Ms Melanie Millington v Traders International Pty Ltd

[2013] FWC 9679

[2013] FWC 9679

FAIR WORK COMMISSION

DECISION

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

Ms Melanie Millington
v
Traders International Pty Ltd
(U2013/8345)

DEPUTY PRESIDENT ASBURY BRISBANE, 10 DECEMBER 2013

Application for unfair dismissal remedy - Jurisdiction - The respondent was not the employer of the applicant - Transmission of business.

BACKGROUND

[1] Ms Melanie Millington applies for an unfair dismissal remedy under s.394 of the Fair Work Act 2009 (the Act)in relation to her dismissal by Traders International Pty Ltd. The application is met with an objection outlined in a series of correspondence from the Director of Traders International, Mr Lachlan Elsworth, on the ground that Ms Millington was not employed by Traders International at the point of her dismissal. Essentially Mr Elsworth contends that prior to her dismissal, Ms Millington was transferred to another company, Teach Me To Trade Pty Ltd, and that a Director of that company, Mr Anthony Eales dismissed Ms Millington.

[2] Mr Elsworth made frequent references in his correspondence to advice he has received from his legal team and barristers in formulating his objection. Given the complexity of the matters in issue, and that no issue of fairness between the parties arises, Ms Millington was given permission to be represented by a lawyer pursuant to s.596(2)(a) and (c) of the Act.

[3] Mr Elsworth did not comply with Directions which were issued in connection with the determination of his jurisdictional objection. In particular he did not provide a witness statement setting out his own evidence or any documentary evidence in support of his argument. Mr Elsworth did provide two witness statements but these were filed and served well outside the time required in the Directions. Notwithstanding his non-compliance with Directions Mr Elsworth was allowed to give oral evidence, and to tender correspondence he had previously forwarded to the Commission outlining the basis of his objection, as his witness statement.

[4] Ms Millington gave evidence on her own behalf. Mr George Trojanowski, a former employee of Traders International, provided two statements, one at the request of Mr Elsworth and a second statement at the request of Ms Millington’s legal representative. Mr Trojanowski also gave oral evidence by telephone. The other person who provided a witness statement at the request of Mr Elsworth was not available to give evidence or to be cross-examined, and after attempts to contact him were made, I decided that I would not take the statement into account. In the circumstances of this case, the evidence of that person would not have assisted Mr Elsworth in any event.

[5] The issue for determination is whether Ms Millington was transferred to Teach Me To Trade prior to her dismissal, so that Traders International was not the employer of Ms Millington when she was dismissed.

EVIDENCE

[6] It is not in dispute that Ms Millington commenced employment with Traders International in 2011 and was employed as Mr Elsworth’s Executive Assistant. It is also not in dispute that Ms Millington was dismissed on 19 March 2013, and was informed that she was to be dismissed, by Mr Anthony Eales.

[7] The case sought to be argued by Mr Elsworth and his evidence to the Commission involves a tangled web of events and allegations. I have considered only those relevant to the issues in dispute. Mr Elsworth is the sole Director of Traders International. Exactly what business is undertaken by Traders International is not clear from the evidence, but it appears that at or around the time that Ms Millington was dismissed, the company traded in commodities markets and currencies and/or sold finance education products to clients. Traders International operates under an arrangement with a company in the United States, Traders International Limited (the US company).

[8] In order to undertake this work, Traders International was required to hold an Australian Financial Services License (AFSL), issued by the Australian Securities and Investment Commission (ASIC). There was some evidence that this license was administered by Mr David Orth, from a company known as “Got Money FX” said to be the “AFSL provider for Traders International”.

[9] At or around October 2012, Mr Elsworth established a company known as Teach Me To Trade Pty Ltd, and was the sole Director of that Company. Mr Elsworth maintains that he established Teach Me to Trade as a “back up plan” to provide continuity in case something went wrong with the Traders International brand, as he was concerned about the possible impact of bad press on the internet about the brand in the United States. Mr Elsworth further maintains that all staff were made aware that they may be required to transfer to Teach me To Trade at short notice.

