Ms Louise Nesbitt v Dragon Mountain Gold Limited

[2014] FWC 5383

[2014] FWC 5383

FAIR WORK COMMISSION

DECISION

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

Ms Louise Nesbitt
v
Dragon Mountain Gold Limited
(U2014/285)

COMMISSIONER CLOGHAN PERTH, 11 AUGUST 2014

Unfair dismissal.

[1] On 3 February 2014, Ms Louise Nesbitt (Ms Nesbitt or Applicant) made application to the Fair Work Commission (Commission) seeking a remedy for alleged unfair dismissal from her former employer, Dragon Mountain Gold Ltd (Employer).

[2] The application is made pursuant to s.394 of the Fair Work Act 2009 (FW Act).

[3] The application was not able to be resolved at a conciliation conference on 17 March 2014 and was referred to me for arbitration on 25 March 2014.

[4] On 27 March 2014, I issued procedural directions for a hearing on 16 June 2014.

[5] On 13 June 2014, the Employer submitted by the Commission does not have, in the first instance, jurisdiction to hear and determine the matter pursuant to subclause 10.1 of Ms Nesbitt’s employment agreement.

[6] Clause 10 of Ms Nesbitt’s employment agreement, in its entirety, is as follows:

“10. ARBITRATION

10.1 In the event of any dispute arising as to the validity of any termination of this agreement and failing resolution of the dispute within twenty-one (21) days of the dispute arising, the parties agree to appoint an arbitrator, or failing agreement as to the person to be appointed arbitrator, an arbitrator will be appointed at the request of either Party by the President for the time being of the Law Society of Western Australia. The submission to arbitration is deemed to be a submission to arbitration within the meaning of the Commercial Arbitration Act 1985. The arbitrator must agree to hear the arbitration and hand down his decision within thirty (30) days of his appointment as arbitrator. The award of the arbitrator will be final and binding on the Parties and any right of the parties to appeal under Section 38 of the Commercial Arbitration Act or to apply to the court under Section 30 of the Commercial Arbitration Act are hereby expressly excluded.

10.2 The arbitrator shall assess the fairness or unfairness of the termination which precipitated the dispute and in so assessing the fairness or unfairness of such termination shall take into account the written submissions of each Party, the terms of this agreement and he will be at liberty to seek legal advice before exercising his judgement as an expert pursuant to this clause.

10.3 The cost of the arbitrator will be borne by the company if the dispute is resolved in favour of Employee or by Employee if the dispute is resolved in favour of the Company.”

[7] At the hearing on 16 June 2014, the Employer provided written and oral submissions that arbitration proceedings should be stayed pending the outcome of arbitration referred to in Clause 10 of the Applicant’s employment agreement. In its submissions, the Employer referred to Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10 (ATCO).

[8] At the hearing, Ms Nesbitt had only recently become aware of the Employer’s submission that the application be stayed. Ms Nesbitt had not had the opportunity to give proper consideration to the submission and case cited in support of the submission.

[9] I adjourned the hearing to enable the Applicant to give proper consideration to the Employer’s request for a stay of proceedings.

[10] Since 16 June 2014, the Applicant and the Employer have provided written submissions.

[11] This is my decision and reasons for decision concerning the Employer’s submission that these proceedings should be stayed pending performance of Clause 10 of Ms Nesbitt’s employment agreement.

CONSIDERATION

[12] The Employer, in its submissions that the proceedings should be stayed referred to and relied upon ATCO and the Commercial Arbitration Act 2012 (WA) (CA Act).

ATCO

[13] In ATCO, Pipeline Services WA Pty Ltd (Pipeline), claimed damages against ATCO alleging a breach of an agreement under which Pipeline was required to install underground pipes for the transmission of gas.

[14] ATCO initially applied for a stay of proceedings in the Western Australian Supreme Court pursuant to the Commercial Arbitration Act 1985 (WA), and subsequently the CA Act. ATCO sought an order for referral to arbitration under section 8 of the CA Act.

[15] In ATCO, the overall value of the contract which was in dispute was approximately $3 million. The contract contained a clause which required escalation to arbitration pursuant to the Commercial Arbitration Act 1985. The issues for determination in ATCO are not on point in relation to this application. The dispute was commercial and the contract was not an employment agreement.

[16] The Employer submits that the application for a stay of proceedings in the Commission is not made pursuant to the CA Act but as a consequence of Clause 10 of the Applicant’s employment agreement. However, the “submission to arbitration is deemed to be a submission to arbitration within the meaning of the Commercial Arbitration Act 1985” [the predecessor to the CA Act]. The Australian Concise Oxford Dictionary defines “deem” as “believe, consider, judge, or count, to be”. Put shortly, the referral to arbitration and appointment of an arbitrator is considered to be for the purposes of the CA Act.

