Dunlop and Secretary, Attorney-General's Department - [2021] AATA 3150

Dunlop and Secretary, Attorney-General's Department [2021] AATA 3150 (3 September 2021)
Division:GENERAL DIVISION
File Number: 2020/6775
Re:Christopher Dunlop
APPLICANT

AndSecretary, Attorney-General's Department
RESPONDENT

DECISION
Tribunal:Senior Member Dr M Evans-Bonner
Date:3 September 2021
Place:Perth

The Reviewable Decision is affirmed.
......................[Sgd]..................................................
Senior Member Dr M Evans-Bonner
CATCHWORDS
FAIR ENTITLEMENTS GUARANTEE – entitlement to redundancy payment – claim for advance on redundancy payment – whether Applicant entitled to an advance under the Fair Entitlements Guarantee Act 2012 (Cth) for redundancy pay – governing instrument for Applicant’s redundancy pay is Fair Work Act 2009 (Cth) – when employment ceased – whether company had requisite number of employees – meaning of a “small business employer” – whether companies are “associated entities” – whether the employees of two companies with separate but interrelated statutory responsibilities for a floating production and storage offloading facility could be counted together – meaning of “control” in s 50AA of the Corporations Act 2001 (Cth) – whether an entity controls a second entity – Reviewable Decision affirmed
LEGISLATION
Corporations Act 2001(Cth) ss 50(a), 50AAA, 50AAA(2), 50AAA(3), 50AA, 437A, 477
Fair Entitlements Guarantee Act 2012 (Cth) ss 3, 5, 6, 6(5), 14, 28, 38(1), 39(1), 40(1)(a)
Fair Work Act 2009 (Cth) ss 14, 23, 23(3), 117(1), 119, 121, 121(1)(b)
CASES
Amcor Ltd v Barnes [2016] VSC 707
Bullivant and Secretary, Department of Employment [2020] AATA 2047
Fink and Secretary, Attorney General’s Department [2021] AATA 734
Hancock v Rinehart (2015) 106 ACSR 207
Mi and Secretary, Department of Employment [2016] AATA 419
New South Wales v Commonwealth [2006] HCA 52; (2006) 229 CLR 1 (Work Choices Case)
REASONS FOR DECISION
Senior Member Dr M Evans-Bonner
3 September 2021
BACKGROUND

The Fair Entitlements Guarantee Act 2012 (Cth) (FEG Act), in summary, provides for the Commonwealth to pay advances to eligible employees for unpaid employment entitlements in circumstances such as where an employer becomes insolvent or bankrupt. The FEG Act further permits the Commonwealth to recover the advances paid to employees through the winding up or bankruptcy of the employers and from other payments the employees receive (see ss 3 and 28 of the FEG Act).
The kinds of employment entitlements a former employee can claim for are set out in s 6 of the FEG Act, and include redundancy pay entitlements, which are defined in s 6(5) of the FEG Act as, “the amount of redundancy pay the person is entitled to under the governing instrument from the employer for termination of the employment”.
On 26 December 2017, the Applicant commenced employment with Northern Oil & Gas Australia Pty Ltd (NOGA) in the role of General Manager (T3/18).
NOGA was part of a group of companies which “conduct[ed] the business of oil exploration, production and exportation from the [Northern Endeavour floating production storage and offloading facility (Northern Endeavour)]” (T4/27 and 37).
Clause 8.2 of the Applicant’s terms and conditions of employment with NOGA stated that if his position became redundant “the Company will provide a severance payment if required under the Fair Work Act” (T3/21). Consequently, the Fair Work Act 2009 (Cth) (FW Act) is the relevant governing instrument (s 5 of the FEG Act).
On 10 July 2019, Northern Endeavour was issued an OHS Prohibition Notice (the Prohibition Notice) by the regulator, the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), following a pipe support falling onto the process deck of the Northern Endeavour. This Prohibition Notice required ongoing hydrocarbon production operations at the Northern Endeavour to halt. The operator of the Northern Endeavour, Upstream Production Solutions Pty Ltd (UPS), had reported this incident to NOPSEMA, who undertook an OHS inspection before issuing the Prohibition Notice. NOPSEMA identified structural defects at the Northern Endeavour due to corrosion, which were to be repaired before the Prohibition Notice could be lifted (T4/39).
On 20 September 2019, administrators were appointed to NOGA (T5/114–115).
The company was subsequently placed into liquidation, with liquidators being appointed on 7 February 2020 as part of a creditors’ voluntary winding up (T5/114).
In a letter from the liquidators, dated 7 February 2020, the Applicant was given formal notice of the termination of his employment (T10/160–162). The Applicant was therefore given notice in accordance with s 117(1) of the FW Act which provides that, “[a]n employer must not terminate an employee’s employment unless the employer has given the employee written notice of the day of the termination (which cannot be before the day the notice is given)”.
