[2017] FWC 4015 [Note: An appeal pursuant to s.604 (C2017/4444) was lodged against this decision [Note: This decision and the associated order has been quashed - refer to Full Bench decision dated 3 October 2017 [[2017] FWCFB 4562]

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s 394 - Application for unfair dismissal remedy

Mr Subeg Singh
v
Sydney Trains
(U2016/12864)

DEPUTY PRESIDENT SAMS

SYDNEY, 7 AUGUST 2017

Application for relief from unfair dismissal – interlocutory matters – representation and whether the parties had negotiated binding terms of settlement – Masters v Cameron categories – reemployment to a non safety critical position – ‘essential terms’ agreed – whether an acceptance of an offer must be complete and unequivocal – essential terms not altered or replaced – Masters v Cameron applies – binding settlement extinguished claim – unfair dismissal application has no reasonable prospects of success – application dismissed.

INTRODUCTION

[1] Mr Subeg Singh (the ‘applicant’) was dismissed from his employment as a Team Leader with Sydney Trains (the ‘respondent’) on 30 November 2016 following a lengthy investigation into two safety incidents on the Illawarra line on 1 August 2015. For the purposes of this decision it is unnecessary to set out the detail of the incidents or the investigation; suffice to note that the reasons for the applicant’s dismissal were said to be his failure to follow safety policies, procedures and guidelines while working in a safety critical location, causing significant risk of harm to himself, his team and members of the public.

[2] The applicant disputes his dismissal as having been based on incorrect findings of fact. In addition, he claimed his dismissal was harsh, because any breaches (although denied) were minor. Mr Singh has 34 years of unblemished service with the respondent, and at 77 years of age, would find it impossible to find alternative employment.

[3] On 24 October 2016, the applicant had filed an application for an unfair dismissal remedy, pursuant to s 394 of the Fair Work Act 2009 (the ‘Act’); although it may be observed that his dismissal had not yet taken effect at that point in time. In any event, nothing turns on this fact. The applicant sought reinstatement and compensation for lost remuneration.

[4] The s 394 application was listed for conciliation and directions on 10 January 2017. At that time, the applicant was unrepresented. The respondent was represented by Ms A Sharp, Solicitor, with permission being granted, pursuant to s 596 of the Act, for the respondent to be represented by a lawyer. Attempts at settling the matter proved unsuccessful and the application was listed for four days of hearing. Nevertheless, I recommended the applicant seek advice about the matter. The Commission was subsequently informed that he was to be represented by law firm, Walter Madden Jenkins (Ms P Austin). It is apparent that the parties then engaged in negotiations to settle the application and on 16 February 2017, the Commission was advised that the matter had ‘settled in principle’ and the hearing dates could be vacated.

[5] However, on 22 March 2017, the Commission received a Notice of Representative Ceasing to Act (F54) and the applicant advised that he was now represented by an Industrial Advocate, Mr Michael Lawler, who advised the matter had not been settled. Mr Lawler’s representation of the applicant became the subject of some contention, as to whether he required permission to do so, as did whether or not a binding settlement had been reached between the parties (the ‘settlement issue’). Further directions were issued in respect to whether Mr Lawler should be granted permission to represent the applicant. Before the Commission could determine this preliminary issue, Mr Lawler filed a Notice of Representative Ceasing to Act. Thereupon, the applicant sought, and was granted further time to obtain alternative legal representation, given the other preliminary question of whether a binding settlement had been reached between the parties, remained extant. Mr O Fagir, of Counsel, subsequently was granted permission to appear for the applicant, pursuant to s 596 of the Act. Directions were issued on 21 June 2017 for submissions and documentary evidence on the ‘settlement issue’ and, by consent, this question is to be ‘determined on the papers’.

[6] I have set out this background in summary form, to explain the delay in this matter progressing to hearing and finality. It is a matter of some concern and regret that it has now been over two years since the safety incidents which resulted in the applicant’s dismissal and nine months since the filing of his unfair dismissal application. I am mindful of the statutory imperative on the Commission, as set out in the objects of Part 3-2 of the Act, ‘to establish procedures for dealing with unfair dismissals that are quick, flexible and informal’. However, for present purposes, I need say nothing further about these delays.

SUBMISSIONS

For the respondent

[7] Mr M Seck, of Counsel submitted that a binding settlement had been reached between the parties and accordingly, the applicant’s claim should be dismissed under:

(a) s 399A(1)(c) of the Act or; alternatively

(b) s 587(1)(c) of the Act.

[1] It was put that a binding contract existed within the first, second or fourth category of cases arising under the principles set out in Masters v Cameron (1954) 91 CLR 353 (‘Masters v Cameron’). The fourth category is in addition to the three in Masters v Cameron in that parties are bound by the terms of their agreement, while expecting a substitute contract, reflecting additional terms or parties; see: Baulkham Hills Private Hospital Pty Ltd v G R Securities Pty Ltd and Ors (1986) 40 NSWLR 622 at 628 (‘Baulkham Hills’) and Helmos Enterprises Pty Limited v Jaylor Pty Limited [2005] NSWCA 235 (‘Helmos’) [68] to [74].

