Elke Small v Tyco Projects

LEGISLATION CITED: Industrial Relations Act 1996 Fringe Benefit Tax Assessment Act 1986 (Cth)

CDJ v VAJ (No.2) (1998) 197 CLR 172 David Jones v Cukeric (1997) 78 IR 430 Eagle Boys Dial-A-Pizza v Clifford (2003) 125 IR 35 Green v Brown (2002) 116 IR 21 House v The King (1936) 55 CLR 499 CASES CITED: Mace v Murray (1955) 92 CLR 370 Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 Redundancy Awards, Re (1994) 53 IR 419 Small v Tyco Projects (Australia) Pty Ltd [2006] NSWIRComm 18 Tszyu v Fightvision (2001) 104 IR 225 Westfield Holdings v Adams (2001) 114 IR 241 Wollongong Corporation v Cowan (1955) 93 CLR 435

HEARING DATES: 15 February 2007, 2 April 2007

APPELLANT (RESPONDENT ON NOTICE OF MOTION) Mr J N West, QC with Mr R J de Meyrick of counsel Solicitor: Mr P Carr Paris J Carr & Associates LEGAL REPRESENTATIVES:

RESPONDENT (APPLICANT ON NOTICE OF MOTION) Mr A Moses of counsel Solicitor: Mr S Price Corrs Chambers Westgarth

CORAM: WRIGHT J, President WALTON J, Vice-President BOLAND J

Application by Elke Small for leave to appeal and appeal from a decision of Justice Staff given on 7 February 2006 in Matter No IRC 2008 of 2003

1 In this matter Elke Small seeks leave to appeal and, if leave is granted, to appeal the decision of Staff J given on 7 February 2006 in Small v Tyco Projects (Australia) Pty Ltd [2006] NSWIRComm 18. In the proceedings at first instance, his Honour dismissed the appellant's summons seeking relief under the unfair contract provisions contained in Pt 9 of Ch 2 of the Industrial Relations Act 1996. His Honour also made a costs order against the appellant. 2 Ms Small had been employed by the respondent, Tyco Projects (Australia) Pty Ltd, as its Human Resources Manager and Marketing Manager in the Safety Products Division. The employment commenced in May 2001. In March 2002, Ms Small's employment was terminated. The appellant was advised by Mr Guttentag, the respondent's general manager, that her position had become redundant because the human resources function was to be subsumed into a new position by virtue of the amalgamation of two divisions of the respondent and that another person (Ms Hughes) had been appointed to that role. Ms Small was provided with one month's notice, three months' severance payment and one month's car allowance. At the time she was advised her position was redundant Ms Small had some leave owing. It was agreed that she would take the leave and that no formal announcement of her termination would be made until her return to the office on 8 April 2002. 3 When Ms Small returned to work she was requested to sign a Deed of Release under which she: (1) acknowledged the payments to be made to her were in full settlement of all claims;

(2) agreed to forsake any claim or other demands, suits or actions as a result of the termination of employment;

(4) acknowledged that she had been overpaid expense reimbursement and Fringe Benefits Tax (FBT) in the amount of $12,557, and agreed to repay that sum in three instalments.

It was also provided that the Deed might be pleaded in bar to any suit arising out of or touching on or concerning the matters in it.

4 After seeking certain advice, including over-the-phone advice from a solicitor, Ms Small signed the Deed on 18 April 2002. The provision in the Deed where Ms Small acknowledged an obligation to repay overpaid expense reimbursement and FBT, related to lease payments of $1,300 per month on the novated lease of a motor vehicle. It had been Ms Small's evidence that she had been advised at the commencement of her employment that the respondent would deduct the lease payments from Ms Small's salary and pay them directly to the finance company. This did not occur and Ms Small was paid the amount directly. Ms Small had said in her evidence she had tried to rectify the matter on a number of occasions but the situation regarding her motor vehicle running expenses remained unresolved for the duration of her employment with the respondent. 5 At the time her employment was terminated Ms Small questioned why she had to pay FBT on the car allowance and was informed by Ms Hughes, the respondent's human resources manager for its Safety Products and Technologies Division, that anyone with a novated lease was required to pay FBT based on the kilometres they travelled. 6 Ms Small was unable to meet the repayment schedule for the debt owed under the Deed to the respondent and the respondent commenced proceedings in the Local Court for recovery of the debt. His Honour noted at [19] that on the material before him Ms Small formed the view that it was unlikely that she could successfully defend the Local Court claim because the amount owing was agreed to pursuant to the Deed of Release and the Local Court had no jurisdiction to vary or avoid such arrangements. His Honour further noted that Ms Small did not defend the Local Court claim and a default judgment was entered against her.

7 After judgment in the appeal had been reserved, an issue arose regarding the Local Court proceedings. We shall deal with that issue later in this decision. 8 The trial judge further noted at [20] that in May 2002, Ms Small decided to set up her own business, being a recruitment agency specifically focusing on the Child Care Industry. Ms Small and a friend, Ms Nightingale, each contributed $30,000 to commence the business. Issues and findings at first instance 9 Staff J identified the issues for determination at [21] of his decision: 21 The issues requiring determination in this matter are firstly whether the deed of release executed on 18 April 2002 was an unfair contract (or arrangement, related condition or collateral arrangement) within the meaning of s 106 of the Act. Secondly, subject to the determination of the first issue, whether the applicant's contract of employment was an unfair contract in that it operated to permit the respondent to provide the applicant with termination pay, severance and or redundancy pay that was inadequate, in light of her age, salary level, status, tenure, and the fact that she was "headhunted" from a secure job to take up employment with the respondent on express inducements of her long term employment prospects. 10 His Honour found: (1) The Court had jurisdiction to make orders in respect of a Deed of Release ([23]); (2) The overall issue of whether the Deed of Release was unfair must be resolved by examining the circumstances surrounding the entering into of the Deed of Release and the conduct of the parties ([33]); (3) The appellant did feel under pressure to sign the Deed of Release. However, some of that pressure was the product of her personal circumstances, in particular, that she owed the company money ([35]); (4) The appellant was invited by the respondent to obtain legal advice, which she did ([35]);

