreement were entered into for the purposes of resolving the FWC proceedings; 2. The only claims which involved all three of Paxus, Transport and Career, were the plaintiff's FWC claims; 3. The monetary amounts involved in the settlement with the plaintiff (the parties' respective contributions to which were governed by the Settlement Agreement) were modest and "incompatible with the likely quantum of any personal injury claim for damages"; and 4. An objective apportionment of liability for fault would attribute the bulk of the liability to Transport and Career.
2. Further, and in the alternative, Mr King submitted that, if the Settlement Agreement was construed as a mutual release of claims in negligence, equity would refuse to permit Transport and Career to rely on such a release because such reliance would be unconscionable in the following circumstances: 1. The parties, including Paxus, did not contemplate that result when the settlement was reached in principle in December 2015; 2. Paxus' exposure to a claim by the plaintiff for damages arose solely because of an amendment proposed by the plaintiff to the definition of "Claim" in the Deed of Release to exclude work injury damages; 3. Any release in the Settlement Agreement was intended to apply in conjunction, and congruently, with the release in the Deed of Release: that is, that Transport, Paxus and Career could not make any claims for contribution against each other but only when the plaintiff could not make any claim for damages against any of them; 4. The settlement amount and contributions were based on each of Transport, Paxus and Career having the same exposure to any claim by the plaintiff; 5. Transport was negotiating on behalf of Paxus with respect to the Deed of Release which meant that Paxus was not in a position to gauge the plaintiff's intentions with respect to negligence claims; 6. Transport and Career were aware, as was the case, that Paxus was not legally represented in the FWC proceedings or in the negotiations between the parties; 7. Ms Witkin, Paxus' representative, had no understanding of what "work injury damages" meant other than that it formed part of the preserved right to claim workers compensation under the workers compensation legislation and Transport and Career had no basis for thinking that she had any greater understanding or that she was legally qualified; 8. As Paxus was based in Victoria, it could not be expected to understand the value of a claim pursuant to the Civil Liability Act 2002 (NSW) and what heads of damage would be recoverable if such a claim were brought; 9. Paxus was entitled to assume that it did not need legal advice unless and until NRF advised it that it did; 10. Although Ms Shields recommended that Ms Witkin obtain independent taxation advice on a comparatively minor matter, she did not recommend that Ms Witkin obtain independent legal advice, including with respect to the proposed amendment to exclude from the definition of "Claim" in the Deed of Release any claim for work injury damages; 11. The releases and bars in the Settlement Agreement were wider than necessary to protect Transport or Career, having regard to the genesis of the Settlement Agreement; 12. At no time did Transport or Career draw to Paxus' attention, the meaning and effect of releases in the Settlement Agreement, having regard to the amendments to the Deed of Release; 13. Transport is obliged to comply with the Model Litigant Policy; and 14. Because Career got the benefit of Transport's conduct, it would be unconscionable for it to rely on Paxus' release in its favour under the Settlement Agreement.

The legal construction of the Settlement Agreement

1. As referred to above, the wording of the Settlement Agreement did not change. A draft was circulated by Ms Shields in December 2015 and Paxus and Career indicated that they were content with its terms. It was not executed until about May 2016. Neither Paxus nor Career indicated that its terms were no longer acceptable. It was executed without material amendment.
2. Ultimately, the terms of the Deed of Release, in the context of the objective circumstances, govern the legal relationship between the parties. The parties' common intention is to be assessed by reference to what a reasonable person would understand by the language chosen by the parties: Toll (FGCT) Pty Ltd v Alphafarm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). That the plaintiff or Paxus might have done a better deal does not make the bargain they struck any less enforceable or its terms any less susceptible of interpretation by reference to the plain meaning of the Deed of Release. Further, no assumption can be made about the value of the plaintiff's common law right to damages which requires proof on the balance of probabilities of damage caused by negligence whereas the claim for workers compensation payments requires only that there be a work injury which causes incapacity for work.
3. The common intention of the parties to the Settlement Agreement was that, when Transport and Career paid Paxus their contributions to the Settlement Amount, Paxus would pay the Settlement Amount to the plaintiff and Paxus, Transport and Career would release each other from any "Claim" the party may have against any other party arising out of any of the matters listed in (1)-(3) of cl 4.1. The drafting convention used in the Settlement Agreement (to define "Claim" extremely broadly but to limit the release to certain subject matters) is different from that used in the Deed of Release (which defines "Claim" by reference to subject matter and provides for a release in general terms) but it is nonetheless effective.
4. The cause of action alleged by Paxus in the first cross-claim against Transport and Career arises exclusively from the events that occurred between January 2015 and January 2016 while the plaintiff, as an employee of Paxus, provided services to Transport and had contact with employees from Career. As a matter of legal construction, it falls squarely within cl 4.1 of the release, which is circumscribed by reference to subject matter, in the Settlement Agreement. Clause 4.2 prohibits the commencement and maintenance of such proceedings. I do not regard the Settlement Agreement as ambiguous, having regard to its terms, the terms of the Deed of Release and the other objective circumstances. In my view, it clearly releases Transport and Career from liability for the claim presently sought to be prosecuted by Paxus in the first cross-claim. I am not persuaded that there is any "constructional choice": Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 at [76] (Leeming JA, Gleeson JA agreeing).