[2] Mr Seck said that the proper inquiry to be made is whether, objectively determined, the parties intended to enter into a binding agreement; see: Geeburg Investments Pty Limited v Varga Group Investments (No 8) Pty Limited (1995) Aust Contract Reports 90-059 and Helmos at [69].

[3] Counsel set out the background matters identified in an affidavit of Ms Amber Sharp, the respondent’s solicitor, dated 27 June 2017, which are largely uncontested. This is recorded as follows.

[4] On 13 February 2017, the applicant’s solicitor (Ms Austin) wrote to the respondent’s solicitor (Ms Sharp) and advised they were instructed to settle the matter on the following terms:

1. The applicant is reemployed by Sydney Trains in the position of Team Leader;

2. Upon reemployment, the applicant performs administrative tasks only, and does not perform any work on the tracks;

3. Unless required by Sydney Trains, the applicant is not to perform any work which would entitle him to be paid overtime and/or penalty rates (for example, on call duties or weekend work);

4. The applicant is to receive no back pay, or any benefits including leave entitlements, for the period 11 November to the date of reemployment;

5. The applicant is subject to any coaching, mentoring, training and development, increased professional, administrative or educational supervision, counselling, retraining, personal development or performance enhancement agreement the respondent considers appropriate; and

6. Each party pays their own costs.

[1] It was Mr Seck’s contention that the ‘essential terms’ of the settlement were:

(a) reemployment (as distinct from reinstatement) of the applicant, with no back pay;

(b) to a role under which the applicant performed administrative tasks only, and does not perform any work on the tracks; and

[1] Shortly thereafter, Ms Sharp replied by adding the following qualifications:

(a) reemployment was subject to passing any medical assessment applicable to the role into which the applicant was reemployed;

(b) the role under which the applicant would perform administrative tasks, and not perform any work on the tracks, would also be located at a non-safety critical work environment; and

[1] It was Counsel’s submission that these qualifications did not depart from the ‘essential terms’ and demonstrated an intent to ‘be immediately bound to the performance of those terms, but at the same time proposed to have the terms restated in a form which will be fuller and more precise but no different in effect’: Masters v Cameron.

[2] Ms Austin responded on the same day as follows:

‘That is great news. My client is coming in this afternoon to go through these terms – do you have a draft deed you are able to send me please? If it is not complete that is fine, just so we can go through the major terms with him today.’

[3] A draft deed of release was provided and Ms Austin advised that her client agreed to settle the application ‘in principle’ based on the deed, with a few minor alterations. As a consequence, the Commission was advised that it could vacate the hearing dates, (which I agreed to).

[4] Mr Seck submitted that the above communications establish that:

(a) there was a ‘deal’;

(b) there was no proposed departure from the ‘essential terms’; and

(c) there were minor amendments to the Deed to be provided, as opposed to amendments to the bargain reached between the parties.

[1] Ms Austin amended the deed to include a specific work location - Sutherland Satellite Depot. However, it was said by the respondent that this did not form part of the ‘essential terms’, in that the nominated location was a safety critical location. Therefore, other reemployment opportunities were to be investigated. An amended Deed was provided which relevantly stated that the applicant would be reemployed to a role where Mr Singh:

‘performs administrative tasks only, and does not perform any work on the tracks or in any safety critical environments.’

[2] The applicant requested a copy of the position description of the role he was to be reemployed to. It was provided on 8 March 2017. On 22 March, Ms Austin’s firm ceased to act for the applicant. On 27 March 2017, the applicant informed Ms Sharp as follows:

‘[he was] not prepared to execute the settlement in the form that Sydney Trains has provided, albeit that I still wish to settle the matter. I will now be represented by an industrial advocate. It seems sensible to seek another settlement meeting.’

[3] In reply, the respondent took the view that the matter had been settled by an enforceable agreement and was therefore unwilling to attend further settlement conferences.

[4] In respect to the dismissal of the application and by reliance on Masters v Cameron, Mr Seck submitted that the resolution of any litigation essentially involves three key issues:

(a) the disposition of the proceedings;

(b) the ‘quid pro quo’ in resolving the proceedings, in this case, reemployment; and

[1] It was said that in this case, the ‘essential terms’ had been agreed to were unambiguous and sufficiently comprehensive to constitute a binding agreement in that:

(a) the parties reached an agreement on the ‘essential terms’;

(b) the parties agreed to vacate the hearing dates;

(c) the qualifications concerned minor details which provided fuller and more precise aspects of the settlement agreement, but made no difference to their effect; and

(d) the settlement did not depend on the Commission taking any further steps.

Executing a deed of release did not alter the effect of the ‘essential terms’ or that the parties made a further contract in substitution for the first, by adding further terms. Even if the settlement did not fall into the first category in Masters v Cameron, it falls squarely into the second or fourth category.

