Diana Tansey v Codebots Pty Ltd

[2021] FWC 6588

[2021] FWC 6588

FAIR WORK COMMISSION

DECISION

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

Diana Tansey
v
Codebots Pty Ltd
(U2021/1424)

DEPUTY PRESIDENT LAKE BRISBANE, 10 DECEMBER 2021

Application for an unfair dismissal remedy – jurisdictional objection – whether there was a dismissal – the Applicant was not dismissed – where the Applicant resigned.

[1] This decision concerns an application by Diana Tansey (the Applicant) for an unfair dismissal remedy pursuant to s.394 of the Fair Work Act 2009 (the Act). The Applicant claims that she was dismissed from her employment with Codebots Pty Ltd (Codebots / the Respondent) and that her dismissal was harsh, unjust and unreasonable.

[2] The Respondent objects to the application on the grounds that the Applicant was not dismissed within the meaning of s.386 of the Act, rather she had resigned. Late in proceedings, the Respondent raised a further jurisdictional objection, namely that the Applicant earned more than the high income threshold. For the reasons set out below, it is unnecessary for me to determine the latter objection.

[3] As to the other matters that s.396 of the Act requires me to decide before considering the merits of an unfair dismissal application, I am satisfied the Applicant had completed the minimum employment period, the Respondent is not a small business so the Small Business Fair Dismissal Code is not relevant, and the alleged dismissal was a case of genuine redundancy.

[4] This matter was the subject of an appeal and was returned to me for a hearing on the jurisdictional matter regarding whether there was a dismissal. The other jurisdictional matters that had been raised, had been resolved. Each party was afforded an opportunity to put on any further material upon which they sought to rely, and the matter was listed for hearing on 19 October 2021. At that hearing, the Applicant gave evidence on her own behalf and the Respondent relied on the evidence of Dr Eban Escott and Mr Liam Robinson.

[5] Both parties sought permission to be represented. In the interests of conducting the matter efficiently and fairly (particularly given the breakdown in the relationship between the parties), I was satisfied that it was appropriate to permit each party to be legally represented. Consequently, Elizabeth Ticehurst of Activate Law appeared for the Applicant, while Troy Spence of Counsel appeared for the Respondent, instructed by Ricky Lee of Globalex Tax & Legal.

Background

[6] Though much of the background was set out in my previous decision, 1 it is worth briefly summarising the factual matrix from which this dispute arises. The Respondent’s CEO, Dr Eban Escott, approached the Applicant to join him in becoming a co-founder in a technology company called WorkingMouse Pty Ltd (WorkingMouse) because he saw that his technical skills could be complimented by the Applicant’s community development skills. The Applicant agreed to join the Respondent. The agreed renumeration package was a lower salary however it was topped up with a number of shares which Dr Escott provided for directly by diluting his shareholding in the Respondent (the First Share Parcel). The First Share Parcel is not the one at the heart of this matter because it was not subject to the same shareholding conditions as the second tranche of shares that the Applicant received, which I will come to shortly.

[7] The Applicant commenced employment with an entity called WorkingMouse as a full-time Community Lead on 9 January 2017. Both WorkingMouse and Codebots are wholly owned subsidiaries of East Cottage Industries Pty Ltd. Mr Escott is the CEO of both companies. As a result of a restructure on 1 July 2018, the Applicant entered a part-time employment contract with the Respondent as a ‘Community Lead’. Her prior service with WorkingMouse was recognised. She also came on board as a co-founder of the Codebots, the Respondent company in these proceedings.

[8] The Respondent was a start-up technology company. To fuel further growth and development, the Respondent company decided to seek further capital. As a result of becoming a co-founder, the Applicant was involved and well briefed on the capital raising and was advised to seek her own legal advice during this process. Following the successful raising of the capital from private sources, the Applicant (in her capacity as a co-founder) signed a comprehensive Shareholder Deed (the Shareholders’ Deed) and, in doing so, received a second grant of shares as part of the capital raise (the Second Share Parcel). These shares were not issued under the Employee Incentive Plan provision in the Shareholders’ Deed.

