El-Chahal and Secretary, Department of Employment
[2015] AATA 512
•15 July 2015
El-Chahal and Secretary, Department of Employment [2015] AATA 512 (15 July 2015)
Division GENERAL DIVISION File Number(s)
2015/1885
Re
Fadi El-Chahal
APPLICANT
And
Secretary, Department of Employment
RESPONDENT
DECISION
Tribunal Mr S. Webb, Member
Date 15 July 2015 Place Sydney Application dismissed.
..............................[sgd]..........................................
Mr S. Webb, Member
CATCHWORDS
PRACTICE & PROCEDURE – application for dismissal – discretion - meaning of ‘frivolous or vexatious’ – fair entitlement guarantee scheme – eligibility for advance – meaning of ‘excluded employee’ – no prospect of success – application dismissed
LEGISLATION
Administrative Appeals Tribunal Act 1975, s 42B.
Corporations Act 2001, ss 9, 556
Fair Entitlements Guarantee Act 2012, ss 10, 11
CASES
Re Mohammed and Secretary, Department of Employment [2014] AATA 611
Re Fulger and Secretary, Department of Employment [2014] AATA 275
Re Dennis and Secretary, Department of Employment [2014] AATA 942Re McBryde and Secretary, Department of Employment [2014] AATA 434
REASONS FOR DECISION
Mr S. Webb, Member
15 July 2015
Fadi El-Chahal lost his job when his employer, Alpine Smash Repairs Pty Ltd (Alpine Smash repairs) was wound up. He was owed, but not paid, wages, redundancy and leave entitlements. He claimed an advance under the Fair Entitlements Guarantee Scheme. This was rejected. He has now applied for review of that decision by this Tribunal.
In the course of proceedings, the Secretary applied for the application to be dismissed on grounds that it is futile and, therefore, vexatious.
It is this matter alone, that I must determine.
Under s 42B of the Administrative Appeals Tribunal Act 1975 (the AAT Act) as it stood when the matter was heard, the Tribunal has discretion to dismiss an application in certain circumstances –
42B Power of Tribunal where a proceeding is frivolous or vexatious
(1) Where an application is made to the Tribunal for the review of a decision, the Tribunal may, at any stage of the proceeding, if it is satisfied that the application is frivolous or vexatious:
(a) dismiss the application; and
(b) …
This power was expanded on 1 July 2015, when amending provision of the AAT Act came into effect –
42B(1) The Tribunal may dismiss an application for the review of a decision, at any stage of the proceeding, if the Tribunal is satisfied that the application:
(a) is frivolous, vexatious, misconceived or lacking in substance; or
(b) has no reasonable prospect of success; or
(c) is otherwise an abuse of the process of the Tribunal.
…
The amendment does not produce a material difference in the result.
Mr El-Chahal’s application proceeds on the basis that he was an ‘employee’ of Alpine Smash Repairs prior to a resolution to voluntarily wind up the company on 10 June 2014.[1] It appears that his employment as Manager was terminated by the company liquidator. Records of the Australian Securities and Investments Commission show that he was a director of the company for two brief periods, from 3 September 2012 to 10 October 2012 and from 4 September 2013 to 28 October 2013.[2]
[1] T8.
[2] T9 folio 72.
I understand that Mr El-Chahal does not dispute this. He says –
I believe FEG’s decisions didn’t take into account the necessity of the directorship, to continue to run the business & keep about 7 employees employed. I feel a decision was made on a policy with no consideration of the circumstances![3]
[Original emphasis]
[3] T2.
The Secretary applies for dismissal of Mr El-Chahal’s application on grounds that he is an ‘excluded employee’ and, as such, he is not entitled to an advance under the Fair Entitlements Guarantee Scheme. The argument is, essentially, that Mr El-Chahal’s application has no prospect of success.
Thus, there are two issues to consider. Firstly, whether Mr El-Chahal has any prospect of success in his application for the purposes of s 42B of the AAT Act. And secondly, if the application has no prospect of success, whether it is appropriate to exercise the discretion to dismiss it.
Prospect of success
This issue is to be determined with reference to the Fair Entitlements Guarantee Act 2012 (the FEG Act) and the Corporations Act 2001 (the Corporations Act).
Eligibility for an advance under the FEG Act is preconditioned by the factors set out in s 10 of that Act. For present purposes it is not necessary to set out these eligibility factors, but the note in s 10(1) is important –
Note – Subdivision B excludes certain persons from eligibility.
Subdivision B contains s 11, which provides –
11 Exclusion for personal connection with employer
(1) A person is not eligible for an advance for the person’s employment by an employer if:
(a) section 556 of the Corporations Act 2001 applies to the winding up of the employer; and
(b) the person is an excluded employee under that section in relation to the employer.
There is no discretion conferred on a decision maker to excuse this exclusion if the two elements concerning the ‘winding up’ and the ‘excluded employee’ are established under the relevant section of the Corporations Act.