(5) It was not the case that the appellant had no practical alternative but to sign the Deed. Ms Small could have refused to sign the Deed and to thereby maintain her rights to take legal action. However, in order to achieve the better financial result, the applicant chose to sign the Deed of Release, accepting her obligation to repay moneys to the respondent and receive the proposed severance payments ([35]); (6) The appellant's signature on the Deed of Release was not obtained by duress. The Deed, therefore, bound Ms Small and she had compromised her rights to take the proceedings ([36]); (7) The evidence did not establish that the respondent misled the appellant in respect of the FBT amount. The unchallenged evidence was that the FBT amount was not payable on a car allowance by the respondent ([37]); (8) The respondent brought proceedings in the Local Court based upon a failure to adhere to the agreement to repay the car allowance, relying upon the relevant terms of the Deed of Release. No defence was filed in the Local Court proceedings, denying that the money was owed, including the FBT component and judgment was entered by the Local Court. It would be extraordinarily rare for the Commission in Court Session to consider making orders that, in effect, reverse an integral part of the judgment of another court, including costs orders. It has at least the potential to amount to an unacceptable interference in proceedings of another court, and thus impact adversely on the integrity of the administration of justice: Green v Brown (2002) 116 IR 21 at [99] ([38]);

(9) The appellant's contract provided that she was to receive in respect of termination, including redundancy, one month's written notice or payment in lieu thereof. The applicant received one month's notice together with three months' severance payment calculated on her base salary, together with one month's car allowance ([41]); (10) If the scale fixed in Re Redundancy Awards (1994) 53 IR 419 was applied to the appellant, she would not have been entitled to any severance payment. Thus, the termination pay, severance and/or redundancy pay received by the appellant was not inadequate: Westfield Holdings v Adams (2001) 114 IR 241 at [154] - [155] ([40], [42], [43]); (11) The contract was not unfair for lack of procedural fairness ([44]-[45]); (12) There was no evidence to support the contention that the respondent held the opinion that the applicant wrongly claimed moneys in respect of her motor vehicle expenses and that this affected the decision to terminate the appellant's services ([46]); (13) The one-month notice period was not inherently unfair and that when properly examined, the contract of employment as a whole, was not unfair by virtue of the manner of its termination in conjunction with the notice period ([48]); (14) There was no basis to depart from the usual order as to costs ([55]). 11 Staff J made the following orders: 1. The summons is dismissed. 2. The applicant shall pay the respondent's costs, as agreed or as assessed. Grounds of appeal

12 The grounds of appeal in the appellant's amended application were in the following terms: 1. His Honour erred insofar as he failed to determine the issue of whether or not the Appellant had a liability to pay Fringe Benefits Tax "FBT".

His Honour erred insofar as he failed to find that liability for FBT lay with the Respondent and that to the extent that the deed of release provided otherwise it was unfair and unconscionable.

His Honour erred in so far as he failed to find that the contract of employment between Tyco, and the Applicant was or had become unfair in that it permitted the Respondent to terminate the employment of the Applicant (a) without requiring that the Respondent inform the Applicant of all and each of the grounds or reasons which formed a part in its decision to terminate the employment;

(b) without requiring that the Respondent provide the Applicant with a reasonable opportunity to deal with or refute any or all of such grounds or reasons and, in event of the Respondent failing to comply with these conditions, provide that the Respondent compensate the Applicant by paying or providing not less than six months notice;

(c) wrongly and unfairly by taking into account the apparent overpayment of moneys in respect to Motor Vehicle Expenses.

His Honour erred in so far as he failed to find that the deed of release was unfair in its terms, to the extent that it: (a) failed to differentiate between FBT amounts repayable to TYCO on account of wrongly paid car allowance; (b) constituted a bar to proceedings against the Respondent including these proceedings; (c) was a deed, to which the Applicant's consent was obtained under duress; (d) was an unfair contract within s106.

AND that it should not operate as a bar to these proceedings.

His Honour erred in concluding that the conduct of the Respondent as permitted by the contract (including the deed) could not be described as unconscionable.

His Honour erred insofar as he failed to find that: (a) the deed was unconscionable or unfair in its terms; (b) to the extent that it compromised the Appellant's rights to bring these proceedings, the deed was, in the events which have happened, unfair or unconscionable. (c) nothing in Green v Brown (2002) 116 IR 21 prevented the Court from giving relief including giving relief by varying so much of the deed as would otherwise bar these proceedings, and from thereafter considering what if any alterations should in fairness be made to the contract and proceeding to make appropriate orders.

His Honour erred in failing to find that the invitation to the Applicant to obtain legal advice was, in the circumstances, inconsequential.

His Honour erred in finding that in any practical sense the Applicant could have refused to sign the deed of release and thereby maintain her right to legal action.

His Honour erred in so far as he failed to have any, or any sufficient, regard to the evidence: (a) as to the circumstances of the Appellant's recruitment to Tyco, (b) of the inducements issued by Tyco to procure such recruitment, (c) of the fact that the Appellant, as Tyco well knew, would be leaving secure and well paid employment with Morgan and Banks to join Tyco, (d) of the fact that, in the events that happened, the Tyco representations of a secure long term engagement to induce the Appellant into their employ were falsified; and (e) of the fact that, despite the falsification of the representations referred to in (d) above, no fair or adequate compensation was required to be paid to the Applicant but rather only one months notice.