[1] The respondent’s submissions dealt with the Commission’s general powers under the Act to dismiss an application where the application had ‘no reasonable prospects of success’; s 587(1)(c) of the Act; see: Kramer v NSW Trains [2015] FWC 7895.

[2] Counsel further submitted that:

1. The ‘essence of accord and satisfaction is the acceptance by the plaintiff of something in place of his cause of action… the accord is the agreement or consent to accept the satisfaction… upon provision of the satisfaction, there is a discharge which extinguishes the cause of action’; see: Federal Commissioner of Taxation v Orica Ltd [1998] HCA 33; (1998) 194 CLR 500 per Gummow J at [116]; McDermott v Black [1940] HCA 4; (1940) 63 CLR 161 (‘McDermott v Black’) at 183-185 per Dixon J; Thompson v Australian Capital Television Pty Ltd and Anor [1996] HCA 38; (1996) 186 CLR 574 at 610 (per Gummow J).

2. Where there is an agreement to accept a promise in satisfaction of a cause of action, the original cause of action is discharged from the date when the promise is made; see: McDermott v Black (per Starke J at 176; Dixon J at 183 - 185) and British Russian Gazette & Trade Outlook Ltd v Associated Newspapers Ltd [1933] 2 K.B. 616 (at 644) per Scrutton LJ.

3. The terms of settlement bring to an end an unfair dismissal application and replaces it with contractual rights and obligations and renders the application unenforceable; see: Illawong Village Pty Limited v State Bank of New South Wales [2004] NSWSC 18.

4. If a party fails to perform a promise, under the terms of settlement, a party’s only remedy is to sue for breach of the promise; see: Koutsourais & Anor v Metledge & Associates [2004] NSWCA 313.

Accordingly, as the applicant is:

a. barred from taking further action in in the proceedings; or

b. is estopped from insisting that he is entitled to pursue arbitration of his unfair dismissal claim,

the proceedings have no reasonable prospects of success and must be dismissed.

For the applicant

[1] Mr O Fagir of Counsel submitted that the respondent’s contentions misunderstood the principles of offer and acceptance and misunderstood the decision in Masters v Cameron. The parties have not reached an agreement; let alone an enforceable agreement, in the absence of a written contract.

[2] Counsel put that acceptance of an offer must be unequivocal, leaving nothing further to be negotiated; see: Redwood Pty Ltd v Mongoose Pty Ltd [2005] NSWCA 32 (‘Redwood Pty Ltd v Mongoose Pty Ltd ‘) at [130]; Appleby v Johnson (1874) LR 9 CP 158; Ballas v Theophilos (1957) 98 CLR 193 and the offer and acceptance must precisely correspond, otherwise it is ineffective; see: Redwood Pty Ltd v Mongoose Pty Ltd at [130] and Boreland v Docker & Ors [2007] NSWCA 94 at [76]. It was further put that an acceptance of an offer which is conditional or proposes a new term, will be a counter offer which replaces the original offer; see: Grainger v Vindin (1865) 4 SCR (NSW) (L) 32; Lang v James Morrison & Co Ltd (1911) 13 CLR 1, Griffith CJ at 6, Barton J at 12–13; Turner Kempson & Co Pty Ltd v Camm [1922] VLR 498 (FC); Davies v Smith (1938) 12 ALJR 258; Cavallari v Premier Refrigeration Co Pty Ltd (1952) 85 CLR 20; JS Robertson (Aust) Pty Ltd v Martin (1956) 94 CLR 30, Dixon CJ at 43, Taylor J at 62; RA Brierley Investments Ltd v Landmark Corp Ltd (1966) 120 CLR 224 Barwick CJ, Kitto and Windeyer JJ at 233–234 (CLR); Outer Suburban Property Ltd v Clarke [1933] SASR 221 (FC) and Baker v Taylor (1906) 6 SR (NSW) 500; 23 WN (NSW) 173. Whether an offer is effectively accepted depends on an objective view of the facts and circumstances, not the subjective views of the parties.

[3] Counsel put that Masters v Cameron is not relevant here because the parties had not reached an agreement and are ad idem as to its terms. Accordingly, the threshold issue of offer and acceptance had not been reached for Masters v Cameron to be triggered.

[4] Mr Fagir argued that the qualifications put by the respondent on 16 February 2017, was not an acceptance of the applicant’s offer, but a counter offer. Any qualification, whether substantial or material, is sufficient to invalidate the purported acceptance, as a matter of both contract law and common sense. At that point, the three terms proposed by the respondent were unknown to the applicant. He had no opportunity to accept or reject them. No Masters v Cameron issue arises and that is the end of the matter.

[5] Counsel put three supplementary arguments:

1. The position to which the applicant was to be reemployed was of fundamental concern. From a position he had occupied for decades, he was to be relocated to the Sydney CBD and to learn a new position in a ‘foreign environment’. As a man of his age, this had ‘risks’.

