Christine Smith v Express Excavation Qld Pty Ltd

[2015] FWC 2436

[2015] FWC 2436

FAIR WORK COMMISSION

REASONS FOR DECISION

Fair Work Act 2009
s 394 - Application for unfair dismissal remedy

Christine Smith
v
Express Excavation QLD Pty Ltd
(U2014/15705)

DEPUTY PRESIDENT SAMS SYDNEY, 10 APRIL 2015

Application for relief from unfair dismissal - application made ‘out of time’ - serious misconduct - ignorance of 21 day time limit - waiting for outstanding entitlements - application not without merit - no ‘exceptional circumstances’ - application dismissed.

[1] This decision arises from an application to the Fair Work Commission (the ‘Commission’) for an extension of time for the lodgement of an application for an unfair dismissal remedy, pursuant to s 394 of the Fair Work Act 2009 (the ‘Act’). Ms Christine Smith (the ‘applicant’) was dismissed by Express Excavation QLD Pty Ltd (the ‘respondent’) from her employment as a Payroll Officer on 31 October 2014, for serious misconduct involving allegations that she had, over a long period of time, increased her own wages without authority. The applicant lodged her unfair dismissal application on 4 December 2014. As the Act mandates a 21 day time limit for initiating an application for an unfair dismissal remedy, her application was therefore lodged 13 days outside of the statutory time limit set out in s 394(2)(a) of the Act.

[2] There is also a second jurisdictional issue which is apparent from the applicant’s F2 application and the respondent’s F3 response. This issue relates to whether the applicant was a casual employee. The applicant also claimed that, as a full time employee, she had not been paid any of her outstanding entitlements, including five weeks notice of her termination and ten weeks accrued annual leave. She claimed that having approached the Fair Work Ombudsman (FWO), she was told the FWO could not help her recovering these amounts. As the respondent had only five employees at the time of the applicant’s dismissal, there might also be an issue of the application of the Small Business Fair Dismissal Code to the applicant’s dismissal.

[3] At this point, I note that the respondent ticked none of the objections to the Commission’s jurisdiction at question 2.2 of its F3 response. However, that does not, and cannot mean the Commission’s jurisdiction can be waived or ignored.

[4] The applicant requested a hearing of her application for an extension of time and the matter was listed for a telephone hearing on 13 February, 2015. The applicant appeared for herself and the respondent was represented by Mr D Willis, Manager and Mr A Prickett, Director. In determining this application, the Commission has had particular regard to the information disclosed during the hearing. I have also relied on the information set out in the applicant’s F2 and the employer’s F3. Having considered all this material, I issued an Order refusing an extension of time and dismissed the application on 3 March 2015. What follows are my reasons for doing so.

STATUTORY PROVISIONS AND PRINCIPLES

[5] The relevant legislative framework, governing the exercise of the Commission’s discretion in relation to applications of this kind, is set out as follows:

‘394 Application for unfair dismissal remedy

...

(2) The application must be made:

(a) within 21 days after the dismissal took effect; or

(b) within such further period as the FWC allows under subsection (3).

(3) The FWC may allow a further period for the application to be made by a person under subsection (1) if the FWC is satisfied that there are exceptional circumstances, taking into account:

(a) the reason for the delay; and

(b) whether the person first became aware of the dismissal after it had taken effect; and

(c) any action taken by the person to dispute the dismissal; and

(d) prejudice to the employer (including prejudice caused by the delay); and

(e) the merits of the application; and

(f) fairness as between the person and other persons in a similar position.’

[6] The meaning of ‘exceptional circumstances’ was considered in Nulty v Blue Star Group Pty Ltd[2011] FWAFB 975 (‘Nulty’). While Nulty was decided under the General Protections provisions of the Act, the definition of ‘exceptional circumstances’ has been held to have the same meaning where it appears in other sections of the Act, most notably in s 394(3). In Nulty, a Full Bench of the Commission said:

‘[10] It is convenient to deal first with the meaning of the expression “exceptional circumstances” in s.366(2). In Cheval Properties Pty Ltd v Smithers a Full Bench of FWA considered the meaning of the expression “exceptional circumstances” in s.394(3) and held:

“[5] The word “exceptional” is relevantly defined in The Macquarie Dictionary as “forming an exception or unusual instance; unusual; extraordinary.” We can apprehend no reason for giving the word a meaning other than its ordinary meaning for the purposes of s.394(3) of the FW Act.”