13 We have concluded in this judgment that Staff J erred in finding that the Deed of Release, in so far as it obliged the appellant to repay monies to the respondent, was not an unfair contract. Given that the powers of the Full Bench on appeal are directed towards correcting error and that one of contracts that is the subject of these appeal proceedings is a Deed of Release thereby giving rise to some uncommon considerations, we have decided that it is in the public interest to grant leave to appeal.

14 Reduced to their essentials, the appellant's case rested on the following propositions: (1) The appellant signed the Deed of Release under the pressure of the respondent's unconscionable conduct and the terms of the Deed itself were unconscionable because they required the appellant to pay some $9,000 of "tax" that she was not otherwise obliged to pay; (2) The Deed was, therefore, unfair and it should not be a bar to proceedings challenging the Deed itself and the contract of employment;

(3) There was an absence of procedural fairness in the termination of the appellant's employment in that she was not given an opportunity to present herself as a suitable candidate through an interview process; no account was taken of the fact she possessed appropriate tertiary qualifications (indeed the respondent acted on the assumption the appellant lacked tertiary qualifications); and, no attempt was made to counsel the appellant to see if she could manage the human resources role for the amalgamated Technology and Safety Products Divisions, even as the respondent's general manager perceived that role; (4) The employment contract contained no substantive benefits which, had they been in existence and required the respondent to comply with them, might have lessened either the chance of her redundancy or, in the event that it was to be insisted upon by the respondent, would have provided the appellant with an appropriate financial buffer against the harmful effects of the circumstances. This was in circumstances where the appellant had been poached away from a secure job on representations of long-term security and upon the basis that she was well qualified to do the jobs she was given at the respondent;

(5) Staff J erred in dismissing the appellant's contention that "it appeared that the Respondent held the opinion that the Applicant wrongly claimed moneys in respect of her motor vehicle expenses and that this affected the decision to terminate the Applicant's services". Contrary to his Honour's finding that there was no evidence to support the contention, there was specific evidence to support it; (6) In finding that the termination pay, severance and/or redundancy pay received by the appellant was not inadequate Staff J misapplied Westfield Holdings v Adams. Responsibility for payment of FBT 15 Whilst we will return to the matter shortly, it is appropriate that we make clear our understanding of the position regarding whose responsibility it was for paying the FBT in connection with the novated lease of the appellant's motor vehicle. The appellant contended at first instance that pursuant the Fringe Benefit Tax Assessment Act 1986 (Cth) the responsibility for paying the FBT lay with the respondent. Ms Hughes gave evidence for the respondent that anyone with a novated lease was required to pay FBT based on the kilometres they travel. Ms Hughes, however, conceded in cross-examination she was not an expert on matters relating to the FBT. Similarly, Ms Gibson the respondent's national payroll manager, whilst holding to the view that no FBT was payable on a car allowance (but conceding the fundamental principle FBT was payable by the employer), conceded she had no responsibility for any aspect of FBT. Ms Gibson's evidence regarding the FBT was challenged in cross-examination. 16 On appeal, the appellant maintained its contention that the responsibility for paying the FBT rested with the respondent. Reliance was placed on s 66 of the Fringe Benefit Tax Assessment Act, which is in the following terms: 66 Liability to pay tax (1) Subject to this Act, tax imposed in respect of the fringe benefits taxable amount of an employer of a year of tax is payable by the employer. (2) A law, or a provision of a law, passed before the commencement of this Act that purports to exempt a person from liability to pay fringe benefits tax or to pay taxes that include that tax does not exempt that person from liability to pay that tax. (3) A law, or a provision of a law, passed after the commencement of this Act that purports to exempt a person from liability to pay taxes under the laws of the Commonwealth or to pay certain taxes under those laws that include fringe benefits tax, other than a law or a provision that expressly exempts a person from liability to pay that tax, shall not be construed as exempting the person from liability to pay that tax. 17 Whilst not resiling from the evidence given by Ms Hughes and Ms Gibson at first instance Mr Moses, counsel for the respondent, properly conceded there was nothing in the relevant legislation that would support a contention that the FBT in this case was payable by any person other than the respondent. 18 Moreover, the evidence of Ms Hughes and Ms Gibson regarding whose responsibility it was to pay FBT, cannot be afforded much weight given the absence of any support for what were lay expressions of opinion by them, opinions that were challenged at first instance. We find ourselves in the position of having to conclude, on the weight of the material that was put at first instance, and on the submissions on appeal, that the responsibility for paying the FBT rested on the respondent. The effect of this conclusion is that the amount of $12,557.00 that the Deed obliged the appellant to repay to the respondent as a consequence of the overpayment to her of car allowances, included an amount attributable to FBT that the appellant was not obliged to pay. Whether respondent's conduct rendered Deed unfair 19 We turn to the question of whether Staff J erred in finding the Deed was not an unfair contract. It will be recalled that his Honour decided the Deed was not unfair because it was not obtained by duress and that in any event his Honour would not exercise his discretion to vary or avoid the Deed because of what the Full Bench said in Green v Brown, namely: It would be extraordinarily rare for the Commission in Court Session to consider making orders that, in effect, reverse an integral part of the judgment of another court, including costs orders. It has at least the potential to amount to an unacceptable interference in proceedings of another court, and thus impact adversely on the integrity of the administration of justice. 20 The first thing to say about the Deed is that it is not an instrument that is immune from the Court's jurisdiction under s 106 merely because of its special character: see for example the Full Bench's treatment of the Deed of Release in David Jones v Cukeric (1997) 78 IR 430. Secondly, the relevant tests to be applied in this case as to whether the Deed is an unfair contract are whether the Deed was unfair, harsh or unconscionable or whether it was against the public interest: see s 105 of the Act. It may be the contract is not unconscionable but it may, nevertheless, be harsh or unfair. In applying the foregoing tests the Court is required to assess all of the relevant circumstances including the conduct of the parties (see s 106(2)) and the terms of the contract.

