2 min read

Deed of release doesn't prevent employer from recovering stolen monies

The Case

Wichmann v Dormway Pty Ltd (2019)

Dormway Pty Ltd (Dormway) employed Ms Wichmann as its office manager. When Dormway discovered Ms Wichmann had stolen $2,809.42, it terminated her employment. As part of the termination, Dormway and Ms Wichmann entered into a deed of release, which contained the following clauses:

"The parties have agreed to settle all matters effective from the 30 April 2018 relating to the employment and the cessation of the employment of Wichmann … 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, or any of these which Dormway now has or had the right to bring against Wichmann at any time hereafter, but for the execution of this agreement; save as to any matter relating to the enforcement of this deed."

After signing the deed, Dormway found Ms Wichmann had actually stolen more money in the sum of $321,593.85. Dormway commenced proceedings against Ms Wichmann in the Queensland Supreme Court to recover the money. Ms Wichmann claimed that the terms of the executed deed prevented Dormway from bringing its legal action. However, the Supreme Court agreed with Dormway. Ms Wichmann appealed to the Queensland Court of Appeal.

The Verdict

The Queensland Court of Appeal, in again finding for Dormway, found Ms Wichmann:

  • was aware at the time of executing the deed that she had stolen more than $2,809.42, that she did not disclose this to Dormway and hence had acted unconscionably;
  • owed a duty of good faith to Dormway and hence had a duty to disclose her wrongdoing before entering into the deed;
  • had in essence committed common law fraud, which could set aside the deed; and
  • did not have an arguable case.

The Court dismissed her appeal and ordered for her to pay Dormway’s legal costs.

The Lessons

While this case provides some assurance that common sense will prevail if such situations do arise, it is important that your deeds of release are carefully drafted to ensure no release is provided in relation to matters of illegal activity or serious misconduct. All releases provided to employees must ensure they exclude a release from such conduct.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.

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