Nelson v Pelikan Artline Pty Ltd

APPLICANT L Goodchild, Barrister REPRESENTATION: RESPONDENT H Sonmez, Barrister

ORDERS: 1. The Tribunal finds that the contract is voidable and therefore is, at the election of the applicant, not a bar to a claim for unlawful discrimination being made and determined 2. There will be no order for costs in these proceedings unless a party files and serves an application for costs, with supporting submissions, within 28 days. In such event, the opposing party or parties must file and serve submissions in response within a further 28 days. The question of costs will then be determined 'on the papers', pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.

1 On 11 September 2008, the applicant lodged a complaint of unlawful discrimination by her employer, the respondent. She complained that she was dismissed on the grounds of race. The complaint was referred to the President of the Anti Discrimination Board.

2 On 25 November 2008 the President declined the complaint under s. 92(1) of the AD Act. On 21 December 2008 the applicant exercised her right under s. 93A(1) to refer the complaint to the Tribunal. It follows that by s. 96(1) leave was required from the Tribunal for the complaint to proceed.

3 The Tribunal file records that on 24 February 2009 "leave was granted" and " factual issue to be determined i.e whether A signed deed of release under duress". As is further discussed below, the "duress" issue concerns the legal consequences of a document in the form of a release signed by the applicant at the time of her dismissal.

4 Read literally the Tribunal's order appears to suggest that some form of limited leave was being granted by the Tribunal to determine the "duress issue" only. However, under s. 96(1) there is no form of "limited leave" that can be granted. An applicant is either given leave to proceed with the complaint or not. Further, neither the ADT Act nor the AD Act contains any express power to formulate a separation question , however an ability to do so would no doubt follow from s.73 of the ADT Act.

5 It seems to me that the most likely position is that on 24 February 2009 the Tribunal in fact granted leave under s. 96(1) but indicated that there would be first a hearing on the "duress issue" which if resolved in favour of the respondent would lead to the dismissal of the proceedings under either s. 102 or s. 108(1)(b) and if resolved in favour of the applicant would require a further hearing before final orders could be made under s. 108. A less likely construction of the Tribunal's orders on that date is that it was deferring the grant of leave to abide a determination of the "duress issue". If that is the true position (which I doubt) then in light of the conclusions I have reached below I order that to, to the extent it may be necessary, leave under s. 96(1) be granted to the Applicant.

6 I should add for the sake of completeness that both parties were content to proceed on a separate hearing of the "duress issue" and, even though the matter was being addressed as a preliminary issue, the submissions of both parties requested that I make findings of fact on the duress issue as though this issue was being dealt with on a final basis.

7 The matter before the Tribunal is a preliminary question as to whether a deed of release signed by the applicant and the respondent on the last day of her employment is a bar to the applicant's proceedings or should be set aside.

8 The applicant contends that the deed entered into is either voidable or void and should be set aside.

9 The respondent seeks orders that leave not be granted to the applicant to pursue the proceedings or alternatively, if leave has already been given, the proceedings be dismissed pursuant to s.102 of the AD Act.

10 The deed is a one page document which includes the following paragraphs

The parties have agreed to settle all matters arising directly or indirectly out of or related to the employment of Employee on the basis of the terms set out in this deed. The Employer must make Payment to the Employee, which includes a total gross amount of $28,662, is inclusive of all Employee entitlements, notice and any ex gratia amounts, less applicable PAYG income tax on the execution of this deed. The Employee acknowledges that the above payment and fee reimbursement is in full and final satisfaction of all claims and Entitlements past, present and future arising out of her employment and termination with the employer. This deed may be pleaded by the Employer as a bar to any proceedings or cause of action brought by the Employee against the Employer. 11 The separation payment comprised 3 months' salary, annual leave of 236.55 hours, less pay in advance and tax. THE EVIDENCE 12 The applicant gave evidence and Mr Colman, the Sales and Marketing Director of the respondent gave evidence. The applicant was not legally represented on the occasion on which she gave evidence in chief. She was represented on the second day of hearing. Each had sworn an affidavit.

13 The applicant commenced work with the respondent on 8 January 2007 as the Key Account Manager for NSW.

14 The applicant's evidence is that on 25 August 2008 she drove to work arriving at the office at approximately 7:37am. On arriving at her desk she saw a note from Mr Colman stating "see me". She went to his office, knocked on the door, entered and Mr. Colman said "You're not happy here are you". She replied "What gave you that impression". Mr. Colman responded "Some people have told me". He said "We are terminating you, effective immediately".