[11] Given that s.366(2) is in relevantly identical terms to s.394(3), this statement of principle is equally applicable to s.366(2).

[12] The ordinary meaning of the expression “exceptional circumstances” was considered by Rares J in Ho v Professional Services Review Committee No 295 a case involving in s.106KA of the Health Insurance Act 1973 (Cth). His Honour observed:

“23. I am of opinion that the expression ‘exceptional circumstances’ requires consideration of all the circumstances. In Griffiths v The Queen (1989) 167 CLR 372 at 379 Brennan and Dawson JJ considered a statutory provision which entitled either a parole board or a court to specify a shorter non-parole period than that required under another section only if it determined that the circumstances justified that course. They said of the appellant’s circumstances:

‘Although no one of these factors was exceptional, in combination they may reasonably be regarded as amounting to exceptional circumstances.’

24. Brennan and Dawson JJ held that the failure in that case to evaluate the relevant circumstances in combination was a failure to consider matters which were relevant to the exercise of the discretion under the section (167 CLR at 379). Deane J, (with whom Gaudron and McHugh JJ expressed their concurrence on this point, albeit that they were dissenting) explained that the power under consideration allowed departure from the norm only in the exceptional or special case where the circumstances justified it (167 CLR at 383, 397).

25. And, in Baker v The Queen (2004) 223 CLR 513 at 573 [173] Callinan J referred with approval to what Lord Bingham of Cornhill CJ had said in R v Kelly (Edward) [2000] QB 198 at 208, namely:

‘We must construe "exceptional" as an ordinary, familiar English adjective, and not as a term of art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered.’

26. Exceptional circumstances within the meaning of s 106KA(2) can include a single exceptional matter, a combination of exceptional factors or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional. Thus, the sun and moon appear in the sky everyday and there is nothing exceptional about seeing them both simultaneously during day time. But an eclipse, whether lunar or solar, is exceptional, even though it can be predicted, because it is outside the usual course of events.

27. It is not correct to construe ‘exceptional circumstances’ as being only some unexpected occurrence, although frequently it will be. Nor is it correct to construe the plural ‘circumstances’ as if it were only a singular occurrence, even though it can be a one off situation. The ordinary and natural meaning of ‘exceptional circumstances’ in s 106KA(2) includes a combination of factors which, when viewed together, may reasonably be seen as producing a situation which is out of the ordinary course, unusual, special or uncommon. And, the section is directed to the circumstances of the actual practitioner, not a hypothetical being, when he or she initiates or renders the services.”

[13] In summary, the expression “exceptional circumstances” has its ordinary meaning and requires consideration of all the circumstances. To be exceptional, circumstances must be out of the ordinary course, or unusual, or special, or uncommon but need not be unique, or unprecedented, or very rare. Circumstances will not be exceptional if they are regularly, or routinely, or normally encountered. Exceptional circumstances can include a single exceptional matter, a combination of exceptional factors or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional. It is not correct to construe “exceptional circumstances” as being only some unexpected occurrence, although frequently it will be. Nor is it correct to construe the plural “circumstances” as if it were only a singular occurrence, even though it can be a one off situation. The ordinary and natural meaning of “exceptional circumstances” includes a combination of factors which, when viewed together, may reasonably be seen as producing a situation which is out of the ordinary course, unusual, special or uncommon.

[14] Mere ignorance of the statutory time limit in s.366(1)(a) is not an exceptional circumstance. Indeed, unfortunately, it would seem to be all too common for dismissed employees to be unaware of the time limits imposed in relation to making an application for an unfair dismissal remedy or a general protections FWA application. The parliament has chosen to condition the discretion to extend time for making such applications on the existence of “exceptional circumstances”. In doing so the parliament must be presumed to have proceeded on the basis that an employee who is aggrieved at being dismissed ordinarily ought be expected to seek out information on any remedy they may have in a timely fashion such that delay on account of ignorance of the statutory time limit is not, of itself, an exceptional circumstance.

