Queensland Industrial Relations Commission s6

[Extract from Queensland Government Industrial Gazette, dated 25 May, 2007, Vol. 185, No. 4, pages 25-30]

QUEENSLAND INDUSTRIAL RELATIONS COMMISSION

Industrial Relations Act 1999 - s. 278 - power to recover unpaid wages and superannuation contribution etc.

The Australian Workers' Union of Employees, Queensland (for Chris Strohfeld) AND Toowoomba City Council (W/2005/73)

COMMISSIONER BROWN 14 May 2007

DECISION

On 6 April 2005 The Australian Workers' Union of Employees, Queensland (Applicant) lodged an application for the recovery of wages from the Toowoomba City Council (Respondent) pursuant to s. 278 of the Industrial Relations Act 1999 (the Act).

A series of conferences and discussions between the parties both with and without the assistance of the Commission led to what the parties believed was an agreement to settle the claim. This agreement was contained in a document entitled "Release Discharge and Indemnity" (Ex. 1) duly executed by the parties. Now reproduced is Ex. 1.

"IN CONSIDERATION of the Toowoomba City Council paying to the person described in the First Schedule ("Releasor") the sum of money referred to in the Second Schedule ("Settlement Money") paid in full and final satisfaction and discharge of all claims whatsoever which the Releasor, or any person on behalf of the Releasor, may have arising as a result of or in any way connected with the matter (as defined in the Fifth Schedule) the Releasor:-

1. Releases discharges and forever holds harmless the Toowoomba City Council ("the persons discharged") with respect to (and agrees to indemnify and keep indemnified the persons discharged in respect of any and all loss arising as a result of) any and all causes of action, claims, (including, but without limiting the reality of the foregoing, claims for legal costs, goods and services tax liability, interest and consequential loss of profit), demands, actions, suits or proceedings (including, but without limiting the generality of the foregoing the proceedings described in the Third Schedule ("present proceedings")) of whatsoever nature, which the Releasor, or any other person, may now have or at any time heretofore had or at any time hereafter may have against the persons discharged (and each of them) with respect to or in any way connected with the matter.

2. Agrees that this Release, Discharge and Indemnity may be pleaded as a bar to any action, suit or proceeding (including the present proceedings commenced now or taken at any time by the Releasor against the person discharged (and each of them) with respect to or in any way connected with the matter.

3. Acknowledges and agrees that the payment of the settlement money is made without any admission of liability on the part of the person discharged (and each of them) (or any of them) and is solely for the purpose of avoiding the uncertainty and expense or litigation.

4. Directs that the settlement money be paid to the representatives for the Releasor, whose name and address is set out in the Fourth Schedule, whose receipt for payment of the settlement money shall constitute a valid discharge.

5. The Releasor jointly and severally agrees to preserve total confidentiality in relation to the matter (as defined in the Fifth Schedule) and not, at any time, without the consent of the person discharged (and each of them) divulge, suffer or permit their advisers to divulge, to any person:-

(a) any details concerning the negotiations preceding this Release Discharge and Indemnity; and

(b) the nature or terms of this Release Discharge and Indemnity.

In the constructions and interpretation of this Release Discharge and Indemnity, where the circumstances so require:-

the singular shall include the plural and vice versa; and

the neuter shall include the personal gender and vice versa; and

the word "person" shall include natural person, Bodies Corporate or voluntary associations and also the person's heirs, executors, administrators, successors and/or assigns. 2

THE FIRST SCHEDULE

The Releasor: CHRISTOPHER BRIAN STROHFELD

THE SECOND SCHEDULE

The Settlement Money: Two Thousand Nine Hundred Dollars only ($2,900.00) all inclusive of damages, interests, costs and outlays. THE THIRD SCHEDULE

The Present Proceedings: Not applicable.

THE FOURTH SCHEDULE

Solicitors for the Releasor: Not applicable.

THE FIFTH SCHEDULE

The Matter: All and any claims relating to your employment with Toowoomba City Council to the date of this Agreement.

DATED this 31st day of October 2005.

SIGNED: CHRISTOPHER BRIAN STROHFELD".

After executing the document the parties subsequently disagreed as to the meaning of the words in the Second Schedule with the Applicant believing that Chris Strohfeld should have received all of the $2,900.00, with the Respondent additionally liable for any tax payable, and the Respondent believing that the settlement money nominated represented a gross amount and that they were legally bound to deduct tax. This they did and subsequently credited Chris Strohfeld's bank account with the sum of $2,016.00.

Chris Strohfeld, upon becoming aware of this, immediately complained to the Applicant.

Further conferences between the parties failed to resolve their differences. The Applicant, in the belief that the issue remained unresolved, sought to further the original application before the Queensland Industrial Relations Commission whilst the Respondent argued that Ex. 1 had compromised the application.

Consequently, the matter to be determined by the Commission as currently constituted, is whether or not the application has been compromised (see Amended Further Directions Order 21 March 2007).