On 7 May 2020, the Applicant submitted a claim for an advance pursuant to s 14 of the FEG Act (T14/185). His claim was for employment entitlements, being annual leave, payment in lieu of notice and redundancy entitlements (T10/147).
In his claim form, the Applicant stated that the last day he worked for NOGA was 7 February 2020 and that he was not given prior notice that his employment would be terminated (T10/146).
THE INITIAL DECISION
In a letter dated 25 May 2020, the Applicant was advised that a decision-maker at the Fair Entitlements Guarantee Branch of the Attorney-General’s Department (the Department) had decided that the Applicant was eligible for an advance pursuant to ss 10 and 15 of the FEG Act (T15/187 and 189) (the Initial Decision). This advance included amounts for annual leave and payment in lieu of notice (T15/190). These sums were paid to the Applicant.
However, as part of the Initial Decision, the decision-maker decided that the Applicant was not entitled to a redundancy pay entitlement (T15/197). This was due to the operation of

ss 119, 121 and 23 of the FW Act which will now be outlined.
Section 119 of the FW Act provides for an entitlement to redundancy pay in certain circumstances, and also sets out how any amount of redundancy payment is to be calculated. It provides, in part:
(1)An employee is entitled to be paid redundancy pay by the employer if the employee’s employment is terminated:
(a)at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or
(b)because of the insolvency or bankruptcy of the employer.
Section 121 of the FW Act provides that s 119 does not apply, and therefore that there is no obligation to pay redundancy pay, in certain circumstances:
(1)Section 119 does not apply to the termination of an employee’s employment if, immediately before the time of the termination, or at the time when the person was given notice of the termination as described in subsection 117(1) (whichever happened first):
(a)the employee’s period of continuous service with the employer (other than periods of employment as a casual employee of the employer) is less than 12 months; or
(b)the employer is a small business employer.
Section 23 of the FW Act defines “small business employer” as follows:
(1)A national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time.
(2)For the purpose of calculating the number of employees employed by the employer at a particular time:
(a)subject to paragraph (b), all employees employed by the employer at that time are to be counted; and
(b)a casual employee is not to be counted unless, at that time, the employee is a regular casual employee of the employer.
(3)For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity.
(4)To avoid doubt, in determining whether a national system employer is a small business employer at a particular time in relation to the dismissal of an employee, or termination of an employee’s employment, the employees that are to be counted include (subject to paragraph (2)(b)):
(a)the employee who is being dismissed or whose employment is being terminated; and
(b)any other employee of the employer who is also being dismissed or whose employment is also being terminated.
(Emphasis added.)
A “national system employer” is defined by s 14 of the FW Act to include “a constitutional corporation, so far as it employs, or usually employs, an individual”. NOGA would fall within the definition of a constitutional corporation. It is a constitutional corporation because a substantial or significant part of its activities constitute “trading” and it was formed within the limits of the Commonwealth (New South Wales v Commonwealth [2006] HCA 52; (2006) 229 CLR 1 (Work Choices Case)).
In the Initial Decision, the decision-maker found that the Applicant’s employment with NOGA was terminated on 7 February 2020. However, the decision-maker found that at 7 February 2020, NOGA was a “small business employer” as defined by s 23 of the FW Act because it had less than 15 employees at that time. Therefore, in accordance with s 121, s 119 of the FW Act did not apply and the Applicant was not entitled to an advance of redundancy pay (T15/197).
THE REVIEWABLE DECISION
On 19 June 2020, pursuant to s 38(1) of the FEG Act, the Applicant applied to the Secretary of the Department for a review of the Initial Decision (T18/207–211; T20/217). In his application, the Applicant claimed that NOGA was not a small business employer “in terms of revenue, contracts awarded for associated employment and services, tax paid and royalties” (T18/210). He also referred to a pending decision in this Tribunal which he thought may impact his claim (Fink and Secretary, Attorney General’s Department [2021] AATA 734 (Fink), which was subsequently published on 31 March 2021). The Applicant also disagreed with the decision-maker’s assessment of his length of service which he said should be 2.06 years rather than 1.73 years (T18/209).
The Applicant was unsuccessful with this internal review. Specifically, on 6 October 2020, a decision-maker in the Review Team at the Fair Entitlements Guarantee Branch of the Department decided, under s 39(1) of the FEG Act, to affirm the Initial Decision (T21/223–232). It is this decision of 6 October 2020, that is the Reviewable Decision currently before this Tribunal.
