Granas v Berkley Challenge Pty Ltd
[2015] FWCFB 1795
•31 MARCH 2015
| [2015] FWCFB 1795 |
| FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.604—Appeal of decision
v
Berkeley Challenge Proprietary Ltd T/A Spotless
(C2015/1504)
JUSTICE ROSS, PRESIDENT | MELBOURNE, 31 MARCH 2015 |
Appeal against decision [[2015] FWC 39] and order [PR559894] of Commissioner Cloghan at Perth on 9 January 2015 in matter number U2014/4776 - settlement agreement concluded – unreasonably failed to discontinue application – discretion to dismiss application – permission to appeal in public interest – order quashed.
[1] Mr Gary Granas made an unfair dismissal remedy (UDR) application to the Fair Work Commission (the Commission) on 19 February 2014. The application was made in respect of the termination of his employment by Berkeley Challenge Proprietary Ltd T/A Spotless (Spotless).
[2] On 28 October 2014, the respondent made an application to the Commission pursuant to s.399A(1)(b) and (c) of the Fair Work Act 2009 (Cth) (FW Act) for the dismissal of the UDR application made by Mr Granas.
[3] Section 399A(1)(b) and (c) of the FW Act is as follows:
- “399A Dismissing applications
(1) The FWC may, subject to subsection (2), dismiss an application for an order under Division 4 if the FWC is satisfied that the applicant has unreasonably: …
(b) failed to comply with a direction or order of the FWC relating to the application; or
(c) failed to discontinue the application after a settlement agreement has been concluded.”
[4] Section 399A(1) provides, relevantly for present purposes, that the Commission ‘may’ dismiss an application if satisfied the applicant has unreasonably failed to discontinue the application after a settlement agreement has been concluded.
[5] In Mihajlovic v Lifeline Macarthur, 1 a Full Bench of the Commission pointed out the following about the use of the word ‘may’ in a statute:
“Section 33(2A) of the Acts Interpretation Act 1901 (Cth) provides:
‘(2A) Where an Act assented to after the commencement of this subsection provides that a person, court or body may do a particular act or thing, and the word may is used, the act or thing may be done at the discretion of the person, court or body.’
Section 40A of the [FW] Act provides that the Acts Interpretation Act as in force on 25 June 2009 applies to the [FW] Act, but that amendments after that date do not. Section 33(2A) came into effect on 18 December 1987, and therefore applies to the [FW] Act. Under s 2 of the Acts Interpretation Act, that Act applies inter alia to all Commonwealth Acts unless an Act is subject to a contrary intention”. 2
[6] The Explanatory Memorandum to the Fair Work Amendment Bill 2012 (Cth) in respect of now s.399A said:
“161. Item 2 inserts a new section 399A to enable the FWC to dismiss an unfair dismissal application where the FWC is satisfied that the applicant has unreasonably:
● failed to attend an FWC conference or hearing relating to the application
● failed to comply with an FWC direction or order relating to the application, or
● failed to discontinue the application after a settlement agreement has been concluded.
162. The power to dismiss an unfair dismissal application in these circumstances is not intended to prevent an applicant from robustly pursuing a legitimate unfair dismissal claim. Rather, the amendment is intended to address the small proportion of applicants who may pursue claims in an improper or unreasonable manner. This amendment responds to Panel recommendation 42.
163. In particular, the power to dismiss an application is only intended to be available where there is an unreasonable act or omission by the applicant. Examples of when the FWC may exercise its discretion to dismiss an application under these provisions may include where:
● an applicant fails to attend an FWC proceeding relating to the matter without providing prior advice and/or without any reasonable excuse for their failure to attend, or
● an applicant continues to pursue an unfair dismissal application despite a settlement agreement having been concluded by the parties.
164. Note 2 to new subsection 399A(1) draws the reader’s attention to the FWC’s capacity to make an order for costs under new section 400A (explained below) if satisfied that the applicant’s failure caused the other party to the matter to incur costs.
165. New subsection 399A(2) provides that the power to dismiss applications is only exercisable on application by an employer.
166. Subsection 399A(3) and Note 1 to subsection 399A(1) make clear that new section 399A is not intended to limit the FWC’s general power to dismiss applications on grounds such as where the application is frivolous or vexatious or has no reasonable prospects of success under section 587. Similarly, item 3 inserts a note to subsection 587(1) to highlight the FWC’s power to dismiss an unfair dismissal application under new section 399A.