2. The respondent itself had described its 16 February 2017 response as ‘without prejudice’. This confirmed that it was not acceptance, but a counter offer.

3. Even though the subjective views of the parties are irrelevant, the parties’ exchanges after 16 February 2017 are inconsistent with a concluded agreement. The respondent’s claim of an agreement was not made until 30 March 2017.

Counsel added that these later exchanges demonstrated ongoing negotiations over the fundamental question of the applicant’s position and the negotiations floundered on this issue.

[1] Finally, Mr Fagir put that the ‘strike out’ application should be dismissed and the applicant’s application be programmed for hearing on its merits.

[2] In reply, Mr Seck rejected the applicant’s criticism of the use of the ‘taxonomy’ of ‘essential’ and ‘non-essential’ terms as contrary to all the relevant legal authority. For a contract to be binding it must be sufficiently certain, in that it must be clear and complete, in relation to its ‘essential terms’; see: Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 436-7 per Barwick CJ; Macdonald v Australian Wool Innovation Ltd [2005] FCA 105 at [181] - [182]; Helmos at [82]- [114]; OXS Pty Ltd v Sydney Harbour Foreshore Authority [2016] NSWCA 120 at [95]; Mushroom Composters Pty Ltd v IS & DE Robertson Pty Ltd [2015] NSWCA 1 at [62]- [63] and Feldman v GNM Australia Ltd [2017] NSWCA 107 at [60] – [72].

[3] Conversely, a contract will fail for incompleteness where some essential, or important part of the bargain, is yet to be agreed; see: O'Brien v Dawson (1942) 66 CLR 18 at 37 (Williams J, Rich J agreeing); Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd (1982) 149 CLR 600 at 604 per Gibbs CJ, Murphy and Wilson JJ; Coal Cliff Collieries v Sijehema Pty Ltd (1991) 24 NSWLR 1; Toyota Motor Corporation Australia Ltd v Ken Morgan Motors Pty Ltd [1994] 2 VR 106 at 170 (Tadgell J); Anaconda Nickel v Tarmoola Australia Pty Ltd (2000) 22 WAR 101 at [25] Australian Securities and Investments Commission v Fortescue Metals Group Ltd (2011) 190 FCR 364 at [123] - [124] (Keane CJ); at [212] (Emmett J) at [223] to [227] (Finkelstein J) and Pavlovic v Universal Music Australia Pty Ltd (2015) 90 NSWLR605; [2015] NSWCA 313 at [65]. Reference was also made to legal texts; see: J W Carter, Contract Law in Australia (6th ed, 2013, LexisNexis) at 91 [4-01]; at 96 [4-10]; N Seddon, R Bigwood and M Ellinghaus, Chesire & Fifoot Law of Contract (10^th Australian Edition) at 260.

[4] Counsel added that the test is whether the parties conveyed an objective intention ‘by what was said or done, having regard to the circumstances in which those statements and actions happened’ to enter into a binding agreement; see: Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95 at [25]. In a given case, the ‘essential terms’ that result in a contract will vary depending on the nature of the agreement; see: Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32 at 68; Foote v Acceler8 Technologies Pty Ltd [2012] NSWSC 635 at [21] and United Petroleum Pty Ltd v Pentaco Oil (Aust) Pty Ltd [2016] FCA 118 at [133].

[5] Mr Seck submitted that the applicant’s contentions wrongly focussed on the differences between the parties, rather than whether the ‘essential’ elements of their agreement had been reached. After restating the 13 and 16 February 2017 email exchanges, the respondent highlighted the applicant’s solicitors response on the same day:

‘I advise my client has instructed me to settle the application in principle based on the Deed you provided to me. There are however a few (what I consider to be) minor alterations and I will send an updated version to you shortly to get instructions from your client.

As we have an agreement in principle, I also propose to email the Associate to Sams DP advising we have settled subject to the parties signing the Deed and the matter can be removed from the list, with leave to restore if necessary in the unlikely event there is a disagreement about the Deed.’

It is plain from this email that:

(a) a settlement had been reached in principle between the parties;

(b) the differences between the parties were minor issues concerning the deed,

thus indicating that agreement had been reached on the ‘essential terms’); and

[6] Thus, the parties had reached finality in arranging all the terms of their bargain and intended 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 no different in effect; see: Masters v Cameron and Howey v Mars Australia Pty Limited t/a Mars Petcare Australia [2012] FWA 6259 at [95].

[7] Counsel added that it was irrelevant that the parties had not signed a deed of release; see: Grave v Blazevic Holdings Pty Limited [2012] NSWCA 329 at [53]; Balcomb v Brownlee [2015] NSWSC 361 at [37] and Universal Music Australia Pty Limited v Pavlovic [2015] NSWSC 791 at [90].