In the reasons for the Reviewable Decision, the decision-maker found that the time from the Applicant’s appointment on 27 December 2017 to the termination of his employment on 7 February 2020 was correctly calculated as 1.73 years. The decision-maker also found that based on information provided by the insolvency practitioner from NOGA’s books and records, as at 7 February 2020, NOGA only had five employees and further that there were no associated entities that employed employees at that time. Consequently, the decision-maker concluded that NOGA was a small business employer and that under s 121(1)(b) of the FW Act, the Applicant was not entitled to redundancy pay (T21/224–225).
On 2 November 2020, pursuant to s 40(1)(a) of the FEG Act, the Applicant filed an application seeking review of the Reviewable Decision in the General Division of this Tribunal (T1/1–7).
ISSUE
The issue before the Tribunal is whether the Applicant is entitled to an advance on account of redundancy pay.
THE HEARING AND THE EVIDENCE
The hearing of this application took place on 13 May 2021. The Applicant appeared in person and was accompanied by a friend as his support person.
The Secretary was legally represented by Mr W Sharpe of HWL Ebsworth Lawyers. Mr Sharpe appeared by videoconference.
Both parties made submissions to the Tribunal. The Applicant also gave evidence and was cross-examined by Mr Sharpe.
The Tribunal admitted the following documents into evidence:
(a)the Applicant’s written submissions, dated 8 April 2021, with attached appendix A and appendix B (Exhibit A1);
(b)letter to Kerry Gordon, Manager, Assessment and Inspection, NOPSEMA, from the Applicant, dated 15 April 2019 (Exhibit A2);
(c)Bundle of documents provided at the hearing, comprising (Exhibit A3):
(i)NOPSEMA Environmental Improvement Notice, dated 12 November 2018;
(ii)section 574 NOPSEMA Direction Number 741, dated 26 April 2019;
(iii)section 574 NOPSEMA Direction Number 753, dated 18 July 2019;
(d)letter to the Applicant from Northern Oil & Gas Australia Pty Ltd liquidator, Robyn Duggan of KPMG, dated 8 May 2020 (Exhibit A4);
(e)s 37 T-documents, labelled T1–T26 and consisting of pages 1–272 (Exhibit R1); and
(f)supplementary T-documents, labelled ST1–ST2 and consisting of pages 273–362 (Exhibit R2).
The Tribunal also had the following submissions before it:
(a)Secretary’s Statement of Issues, dated 18 December 2020;
(b)Secretary’s Statement of Facts, Issues and Contentions, dated 4 March 2021 (SFIC);
(c)Applicant’s submissions, dated 8 April 2020; and
(d)Secretary’s submissions in reply, dated 23 April 2021.
At the conclusion of the hearing on 13 May 2021, the Tribunal issued a Direction seeking further submissions from the parties as follows:
The Tribunal seeks written submissions from the parties regarding whether s 23(3) of the Fair Work Act 2009 (Cth) which provides that, ‘For the purpose of calculating the number of employees employed by the employer at a particular time, associated entities are taken to be one entity’, is applicable.
Specifically, was Upstream Production Solutions Pty Ltd (UPS) an “associated entity” of Northern Oil & Gas Australia Pty Ltd (NOGA) so that the employees of UPS and NOGA can be counted together?
In their submissions, the Tribunal asks that the parties:
·address the definition of an “associated entity” with reference to the applicable subsection(s) of s 50AAA and s 50AA of the Corporations Act 2001 (Cth); and
·refer to any relevant evidence admitted into evidence at the hearing in support of their submissions.
Consequently, the Tribunal received the following post-hearing submissions:
(a)Secretary’s submissions on definition of “associated entity”, dated 27 May 2021, with annexure A, being a Current and Historical Organisation Extract for Upstream Production Solutions Pty Ltd (UPS) from the Australian Securities and Investments Commission;
(b)Applicant’s submissions on definition of “associated entity”, dated 10 June 2021, with attachments 1–12; and
(c)Secretary’s submissions in reply, dated 23 June 2021.
CONSIDERATION OF THE SUBMISSIONS
The Respondent submitted that the exclusion in s 121 of the FW Act applies because, as at 7 February 2020, NOGA was a small business employer in the sense that it employed less than 15 employees.
The Applicant raised numerous arguments in support of his being entitled to an advance of his redundancy payment. For convenience, the Tribunal has categorised the Applicant’s submissions under two broad headings. Firstly, the Applicant made submissions in support of the definition of “small business employer” being expanded. Secondly, the Applicant also made submissions to the effect that the number of employees of both NOGA and UPS should be counted together. If so, NOGA would not be a “small business employer” because the combined number of employees of both companies as at 7 February 2020 would be 15 or more employees. If this submission is accepted, the Applicant would be entitled to an advance of redundancy pay under s 119 of the FW Act, because s 119 would not be excluded by s 121(1)(b) of the FW Act which provides for the “small business employer” exclusion. The Tribunal will now consider these submissions.
