Mrs Karen Debra StockervA.B.C. Developmental Learning Centre Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) T/A A.B.C. Learning Centre
[2011] FWA 2326
•16 MAY 2011
[2011] FWA 2326 |
|
INTERIM DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mrs Karen Debra Stocker
v
A.B.C. Developmental Learning Centre Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) T/A A.B.C. Learning Centre
(U2010/9165)
COMMISSIONER CLOGHAN | PERTH, 16 MAY 2011 |
Unfair dismissal.
[1] On 27 May 2010, Ms Karen Stocker (“the Applicant”) made application to Fair Work Australia alleging that she had been unfairly dismissed from her employment with A.B.C. Developmental Learning Centre Pty Ltd trading as A.B.C. Learning Centre (“the Employer”).
[2] Ms Stocker has made the application pursuant to s.394 of the Fair Work Act 2009 (“the FW Act”).
[3] The application was the subject of conciliation on 15 June 2010.
[4] At the conclusion of conciliation, it was understood that the parties had reached, “in principle” settlement of the matter. The settlement was subject to the exchange and signing of documentation reflecting the agreement.
[5] Ms Stocker signed a Form F50-Notice of Discontinuance on 15 June 2010 which was received in the Fair Work Australia (FWA) on 18 June 2010.
[6] Subsequently on 5 July 2010, Ms Stocker made application to set aside the Notice of Discontinuance filed with FWA on 18 June 2010.
[7] The application to set aside the Notice of Discontinuance was the subject of a hearing on 17 August 2010 before Senior Deputy President Acton. By Order of SDP Acton (PR500661), the Notice of Discontinuance was set aside.
[8] At the conclusion of the hearing on 17 August 2010, SDP Acton observed that the Employer’s representative was to file a Form F4 in respect to certain jurisdictional objections and that those matters would be dealt with by a FWA member who would be allocated the application for arbitration.
[9] The application was referred to me for arbitration.
[10] On 1 September 2010, the application was the subject of a conference. The conference discussed the various possibilities on how the application could progress to resolution. The conference concluded on the basis that the Employer’s representative would provide, on a “without prejudice” basis, for the Applicant’s consideration, a proposed settlement of the matter The proposed settlement was provided to the Applicant on 3 September 2010. The Applicant rejected the proposed settlement and indicated she wished to proceed to arbitration before the Tribunal.
[11] On 15 September 2010, I issued Directions to the parties stating, as I did at the conference on 1 September 2010, that “unless and until the jurisdictional objection is determined, the merit of Ms Stocker’s allegation of unfair dismissal would not be inquired into”1.
[12] The Directions required the Employer to set out the jurisdictional objection and any documentary material upon which it relies, to support the objection. The Applicant was given 14 days to respond to the jurisdictional objection.
[13] At paragraph [15] of the Directions it states that “unless there is an objection by either party, I intend to determine the jurisdiction objection by way of written submission”.
[14] On 17 November 2010, I received a request from the Applicant’s representative for a “stay and recess of proceedings” until 1 February 2011.
[15] I agreed to the Applicant’s request and issued an Interim Decision which stayed the proceedings until 1 February 2011.
[16] On 1 February 2011, I received from the Applicant’s representative an email which referred to the Applicant’s medical condition. The email concluded with the statement “I shall keep you informed”.
[17] On 18 March 2011, I contacted, by telephone, the Applicant’s representative. The Applicant’s representative advised that Ms Stocker expected the matter to be reactivated.
[18] These are the reasons for my Decision in respect to the “jurisdictional objections” referred to in paragraph [8].
RELEVANT BACKGROUND FACTS
[19] The Applicant was employed by the Employer at the A.B.C. Mt Nasura Centre. A.B.C. Developmental Learning Centres was part of the A.B.C. Group.
[20] On 6 November 2008, a secured creditor appointed receivers and managers of certain companies within the A.B.C. Group. On 6 November 2008, Administrators were appointed to the A.B.C. Developmental Learning Centres Pty Ltd.
[21] The Mt Nasura Centre has since been sold to Goodstart Childcare Limited.
[22] On 2 June 2010, at a meeting of the creditors of the A.B.C. Developmental Learning Centres Pty Ltd, it was resolved that the company be wound up pursuant to s.439(c) of the Corporations Act 2001 (“the Corporations Act”). Further, as a consequence and pursuant to s.446A of the Corporations Act, the Administrators became the liquidators.