[9] Relevant to this case, the Shareholders’ Deed contained a clause which defined a “bad leaver” as:

“A person who ceases to be employed or engaged by a Group Company, as a result of their:

(a) resignation within 3 years of the date of this document; or

(b) termination by the Company with cause, including because they have committed:

(i) fraud;

(ii) an indictable criminal offence;

(iii) a breach of a restrictive covenant; or

(iv) a material breach of their employment or consulting agreement.”

[10] The Shareholders’ Deed went on to provide for “Bad leaver arrangements”, including that:

“14.1 Bad Leaver

(a) If a Founder ceases to be employed or engaged by a Group Company in circumstances where they are a Bad Leaver, the Company may by written notice, buy back the Shares held by the Founder Shareholder (Default Shares) from the Founder Shareholder or direct the Founder Shareholder to transfer to a person nominated by the Board all of the Default Shares at the price set out in clause 14.2.

(b) If the Company notifies the Founder Shareholder that it wishes to buy back or require a compulsory transfer of the Default Shares under clause 14.1(a), the Founder Shareholder and the other Shareholders must do everything necessary to facilitate the sale of the Default Shares to the Company or the Company’s nominee within 10 Business Days of the Company’s notice.

(c) Despite clauses 14.1(a) and 14.1(b), the Company may only buy back the Default Shares if that is permitted under Part 2J.1 of the Corporations Act and, for the avoidance of doubt, if the buyback will not materially prejudice the Company’s ability to pay its creditors.

14.2 Price for Default Shares

The price for the Default Shares is 75% of Fair Market Value.

…

14.5 Fair Market Value

(a) The Board will determine by Required Resolution the Fair Market Value of the Default Shares and will notify the Founder within 5 Business Days of such determination.

(b) If the Board is unable to determine the Fair Market Value by required Resolution, the Board must appoint an Independent Expert to determine the Fair Market Value.”

Was the Applicant dismissed?

Respondent’s material

[11] The Respondent submits that the application should be dismissed as the Applicant was

not dismissed within the meaning of s.386(1) of the Act but rather resigned from her employment and that resignation did not occur in circumstances where she was forced to do so by reason of conduct, or a course of conduct, engaged in by the Respondent.

[12] The Respondent asserts that the Applicant resigned, in writing, from her employment on 10 August 2020, with her proposed resignation date being 31 October 2020. The resignation letter makes it clear that as the priorities for the start-up company evolved, she felt that her contribution was no longer relevant to the organisation. The Applicant brainstormed other proposed roles within the Respondent, however, ultimately did not feel she wanted to undertake a different role. Subsequent to that communication, there were several discussions between the Applicant, Dr Escott and Liam Robinson, a director of the Respondent.

[13] The Respondent’s evidence was that on 16 October 2021, while on a trip to Moreton Island, the Applicant told Dr Escott that she had decided to leave the Respondent and do something different the following year. This announcement followed a conversation between the pair about how the Applicant was enjoying her work but how her role had shifted in a new direction. The Applicant had been inspired, following her attendance at the Davos seminar (which the Respondent had paid for her to attend), to become a “sustainability artist”.

[14] Dr Escott was very unhappy with this news. From his perspective, the exit of a co-founder during this early stage of the start-up’s life would not send a good message to the investors about this emerging organisation and did not demonstrate commitment to the Respondent and its future. Further, the Applicant held a unique set of skills that he valued. Dr Escott attempted to convince the Applicant to stay. However, notwithstanding those attempts, the Applicant was adamant about her decision. By the time the boat had returned to Brisbane, Dr Escott had a concluded an unambiguous view that his co-founder was leaving the Respondent.

[15] It seems that after announcing to Dr Escott that she wanted to leave the Respondent, the Applicant spoke with lawyer friend. It is likely that during her discussion with her lawyer friend, she identified that pursuant to the recent Shareholders’ Deed she had signed, she would be regarded as a “bad leaver” and thus incur a penalty on the value of the shares as a result of her departing the organisation this early in the business’ life and soon after a capital raise. The Applicant raised this issue with Dr Escott and indicated that she wished to negotiate an alternative exit by which she could be treated as a good leaver, both to avoid negative external perceptions as well as the financial penalty that would be triggered by her resignation.