Expanded definition of “small business employer”
The Applicant agreed that the relevant date for consideration was 7 February 2020, being the date that his employment was terminated, but argued that other factors should be considered to determine whether NOGA was a small business employer. As stated in the Applicant’s application for review to this Tribunal, he believed that the value of assets and revenue generated by NOGA should be considered in determining whether NOGA was a small business employer (T1/5):
… this demarcation at 15 employees as the designator for a small business should not be applicable in the case of NOGA administration without consideration for other factors. The FW Act section 23 simply states the number 15 as the definition of a small business without consideration for another [sic] pertinent factors. The argument should be the size of company due to the assets owned ($200m), revenue generation ($50m), royalties generated and paid, individuals employed contractor & company (100+), contractor award and administration, logistics and materials supplied.
I request the AAT reconsider the decision made in relation to my claim for payment of redundancy I am owed, taking into account the matters I have outlined above and in my letter attached, which highlight the unique and special circumstances that apply in this exceptional situation.
The Tribunal understands why the Applicant makes this argument. It is a reasonable one, from a practical perspective. However, s 23(1) sets the limits for the definition of a small business employer, as it states that, “[a] national system employer is a small business employer at a particular time if the employer employs fewer than 15 employees at that time”. The requirement for 15 employees is determinative. As was stated by Deputy President Deutsch in Mi and Secretary, Department of Employment [2016] AATA 419 (Mi) at [23]:
With some regret, I conclude that it is not open to me sitting as the decision-maker in this case to insert a different test in s 121(1) for determining the time at which an employer was a small business employer. For example, it is not open to me to insert a longer or different date, such as immediately before the time at which the employer company is placed into administration/liquidation. Sitting as the Tribunal, I am required to apply the unambiguous language chosen by Parliament and that language drives the conclusion that the relevant date to consider in this case is 4 October 2013 being both the date of the Applicant’s termination of employment and the date of the notification to her of that termination. I am clearly not at liberty to look to an earlier date such as the date immediately prior to the commencement of the administration.
(Emphasis added.)
Although the learned Deputy President made these comments in the context of the point in time at which the number of employees should be counted, it is equally applicable to address the Applicant’s argument above. The Applicant is effectively asking the Tribunal to broaden the test stated in s 23 to have regard to factors other than the number of 15 employees, that is, to the assets and revenue generated by NOGA. However, the Tribunal is unable to do so because the unambiguous language of Parliament provides for a narrow discretion where the number of employees is determinative.
The Applicant also argued that there were policy reasons to apply the legislation in such a way as to justify him being advanced a redundancy payment. For example, the Applicant submitted that the fact that he and other employees stayed with NOGA after the company went into administration and liquidation effectively saved the taxpayer millions of dollars (transcript/24).
An email to the Applicant from the liquidator dated 12 March 2021, supports this argument, as the liquidator identified additional policy concerns about the operation of the legislation (A4). She stated:
I understand why [Fair Entitlements Guarantee] is asserting the small business limitation – they are simply applying the law as it currently stands. What they are not appreciating however (and this was a point that I made in my initial representations to them on this matter) is that it is a discouragement to efforts to try and achieve a successful outcome for all stakeholders including employees.
As you know, we were all working extremely hard to try and hold the operations together while plans were being developed for a DOCA [deed of company arrangement]. In the background we had a secured creditor who was committed to fund but was demanding cost reductions continuously. There was no option but to undertake the staggered redundancies to reduce head count whilst retaining key personal [sic] necessary to maintain operations and meet regulator expectations.
The stance taken by FEG will drive a situation where administrators will have to terminate [the employment of] all staff on day one to protect entitlements and then re-engage key staff on a casual basis while the VA [voluntary administration] plays out. This runs a huge risk of employee disengagement and departure and places any opportunity to enable the business to continue to trade in jeopardy in complete contradiction to the intentions of Part 5.3A of the Corporations Act 2001.

Similar arguments to those outlined in the email above from the liquidator of NOGA were raised in Fink. Relevantly, Member Burke AO stated at [136]–[138]:
136.As in the matter of Bullivant, the Administrators of Unlockd had asked several staff, including Mr Fink, to stay on after they were appointed to assist selling the business as an ongoing concern, sadly for all this did not eventuate and all staff were subsequently terminated. The Administrators of Unlockd rightly observed that winding up a company is a difficult, complex task, to be actioned in a tight, fast-paced and often stressful environment. They went onto assert that it is the Administrators who are often making difficult decisions about when to terminate staff. They observed that if the Tribunal upholds this delegate’s decision in respect of the refusal of Mr Finks’ redundancy payment, this would undermine Administrators’ ability to ask staff to remain to help wind up business.
