s.394 - Unfair dismissal

Certis Security Australia (Victoria) Pty Ltd T/A BRI Security

Application for an unfair dismissal remedy- request to re-open application - binding settlement agreement - accord and satisfaction extinguishes cause of action - application dismissed pursuant to s.587 of the FW Act.

[1] On 28 May 2020 Mr Thinagaran Segran (Applicant) made an application to the Fair Work Commission seeking relief from unfair dismissal. The Applicant had been employed by Certis Australia (Victoria) Pty Ltd T/A BRI Security[1] (Respondent) as a security guard. The application was subject to conciliation before a staff conciliator of the Commission on 25 June 2020. As a result of that conciliation the matter apparently was resolved. At the conciliation the Respondent was represented by HWL Ebsworth Lawyers while the Applicant was unrepresented.

[2] On 3 July 2020 the Applicant's lawyer (retained after the conciliation) wrote to HWL Ebsworth Lawyers and advised that, while the Applicant had reached agreement, the consideration under the Agreement was not what the Applicant was otherwise entitled to in redundancy payment under the Fair Work Act 2009 (FW Act). The Applicant's lawyer therefore sought payment to the Applicant of the amounts owing to him.

[3] On 7 July 2020 the Applicant's lawyer wrote to the Commission requesting that the unfair dismissal application be re-opened.

[4] As a result of this request the Commission wrote to the parties and issued directions with respect to filing submissions in relation to the request to re-open the unfair dismissal application and as to whether a binding settlement agreement had been reached.

[5] The parties each filed submissions in accordance with the Directions. They advised that they are content for the Commission to resolve the application on the basis of the submissions filed.

[6] The Applicant submits that the conciliation did occur on 25 June 2020 but that, whilst a Deed of Release (Deed) was drafted it has not been signed by either party and has not been executed.

[7] The Applicant submits that the conciliation was not conducted in such a way as to the protect the Applicant's interests. The Applicant felt overwhelmed by the conciliation conference and did not receive "proper support" from the conciliator. The Applicant was under financial stress and was feeling anxious which affected his decision making abilities.

[8] The day following the conciliation the Applicant sought legal assistance.

[9] The Applicant says that the Deed provides payment of a sum to the Applicant less than his legal entitlements (to redundancy) under the FW Act_._

[10] The Applicant submits that:

• conciliation is an informal approach aimed at resolving complaints and is not binding on the parties involved;

• it is in the public interest to re-open the matter to rectify the injustice imposed on him;

• he was dismissed by reason of redundancy and to deny him what is owed "would set an unwanted precedent for future cases"; and

• he has been underpaid for his period of his employment.

[11] The Respondent says that the conciliation was not "unfair or insufficient". It says that the conciliator explained the process of conciliation, allowed the parties to express their views, outlined the options of the Applicant, conveyed offers, assisted the parties in reaching an agreement, offered the Applicant a 3 day cooling off period and asked the Applicant if he had questions of the process or the agreement reached.

[12] The Respondent says the Applicant was articulate in his oral submissions in conciliation and in his written application for unfair dismissal. The Respondent submits that at no stage during the conciliation did the Applicant express any concern or state that he was anxious or unsure or that he did not consent to the agreement reached.

[13] The Respondent says that the Applicant chose to waive the cooling off period.

[14] Following the conciliation the Conciliator wrote to the parties confirming that an agreement had been reached, the Applicant had agreed to waive the cooling off period and that the Respondent's representative would draft the Deed.

[15] The Deed was provided to the Applicant on 30 June 2020 under cover of an email which stated, in part, "Please find attached a copy of the Deed of Release which reflects the terms of settlement agreed during conciliation".

[16] On 3 July 2020 the Respondent's representative followed up with the Applicant with respect to the Deed.

[17] The Respondent says that a binding agreement was reached by the parties in conciliation. The agreed terms included a settlement amount; that the Applicant would discontinue his unfair dismissal application; and mutual release, non-disparagement and confidentiality terms.

[18] The Respondent says that the agreement reached is the kind contemplated by category 2 in Masters v Cameron.[2] It says that the parties intended to and did settle the unfair dismissal application at conciliation.

[19] The Respondent submits that the application for unfair dismissal should be dismissed pursuant to s.587 of the FW Act because a binding settlement agreement has been reached or, in the alternative, because the application has no reasonable prospect of success.

[20] The Respondent says further that the application has no reasonable prospect of success as the Applicant says that his dismissal was a genuine redundancy. Section 385 of the FW Act provides that a person has been unfairly dismissed if the dismissal was not a genuine redundancy. On the Applicant's own submissions the dismissal was a genuine redundancy such that he could not have been unfairly dismissed.