[16] As the conversations about the Applicant’s departure continued, the relationship between the two founders became increasingly strained. Consequently, Dr Escott tasked Mr Robinson with trying to find solutions to these issues. There were subsequent email exchanges between the Applicant, Dr Escott and Mr Robinson regarding the Applicant’s final day of employment. The Respondent’s evidence was that the parties agreed that the Applicant would be employed for another month (though would work from home) to allow further time for the share issue to be resolved. More specifically, the Respondent’s evidence is that it was agreed that the Applicant’s final day of attending the office was 18 December 2020, with her last day of employment being on 31 December or 1 January 2020, and the Applicant being paid up to 31 January 2021.

[17] The Respondent accepts that the departure date changed as the parties navigated the implications to the business and the Applicant’s circumstances arising out of the Applicant’s decision to leave the company. However, the Respondent maintains that the email correspondence between the parties following the Moreton Bay trip supports its contention that the Applicant had resigned, and that all that was left to be discussed was the process of ending the employment relationship. The Respondent points to discussions between Dr Escott and the Applicant on 5 November 2020, which concerned the Applicant’s “amicable exit from the company”, which was – the Respondent says – to take place “by the end of January 2021”. In any event, the Respondent’s evidence was that the date of 31 January 2021 was nominated by the Applicant on, or around, 5 November 2021.

[18] Dr Escott and Mr Robinson identified a couple of options to try and alleviate the impact and recast the Applicant’s early departure from the business in more positive terms and to avoid the penalty imposed by the Shareholders’ Deed.

[19] During these discussions, the Applicant proposed to change the exit date by one month on the basis that amount would be approximately equivalent to the penalty that would be levied by her early departure. In her email on 19 November 2020, she further proposed a deed of settlement which sought to characterise the departure as a negotiated one and would include terms that mitigated the effects of the Shareholders’ Deed. The Respondent asserts that by seeking to connect her departure as an employee with the Shareholders’ Deed, she sought to gain leverage in her negotiations regarding a good leaver status.

[20] While it is conceded that the Respondent was exploring the option of reaching an agreement to ameliorate the effects of the bad leaver clause pursuant to the Shareholders’ Deed on the Applicant by reason of her resignation, both Dr Escott’s and Mr Robinson’s evidence was that the Applicant’s resignation was never contingent on this matter. The Respondent submits that much is clear from the representations the Applicant made in emails she sent and the resignation video.

[21] As the proposed date of her leaving came closer, the Respondent submits that there was a noticeable effort by the Applicant to characterise her departure as having not been finalised given that no fresh agreement had been reached in respect of the bad leaver clause and its effect on her shares. In other words, the Applicant did not want to leave until she achieved her preference of being treated as a good leaver and not being financially disadvantaged because of her decision to leave. The Respondent submits that it continued to act on the belief that the Applicant had resigned, with her departure date to be the end of the year. In its eyes, the issue with respect to the Shareholders’ Deed were tangential to her resignation.

[22] Conversations remained on foot regarding the impact of the Shareholders’ Deed. However, in an email on 22 January 2021, Mr Robinson confirmed to the Applicant that, “With respect to the employment it'll terminate either way on the 31st as agreed. Hoping this will be with the first option - not the bad leaver”.

[23] While the Applicant asserted in a further email sent to Mr Robinson on 22 January 2021 that, inter alia, “Just for the record, nothing has been formally agreed at this point”, the Respondent submits that this did not amount withdrawing her resignation or evidence that her resignation was contingent on the finalisation of her being released from the bad leaver clause as part of the Shareholders’ Deed.