167. Item 1 of Schedule 11 inserts a new Schedule 3 into the FW Act. Item 11 of Schedule 3 provides for these amendments to apply in relation to dismissals that take effect after the commencement of this Part.”
[7] Since the Explanatory Memorandum refers to now s.399A ‘enabling’ the Commission to dismiss a UDR application, we do not consider s.399A is within the category of statutory provisions where the word ‘may’ is to be read as ‘must’.
[8] The discretion to dismiss an application under s.399A is only enlivened if the Commission is satisfied that the applicant has unreasonably failed to do one of the things referred to in s.399A(1)(a), (b) or (c). Accordingly, we consider s.399A(1)(c) provides the Commission with a discretion to dismiss a UDR application provided the Commission is ‘satisfied that the applicant has unreasonably… failed to discontinue the application after a settlement agreement has been concluded’.
[9] Section 399A(2) of the FW Act provides that the Commission may exercise its power under s.399A(1) on application by the employer. As the power in s.399A is only exercisable on application by an employer it is the employer who bears the burden of persuading the Commission that the requirements of s.399A(1)(a), (b) or (c) have been met and that the discretion should be exercised in favour of the UDR application being dismissed.
[10] Commissioner Cloghan conducted a hearing on the s.399A application of Spotless on 17 November 2014.
[11] On 9 January 2015 the Commissioner issued a decision 3 in the matter.
[12] In the decision, the Commissioner found that a settlement agreement in respect of the UDR application of Mr Granas was reached between Spotless and Mr Granas on 3 or 4 April 2014 4 and that the terms of the settlement agreement were as submitted by Spotless.5
[13] The Commissioner also found that those terms included the payment by Spotless to Mr Granas of an amount of $3,593 6 and that Mr Granas ‘would discontinue his application when the terms had been complied with’.7
[14] In considering the s.399A(1)(b) and (c) application of Spotless, the Commissioner referred to the judgment of Besanko J in Australian Postal Corporation v Gorman. 8 In that case, Besanko J states:
“30. The applicant’s case is that there was an accord and satisfaction between it and the first respondent. It is not suggested that the agreement constituted an accord executory (McDermott v Black[1940] HCA 4; (1940) 63 CLR 161 at 184 per Dixon J (as his Honour then was)). It would not matter if the accord and satisfaction was conditional as the applicant is prepared to carry out its obligations under the agreement (Seddon N and Ellinghaus M, Cheshire and Fifoot’s Law of Contract (8th Australian ed, LexisNexis Butterworths, 2002) [4.24]).
31. An accord and satisfaction extinguishes the existing cause of action and replaces it with a new cause of action based on the agreement. A valid accord and satisfaction is not a discretionary factor relevant to the subsequent litigation of the original claim; it is an answer to the claim.
32. It seems to me that the fact of an accord and satisfaction can either be raised under the Act at an ‘interlocutory’ stage and at the final hearing or it cannot be raised at all. As it is a complete answer to a claim there would be no reason why it could be raised at a final hearing but not at a preliminary stage under a section such as s 587.
33. There is nothing in the Act which suggests that an accord and satisfaction should not be recognised. At a general level the object of Chapter 3 Part 3-2 and the general statements of the manner in which FWA is to perform its functions and the matters to which it is to have regard are consistent with the recognition of an accord and satisfaction. Furthermore, the words of subsection 587(1) are wide enough to include the recognition of an accord and satisfaction. As I have said, a valid and effective accord and satisfaction extinguishes the pre-existing cause of action and continued pursuit of an application based on such cause of action is clearly capable of being considered to be frivolous or vexatious or without reasonable prospects of success.
34. Although the Australian Industrial Relations Commission was dealing with s 111(1)(t) of the Workplace Relations Act 1996 (Cth) in Zoiti-Licastro v Australian Taxation Office the considerations which led it to conclude that the Senior Deputy President had the power to dismiss an application on a summary basis on the ground that there was a binding settlement agreement apply with equal force under the Act.