Commercial Arbitration Act 2012 (WA)

[17] Section 8 of the CA Act relevantly is as follows:

“8. Arbitration agreement and substantive claim before court (cf. Model Law Art 8)

(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party’s first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.

(2) ...”

[18] “Arbitration agreement” is defined in s.7 of the CA Act. The relevant parts are as follows:

“7. Definition and form of arbitration agreement (cf. Model Law Art 7)

(1) An arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.

...”

[19] The object of the CA Act is found in s.1C and the relevant provisions are as follows:

“1C. Paramount object of Act

(1) The paramount object of this Act is to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense.

(2) This Act aims to achieve its paramount object by -

(a) enabling parties to agree how their commercial disputes are to be resolved...

...” (my emphasis).

[20] Section 1D of the CA Act provides an explanation and origin of the legislation. Where the CA Act refers to “Model Law” as it does in sections 7 and 8 above, it is a reference to the UNCITRAL or Model Law on international commercial arbitration. This Model Law seeks to provide for all countries that are signatories to the United Nations Commission on International Trade Law, a uniform model of arbitration given the nature of international trade.

[21] The CA Act applies to domestic commercial arbitration.

[22] Arbitration is domestic if the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in Australia.

[23] At subclause 1(6) of the CA Act, there is a legislative Model Law Note which reads:

“The term ‘commercial’ should be given a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business cooperation; carriage of goods or passengers by air, sea, rail or road.”

[24] The expressions following the word “includes” in the legislative note after subclause 1(a) of the CA Act, should be given their ordinary meanings which are commercial transactions. However, there are no expressions or transactions, which indicates that the term commercial was meant to include the employment relationship.

[25] The fact that Ms Nesbitt is employed in a commercial undertaking does not mean that her relationship with the owners is “commercial”. Ms Nesbitt’s contractual relationship is an employment relationship, or to put it in the anachronistic vernacular, “master and servant”. The relationship is non commercial.

[26] In Patel v Kambay International Inc., 2008 ONCA 867 (Patel), the appellants sought a stay of proceedings and submitted that the issue of Mr Patel’s dismissal be referred to arbitration and relied upon the International Commercial Arbitration Act (ICAA). In seeking the stay, the appellants relied on s.8 of the ICAA which is in similar terms to s.8 of the CA Act.

[27] The Court of Appeal dismissed the stay application and referred, in its judgement, to Article Eighteen of Part II of the report of the United Nations on International Trade Law which reads as follows:

“18 The content of the footnote reflects the legislative intent to construe the terms commercial in a wide manner. The call for a wide interpretation is supported by an illustrative list of commercial relationships. Although the examples listed include almost all types of context known to have given rise to disputes dealt with in international commercial arbitrations, the list is expressly not exhaustive. Therefore, also covered as commercial would be transactions such as supply of electric energy, transport of liquefied gas via pipeline and even “non-transactions” such as claims for damages arising in a commercial context. Not covered are, for example, labour or employment disputes and ordinary consumer claims, despite their relation to business.” (my emphasis)

[28] In Patel, one of the two issues in dispute related to an alleged wrongful dismissal. The Court of Appeal determined “Neither question arises in a dispute over a commercial transaction. In context of this case, the term commercial does not apply and the issues cannot be said, to require a “commercial arbitration for their resolution”. 1 A similar position was adopted by the Alberta Court of Queens Bench in Borowski v Heinrich Fiedler Perforietechnik GmbH, 158 Alberta Reports 213.

[29] The effect of the Employer’s application is for the Commission to endorse employers inserting in contracts of employment a clause which ousts its jurisdiction to deal with alleged unfair dismissals. I am not prepared to adopt such an approach. Secondly, I consider the purported legislative foundations upon which Clause 10 of the employment agreement is built inconsistent with the legislation relied upon.

[30] For the reasons set out above, the stay application is refused.

[31] The Employer is a national employer pursuant to s.380 of the FW Act. The Employee is a national system employee and consequently the application has been properly made pursuant to Part 3-2 of the FW Act. The FW Act takes precedent over
Clause 10 of the employment agreement.

[32] As a result of refusing the stay application, it is now necessary to consider the remaining jurisdictional issues submitted by the Employer, and if appropriate, the substantive merits of the application. My Associate will contact the parties to consider how these matters should be progressed.

COMMISSIONER

Appearances:

L Nesbitt, the Applicant.

L Swanson of counsel for the Respondent.

Hearing details:

2014:

Perth,

16 June.

Final written submissions:

Applicant: 23 June 2014.

Respondent: 30 June 2014.

 1   Patel v Kambay International Inc., 2008 ONCA 867 paragraph [13]

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