FEDERAL COURT OF AUSTRALIA

Rucinski v Monash University [2012] FCA 362

THE COURT ORDERS THAT:

1.    The respondent has leave to amend the Points of Defence in the terms of the attachment to the interlocutory application filed on 15 December 2011.

2.    The application is dismissed.

3.    The applicant pay the respondent’s costs of 5 December 2011 fixed in the sum of $3500, in two instalments, the first instalment of $1750 by 1 May 2012, and the second instalment of $1750 by 1 June 2012.

Note:    The entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

the application for judgment

1    On 7 October 2011, the respondent, Monash University (Monash), filed an interlocutory application seeking an order under s 31A of the Federal Court of Australia Act 1976 (Cth) (the Act), and/or r 26.01(1) of the Federal Court Rules 2011, that summary judgment be given against the applicant, Mr John Rucinski. The grounds upon which Monash relied were that Mr Rucinski has no reasonable prospect of successfully prosecuting the proceeding (s 31A of the Act; r 26.01(1)(a)), no reasonable cause of action is disclosed (r 26.01(1)(c)), and/or the proceeding is an abuse of the process of the Court (r 26.01(1)(d)).

BACKGROUND

2    The proceeding was filed on 5 May 2010, and alleged that Monash had taken adverse action against Mr Rucinski. On 26 July 2010, the Court ordered that the matter be referred to mediation before a registrar of the Court. The mediation commenced on 17 February 2011. The mediation was attended by counsel for Monash together with Mr Andrew Picouleau, the Deputy Executive Director of Human Resources and the Director of Workplace Relations at Monash. Mr Rucinski also attended and was represented by counsel and instructing solicitors from Harmers Workplace Lawyers.

3    The matter was not resolved but the mediation was adjourned. Following that session there were a number of telephone conferences in an attempt to advance the resolution of the matter. Then, on 6 June 2011, a further mediation session was held and on this occasion the parties attended at the Court for that purpose. As with the previous session, both parties were represented. Mr Rucinski attended with counsel and instructing solicitor and Mr Picouleau attended with counsel for Monash.

the settlement

4    Later that day a deed of settlement and release was executed by Mr Rucinski, on his own behalf, and Mr Picouleau on behalf of Monash. The deed provided that Monash would pay to Mr Rucinski, within 14 days, the sum of $60,000, as an employment termination payment, and a further amount of $35,000, as reimbursement of Mr Rucinski’s legal costs. The deed also provided that Monash would give Mr Rucinski a letter, signed by the Deputy Vice Chancellor of Research, acknowledging his contribution to the Maintenance Technology Institute (MTI) and appoint him as an honorary associate to Monash for two years, with the entitlements associated with that position. The deed also obliged Monash to include a statement in MTI publications and on the MTI website, acknowledging that Mr Rucinski was one of the founders of the institute and the inaugural director from 2000 to 2008. The deed provided that, within 14 days of Monash complying with these provisions, Mr Rucinski:

…will seek orders by consent dismissing the proceeding in its entirety with no order as to costs.

5    There were other terms of the deed, including releases by Mr Rucinski in favour of Monash and its employees, in their capacity as such, its officers and agents from all claims. The expression “claims” was defined in the deed to include all actions, including but not limited to matters arising out of his employment with Monash, the cessation of the employment, all matters arising in the proceeding, and all matters relating to intellectual property, but excluding a claim arising under workers’ compensation or superannuation legislation.

6    The deed further provided that Monash was entitled to plead the deed in any court of law in proceedings arising out of, or related to, or concerning the matters contained in the deed, as a complete defence to such proceedings. There was also a warranty in the deed that Mr Rucinski had voluntarily entered into it and had full opportunity to consult a legal adviser concerning the nature, effect and extent of the deed.

7    In accordance with the terms of the deed, Monash made the payments required, offered Mr Rucinski the honorary associate appointment, and then sought Mr Rucinski’s consent to the dismissal of the proceeding.

DIRECTIONS HEARINGS ON 1 AUGUST and 5 DECEMBER 2011

8    The matter was listed for directions on 1 August 2011. By this time, Mr Rucinski had raised concerns about the settlement which had been reached. Consequently, when the lawyers for each side appeared at the directions hearing, they agreed that the matter should be adjourned so that Mr Rucinski could obtain independent legal advice concerning the circumstances in which he entered into the deed. The directions hearing was adjourned until 13 October 2011 on that basis. On 13 October 2011, the directions were adjourned by consent, without an appearance, to 5 December 2011.