[21] The Applicant submits that the Commission does have jurisdiction to deal with the application as the Commission has power to hear disputes in accordance with the dispute resolution procedure of an award or agreement and the Applicant's employment was covered by the Security Services Industry Award 2010[3] (SSI Award). Jurisdiction therefore exists under the Award to hear and determine the matter.

[22] The Applicant submits that all correspondence sent on his behalf from 3 July 2020 indicated that he did not voluntarily waive the cooling off period offered to him in conciliation.

[23] The Applicant reiterated that conciliation is an informal approach to resolving complaints and "is not binding to any parties involved" and disputes that there is a binding agreement between the parties.

[24] The Applicant maintains that the conciliation process was unfair and insufficient, the Applicant is from a non-English speaking background, was not represented while the Respondent did have a "strong legal team" present, did not have the resources or knowledge to express "proper dissatisfaction" and was significantly disadvantaged in the conciliation.

[25] Further, the Applicant says that the offer (payment of $888.02) is well short of the Applicant's SSI Award and FW Act entitlement for redundancy (of $7,187.24) and therefore represents a substantial injustice and underpayment.

[26] If the Respondent knew the redundancy of the Applicant was genuine then it must have known that the offer made to the Applicant was well short of what was owed to him.

[27] In Masters v Cameron the High Court held that:

9. Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three cases. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.

10. In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. Of these two cases the first is the more common. Throughout the decisions on this branch of the law the proposition is insisted upon which Lord Blackburn expressed in Rossiter v. Miller [1877] UKLawRpCh 168; (1878) 3 App Cas 1124 when he said that the mere fact that the parties have expressly stipulated that there shall afterwards be a formal agreement prepared, embodying the terms, which shall be signed by the parties does not, by itself, show that they continue merely in negotiation. His Lordship proceeded: " . . . as soon as the fact is established of the final mutual assent of the parties so that those who draw up the formal agreement have not the power to vary the terms already settled, I think the contract is completed" (1878) 3 App Cas, at p 1151 : see also Sinclair, Scott & Co. Ltd. v. Naughton [1929] HCA 34; (1929) 43 CLR 310, at p 317 . A case of the second class came before this Court in Niesmann v. Collingridge [1921] HCA 19; (1921) 29 CLR 177 where all the essential terms of a contract had been agreed upon, and the only reference to the execution of a further document was in the term as to price, which stipulated that payment should be made "on the signing of the contract". Rich and Starke JJ. observed (1921) 29 CLR, at pp 184, 185 that this did not make the signing of a contract a condition of agreement, but made it a condition of the obligation to pay, and carried a necessary implication that each party would sign a contract in accordance with the terms of agreement. Their Honours, agreeing with Knox C.J., held that there was no difficulty in decreeing specific performance of the agreement, "and so compelling the performance of a stipulation of the agreement necessary to its carrying out and due completion" (1921) 29 CLR, at p 185 : see also O'Brien v. Dawson [1942] HCA 8; (1942) 66 CLR 18, at p 31.

[28] It is argued in this case that the parties reached agreement in conciliation and proposed to have those terms reflected fully in a written agreement but intended to be bound by the terms of the agreement. That is, the Respondent says that the agreement reached is of the second type referred to above. The Applicant does not appear to dispute that some agreement was reached in conciliation but says that it was an unfair agreement given the Applicant's circumstances.

[29] In Australia Post v Gorman[4] (Gorman) Besanko J said:

30 The applicant's case is that there was an accord and satisfaction between it and the first respondent. It is not suggested that the agreement constituted an accord executory (McDermott v Black [1940] HCA 4; (1940) 63 CLR 161 at 184 per Dixon J (as his Honour then was)). It would not matter if the accord and satisfaction was conditional as the applicant is prepared to carry out its obligations under the agreement (Seddon N and Ellinghaus M, Cheshire and Fifoot's Law of Contract (8th Australian ed, LexisNexis Butterworths, 2002) [4.24]).

31 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.

32 It seems to me that the fact of an accord and satisfaction can either be raised under the Act at an 'interlocutory' stage and at the final hearing or it cannot be raised at all. As it is a complete answer to a claim there would be no reason why it could be raised at a final hearing but not at a preliminary stage under a section such as s 587.

33 There is nothing in the Act which suggests that an accord and satisfaction should not be recognised. At a general level the object of Chapter 3 Part 3-2 and the general statements of the manner in which FWA is to perform its functions and the matters to which it is to have regard are consistent with the recognition of an accord and satisfaction. Furthermore, the words of subsection 587(1) are wide enough to include the recognition of an accord and satisfaction. As I have said, a valid and effective accord and satisfaction extinguishes the pre-existing cause of action and continued pursuit of an application based on such cause of action is clearly capable of being considered to be frivolous or vexatious or without reasonable prospects of success.