EMPLOYER’S SUBMISSION CONCERNING JURISDICTIONAL OBJECTION
[23] As a consequence of the resolution voluntarily winding up A.B.C. Developmental Learning Centres Pty Ltd, the Employer submits that Ms Stocker cannot proceed with her application except by leave of a Court, in accordance with the provisions of s.500(2) of the Corporations Act which provides:
“After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.”
[24] The Employer asserts that s.500(2) of the Corporations Act is a prohibition on any “action or other civil proceeding”, including an application alleging unfair dismissal without the leave of a Court.
[25] The Employer states that “the question of the correctness” of the Full Bench Decision in Smith & Ors v Trollope Silverwood & Beck Pty Ltd (2003) 142 IR 137 PR940508 (Smith), is not appropriate as it “no longer arises for consideration”, in this application.
[26] In Smith, the Full Bench determined:
“...It is beyond argument that the Commission is not a body capable of exercising the judicial power of the Commonwealth: R v Kirby; Ex parte Boilermakers' Society of Australia; Miller v University of New South Wales. If the term "court" is to be given its defined meaning it excludes the Commission. Therefore the Commission is not a court within the definition of that term in s.9. This was the conclusion reached by a justice of the Federal Court of Australia in Australian Liquor, Hospitality and Miscellaneous Workers Union v Home Care Transport Pty Ltd (Home Care). We respectfully agree.”2
[27] However, the Employer is posing the question of the “correctness” of Smith because the Federal Court determined, for the purposes of s.471B of the Corporations Act, that the Australian Industrial Relations Commission (AIRC) was a court in the Home Care matter. Merkel J concluded:
“There are, however, two further matters. The first is that the legislature can be taken to have assumed that State industrial tribunals of the kind found to be courts in Rochford and Helm would be courts for the purposes of s 440D and s 471B of the CA. There is nothing to indicate that the legislature, in enacting s 58AA of the CA, intended to change the law in that regard. In those circumstances it is most unlikely that the legislature would intend to treat the AIRC, which has a broader power and capacity to make awards affecting the property and affairs of a corporation than its State counterparts, in any different manner.
The second matter is that it is difficult to discern any reason for excluding an industrial tribunal, such as the AIRC, from the ambit of ss 440D and 471B. Indeed, given the capacity of awards to be made in respect of employees' entitlements, which may prejudice the rights of other unsecured creditors, I would expect a positive legislative intent to include the AIRC and similar industrial tribunals within the purview of the s 471B.” 3
[28] The Employer also asserts in its submission that s.440D of the Corporations Act is not applicable in these proceedings. Section 440D is as follows:
“Stay of proceedings
(1) During the administration of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with, except:
(a) with the administrator's written consent; or
(b) with the leave of the Court and in accordance with such terms (if any) as the Court imposes.
(2) Subsection (1) does not apply to:
(a) a criminal proceeding; or
(b a prescribed proceeding.”
[29] As I have already set out in paragraph [30], Merkel J came to the conclusion that the AIRC could not be excluded from the ambit of s.440D and s.471B of the Corporations Act and leave of the Court was required.
[30] The definition of “court” (small c) and “Court” (capital C) are provided in s.9 of the Corporations Act:
“Unless the contrary intention appears:
...
"court" has the meaning given by section 58AA .
"Court" has the meaning given by section 58AA.”
[31] Section 58AA of the Corporations Act provides:
“Meaning of court and Court
(1) Subject to subsection (2), in this Act:
"court" means any court.
"Court" means any of the following courts:
(a) the Federal Court;
(b) the Supreme Court of a State or Territory;
(c) the Family Court of Australia;
(d) a court to which section 41 of the Family Law Act 1975 applies because of a Proclamation made under subsection 41(2) of that Act.
(2) Except where there is a clear expression of a contrary intention (for example, by use of the expression "the Court"), proceedings in relation to a matter under this Act may, subject to Part 9.6A, be brought in any court.
Note: The matters dealt with in Part 9.6A include the applicability of limits on the jurisdictional competence of courts.”
[32] In summary, the Employer submits that s.500(2) of the Corporations Act is a general “catch all” prohibiting the commencement of any “action or other civil proceedings” being commenced against the company in liquidation except by leave of the Court as defined in s.58AA of the Corporations Act. The Employer relies upon this in asserting that the Full Bench’s determination in Smith that the AIRC was not a court, and therefore the leave of the Court was not required, is not relevant to the matter in hand.