21 In relation to the fact there was an overpayment to the appellant of her car allowance and that continued to be the case during the entire course of her employment, no fault in that regard lay with the appellant. The appellant's evidence that she repeatedly attempted to rectify the situation whereby she was incorrectly paid a car allowance (that was to have been remitted directly by her employer to the finance company) should be accepted and the respondent on appeal did not contend otherwise. Emails sent by Ms Small and others at the time regarding the matter were in evidence. The only evidence against Ms Small's version was that of Ms Gibson who stated she did not recall any contact from Ms Small regarding the payment of the car allowance. Ms Gibson was the respondent's National Payroll Manager. However, counsel for the respondent indicated in the first instance proceedings that on the state of the evidence he would not be putting as a positive proposition that Ms Small did not send an email to Ms Gibson on 15 June 2001 advising her that: [B]oth Achim Drescher and myself are still both being paid our car allowances. This is in fact incorrect, as both of us are running novated leases which are to be paid directly by TEPG. Could you please follow this up and correct as soon as possible? I would appreciate your urgent attention to this matter, as both Achim and I want to avoid a situation where we are in debt through no fault of our own. 22 Despite promises by Mr Cole, the Financial Controller (Ms Small was advised in March 2002 by Mr Guttentag that Mr Cole had misappropriated $1.3 million of the company's funds), to remedy the matter of the car allowance, as we have noted, it remained unresolved for the period of the appellant's employment. 23 Not only did Ms Small attempt to have the car allowance matter rectified but also she readily acknowledged at the time of the termination of her employment that she had been paid the car allowance and did not resist having to repay what was owed. 24 The termination of Ms Small's employment came about in circumstances that cause us some disquiet. The appellant was poached from secure employment as a senior recruitment consultant with Morgan & Banks on the basis of a representation that employment with the respondent would be full time "with long term prospects". The appellant performed her role with the respondent without complaint. In mid-March 2002 Ms Small was advised that Mr Cole had allegedly misappropriated company funds. As Ms Small was a cheque signatory, she was investigated and was found to be innocent of any wrongdoing. On 15 or 16 March 2002, Ms Small had a conversation with Mr Guttentag regarding the overpayment of the car allowance, and it was Ms Small's evidence that Mr Guttentag said to her in relation to the overpayments words to the effect that whilst Tyco had to accept some blame for what had occurred he held senior officers of the company "100% responsible", including Ms Small. Mr Guttentag did not recall the conversation. 25 The same day as the conversation occurred over car allowances, Mr Guttentag notified Ms Small her position was to be made redundant. In doing so Mr Guttenberg conceded in cross-examination that at the time he decided to terminate the employment: (a) he held "a suspicion that she (the appellant) was guilty of double dipping of car allowances"; and (b) he considered that such an activity, was a "form of fraud"; and

(c) that that opinion played a part in his decision. As he put it - "it was inevitable. It had to be", but then went on to assert, "...it did not play a major part. The major part was about skills and what have you". 26 It is understandable in those circumstances that, as the appellant stated in her evidence, she was "very concerned and distressed" at her treatment, especially when: she had been poached from secure employment to a position that was represented to have long-term prospects; there was no evidence she performed her role other than satisfactorily; she had not been previously consulted about the new human resources role nor provided with an opportunity to apply for it; and, in circumstances where Mr Guttentag held her to blame for the overpayment of the car allowance. Moreover, the fact that Mr Guttentag held a baseless suspicion Ms Small had "double dipped" on her car allowance, leaves a nagging doubt about the true reason why her employment was terminated, but there is insufficient evidence to conclude that the creation of the new human resources role was merely a contrivance to oust Ms Small for the reason that Mr Guttentag held suspicions about Ms Small's honesty. 27 In any event, the position in which the appellant found herself in March 2002 was that she had been made redundant and was to be paid an amount which comprised salary due and owing, unpaid annual leave, a redundancy payment equalling three months' salary and one month's car allowance. This totalled a net amount of $24,370.80. From this was to be deducted the overpaid vehicle expenses of $12,557.00, thus producing a final net amount of $11,813.80. The Deed of Release provided for the payment of $24,370.80 to Ms Small but the amount of $12,557.00 was subject to the condition that it was to be repaid to the respondent in three equal instalments and that the repayable amount ($12,557.00) would not be paid to Ms Small until she signed the Release. 28 It appears that the three months' redundancy payment was not an element of the appellant's written contract of employment but in Mr Guttentag's affidavit it was stated that the payment was "Tyco's practice for managers at your level with your length of service". Thus, Ms Small was to be paid all that was properly owing to her on termination except that unless she signed the Deed the respondent was going to withhold an amount that it claimed was owing to it for overpaid car allowance. 29 As Staff J noted at [17] of his judgment, Ms Small sought advice from a work colleague, Ms Nightingale, regarding the terms of the Deed. She also contacted a solicitor in Parramatta and went through the Deed of Release over the phone prior to signing the Deed. Her evidence was that it was made clear to her by the solicitor that she needed to sign the Deed in order to get the second part of her termination pay, that is, the $12,557.00. 30 In relation to the contact with the solicitor, senior counsel for the appellant submitted: The trial judge had before him the evidence that demonstrated that although the Appellant contacted a solicitor, she could not be said to have been given an appropriate opportunity to obtain legal advice. It is obvious that what passed as legal advice in a telephone consultation was of the most cursory kind. It did not come to grips with how the Deed worked but rather reinforced the Appellant's unfortunate position - if she wanted the money she had to sign it. The Appellant was simply not able to see how to act in her own best interests. She could not appreciate the true scope of the manifest unfairness in what was being imposed upon her. The Court was in a position to make this assessment, but, wrongly, did not do so. 31 Moreover, it was submitted: To suggest... that the Appellant had any real alternative is unrealistic. She was placed in a position of greatly inferior bargaining power - she was going to lose her job and be rendered unemployed, she had an acknowledged debt to the Respondent and yet it is apparently suggested that she could realistically refuse the payment and sue the Respondent for whatever she could get. 32 Faced with the prospect of unemployment, Ms Small felt she needed the money. Ms Small deposed that: Given the loss of employment, I needed the money to live on until I could get back on my feet financially. I therefore signed the Deed of Release. 33 Some support for this need is provided by the fact that rather than having to repay the $12,557.00 immediately, Ms Small sought the respondent's agreement to do so over a six months' period. Having obtained that agreement, Ms Small signed the Release. 34 The appellant contended that she signed the Release under the influence of the respondent's unconscionable conduct and that the terms of the Release were themselves unconscionable. In circumstances where: (1) an employee is poached from secure employment on the promise of long-term prospects in the new position; (2) works without any complaint about her performance in the new position for only 11 months; (3) is not consulted about the elimination of her position; (4) is not provided with any opportunity to apply for the role into which her position is to be subsumed; and (5) immediately prior to being notified she is to be made redundant the employee is accused of conduct that is capable of being interpreted as an accusation of dishonesty when there is no proper foundation for the accusation,