137.Whilst the Tribunal has no quibble with this statement, it is surprising that a large administrator, which has been successfully operating for many years is just coming to this realisation – as this has been the case since the FEG Act was first introduced in 2012. The Tribunal was surprised to see that so much time and effort had gone into pursuing this action but it seemed no time had been taken, or action or explanation on behalf of the Administrators had occurred at the time staff were asked to transition from Unlockd to the liquidator. If the Administrators had clarified the terms of the individuals’ employment contracts at that stage, as the Senior Member observed in Bullivant:
There is nothing in the applicant’s evidence to suggest that the potential impact of section 121(1)(b) was explicitly raised or discussed. But the insolvency practitioners would have known, as an elementary matter, that if an employer is a SBE immediately before an employee receives a notice of termination, then section 121(1)(b) of the FWA will generally defeat a FEG redundancy claim. It does not matter if the employer was once a large employer and became an SBE during the course of administration
this whole sorry situation for Mr Fink and his fellow colleagues could have been avoided.
138.The Tribunal noted that [the applicant’s representative’s] contention that it would be profoundly unfair in any insolvency if one employee were entitled to a higher return over another was slightly surprising, as this has been the case since the introduction of the FEG Act in 2012 and the basis for many applications for review before the Tribunal. If this perceived unintended consequence of the legislation is of such aggrievance to administrators, then an appeal to Government to amend the legislation would be worthy of consideration. Again, as the Senior Member found in Bullivant, this is the consequence of the legislation unless the liquidator takes action to mitigate against such an outcome.
However, it does not follow from this that the insolvency practitioners, at the time they discussed the possibility of staying on with the applicant, and with other employees, overlooked a matter as vital to the applicant as the status of the employer company. I would be reluctant to make such a finding.
Where an insolvency practitioner undertakes to specific employees that, in return for ongoing service their entitlements to redundancy pay will be protected (whether or not the employer becomes a SBE), section 121(1)(b) of the FWA is necessarily excluded from the agreement. Otherwise, a promise along such lines would be dishonest or at the very least negligent. If the Company is, or becomes, an SBE, and the governing instrument for employee entitlements is the FWA, then such an undertaking would be worthless.
(Emphasis added.)
The Tribunal agrees with these observations of Member Burke in Fink. It is the role of Parliament (and not the Tribunal) to remedy any “unintended consequence(s)” of the operation of legislation through legislative amendment. As was observed by Member Burke AO, in Fink at [138], the liquidators should have been aware of these “unintended consequences”, including the possibility that remaining employees may lose their entitlements when the number of employees falls below 15. Whilst it is not within the power of this Tribunal to interpret the law beyond the meaning that was intended by Parliament, it was certainly within the knowledge and ability of liquidators to forewarn employees about the potential loss of entitlements so that employees could make informed decisions to protect their entitlements.
The Applicant submitted that during an initial briefing by the administrators, they did not warn him that if he continued his employment with NOGA he could lose his entitlements. The Applicant said that he was told by the liquidators that it was “business as usual”. In his written submissions, dated 8 April 2021, the Applicant stated that, “[t]here was never any indication that subsequent NOGA personnel would be disadvantaged by remaining employed and continuing to support the attempts to restructure the business through the administration process” (A1/5). Understandably, the Applicant stated that he would have taken a voluntary redundancy if he had known that he risked losing his entitlements should he remain employed by NOGA (transcript/25–26).
Unfortunately for the Applicant, silence on the part of the administrators, however questionable, cannot remedy the operation of the relevant statutory provisions which should be given their plain and ordinary meaning. The Tribunal observes that the Applicant’s situation is distinguishable from that in Bullivant and Secretary, Department of Employment [2020] AATA 2047 where the Tribunal found, at [56], that “the insolvency practitioners gave to the Applicant an undertaking to protect her redundancy entitlements if she stayed on”. However, in this case there was no formal undertaking commensurate to that which the Tribunal found was given in Bullivant.
Whether NOGA and UPS employees can be counted together
The Applicant submitted that the number of employees of NOGA and UPS as at 7 February 2020 should be counted together for reasons including that the entities ostensibly operated as “one entity” (transcript/23). In other words, the Tribunal is to consider whether the companies (NOGA and UPS) meet the statutory definition of being “associated entities”. This would, according to s 23(3) of the FW Act, permit the employees of such entities to be counted together for the purpose of calculating the number of employees. As noted above, the Tribunal was assisted by the written submissions of the parties on this issue, which will now be referred to.
However, first, it is useful to outline the structure of the group of companies more particularly. In their voluntary administrators’ report, the administrators described the company structure as follows (T4/31):
NOGA Holdings [Pty Ltd] is the parent company within the group. NOGA Holdings is not in voluntary administration.
NOGA owns 100% of the shares in [Timor Sea Oil & Gas Australia Pty Ltd], which is the owner of the [Northern Endeavour] and holder of the Production Licenses and associated infrastructure.
