Settlements in the fair work system are binding

Once a legitimate agreement is reached at a conference before the Fair Work Commission in an unfair dismissal or general protections’ case the matter can be struck out and dismissed once and for all if one of the parties seeks to reneg upon the settlement terms.

“Consideration

[9] It was clear that the parties had reached agreement to the separation on mutual

conditions on the 6 October 2022. However, as the time went on each party although agreeing

and sticking to the terms of the agreement still had a concern the other party would not complete

the agreement. The Car transfer being the key matter of sensitivity.

[10] The Applicant filed an unfair dismissal claim once the vehicle had been transferred to

their ownership and the Respondent says that they had agreed to a mutual separation on terms

which they Applicant and his wife are seeking to alter or receive the benefit of the agreement

and take issue with the Respondent out of malice.

[11] There was no disagreement to the terms of the Agreement, the objective facts are the

Applicant agreed to leave the employment of the Respondent on the basis that it was a mutual

decision, that is a mutual separation, by making an application for an unfair dismissal the

Applicant is breaking the binding agreement with the Respondent and making an argument and

application based that the separation was a dismissal that was unfair.

[12] During the hearing once the details of the binding agreement became apparent, I was

minded to dismiss the application as it was frivolous and had no reasonable prospects of

success pursuant to s.587(1)(c) of the Act. However, I determined that I would consider the

testimony and materials before the Commission and provide my decision in writing.

[13] There was no change to the terms by the parties following the 6 October 2022, the

agreement was concluded and following that period the sale of the vehicle process was

undertaken, the Respondent providing a value for the car and the Applicants providing payment

for the vehicle. There were no changes or renegotiation of the agreed terms and both parties’

actions were entirely consistent with the agreement reached. The written document however

remained unsigned. I have determined that the parties wished to be immediately bound by the

agreement and the sequence of events following the discussions on the 6 October 2022

continued once a value for the car had been determined.

[2023] FWC 560

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[14] Section 587 of the Act provides as follows:

“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

(c) the application has no reasonable prospects of success.

Note: For another power of the FWC to dismiss an application for a remedy for

unfair dismissal made under Division 5 of Part 3 2, see section 399A.

(2) Despite paragraphs (1)(b) and (c), the FWC must not dismiss an application

under section 365 or 773 on the ground that the application:

(a) is frivolous or vexatious; or

(b) has no reasonable prospects of success.

(3) The FWC may dismiss an application:

(a) on its own initiative; or

(b) on application.”

[15] In the decision in Masters v Cameron the High Court outlined the following regarding

binding contracts1

:

“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.

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

[2023] FWC 560

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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.”2

(emphasis added)

[16] In Australian Postal Corporation v Gorman, Besanko J gave consideration to the

question that the Commission has the power to dismiss an unfair dismissal application under

s.587 where a binding settlement agreement exists.

[17] In Australian Postal Corporation v Gorman3

, the Federal Court (Besanko J) said:

“[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.”

[18] The reasoning is clear, the binding settlement agreement extinguishes the pre-existing

cause of action and the continued pursuit of the application based on such cause of action is

clearly capable of being considered to be frivolous or vexatious or without reasonable prospects

of success. The effect of the Agreement as drafted and unsigned by the Applicant operates as a

complete answer to the Applicants unfair dismissal application.

[19] I am satisfied that a binding settlement agreement was reached between the

parties. The evidence is that the parties negotiated and agreed to a mutual separation, the

Respondent would not press forwards to dismiss the employee on the basis of serious

misconduct and the Applicant would leave on terms that included the sale of the car to him on

a beneficial arrangement. The terms were agreed to by both parties and were immediately

binding. This was a complete answer to the unfair dismissal application. An agreement was

drafted by the Respondent and sent to the Applicant. However, in the wash up of the separation

the Applicant refused to sign the agreement and facilitated a transfer of the vehicle through an

alternative means without signing the agreement.

[2023] FWC 560

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[20] The Applicant and Respondent had reached what I consider to be a binding agreement

as per the first category of Masters v Cameron, the Respondent had produced an agreement, a

letter stating the terms which all parties had agreed to, however the Applicant upon securing

ownership of the car through an alternative pathway then determined to not sign the agreement

and instead make an application for an unfair dismissal.

[21] In this matter, I regard the parties having reached a binding contract for a mutual

separation that involved the sale of a car on beneficial terms and for no misconduct to be

recorded. The Agreement was designed to be a full resolution of the separation between the

parties. The Applicant has attempted through avoiding signing the termination agreement to

reopen the matter and the Applicant attempting to renege on the deal/agreement and have

another attempt at prosecuting the matter after already agreeing to a mutual separation.

Conclusion

[22] Where there is a binding settlement agreement, the Commission does have the power

under s.587(1)(c) of the Act to dismiss an unfair dismissal application as the settlement

agreement extinguishes the pre-existing cause of action and it is plain that further pursuit of the

matter is frivolous and would have no reasonable prospects of success.

[23] I am satisfied that a binding settlement agreement was reached between the Applicant

and Respondent and that the terms of that agreement have been executed. I would not have

the power to determine the contractual claim that arises from the binding agreement or to

determine to award an appropriate remedy in this matter.

[24] For the above reasons, I have determined that the application should be dismissed. I

order accordingly.”

 

Miller v Keystone Project Management Pty Ltd – Wade Hastie  [2023] FWC 560 delivered 13 March 2023 per Lake DP