[24] This, the Respondent says, is supported by the departure video released by the Applicant on 20 December 2020, in which she announced to her co-workers that she would be leaving the Respondent. In that video, the Applicant thanked and farewelled her colleagues and explained that she now had a calling to pursue new opportunities to improve sustainability. Specifically, the reason stated for her resignation were because she “just [had] this calling now to go and explore” being a “a sustainability artist” and needed “to go fly… fly [her] wings”. The video ended with a montage of photos playing to Louis Armstrong’s “What A Wonderful World”. The Respondent submits that this video supports the notion that the Applicant resigned of her own volition and discredits the Applicant’s accusations regarding Dr Escott’s conduct with respect to her announcing her leaving. In the video, the Applicant expressly states that she took “the initiative” to “make a little video” to thank her colleagues.

[25] Further, the Respondent drew my attention to the Applicant’s reactivation of her a “sole trader” Australian Business Number registration on 10 December 2020, subsequent to it being cancelled between 25 June 2019 and 10 December 2020 and her amendment of her LinkedIn profile to list her employment as ending in December 2020. The Respondent submits that an inference can be made regarding the preparatory steps she had taken for her employment to end on 31 January 2021, and the Applicant regarded her employment as ending with the Respondent in “December 2020”. This accords with her final day of attending the office being 18 December 2020.

[26] In short, the Respondent submits that the Applicant was not dismissed from her employment with the Respondent for the purposes of s.386 of the Act. Rather, in her conversation with Dr Escott on 16 October 2020, the Applicant indicated that she wanted to do “something different” in 2021 and leave her employment with the Respondent. Despite Dr Escott’s attempts to persuade the Applicant to remain in her role, she resigned. After she realised that her leaving would activate the bad leaver clauses, the Applicant sought to recharacterise her initial resignation as being contingent upon the parties reaching another agreement to displace the effect of, and waive her obligations under, the Shareholders’ Deed. When it became apparent that “such a tactic was not to succeed”, the Applicant made a complaint against Mr Escott and lodged the present application. The Respondent alleges that the commencement of these proceedings is an abuse of process engaged in with a view to avoiding contractual and common law obligations under the Deed.

[27] The Respondent says that 31 January 2021 was a date chosen by the Applicant as early as 6 November 2020 and this this situation was not one in which the employee resigned but the employer sought to terminate with immediate effect or on a date earlier than that intended by the employee.  2

[28] Further, the Respondent contends that the Applicant’s employment contract did not include any rights arising under the Shareholders’ Deed, nor did the Applicant’s rights under the Shareholders’ Deed require her to be employed. She was only required to be “employed or engaged by a Group Company”. The Respondent submits, therefore, that the Commission has no jurisdiction to determine any rights the Applicant had pursuant to the Shareholders’ Deed. It further submits that any rights the Applicant was seeking to protect in relation to the Shareholders’ Deed are an irrelevant consideration for the purposes of the Commission determining if the termination was at the initiative of the Respondent. Any reliance of on this would lead the Commission into legal error.  3

[29] The Respondent submits that the evidence shows that while the date of the Applicant’s final day changed, she resigned voluntarily for the reasons stated in her resignation video. On that basis, the Respondent contends that I should find that the Applicant was not “dismissed” by the Respondent within the meaning of s.386(1) of the Act and that therefore the application should be dismissed.

Applicant’s material

[30] The Applicant contends that her employment was terminated by the Respondent on 31 January 2021 and that she only became aware of this on 3 February 2021 when she realised that her entitlements had been paid out and she no longer had access to her work accounts. She claims that she did not resign, but rather that the actions of the Respondent in blocking her access to her work accounts and paying out the Applicant’s entitlements brought the employment relationship to an end.

[31] The Shareholders’ Deed was signed by the Applicant on 29 September 2019. That Deed contained the bad leaver provisions set out above.

[32] The Applicant resigned from her position as Chair of the Board in July 2020 and resigned completely from her position on the Board on 14 July 2020.

[33] In respect of the Moreton Bay trip on 16 October 2020, the Applicant was adamant in her evidence that, “on the ferry we did not agree to [the Applicant] leaving at the end of the year”. In respect of the email the Applicant sent on 20 October 2020 which referred to the Applicant leaving at the end of the year, her evidence was that referred to, “an end date for my story-teller and sustainability, my thoughts of it, was end of the year, yes, based on our August discussions.” She went on to say, “My answer is that in October 20th email, I put some thoughts on paper about that role, based on our agreement to talk at the end of the year on it.  That doesn't, for me, represent an explicit understanding.”

