The Federal Circuit Court of Australia (FCCA) has found that the Court has the power under s46PO(4) of the Australian Human Right Commission Act 1986 (Cth) (AHRC Act) to set aside a deed of release, where the deed comes into existence as a consequence of unlawful discrimination.[1]

Background

The Applicant commenced employment as a primary school teacher in a Sydney private school in April 1991.

In December 2007, the school sent the Applicant a show cause letter in relation to an incident which had caused the school to form the preliminary view that the Applicant’s employment should be terminated without notice.

In response to the show cause letter, the Applicant via her lawyer sent a without prejudice letter to the school proposing a resolution which included that the Applicant’s employment would terminate by reason of her retirement and that the parties would enter into a formal deed of release containing certain terms.

The parties executed a deed of release dated 7 December 2007 on the terms proposed by the Applicant (Deed of Release).

Proceeding

The Applicant commenced proceedings against the members of the school Council (Respondents), the employing body for the school, seeking orders that (among other things) the:

  • Deed of Release be set aside; and
  • Respondents engaged in unlawful discrimination contrary to the Disability Discrimination Act 1992 (Cth) (DDA) when it required the Applicant to execute the Deed of Release.

The Applicant alleged that by requiring her to address the issue of her ongoing employment and execute the Deed of Release, the Respondents indirectly discriminated against the Applicant because of the Applicant’s asserted psychological disabilities.  In this regard, the Applicant alleged that she suffered from a variety of symptoms of anxiety and/or depression including impaired cognition and comprehension which rendered her unable to properly address the issue of her ongoing employment, to comprehend the Deed of Release or make a rational and objective decision to execute it.

The Respondents opposed the proceedings on the following bases:

  • the Deed of Release was a bar to the proceedings;
  • the Court had no jurisdiction to set aside the Deed of Release; and
  • in the alternative, the Applicant had no reasonable prospects of succeeding in an order that the Deed of Release be set aside on the grounds that the Respondent engaged in unlawful discrimination contrary to the DDA; and
  • the proceedings were an abuse of process having regard to the Applicant’s unreasonable delay in commencing the proceedings.

Decision

Judge Manousaridis found the Court did have jurisdiction to set aside the Deed of Release.  In this regard, he rejected the Respondents’ submissions that the DDA has no application to deeds of release or conduct in relation to negotiating or executing deeds of release and that the Court is not empowered under Section 46PO(4) of the AHRC Act to declare a deed of release void or set it aside.

Section 46PO(4) of the AHRC Act provides that if the Court is satisfied there has been unlawful discrimination by any respondent, the Court may make such orders as it thinks fit.  Judge Manousaridis noted that the powers available to the Court under section 46PO(4) are extensive and the discretion conferred on the Court under the section is broad.  In this regard, he found:

“In my opinion, s.46PO(4) of the AHRC Act is broad enough to empower the Court to set aside a deed of release if the deed of release has been brought about as a result of unlawful discrimination, provided it is reasonably open to the Court to conclude that the making of such an order is necessary to remedy the consequences of the unlawful discrimination.”[2]

While finding the Court did have the power to set aside the Deed of Release, Judge Manousaridis declined to do so in this case and dismissed the proceeding finding that the Applicant had no reasonable prospects of prosecuting the proceeding on the basis that she could not establish each of the elements of the alleged contravention of the DDA.[3]  In this regard, the Judge found (among other things) that the Applicant did not have any reasonable prospect of successfully submitting that the Respondent imposed a requirement or condition that the Applicant sign the Deed of Release in circumstances where the Applicant had, via her lawyer, been the one to propose that the parties execute a deed of release and the terms to be included in the Deed of Release.[4]

In the light of these findings, the Judge did not consider the Respondent’s application that the proceeding be permanently stayed because of the Applicant’s delay in commencing the proceeding.

The Court ordered that the proceeding be dismissed and that the Applicant pay the Respondent’s costs.

Takeaway

In approaching separation discussions with an ill or injured employee, employers should ensure they are reasonably satisfied that the employee’s physical or mental condition is unlikely to impact on their ability to properly consider and participate in separation discussions.

Where a deed of release is proposed or provided to an ill or injured employee, it is prudent to ensure the employee has access to the services of a legal practitioner and is in a position to properly comprehend the terms of any deed of release and the effect of executing it.

[1] O’Hanlon v Williams & Ors [2017] FCCA 381

[2] Paragraph [56]

[3] See paragraphs [93] to [106]

[4] See paragraph [77]