Section 556 of the Corporations Act provides for priority payment of specified debts and claims over other unsecured debts and claims on the winding up of a company, including amounts due to employees in respect of wages and superannuation (s 556(1)(e)), injury compensation (s 556(1)(f)), leave (s 556(1)(g)) and retrenchment payments (s 556(1)(h)). The section also imposes limits on payments to ‘excluded employees’ in respect of wages and superannuation (s 556 (1A)), leave (s 556(1B)) and retrenchment payments (s 556(1C)).
The term ‘excluded employee’ is defined in s 556(2) –
excluded employee, in relation to a company, means:
(a) an employee of the company who has been:
(i) at any time during the period of 12 months ending on the relevant date; or
(ii) at any time since the relevant date;
or who is, a director of the company;
(b) an employee of the company who has been:
(i) at any time during the period of 12 months ending on the relevant date; or
(ii) at any time since the relevant date;
or who is, the spouse of an employee of the kind referred to in paragraph (a); or
(c) an employee of the company who is a relative (other than a spouse) of an employee of the kind referred to in paragraph (a).
There is no discretion to treat an employee who has been a director of a company and falls within the meaning of ‘excluded employee’ as an employee who is not excluded, however brief or necessary for the continuing operation of the company business the directorship may have been.
I note that the Tribunal (differently constituted) arrived at similar conclusions in four recent decisions, with which I respectfully concur, albeit in different circumstances.[4]
[4] Re Mohammed and Secretary, Department of Employment [2014] AATA 611, Re Fulger and Secretary, Department of Employment [2014] AATA 275, Re Dennis and Secretary, Department of Employment [2014] AATA 942 and Re McBryde and Secretary, department of Employment [2014] AATA 434.
I note in passing that the ‘relevant date’ referred to in s 556(2)(b)(i) is defined under s 9 of the Corporations Act to mean ‘the day on which the winding up is taken because of Division 1A of Part 5.6 to have begun’.
On the facts of Mr El-Chahal’s case, the relevant date is 10 June 2014.
It is quite clear that Mr El-Chahal was a director of the Alpine Smash Repairs within the 12 months preceding the ‘relevant date’.
That being so, he is within the meaning of ‘excluded employee’. This is so regardless of any circumstances attaching to his brief directorship of the company.
It follows, under s 11 of the FEG Act, that he is not eligible for an advance under the terms of that Act.
For this reason, without ambiguity or available discretion, his application cannot succeed and it may properly be treated as ‘vexatious’.
This should not be misconstrued to mean that the application is brought for a mischievous purpose or with any bad intent; it is simply that it has no prospect of success whatsoever and for that reason it is ‘manifestly untenable’.
The discretion to dismiss the application under s 42B of the AAT Act is enlivened.
Discretion to dismiss
As has been noted in the authorities to which I have been referred, the purpose of the discretion must be construed in view of the objects of the AAT Act, and s 2A in particular. It is difficult to see how the objective of providing a mechanism of review that is proportional as well as fair, just, economical, informal and quick can be served by allowing an application with no prospect of success to proceed, and in so doing to put the parties and the Tribunal to costs.
Even so, the rules of procedural fairness must be considered in the balance and a cautious approach adopted.
Even though he had but little to say, Mr El-Chahal has been given an adequate opportunity to be heard on these matters in the hearing before me.
In the circumstances, I understand his frustration and his assertion that, in the circumstances of his case, the legislation is unfair. I accept that he undertook the brief directorial appointment in 2013 for operational reasons, “to continue to run the business” as its manager, when the managing director was unwell. I accept that he was motivated to do so with the best intentions, and without additional payment or benefit, as a dedicated employee. It is also likely that he did so with no knowledge of the consequential effects of such action if the company went into liquidation, as occurred.
Mr El-Chahal’s problem arises from the inflexible form of the legislation and the policy it gives effect to. The legislation does not provide any discretion to deal with the particular circumstances of any individual case, however unusual, special or deserving. The Tribunal must apply the law as it stands and, in the present circumstances, it can do nothing positive in respect of his application. It is not the role of the Tribunal to provide commentary on legislative policy. Furthermore, to my mind, it is not appropriate to seek to use the Tribunal as a vehicle to agitate for a change in policy – matters of that kind are best taken up with members of Parliament.
While I am sympathetic to Mr El-Chahal’s case, I see no good reason to allow his application to proceed, when it can serve no useful purpose and it has no reasonable prospect of success.
In all of the circumstances, and in view of the hopeless nature of Mr El-Chahal’s application, for reasons I have explained, I am satisfied that it is appropriate to exercise the discretion to dismiss it under s 42B(1)(b) of the AAT Act.
DECISION
Application dismissed.
I certify that the preceding 34 (thirty – four) paragraphs are a true copy of the reasons for the decision herein of Mr S. Webb, Member .................................[sgd].......................................
Associate
Dated 15 July 2015
Date(s) of hearing 24 June 2015 Applicant In person Solicitor for the Respondent Lea Christopher, Clayton Utz
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