[34] On 5 November 2020, she met with Dr Escott and Mr Robinson, another director of the Respondent, to discuss her future with the Respondent. In that meeting, an agreement was reached which included that the terms of the agreement would be reduced to writing and once that document was signed, the Applicant would resign with 31 January 2021 being the target date for the cessation of her employment with the Respondent. The Applicant’s evidence was that on 5 November 2020, she engaged in discussions with Mr Escott and Mr Robinson about coming to an arrangement that would mean she did not incur the penalties of the bad leaver clause. Her evidence was that an oral agreement was reached between the parties that:

“a. I would transfer 130,500 ECI shares (around one third of my total shareholding) to Mr Escott;

b. I would be exempted from the application of the ‘bad leaver’ provisions in the Shareholder’s Deed with regard to my remaining shares;

c. We would enter into a written agreement formalising these terms, with my associated legal fees to be paid by the Respondent; and

d. Upon execution of the formal written agreement, I would resign, with 31 January 2021 being the target date for me leaving employment.

[35] A draft agreement was then provided to the Applicant on 23 November 2020, but she says it did not include the full terms of the agreement reached on 5 November 2020.

[36] The Applicant says that she refused Mr Escott’s request to formally announce her departure at a staff lunch party held on 26 November 2020 because the oral agreement had not been finalised.

[37] Another draft agreement was provided to the Applicant on 16 December 2020, but she says it did not include the full terms of the agreement reached on 5 November 2020.

[38] The Applicant had further exchanges with Mr Robinson throughout December 2020 and January 2021. On 22 January 2021, the Applicant received an email from Mr Robinson advising her that her employment will “terminate either way on 31 January 2021 as agreed”. The Applicant responded on the same day and stated “just for the record, nothing has been formally agreed at this point. We are just working off good will and proposed exit strategies”.

[39] The Applicant claims that she had been subject to aggressive and bullying behaviour from Dr Escott.

[40] On 29 January 2021, the Applicant’s legal representative sent correspondence to the Respondent. Among other things, the correspondence makes clear that the Applicant had not resigned from her employment with the Respondent. No response was received.

[41] The Applicant’s evidence was that they had agreed that 31 January 2021 was the target date for her leaving the Respondent’s employment, as it allowed time to formalise and agree on the written terms of her exit. However, she submits that this was a target date rather than a non-negotiable end date because it required other conditions to be satisfied, namely that a written agreement be made between the parties. She submits that she did not intend to resign unless and until she could ensure that she would be exempted from the bad leaver clause and penalty that she would otherwise incur under the Shareholder’s Deed.

[42] Then, the draft agreement sent to the Applicant from the Respondent on 16 December 2020 did not reflect the terms agreed to orally. Between 16 December 2020 and 20 January 2021, the Applicant engaged in discussions with the Respondent to confirm the terms of the original oral agreement. The Applicant says the situation remained unclear on 22 January 2021, so she emailed Mr Robinson asking what would happen to her employment. Mr Robinson replied that her employment would terminate on 31 January 2021. The Applicant responded to that email saying she had not agreed to any termination. She received no response.

[43] On 1 February 2021, the Applicant became aware that her email and messaging accounts with the Respondent had been deactivated. On 3 February 2021, the Applicant received a payslip from the Respondent showing that her entitlements had been paid out. She maintains that her evidence was consistent and unshaken. Her representative submits that her account should therefore be accepted.

[44] In respect of the events that occurred between November 2020 and January 2021, the Applicant notes there are two competing versions of events. Dr Escott’s evidence was that the Applicant had resigned, then discovered the effects of the bad leaver clause in the Shareholders’ Deed and subsequently reneged. Mr Robinson gave evidence that the Applicant was always leaving her employment with the Respondent regardless of whether there was an agreement with respect to the bad leaver clause. The Applicant asserts that she did not “renege” on an agreement as she always contemplated the issue of her shares and the bad leaver clause as part of an agreement with the Respondent. In cross examination, she expressly rejected the proposition that she had agreed to leave at the end of the year and only started to change her position when she found out about the bad leaver clause. Nor, the Applicant says, should Mr Robinson’s version of events be accepted because she had indicated to him previously that she required a formal signed written agreement before tendering her resignation.