34 Although the Australian Industrial Relations Commission was dealing with s 111(1)(t) of the Workplace Relations Act 1996 (Cth) in Zoiti-Licastro v Australian Taxation Office the considerations which led it to conclude that the Senior Deputy President had the power to dismiss an application on a summary basis on the ground that there was a binding settlement agreement apply with equal force under the Act.

[30] There appears to be no disagreement between the parties that an agreement to settle the unfair dismissal application was reached between the parties on 25 June 2020. Further, there is no disagreement between the parties that the written terms of the Deed provided by the Respondent's lawyers to the Applicant on 30 June 2020 reflected the terms agreed in conciliation. Further, the evidence before me supports a conclusion that the Applicant did waive the cooling off period offered to him although I accept that he did seek legal advice after having given that waiver.

[31] It does appear that the primary complaint of the Applicant is that the conciliation was not binding, was unfair, that he was disadvantaged and the offer was disproportionate (or insufficient) to what was otherwise owed to him.

[32] There is nothing in the submissions before me to suggest that there was not an offer and acceptance of the terms of the agreement during conciliation or that the Applicant was not capable of entering into a legally binding agreement with the Respondent.

[33] In this case I am satisfied that an "accord and satisfaction" has been reached. That the Applicant has not signed the Deed or it has not been executed is not to the point. The agreement was reached in conciliation. It was then to be more fully set out in the Deed and this was done by the Respondent on 30 June 2020 (although why it took 4 business days for this to be done is unclear). Any cause of action now resides in the agreement reached.

[34] To the extent that the Applicant now says that the agreement was not fairly reached this is not a matter of the Commission. The agreement is made, the existing cause of action (the unfair dismissal application) is "extinguished".

[35] For these reasons the application to "re-open" the unfair dismissal application - which would require the agreement reached to be set aside - is not available to the Commission and the application must be dismissed.

[36] In reaching my conclusion I would observe that there is no claim of any improper conduct of the Conciliator who worked with the parties on this matter. Rather it appears that the Applicant, on reflection but having refused a cooling off period, has changed his mind as to the fairness of the agreement reached. There is no indication that the Respondent refused an agreement if the Applicant was given a cooling off period. The purpose of the cooling off period is to allow an unrepresented party time to consider and digest what is put for agreement. To not take that option and then complain of unfairness is to attempt to shift the responsibility for the decision of the Applicant onto the Conciliator.

[37] If it is claimed that the Applicant was coerced into the agreement (although this does not appear to be put in such terms) it is unclear how the Commission can deal with that. To set aside an agreement reached or to claim the agreement is void are not matters, it would appear to me, within the jurisdiction of the Commission.

[38] To the extent that the Applicant says that conciliation is not binding, that may so. What is binding however is the agreement that was reached by the parties in that conciliation for all of the reasons outlined above in Gorman.

[39] As to the Applicant's submission that it is in the public interest for the Commission to hear the unfair dismissal application that may be so. However, the Commission's powers are limited by the provisions of the FW Act. The Commission does not have power at large to hear matters because they might be in the public interest. This is, therefore, not a relevant consideration.

[40] On the material before the Commission the Commission does not appear to have jurisdiction to deal with the Applicant's dispute in relation to his redundancy under the SSI Award or the FW Act. The only application by the Applicant before the Commission is under Part 3-2 of the FW Act. The Commission's power to deal with a dispute under an award is found in Part 6-2 of the FW Act. Further, to make an application or for the Commission to deal with a dispute an applicant must be an employee. At the time of making his application for unfair dismissal the Applicant was no longer an employee of the Respondent - his employment had been terminated. The Commission would therefore not have jurisdiction to deal with a dispute in accordance with the SSI Award.

[41] For the reasons given above I am satisfied that an agreement was reached between the Applicant and the Respondent of the second type referred to in Masters v Cameron. The terms were agreed and it was intended that those terms be set out more fully in a written agreement.

[42] I am satisfied that the agreement reached "extinguishes the existing cause of action"[5] - that is the unfair dismissal application.

[43] For these reasons I will grant the application of the Respondent to dismiss the application pursuant to s.587 of the FW Act on the grounds that a binding settlement agreement has been reached. In this regard I do note that s.587 of the FW Act does not limit the grounds on which an application may be dismissed such that it is open to me to dismiss for this reason.

[44] The Respondent should not take this decision as any endorsement of the Commission of its basis for not making redundancy payment to the Applicant.

[45] An order[6] dismissing the application will be issued in conjunction with his decision.

[1] The Applicant named the Respondent to his application as "Certis Australia Pty Ltd T/A Certis Australia". The Respondent, in its response gave its correct name as "Certis Australia (Victoria) Pty Ltd T/A BRI Security". This is the name used in this decision.

[2] [1954] HCA 72.

[3] MA000016.

[4] [2011] FCA 975.

[6] PR721701.

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