9    On 5 December 2011, Mr Rucinski appeared without legal representation, but indicated that he desired to seek such representation. As a consequence, the application for summary judgment was adjourned until today, 29 February 2012.

THE APPLICATION to amend the defence

10    On 15 December 2011, Monash filed a further interlocutory application seeking leave to amend its points of defence in order to plead the causes of action upon which it claimed, following the execution of the deed, it had a complete defence to the application.

11    The amendments contended that the deed, and the subsequent compliance by Monash, constituted an accord and satisfaction of the matters in issue before the Court and, alternatively, claimed that Mr Rucinski is estopped from maintaining the claims in the proceeding.

THE HEARING

12    In support of the applications for summary judgment and leave to amend, Monash filed an affidavit of Andrew Picouleau sworn 28 November 2011, as well as two affidavits of its solicitor, Stuart Matthew Pill, sworn on 6 October 2011 and 15 December 2011 respectively.

13    At the hearing today, Mr Rucinski appeared without legal representation. He explained that he had been unable to obtain legal representation, and that one of the two firms that he had selected had withdrawn as late as 7 February 2012. However, he did not seek a further adjournment for this reason.

14    Mr Rucinski was very articulate in support of his case. He relied on an affidavit of his treating psychologist, Ms Guna Celms, sworn on 11 November 2011, which had been filed by his previous lawyers. Exhibited to that affidavit was Ms Celms’s psychological report concerning Mr Rucinski dated 11 November 2011. Mr Rucinski also prepared a draft affidavit which was admitted into evidence during the course of the hearing.

15    Mr O’Grady, who appeared as counsel for Monash, contended that the Court should not find that Mr Rucinski, at the time of executing the deed, lacked capacity to legally bind himself. In his submission, there was no proper basis for relieving Mr Rucinski from the obligations contained in the deed. He referred to the affidavit of Mr Picouleau, and some of the responses of Mr Rucinski to it.

16    The affidavit of Mr Picouleau set out the circumstances in which the agreement was reached at the mediation on 6 June 2011. Mr Picouleau explained that he attended together with counsel and instructing solicitor, and that he was told by the registrar that Mr Rucinski was in attendance with counsel and instructing solicitor. He said that the mediation was conducted in caucus sessions with the registrar moving between the parties who were separately located so that at no time was he directly in communication with Mr Rucinski. In relation to Mr Rucinski’s perceived capacity on the day, Mr Picouleau deposed as follows:

5.    At no time during the course of the mediation on 6 June 2011 was the Respondent advised by the Applicant’s representatives or the Registrar conducting the mediation or any other person, or otherwise aware that the Applicant:

(a)    had attended counselling sessions with a psychologist;

(b)    had seen a psychologist or was under any medical care;

(c)    had any medical condition or any potential mental incapacity;

(d)    was stressed and/or anxious such that his capacity to understand the advice of his representatives in respect of the settlement reached or the operation of the terms and conditions of the settlement agreement that was signed by the parties (“Settlement Agreement”) was impaired.

6.    Further, as the mediation was conducted in caucus sessions as described below there was limited opportunity for the Respondent or its representatives to observe the Applicant.

17    Mr Picouleau said that the key issues in the negotiation were threefold. First, the scope of the settlement and, in particular, whether potential claims in respect of intellectual property should be included. Second, the appointment of Mr Rucinski to an adjunct role at Monash. Third, the quantum of any settlement amount.

18    At around 3.30 pm, an in principle agreement was reached on the scope of the settlement and negotiations continued in relation to the quantum of any settlement payment and the possible adjunct appointment. By that time it was accepted that the settlement would include all matters concerning the proceeding, the employment and its cessation, including intellectual property. It was also agreed that the settlement would be on the basis of written terms, including releases.

19    By approximately 5 pm, the amount of the quantum had been agreed and a draft of the settlement deed was provided to the registrar by email at about 5.12 pm, so that Mr Rucinski could consider it. At 5.45 pm the registrar returned and said that the terms had been discussed with Mr Rucinski and considered by him and his representatives. The registrar indicated certain amendments and adjustments which Mr Rucinski required, and to which Monash agreed. At this stage, Mr Rucinski also put to Monash a counter-proposal in respect of the quantum of the settlement sum of $95,000, including $35,000 for legal costs. The counter-proposal was also accepted by Monash. Mr Rucinski’s instructing solicitor then arranged for the deed which had been prepared to be amended accordingly and emailed to the registrar. This occurred around 5.50 pm. Afterwards, at Mr Rucinski’s request, some handwritten amendments were made to cl 3.1 of the deed to ensure that the releases released Monash employees only in their capacity as such.

