Ms Bianca Middleton

[2017] FWC 1473

[2017] FWC 1473

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Ms Bianca Middleton
(U2016/13368)

Mr Shaun Middleton
(U2016/13371)

v
Build West Pty Ltd ATF The Leverett Trading Trust T/A Build West

SENIOR DEPUTY PRESIDENT O'CALLAGHAN ADELAIDE, 15 MARCH 2017

Application for relief from unfair dismissal – employees – small business fair dismissal code - redundancy.

[1] On 7 November 2016 Mr and Ms Middleton lodged applications pursuant to s.394 of the Fair Work Act 2009 (the FW Act), in which they asserted that they had been unfairly dismissed by Build West Pty Ltd ATF The Leverett Trading Trust T/A Build West (Build West). The applications were not settled through the conciliation process and were referred to me for arbitration.

[2] In their applications, Mr and Ms Middleton asserted that they were advised of the termination of their employment on 19 October 2016 and that this dismissal took effect on that same date. Both Mr and Ms Middleton sought compensation for loss of income and asserted they had not been paid statutory entitlements nor had they received redundancy payments.

[3] In its Employer’s Response to the applications Build West asserted that the applications were without jurisdiction in that, at the date nominated by the applicants, they were not employees. In the alternative, Build West asserted that if they were dismissed, that dismissal should be regarded as a case of genuine redundancy. Again, in the alternative, Build West asserted that it was a small business and any dismissal was consistent with the Small Business Fair Dismissal Code.

[4] The applications were initially listed for hearing on 28 February 2017. In directions issued on 20 December 2016, I set out requirements in the event that either party sought to be represented by a lawyer or paid agent. Mr and Ms Middleton sought to be so represented. After considering the position of both parties in this respect I issued a decision 1 on 13 January 2017, in which I refused permission for representation by a lawyer.

[5] The directions issued on 20 December 2016 also specified requirements for the provision of material by the parties. Neither party complied with this requirement and the matter was then listed for a telephone hearing on 7 February 2017 to deal with that non-compliance issue. Mr and Ms Middleton did not participate in this hearing and could not be contacted for this purpose. Mr Gray from Build West participated from overseas and advised that Build West had not complied with my earlier directions because of his overseas travel commitment. The applications were relisted for hearing on 9 March 2017 and revised directions were issued. These required Build West to provide the material it relied upon in support of its jurisdictional objections by 2 March 2017, and Mr and Ms Middleton to provide its material in reply by 7 March 2007. In the directions issued on 7 February 2017 I stated:

“[4] Secondly, as neither Mr nor Ms Middleton participated in the directions hearing convened today, the FAIR WORK COMMISSION DIRECTS both Mr and Ms Middleton to confirm, in writing, by close of business 16 February 2017, that they are still pursuing these applications. A failure to comply with this direction may give rise to a conclusion that either, or both, Mr and Ms Middleton, are no longer seeking to pursue the application. For the avoidance of doubt, Build West should proceed on the basis that the matter is continuing unless the Fair Work Commission advises to the contrary.”

[6] Mr and Ms Middleton responded on 17 February 2017 so as to confirm that they sought to pursue the applications. They also confirmed their email address for contact purposes.

[7] Build West provided a witness statement made out by Mr Gray together with supporting material on 2 March 2007. Neither Mr nor Ms Middleton provided any further material and could not be contacted. A reminder email was forwarded to them on 8 March 2017 in the following terms:

“Mr and Ms Middleton
In directions issued on 7 February 2017 you were required to provide to the Commission and to Build West, witness statements relative to the initial issues and a copy of any document upon which you rely. That material was to be provided by close of business 7 March 2017. Following those directions, you acknowledged by email, on 17 February, that you wished to pursue the matters.

No material has been provided by you. Build West has provided its material. The matter is listed for hearing, by video, on 9 March 2017.

Any witness statements or documents must be provided urgently.

Further, you should be aware that if you do not attend this hearing, the matter may proceed in your absence.”

[8] Neither Mr nor Ms Middleton could be contacted and they did not participate in the hearing on 9 March 2017. As a consequence, the matter proceeded on that date.

[9] Whilst it is open to me in the these circumstances to dismiss the application for want of prosecution, pursuant to s.587, I have noted that Build West bears the onus of establishing its jurisdictional objections and the hearing on 9 March 2017 was to consider those objections. Consequently, I have determined the jurisdictional objections on the information before me.

The Evidence

[10] Mr Gray’s evidence was that he is a Director of Build West who was appointed by its owner, Ms Leverett, to work on a voluntary basis, to assist her to close down the business from October 2016. Ms Leverett is apparently the estranged mother of Ms Middleton. Mr Gray’s evidence was that Mr and Ms Middleton were directors of Build West and had full control of the company. He advised that they had agreed that, given the parlous finances of the business they would not be paid until and unless the business recovered. Mr Gray provided evidence of the extent to which the last payment made to Ms Middleton was on 2 May 2016 whilst the last payment made to Mr Middleton was on 24 June 2016.