Each of NOGA Holdings, NOGA and [Timor Sea Oil & Gas Australia Pty Ltd] are parties to an ASIC Class Order Deed of Cross Guarantee, which means each of these entities are each responsible for the others’ liabilities.
The ultimate holding company of UPS is, and was at the relevant time, GR Engineering Services Ltd, which holds the only share issues in UPS (annexure A, Secretary’s post-hearing submissions dated 27 May 2021). As mentioned above at para [6], UPS is associated with NOGA by virtue of its position as the operator of the Northern Endeavour.
In a letter dated 31 October 2020, attached to his application for review (T1/9–11), the Applicant expanded upon the “unique and special circumstances” that he referred to in his application to this Tribunal, and upon why he claimed that this was an “exceptional situation” whereby the number of employees of NOGA and UPS should be counted together.
More specifically, the Applicant explained in his letter dated 31 October 2020 that the “title” to own, operate and develop the reservoir, as well as the “safety case” and “environment plan”, were normally issued by NOPSEMA to a single company. However, the Applicant submitted that “the operation was a combined effort by NOGA and UPS” because NOGA subcontracted the Safety Case to UPS. He explained (T1/10):
NOGA … subcontracted the safety case by issuing a long-term Operations & Maintenance contract with UPS but this should be considered in the same light.
This joint approach to both Title and Safety Case meant that in reality at the actual time that NOGA was placed into liquidation there was a total of 24 people engaged with the Northern Endeavour, 19 UPS and 5 NOGA personnel.
All of these employees were essential for the occupational health & safety of all personnel associated with the operation and combined with the vessel environmental sensitivities.
(As original.)
At the hearing the Applicant submitted that this was a “one-off situation that is never going to be repeated again” (transcript/29). This was because, the Applicant submitted, the government would never again allow the safety case and title to be held by two different companies and was implementing legislative changes to impose liabilities on oil companies to pay for decommissioning (transcript/23).
The Applicant made further submissions that NOGA and UPS were ostensibly the same entity. He stated that the government regulator, NOPSEMA, “issued [a] cessation of work [notice] to NOGA to shut down, not to UPS who owns the safety case” (transcript/28). The Applicant further explained (transcript/29):
But the point I’m trying to make is that it was one entity, it is one entity today, with the inclusion of the federal government themselves. And the recognition that it was one entity to me, for want of a better word, is the fact that NOGA was issued with the cessation of work notice, with the prohibition notice. And it was NOGA that had to go down there on a regular basis to present the recovery plans, et cetera, to NOPSEMA. So it was KPMG and NOGA that had to go down there and satisfy the government, right.
So to me, I think if you were to say was there less than 15, I think that’s a very clear cut decision, yes/no. But in this case, I don’t think it 100 per cent applies. This was a one-off situation that is never going to be repeated again. The government will never let the title and the safety case be split between two different people for this reason. They will never let companies get involved in the production of oil and gas, oil and G or whatever it may be, offshore, without a prior commitment and money put in escrow to take care of decommissioning.
In his post-hearing submissions dated 10 June 2021, the Applicant summarised these submissions more clearly. He stated (pages 2–3):
In my previous submissions, I have explained how the legislative requirement of the Offshore Petroleum Greenhouse Gas Storage Act 2006 requires suite of operational management documents that includes a Safety Case, a Well Operations Management Plan and an Environment Plan to legally operate a facility.
And that within these documents the legal responsibilities of the Titleholder (NOGA) and Operator (UPS) are intertwined and co-dependent within the key regulatory documentation. Under the OPGGSA regulations,
·the Safety case, which is held by the Operator
·while the Environment Plan and Well Operations Management Plan are held by the Titleholder who meets those obligations with the support of the Operator.
These documents are prepared and submitted to NOPSEMA as the relevant regulator and once accepted is an offence under the act to not operate in accordance with those documents.
The regulatory approval documents tied UPS and NOGA together and the merged organizational structure was reflected within these documents.
In many respects NOGA and UPS were tied at the hip like cojoined twins and any attempt to sever one from the other would have a life crippling effect on the other. It is this reliance on co-dependance [sic] that enabled control to be exercised.
(Original emphasis.)
The Applicant further stated at the hearing (transcript/26–27), that “every functional department within UPS had a NOGA reporting line”.
The Applicant also gave detailed examples to “demonstrate that NOGA’s level of control had a direct impact upon the way UPS’s [sic] operated at a financial and operational level” (Applicant’s post-hearing submissions, pages 4–6). This included, amongst other changes, establishing daily operations meetings comprised of both UPS and NOGA management, NOGA being responsible for basic and emergency training of UPS personnel, reducing the number of personnel onshore and offshore and making other changes which “had a direct impact on UPS’s charge out rate and profit margins” (page 4).
