Bianca Lanza v Grenade Studio Pty Ltd

[2023] FWC 2922

[2023] FWC 2922

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.365—General protections

Bianca Lanza
v

Grenade Studio Pty Ltd

(C2023/5915)

DEPUTY PRESIDENT COLMAN MELBOURNE, 8 NOVEMBER 2023

Section 365 application – no dismissal – application dismissed

1. Bianca Lanza has made an application under s 365 of the Fair Work Act 2009 (Act) for the Commission to deal with a general protections dispute involving an alleged dismissal. She contends that Grenade Studio Pty Ltd (Grenade) contravened various provisions of Part 3-1 of the Act by dismissing her for proscribed reasons. Grenade objects to the application on the jurisdictional basis that Ms Lanza was not dismissed.

1. Section 365 of the Act states that if a person has been dismissed and alleges that the dismissal was in contravention of Part 3-1, the person may apply to the Commission to ‘deal with the dispute’. Generally speaking, the Commission does not have a determinative function in relation to applications made under s 365. It will conduct a conciliation conference and, if satisfied that all reasonable attempts to resolve the matter have been or are likely to be unsuccessful, it will issue a certificate that allows an application to be made in an eligible court. However, if a respondent raises a jurisdictional objection, the Commission is required to determine it (see Coles Supply Chain Pty Ltd v Milford [2020] FCAFC 152). I conducted a jurisdictional hearing on 6 November 2023.

1. Ms Lanza’s evidence was that she is one of three directors and co-owners of Grenade, the others being Lynne Franke and Robert Davies. Ms Lanza said that on 25 August 2022 she commenced a period of maternity leave, planning to return twelve months later. In April 2023 she proposed to Ms Franke and Mr Davies that she would extend her leave until early October 2023, and then return to work three days per week. At a meeting on 2 June 2023, Ms Franke and Mr Davies gave her a letter dated 25 May 2023, in which they proposed to buy her shares in Grenade. At a further meeting on 29 June 2023, Ms Lanza told Ms Franke and Mr Davies that she was not prepared to sell her shares and that she did not believe it was fair of them to offer to buy her shares while she was still on parental leave. She said however that she might be prepared to consider selling her shares once she had returned to work. The three of them also discussed the possibility of establishing different classes of shares with different dividends. On 28 July 2023, Ms Franke and Mr Davies gave Ms Lanza a letter from Grenade’s accountants setting out a possible new shareholding structure. Ms Lanza told them that she would review the options and get back to them.

1. Ms Lanza said that in a meeting on 15 August 2023, she told Ms Franke and Mr Davies that she would be returning to work on 2 October 2023. On 3 September 2023, she sent them an email with her thoughts on the shareholding proposal in the accountants’ letter. Then on 5 September 2023, she received an email from Mr Davies, under his name and that of Ms Franke, stating that they did not foresee themselves working with her going forward. Ms Lanza said that on 26 September 2023 her solicitors sent a letter to Ms Franke and Mr Davies, stating that the effect of the email of 5 September 2023 had been to terminate her employment, and attaching an application under s 365 of the Act.

1. Ms Lanza said that she believed she had been discriminated against for prohibited reasons. She contended that Mr Davies’ email of 5 September 2023 had terminated her employment on the initiative of her employer, and that she had therefore been dismissed within the meaning of s 386(1)(a) of the Act. The email had stated that Mr Davies and Ms Franke had come to a ‘conclusion’ that they would not be ‘working with’ her, and that this could only mean that she had been dismissed. These words, which appeared in the first paragraph of the email, made no mention of and had nothing to do with the question of shareholding, which was dealt with only in the second paragraph, and were concerned with a different subject matter, namely her employment and its termination. Ms Lanza contended that, whatever might have been the subjective intention of Mr Davies and Ms Franke, the objective meaning of the message of 5 September 2023 was that her employment had been terminated.