the irresistible conclusion is that the employee was not treated fairly even if there was a legitimate basis for making the employee's position redundant, which in the present case was a desire to amalgamate two divisions of the business under one human resources function. 35 Notwithstanding this conclusion we do not consider that Staff J was in error in finding that the appellant's signature on the Release was not obtained by duress. Nor do we consider the unfairness engaged in by the respondent was such that its effect on the appellant caused her to act against her own best interests in signing the Deed. Undoubtedly, the appellant was in an unequal bargaining position vis a vis the respondent and she felt she needed the money. However, there was no evidence that Ms Small was in dire financial straits. On the contrary, a short while after the termination of her employment she contributed $30,000 towards setting up a business in partnership with Ms Nightingale. 36 Moreover, the appellant could not have been under any misapprehension that in signing the Deed she was giving up her rights to pursue any cause of action arising out of or touching on or concerning the matters in the Deed. Ms Small held a reasonably senior position in human resources with the respondent and prior to that was a senior recruitment consultant with Morgan & Banks. The respondent's practice was to secure Deeds of Release where the employment of senior personnel was terminated. It is impossible to accept she would not have understood the implications of signing the Deed. 37 Further, it is to be accepted that the respondent provided the appellant with a copy of the draft Deed of Release (on 15 April 2002) three days before she executed it. The respondent suggested the appellant seek legal advice in relation to the draft Deed of Release, which she did. That the appellant was content to receive the advice over the phone rather than have the solicitor properly examine the terms of the draft Deed was the appellant's choice. Further, that the solicitor's advice may have been lacking, cannot make the respondent blameworthy in that respect. 38 We accept that there is some parallel between the circumstances under which the appellant signed the Release in this case and the circumstances in Cukeric that are described by the Full Bench at 457: In making its later 'offer', the Company advised Mr Cukeric that unless it was accepted within 7 days, accompanied by a release in the Company's favour, it would not make the payments proposed but would pay some lesser unspecified amount. Mr Cukeric was also told that if a release was not given he would not be treated as having been retrenched for superannuation purposes. On the evidence, we are satisfied that that advice was intended to convey to Mr Cukeric that he would receive a superannuation benefit of some hundreds of thousands of dollars (to the order of $300,000) less than he had been told he would receive on termination if he accepted the Company's 'offer' and its conditions. This was reinforced in Mr Tideman's letter sent in response to Mr Cukeric's request for reconsideration of his personal circumstances, a reconsideration initially invited by the Company but then rejected by it in terms of any more favourable outcome for Mr Cukeric. We accept Mr Cukeric had good reason to feel pressured and intimidated by the Company's treatment of him. The evidence was that he perceived the Company's conditional 'offers' to amount to threats, a perception which we think was clearly open in the circumstances. Indeed, Mr Budge's evidence made it clear that the threats were intended as a lever to persuade Mr Cukeric to accept the Company's proposal. His Honour was critical of Mr Cukeric in having executed the release because he had had the opportunity to consider its terms and to seek legal advice. Nevertheless, his Honour concluded that the Company's representation of Mr Cukeric's entitlements to superannuation if he did not give the release was incorrect; the misrepresentation was such that, in his view, the Company should not derive any benefit from the release. Notwithstanding that the Company has challenged this approach we are of the opinion, on a careful review of the record, that the question of misrepresentation did in fact arise out of the Company's defence to the claim, namely, its reliance upon the bar contained in the release, rather than out of any specific claim by Mr Cukeric. In those circumstances, should Mr Cukeric have been held to his release? We accept, as we indicated earlier, the Company's submission as to the importance in the public interest for parties to honour their agreements, and to be seen to do so, particularly those made in settlement of litigation. There is also, however, a public interest in parties honouring the obligations which they have under contracts including employment contracts and any promises and/or representations made in relation to such contracts. In this regard, the Company was remarkably deficient to the point, in our view, of engaging in conduct which was both reprehensible and unconscionable. It was conduct which makes irresistible the conclusion that the release it extracted from Mr Cukeric was harsh, unfair and unconscionable and contrary to the public interest within the scope of s 275. While we do not condone the action of Mr Cukeric in giving the release, the wrong there involved is submerged by the unconscionable conduct of the Company in misrepresenting Mr Cukeric's superannuation entitlements and demanding the release as a condition of paying him his correct and lawful ones. We are satisfied it would be unjust in the circumstances for Mr Cukeric to be held to the release. 39 In Cukeric, however, the Full Bench regarded the appellant's conduct as reprehensible and unconscionable and an attempt by the company to intimidate the respondent into signing the deed of release under the threat of not paying him some $300,000. We do not consider the respondent's conduct here was of the same character and such that Ms Small's will was overborne by threats or intimidation. Whether terms of Deed rendered it unfair 40 The terms of the Deed are, however, a different matter. The Deed required the appellant to repay to the respondent an amount she was not obliged to repay, from monies to which she was lawfully entitled in the first place. That the respondent held a bona fide belief that FBT was the responsibility of the appellant does not render the Deed fair. It would be perpetuating a fundamental unfairness to allow an employer to retain monies lawfully owed to an employee. 41 It was contended for the respondent on the appeal that it was not put to Staff J at first instance that the Deed was unfair because it wrongfully required the appellant to repay monies and that the Deed should, therefore, be varied to overcome that unfairness. Consequently, it was contended, the appellant should not be permitted to run a different case on appeal. 42 However, there is no doubt that the FBT issue was squarely before his Honour and that his Honour was alive to the appellant's contention that she was not liable for the FBT on the novated lease of the car. Staff J appears to have accepted the evidence of Ms Gibson that the FBT amount was not the respondent's responsibility or, more specifically, the evidence that "FBT is not payable on a car allowance". We note, though, that Ms Gibson in her evidence conceded that she had no responsibility for FBT and provided no material in support of the contention that payment of FBT was not the respondent's responsibility. We consider his Honour erred in relying on the evidence of Ms Gibson. If his Honour had not relied on that evidence and had come to the view that the respondent was responsible for payment of the FBT, and not the appellant, the focus would inevitably have turned to the terms of the Deed. As it was, his Honour did not reach that point and, therefore, was not required to consider any variation to the Deed and consequential money orders. 43 As to his Honour's reliance on Green v Brown for not exercising his discretion to vary or avoid the Deed that was a case dealing with quite different circumstances to those that apply here. Green v Brown was an appeal from a decision and orders of Schmidt J and the paragraph relied on by Staff J appeared in the following context (at [95]-[99]): [H]er Honour found that if it had not been for the conduct of the appellants in the first place the proceedings in the Supreme Court would not have been necessary and the respondents would not have incurred the legal costs they did. Therefore, in remedying the unfairness it was necessary to vary the partnership agreement from its commencement and to restore the respondents, as close as practicable, to a position that they would have been in had it not been for the appellants' conduct. In doing so it was appropriate to make money orders relieving them of the burden of legal costs that they would not otherwise have incurred but for the conduct of the appellants. 96 The appellants have not cited any jurisdictional bar to the Commission making orders B3 to B5 and we do not consider there are any such barriers (We should be taken, however, as accepting the form of the orders made as either available or appropriate). The question, therefore, is whether Schmidt J failed properly to exercise the discretion committed to her in respect to the legal costs issue: House v The King (1936) 55 CLR 499 at 504-505; Mace v Murray (1955) 92 CLR 370 at 378.