APPLICANT’S RESPONSE TO EMPLOYER’S JURISDICTIONAL OBJECTION
[33] The Applicant provided a response which primarily related to her general circumstances and a desire for the matter to be heard and determined on the merits of the application.
CONSIDERATION AND CONCLUSION
[34] Stripped to its bare essentials, Part 3-2 Unfair Dismissal Provisions of the FW Act give national system employees the right to challenge the decision of a national system employer to dismiss them unfairly. If a dismissal is found to be unfair, the remedy against the employer can take a number of forms, but the emphasis is upon reinstatement.
[35] Subject to a minimum period of employment, if a modern award, enterprise agreement or annual earnings are less than the minimum cap, an employee can challenge the employer’s right to dismiss an employee if the dismissal was unfair.
[36] If an employee claims to have been unfairly dismissed from their employment, the burden of proof in establishing (excluding what is generally referred to as constructive dismissal) the unfairness lies with the employee.
[37] As a matter of logic, it is the action of the employer in dismissing an employee which gives rise to the claim of unfairness, which subsequently leads to the right of an employee under the FW Act to seek a remedy against that alleged unfairness. Arbitration provides an enquiry into the circumstances which led the employer to make that decision. The FW Act enables employees to make submissions and provide evidence that the action taken by the employer to dismiss the employee was prohibited on the grounds of fairness.
[38] Ms Stocker was dismissed on 18 May 2010.
[39] At the time she was dismissed, Ms Stocker’s employment was regulated, in part, by the A.B.C. Learning Centres and LHMU Enterprise Agreement 2009 (the Agreement) [2010] FWAA 1687. The Agreement has a nominal expiry date of 31 December 2012.
[40] Two observations can be made regarding the creation of the Agreement.
[41] Firstly, the Employer tendered an exhibit during the agreement application proceedings. The exhibit was the written consent to the proceedings of A.B.C. Developmental Learning Centres Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) pursuant to section 440D of the Corporations Act 2001 seeking approval for the enterprise agreement. Counsel for the Employer, in those proceedings stated:
“...Our view was that it wasn’t necessary to obtain consent as this is not proceedings against the company, but for abundance of caution we’ve obtained the consent in any event.” 4
[42] As outlined in paragraph [31], s.440D has two “limbs” in which the administrator’s written consent can be given: in proceedings “against the company” or “in relation to any of its property”. If the written consent was not provided because the proceedings were not against the company, the alternative was that it related to the company’s property. This view is consistent with the role of the administrator as “steward” of the company’s assets which, as a result of the Agreement being made, the Employer will incur statutory liabilities.
[43] Second, in a declaration seeking approval of the Agreement, the Employer’s representative has not specified any steps taken by itself to explain to employees the effect of the Employer’s status under the Corporations Act in that relevant clauses are only enforceable, in the first instance, with leave of the Court as provided for in s.58AA of the Corporations Act.
[44] I now return to Smith which the Employer highlighted in its submission.
[45] The Employer, having referred to the “correctness” or otherwise of its conclusion (that the Tribunal is not a court) should not overlook other considerations in the Decision.
[46] The Full Bench in Smith set out that the then Commission, and now Tribunal, is concerned with the creation and adjustment of rights rather than the declaration and enforcement of existing rights. While the Full Bench’s observations were only in relation to s.471B of the Corporations Act, the comments are apposite to s.500(2) of the Corporations Act. The Full Bench, in my view, is rightly safeguarding the rights and interests of employees to be protected from unfair dismissal with the following observation:
“Since the Commission is primarily concerned with what rights there should be rather than with existing rights, the court could not supervise the exercise of the Commission’s jurisdiction in the same way in which it might supervise the exercise of jurisdiction by a court. The Commission is required to take policy considerations into account in deciding what rights should exist whereas a court is not primarily concerned with such questions. If Commission proceedings were subject to the leave requirement, in exercising its discretion on the question of leave in a particular case, the relevant court may have to take into account considerations additional to those which might be relevant if leave were sought in relation to court proceedings. It is a truism that the relevant court could not itself exercise the Commission’s jurisdiction and accordingly the nature of the supervision would be different on that account also. Because supervision of Commission proceedings would differ significantly from supervision of court proceedings, we think some specific indication would be required for an intention to appear that “court” should be given a meaning which differs from its defined meaning and which includes the Commission.” 5
[47] The Employer has not put to the Tribunal that the regulatory system has provided competing demands but simply that the Tribunal, as a result of s.500(2) is the servant of the Corporations Act.