15 The applicant said that Mr. Colman then discussed a recent Big W conference where no Artline product had been accepted into the back to school range. The applicant questioned Mr. Colman as to that matter and then asked "Is this negotiable" to which he replied "No".

16 The applicant's evidence is that she was then told that she would be receiving three months salary if she signed some documentation which she must do before leaving the office. Mr. Colman passed her some paper work and a pen and she asked if she could read it first. He replied "If you're quick". She had only read about a third of the document when Mr. Colman forcibly placed the pen in front of her and said "Sign it now". Mr. Colman said "If you don't sign it you'll get nothing". The applicant then questioned him about her one month's notice and leave entitlements to which he replied "As I said you'll get nothing".

17 Her evidence is she felt she had no alternative but to sign the document and she did so without having had time to read it fully or comprehend its meaning. She gave evidence that she was not quite sure of what his next move would be and had been in a violent relationship before and gets nervous.

18 She then followed Mr Colman to her workstation handed back her mobile phone and when seeking to clear out the contents of a locker was told that somebody would go through her desk and pass on the contents. She then left the premises.

19 The applicant estimates that a period of thirteen minutes passed from her arrival at work to when she left work. The respondent did not dispute that period of time.

20 In oral evidence the applicant said that she read the deed until she reached the paragraph concerning the amount of money. She estimates that it took 17 seconds to read that part of the release until it referred to money.

21 The applicant gave evidence that she understood a bonus would be due to her on 30 September 2008 and had calculated that to be about $15-$20,000. She saw the amount of $28,662 when she first opened the envelope in the car. She believed that the payment of money was the payment of that bonus. She said she wasn't sure what ex gratia meant. She gave evidence that she thought it was a mistype that 3 months salary was written because she thought that that amount represented the bonus. She gave evidence that she has spent the amount given and has not offered to return the money.

22 The respondent gave evidence that at the meeting with the applicant on 25 August 2008 he gave her the 'reasons for termination' letter, a schedule of payments and a deed of release. His evidence is that he advised the applicant that "The decision to terminate your employment is based on performance issues. There have been several instances of poor account management on your part, including issues surrounding the Big W, Metcash and Woolworths accounts". His evidence is the applicant then said words to the effect of "Is this termination negotiable" to which he responded "No we've made our decision".

23 The respondent denied that he was hostile or pressured the applicant or that he made the comments attributed to him namely "if you are quick" and "if you don't sign it you'll get nothing".

24 The respondent's evidence is that the applicant asked whether she should read the deed and he responded "I recommend that you should read the deed before signing it. You will receive all of your statutory entitlements plus an ex gratia payment in consideration for signing the deed. If you choose not to sign the deed you will still receive your statutory entitlements but will forego the ex gratia payment of the separation payment".

25 His evidence is the applicant took about 5 minutes to read the deed, he remained silent while she did it and after she finished reading it, she asked for a pen and he handed it to her and then observed her sign the deed.

26 His evidence is that the termination documentation was placed in envelope and given to the applicant in his office not, as she indicated when she was exiting the building.

27 Various documents were tendered (exhibits 3 to 6) which set out the sales budget for the year 2007- 2008, the sales performance against the budget, the sales for the top 30 customers and budgets by customer and sales performance by branch and division.

28 Mr. Colman gave evidence by reference to these documents that the applicant was not "close to getting a bonus" because Woolworths was about $3m below budget by sales. Further, he gave evidence that the bonus scheme runs for the full financial year and the decision as to whether they are paid occurs after September 30. In cross examination he accepted that some bonuses had been paid when less than a full financial year had passed.

29 He gave evidence that he did not explain the meaning of 'ex gratia' and that he did not explain the deed or go through her statutory entitlements nor did he give her any opportunity to make any changes.

30 In cross examination he gave evidence that he did not ask her if she understood the deed. He disagreed that she had no opportunity to fully read the deed.

31 He gave evidence that he understood clause 5 of the deed concerning claims and entitlements prevented any claims being made although it did not include any personal injury which may have been suffered.