97 In examining this question we observe, firstly, that in choosing the jurisdiction in which to pursue a remedy against the appellants, the respondents initially chose the Equity Division of the Supreme Court. And whilst we have found that special circumstances exist that displace the operation of the Anshun principle, we do not consider that the circumstances justify orders B3 to B5.

98 Having chosen their jurisdictional venue the respondents indicated to McLelland CJ in Eq that they did not intend to pursue their claim for relief in proceedings 4074/94 based on the Trade Practices Act and the Fair Trading Act and, consequently, his Honour dismissed that part of the respondents' claim. The respondents subsequently failed in their bid for relief and their remaining claims were dismissed. At the same time, McLelland CJ in Eq declared in proceedings 4136/94 that "the partnership between the plaintiff and the defendant carrying on the business of the retail sale of the designer label 'Howard Showers' clothing was dissolved on 27 September 1994" and also declared that "cl 13 of the deed of partnership dated 22 March 1993 between the plaintiff and the defendant has no application to such dissolution." His Honour ordered that the partnership be wound up under the direction of the Court and, in relation to costs, ordered the respondents to pay the costs of the appellants in both proceedings (4074/94 and 4136/94). 99 It is not appropriate, in our opinion, to now shift the burden of costs relating to the Equity proceedings from the respondents to the appellants. The Equity Division of the Supreme Court was the place chosen by the respondents to pursue their claims in relation to the partnership agreement; the Equity proceedings were discrete proceedings. The respondents' claims and those of the appellants were dealt with on their merits and the respondents lost. The costs orders were consequent upon that result. It would be extraordinarily rare for the Commission in Court Session to consider making orders that, in effect, reverse an integral part of the judgment of another court, including costs orders. It has at least the potential to amount to an unacceptable interference in proceedings of another court, and thus impact adversely on the integrity of the administration of justice. 44 The proceedings in the Local Court resulting in a default judgment against the appellant were not proceedings dealt with on their merits; there was no jurisdiction in the Local Court to avoid or vary the Deed on grounds of unfairness. The respondent sued on the face of the Deed. The Deed created a legally enforceable debt because the appellant acknowledged the debt and agreed to repay it. 45 Mr Moses contended that what has occurred here had parallels with Tszyu v Fightvision (2001) 104 IR 225 in the sense that in Tszyu it was held that to declare the contract void or to vary it under s 106 of the Industrial Relations Act would be to contradict the very basis upon which the earlier judgment in the Supreme Court concerning breach of contract stood and that continued prosecution of the industrial proceedings would be an abuse of process. It was submitted by counsel that the course the appellant should have followed was to commence the proceedings under s 106 of the Act and seek a stay of the Local Court proceedings. 46 As Mason P observed in Tsyzu, the appellant's case "ran smack into the principles of issue estoppel": at [59]. There is no issue estoppel here. The issue in these proceedings is whether the Deed was unfair by virtue of it depriving the appellant of an amount of money that was rightfully hers. That issue was not before the Local Court and hence was not decided by the Local Court. 47 Anshun estoppel (Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589) was not pleaded on appeal. Understandably so, in our opinion, because it would not have been open to the Local Court to countenance any contention that the Deed should be declared void or varied on grounds of unfairness.