[48] I have little doubt that since the approval of the Employer’s enterprise agreement, the external Administrator has administered the company expecting employees to comply with their contractual obligations. I am sure that the Administrator has passed on wage increases. However, as in this application, when the employee seeks to challenge her summary dismissal for serious misconduct as provided for in the enterprise agreement, the Administrator objects and requires the Applicant to seek leave of the Federal Court or Supreme Court to commence proceedings. It is open to question as to why the Administrator raises objection in these proceedings but not in the enterprise agreement application.
[49] It is not uncommon for businesses to fail and creditors resolving that the company be wound up and liquidators appointed. It is also understandable that external administrators of such companies do not want to be distracted by litigation and have the remaining assets available to creditors “whittled away” through legal costs. For this reason, the Parliament, for good policy reasons, has put in place a process in which proceedings against a company in liquidation can only take place with the approval of the administrator’s written consent in the case of s.440D of the Corporations Act or with the leave of the Court pursuant to ss.440D, 471B and 500(2) of the Corporations Act.
[50] The origins of s.500(2) of the Corporations Act can be traced back to the previous Companies Act 1981.
[51] The explanatory memorandum for the Corporations Bill 1988 reproduces the explanations outlined in the Companies Bill 1981’s explanatory memorandum. In relation to s.500 (at paragraphs 1645 and 1646 of the Corporations Bill 1988 explanatory memorandum) it states:
“After commencement of the creditor’s voluntary winding up, any attempt by a creditor to enforce a remedy by proceeding against the property of the company will be void and civil proceedings will only be commenced against the company with the leave of the Court.”
[52] While creditor is not defined in the Corporations Act, it is unlikely, in my view, that Ms Stocker could be characterised in such a way in these proceedings. In my view, the provisions of s.500(2) of the Corporations Act is casting its net wider than the original intention of Parliament as outlined in the explanatory memorandum.
[53] Finally, I note, and it is self evident, that should the Court give leave to Ms Stocker, the Tribunal may find that she was fairly dismissed, or if she was unfairly dismissed, award a minimal amount or a maximum of half the high income threshold as it existed on 18 May 2010, depending on the circumstances.
[54] As I have previously set out in these reasons, I have an unease with a situation where an Employer is subject to external administration, Receivers and Managers are appointed and they then make an enterprise agreement with employees under the FW Act, before subsequently requiring an employee to seek leave of the Federal Court or a State Supreme Court, to commence proceedings challenging their alleged unfair dismissal.
[55] Just as external administrators are concerned that the company’s resources are not “whittled away” by legal proceedings, so to a child care worker has limited resources in which to pursue the matter in the Federal Court or Supreme Court. Certainly, the need to do so appears to conflict with the object of Part 3-2 of the FW Act relating to unfair dismissals, which is expressed in s.381(1)(b) as follows:
“(b) to establish procedures for dealing with unfair dismissal that:
(i) are quick, flexible and informal; and
(ii) address the needs of employers and employees.”
[56] However, having expressed my unease, Ms Stocker’s application to the Tribunal falls within the generally understood definition of “action” or “civil proceedings” in that she is seeking to remedy an alleged wrong in the Tribunal.
[57] For the above reasons, I find that, in accordance with s.500(2) of the Corporations Act, Ms Stocker is required to seek leave of the Court as defined in s.58AA of the Corporations Act before the Tribunal can continue with these proceedings.
[58] In conclusion, the Tribunal will adjourn these proceedings until 22 June 2011 to enable Ms Stocker to seek leave of the Court. Should Ms Stocker not receive or establish that she is pursuing leave of the Court by 22 June 2011, the application will be dismissed.
COMMISSIONER
1 Paragraph [11] of Directions dated 15 September 2010
2 Ibid - para 9
3 Australian Liquor, Hospitality & Miscellaneous Workers’ Union v Home Care Transport Pty Ltd (in liquidation) [2002] FCA 497 - paras 22 and 23
4 Transcript of proceedings AG2009/24724 - PN 141
5 Op cit - para 18
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