Risky releases – part 2

By |2022-07-12T13:17:10+10:0015-3-19|
In my previous article on 17 December, I wrote about what to consider when granting releases, commenting on the Queensland Supreme Court decision (Dormway Pty Ltd v Wichmann [2018] QSC 277).
To recap briefly –
  • Wichmann was terminated for misuse of company credit cards, after being office manager for seven years.
  • The employer (Dormway) and employee signed a deed of agreement and confidentiality to end the employment relationship. Around $2,800 was recovered from Wichmann – offset against a redundancy payment of around $42,000 which Dormway was to pay.
  • The deed said that “DORMWAY hereby releases and discharges WICHMANN from all causes of action, action suits, arbitrations, claims, demands, costs, debts, damages, expenses and legal proceedings whatsoever arising out of or in any way connected with:
(a) The Employment or its termination or any circumstance relating to its termination; or
(b) Any matter, act or circumstance occurring between the date of termination of the employment and the date of this agreement; save as to any unlawful act; and
(c) Whether arising under statute, common law or equity,”
  • The employer later discovered that, over a 2 ½ year period, Wichmann had transferred over $320,000 in a series of payments from the company’s bank account.
  • The employer sought to recover a bit over $320,000 from Wichmann, and the court had to consider whether Wichmann was effectively released from the employer’s claim by the deed.
Wichmann lost in the Supreme Court in December, but appealed.
In late February, Wichman lost the appeal also – see Wichmann v Dormway Pty Ltd [2019] QCA 31 – available here.
The point of my initial article was to mention some of the important principles to consider when negotiating and drafting a release.  For example, always consider whether you really need to grant a release, and how broad it should be.
The appeal court did confirm that general words of release can sometimes be effective to release one party from liabilities that the other party does not even know about (see para [9] of the judgment). However, the language of the release has to be clear, to achieve that.
In my opinion, the key message from this case, and recently decided appeal is still – be very, very careful when considering and negotiating a release.  You should assume that there is an imbalance in the information available to you, when compared to the other side – which is very often the case – and consider the risk that you are giving away more than you may have ever intended.
Stephen can be contacted at sjr@nicholsons.com.au or call him on (07) 3226 3944.
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