48 Given the unfairness of the Deed in so far as it obliges the appellant to repay monies to which she is lawfully entitled and the respondent is not, it would be untenable to allow the respondent to rely on a judgment of the Local Court in circumstances where it was not open to that Court to do other than give default judgment. It would be perpetuating a fundamental unfairness to allow the respondent to retain monies lawfully owed to the appellant. Accordingly, we find that Staff J erred in not finding the Deed was unfair in so far as it made it a condition that the second stage payment of $12,557.00 was to be payable within two working days of the signed Deed being returned to the respondent and that the amount of $12,557.00 was to be repaid by the appellant to the respondent.

49 It follows that the Deed should be varied to provide: (1) That the appellant shall be paid $24,370.80 net (constituted by the two amounts $11,813.80 and $12,557.00); (2) That the condition regarding the second stage payment of $12,557.00 to be payable within two working days of the signed Deed being returned to the respondent shall be avoided; (3) That the appellant shall repay to the respondent an amount that represents the difference between the judgment debt determined by the Local Court on 4 April 2003 ($13,274.94) and the FBT component of that debt (which is calculated below to produce an amount of $9,710.12). (4) Any necessary consequential amendments. What money orders should be made 50 Given these findings it becomes a question of what money orders, if any, should be made pursuant to s 106(5) of the Act in connection with the unfair Deed. There was disagreement between the appellant and the respondent over the amount that should be paid to the appellant in the event the Full Bench decided to make money orders in the appellant's favour. In this regard, the Full Bench directed the parties to confer on the matter. In the result, the parties were unable to reach agreement and filed separate submissions as to what they considered was the amount owed. 51 The respondent contended that the FBT component of the overall debt was $5,000.12. If interest was to be ordered the respondent contended it should be calculated from the dates upon which the repayments were made by the appellant. 52 The appellant contended the amount owed to the appellant was $9,714.87 plus $3,418.03 interest calculated at Supreme Court rates from the date of judgment in the Local Court, which was 4 April 2003. The difference in amounts is attributable to the respondent's treatment of tax. 53 We do not find it necessary to set out the parties' competing calculations or the basis of those calculations. In general terms, we prefer the appellant's approach. We are satisfied that an order should be made in favour of the appellant for an amount of $9,710.12 plus interest. This amount is calculated as follows: · The judgment debt from the Local Court proceedings was $13,274.94 (Principal, court costs and interest) plus legal costs of $8,818.19.

· The amount of $13,274.94 was made up of the following components: o $12,557.00 Principal (which included FBT of $9,306.87)

o $173.00 court costs o $544.94 interest · The FBT component was approximately 74 per cent of the Principal. It would, therefore, have contributed approximately 74 per cent of the interest awarded (being $403.25). Consequently, it may be said that the FBT contributed $9,710.12 to the judgment debt.

Interest should be calculated from the dates upon which the appellant made the repayments. Whether Deed should be avoided or further varied to remove its bar

54 The appellant contended that the Deed should be further varied or avoided so as to remove its bar to proceedings challenging the Deed itself and the contract of employment. 55 It is generally inappropriate to order variations to a contract that travel beyond providing a remedy for the unfairness found - that is, righting the wrong found in the relevant contract: Eagle Boys Dial-A-Pizza v Clifford (2003) 125 IR 35 at [43] and [60]. For the reasons earlier expressed, whilst we found the conduct of the respondent was unfair, that unfairness was not such that it caused or induced the appellant to sign the Deed; there was no conduct that could be considered to be reprehensible and unconscionable of the kind found in Cukeric, no unlawful threat and no illegitimate pressure. In those circumstances, there is no basis to further avoid the Deed. All that is permissible is a variation of the Deed to right the wrong contained within its terms and that is what we have done. 56 It follows that the Deed, as it is to be varied in accordance with this decision, remains a bar to the appellant's remaining claims relating to the unfairness of the employment contract given that the Deed provides: 2. In consideration of the payments, benefits and services made or provided by the Employer, referred to in the Deed: (a) the Employee hereby acknowledges that such payments, benefits and services are in full and final settlement of all claims, actions, suits and demands whatsoever, whether before or after the date of this Deed, arising out of or touching or concerning his/her engagement or employment by the Employer, or as a result of the termination of that employment. (b) the Employee hereby agrees not to make any claim or demand, or take or institute any proceedings, actions, suits, claims or demands in relation to his/her employment or engagement by the Employer, or as a result of the termination of that employment....

57 As the Full Bench observed in Cukeric, there is an important public interest in parties honouring their agreements, and to be seen to do so, particularly those made in settlement of litigation. We do not consider the evidence in this matter was of such a kind that upon an objective view of it Ms Small was so overborne by the prospect that the respondent would withhold $12,557.00 if she did not sign the Deed, or had no other choice but to sign the Deed and thereby forego any right to make a claim against the respondent, that it rendered the Deed, as a whole, unfair. Whether employment contract unfair 58 Even if we had come to a different conclusion regarding the effect of the respondent's unfair conduct and had varied or avoided the Deed to remove it as a bar to the appellant's remaining claims relating to the contract of employment, we should indicate, for the sake of completeness, that we would not have made money orders granting a further three months' pay as claimed by the appellant. The making of money orders under s 106(5) of the Act is to be in connection with the contract varied or avoided but there is no automatic right to such orders merely because of such variation or avoidance. It is a matter for the Court's discretion.