32 On re-examination Mr. Colman indicated that he believed the 13 minutes were comprised of 20 seconds for the applicant to get to his office, 8 minutes in the meeting, 20 seconds to walk back and a few minutes to have the discussions around the desk gather some person effects and leave the office. APPLICANT'S SUBMISSIONS 33 The applicant submits that the deed is either voidable or void and should be set aside for the following reasons: a)the deed is not a deed; b)the purported exclusion clauses does not operate to exclude liability of the respondent under the AD Act, the clauses are uncertain in their inclusion and application, are ambiguous in their meaning and the contra proferentem rule should apply; c)interpreting the clauses as operating to exclude the liability of the AD Act would be contrary to public policy and as such the clauses should be struck down; d)the behaviour by the respondent and the circumstances surrounding the execution of the deed manifest as unfair and unconscionable; and e)the applicant was under duress when the deed was executed. 34 The applicant submits that by executing the deed on 25 August 2008 when her employment was terminated, she agreed that in consideration of the payment to her of $28,662 that her employment with the company was terminated and that the payment represented a payment of all entitlements owed to her including a bonus which she expected.

35 The applicant submits it was not agreed that she would be barred from taking any further action of any kind against her employer and further that the behaviour of Mr. Coleman and the circumstances of his securing her signature caused her to sign the document without full knowledge and understanding of its scope and effect.

36 The applicant contends that the following evidence supports her submissions: a)That Mr Coleman alerted her to meeting only upon her arrival in the office that morning by way of sticky note. b)Mr. Coleman admitted he did not explain his understanding about the deed to her including that it did not apply to claims such as personal injuries sustained at work. c)Mr. Coleman did not give evidence that he informed her of her right to ask questions or request alterations, although his evidence was he did not preclude her from doing so. d)Mr. Coleman's evidence that the applicant nodded when reading the termination payout schedule and letter of termination, was contrary to his affidavit evidence. e)Mr. Coleman gave evidence that he did not explain the words ex gratia to the applicant. f)The haste with which Mr. Coleman had the applicant leave the office. h)The period of thirteen minutes does not support Mr. Coleman's evidence that the applicant read the deed for five minutes. i)Mr. Coleman's affidavit was not complete as to conversations he had had with the applicant. j)The evidence of Mr. Coleman that bonuses could be awarded for incomplete years and that the spreadsheet figures provided were incomplete and thus his evidence that the applicant was not entitled to a bonus should be not accepted over the applicant's assertion that she was eligible for a bonus. 37 The applicant submits that the deed is not a deed because it doesn't convey some privilege or thing to a person, the words hereby or the phrase by these presents is not used, it was not executed in the presence of any witnesses and there is no seal affixed.

38 The applicant submits that the deed, by purporting to exclude liability for any proceedings or cause of action is so broad and uncertain and contains ambiguity. The deed was not intended to exclude liability for such actions as occupier's liability and negligence although there is no reference in the deed to the limitation of any exclusion as determined by statute.

39 It was further submitted that if the content of the exclusion is harsh or stringent in what it is contemplated to cover, the person for whose benefit it exists has an obligation to draw attention to it so as to provide adequate notice to the person those rights are being affected.

40 In addition, it was submitted that any attempt to contract out or exclude liability of the act offends public policy.

41 The applicant further contended that the respondent engaged in unconscionable conduct and/or misleading and deceptive conduct such as the deed should be set aside. In this submission the applicant relied upon a number of cases determined pursuant to the Trade Practices Act 1974.

42 The applicant submitted that there was unfairness by reference to the bargaining position of the parties, the conduct of the parties in the negotiations, the mutual understanding of the parties, the capability of the applicant to appreciate the bargain being made and the ultimate operation of the contract. The applicant referred to decisions in the Full Court of Federal Court and the Court of Appeal concerning unfairness in the terms of the Industrial Relations Act 1996.

43 Finally, the applicant argued that she was under duress because of the combination of circumstances including the failure of Mr. Coleman to explain the effect of the deed, to provide her with all the documents and to explain what the termination payment was for, the statement that if the deed was not signed she would receive nothing, the haste of the exchange, his behaviour was "approaching intimidatory" and that an opportunity was not provided to the applicant to review the deed and other documents.

44 The applicant referred to Universe Tankships Inc of Monrovia v International Transport Workers Federation (1983) IAC 366 in which duress was defined as follows: "there must be pressure, the practical effect of which is compulsion or absence of choice. Compulsion is variously described in the authorities as coercion or the vitiation of consent. The classic case of duress is however, not the lack of will to submit but the victim's intentional submission arising from the realisation that there is no other practical choice open to him".

45 The applicant contended that the whole deed should be set aside and not just the offending clause. THE RESPONDENT'S SUBMISSIONS 46 The respondent seeks that the proceedings be dismissed pursuant to s.102 of the AD Act.

47 The respondent submits that at the time the deed was signed the applicant was in a position to be aware of and know of any matters that she anticipated would be affected by her signing the deed. The applicant did not meet the criteria to be paid a bonus and that a failure to perform her duties to an acceptable standard was the reason for her termination of employment.