[11] Mr Gray gave evidence about the extent to which Build West employed fewer than 15 employees. His evidence was that Mr and Ms Middleton retained a company car which they subsequently sold and kept the proceeds. He asserted that they had stolen tools to the value of an estimated $90,000, and that this theft was reported to the police. He asserted that they had also taken a trailer with an estimated value of $10,000 and, lastly, that they had acted fraudulently when they represented to two clients that Build West was licensed to build their houses, when this was not, in fact the case.

[12] Mr Gray’s evidence was that, as Directors, Mr and Ms Middleton had not supplied the Build West accountant with any proper financial information for a period of some two years and that the business was in a substantial loss making position such that it could not retain Mr or Ms Middleton as employees. Mr Gray confirmed that he arranged for correspondence to be sent to Mr and Ms Middleton on 19 October 2016 which confirmed that they had been made redundant and invited them to provide to him any basis upon which they might argue that they were owed wages. That correspondence also sought the return of various vehicles and equipment. Finally, Mr Gray advised that he was in the process of finalising the Build West financial affairs and that the business would most likely no longer operate at all, and certainly not in the form in which it previously operated.

Findings

[13] To be able to pursue an application for unfair dismissal, Mr and Ms Middleton had to be employees at the time they assert they were dismissed. As at 19 October 2016, they had not been paid for some five months. The evidence of Mr Gray indicates that they both held directorships of the business over that time. However, that evidence also indicates that, whilst Mr and Ms Middleton had controlled the business and had elected not to claim payments over that period of time, they had continued to have access to business property in the form of vehicles and tools.

[14] On the evidence before me, I am unable to characterise the arrangement that Mr and Ms Middleton had with Build West as a form of voluntary arrangement and it seems to me that they must be regarded as employees. This does not imply that they have any legitimate claim to particular additional payments over that time as that issue is not a matter which I need to determine. Had it been the case that the evidence demonstrated that Mr and/or Ms Middleton had ceased working for Build West in May or June 2016, the unfair dismissal claims would have been made substantially outside of the 21 day legislative time limit. However, the correspondence to both Mr and Ms Middleton of 19 October 2016 clearly suggests that they were regarded by Build West, until that date to be employees. Those letters commence with the following statement:

“I write to advise you that you have been made redundant from Build West Pty Ltd, effective immediately, and as such, your employment has terminated. I have exercised my rights in accordance with the Memorandum and Articles of Association of Build West Pty Ltd as sole member (shareholder and owner) of Build West, and by ordinary resolution you are no longer a director, effective 17th October 2016.

…” 2

[15] As a result, I have concluded that, until 19 October 2016, Mr and Ms Middleton were regarded as employees and that the letter of that date purported to dismiss them. Accordingly, I am not prepared to accept the Build West contention that Mr and Ms Middleton could not be regarded as employees.

[16] Mr Gray’s evidence indicates that Build West was clearly a small business as at 19 October 2016. Accordingly, s.385 of the FW Act establishes that, if the termination of Mr and Ms Middleton’s employment was consistent with the Small Business Fair Dismissal Code, that dismissal cannot then be regarded as unfair.

[17] The Small Business Fair Dismissal Code (the Code) states:

“Small Business Fair Dismissal Code

Commencement

The Small Business Fair Dismissal Code comes into operation on 1 July 2009.

Summary Dismissal

It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee’s conduct is sufficiently serious to justify immediate dismissal. Serious misconduct includes theft, fraud, violence and serious breaches of occupational health and safety procedures. For a dismissal to be deemed fair it is sufficient, though not essential, that an allegation of theft, fraud or violence be reported to the police. Of course, the employer must have reasonable grounds for making the report.

Other Dismissal

In other cases, the small business employer must give the employee a reason why he or she is at risk of being dismissed. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

The employee must be warned verbally or preferably in writing, that he or she risks being dismissed if there is no improvement.

The small business employer must provide the employee with an opportunity to respond to the warning and give the employee a reasonable chance to rectify the problem, having regard to the employee’s response. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

Procedural Matters

In discussions with an employee in circumstances where dismissal is possible, the employee can have another person present to assist. However, the other person cannot be a lawyer acting in a professional capacity.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal). Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.”

[18] The evidence of Mr Gray is that he had reasonable grounds to believe that Mr and Ms Middleton had stolen vehicles and equipment from Build West and that a report to the Police to this effect had been made. I am satisfied that the evidence establishes that Build West had a reasonable basis for this concern so as to underpin the employment termination advice of 19 October 2016. Accordingly, I am satisfied that the requirements of the Code for summary dismissal have been met and that the correspondence of 19 October should be construed in the context. Accordingly, I have concluded that the termination of Mr and Ms Middleton’s employment could not be regarded as unfair.

[19] As a consequence of this conclusion, it is not necessary that I further consider the extent to which the termination of Mr and Ms Middleton’s employment meets the strict definition of a redundancy set out in s.389 of the FW Act.

Conclusion

[20] For the reasons I have specified, Mr and Ms Middleton’s applications must be dismissed. An order (PR590991) to this effect will be issued.

Appearances:

A Gray on behalf of Build West.

Hearing details:

2016.

Adelaide (and video-link to Perth):

March 9.

 1   [2017] FWC 272

 2   Correspondence dated 19th October 2016, from V Leverett to Mr and Ms Middleton

Printed by authority of the Commonwealth Government Printer

<Price code C, PR590990>