59 The unfairness we found in relation to the respondent's conduct, especially given the appellant was poached from secure employment with the promise that the position with the respondent had long-term prospects, might be capable of rendering the employment contract unfair. This could be so if the contract contained no substantive benefits which, had they been in existence and required the respondent to comply with them, might have lessened either the chance of her redundancy or, in the event that redundancy was to be insisted upon by the respondent, would have provided the appellant with an appropriate financial buffer against the harmful effects of the circumstances. 60 Absent the three months' redundancy benefit that was paid to the appellant, it was open to conclude the employment contract was unfair. To entice a person from a well-paid, secure job, on the promise of long-term prospects, and then to make the person redundant after 11 months of satisfactory service without any counselling and without providing an opportunity for the person to apply for another available position in circumstances where the contract offered no adequate protection against the prospect of, or in the event of, early redundancy would have, in all likelihood, rendered the contract unfair. 61 The additional three months' salary does not appear to have been an express term of the employment contract and was either an ex gratia payment or an implied term. In any event, it was paid and, in our opinion, if the contract were otherwise unfair, the additional payment would have left it open to the Court at first instance, having regard to what was just in the circumstances of the case, to exercise its discretion not to make any money orders in connection with the varied contract. 62 Staff J decided that the employment contract was not unfair, in part, because the payments made to the applicant were not inadequate. His Honour arrived at that conclusion by quite a different route to the one taken by this Full Bench but we do not consider there was any error on his Honour's part in so far as his assessment of the adequacy of the redundancy benefit was concerned. However, his Honour may have applied the decision in Westfield Holdings v Adams (2001) 114 IR 241 incorrectly when he stated at [42]: If the scale fixed in the Redundancy Awards Case (1994) 53 IR 419 was applied to the applicant, she would not have been entitled to any severance payment. 63 Westfield Holdings v Adams does not establish the safety net scale fixed in the Redundancy Awards Case as a benchmark by which to measure the adequacy or otherwise of redundancy or severance payments in unfair contract cases. The scale is only one matter that may be considered, but as the Full Bench stressed in Westfield, primacy is to be given to the particular circumstances of the individual contract or arrangement concerned. That a particular redundancy payment may exceed the safety net scale does not mean in particular cases the payment is necessarily adequate. Application to re-open and to adduce further evidence

64 After judgment had been reserved on the appeal the respondent filed a notice of motion on 12 March 2007 and affidavit in support seeking leave to file an affidavit annexing: (a) Notice of Grounds of Defence to an Action Commenced by a Statement of Liquidated Claim filed on 13 November 2002 in the Local Court; and

(b) Statement of Confession filed on 3 April 2003 in the Local Court. 65 The respondent indicated that it wished to re-open the proceedings to have the two documents brought into evidence pursuant to s 191(2) of the Act and to make further submissions regarding the implications of the documents. The documents referred to were filed in the Local Court by the appellant. Neither of the documents was referred to in the evidence at first instance nor on appeal. In fact, the Full Bench was simply advised that the appellant did not offer a defence to the claim in the Local Court. 66 The respondent's notice of motion came before the Full Bench on 2 April 2007. The appellant opposed the motion and referred to CDJ v VAJ (No.2) (1998) 197 CLR 172 at [89] where the High Court (McHugh, Gummow and Callinan JJ) referred to the principles laid down in Wollongong Corporation v Cowan (1955) 93 CLR 435 in relation to the power to receive further evidence was governed by the principles: (i) that the evidence sought to be admitted could not with reasonable diligence have been obtained for use at trial; and, (ii) that, if the evidence had been available at the trial it is reasonably clear that an opposite outcome would have resulted. 67 Counsel for the appellant contended that the material sought to be admitted could, with due diligence, have been obtained for use at trial and even if it had been available at trial it would have made no difference; the proceedings in the Local Court were ultimately not defended by the appellant. 68 The Full Bench took a short adjournment to consider the respondent's motion and upon resuming advised the parties that it had decided to refuse the order sought. The Full Bench dismissed the motion. 69 Wollongong Corporation has nothing authoritative to say about the admissibility of further evidence in respect of a statutory power such as s 191(2) to admit evidence on appeal and is confined to procedures in the common law courts (see CDJ v VAJ at [97]). We do not consider the respondent established any basis to re-open the appeal proceedings. In any event, we consider that even if the material sought to be admitted was admitted, in the absence of any further evidence going to the appellant's credit, or any further attack on her credit (something the respondent indicated it did not intend to do), it would not have produced a materially different result to the one we have determined. Hence the decision to refuse the order sought. 70 We consider that costs of the appeal proceedings should be paid by the respondent.

71 The Court makes the following orders and directions: (1) Leave to appeal is granted. (2) The appeal is upheld to the extent determined in this judgment. (3) The decision of Staff J in Matter No IRC 2008 of 2003 is set aside to the extent it is inconsistent with this judgment. (4) The Deed of Release signed for and on behalf of Tyco Electronic Group on 19 April 2002 and by Elke Small on 18 April 2002 is varied to provide: (a) That Elke Small shall be paid $24,370.80 net (constituted by the two amounts $11,813.80 and $12,557.00);

(b) That the condition regarding the second stage payment of $12,557.00 to be payable within two working days of the signed Deed being returned to Tyco Electronic Group shall be avoided;

(c) That Elke Small shall repay to Tyco Electronic Group an amount of $3,564.82 (being the difference between the judgment debt of $13,274.94 and the FBT component of that debt of $9,710.12);

(d) Any necessary consequential amendments. (5) The respondent shall pay Ms Small an amount of $9,710.12. (6) Interest shall be payable by the respondent to Ms Small in accordance with the Supreme Court scale on the amount of $9,710.12 from the dates upon which Ms Small made the repayments by instalment.

(7) The respondent shall pay the appellant's costs of the appeal proceedings. ___________________________

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