Whether enforcement of the Settlement Agreement by Transport and Career is unconscionable in the circumstances

1. The further question arises whether the application of equitable principles, including those considered in Grant, produce the result that Transport and Career are not entitled to rely on their strict legal rights under the Settlement Agreement. This inquiry requires consideration of the evidence summarised above as to the way in which the terms of the Deed of Release came about and their interaction, if any, with the Settlement Agreement.
2. I am not persuaded that the terms of the Deed of Release attract the principles in Grant, because the effect of the deed is that the releases are limited to claims arising from the plaintiff's employment with Paxus pursuant to which he provided services to Transport and had contact with employees of Career. However, as the primary judge, I am obliged to make findings on all relevant issues. Accordingly, I will address Mr King's alternative argument in the reasons set out below.
3. As summarised above, Mr King submitted, on behalf of Paxus, that, it would be unconscionable for Transport and Career to rely on the release in the Settlement Agreement and that equity would restrain such reliance. In order to address this argument, it is necessary to turn to the matters raised by Mr King which are listed above, which will be considered individually and cumulatively.

The parties did not contemplate the result when the settlement was reached

1. The evidence summarised above demonstrates that the operative effect of the Settlement Agreement changed during the period from December 2015 until its execution in about May 2016, although its terms did not.
2. Initially, the only matter to be excepted from the release granted by the plaintiff was the plaintiff's right to claim workers compensation payments. In circumstances where an employer becomes liable to pay workers compensation payments to an employee, the employer has, subject to a release, a right to recover such payments from a negligent tort-feasor pursuant to the statutory indemnity in s 151Z(1)(d) of the 1987 Act. It would appear that Paxus was prepared to relinquish any potential right to indemnity which it had against Transport or Career when it agreed to the terms of the Settlement Agreement in December 2015.
3. Subsequently, the plaintiff sought to have his right to claim work injury damages (being common law damages in an action for negligence against Paxus) excepted from the definition of "Claim". Objectively, it can be inferred from Paxus' agreement to this course that it was prepared to accept that risk (and not seek to off-set it by proposing that the Deed of Release and Settlement Agreement be amended to allow the plaintiff to sue Transport and Career in negligence and allow Paxus to seek contribution from Transport and Career, if it was sued, pursuant to s 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW)).
4. Thus, although it is true that the parties may not have contemplated that the plaintiff would still be permitted to bring an action against Paxus for work injury damages when they settled the FWC proceedings in 2015 in principle, the settlement was expressed to be subject to a deed, the terms of which remained to be drafted and negotiated in order to reach agreement.

The genesis of Paxus' exposure to a claim for work injury damages

1. The narrative set out above indicates that, as Mr King submitted, the reason why the plaintiff's right to sue Paxus for work injury damages was excepted from the definition of "Claim" in the Deed of Release was that the plaintiff insisted on it.