As the original application was made pursuant to s. 278 the Applicant objected to the appearance for the Respondent of Ms Pradeepa Jayawardena York, a qualified lawyer. The Commission referred the parties to s. 320 of the Act and the likelihood of the exclusion of Ms York should this issue be dealt with pursuant to s. 278. Ms York advised the Commission that if she were to be excluded, the Respondent would require the matter to be adjourned as the Respondent would be unable to proceed until a new advocate was properly briefed.

After some discussion, the parties agreed that the most appropriate provision of the Act under which to determine this matter was s. 230, "Action on industrial dispute" and subsection (3)(b) which states:

"The commission may take the steps it considers appropriate for the prevention or prompt settlement of the dispute, by -

(b) if the commission considers conciliation has failed and the parties are unlikely to resolve the dispute - arbitration.".

In the view of the Commission this course was appropriate and in the public interest (see s. 230(1)(c)) having regard to the time resources and cost to the parties and the Commission, as well as the resources of the Toowoomba Court complex if the matter were to be adjourned and heard at another time.

Leave for Ms York to appear was granted. 3

Ms York raised a jurisdictional objection based on the Federal Work Choices legislation effective 27 March 2006, arguing that because the Respondent was a constitutional corporation, this Commission lacked the jurisdiction to hear the matter.

The Commission, in giving the decision from the Bench, cited the dates of the relevant events, namely the lodging of the application (6 April 2005), the execution of the Release Discharge and Indemnity (Ex. 1) (31 October 2005) and the emergence of the disagreement, (November/December 2005). The Commission concluded that as they all fell before 27 March 2006, the operative date for Work Choices, the Applicant had accrued the right to have the matter determined pursuant to the law as it then was and on this basis the jurisdictional objection was rejected.

The Commission was of the view that the constitutional, financial or trading corporate status of the Respondent needed no determination.

Chris Strohfeld and Ms Tracey Sharpe (District Secretary of The Australian Workers' Union of Employees, Queensland) gave evidence supporting the application. Both attested to their having been at all times of the opinion that they were discussing the settlement terms in "after tax" or "in the hand" terms.

Ms Sharpe stated that at various times during settlement negotiations she had used the term "in the hand" when talking with Mr McLoughlin (Manager People Development at Toowoomba City Council) and Mr McLoughlin recollected as much during his oral evidence.

Mr McLoughlin, however, was also consistent in his recollections that he at no time indicated agreement to the payment as a net figure and referred in evidence to a $3,000.00 limit placed on him by the Council (and in negotiations conveyed to Ms Sharpe) to support his claim in that to pay $2,900.00 and then also accept additional responsibility for tax, would have exceeded the $3,000.00 authorised limit.

In answer to questions from the Commission, Mr McLoughlin accepted that the deed would have been more complete had tax been specifically dealt with (Tp. 63 ll. 5/6).

Witnesses for both the Applicant and the Respondent were, in the view of the Commission, reliable. They answered questions directly and without any apparent guile.

Mr Eldon's submissions were that at all times in the lead up to the now disputed agreement, Chris Strohfeld and Tracey Sharpe held, and expressed the view to management, that the various settlement figures put forward by them in discussions were "in the hand" figures and that any tax obligation was to be met by the Respondent in addition to the settlement amount of $2,900.00.

His further submission was that the wording in Ex. 1, Schedule 2, did not authorise the Respondent to deduct tax from the amount and that the evidence of both Tracey Sharpe and Chris Strohfeld supported the contention that this was their clear understanding when they both read, and Mr Strohfeld signed, the document.

He submitted that Mr McLoughlin in his evidence had claimed to be an experienced industrial relations practitioner and yet had accepted in evidence that the terms of the settlement as they related to tax could have been clearer.

Ms York for the Respondent, submitted that to determine the matter, the duty of the Commission was to consider the actual wording of Ex. 1 and only in the event that the Commission believed that there existed ambiguity or uncertainty as to the meaning of the words was the Commission permitted to look behind the actual wording. In support of this contention, she cited Grainger C in M. Willians and Baptist Community Services NSW & ACT (U2001/7043) at para. 25 which states:

"25. The Commission's attention is specifically drawn to section 1.03 of that Chapter. The extract of Lord Simon of Glaisdale's speech in Schuler (L.) A.G. v Wickman Machine Tool Sales Ltd set out there is particularly pertinent:

'… the question to be answered always is "What is the meaning of what the parties have said?" not "What did the parties mean to say?" … it being a presumption juris et de jure … that the parties intended to say what they have said'.".

In further submissions she cited Kaufman SDP in Paul Thomas and Logica Pty Ltd (U2003/988) at para. 33 where he stated:

"33. … It is in the public interest that settlements compromising proceedings or potential proceedings be honoured, unless here is a sound reason, such as that the compromise was obtained by duress, not to observe their terms.". 4

Both submissions are accepted as appropriate for the circumstances in this proceeding. It is the case that the public interest is best served by the honouring of compromise agreements.

