Merante and Secretary, Department of Employment
[2017] AATA 1178
•1 August 2017
Merante and Secretary, Department of Employment [2017] AATA 1178 (1 August 2017)
Division:General Division
File Number(s): 2016/4599
Re:Adrian Merante
APPLICANT
AndSecretary, Department of Employment
RESPONDENT
DECISION
Tribunal:Deputy President S A Forgie
Date:1 August 2017
Place:Melbourne
The Tribunal decides:
to dismiss the application under s 42B(1)(b) of the Administrative Appeals Tribunal Act 1975.
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Deputy President S A Forgie
Catchwords
FAIR ENTITLEMENTS GUARANTEE – whether effective claim – claim not lodged before the end of 12 months of insolvency event – no power to extend time - no reasonable prospect of success – application dismissed
Legislation
Acts Interpretation Act 1901 s 36
Administrative Appeals Tribunal Act 1975 ss 37, 42B, 43
Bankruptcy Act 1966
Corporations Act 2001 s 556
Fair Entitlements Guarantee Act 2012 ss 5, 10, 11, 12, 13, 14, 15
Federal Court Act 1976 s 31A
Public Governance, Performance and Accountability Act 2013 s 11
Cases
Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955
Federal Commissioner of Taxation v Brown [1999] FCA 1198
Mogilevsky v Leroy (Trustee) [2017] FCAFC 52
Re Browne and Secretary, Department of Employment [2015] AATA 978
Re Mills and Secretary, Department of Employment [2016] AATA 121
Re Paraponiaris and Secretary, Department of Employment [2015] AATA 895
Windshuttle v Commissioner of Taxation [1993] FCA 553; (1993) 46 FCR 235; 93 ATC 4992; 27 ATR 88
Secondary Materials
Chambers 21st Century Dictionary (1999, reprinted 2004)
REASONS FOR DECISION
Deputy President S A Forgie
Mr Merante’s employment with Employment Innovations Victoria Pty Ltd (EIVPL) began on 4 January 2000 and ended in May 2015 after the appointment of administrators to the company on 8 April 2015.[1] Later, on 22 June 2015, Mr David Ross and Mr Richard Albarran of Hall Chadwick were appointed as liquidators to manage EIVPL’s affairs.[2] There was no dispute between Mr Merante and the Secretary of the Department of Employment (Secretary) that the appointment of the liquidators was an “insolvency event” for the purposes of the Fair Entitlements Guarantee Act 2012 (FEG Act). Consequent upon that insolvency event, Mr Merante lodged a claim for an advance under the FEG Act in respect of annual leave entitlement, payment in lieu of notice entitlement, redundancy entitlement and long service leave entitlement. He did so on 24 June 2016, which was two days after the first anniversary of the insolvency event relating to his former employer. The Secretary rejected Mr Merante’s claim on the basis that he had not made an effective claim under s 14 as required by s 10(1)(h) of the FEG Act.
[1] Documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T documents); T8 at 75
[2] T documents; T6 at 54
The Secretary’s position as presented by Mr Holcombe on his behalf is that Mr Merante had to make his claim for an advance by 22 June 2016 in order to have an effective claim which could be considered by the Secretary. He had to make it by that date in order to satisfy the criterion that he make a claim “before the end of 12 months after” the insolvency event happened to EIVPL i.e. before the end of 12 months after 22 June 2015. That is one of the criteria specified in s 10(1) of the FEG Act and that he must meet in order to have an effective claim. As Mr Merante did not make his claim until 24 June 2015, he could not satisfy that criterion and so the criteria in s 10(1). There is no power to extend the time within which Mr Merante could make his claim.
Although it is most unfortunate that Mr Merante was only two days late in making his claim, I agree with Mr Holcombe’s submission that I do not have power to extend the time prescribed under the FEG Act. Mr Holcombe submitted that I should dismiss Mr Merante’s application under s 42B(1)(b) of the Administrative Appeals Tribunal Act 1975 (AAT Act). In a case such as this in which the law and facts are not disputed, I have reservations about whether dismissal under s 42B(1)(b) is to be preferred to hearing the matter on its merits. That said, the Secretary’s application for dismissal is the only one on foot. Consideration of her application requires limited consideration to be given to the merits of Mr Merante’s application although the outcome is agreed. I will return to that but, for the reasons I give below, I have dismissed Mr Merante’s application under s 42B(1)(b)on the basis that it has no reasonable prospect of success.