20    Against this background, Mr Rucinski today argued that he signed the deed under duress. He submitted that the Court should therefore dismiss the interlocutory application brought by Monash, order that the matter return to mediation and, in the event that mediation fails to resolve the dispute, program the proceeding for a hearing. He relied on Ms Celms’s report, and contended that at the time of the mediation it was known to Monash that he was stressed and anxious and undergoing counselling by a professional psychologist.

21    Ms Celms’s affidavit explained that Mr Rucinski was first referred to Ms Celms for counselling in March 2009 as a result of stress and depression arising from the difficulties in his workplace at Monash. By the time she made her report, Ms Celms had seen Mr Rucinski for 19 sessions. The report provides a detailed account of many of those sessions. Ms Celms, however, did not see Mr Rucinski on 6 June 2011 when he executed the deed. She saw him approximately one month before, on 4 May 2011, and approximately one month after, on 8 July 2011. Ms Celms freely accepted that she was not able to give an opinion about Mr Rucinski’s exact condition on 6 June 2011, but from the observations she had made in the other sessions, both before and after, she concluded that:

At the time of executing the Deed, it was highly likely that John was very stressed and very anxious which in turn affected his capacity to fully understand the nature of the Deed.

…

Ms Celms further opined that given that it was highly likely that Mr Rucinski was very stressed and anxious at the time of executing the deed, his emotional state would have impaired his capacity to consider advice given to him during the course of the mediation and make a rational and considered decision regarding the deed.

22    Mr Rucinski said that it must have been evident to Monash that he was stressed and anxious and undergoing counselling because he claimed in his application to Fair Work Australia which preceded the application in this Court, that Monash had damaged his wellbeing, and also because in this proceeding he had made claims for damages for medical treatment and for general damages for distress, disappointment, humiliation, embarrassment, vexation and inconvenience.

23    In the draft affidavit which was accepted as his evidence, he said at [5] as follows:

During the mediation, I continued to experience the feeling of a great power imbalance, intimidation (eg withholding of my personal and professional property and archives for over 18 months) as a result of the continued actions by the respondent (persecution and oppression since 2006). As a result of this unreasonable pressure, I suffered a significant lack of sleep, particularly leading up to this mediation. Consequently, I was exhausted, gutted, drained, “in a haze”, dehydrated, and completely wasted towards the end of the mediation, when the Deed of Release was presented by Monash. Reviewing the Deed, I became extremely angry at the respondents (sic) attempt to re write history and cement the damaging effect on my professional standing and career. The impact of this great injustice may have further compounded lack of understanding of the broader impact of the release which were not meant to be part of the settlement namely, intellectual property, trade practices and other aspects which were clearly outside the adverse action case subject to mediation.

24    Mr Rucinski then explained that, since the signing of the deed, he has raised significant concerns and invited Monash to renegotiate the deed on matters which he argued should not have been incorporated into the release. At [7] of his affidavit, Mr Rucinski said the deed of release was a major travesty of justice for the following three reasons:

(a)    it is grossly inadequate and disproportionate in the remedies acknowledged in the settlement. That is, the settlement represents a small percentage (<5%) of the damages sought from Monash through cases including personal injury, intellectual property, and others. The settlement amount barely covers my basic entitlements (long service leave, annual leave, termination etc) which the respondent had unreasonably withheld for over 18 months since my departure from Monash.

(b)    Furthermore, the Deed eliminates very substantial potential case(s) against Monash University and its employees who are trading on my intellectual property and deriving significant revenues which will continue for years to come, inappropriately acquired around 2008.

(c)    It purports and sanctions a false and damaging to my reputation, depiction of history, namely portrays my contribution as a relatively minor one (one of the founders!!!), someone who came to be employed by Monash on a 12 month contract, rather than the true contribution and role as the visionary, architect and founder of the BHP-Monash Maintenance Technology Institute (MTI). This distortion of history is very damaging to my professional integrity, reputation and ultimately my career.

25    Then Mr Rucinski said that he has an extensive potential claim against Monash and a company called SIM Pty Ltd, for trading on his intellectual property. He stated that the deed of release was signed contrary to his instructions, and that the release was intended by him to settle only the adverse action proceeding and not any other claim, such as that pertaining to his intellectual property. He then continued to explain that his emotional and mental state remains fragile as a result of the treatment he has received from the Dean of the Faculty of Engineering, Professor Sridhar and others at Monash.