1. Ms Lanza contended that the surrounding circumstances supported this conclusion. The letter of 25 May 2023 had proposed new conditions of employment as well as different shareholding arrangements; both matters had been raised at that time, and both had been addressed in the email of 5 September 2023: employment (and dismissal) in the first paragraph, and shareholding in the second. The accountants’ letter had related to the shareholding question in the context of possible changes to Ms Lanza’s employment arrangements. The meetings between the three directors in June and July had involved discussion both about the shareholding issue and Ms Lanza’s employment. Both matters had been at issue, and therefore the email of 5 September 2023 could not be read as pertaining to shareholding alone. Ms Lanza said that the email of 5 September 2023, and in particular its conclusion that Ms Franke and Mr Davies would not work with her, was the principal contributing factor leading to the end of her employment and that she had therefore been terminated on Grenade’s initiative.

1. In the alternative, Ms Lanza submitted that she had been forced to resign on 26 September 2023 by the conduct of Grenade constituted by Mr Davies’ email message to her on 5 September 2023, understood in the context of the events that had preceded the sending of the message. She contended that this conduct directly or indirectly or consequentially led to the sending of her solicitors’ letter on 26 September 2023 which constituted her forced resignation.

1. Mr Davies’ evidence was that the relationship between him and Ms Franke on the one hand and Ms Lanza on the other had deteriorated since May 2023. In their letter to Ms Lanza dated 25 May 2023, they offered to buy her shares in the business. The letter stated that Ms Lanza was appreciated and respected, that Mr Davies and Ms Franke wanted her to remain at the company in her current role, and that she could return from maternity leave to work 3 days a week as she had requested. Ms Lanza rejected the proposal, and various meetings failed to resolve the matter. In July 2023, Mr Davies and Ms Franke suggested that the three directors change the shareholding structure of the company however no agreement was reached. Mr Davies said that on 5 September 2023, he sent an email to Ms Lanza with a subject line ‘Grenade Shareholding’, which read as follows:

“Hi Bianca,

After much reflection on our recent discussions in relation to the future of the business, we have come to the conclusion that we do not foresee ourselves working with you in Grenade Studio going forward.

In our view, the only way to move forward is for us to buy out your shares in the business. If you agree in principle to the buy-out, we will formulate a proposal for you to consider.

If you do not agree, we will have no choice but to explore all options available to us which will include winding up/down the business so that we can all move on and go our separate ways.”

1. Mr Davies said that the letter sought Ms Lanza’s in principle support for the proposal and that no decision had been made. Having Ms Lanza continue in her employment was one of the matters up for further discussion. But three weeks later, on 26 September 2023, the company received a letter from Ms Lanza’s lawyer claiming that she had been dismissed.

1. Grenade contended that it had not dismissed Ms Lanza on 5 September 2023 or at any other time. First, it submitted that the message of 5 September 2023 simply did not say or imply that Ms Lanza had been dismissed. The message related to the proposed buyout of Ms Lanza’s stake in the company, and it was in this context that Mr Davies and Ms Franke did not foresee themselves working with her. This meaning was also clear from the surrounding circumstances because the parties had been considering the possibility of a share buyout for some time and it had been proposed by the company that Ms Lanza’s employment continue. Secondly, Grenade submitted that the text of the message referred to action that might occur in the future. It sought Ms Lanza’s agreement in principle to the share buyout and contemplated further discussions. Nothing had yet been decided. Grenade also noted clause 11 of Ms Lanza’s contract, which stated that because she was a director, ‘termination does not apply’, and therefore she was effectively guaranteed ongoing employment, which Ms Lanza acknowledged under cross-examination. Grenade asked the Commission to uphold its jurisdictional objection and dismiss Ms Lanza’s application.