FEG ACT
Legislative framework
The FEG Act provides financial assistance to workers who have not been fully paid for work done for insolvents or bankrupts.[3] It does this by providing for the Commonwealth to pay advances on account of unpaid employment entitlements of former employees of employers provided certain criteria are met. The general conditions of eligibility for an advance are:
[3] FEG Act; Long Title
“A person is eligible for an advance if the Secretary is satisfied of all of the following:
(a)the person’s employment by a particular employer has ended;
(b)after the commencement of this section, an insolvency event happened to the employer;
(c)the end of the employment:
(i)was due to the insolvency of the employer; or
(ii)occurred less than 6 months before the appointment of an insolvency practitioner for the employer; or
(iii)occurred on or after the appointment of an insolvency practitioner for the employer;
(d)the person is (or would, apart from the discharge of the bankruptcy of the employer, be) owed one or more debts wholly or partly attributable to all or part of one or more employment entitlements;
(e)the person has taken steps, so far as reasonable, to prove those debts in the winding up or bankruptcy of the employer;
(f)if the person was owed any of those debts before the insolvency event happened, the person took reasonable steps before that event to be paid those debts;
(g)when the employment ended, the person was an Australian citizen or, under the Migration Act 1958, the holder of a permanent visa or a special category visa;
(h)an effective claim (see section 14) that the person is eligible for the advance has been made to the Secretary by or on behalf of that person.
…”[4]
Sections 11, 12 and 13 provide for the exclusion of certain persons from eligibility under s 10. None of those exclusions applies to Mr Merante.
[4] FEG Act; s 10
Section 14 sets out the way in which a person must make an effective claim. As the General Employee Entitlements and Redundancy Scheme, which applied at a time before the FEG Act commenced operation, has no relevance in this case ss 14(4) and (5) do not apply. Section 14(3) does not apply for EIVPL is not a bankrupt under the Bankruptcy Act 1966. A liquidator was appointed under the Corporations Act 2001 (Corporations Act). That means that only ss 14(1) and (2) apply. They provide:
“(1) To be effective for the purposes of this Act, a claim that the person is eligible for an advance for the person’s employment by an employer must:
(a)be in a form approved by the Secretary; and
(b)be accompanied by any documents required by the Secretary; and
(c)be made in accordance with subsection (2), and with subsection (3) if it applies.
(2)The claim must be made before the end of 12 months after the later of the following events:
(a)an insolvency event happens to the employer;
(b)the person’s employment by the employer ends.”
The appointment of the liquidators on 22 June 2015 under the Corporations Act was an “insolvency event” as that term is defined in s 5 of the FEG Act. AS Mr Merante’s employment had been terminated within six months of that insolvency event, he met the eligibility criterion set out in s 10(1)(c)(ii) of the FEG Act. Therefore, Mr Merante was required to make his claim under the FEG Act before the end of 12 months after that insolvency event i.e. 22 June 2016.[5]
[5] If the period of time is expressed to begin from a specified day, it does not include that day: Acts Interpretation Act 1901; s 36(1), Item 6. Therefore, the day by which a claim must be made under the FEG Act in this case is calculated from 23 June 2015. That is the day after the appointment of the liquidators but the period of 12 months after 22 June 2015 ends on 22 June 2016. Therefore, Mr Merante had to make his claim by that date.