The role played by NRF

1. Mr King submitted that Transport, through its solicitors, NRF, was negotiating with the plaintiff on its own behalf and also on behalf of Paxus. The narrative referred to above shows that NRF acted as the conduit between Transport (for which it acted), Paxus and Career (for which it did not act) on the one hand and the plaintiff on the other. NRF made it clear to the plaintiff's solicitors (and to Career and Paxus) that it did not act for Paxus or Career. NRF forwarded correspondence with the plaintiff to Paxus and Career and reverted to them whenever required to formulate a response to the plaintiff.
2. In matters which solely concerned Paxus, such as the wording of the carve-out in the definition of "Claim" in the Deed of Release, NRF told Ms Witkin that Ms Witkin would have to let NRF know of Paxus' position so that NRF (Ms Shields) could inform the plaintiff. I do not accept that NRF assumed any duty or responsibility to Paxus to provide it with legal advice or to tell Ms Witkin to obtain legal advice.
3. Paxus presented as a sophisticated labour-hire company, based in Melbourne but which also operated in Sydney, which had an "HR and Contractor Operations" Department of which Ms Witkin was the Director. There was nothing about Paxus which could have put NRF (or through them, Transport or Career) on notice that Ms Witkin did not appreciate the meaning of the terms which were used (see below). Ms Witkin had informed NRF that she was proposing to communicate with Paxus' workers compensation insurer, which indicated to NRF that Paxus had access to (or the capacity to access) external expert sources. NRF had neither a right nor a duty to interrogate Ms Witkin as to her legal expertise or whether she was seeking legal, or other, advice externally, in-house or not at all. The negotiations concerning the Deed of Release occurred over a period of about six months. Thus, each party, including Paxus, had considerable opportunity to seek and obtain legal advice about the terms of the Deed of Release, as they evolved, and the effect of the Settlement Agreement.
4. I do not regard the line in Ms Witkin's email to Ms Shields of 3 February 2016, "I continue to heed your counsel and advice in this matter", as displacing this conclusion. It was said in the context of the further application which the plaintiff had filed in the FWC a few days earlier and Ms Shields statement in her email, sent earlier on 3 February 2016, that the Deed would cover "all proceedings against the parties, both existing and future", including the most recent of the plaintiff's applications in the FWC. In substance, Ms Shields had communicated to Ms Witkin that they should include the most recent proceedings in the Deed of Release and Ms Witkin was communicating her agreement with this approach.

Ms Witkin's ignorance of the meaning of "work injury damages"

1. It is plain from Ms Witkin's unchallenged evidence that, despite her apparent expertise in the FWC proceedings, she did not understand that there was a distinction between workers compensation payments and work injury damages and, indeed, did not understand what work injury damages were. Thus, I infer, she had no appreciation of the difference it would make to Paxus that the plaintiff would be permitted to sue Paxus for work injury damages.
2. It was not suggested that her ignorance was ever communicated to Transport or NRF, either expressly or by implication. The assessment by one party of the risk of proceedings being brought against it will turn on a number of factors. I am not persuaded that the circumstances were such that NRF could reasonably have appreciated that Paxus did not understand a fundamental distinction between workers compensation payments on the one hand and work injury damages on the other. Further, the fact that Paxus obtained tax advice from Deloitte would tend to indicate that it was in a position to pay for expert professional advice, as and when required.

The assumed symmetry between the Deed of Release and the Settlement Agreement

1. Mr King submitted that Transport, Career and Paxus contracted on the footing that the plaintiff would not be able to make any claims for damages against any of them (by reason of the Deed of Release in its original form) and that, accordingly, they would not be able to make claims against each other (as reflected in the terms of the Settlement Agreement). He submitted that this foundation was displaced when the carve-out for work injury damages was inserted into the definition of "Claim" in the Deed of Release and that the Settlement Agreement ought be adjusted accordingly to preserve the symmetry of exposure.
2. I am not persuaded that the evidentiary foundation supports this submission. The negotiations regarding the Deed of Release took place over a period of about six months. There was ample time for each party to consider its position under the Deed of Release and the effect any changes to that deed would have on the arrangement provided for under the Settlement Agreement. That one party, Paxus, failed to appreciate that its exposure had increased (by the larger carve-out in the definition of "Claim" in the Deed of Release) but that it would, if it signed the Settlement Agreement in its original form, contract out of its capacity to seek recompense from Transport and Career, does not make it unconscionable, without more, for the other parties not to point out Paxus' error, even had they appreciated that Paxus was labouring under a misapprehension.

Transport's status as a model litigant

1. Mr King included this matter in his written submissions but did not develop it in oral argument. Government instrumentalities, including Transport, are required to act as "model litigants". It does not follow from this that Transport is not entitled to act in its own interests in commercial transactions.

