//
[86]
[2023] FWC 697
General information, not legal advice.
Fair Work Commission
2023-03-27
Original judgment source is linked above.
s.394 - Unfair dismissal
Canterbury Surrey Hills Community Finance Limited
Application for an unfair dismissal remedy - prior settlement agreement - whether settlement agreement should be set aside - whether extension of time allowed - application dismissed.
[1] On 30 January 2023, Mr Nicholas Azar made an application (Application) to the Fair Work Commission (Commission) for relief from unfair dismissal under s.394 of the Fair Work Act 2009 (the Act). The Applicant alleges he was unfairly dismissed by Canterbury Surrey Hills Community Finance Limited (Respondent) on 15 September 2021.
[2] This decision concerns two key issues. Firstly, as the Respondent contends, is whether a settlement agreement made by the parties in October 2021 acts as a complete bar to the application. Second, if the settlement agreement does not act as a bar, should Mr Azar be granted an extension of time under s.394(3) of the Act to make the Application?
[3] I conducted a hearing of the matter on 2 March 2023. Mr Azar tendered a witness statement on behalf of himself. The Respondent tendered a statement of Mr Adrian Sbrugnera, Senior Manager, Employee Relations, for the Respondent. Neither witness was required for cross-examination.
[4] The Respondent is a 'community bank', trading as part of the Bendigo Bank network. Mr Azar had been employed with the Respondent since 2016.
[5] There is a procedural history to the dispute between the parties, which is necessary to briefly explain to understand these reasons. That history began in about March 2021, when the Respondent informed Mr Azar it was investigating certain allegations. As there remains sensitivity to the reasons for the termination of employment and because there is a settlement agreement requiring the parties to maintain confidentiality about those matters, I will not set out the details of the competing claims here, except so far as to identify the matters I must decide.
[6] From around May 2021, it appears Mr Azar was represented by solicitors while that investigation continued.
[7] In about mid-August 2021, it appears Mr Azar was informed of the Respondent's decision to terminate his employment, which would be effective on 15 September 2021.
[8] On 9 September 2021, Mr Azar commenced an application in the Victorian Civil and Administrative Tribunal (VCAT).
[9] On 15 September 2021, the termination of Mr Azar's employment took effect.
[10] On 16 September 2021, Mr Azar filed an application for an unfair dismissal remedy (the 2021 application).
[11] On 6 October 2021, the Respondent filed a 'Form F3' response to the 2021 application. That response set out a timeline of events leading up to the termination and stated the reasons for the termination (which, for the reasons I have described, I will not set out in this decision).
[12] On 21 October 2021, the parties attended a conciliation conference before the Commission. The matter did not resolve that day but, in the days that followed, discussions between the parties continued with a view to resolution.
[13] On 25 October 2021, following the discussions between the parties, the Respondent forwarded a proposed settlement agreement to Mr Azar's solicitor for review. There was some further discussion that occurred, which resulted in one amendment before a further (and final) draft was prepared.
[14] On 27 October 2021, each of the parties executed and exchanged a written settlement agreement (Settlement Agreement).
[15] On 4 November 2021, Mr Azar filed a Notice of Discontinuance in the proscribed form in respect of the 2021 Application. It would appear Mr Azar also discontinued his claim in VCAT at around the same time.
[16] I will return to the terms of the Settlement Agreement below but, for present purposes, the parties then went their separate ways, with the matter ostensibly resolved, until events occurring around a year later.
[17] In November 2022, Mr Azar applied for a prospective position at a different financial institution. As part of that application, Mr Azar gave written consent for the prospective employer to conduct a reference check. Prior to replying to the reference check request, the Respondent wrote to Mr Azar setting out the terms in which it intended to respond to the prospective employer. Mr Azar objected to the proposed response. He considered that the proposed response would, if sent, amount to a contravention of the Settlement Agreement.
[18] Correspondence ensued between the parties in relation to that matter, without resolution. In short, the Respondent's position was that it was permitted, and in fact required, to provide the proposed response due to the requirements of the ASIC Corporations and Credit (Reference Checking and Information Sharing Protocol) Instrument 2021/429 (ASIC protocol).
[20] The Recitals to the Settlement Agreement record, in a largely orthodox way, that the Respondent terminated Mr Azar's employment on 15 September 2021 but that the termination will be treated as a resignation from employment for all purposes, which was defined as the "Cessation". The Recitals noted Mr Azar commenced a proceeding in VCAT, as well as the 2021 application. The Recitals record that the bank was defending both proceedings and denied liability of any kind in respect of both of them. They also recorded that "without admissions of any kind", the parties agreed to settle their differences and all issues between them.
[21] Clause 1 of the Settlement Agreement was titled "Provision of benefits to Mr Azar". The benefits, described in that clause, were to be provided within 14 days of the Respondent receiving a properly executed copy of the Settlement Agreement from Mr Azar.