[8] In the alternative, Mr Seck submitted that having settled the matter ‘in principle’, subject to a deed containing additional terms, was consistent with the fourth Masters v Cameron category in that the parties had reached a binding agreement with immediate effect, but intended to enter a deed in substitution for the existing agreement; see: Baulkham Hills at [628]. Reference was made to the meaning of the words ‘in principle’ from Pacific Power & Elcom Collieries Pty Ltd v Cumnock No. 1 Colliery Pty Limited & Ors [2001] NSWSC 1100 at [122]; Donaldson Coal Pty Limited v Pacific National (NSW) Pty Limited [2007] NSWSC 1446 at [101] and Dib & Anor v Taylor & Ors [2008] NSWSC 493 at [50].

[9] Counsel said the commercial settling of negotiations disclosed that the costs associated with the hearing were sensibly avoided by the agreement of the parties to vacate the four day arbitration. This would hardly have been agreed to, if a binding settlement agreement had not been reached. Further, the applicant’s refusal to sign a deed of release concerned non ‘essential’ detail as to his precise administrative role. That he now wished to be reinstated to his former track work role, was inconsistent with what had been proposed in his solicitor’s 13 February 2017 email.

CONSIDERATION

Relevant statutory provisions

[10] This application, perhaps correctly described as a ‘strike out’ application, is sought by the respondent, pursuant to the Commission’s powers under ss 399A(1)(c) or alternatively, 587(1)(c) of the Act. These sections read:

Section 399A – Dismissing applications

(1) The FWC may, subject to subsection (2), dismiss an application for an order under Division 4 if the FWC is satisfied that the applicant has unreasonably:

(a) failed to attend a conference conducted by the FWC, or a hearing held by the FWC, in relation to the application; or

(b) failed to comply with a direction or order of the FWC relating to the application; or

Section 587 – Dismissing applications

(1) Without limiting when the FWC may dismiss an application, the FWC may dismiss an application if:

(a) the application is not made in accordance with this Act; or

(b) the application is frivolous or vexatious; or

Masters v Cameron

[11] Given the focus in this case on the High Court judgement in Masters v Cameron, it is useful to set out the relevant passages from the judgement. These are found at paras [9] to [11] which I set out below:

‘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. (at p360)

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 (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. (at p361)

11. Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own: Governor & c. of the Poor of Kingston-upon-Hull v. Petch [1854] EngR 995; (1854) 10 Exch 610 (156 ER 583). The parties may have so provided either because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document, as in Summergreene v. Parker [1950] HCA 13; (1950) 80 CLR 304 or simply because they wish to reserve to themselves a right to withdraw at any time until the formal document is signed. These possibilities were both referred to in Rossiter v. Miller (1878) 3 App Cas 1124. Lord O'Hagan said: "Undoubtedly, if any prospective contract, involving the possibility of new terms, or the modification of those already discussed, remains to be adopted, matters must be taken to be still in a train of negotiation, and a dissatisfied party may refuse to proceed. But when an agreement embracing all the particulars essential for finality and completeness, even though it may be desired to reduce it to shape by a solicitor, is such that those particulars must remain unchanged, it is not, in my mind, less coercive because of the technical formality which remains to be made" (1878) 3 App Cas, at p 1149 . And Lord Blackburn said: "parties often do enter into a negotiation meaning that, when they have (or think they have) come to one mind, the result shall be put into formal shape, and then (if on seeing the result in that shape they find they are agreed) signed and made binding; but that each party is to reserve to himself the right to retire from the contract, if, on looking at the formal contract, he finds that though it may represent what he said, it does not represent what he meant to say. Whenever, on the true construction of the evidence, this appears to be the intention, I think that the parties ought not to be held bound till they have executed the formal agreement" (1878) 3 App Cas, at p 1152 . So, as Parker J. said in Von Hatzfeldt-Wildenburg v. Alexander (1912) 1 Ch 284, at p 289 in such a case there is no enforceable contract, either because the condition is unfulfilled or because the law does not recognize a contract to enter into a contract. (at p362)’

The offer and its acceptance

[1] It is common ground that the applicant’s offer and the respondent’s response to that offer, were set out in the following email exchanges of 13 and 16 February 2017:

13 February 2017

Dear Madam

Re: Subeg Singh v Sydney Trains

We refer to the above and advise we instructed to settle the application on the following terms:

1. The applicant is re-employed by Sydney Trains in the position of Team Leader;

2. Upon reemployment, the applicant performs administrative tasks only, and does not perform any work on the tracks;

3. Unless required by Sydney Trains, the applicant is not to perform any work which would entitle him to be paid overtime and/or penalty rates (for example, on call duties or weekend work);

4. The applicant is to receive no back pay or any benefits including leave entitlements for the period 11 November to the date of reemployment;

6. Each party pays their own costs.

Please advise whether the offer is acceptable to your client by close of business on Wednesday, 15 February 2017.

Yours faithfully

Walter Madden Jenkins

16 February 2017

Good morning Pippa

I am instructed that Sydney Trains accepts the offer dated 13 February 2017 subject to the following qualifications:

1. with respect to paragraph 1, re-employment will attract payment at the Team Leader rate but is subject to Mr Singh passing any category 3 medical assessment which is applicable to the role into which he is re-employed;

2. with respect to paragraph 2, the following words are added “or any safety critical environments”; and

3. parties to enter into a deed of release, drafted by us, including the usual provisions with respect to confidentiality.