[45] Based on the evidence she presented, the Applicant says she had not resigned. Rather, she had indicated that upon the execution of a formal agreement she would resign and that the target date for that to occur was 31 January 2021. Deeds were exchanged between the parties however none were executed. On that basis, the Applicant contends that she therefore had not resigned.

[46] The Applicant submits that because Dr Escott had the benefit of reading her material prior to giving evidence but did not specifically take issue with her evidence regarding their conversation on 5 November 2020, that her evidence should be accepted.

[47] In respect of the correspondence that occurred on or around 22 January 2021, the Applicant states that she and her legal representatives consistently maintained that she had not resigned. She submits that, at that time, it was thus abundantly clear that the Applicant had not resigned and there was no agreement that her employment would cease on 31 January 2021. The terms of the agreement struck on 5 November 2020 had not been reflected in the draft deeds provided by the Respondent to the Applicant and as late as 28 January 2021, arrangements were still being made to provide the Applicant with money towards obtaining legal advice. Mr Robinson conceded that the Applicant was seeking the finalisation of the documentation prior to leaving her employment, a position at odds with his previous evidence that the Applicant was leaving regardless of what occurred with respect to the subject matter of the deed, that is, the Applicant’s shares and the bad leaver clause of the Shareholders’ Deed.

Legislative framework

[48] Section 386(1) of the Act relevantly provides that a person has been dismissed if:

“(a) the person's employment with his or her employer has been terminated on the employer's initiative; or

(b) the person has resigned from his or her employment, but was forced to do so because of conduct, or a course of conduct, engaged in by his or her employer.”

[49] Section 386 of the Act has created two clear grounds on which a claim could potentially proceed. In Bupa Aged Care Australia Pty Ltd T/A Bupa Aged Care Mosman v Shahin Tavassoli, the Full Bench expanded on the content of the two limbs:

“(1) There may be a dismissal within the first limb of the definition in s.386(1)(a) where, although the employee has given an ostensible communication of a resignation, the resignation is not legally effective because it was expressed in the “heat of the moment” or when the employee was in a state of emotional stress or mental confusion such that the employee could not reasonably be understood to be conveying a real intention to resign. Although “jostling” by the employer may contribute to the resignation being legally ineffective, employer conduct is not a necessary element. In this situation if the employer simply treats the ostensible resignation as terminating the employment rather than clarifying or confirming with the employee after a reasonable time that the employee genuinely intended to resign, this may be characterised as a termination of the employment at the initiative of the employer.

(2) A resignation that is “forced” by conduct or a course of conduct on the part of the employer will be a dismissal within the second limb of the definition in s.386(1)(b). The test to be applied here is whether the employer engaged in the conduct with the intention of bringing the employment to an end or whether termination of the employment was the probable (sic) result of the employer’s conduct such that the employee had no effective or real choice but to resign. Unlike the situation in (1), the requisite employer conduct is the essential element.” 4

Consideration

[50] The question before me is whether the Applicant was dismissed. For the reasons set out below, I am satisfied that she was not dismissed within the meaning of the Act but rather, by 16 October 2020, had resigned her employment.

[51] There is a confusing melange of circumstance and fact in this matter and my principal task has been to determine if there has been a dismissal. Based on the evidence before me, I am satisfied that on the boat ride back from Moreton Bay on 16 October 2020, the Applicant told Dr Escott that she had decided to do something different the following year. This conversation followed on from the Applicant’s resignation from the Board in July 2020 and her email on 10 August 2020 which stated,“I propose that I complete my current projects and commitments, finishing my employment with Codebots in 2 months' time on the 16^th October”.