[10] Mr Elsworth commenced a period of leave on 1 March 2013 at which point he reached an agreement with Mr Anthony Eales that Mr Eales would “baby sit” the business while he was on leave. In preparation for this, on 26 February 2013, Mr Elsworth appointed Mr Eales as a Director of Teach Me To Trade, and it was agreed that Mr Eales would hold 100% of the share holding of that Company.

[11] Mr Elsworth alleges that at some point, Mr Eales caused Mr Elsworth to be removed as a Director of Teach Me To Trade, and stole computers and office equipment from the business. The allegations made by Mr Elsworth about this matter are unsubstantiated and are not relevant to the issues in dispute. I do not intend to traverse them further.

[12] Mr Elsworth also said that on 4 March 2013 Mr Eales told Mr Elsworth that he was seeking legal advice about sacking Ms Millington. Mr Elsworth states that after seeking clarification about the reasons for this from Mr Eales, he heard nothing further.

[13] In March 2013, Mr Elsworth was advised by Mr Orth that Traders International had failed its annual audit, and must cease selling any new product under that brand. Mr Elsworth initially said that this advice was received on 14 March 2013. Mr Elsworth later said that he had retained control of “stolen” computers and had ascertained that this occurred on 6 March 2013.

[14] Notwithstanding that at the point this matter was heard he had regained control of the “stolen” computers, Mr Elsworth did not produce the email from Mr Orth. Other than his assertion that there was an email from Mr Orth, no documentary evidence was produced by Mr Elsworth in relation to the loss of the AFSL.

[15] Mr Elsworth also said that he had cause to question the date on which he became aware that the AFSL had been lost, when Ms Millington provided a medical certificate to the Commission as evidence in these proceedings, indicating that she was not at work on 14 March 2013.

[16] Regardless of the date, Mr Elsworth maintained that on the day he became aware that Traders International had lost the use of its AFSL, he chaired a meeting of all staff and without exception, all staff were present. At that meeting, Mr Elsworth told staff that Traders International had lost its AFSL and was required by law to cease selling any further finance education products and the business needed to cease immediately.

[17] Upon being informed of this, Mr Elsworth said that all staff voluntarily agreed to transfer to Teach Me To Trade “on mass” [sic]. Mr Elsworth also stated that all staff were already aware that if Traders International lost its licence, the Teach Me To Trade “back up plan” would be immediately triggered. Further, Mr Elsworth said that staff were given the opportunity to discuss the transfer with him or to seek a redundancy from Traders International if they were not happy to transfer.

[18] According to Mr Elsworth, no staff member questioned the transfer or disagreed that it needed to take effect immediately because of the loss of the AFSL. All staff took identical roles with the new company with no loss of pay, entitlements or conditions, and new contracts of employment were drawn up within six weeks of the transfer. In support of the proposition that Ms Millington transferred to Teach Me To Trade, and knew that this transfer would occur, Mr Elsworth tendered emails showing that Ms Millington had an email address using the name Traders International, and a “Teach Me To Trade Gmail address”, which she used prior to the transfer.

[19] Under cross-examination, Mr Elsworth said that Mr Eales was never employed by Traders International but may have been a sub-contractor. Mr Elsworth also maintained that if Mr Eales purported to act in the capacity of Managing Director or General Manager of Traders International when he dismissed Ms Millington, or at any other time, that he did so without authority.

[20] Mr Elsworth contends that the evidence he has placed before the Commission establishes that there was a transfer of business between Traders International and Teach Me To Trade on 6 March 2013 and that Ms Millington was a transferred employee in accordance with the Act.

[21] Mr Trojanowski provided a statement at the request of Mr Elsworth, dated 10 September 2013, wherein he said that there was a meeting on 14 March 2013 at which all staff transitioned voluntarily to Teach Me To Trade and agreed that new contracts would be drawn up in the preceding weeks.