35. In his reasons the Senior Deputy President drew a distinction between finding that there was a binding settlement agreement and a finding that ‘there had been an enforceable contract’. It is not entirely clear what he meant by that but I take him to mean that any action to enforce the contract may need to be taken in another jurisdiction and that is almost certainly so. However, that circumstance is not a reason to conclude that FWA cannot recognise a binding settlement agreement. It might mean that in a particular case FWA will adapt its remedies, that is, a temporary stay rather than a dismissal, to meet the particular circumstances.”
[15] The Commissioner went on to find in respect of the s.399A(1)(b) and (c) application of Spotless as follows:
“[62] Having considered all the circumstances of the conciliation conference and its immediate aftermath, I find that the parties reached an accord and satisfaction on 3 or 4 April 2014 which included agreement that the Applicant would discontinue his application when the terms had been complied with. In my view, the proper attempts of the Employer to ensure the accuracy of the settlement have been wrongly described by the Applicant. The Applicant has chosen not to formally reduce the agreement to an enforceable contract. Instead, the Applicant has chosen to make a complaint to the FWO and subsequently, is now seeking to refer the matter to a hearing.” 9
[16] The Commissioner subsequently stated the following:
“[66] The accord and settlement reached on 3 or 4 April 2014, as stated by Bensanko J, ‘extinguishes the existing cause of action and replaces it with a new cause of action based on the agreement’. As a consequence of my finding in paragraph [62], there are resultant implications for the Employer concerning the monetary amount agreed upon as part of that settlement. There is no agreement with the Applicant, other that [sic] an amount of $3 593 payable to Mr Granas which was agreed upon as part of the settlement.” 10
[17] The Commissioner concluded as follows:
- “CONCLUSION
[68] Having considered all the material provided to the Commission, and the provisions of ss.381, 577 and 578 of the FW Act, I am satisfied that the Applicant has unreasonably failed to discontinue the application after a settlement agreement had been concluded at conciliation. Accordingly, the application is dismissed pursuant to s.399A(c) [sic] of the FW Act. An order to this effect is issued jointly with this Decision.” 11
[18] The Commissioner found it unnecessary to determine the Spotless application under s.399A(1)(b) of the FW Act.
[19] The order issued by the Commissioner in the matter was as follows:
“In accordance with the Decision issued by the Fair Work Commission on 9 January 2015, [2015] FWC 39, and pursuant to s.587(3)(a) of the Fair Work Act 2009, I hereby order that this application be dismissed.” 12
[20] There was no dispute before the Commissioner or us that the said $3,593 has not been paid by Spotless to Mr Granas.
[21] Mr Granas has filed a notice of appeal against the Commissioner’s decision and order. The appeal is opposed by Spotless. The appeal was the subject of a hearing before us on 18 March 2015.
[22] Section 399A is contained within Part 3-2 of the FW Act. Section 400 of the FW Act, which is also contained within Part 3-2, provides as follows:
- “400 Appeal rights
(1) Despite subsection 604(2), the FWC must not grant permission to appeal from a decision made by the FWC under this Part unless the FWC considers that it is in the public interest to do so.
(2) Despite subsection 604(1), an appeal from a decision made by the FWC in relation to a matter arising under this Part can only, to the extent that it is an appeal on a question of fact, be made on the ground that the decision involved a significant error of fact.”
[23] In Coal & Allied Mining Services Pty Ltd v Lawler and others, 13 Buchanan J (with whom Marshall and Cowdroy JJ agreed) characterised the test under s.400 as ‘a stringent one’.14 The Commission must not grant permission to appeal unless it considers that it is ‘in the public interest to do so.’
[24] The task of assessing whether the public interest test is met is a discretionary one involving a broad value judgment. 15 In GlaxoSmithKline Australia Pty Ltd v Makin,16 a Full Bench of the Commission identified some of the considerations that may attract the public interest:
“... the public interest might be attracted where a matter raises issues of importance and general application, or where there is a diversity of decisions at first instance so that guidance from an appellate court is required, or where the decision at first instance manifests an injustice, or the result is counter intuitive, or that the legal principles applied appear disharmonious when compared with other recent decisions dealing with similar matters.” 17
[25] For the reasons which follow we are satisfied that it is in the public interest to grant permission to appeal and we grant permission on that basis. We are also satisfied that the Commissioner’s decision is affected by appealable error and on that basis we uphold the appeal and quash his decision.