Consideration

1. In my opinion it is very clear that Grenade did not dismiss Ms Lanza. Mr Davies’ email of 5 September 2023 did not terminate her employment. Ms Lanza focuses on the statement that the directors do not foresee themselves working with her going forward. But it is plain from both the text and the context that they are referring to the business relationship, not her employment. The subject line of the message is ‘Grenade Shareholding’. Nowhere does the message refer to employment or termination. The first paragraph states that a conclusion has been reached, but it is merely a conclusion about what the directors foresee. The fact that Ms Lanza’s shares in Grenade were held by a company under her control does not affect the meaning of the first paragraph. It does not mean that the only way in which Ms Franke and Mr Davies were working with Ms Lanza was in the context of employment. Plainly, they were working together as common owners of a business. The second paragraph says that the only way forward is for Ms Franke and Mr Davies to buy out Ms Lanza’s shareholding. This message was sent only two days after Ms Lanza had sent Ms Franke and Mr Davies an email discussing the possibility of a buyout at some length. Mr Davies’ message of 5 September 2023 is a continuation of this discussion. A message sent by Ms Franke to Ms Lanza on 4 September 2023 had noted that Ms Lanza would be returning to work in 4 weeks and that ‘we are certainly up against it and will be (sic) potentially a challenge’. But contrary to the suggestion of Ms Lanza, this is not suggestive of some problem with her employment, but rather of a desire to finalise the shareholding arrangements before she returns to work.

1. Further and in any event, the message does not convey that any final decision has been taken about any matter. As noted above, the conclusion stated in the first paragraph is merely that Mr Davies and Ms Franke do not foresee themselves working with Ms Lanza in the future. The email then records their view that the only way forward is for them to buy out her shares, and that if she agrees in principle, they will formulate a proposal for her to consider. If she does not agree, they will explore all options, including winding up the business. The message discusses a future that remains to be shaped by the parties. It certainly does not convey a decision of the company to terminate Ms Lanza’s employment. If the company were to be wound up, Ms Lanza would no doubt be dismissed. But that was a matter for another day.

1. The fact that the previous correspondence and meetings between the directors had canvassed both Ms Lanza’s shareholding and her employment is not a reason to infer from the email of 5 September 2023 that she would no longer be employed by Grenade. The letter of 25 May 2023 had explicitly contemplated that Ms Lanza would continue in her employment with the company after a share buyout. Ms Franke and Mr Davies had told Ms Lanza that they valued and respected her. There was no textual or circumstantial reason for Ms Lanza to think that she had been dismissed.

1. I find that the text of Mr Davies’ email of 5 September 2023, considered in light of the surrounding circumstances, did not say, and did not mean, that Ms Lanza was dismissed. This conclusion is only underscored by the fact that Ms Lanza’s contract of employment stipulated in clause 11 that ‘as a Director of Grenade, termination does not apply’. Although the clause goes on to direct attention to ‘the Shareholders Agreement and Buy / Sell documentation’, which does not in fact exist, Ms Lanza said in cross-examination that she knew that, before she could be dismissed, the question of her shareholding would need to be sorted out. It was clear from the message of 5 September 2023 that this had yet to be resolved. Ms Lanza’s employment was not terminated on the employer’s initiative. Termination was not the intended or probable result of the message of 5 September 2023, or any other conduct of the employer.

1. I reject Ms Lanza’s alternative contention that she was forced to resign. She was not forced to do anything. For 21 days, she did not do anything. On 26 September 2023, she instructed her lawyers to write to Grenade contending that she had been dismissed. This was her choice. Other available choices included engaging with the company about the letter of 5 September 2023; negotiating terms of a share buyout; discussing her role at the company after any such buy out; or declining to discuss these things. She could have simply remained in her employment. There were no circumstances compelling Ms Lanza to have her lawyers send the letter of 26 September 2023. She was not forced to resign. Ms Lanza chose to treat herself as having been dismissed when this was not the case.

Conclusion

1. Section 386(1) states that a person has been dismissed if the person’s employment has been terminated ‘on the employer’s initiative’ (s 386(1)(a)) or the person has resigned but was ‘forced to do so’ because of conduct or a course of conduct engaged in by the employer (s 386(1)(b)). The company did not dismiss Ms Lanza within the meaning of s 386(1)(a), nor was she forced to resign, either on 5 September 2023 or at any other time. As Ms Lanza was not dismissed, she was not a person eligible to make an application under s 365 of the Act. The Commission has no power to deal with her dispute. The jurisdictional objection is upheld. Ms Lanza’s application is dismissed.

DEPUTY PRESIDENT

Appearances:

A. Norman for the applicant
R. Miller of counsel for the respondent

Hearing details:

2023
Melbourne
6 November

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