[22] Mr Trojanowski later sent an email to Ms Millington’s Lawyer Mr Yates, who had also sought a statement from him on behalf of Ms Millington, and advised that he could not confirm whether Ms Millington was at the meeting at which the transfer was discussed, and that the comment that it had occurred immediately was “anecdotal”. Mr Trojanowski also said that even though staff agreed to the transfer on that date, the official transition and commencement date of their employment with Teach Me To Trade was not until 25 March 2013, as indicated by a payslip tendered by Mr Trojanowski.

[23] In response to the proposition that the meeting took place on 6 December, Mr Trojanowski said that he no longer had access to his diary and was unsure when the meeting took place, or who attended.

[24] Mr Trojanowski also said that Mr Eales stated that he had taken over control of Traders International by the time the meeting was held, and that Mr Eales and his accounts person met with Ms Millington on 19 March 2013. Further, Mr Trojanowski said that Mr Eales held a meeting of all staff on the morning of 21 March 2013 and advised that he had dismissed Ms Millington.

[25] In his witness statement made at the request of Ms Millington, Mr Trojanowski said that he was employed by Traders International as a telephone support person from February 2011 until his transfer to Teach Me To Trade effective on 24 March 2013. Mr Trojanowski tendered the following documents:

● Payslip from Traders International for the period 25 February 2013 until 10 March 2013;
● Payslip from Traders International for the period 11 March 2013 until 24 March 2013.

[26] Mr Trojanowski also tendered a letter from Traders International dated 17 April 2013 stating that Teach Me To Trade was taking over the business and offering Mr Trojanowski employment from 25 March 2013. That letter dated 17 April 2013 is on Traders International letterhead, and signed by Mr Eales in the capacity of General Manager. The letter states that employment with Traders International effectively ceases on 24 March 2013 and that Mr Eales understands that Teach Me To Trade would make Mr Trojanowski an offer to become an employee of that company on terms that would be set out in a separate letter, and take on all of his outstanding entitlements.

[27] The letter of 17 April 2013 further states that if the offer is accepted, Mr Trojanowski’s employment with Teach Me To Trade would commence on 25 March 2013 or the next ordinary working day following that date. The letter of 17 April 2013 concludes by stating that if Mr Trojanowski accepts the offer of employment from Teach Me To Trade, he will be required to resign his employment with Traders International with effect from the day before he commences with Teach Me To Trade.

[28] In his oral evidence to the Commission, Mr Trojanowski said that in around February 2013, there were two new people in the office of Traders International, one being Mr Eales. Mr Eales appeared to be in charge of the Company and two weeks later told employees that he had taken over. According to Mr Trojanowski, Teach Me To Trade was a backup or alternative venue for trading ideas, and was used by Mr Elsworth as a venue to interest parties outside of the Traders International Group. Teach Me To Trade also had a presence on Facebook and was a venue for communication.

[29] Mr Trojanowski said that the letter from Traders International dated 17 April 2013 was the first time employees had any official documentation to confirm what had been said in meetings. Any offers from Teach Me To Trade in those meeting had been verbal and “in principle”. Mr Trojanowski also said that the first staff knew that they were being paid by Teach Me To Trade, was when their payslips for the period commencing 25 March 2013 indicated that their employer was Teach Me To Trade. Further, Mr Trojanowski said that when he commenced employment with Teach Me To Trade, the terms and conditions were different and he received annual leave and other entitlements instead of the casual conditions he had received while working for Traders International.

[30] Ms Millington maintains that she was dismissed by Mr Eales in his capacity as Managing Director of Traders International. Ms Millington said that she was aware that Teach Me To Trade was set up in around October 2012, and was a similar business to Traders International. Ms Millington was required to produce documents for people to purchase products under that brand, using different merchant facility details. Ms Millington also said that Mr Elsworth told her that he had set up Teach Me To Trade so that it would be available when Traders International no longer had an AFSL.

[31] According to Ms Millington, Mr Elsworth expressed concern on a number of occasions that Traders International was not complying with ASIC rules. Ms Millington also said that Mr Elsworth was using the loss of the AFSL to block Traders International Limited (the US company), so that he would not have to comply with a contract between the US company and Traders International Pty Ltd.