Please confirm if this is suitable and we will proceed to prepare the deed of release.

Regards

Amber Sharp

[1] As I apprehend the respective positions of the parties, Counsel for the applicant described the exchanges of 13 and 16 February as an incomplete settlement which was subject to further negotiable terms (counter offers), which were not agreed, so no formal contract existed between the parties. It followed that Masters v Cameron did not apply, because the parties had not reached a complete agreement.

[2] On the other hand, Counsel for the respondent, identified the ‘essential terms’ of the offer of 13 February 2017 which were not altered or replaced and anything anterior or ancillary to the execution of the ‘essential terms’ did not change the characterisation of the binding settlement between the parties of the kind set out in categories one and two in Masters v Cameron or the fourth additional category; see: para [8] above.

[3] In my view, the question of whether the settlement offer of the applicant on 13 February 2017 and Sydney Train’s response to that offer of 16 February 2017 was a binding settlement of the applicant’s unfair dismissal application, can only be determined in the context of whether the ‘essential terms’ of the offer were later altered or replaced by other ‘essential terms’. In my analysis, that is not the case here and the circumstances of this case, fall within the first or the second category identified in Masters v Cameron. Counsel for the applicant relied on the opening words in para [9] - ‘Where parties who have been in negotiation reach agreement upon terms of a contractual nature…’, but he ignored the second part of the sentence - ‘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’.

[4] Despite Mr Fagir’s learned submissions, I do not accept that this is a case where Masters v Cameron does not arise. Mr Fagir submitted that the offer and acceptance must be comprehensively precise, before Masters v Cameron is triggered. This submission cannot be right, given that Masters v Cameron itself envisages circumstances where a binding settlement is subject to a form which is ‘fuller or more precise, but not different in effect’.

[5] Even so, in my view, the dichotomy between ‘essential’ terms and ‘ancillary’ or ‘anterior’ terms is a critical distinction in a case of the kind that must be decided here. The Oxford Dictionary defines the word ‘essential’ as:

‘Absolutely necessary; extremely important; fundamental or central to the nature of something or someone’.

[6] In Thorby v Goldberg (1964) 112 CLR 597 at pages 606-607, the High Court, Menzies J said:

‘The appellants sought to establish that the clauses in question do not impose contractual obligations upon the interrelated grounds (i) that it appears from the agreement that there was no completed agreement between the parties about matters to which the clauses relate and (ii) that the clauses in their context lack the certainty requisite to establish legal rights and obligations. It was further argued that the agreement contained illegal covenants. It will therefore be necessary to examine the agreement as a whole but, before I do so, I would say that I do not think the law to be applied is in any doubt and I agree with and will apply the following statement of that law from the dissenting judgement of Sugerman J. He said :- “It is a first principle of the law of contracts that there can be no binding and enforceable obligation unless the terms of the bargain, or at least its essential or critical terms, have been agreed upon. So, there is no concluded contract where an essential or critical term is expressly left to be settled by future agreement of the parties. Again, there is no binding contract where the language used is so obscure and incapable of any precise or definite language that the court is unable to attribute to the parties any particular contractual intention”.’ (my emphasis)

[7] In Mcdonald v Australian Wool Innovation Ltd [2005] FCA 105, the Federal Court, Weiberg J said at para [182]:

‘182. It is clearly established that there cannot be a concluded agreement unless the parties are "of one mind" on all essential terms. The test for determining whether a term is "essential" is objective. One way of answering that question is to ask whether the contract would be "commercially viable" without such a term. In relation to the agreement of further, non-essential, terms, the question to be asked is: did the parties intend that the agreement would not become binding until there was agreement on the further terms, or did they intend to be bound forthwith, even if there were terms still to be agreed. In addition, there ought to be some indication that there has been an offer, and an acceptance of that offer, though many commercial dealings do not lend themselves to such an orthodox analysis. See generally, H G Beale (ed.), Chitty on Contracts, 29^th ed., 2004, Chapter 2.’ (my emphasis)

For an extensive discussion of the subject; see: Helmos at paras [82]-[114].

[8] What then were the ‘essential’, ‘critical’, ‘fundamental’, or ‘extremely important’ terms of the agreement? There also seems to me to be a consequential question as to whether the ‘essential terms’ were removed or altered by the respondent’s reply on 16 February 2017 or at any subsequent time? It follows that if they did change or were removed, there was no binding settlement between the parties.

[9] Before dealing with these questions, the context in which offer and acceptance was made is, in my opinion, a relevant consideration.