The matters regarded as a whole

1. I am not persuaded that any of the matters raised by Mr King, taken individually or cumulatively, amount to unconscionability, or are sufficient to bring the present case within Grant or cases concerning special disadvantage. The releases in the Deed of Release and the Settlement Agreement are factually circumscribed and connected, in terms of subject matter and time, with the matters raised in the FWC proceedings. Even if Ms Witkin herself did not envisage that the plaintiff might bring a claim for damages in negligence, the Deed of Release and Settlement Agreement plainly, in express terms, contemplated that possibility.
2. I understood Mr King to submit, in effect, that the unconscionability against which equity would provide relief, arose from the improvidence of the transactions as far as Paxus was concerned. He said, orally, that Paxus had been "hung out to dry" by Transport and Career, by continuing to bear any liability to the plaintiff for damages in negligence, when there was no prospect of recoupment from the other, more responsible, parties. I do not accept that NRF was conscious, much less took advantage, of Paxus' ignorance of the effect of the increased carve-out. NRF had no obligation to point out to, or explain the consequences of these agreements to Paxus and, had it done so, it may have been in breach of its fiduciary duties to their client, Transport.
3. Mr King chose not to cross-examine Ms Shields on her affidavit evidence. Accordingly, Ms Shields had no opportunity to respond to the allegation that, through her actions and those of others at NRF, Paxus had been "hung out to dry": Allied Pastoral Holdings Pty Limited v Commissioner of Taxation [1983] 1 NSWLR 1 at 16C-E (Hunt J). Nor was she given the opportunity to respond to Mr King's submission that "[she] and Ms Woodward must have appreciated that these nuances and changes [to the Deed of Release] weren't going to be picked up by Ms Witkin".
4. It is not productive to speculate what Ms Shields might have responded had these allegations been put to her. It is possible that Ms Shields gave no thought to the ambit of the carve-out in the definition of "Claim" since it did not affect her client, Transport. I reject any suggestion that Ms Shields, or anyone from NRF or Transport took advantage of Ms Witkin's ignorance. There is no suggestion that Ms Shields was aware that Ms Witkin was not a lawyer, had not sought legal advice or was labouring under a basic misapprehension about what work injury damages meant. Indeed, having regard to the prominence of this concept in the Deed of Release (and its being different from workers compensation payments), Ms Shields would have had no reason to suspect that Ms Witkin, much less Paxus, did not understand the distinction. Paxus presented itself as a competent commercial entity, well able to act in and protect its own interests. Like Career, it had chosen not to engage external lawyers to represent it in the FWC and had chosen to use NRF as its conduit in communications with the plaintiff about the Deed of Release

Costs

1. The parties to the Settlement Agreement separate questions, Paxus, Transport and Career, agreed that costs ought follow the event in accordance with the general rule: Uniform Civil Procedure Rules, r 42.1.
2. The parties to the Deed of Release separate question asked that costs be reserved, pending determination of the plaintiff's application for leave to amend his statement of claim. While, as is apparent from his notice of motion, the plaintiff accepts that he must pay the costs of the other parties thrown away by the amendment, there is an issue about the extent to which the costs associated with the Deed of Release separate question ought be borne by the plaintiff.

Orders

1. For the reasons given above, I make the following orders: 1. The separate questions be answered as follows: 1. Did the Deed of Release entered into in May 2016 between parties including the plaintiff, the First Cross-Defendant (Transport) and the Second Cross-Defendant (Career), on its proper construction, have the effect of extinguishing any rights the plaintiff may have had to bring proceedings against Transport and/or Career for damages for psychiatric injury sustained due to bullying and verbal abuse which the plaintiff alleges he experienced at his place of work while allegedly subject to the control of Transport and/or Career? Yes. 2. Does the Settlement Agreement operate as a bar to the cross-claimant (Paxus) pursuing the first cross-claim as against the first cross-defendant (Transport), or otherwise disentitle the cross-claimant (Paxus) from the relief sought in the first cross-claim as against the first cross-defendant (Transport)? Yes. 3. Does the Settlement Agreement operate as a bar to the cross-claimant (Paxus) pursuing the first cross-claim as against the second cross-defendant (Career), or otherwise disentitle the cross-claimant (Paxus) from the relief sought in the first cross-claim as against the second cross-defendant (Career)? Yes. 1. The first defendant/cross-claimant pay the first and second cross-defendants' costs of the Settlement Agreement separate questions. 2. Reserve the costs of the Deed of Release separate question.

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. Decision last updated: 12 April 2022