[32] Ms Millington said that she never worked for Teach Me To Trade, but did work for Mr Elsworth using the Teach Me To Trade banners and logo. Ms Millington agreed that she was employed by Traders International but that from time to time, her work was “outsourced” to Teach Me To Trade. Ms Millington also said that she set up the Teach Me To Trade Gmail address upon the instructions of Mr Eales to prevent the US company from having visibility of emails on the server. Further, Ms Millington maintained that Teach Me To Trade and Traders International had separate merchant facilities, and disputed Mr Elsworth’s assertion that the two entities shared a facility.

[33] Ms Millington maintained that she did not recall a meeting on 6 March 2013 or any other date, during which the transfer of employees between Traders International and Teach Me To Trade had been discussed. Ms Millington also said that she could not recall ever being told that Traders International had lost its AFSL, but remembered a conversation between Mr Elsworth and another person during which Mr Elsworth stated that the licence would be lost as tactic to shut down litigation between Mr Elsworth and the US company.

[34] On the day she was dismissed, Ms Millington was handed a document setting out a salary sacrifice arrangement she had entered into with respect to her employment with Traders International. Mr Eales told her that the arrangement was fraudulent. Ms Millington said that this scheme was set up by the former Chief Financial Officer of Traders International, and initiated by the company.

CONCLUSIONS

[35] I am unable to accept that Ms Millington transferred to Teach Me To Trade prior to her dismissal. Mr Elsworth’s evidence about the events was far from compelling. It does not establish to the required degree - on the balance of probabilities - all of the matters he asserts. There is insufficient evidence upon which I could be satisfied that Traders International lost its AFSL. Other than assertions about an email informing him that Traders International had failed an audit, which Mr Elsworth has not tendered, there is no evidence about that matter.

[36] Mr Elsworth has also made a series of allegations about theft of computers in an attempt to justify the lack of documentary evidence. Despite making repeated references to a police report about the matter, there is no evidence upon which I could be satisfied that, if there was theft, it prevented Mr Elsworth from putting appropriate documents before the Commission to substantiate his allegations. In this regard, I note that Mr Elsworth informed the Commission that he had regained the computers, and could ascertain dates from them, but was still unable to tender any documentary evidence to support his assertions, despite being granted numerous opportunities to do so.

[37] Even if I accept that Traders International lost its AFSL on 6 March 2013 as asserted by Mr Elsworth, and all of the other evidence he has provided, it is not sufficient to establish that Ms Millington was employed by Teach Me To Trade at the time she was dismissed. I have reached this conclusion for the following reasons.

[38] Regardless of the nature of the relationship between Mr Eales and Traders International, Mr Elsworth as the sole Director of that company, put Mr Eales in charge of it from 1 March 2013. On Mr Elsworth’s own evidence, Mr Eales was “babysitting” Traders International and there is no evidence that Mr Elsworth had taken back control of Traders International when Ms Millington was dismissed on 19 March 2013.

[39] If there was a meeting on 6 March 2013 at which the transfer of employees to Teach Me To Trade was discussed, I am unable to be satisfied that there were any such transfers effected on that date.

[40] It is a fundamental principle of law that contracts of employment are contracts for personal services, and the benefits and obligations of such contracts cannot be unilaterally assigned. 1 There is no evidence of any agreement on the part of Ms Millington to such a transfer. Absent evidence of such agreement, I am unable to accept that the alleged transfer occurred.

[41] Even if I was to accept the evidence that other employees of Traders International were transferred to Teach Me To Trade, the evidence is that the transfers were not effected until April 2013, at least a month after Ms Millington’s dismissal. The evidence of Mr Trojanowski and the documents tendered through him, show at best, an attempt to retrospectively transfer Mr Trojanowski from Traders International to Teach Me To Trade, with effect from 25 March 2013, a date after Ms Millington was dismissed.

[42] It is also the case that Mr Trojanowski continued to be paid by Traders International after the date of the alleged transfer to Teach Me To Trade, and I do not accept that this is because the two companies had the same merchant facility. This is another matter about which Mr Elsworth provided no evidence, other than an assertion contradicted by Ms Millington.