48 Further, the respondent submits that the monies paid were in consideration for the release provided by the applicant in the deed, these monies were not returned and that the conduct of the applicant amounts to an affirmation of the deed.

49 Further, the Tribunal should not take the applicant's evidence at its highest in determining the s.102 application because, the Tribunal was not being asked to dismiss the claim because of the frivolous nature of the substantive complaint of discrimination.

50 The respondent refers to differences between the evidence the applicant gave in her statement and orally in relation to the number of documents she reviewed at the meeting, whether the pen was placed or slammed on the desk.

51 The respondent submits that the applicant's evidence that she had only read about a third of the deed was not credible, as she conceded she had read the part in relation to settling all matters related to the employment on the basis of the terms of the deed.

52 The applicant in oral evidence said by signing the deed she was making an agreement to claim no more entitlements and thus appreciated that she was signing away some rights in the effect of a release. Combined with her evidence of receiving three months salary, the respondent submitted that the applicant appreciated she would be getting consideration for any signing away of her rights to make claims.

53 The respondent submits there was no ambiguity as to the meaning and effect of the deed. The application before the Tribunal was not conducted on the basis of breach of public policy but was limited to the issue of duress. It was submitted that the applicant cannot reasonably submit that parties cannot compromise discrimination claims by agreement.

54 The respondent submits that the applicant, even if accepted that the applicant did not read the whole of the deed, signed the deed.

55 The respondent submits that the principle of unconscionable conduct is based on special disadvantage which does not arise from the evidence; further the Tribunal is not vested with the jurisdiction to determine matters under the Trade Practices Act. Similarly the respondent claims that the applicant's submissions relating to unfairness are misguided as the Tribunal is not vested with statutory jurisdiction under s.106 of the Industrial Relations Act.

56 In relation to duress, the respondent submits as follows: a)The applicant has accepted the consideration. b)The applicant had the practical alternative of refusing to sign and leaving the premises and asserting her legal rights. c)The applicant elected to take a course financially advantageous to her. d)The applicant did not convey to the respondent at the meeting feelings of confusion, stress or pressure. e)Mr. Coleman was inexperienced in terminating employees and endeavoured to complete the meeting expeditiously for the benefit of the applicant. f)The respondent's evidence that the applicant was provided with the agreement and that Mr. Coleman denied he told the applicant she would get nothing. g)The respondent rejects the applicant's submissions relating to severance as not relevant as the issue is whether the deed was executed under duress if so, it is voidable. h)The conduct of the applicant, particularly in retaining the consideration is consistent with having affirmed the deed. Thus even if the deed was found voidable based on duress the applicant's conduct is consistent only with affirming the deed.

57 The respondent referred to a decision of Patch JR in Tunbridge v Linde Material Handling Pty Limited (1997) IR 115 as follows:

"…it does not necessarily follow that he had no practical alternative but to sign the deed of release. He did have a practical or reasonable alternative of which he was aware. This was to refuse to sign it and to thereby maintain his rights to take legal action. But in order to achieve the better financial result, the applicant chose to sign the deed of release and to accept an extra month's salary in return" 58 The respondent referred to a decision of the Victorian Supreme Court in Blooomingdale Holdings Pty Ltd v 63 Buckley Street Pty Ltd [2008] VSC 168 in which Hargrave J referred to the relevant legal principles not being in doubt and that if a party's signature to a contract is procured by duress, the resulting contract is voidable, not void.

59 The respondent also referred to Pittorino v Meynert (as Executrix) of the wills of Guiseppe Pittorino (dec) and Jessipina Pittorino (dec) and Ors [2002] WASC 76 which concerned an application by the plaintiff to set aside a mediation agreement, as relevant to the acceptance of the mediated settlement monies as acceptance of the terms of settlement.

60 In that case, the mediation agreement was signed by the plaintiff and her solicitor. There was no suggestion of economic duress, instead it had been suggested that there was undue pressure exerted on the plaintiff. The agreement was that the plaintiff would receive a portion of the amount within seven days. Her evidence was that she had used that money.

61 Scott J found that undue pressure had not been made out, however, if it had there was no pressure on the plaintiff at the time at which she accepted the balance of the sum owing, which she realised was paid pursuant to the terms of the mediation agreement. CONSIDERATION 62 The Tribunal has jurisdiction to determine whether the deed is a bar to the proceedings brought by the applicant. (See Chi v Coles Supermarket Australia Pty Limited (EOD) [2006] NSWADTAP 3, Sebastian v Rail Infrastructure Corporation & Ors [2005] NSWADT 281 at [43] to [50] and Qantas Airways Ltd v Gubbins and Others (1992) 28 NSWLR 26 at 31A-B.)