[22] There were clauses for "withholding", "discontinuance", Mr Azar's "ongoing obligations", "non-disparagement", "costs and expenses", and "interpretation". It is not necessary to explain or set these out.
[23] Clause 5 is titled "release". Clause 5(a), which applies to Mr Azar, is as follows:
"In consideration for this Agreement, Mr Azar absolutely releases and forever discharges the Bank from and against all claims, suits, demands, liabilities, actions, damages and costs of whatsoever kind relating to or arising out of the Employment, the Cessation, Proceeding 1 and Proceeding 2, which Mr Azar has or may have had in the future against the Bank but for this Agreement (including but not limited to any action under Federal or State anti-discrimination legislation or the Fair Work Act 2009 (Cth)), but excluding any workers' compensation claim for personal injury under statute or any claim under superannuation guarantee legislation (Claims)."
[24] Clause 5(b) is a release applying to the Respondent in relevantly similar terms.
[25] Clause 6 is titled "Confidentiality". It provides:
"(a) The parties must keep absolutely confidential and not divulge or
(ii) the events, discussions and circumstances leading to the making of this Agreement.
(b) This clause does not preclude the parties from disclosing the matters referred to in sub-clause 6(a):
(ii) with the express written authority of each other party;
(iii) for the purpose of obtaining confidential accounting or legal advice;
(v) in the case of the Bank, where Mr Azar has provided written consent to a prospective employer for a Conduct Background check to be carried out with the Bank in accordance with the Australian Banking Association's Industry Register - Industry Conduct Background Check (Protocol). Notwithstanding, the Bank confirms that it considers the misconduct which lead to the Cessation to not constitute misconduct for the purposes of the Protocol. For the avoidance of doubt, the Bank confirms it will respond with 'No' or 'N/A' to the Protocol questions listed in "Appendix 1- Conduct Background Check"; or
(vi) in the case of the Bank, as may be reasonably required in the ordinary course of business, including but not limited to, concerning insurance and/or for internal reporting and operational purposes.
[26] Clause 8 is titled "No admission". It provides:
"This Agreement will not in any way be construed as an admission by the Bank of any acts whatsoever against Mr Azar and the Bank specifically disclaims any liability to Mr Azar."
[27] Clause 9 is titled "Absolute bar". Clause 9(a) provides:
"Except by way of enforcement of this Agreement, this Agreement will operate as an absolute bar to all Claims of whatsoever kind threatened, brought or attempted to be brought by or in the name of any of Mr Azar against the Bank."
[28] Clause 12 is titled "Independent advice". It provides:
(a) carefully read and fully understood all the provisions and the legal significance and effect of executing this Agreement;
(b) had the opportunity to obtain independent legal advice about all aspects of this Agreement; and
[29] Clause 13 is titled "General provisions" and clause 13(b) provides:
"This Agreement is governed by the laws of Victoria and the Commonwealth of Australia. Each party irrevocably submits to the non-exclusive jurisdiction of the courts of Victoria and the Commonwealth of Australia and the courts hearing appeals from those courts."
[30] An extract of the "Australian Banking Association's Industry Register - Industry Conduct Background Check" (ABA protocol), referred to in the confidentiality clause of the Settlement Agreement, was attached to the copies signed by the parties. That extract set out a list of questions that, evidently, form part of the ABA protocol as follows:
1B. If the answer to question 1A is yes, has there been a final determination from a court or tribunal that:
ii) the evidence did not establish the person was engaged in Misconduct?
1C. If the answer to question 1A is yes, is there any litigation or other legal challenge to the dismissal currently before a court or tribunal which alleges that:
ii) the evidence did not establish the person was engaged in Misconduct.
2A. Did the person resign from their employment whilst the subject of an open and continuing Investigation into their alleged Misconduct of which they had been notified?
*If an investigation was concluded subsequent to the resignation of the employee and the allegation of Misconduct was not substantiated, answer "No" to Question 2A.
2B. Did the person resign from their employment after they were notified of a finding that they engaged in Misconduct following an Investigation but before any dismissal took effect?
2C. Is the person still employed but been notified by the employer of an Investigation into their alleged Misconduct and the investigation is still ongoing?
3. What is/was the category of actual or alleged Misconduct?"
[31] It can be seen that the ABA protocol adopts a defined term for "Misconduct". A complete copy of the ABA protocol was included with the Respondent's 'Form F3' response. The definition of Misconduct is:
"Misconduct means any one or more of the following types of actual or alleged conduct, that, if found may give the Employer a basis for dismissal:
These findings are made using the civil standard of proof, being 'on the balance of probabilities'."
[32] For completeness, the definition of "material", as it applied to the above definition of "Misconduct", was "wilful, serious, deliberate or grossly negligent."
Settlement Agreement is prima facie enforceable
[33] In my view, the Settlement Agreement is prima facie binding on the parties. Clauses 5(a) and (b) of the Settlement Agreement were expressed to be immediately binding in "consider for this Agreement". Similarly, the bar in cl. 9 was expressed to be operable by "this Agreement".