[10] In Australian Broadcasting Corporation v XVIth Commonwealth Games Ltd (1988) 18 NSWLR 540, Gleeson J said in the context of a Masters v Cameron dispute:

‘In a case where a court is required to make a judgment concerning the intention of the parties in relation to what might broadly be described as a Masters v Cameron ((1954) 91 CLR 353) dispute, it will normally be of importance that the court have an understanding of the commercial context in which the dispute arises, and a most significant feature of that context will relate to the subject which the parties regard, or would ordinarily be expected to regard, as matters to be covered by their contract. In some cases, such as transactions involving the sale and purchase of land, or leases, courts may properly feel well equipped to form a view on such matters without the need for much evidence. In many cases, however … there is a need for evidence in one form or another as to what subjects would be regarded as requiring agreement between the parties. In this case the best evidence on that subject is to be found in the actual communications between the parties and, in particular, in the issues which they in fact addressed when they set about drafting their detailed contract.

It is to be noted that the question in a case such as the present is expressed in terms of the intention of the parties to make a concluded bargain: see: eg, Masters v Cameron (at 360). That is not the same as, although in a given case it may be closely related to, the question whether the parties have reached agreement upon such terms as are, in the circumstances, legally necessary to constitute a contract. To say that parties to negotiations have agreed upon sufficient matters to produce the consequence that, perhaps by reference to implied terms or by resort to considerations of reasonableness, a court will treat their consensus as sufficiently comprehensive to be legally binding, is not the same thing as to say that a court will decide that they intended to make a concluded bargain. Nevertheless, in the ordinary case, as a matter of fact and commonsense, other things being equal, the more numerous and significant the areas in respect of which the parties have failed to reach agreement, the slower a court will be to conclude that they had the requisite contractual intention.’ (My emphasis)

[11] Returning to the context here, firstly, it should be not be lost sight of that it was not the respondent which made the offer to settle the applicant’s claim. The applicant, through his solicitor, was the initiating moving party. It was the applicant’s instructions to his lawyer to settle his unfair dismissal claim, based on his consistent position that he wanted his job back. There was no submission put, let alone evidence that the applicant’s solicitor’s instructions were wrong or misconceived by her. Secondly, as a Team Leader, it may safely be assumed that the applicant understood that reinstatement to his former role was not an option, (and nor did he seek it), given the respondent’s insistence that he could not be returned to a ‘safety critical role’. Moreover, to do so may well have had implications for the respondent’s obligations to the industry regulators, as was explained to him during conciliation conferences.

[12] Thirdly, the applicant himself did not specify what ‘non safety critical’ role he was seeking in the 13 February 2017 email. It seems reasonable to accept (although I have no evidence of this) that he was relying on the respondent to identify what role would be available (as later did happen). Fourthly, the applicant well understood that the implications of being returned to a ‘non safety critical’ role would be his loss of regular overtime and weekend work (Term 3).

[13] Fifthly, the applicant is a 77 year old man, with 34 years of relatively unblemished service with the respondent. Given his age, and limited skills set, the prospects of him obtaining alternative employment, are problematic. It seems to me that this context plainly demonstrates that the ‘essential’, fundamental or central element of the settlement offer was his return to work to a ‘non safety critical’ role. It was not an offer to a specific role and most certainly not an offer to his previous role. In my view, the importance of the applicant being accepted back to work is the fundamental or ‘essential term’ of the offer and acceptance. In addition, it is consistent with the primacy given to reinstatement under the Act, rather than compensation; see: Objects of Part 3-4 (s 381(1)(c), which reads:

Object of this Part

(1) The object of this Part is:

…

[14] As a consequence of his reemployment the other ‘essential terms’ were:

(a) he was to perform administrative tasks only;
(b) a loss of entitlements to overtime or weekend penalties;
(c) no back pay or benefits from 11 November 2016 to the date of reemployment;
(d) further professional development, coaching and training;
(e) each party to bear their own costs.

I do not see how it is possible to argue that the respondent’s email acceptance of this offer altered or replaced any of the ‘essential terms’. The alleged conditions did:

● no more than state the obvious;
● clarify the definition of reemployment as to a non-safety critical role; and

● propose the usual standard terms in the deed of release in such circumstances.

[1] I elaborate further. In my opinion, the applicant would have been in no doubt that any position he was reemployed to in Sydney Trains, or had applied for at any time in his career, is subject to him satisfying any medical requirements for that position. Such a purported condition did not change the terms of settlement, or amount to a further offer, subject to negotiation. It was obvious, sensible and non negotiable and, in any event, a mandatory condition of the employment relationship generally.

[2] It is tolerably clear that no actual position, or where it would be located, was a term of settlement. These conditions were not even proposed by the applicant in his offer to settle. It cannot now be suggested that the actual position or location was not agreed, when that was never a term of the offer to settle the matter at the time it was proposed and accepted. This is strengthened by the fact that the respondent did not identify a position or location in its acceptance email, yet the applicant’s solicitor replied:

‘That is great news. My client is coming in this afternoon to go through these terms – do you have a draft Deed you are able to send me please? If it is not complete that is fine, just so we can go through the major terms with him today.’