[52] Dr Escott quite reasonably took this statement on 16 October as a final confirmation that the Applicant was resigning . Dr Escott had been determined to try and create a suitable role in the organisation following on from the Applicant’s resignation from the Board and then her written resignation on 10 August 2020, however nothing that he offered was acceptable to the Applicant. Dr Escott proceeded on that basis that her statement of departure confirmed her written resignation earlier and was the Applicant’s final position. Conversations ensued which saw the Applicant’s termination date pushed until the end of December that year. The evidence does not suggest that the Applicant’s resignation was made in the heat of the moment. The parties had been in discussions since at least August 2020, regarding the Applicant not being entirely happy in her employment and wanting to explore opportunities. Her resignation video evinces her desire to pursue her new-found passion in a different area. Additionally, I accept Dr Escott and Mr Robinson’s evidence to the effect that Dr Escott had tried to convince her to stay. All these factors suggest that the Applicant’s resignation did not occur in the heat of the moment.

[53] A separate issue regarding how the Applicant’s shares arose which complicated matters. It seems clear from the evidence that the Applicant, having only appreciated that she would be called a bad leaver and incur a financial penalty in respect of her Second Share Parcel after her resignation, sought to combine the two matters. In her evidence, the Applicant stated, “nobody in the company even knew about the bad leaver clause.  It was a surprise to everybody”. It is hard to understand how that can be so, given she had signed the Shareholders’ Deed willingly and voluntarily. She was a co-founder of a start-up company and not someone who was naïve and unfamiliar with the importance of contracts and of reading them before signing them. It is thus curious why she did not consider the impact of the Shareholders’ Deed before resigning, particularly given she had been the Chair of the Board and had benefited from the recent capital raising and knew that all the shareholders from the recent capital raising were bound by the same agreement.

[54] All that said, her evidence seemed genuine that the two issues – her resignation and the shares – were inextricably linked in her mind. The threat of the financial penalty and the fact that she would be categorised as a bad leaver prompted the Applicant to link the departure from employment as being contingent upon a solution being reached in respect of the Shareholders’ Deed. The difficulty she faces, however, is that the authorities demonstrate that once the resignation has been given, it can only be withdrawn with the consent of the employer.

[55] For example, in Delarouche-Souvestre v Public Transport Corporation, Commissioner Holmes quoted Gray J in the following terms:

“…in Birrell v Australian National Airlines Communication [1984] FCA 378. His statement of the law in relation to the giving of notice and the unilateral withdrawal thereof is most apposite. In relation to the first matter His Honour stated that:

‘The giving of notice of termination of a contract, in accordance with the terms of that contract, is a unilateral right. Its exercise does not depend in any way on the acceptance or rejection of the notice by the other party to the contract. The giving of such a notice operates to determine the contract by effluxion of the period of notice.’

…

It is clear that such a notice could be withdrawn by the consent of both parties to the contract; it seems unnecessary to determine whether, in the case of withdrawal of a notice by consent, the existing contract continues or a new contract comes into being. A question does arise, however, whether unilateral withdrawal of a notice is possible.’” 5

[56] Gray J considered a number of authorities in respect of unilateral withdrawal and concluded that:

“These authorities all support the view that unilateral withdrawal of a notice of termination of a contract of employment is not possible. In principle, this conclusion must be correct. The purpose of providing in a contract for a period of notice of termination is to enable the party receiving the notice to make other arrangements. An employee given notice by his or her employer has a period of time in which to seek another job; an employer who receives notice has time to arrange for a substitute employee. It would be harsh if arrangements so made during the running of the notice could be disrupted, and parties could be held to their contracts by unilateral withdrawal of the notice at the last minute. Such withdrawal, if possible, could lead to an employee being bound by contracts of employment with two employers, or an employer being bound by contracts of employment with two employees, each being required to give notice to one or the other in order to be extricated from this position, or possibly to suffer the requirement to forfeit or pay wages for a period of time. In my view, I should lean against the adaption of any principle which could lead to such an unfortunate consequences, and I should follow the authorities which tend to establish that withdrawal of a notice of termination of a contract of employment can only be effected by consent of both parties. This conclusion is consistent with authority to the effect that unilateral withdrawal by a landlord of notice to quit is not possible…” 6

[57] In light of these authorities, I am satisfied that the Applicant’s attempt to effectively withdraw her resignation – or prolong her exit until after an alternative agreement could be reached in respect of how the Second Share Parcel would be dealt with upon her exit from the company – was ineffectual given the Respondent never consented to such a course. All the discussions that occurred between the Applicant, Dr Escott and Mr Richardson in November and December related to the dilemma in respect of the Second Share Parcel. The extension to the end of January was her suggestion as per her email dated 3 November 2020 to mitigate the financial penalty effect of the bad leaver clause in the Shareholders’ Deed and buy time for the bad leaver issue to be resolved in her favour.