Ms York submitted that the Respondent would have breached taxation laws had it not deducted tax. She further submitted that Ms Sharpe's evidence showed an incorrect understanding of how the various components of the $2,900.00 should be taxed.

This submission is not helpful in that the Applicant did not argue that the Respondent had incorrectly taxed the amount or that various parts of the amount should have been treated in a particular way in relation to tax. The Applicant argued that any tax payable on the amount was to be met by the Respondent in addition to the $2,900.00.

Additionally, the Respondent would not have breached taxation laws had they paid the appropriate amount of tax in addition to the $2,900.00.

Ms York then argued that the term "costs" where it appears in the words "all inclusive of damages, interests, costs and outlays", refers to PAYG tax and that in any event the payment of $2,016.00 to Chris Strohfeld and the balance to the Australian Taxation Office on his behalf represented a payment of $2,900.00 to Chris Strohfeld.

In my view, the term "all inclusive of damages, interests, costs and outlays", does not clearly signal that the $2,900.00 was an after tax figure nor is it a clear authorisation to deduct tax. Indeed, should the term "costs and outlays" be construed as it would normally be in legal proceedings, it would more likely relate to the costs and outlays incurred in prosecuting or defending the application. Ms York's argument would have been stronger if Schedule 2 had included the term "less costs" rather than "inclusive of … costs …".

Ms York further submitted that the law of estoppel was relevant in that upon the execution of the Release Discharge and Indemnity (Ex. 1) the Applicant was estopped from further pursuing the matter against the Council.

The Applicant is not estopped by record, nor, given the Applicant's and Chris Strohfeld's immediate and consistent reaction to the situation, is the Applicant estopped by conduct and whether or not the Applicant is estopped by deed, is in essence the matter in issue.

In following the submissions of Ms York, the Commission accepts that the first step is to determine whether or not on the question of tax, the deed is clear or less than clear and, then in the case of the latter, to look behind the actual words in the deed to attempt to determine the true position.

I accept Ms York's submissions that the evidence of Mr McLoughlin regarding the lack of clarity in the deed was given as he said, with the benefit of hindsight. However, all concerned, this Commissioner included, have been put in the position of viewing the matter in hindsight.

The deed provides no breakdown of the $2,900.00. It could well be that some of the total is regarded by the Applicant as reimbursement for telephone and petrol costs incurred in pursuing his claim and not be subject to tax. We may never know. It may also be that in any event taxing the $2,900.00 as though it were all earnings was excessive.

I find that the agreement (Ex. 1) lacked clarity as to whether or not the $2,900.00 was a before tax or after tax figure.

An examination of the intentions of the parties in negotiating the agreement is unhelpful because, as mentioned, the evidence of all witnesses regarding the period leading to the agreement, supported that the parties' conflicting views were genuinely held. It is not contended by either party that the other knowingly entered into an agreement from which they later sought to resile. It is the case that while the parties made certain statements during negotiations, the question of the taxation aspect of the settlement was ultimately not the subject of specific discussion.

In the absence of clarity, I have considered the circumstances, evidence and submissions covering the period leading to, and subsequent to, the signing of the deed and am satisfied that in reality the parties were never, at any stage, of one mind on the question of how the settlement money was to be treated or who was responsible for the tax obligation.

The problem was that neither party sought to clarify the crucial point but instead relied on a presumption that the other party concurred with their understanding.

Ms York also submitted that in the event of a finding that the Respondent had not met the requirements of Ex. 1 then the preferable remedy would be to order the Respondent to pay the extra rather than void the contract. 5

Having made no finding adverse to the Respondent regarding its obligations under the contract, such an order would be inappropriate. However, having regard to the principles of equity, good conscience and the substantial merits of the case, I believe that the original application would be compromised if the Respondent chose to accept the interpretation of the Applicant and paid Chris Strohfeld a further sum of $884.00 and ensured that the Australian Taxation Office had received the correct amount of tax.

Should the Respondent accept this course, the Applicant should be immediately advised and payment should be made to Chris Strohfeld within seven days of the release of this decision.

In the event the Respondent chooses not to adopt this course (and it is free to do so), I believe that the situation should be restored to that which existed prior to the execution of the deed, i.e. that the Applicant be free to pursue the application, as amended, on the proviso that Chris Strohfeld returns the $2,016.00 to the Respondent within a further 21 days from the conclusion of the seven day timeframe offered to the Respondent (28 days from the date of release of this decision).

Failure to repay this amount in the set timeframe would, I believe, render the application compromised.

I so order. Appearances: D.K. BROWN, Commissioner. Mr P. Eldon on behalf of the Applicant. Ms P. York on behalf of the Respondent. Hearing Details: 2007 16 April

Released: 14 May 2007

Government Printer, Queensland The State of Queensland 2007.