On the other hand, the Respondent submitted in their post-hearing submissions and post-hearing reply submissions that as at 7 February 2020 UPS and NOGA were not “associated entities” and, consequently, that UPS’s employees cannot be counted with those of NOGA to determine whether NOGA was a small business employer.
A reading of the Applicant’s post-hearing submissions (page 3) indicates that he relies upon the definition of an “associated entity” in s 50AAA(3) of the Corporations Act 2001 (Cth) (Corporations Act) because, in summary, the Applicant submitted that “NOGA exercised a level of control over UPS from daily operations through to actual work execution and engineering”. Section 50AAA of the Corporations Act states, in part:
(1)One entity (the associate) is an associated entity of another entity (the principal) if subsection (2), (3), (4), (5), (6) or (7) is satisfied.
(2)This subsection is satisfied if the associate and the principal are related bodies corporate.
(3)This subsection is satisfied if the principal controls the associate.
(4)This subsection is satisfied if:
(a)the associate controls the principal; and
(b)the operations, resources or affairs of the principal are material to the associate.
NOGA Holdings Pty Ltd, NOGA and Timor Sea Oil & Gas Australia Pty Ltd (TSOGA) are related bodies corporate, and therefore “associated entities” (ss 50(a) and s 50AAA(2) of the Corporations Act). However, UPS, as outlined above at paras [43]–[44], is not part of this group of related bodies corporate and is not an “associated entity” on that basis.
However, an entity may still be an associate of another where one entity controls the other (ss 50AAA(3) and 50AAA(4) of the Corporations Act). Relevantly, s 50AA of the Corporations Act provides guidance for determining whether an entity controls a second entity. It provides:
(1)For the purposes of this Act, an entity controls a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity’s financial and operating policies.
(2)In determining whether the first entity has this capacity:
(a)the practical influence the first entity can exert (rather than the rights it can enforce) is the issue to be considered; and
(b)any practice or pattern of behaviour affecting the second entity’s financial or operating policies is to be taken into account (even if it involves a breach of an agreement or a breach of trust).
(3)The first entity does not control the second entity merely because the first entity and a third entity jointly have the capacity to determine the outcome of decisions about the second entity’s financial and operating policies.
(4)If the first entity:
(a)has the capacity to influence decisions about the second entity’s financial and operating policies; and
(b)is under a legal obligation to exercise that capacity for the benefit of someone other than the first entity’s members;
the first entity is taken not to control the second entity.
The meaning of control in s 50AA of the Corporations Act has been judicially considered. In Hancock v Rinehart (2015) 106 ACSR 207 at [152]–[153], Brereton J stated:
The concept of ‘control’ of an entity is concerned with the ability to determine the outcome of decisions of the entity ... In the context of a company, this ordinarily means the ability to carry a resolution by majority at the general meeting — and thus to determine the composition of the board of directors …
Control is concerned with decision-making, rather than proprietorship, and control, like ownership, can be indirect: there are circumstances in which those who have the ability to carry a resolution may become bound to act on the direction of another (for example, a mortgagee). The ‘control’ requirement is directed to the ultimate power to decide how an entity acts, as distinct from beneficial ownership, and also as distinct from the delegated power of directors or officers. Although typically those who wholly own a company will control it, that is not necessarily so: it is not unknown for those entitled to exercise voting power to become bound or accustomed to exercise their voting rights in accordance with the direction of another (as would be the case, for example, if under her settlement with Mrs Rinehart, Hope were bound to vote in accordance with Mrs Rinehart’s direction). In such a case, that other person will ‘control’ the company if he or she has a sufficient accumulation, directly or indirectly, of voting power to carry the general meeting.
(Emphasis added.)
In Amcor Ltd v Barnes [2016] VSC 707 at [1282], Sloss J stated:
… one does not discern or ascertain whether there is a change of control by simply looking at the number of shares held at any particular time, or to strict legal rights, or to the rights of directors etc. Rather one must look to see whether the entity has the capacity, in a real and practical sense, to determine the important decisions of the company that set the framework for the operation of the business, in meeting its legal and regulatory obligations and in achieving its financial and other corporate objectives, as distinct from the day to day decisions made within that framework.
(Emphasis added.)
However, before considering the issue of control in more detail, there is a more fundamental problem for the Applicant, which was noted by the Tribunal in Mi at paras [45]–[47]:
On 27 September 2013, Auto Tuft went into voluntary administration and appointed administrators on the same day. The administration did not end until 4 November 2013, when liquidators were appointed.
Accordingly, on 4 October 2013, Auto Tuft was under administration. It was therefore under the control of the administrators, to the exclusion of any other person or company.