Consideration
Mr Merante said that he thought that the liquidators would make the claim under the FEG Act for him. He referred to a letter dated 17 June 2015 they had written to him. In that letter, the liquidators set out the gross outstanding employee entitlements owed by EIVPL to Mr Merante before the appointment of administrators on 8 April 2015. They had based their calculations on documents held by the company and from a termination date of 27 May 2015.[6] Mr Merante stated in his claim made under the FEG Act that his termination date had been 14 May 2015[7] but the difference in dates is of no consequence in this matter. What I do note is that the letter did not make any reference to the FEG Act. Beyond setting out the type and amount of his employee entitlements, the letter did not make any reference to whether Mr Merante would recover any of the money that he was owed. The liquidators said that they would realise the assets of EIVPL and distribute it in the order of priority required by s 556 of the Corporations Act. Enclosed with the letter was a Proof of Debt Form which the liquidators asked him to complete and return to record his claim against EIVPL.
[6] T documents; T8 at 5
[7] T documents; T8 at 69
There is nothing in the liquidators’ letter that leads the reader to believe that they will make a claim under the FEG Act. The Proof of Debt Form related to the liquidators’ duty to assess outstanding debts and to pay them in the order of priority set out in the Corporations Act. That is a matter quite separate from the FEG Act and it is most unfortunate that Mr Merante did not realise at the outset that this was so. It is not the fault of the liquidators that he did not do so but it is understandable that he might not realise that an employee’s seeking to recover employee entitlements as a debtor in a liquidation is a different matter from an employee’s seeking an advance when not paid those employee entitlements. The provisions of the FEG Act and of the Corporations Act might well appear to be an impenetrable thicket to many.
Despite accepting that Mr Merante could well have been confused, the fact remains that my powers are constrained by the FEG Act. That follows from the fact that, “For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment [and so the FEG Act] on the person who made the decision …”.[8] There is no power or discretion given by the FEG Act to the Secretary to alter or vary the manner in which a person may make a claim that is effective for the purposes of the FEG Act. As s 14(1) provides, to be effective for the purposes of that Act, a claim that a person is eligible for an advance “must” comply with the three criteria it sets out. Among those criteria is the criterion that the claim is made, in this case, in accordance with s 14(2)(a) i.e. before the end of 12 months after the insolvency event happened as that happened after the end of Mr Merante’s employment. The meanings of the word “must” include: “… 1 used to express necessity … 2 used to express duty or obligation”.[9] On its face, then, Parliament’s choice of the word “must” suggests that it imposed an obligation on the person making the claim to comply with the time limit. That suggestion is strengthened by the reference to the opening words of s 14(1) i.e. “To be effective for the purposes of this Act …” the claim must comply with the criteria that follow (emphasis added). An “effective claim” (emphasis added) imposes an obligation on the Secretary to decide whether the person is eligible for an advance and, if so, the amount of that advance.[10] In deciding whether a person is eligible for an advance, the Secretary must be satisfied of the criteria set out in s 10 of the FEG Act. The criterion set out in s 10(1)(h) is that “an effective claim … that the person is eligible for an advance has been made to the Secretary by or on behalf of the person.” (emphasis added)
[8] AAT Act; s 43
[9] Chambers 21st Century Dictionary (1999, reprinted 2004)
[10] FEG Act; s 15
These provisions do not leave any room for the implication of a power to extend the time within which to make a claim for an advance. No express power is given and so, as unfortunate as it is, I do not have power to extend the time within which Mr Merante could make his claim by just two days.
APPLICATION UNDER SECTION 42B OF THE AAT ACT
Section 42B(1)(b)
Section 42B(1)(b) of the AAT Act provides:
“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)…
(b)has no reasonable prospect of success; or
(c)…”
“no reasonable prospect of success”
The power given to the Tribunal under s 42B(1)(b) of the AAT Act has some similarity to that given to the Federal Court by s 31A of the Federal Court Act 1976 (Federal Court Act). Section 31A provides:
“Summary judgment
(1)The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a)the first party is prosecuting the proceeding or that part of the proceeding; and
(b)the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2)The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a)the first party is defending the proceeding or that part of the proceeding; and
(b)the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3) For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a)hopeless; or
(b)bound to fail;
for it to have no reasonable prospect of success.
(4)This section does not limit any powers that the Court has apart from this section.