[26] In our view the Commissioner erred in failing to have regard to a consideration which was relevant to the exercise of the discretion conferred by s.399A(1).
[27] As we have mentioned, the Commissioner found that a settlement agreement had been concluded between Spotless and Mr Granas. Further the terms of that agreement provided that Spotless would pay Mr Granas the sum of $3,593 and that Mr Granas ‘would discontinue his application when the terms have been complied with’ (emphasis added). That is, Mr Granas’ obligation to discontinue his UDR application only arose after Spotless had paid him the agreed sum. It is common ground that Spotless has not paid Mr Granas the agreed sum. In such circumstances the settlement agreement (as found by the Commissioner) did not impose any obligation on Mr Granas to discontinue his UDR application. These matters are plainly relevant to the question of whether Mr Granas had ‘unreasonably... failed to discontinue the [UDR] application after a settlement agreement has been concluded’, as required by s.399A(1)(c) and to the exercise of the Commissioner’s discretion under s.399A(1).
[28] However, the decision subject to appeal does not disclose that the Commissioner took these matters into account in reaching the requisite satisfaction in s.399A(1)(c) that Mr Granas ‘unreasonably’ failed to discontinue his UDR application or in the exercise of his discretion under s.399A(1)(c).
[29] The Commissioner erred in failing to consider these matters and there is no sound basis for us to conclude the Commissioner would still have reached the same conclusion had he considered these matters. Indeed such an outcome would be plainly unjust as it would result in the dismissal of Mr Granas’ UDR application because he had concluded a settlement agreement in circumstances where Mr Granas had not yet received the benefit of that agreement.
[30] The error identified has led us to grant permission to appeal in the public interest, uphold the appeal and quash the Commissioner’s order.
[31] We add that the Commissioner’s order purports to rely on s.587(3)(a) of the FW Act. Section 587 is relevantly as follows:
- “587 Dismissing applications
(1) Without limiting when the FWC may dismiss an application, the FWC may dismiss an application if:
(a) the application is not made in accordance with this Act; or
(b) the application is frivolous or vexatious; or
(c) the application has no reasonable prospects of success.…
(3) The FWC may dismiss an application:
(a) on its own initiative; or
(b) on application.”
[32] It was s.587 of the FW Act, rather than s.399A, that was considered in Australian Postal Corporation v Gorman to which we have earlier referred. The proceedings before the Commissioner with which we have been concerned were not proceedings in which the parties were on notice that the Commissioner may rely on s.587(3)(a) to dismiss the UDR application of Mr Granas.
[33] We refer Spotless’ s.399A application in respect of matter U2014/4776 to Commissioner Johns and require him to deal with the s.399A application pursuant to s.607(3)(c)(i).
PRESIDENT
Appearances:
G. Granas on his own behalf.
J. Douglas from Berkeley Challenge Proprietary Ltd T/A Spotless.
Hearing details:
2015.
Melbourne and Perth (video hearing):
March 18.
1 (2014) 241 IR 142.
2 Ibid at 156.
3 Mr Gary Granas v Berkeley Challenge Proprietary Ltd T/A Spotless [2015] FWC 39.
4 Ibid at [49], [58], [62] and [66].
5 Ibid at [49].
6 Ibid at [66].
7 Ibid at [62].
8 [2011] FCA 975.
9 Mr Gary Granas v Berkeley Challenge Proprietary Ltd T/A Spotless [2015] FWC 39.
10 Ibid.
11 Ibid.
12 Mr Gary Granas v Berkeley Challenge Proprietary Ltd T/A Spotless, PR559894.
13 (2011) 192 FCR 78.
14 Ibid at paragraph 43.
15 O’Sullivan v Farrer (1989) 168 CLR 210 per Mason CJ, Brennan, Dawson and Gaudron JJ; applied in Hogan v Hinch (2011) 85 ALJR 398 at paragraph 69 per Gummow, Hayne, Heydon, Crennon, Kiefel and Bell JJ; Coal & Allied Mining Services Pty Ltd v Lawler and others [2011] FCAFC 54 at paragraphs 44 - 46.
16 [2010] FWAFB 5343.
17 Ibid at [27].
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