The breadth of an administrator’s legal control over a company in administration is set out in s 437A of the Corporations Act, which provides as follows:
(1)While a company is under administration, the administrator:
(a)     has control of the company’s business, property and affairs; and
(b)     may carry on that business and manage that property and those affairs; and
(c)     may terminate or dispose of all or part of that business, and may dispose of any of that property; and
(d)     may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not under administration.
Thus, from the time that NOGA went into administration on 20 September 2019, it was under the control of administrators (s 437A of the Corporations Act). Even if NOGA and UPS could be regarded as “associated entities” up to that time, when NOGA was placed into administration, that control shifted, and the entities ceased to be associated. Similarly, when NOGA was placed into liquidation on 7 February 2020, control shifted from the administrators to the liquidators for the purpose of winding up the business of NOGA (see s 477 of the Corporations Act). This means that at the date that the Applicant was made redundant, being 7 February 2020, UPS and NOGA were not “associated entities”.

Additionally, there is no evidence that the administrators or liquidators had any capacity to exert control over UPS, as evidenced by the administrators having to negotiate with UPS to secure their continued services. The administrators stated that (T4/46), “[f]ollowing a number of meetings and negotiations, we were successful in procuring UPS’s continued services and they have continued to operate and maintain the [Northern Endeavour] to date”. Also, to date, UPS continues to operate despite TSOGA and NOGA having been wound up. This is a further indication that the companies were not, at the relevant time, associated entities and that UPS was an unrelated entity which the administrators had to negotiate with in order to obtain its continued services.
However, even if the issue of a shift in control to the administrators, and then to the liquidators could be put aside, the Tribunal is, in any event, not of the opinion that the evidence supports a finding that NOGA controlled UPS (or indeed, that UPS controlled NOGA) in the manner contemplated by s 50AA of the Corporations Act. This is because, amongst other factors, there is no evidence of a legal relationship under which NOGA could control UPS. Rather, there is an operations and maintenance services agreement between TSOGA (which is wholly owned by NOGA: T4/31) and UPS, under which UPS, as a “contractor”, provides those services to TSOGA (ST1/279). However, this agreement is not enough to conclude that TSOGA (and perhaps, by extension, NOGA, by virtue of TSOGA being wholly owned by NOGA) had the requisite degree of control over UPS. Indeed, various provisions in this agreement make it clear that there is no employer-employee relationship, but rather indicate that the relationship between TSOGA and UPS is essentially that of an independent contractor (being a contract for services).
As well as this, UPS was contracted to provide services for the operation of a particular facility (the Northern Endeavour), and there is no evidence of NOGA having the capacity to determine the outcome of decisions about UPS’s financial and operating policies in terms of UPS’s broader business, which is what is contemplated by s 50AA. What the Applicant has described in his evidence is a unique situation arising from the title and safety case required for the operation of a particular facility, the Northern Endeavour, being divided between the two different companies. The Applicant described a “combined effort” between the two companies by virtue of the division of the title and safety case which was “essential” to ensure occupational health and safety and environmental compliance on the Northern Endeavour. NOGA and UPS worked together on the facility with different responsibilities that co-existed, with the day to day management being undertaken by NOGA. Some of the decisions concerning operations on the Northern Endeavour that were described by the Applicant as being made by NOGA may have had some financial impact on UPS, for example, decisions concerning levels of staffing. However, these types of decisions are better characterised as decisions concerning the day to day operation of the facility, as opposed to “the important decisions of the company that set the framework for the operation of the business” (Amcor). In other words, there is insufficient evidence upon which the Tribunal could conclude that any control exerted by NOGA over UPS went as far as “the ultimate power to decide how an entity [in this case UPS] acts” (Hancock).
In conclusion, UPS was not an associated entity of NOGA and therefore it cannot be concluded that the employees of each company could be counted together for the purpose of determining whether NOGA was a small business employer as at 7 February 2020.
CONCLUSION
Unfortunately for the Applicant, and for the reasons set out above, the statutory definition of “small business employer” cannot be expanded on the basis of the assets and revenue generated by NOGA or for policy reasons. Also, there is no basis for counting the employees of UPS and NOGA together.
Consequently, as at 7 February 2020, NOGA satisfied the definition of a “small business employer”, and therefore s 119 of the FW Act, which provides for an entitlement to redundancy pay, does not apply. This means that the Applicant is not entitled to an advance for redundancy pay.
DECISION
The Reviewable Decision is affirmed.

I certify that the preceding 66 (sixty- six) paragraphs are a true copy of the reasons for the decision herein of Senior Member Dr M Evans-Bonner

...[Sgd]...............................................................
Associate
Dated: 3 September 2021
Date of hearing:  13 May 2021
Representative for the Applicant:             Self-Represented
Representative for the Respondent:         Mr W Sharpe, HWL Ebsworth Lawyers