[35] As stated by Besanko J in Australian Postal Corporation v Gorman [2011] FCA 975; (2011) 196 FCR 126:
"An accord and satisfaction extinguishes the existing cause of action and replaces it with a new cause of action based on the agreement. A valid accord and satisfaction is not a discretionary factor relevant to the subsequent litigation of the original claim; it is an answer to the claim."
[36] I consider that Mr Azar's complaint that the Respondent's (proposed) response to the new prospective employer could only, on Mr Azar's case, constitute a breach of the Settlement Agreement. As clause 13(b) makes clear, it is the function of a Court, not of the Commission, to determine the rights and liabilities of the parties to the Settlement Agreement. For avoidance of doubt, I express no views on whether there was a prospective breach of not.
Should the Settlement Agreement be set aside?
[37] I stated above that the Settlement Agreement is 'prima facie' binding on the parties. I only do so, because Mr Azar seeks to have that agreement set aside for what is broadly described as "error".
[38] Mr Azar's witness statement evidence of the error is as follows:
"12. I strongly deny the assertions made by the Bank about me, and had been of the belief that the Agreement resolved the dispute about my dismissal on certain terms, specifically what the Bank would include in any reference to my prospective employers in the future. If I had known the Bank did not feel itself bound by those terms I would never have permitted my solicitor to lodge a Notice of Discontinuance in Application U2021/8446.
13. I believe that I was misled by the Bank, and that the Notice of Discontinuance was therefore filed in error."
[39] In his written submissions, Mr Azar draws attention to the difference between the Respondent's current position, in which it intends to describe "misconduct" to the prospective employer, and the confidentiality provision in cl.6(b)(v) of the Settlement Agreement where (on Mr Azar's submission) "[t]he Bank specifically stated there was "no misconduct"."
[40] I do not accept Mr Azar's construction of the Settlement Agreement. Clause 6(b)(v) is specifically aimed at background checks in accordance with the ABA protocol. As set out above, the ABA protocol provides a specific definition of "Misconduct". There is no inherent inconsistency with other uses of the term, particularly as they might apply to the ASIC protocol.
[41] With no disrespect to Mr Azar, who is clearly concerned by how events have turned out, the evidence before me falls a long way short of demonstrating an "error" or other conduct that would vitiate the Settlement Agreement. Even assuming some form of misrepresentation is alleged, the material before me does not disclose a misrepresentation. Specifically, cl. 6(b)(v) of the Settlement Agreement does not constitute a representation by the Respondent that there was no misconduct generally or no basis for dismissal. Nor does it constitute a representation that it would not comply with any valid request under the ASIC protocol (as distinct from the ABA protocol). Given my understanding that compliance with the ASIC protocol was mandatory, I cannot see how the Respondent could refuse such a request and it would appear to fall squarely within the carve out to cl. 6 for disclosures "as required by law".
[42] So far as there was a pre-contractual representation, any relevant representation contained in cl. 6 of the Settlement Agreement was only to the effect that the Respondent would answer "no" to a background check involving the specific definition of Misconduct for a request made under the ABA protocol.
[43] In any event, I also do not consider that I have power to set aside the Settlement Agreement. That determination, if it was to be made, is properly within the jurisdiction of a court, not the Commission.
[45] While it is not necessary for me to do so, given the parties have filed written submissions on whether an extension of time should be granted, I would briefly record that I would not extend the time required for Mr Azar to file a fresh unfair dismissal application for the purposes of s.394(3) of the Act.
[46] Having regard to the factors in s.394(3)(a) - (f), I consider that factors (b) (becoming aware of the dismissal after it took effect), (d) (prejudice to the Respondent), and (f) (fairness between other persons in a similar position) are largely neutral factors between the parties. The factor in s.394(3)(c) (action taken to dispute the dismissal) is a matter in Mr Azar's favour, as history records that he did dispute the dismissal actively.
[47] I consider that the factor in s.394(3)(a) (reasons for delay) tends strongly against a grant of extension of time. The reason for delay was the execution of a Settlement Agreement, combined with a dispute that arose a year after execution as to the application of (and entry into) that agreement. The delay is extensive. More generally, I also do not consider that it is desirable for a wait-and-see approach to confidentiality terms in settlement agreements to be taken with a view to recommencing the original claim if the settlement agreement does not fulfil one party's private expectations or hopes. As also set out above, I also do not consider it is the function of the Commission to judicially determine the parties' rights under such agreements or whether such agreements should be set aside.
[48] As to the merits of the proposed unfair dismissal application, when having regard to the terms of the Settlement Agreement, I consider the merits poor - indeed, that claim as been "extinguished". But even were the Settlement Agreement to be temporarily disregarded (which I do not consider appropriate) at best that factor might be neutral between the parties.
Printed by authority of the Commonwealth Government Printer
Nicholas Azar
Canterbury Surrey Hills Community Finance Limited [2023] FWC 697
(2011) 196 FCR 126
(1940) 63 CLR 161