[43] At its highest, if all of the evidence placed before the Commission by Mr Elsworth is accepted, that evidence establishes that at a meeting on 6 March 2013, some employees of Traders International agreed in principle to transfer to Teach Me To Trade subject to being provided with formal documentation at some point in the future.

[44] Such an agreement is insufficient to effect a transfer of employment, as evidenced by the subsequent correspondence about the matter with Mr Trojanowski. A transfer of employment cannot occur en masse in circumstances where each individual employee has not been made an offer of employment by the employer to whom he or she is transferring, and has not accepted such an offer. Even if what transpired at the meeting of 6 March 2013 was sufficient, there is no evidence that Ms Millington was at that meeting.

[45] The submission that Mr Eales had no authority to act on behalf of Traders International is also entirely at odds with the evidence. As previously stated, Mr Elsworth put Mr Eales in charge of Traders International with effect from 1 March 2013. On Mr Elsworth’s own evidence, Mr Eales told him on 4 March 2013 that he was taking legal advice about dismissing Ms Millington. Mr Elsworth’s evidence - that he asked Mr Eales why he was considering dismissing Ms Millington, and that he heard nothing more from Mr Eales in relation to this matter - is at odds with his assertion that Mr Eales was not in charge of Traders International and had no authority to manage that company. If Mr Eales had no authority to make such decisions, Mr Elsworth would surely have prevented Mr Eales from taking any further steps to dismiss Ms Millington. This is particularly so given Mr Elsworth’s repeated statements that Ms Millington was an outstanding employee.

[46] Mr Eales dismissed Ms Millington for alleged fraud in relation to a salary sacrifice arrangement between Ms Millington and Traders International. Mr Eales’ authority is also apparent from the letter he signed on 17 April 2013 on Traders International letterhead, in the capacity of General Manager. There is no evidence that Mr Elsworth sought to inform employees that Mr Eales was not the General Manager of Traders International. In short, Mr Elsworth’s assertions about Mr Eales’ role at Traders International are improbable and contrary to the weight of the evidence.

[47] The legislative provisions relied on by Mr Elsworth do not assist him to establish that Ms Millington’s employment transferred from Traders International to Teach Me To Trade prior to her dismissal. The provisions of the Act dealing with transfer of business are found in Division 2 of Part 2-8 which deals generally with transfer of instruments. It is not necessary to set out those provisions.

[48] It is sufficient to note that the legislation simply provides a scheme whereby instruments such as agreements may transfer, or employees have continuity of service between two employers, in circumstances where there is a transfer of business between those employers and the employee ceases employment with the first employer and commences with the second employer in accordance with the provisions. The provisions do not operate to effect a transfer of employment without the agreement of the employee concerned.

[49] I am satisfied that on 19 March 2013, Ms Millington was dismissed from her employment with Traders International Pty Ltd. The jurisdictional objection advanced by Mr Elsworth on behalf of Traders International is dismissed.

[50] A further outstanding issue in relation to whether Ms Millington can pursue an unfair dismissal application because she is an undischarged bankrupt, has been referred to a Full Bench of the Commission for determination.

DEPUTY PRESIDENT

Appearances:

Mr M. Yates on behalf of the Applicant.

Mr L. Elsworth on behalf of the Respondent.

Hearing details:

2013.

Brisbane:

September 24.

Final written submissions:

8 October 2013.

 1   See ACE Insurance Limited v Trifunovski [2013] FCAFC 3 (25 January 2013) per Buchanan J with whom Lander J agreed citing: Nokes v Doncaster Amalgamated Collieries Limited [1940] AC 1014 at 1018-9, 1024, 1026, 1029, 1048; Mersey Docks and Harbour Board v Coggins and Griffith Liverpool (Limited) [1946] UKHL 1; [1947] AC1 at 14,15; Denham v Midland Employers Mutual Association Limited [1955] 2 QB 437 at 443.

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