26    In oral submissions, Mr Rucinski restated many of the matters referred to in his affidavit, but elaborated on some of them. In particular, he said that he thought that the release applied only to the Court proceeding and did not extend beyond it to intellectual property claims and other claims related to his employment. He said that he did not read the document, but trusted counsel. He maintained that the release was contrary to his instructions. For example, he had asked his legal advisers to negotiate a cooling-off period, however, they did not do this. He said that at the mediation there was a power imbalance, he felt intimidated and only had a short time to read the deed.

consideration

27    Much of the argument raised by Mr Rucinski reflected a deep disappointment and anger at the treatment which he had received in his workplace. Mr Rucinski is a very articulate person who was able to explain clearly the emotions which he felt surrounding these events.

28    However, in order to overcome the effect of the deed, it is necessary for Mr Rucinski to establish that he lacked capacity to enter into the deed and that Monash was aware or ought to have been aware of his incapacity at the time: See Gibbons v Wright (1954) 91 CLR 423, at 441; and National Australia Bank v Koller (2011) VSC 228, at 81.

29    The evidence establishes that Mr Rucinski was anxious and stressed over the events and during the mediation. All that can be readily understood. The experience of litigation and mediation in respect of a matter which is so bound up with high emotion over the recent past can provoke such reactions in even the strongest person.

30    However, the evidence does not establish that Mr Rucinski failed to understand what was in the deed. He attended the mediation with his own barrister and instructing solicitor. The mediation was conducted by a registrar of the Court. These are all factors which are apt to provide Mr Rucinski with protection from any power imbalance. None of his legal advisers gave evidence that he lacked the capacity to understand the terms of the deed.

31    In explaining his response to the deed, Mr Rucinski told the Court that when he first looked at it, he was overwhelmed with anger at the effect of the recitals which he perceived demeaned his contribution to the MTI. Quite apart from the lack of any evidence of mental incapacity, this evidence demonstrates that during the mediation Mr Rucinski actively considered the issues which arose.

32    The sequence of events during the mediation as outlined by Mr Picouleau show that there was an opportunity for Mr Rucinski to give consideration to the points negotiated. Mr Rucinski was not able to recall how the handwritten alteration to cl 3.1 came into being. Mr Picouleau’s evidence established that the suggestion came from Mr Rucinski’s camp. This alteration is also indicative of a careful consideration of the scope of the releases.

33    The evidence before the Court establishes that Mr Rucinski understood and actively participated in the negotiation of the deed. It is not necessary to go that far. It is sufficient, as I find, that Monash had no knowledge that Mr Rucinski lacked capacity to enter into the deed.

34    Thus, the deed of settlement is conclusive against the application brought by Mr Rucinski. He has no reasonable prospect of successfully prosecuting the proceeding and it must therefore be dismissed in accordance with the agreement between the parties.

costs

35    Monash has made an application for costs under s 570(2) of the Fair Work Act 2009 (Cth), which provides:

The party may be ordered to pay the costs only if:

(a)    the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or

(b)    the court is satisfied that the party’s unreasonable act or omission caused the other party to incur the costs; or

(c)    the court is satisfied of both of the following:

(i)    the party unreasonably refused to participate in a matter before FWA;

(ii)    the matter arose from the same facts as the proceedings.

36    Mr O’Grady argued that the persistence by Mr Rucinski in arguing against the dismissal of the proceeding was an unreasonable act causing Monash to incur the costs of the hearing. I am not satisfied that Mr Rucinski’s attempt to put before the Court the reasons why the deed should not be seen as foreclosing further proceedings was unreasonable. He had a case which he wished to put. It turned out that it was not legally sustainable but it cannot be said that his position was, in the context of this statutory scheme, conduct which he should not have engaged in.

37    The reserved costs of the hearing on 5 December 2011 stand in a different category. On that occasion, Mr Rucinski sought further time in order to obtain legal representation. He appeared today without that representation. The matter could have proceeded on 5 December 2011. Nothing changed between then and now. Seeking an adjournment in order to obtain legal representation on 5 December 2011 was unreasonable and put Monash to an expense which should be borne by Mr Rucinski. Monash made a claim for $5000. Mr Rucinski had no basis for questioning that quantum. However, in the circumstances, it is reasonable to allow the sum of $3500.

Associate:

Dated:     11 April 2012