(5)This section does not apply to criminal proceedings.” (emphasis added)
The responsibility of the Tribunal as the reviewer of the merits of an administrative decision according to the law and on the evidence and the role of the Federal Court as the adjudicator of disputes between parties on the basis of pleadings account for the most obvious difference between s 42B(1)(b) of the AAT Act and s 31A of the Federal Court Act. That difference is that, unlike s 31A, s 42B(1)(b) gives the Tribunal power to dismiss only the application of the applicant. Consistently with the Tribunal’s responsibility, it does not give the Tribunal power to make a decision affirming the decision-maker’s decision. Section 31A, on the other hand, gives the Court power to enter judgment for the party prosecuting or defending a proceeding if the criteria are met.
Despite that difference, some guidance is to be found in the cases that have considered s 31A. I have not had regard to those cases that have considered when the Tribunal should be satisfied that an application “is frivolous, vexatious, misconceived or lacking in substance” or “is otherwise an abuse of the process of the Tribunal” for Parliament has chosen to deal with those separately from the circumstances in which an application “has no reasonable prospect of success”. It has done so in ss 42B(1)(a) and (c).
As Gilmour J said in Dandaven v Harbeth Holdings Pty Ltd[11] in relation to whether there is “no reasonable prospect of success”, which lies at the heart of s 31A and is the only issue arising under s 42B(1)(b):
[11] [2008] FCA 955 at [6]
“Success under s 31A does not require a demonstration that the case is hopeless or bound to fail. The following principles are of general application to an application under s 31A:
(a)the Court must be very cautious not to do a party an injustice by summarily dismissing proceedings;
(b) the Court ought not dismiss a claim based on a predictive assessment of prospects, where it is possible that if the claim went to trial, it may succeed;
(c) in a case where evidence can give colour and content to allegations, and where questions of fact and degree are important, the Court should be more reluctant to dismiss a proceeding on the face of a pleading;
(d) it is not Parliament's intention to require the Court to engage in lengthy and elaborate trials on an interlocutory basis for the purposes of determining whether or not a proceeding has no reasonable prospects of success. It may be necessary for the opposing party to provide no more than an outline of evidence, sufficient to show that there is a genuine dispute, to prevent the summary application becoming a trial;
(e) if there is a real issue of fact or law to be decided, and the rights of the parties depend upon it, it is obviously appropriate that the matter goes to trial. It cannot be said that where there is a real factual dispute and that factual dispute must be resolved to determine whether the claim succeeds that there is ‘no reasonable prospect of success’;
(g)it ought not be used to shut out proceedings where, on a proposition of law, there may be room for doubt. On questions of law, an inquiry as to their merit should not be for the purpose of resolving them and also not simply to determine whether the argument is hopeless, but in order to decide if it is sufficiently strong to warrant a trial;
(h)evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects;
(i)in determining if there are real issues of fact in issue so as to preclude summary judgment the courts must draw all reasonable inferences in favour of the non-moving party.”[12]
[12] [2008] FCA 955 at [6] (paragraph (g) omitted in judgment)
This summary of the relevant principles was repeated with approval by the Full Court of the Federal Court in Mogilevsky v Leroy (Trustee).[13] They are principles that have also been considered in the related context of considering whether an application has reasonable prospects of success rather than whether it has no reasonable prospect of success. That issue arises in various interim or interlocutory proceedings such as an application for an extension of time within which to lodge an application for review of a decision. Whether an application has reasonable prospects of success has been considered by the Federal Court in cases such as Windshuttle v Commissioner of Taxation[14] (Windshuttle). Those cases establish that a consideration of the prospects of success of an application and so the merits of the substantive application must not involve the Tribunal in a full consideration of those merits. In the case of Windshuttle, Mrs Windshuttle had applied for an extension of time within which to lodge an application in the Tribunal. Von Doussa J explained the relevance of issues relating to the merits of the substantial application considering its prospects of success:
“… It is sufficient for that purpose, if the parties chose to so argue their case, to merely identify the factual assertions which the applicant made in the objection, and then to consider whether the application of the law to those assertions would bring about the result for which the applicant contends. In other words the assertions can, if the parties so choose, be treated as pleadings are treated where an application is made to strike out an action on the ground that the pleadings disclose no cause of action. On an application of that kind the true existence of the facts alleged in the pleadings is not explored by evidence. … [W]here the issue is whether leave should be given to extend time it is inappropriate for the tribunal concerned to embark on a full scale trial of the merits of the underlying question which will be agitated only if time is extended. …”[15]
[13] [2017] FCAFC 52 at [64]; McKerracher, Farrell And Markovic JJ
[14] [1993] FCA 553; (1993) 46 FCR 235; 93 ATC 4992; 27 ATR 88; Von Doussa J
[15] [1993] FCA 553; (1993) 46 FCR 235; 93 ATC 4992; 27 ATR 88 at [26]; 243-244; 4999 and 95 and approved by Federal Commissioner of Taxation v Brown [1999] FCA 1198 at [12] per Drummond, Sackville and Hely JJ
These principles are equally applicable to a consideration of whether an application has no reasonable prospect of success. It is not a situation in which it is appropriate to undertake a full scale consideration of the merits of the application. If, on the facts as asserted by the applicant on a view of the law that is arguable - or that at least leaves open some room for doubt as to whether it is correct or not - the applicant would have some measure of success in varying or setting aside the decision under review, it cannot be said that an applicant has no prospect of success. It does not matter at this stage whether the assertions of fact are supported by evidence or not. Evidence is a matter for any substantive hearing.
In a case such as this where the law is clear and the facts are not in dispute between the parties, it has not been possible to maintain the “pure” approach in its entirety and I have looked at the actual merits of the application. Although cases of such clarity do not arise often, they have arisen in previous cases under the FEG Act.[16] They could be equally considered on their merits as on an application under s 42B(1)(b) for their preparation and hearing would be no different. As the matter was not listed for hearing but for dismissal, I find that Mr Merante’s application has no reasonable prospect of success and dismiss it under s 42B(1)(b).
[16] Re Paraponiaris and Secretary, Department of Employment [2015] AATA 895; Deputy President Alpins and two cases heard by Deputy President Kendall Re Browne and Secretary, Department of Employment [2015] AATA 978 and Re Mills and Secretary, Department of Employment [2016] AATA 121
At the hearing, some thought was given to whether Mr Merante might be eligible for compensation under the Scheme for Compensation for Detriment caused by Defective Administration (CDDA). That is a scheme developed under the authority of the executive power under s 61 of the Commonwealth Constitution. It provides a mechanism by which those entities which are non-corporate Commonwealth entities under the Public Governance, Performance and Accountability Act 2013 (PGPA Act) may compensate persons who have experienced detriment as a result of a non-corporate Commonwealth entity’s defective actions or inaction. The Tribunal has no power to review decisions made under the CDDA and none has been made. To assist Mr Merante, however, I simply note that the liquidator is not a non-Corporate Commonwealth entity.[17] Therefore, Mr Merante would not have an entitlement to apply under the CDDA in respect of any action or inaction by the liquidator. The Secretary’s Department is a non-corporate Commonwealth entity but it has simply acted under the FEG Act in relation to events over which it had no control.
[17] Section 11 of the PGPA Act provides:
| I certify that the preceding 19 (nineteen) paragraphs are a true copy of the reasons for the decision herein of Deputy President S A Forgie |
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Associate
Dated: 1 August 2017
Date of hearing by telephone: 14 December 2016
Last submission received:
Applicant:
20 January 2017
Self-represented
Solicitor for the Respondent: Mr Lex Holcombe
HWL Ebsworth Lawyers
“There are 2 types of Commonwealth entities:
(a) a corporate Commonwealth entity, which is a Commonwealth entity that is a body corporate; and
(b) a non-corporate Commonwealth entity, which is a Commonwealth entity that is not a body corporate.
Note:Corporate Commonwealth entities are legally separate from the Commonwealth, whereas non-corporate Commonwealth entities are part of the Commonwealth.”
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