[3] Mr Fagir’s submission was that the reemployed role was of fundamental concern, given the applicant had been working in his former role for decades and he was being prepared for a different role, involving new skills and in a ‘foreign environment’ with ‘risks’. I reject this submission. No concern – fundamental or otherwise – was raised in the applicant’s 13 February 2017 offer that a new role might be an issue, if it involved new skills or a new location. Firstly, the applicant had not proposed reinstatement to his former role in the offer. Indeed, he expressly eschewed doing so. Secondly, any training or coaching for new skills required in a new role was covered by Term 5 in the 13 February 2017 email. Thirdly, I have some difficulty in accepting the notion of the applicant being placed in a ‘foreign environment’, when he had worked for Sydney Trains for over 34 years. Fourthly, Mr Fagir did not elaborate or explain what he meant by ‘risks’ for the applicant in accepting reemployment.

[4] While I accept the question to be determined in this case is undertaken by an objective analysis of the facts and circumstances - not the subjective intent of the parties - the conduct of the parties post 16 February 2017, points to the soundness of the conclusion that the settlement offer and acceptance falls within category one or two of Masters v Cameron. I note the following factual circumstances post the 16 February 2017.

[5] The same day the applicant’s solicitor responded:

Dear Amber

Thank you for the Deed.

I advise my client has instructed me to settle the application in principle based on the Deed you provided me. There are however a few (what I consider to be) minor alterations and I will send an updated version to you shortly for you to get instructions from your client.

As we have agreed in principle, I also propose to email the Associate to Sams DP advising we have settled subject to the parties signing a Deed and the matter can be removed from the list, with leave to restore if necessary in the unlikely event there is a disagreement about the Deed. I will copy you into that email.

Kind Regards

Pippa Austin

She then advised the Commission as follows:

Dear Deputy President

I am writing to advise the above matter has settled in principle, subject to the parties signing a Deed of Release, and thus I make application for the hearing dates of 20 and 21 February and 2 and 3 March 2017 to be vacated. I understand this application is by consent of both parties, and I have copied into this email Ms A Sharp of Messrs Bartier Perry. I also respectfully request the parties be granted leave to restore the matter in the unlikely event we are unable to agree upon the Deed.

Kind regards

Pippa Austin

[6] I agree with Mr Seck’s logical submission that the parties would have hardly agreed to vacate the four days of hearing and the associated and not insubstantial costs involved, if there was not a plain and obvious intention that the matter had been settled ‘in principle’.

[7] Moreover, the applicant’s solicitor, also that day, suggested amendments to the Deed of Release such to remove the applicant’s date of termination. The respondent agreed. When a Deed of Release identified the actual role and location for the applicant, his solicitor responded on 6 March 2017 questioning the tasks required and seeking clarity about the location being ‘initially working at 477 Pitt Street Sydney’. The respondent’s solicitor replied with further details on 8 March 2017. The Notice of Representative Ceasing to Act of 22 March 2017 and the rejection of the settlement was on 27 March 2017. In other words, at least for over a month between the 16 February 2017 acceptance of the applicant’s offer, until 22 March 2017, there was no indication - not even a hint - from the applicant or his solicitor, that the ‘in principle’ settlement was to be rejected. Indeed, during this period, the parties were communicating in an entirely unremarkable and orthodox fashion, consistent with category one of Masters v Cameron.

[8] For all the above reasons, I am satisfied that the parties had ‘reached finality in arranging all the terms of their bargain and intend[ed] to be immediately bound to the performance of those terms, but at the same time propose[d] to have the terms restated in a form which will be fuller or more precise, but not different in effect’.

[9] In Australia Postal Corporation v Gorman [2011] FCA 975 (Australia Postal Corporation v Gorman), Besanko J held that the existence of a binding settlement or ‘accord and satisfaction’ extinguishes the existing cause of action and replaces it with a new cause of action based on the agreement. His Honour stated at [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.”

[10] As can be seen from Australia Postal Corporation v Gorman, if there is a binding agreement between the parties, the Commission has the power to dismiss an application on the basis that it has no reasonable prospects of success.

[11] As I have found that the parties reached agreement in their email exchanges of 13 and 16 February 2017 and I am satisfied that the agreement was of the first or second category discussed in Masters v Cameron, I am persuaded that I should exercise my power under s 587(1)(c) of the Act to dismiss the application on the basis that it has no reasonable prospects of success. An order to this effect will be issued in conjunction with this decision.

[12] Finally, I would add that the import of this decision is that the settlement agreement of 13 February 2017 remains in effect. Given its terms, and the passage of time, I earnestly hope that Mr Singh will be re-employed by Sydney Trains to a ‘non safety critical position’, as soon as can be practically arranged.

DEPUTY PRESIDENT

Appearances:

Mr O Fagir, Counsel for the applicant.

Mr M Seck, with Bartier Perry instructing.

Final written submissions:

For the applicant, 4 July 2017.

For the respondent, 12 July 2017.

Printed by authority of the Commonwealth Government Printer