[58] As it happened, the Respondent did not agree to all the Applicant’s requests. They provided her with two draft deeds but she was not satisfied with the terms of either. Dr Escott and Mr Robinson became frustrated by the Applicant’s continued and more strident attempts to link the issues she faced in respect of the Shareholders’ Deed with the resignation, which they understood had already been clearly and unequivocally given. It is understandable that Dr Escott was perhaps blunt in his communication as the December departure date loomed and still the Applicant had made no announcement on her departure. They had agreed to her proposal to stay for one more month to mitigate the financial impact of the Applicant’s decision to leave but no formal agreement was reached in respect of the bad leaver provisions.

[59] The Applicant became uncomfortable with their resistance. She made allegations of bullying against Dr Escott. Having considered the evidence of both parties, I do not give much weight to these allegations though I accept the relationship between the parties became increasingly tense and uncomfortable.

[60] I have considered the possibility that even though the Applicant had resigned from the Board and indicated that she wanted to do something different the following year, this had been her simply expressing an ‘intention’ and an emerging view, not a formal resignation. She may have thought that in expressing that view she and the Respondent could work towards developing alternatives which included other roles that might interest her. The Respondent did in fact provide a number of alternative roles for her to consider however none of these came to fruition. That may have been the proper construction of events up until 16 October 2021.

[61] However, I accept Dr Escott’s evidence that on 16 October 2021 during the boat trip back from Moreton Bay, the Applicant confirmed that she did not wish to continue working for the Respondent the following year. This conversation occurred following her resignation letter on 10 August and numerous attempts to retain her in the organisation. After making that declaration, the conversations between the parties centred around an appropriate departure arrangements. The parties agreed that she would not substantially return to work in the new year. Subsequent discussions confirmed that her employment would officially end on 31 January 2021. The matters arising under the Shareholders’ Deed were separate. They had until her termination to be negotiated. Absent any formal agreement being made between the parties to displace the Shareholders’ Deed, that document was effective and capable of governing how the Applicant’s shares were to be dealt with upon her departure. The fact that the Applicant’s decision to resign triggered a consequence that she had not anticipated does not detract from the effectiveness of the resignation itself.

[62] In short, I find that the Applicant did resign and communicated her resignation in unequivocal terms to Dr Escott, at least by 16 October 2020. He accepted that resignation. The Applicant then sought to make her resignation contingent upon an agreement being reached with respect to the Shareholders’ Deed. However, in the absence of the Respondent accepting the Applicant’s withdrawal of her resignation, the Applicant’s resignation remained in effect.

[63] On that basis, the Applicant’s application cannot proceed because she was not dismissed within the meaning of the Act.

[64] Accordingly, I order that the matter be dismissed.

DEPUTY PRESIDENT

Printed by authority of the Commonwealth Government Printer

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 1   [2021] FWC 4076.

 2   Cf Nohra v Target Australia Pty Ltd (2010) 204 I.R. 389.

 3   Craig v South Australia (1995) 184 CLR 163, 179.

 4   Bupa Aged Care Australia Pty Ltd T/A Bupa Aged Care Mosman v Shahin Tavassoli [2017] FWCFB 3941 [47]; see also Mohazab v Dick Smith Electronics (No 2) (1995) 62 IR 200.

 5   Delaroche-Souvestre v Public Transport Corporation [1999] AIRC 132.

 6   Farrelly v L&R Health Centre Pty Ltd [PR907849] [17] referring to Delaroche-Souvestre v Publich Transport Corporation [1999] AIRC 132.