[15] A finding that there are “exceptional circumstances”, taking into account the matters specified in paragraphs 366(2)(a) to (e), is necessary before the discretion to extend time is enlivened. That is, even when “exceptional circumstances” are established, there remains a discretion to grant or refuse an extension of time. That discretion should be exercised having regard to all the circumstances including, in particular, the matters specified in paragraphs 366(2)(a) to (e) and will come down to a consideration of whether, given the exceptional circumstances found, it is fair and equitable that time should be extended [Endnotes not reproduced].’

[7] It is plain from the above extract from Nulty that all of the factors outlined in s 394(3) above, must be considered when deciding whether or not ‘exceptional circumstances’ have been established. Even if ‘exceptional circumstances’ are established, this is merely the jurisdictional gateway for the exercise of the Commission’s discretion to extend the time for filing an unfair dismissal application. In other words, ‘exceptional circumstances’ may be found to have existed, but the Commission may still refuse to exercise a discretion to accept the application out of time; See: Nulty at para [15]. A recent Full Bench of the Commission in Lombardo v Commonwealth of Australia [2014] FWCFB 2288 succinctly described the Commission’s decision making process under s 394(3) of the Act as: ‘The test for granting an extension of time involves both a broad discretion and a high hurdle of ‘exceptional circumstances.’ I turn now to each of the criteria set out under s 394(3) of the Act.

CONSIDERATION

Reasons for the delay (s 394(3)(a))

[8] There are essentially two reasons advanced by the applicant for the delay in filing her application for an unfair dismissal remedy. Firstly, that she was unaware of the 21 day time limit for filing and secondly, that she was waiting to see what, if any payments would be made to her in respect to her outstanding entitlements. She had waited until the end of November 2014 and when nothing was paid after a month she made inquiries with the FWO. When she was told the FWO could not help her, she then filed her unfair dismissal application. For the following reasons, I am not satisfied that either of the two explanations given by the applicant for the delay in lodging her unfair dismissal application, either separately or cumulatively, constitutes an ‘exceptional circumstance’, within the meaning of the Act.

[9] Regrettably, ignorance of the Act’s 21 day time period for filing an unfair dismissal application, is not an ‘exceptional circumstance’. The decision in Nulty above makes this clear at paragraph 14, noting that Parliament presumably intended that an aggrieved dismissed employee would act in a timely fashion to contest their dismissal.

[10] Again, unfortunately for the applicant, waiting to see if the employer would pay her outstanding entitlements does not constitute an ‘exceptional circumstance’. Obviously, the 21 day time period for filing an unfair dismissal application does not commence from any other point than the date of the applicant’s dismissal, not the date outstanding entitlements are paid, the FWO provides advice, or any other circumstance. It is perplexing as to why it was necessary for the applicant, particularly given she was a Payroll Officer, to wait to see if she was to be paid her entitlements, if she truly believed she had been unfairly dismissed. She strongly contested the allegation of misconduct from the outset. The unfairness (or fairness) of her dismissal is simply not contingent upon the payment of outstanding entitlements. They are two separate and distinct issues with different avenues for redress. In any event, if the applicant had any advice at all or had contacted the Fair Work Commission information line, she still waited the whole of November before taking steps to pursue either matter. That being said, the applicant’s alleged rights to outstanding entitlements can still be pursued through the Local Court, although I note the respondent claimed that as a casual employee, she was not entitled to permanent employee benefits.

When the person first became aware of the dismissal after it had taken effect (s 394(3)(b))

[11] There is no contest that the applicant was dismissed without notice on 31 October 2014 and that she was aware of this from this date. This is a neutral factor in this case.

Any action taken by the person to dispute the dismissal (s 394(3)(c))

[12] As mentioned earlier, the applicant did not dispute her dismissal until lodging this application on 4 December 2014. Of course, she had contested the failure of the respondent to pay her termination entitlements with the FWO prior to this date, but apparently not until early December. On her own admission, she did not challenge the respondent on either matter for the whole of November. Given these circumstances, this factor must weigh against the grant of an extension of time.

Prejudice to the employer (s 394(3)(d))

[13] Given the delay in filing the application was 13 days, I do not consider that there is any prejudice to the employer, save the usual prejudice of costs and time in defending the claim. In any event, as neither party addressed this criterion, it is a neutral factor in this case.