63 The applicant raised a number of grounds upon which she asserted the deed of release should not operate as a bar to proceedings in the ADT. I will deal first with the submission that the deed is void or voidable by reason of being procured by duress.

64 The test in relation to economic duress was set out by McHugh JA in Crescendo Management Pty Ltd v Westpac Banking Corporation (1988) 19 NSWLR 40 at 45 said:

"The proper approach in determining whether there has been economic duress is to ask whether any applied pressure induced the victim to enter the contract and then ask whether that pressure went beyond what the law is prepared to countenance as legitimate? Pressure will be illegitimate if it consists of unlawful threats or amounts to unconscionable conduct…It is unnecessary for the victim to prove that the illegitimate pressure was the sole reason for him entering into the contract. It is sufficient that the illegitimate pressure was one of the reasons for the person entering the contract. Once the evidence establishes that the pressure exerted on the victim was illegitimate, the onus lies on the person applying the pressure to show that it made no contribution to the victim entering into the agreement." 65 In Universe Tankships Inc of Monrovia v International Transport Workers Federation (1983) IAC 366, Lord Scarman considered the circumstances which the law regards the pressure as legitimate. In determining what is legitimate, two matters may have to be considered. The first is as to the nature of the pressure. In many cases this will be decisive, though not in every case. And so the second question may have to be considered, namely, the nature of the demand which the pressure is applied to support. 66 In addition to considering these matters, the response of the person claiming duress is a relevant factor. That person may often have the alternative of litigating rather than signing a contract under duress. That possibility alone would not make the person's conduct in signing voluntary, given the uncertainty, expense and delay associated with court proceedings (see Mason v New South Wales (1958) 102 CLR 108 at 145).

67 I accept the applicant's account of what occurred in Mr Colman's office. I have taken into account the submission of the respondent that Mr Colman was inexperienced in terminating employees and did it quickly. I accept that the applicant felt pressured by the statement made by Mr Colman that if she did not sign the document she would get nothing. I accept her evidence that she interpreted that to include her lawful entitlements.

68 I am satisfied that, in light of the chronology given by the applicant, and largely agreed by the respondent, 13 minutes which elapsed between the applicant arriving at the premises and leaving them, did not permit sufficient time in Mr Colman's office for the applicant to read, understand and appreciate the terms of the deed of release.

69 I accept that she believed that the amount paid represented a bonus to which she thought she was entitled, even if mistakenly so. Mr Colman accepted that bonuses had been paid for periods short of 12 months.

70 In determining this matter, I have had regard to the fact that the applicant did not have an opportunity to seek legal advice or any independent advice and she was not aware in advance of the matters to be discussed at the meeting.

71 I am satisfied that Mr Colman used pressure in the form of indicating to the applicant that she would get nothing, including her statutory entitlements, if she did not sign the deed, and in the amount of time he permitted her to read the document and that that pressure was illegitimate, and was applied in order to compel her to sign the deed.

72 That pressure was illegitimate because it amounted to a threat to withhold monies which were due to the applicant under her employment contract, namely leave entitlements amounting to 236.55 hours.

73 I am satisfied that that pressure was at least one of the reasons which caused the applicant to sign the deed and that she believed she had no reasonable alternative.

74 That the applicant has not sought to return the monies paid, is not a matter which persuades me, that in all the circumstances, in particular her understanding as to her entitlement of a bonus, the deed was not signed under duress.

75 The Tribunal finds that the contract is voidable and therefore is, at the election of the applicant, not a bar to a claim for unlawful discrimination being made and determined.

76 Given this decision, it is not necessary to consider that other matters raised by the applicant, although it is noted that the proceedings were brought on the basis that the deed was procured by duress.

77 It is also unnecessary to consider the respondent's application for dismissal of the proceedings pursuant to s.102. The preliminary hearing was for the purpose of determining whether the deed of release was a bar to the proceedings brought by the applicant. Any application for s.102 is more appropriately made in relation to the substantive proceedings.

78 There will be no order for costs in these proceedings unless a party files and serves an application for costs, with supporting submissions, within 28 days. In such event, the opposing party or parties must file and serve submissions in response within a further 28 days. The question of costs will then be determined 'on the papers', pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.

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