The merits of the application (s 394(3)(e))

[14] It is important for applicants to understand that a consideration of the merits of an application, at such an early stage in the proceedings and without the benefit of tested evidence, will only ever be on a prima facie basis. In Kornicki v Telstra Network Technology Group P3168, a Full Bench of the Australian Industrial Relations Commission said:

‘The merits of the substantive application. If the application has no merit then it would not be unfair to refuse to extend the time period for lodgment. However we wish to emphasise that a consideration of the merits of the substantive application for relief in the context of an extension of time application does not require a detailed analysis of the substantive merits. It would be sufficient for the applicant to establish that the substantive application was not without merit.’

[15] The applicant is now aware that she had been dismissed for serious misconduct, but appears to have not been told of the allegations at the time; let alone given an opportunity to explain herself. Unsurprisingly, she strenuously rejected any allegation of misconduct stating that the respondent could not have been unaware of what she was being paid.

[16] The reasons for the applicant’s dismissal are set out in the employers F3 as follows:

‘For a month prior to Christine Smiths departure, Express Excavation Pty ltd Manager, Daniel Willis, verbally informed Christine Smith the need for the company to cut costs and advised she was only required 2 days a week and would be paid $500. Christine Smith ignored these orders and continued to pay her self her self [sic] imposed wage increase of $1,330.00 per week for the following 4 weeks. On 31 October, Christine Smith was instructed by the Manager Daniel Willis not to pay anyone without authority from the Director Alan Prickett. Again Christine Smith totally ignore this direct order and continued to pay herself $1,330.00 plus $697.00 (gross) as soon as the funds were cleared in the bank account for Express Excavation Qld Pty ltd around 2.30pm. As a result, Christine Smith was instantly dismissed.

As stated in the Fair Work Act 2009, Express Excavation Qld Pty ltd is of the understanding the “do not need to provide notice of termination to an employee whose employment is terminated because of serious misconduct (for example, an employee who has, in the course of their employment, engaged in theft, fraud or assault)”.

Christine Smith stole from the company by increasing her wages (of which only one increase was ever approved by the by the Director 6 years) from $575.0 gross per week as at 1/09/2009 to $1424.00 per week for a period of 15 months up until 16 July 2014 when she reduced her pay to $1330.00 per week until termination of employment.

Christine Smith has committed fraud by signing a document stating it was Daniel Willis, causing monetary stress of the company.

Christine Smith was employed on a casual basis and was never employed on a full time basis. Please see Tax file declaration lodged with the ATO stating she was a casual dated 13/08/2009.’

[17] If these allegations are proven, they most certainly justify the applicant’s summary dismissal, without notice. Nevertheless, at the very least, she was denied procedural fairness, in that it appears the respondent gave her no opportunity to explain her conduct or answer the allegations. Whether this would have altered the outcome is not the point. However, if proven, the allegations were of such seriousness that they would unlikely be outweighed by a denial of procedural fairness. In addition, it seems very curious to me that a Manager and a Director of a small company (with only five employees at the time) would have been totally unaware of what the applicant was allegedly paying herself over five years, and increasing her pay 20 times over that period, without informing Mr Willis. Mr Willis explained that this was because he had trusted her, particularly as a Payroll Officer. Even so, it must be said that the applicant’s case is not entirely without merit.

Fairness as between the applicant and other persons in a similar position (s 394(3)(f))
[18] As neither party addressed this criterion, it is a neutral factor in this case.

CONCLUSION

[19] Having considered and balanced all of the matters which the Commission is required to take into account under s 394(3) of the Act, I am not satisfied that there are ‘exceptional circumstances’ which would warrant the Commission granting an exception to the statutory time limit for the lodgement of this unfair dismissal application. In my opinion, the circumstances, as disclosed by the material submitted by the applicant, are not ‘out of the ordinary course, unusual, special or uncommon’. The application for an unfair dismissal remedy must be dismissed. I confirm my Order of 3 March 2015.

DEPUTY PRESIDENT

Appearances:

Ms C Smith, on her own behalf.

Mr D Willis, Manager, and Mr A Prickett, Director, on behalf of the respondent.

Hearing details:

Sydney

2015

13 February

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