Ms Yolande Dubow v Aboriginal and Torres Strait Islander Legal Service (Qld) Ltd T/A ATSILS

[2013] FWC 6171

[2013] FWC 6171

FAIR WORK COMMISSION

DECISION

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

Ms Yolande Dubow
v
Aboriginal and Torres Strait Islander Legal Service (Qld) Ltd T/A ATSILS
(U2013/9152)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 4 SEPTEMBER 2013

Summary: can an un-discharged bankrupt make an application for an unfair dismissal remedy? - whether review of decision and/or order for reinstatement a matter in which beneficial creditors have an interest - trustee has no “interest” in application for reinstatement - application competent to the extent of the jurisdiction.

[1] On 6 May 2013, Ms Yolande Dubow (“the Applicant”) made an application under s.394 of the Fair Work Act 2009 (“the Act”) seeking a remedy in respect of her dismissal from the Aboriginal and Torres Strait Islander Legal Service (Queensland) Ltd (“ATSILS”).

[2] The Applicant had been employed on a contract of employment on 15 June 2011 as a legal practitioner with ATSILS. The employment contract appears to be one for an outer limit, in so far as the contract was to self terminate on 30 June 2014 (subject to various termination provisions, which include the operation of a probationary period). On 24 April 2013, ATSILS dismissed the Applicant for reasons of insubordinate conduct pursuant to clause 17.1 of the contract of employment.

[3] The issue ventilated by ATSILS was that the Applicant was precluded from making her application as described above for reasons that the Applicant does not have standing to make an application under s.394 of the Act. ATSILS’ rationale in this regard was that the Applicant had become a bankrupt on the evidence on 20 March 2012. Consequently, the Applicant’s rights in respect of the application are vested in her trustee by virtue of the Applicant having been the subject of proceedings pursuant to s.58 of the Bankruptcy Act 1966 (“the Bankruptcy Act”).

[4] These provisions are helpfully discussed in the decision of Senior Deputy President Acton in Hampson v Circuit Finance Australia Ltd [PR967475]. There, Her Honour set out the following:

Section 58 of the Bankruptcy Act provides [relevantly] as follows:

(1) Subject to this Act, where a debtor becomes a bankrupt:

(a) the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and

(b) after-acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee.

(6) In this section, after-acquired property, in relation to a bankrupt, means property that is acquired by, or devolves on, the bankrupt on or after the date of the bankruptcy, being property that is divisible amongst the creditors of the bankrupt.

“The property of the bankrupt” is defined, so far as is relevant, in s.5 of the Bankruptcy Act as meaning in relation to a bankrupt:

(a) except in subsections 58(3) and (4):

(i) the property divisible among the bankrupt's creditors; and

(ii) any rights and powers in relation to that property that would have been exercisable by the bankrupt if he or she had not become a bankrupt.

Section 116 of the Bankruptcy Act defines “property that is divisible amongst the creditors of the bankrupt”. Section 116 states:

(1) Subject to this Act:

(a) all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired or is acquired by him or her, or has devolved or devolves on him or her, after the commencement of the bankruptcy and before his or her discharge;

(b) the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his or her own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his or her discharge;

(c) property that is vested in the trustee of the bankrupt's estate by or under an order under section 139D; and

(d) money that is paid to the trustee of the bankrupt's estate under an order under section 139E;

is property divisible amongst the creditors of the bankrupt.

(2) Subsection (1) does not extend to the following property:

...

(g) any right of the bankrupt to recover damages or compensation:

(i) for personal injury or wrong done to the bankrupt, the spouse of the bankrupt or a member of the family of the bankrupt; or

(ii) in respect of the death of the spouse of the bankrupt or a member of the family of the bankrupt;

and any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such an injury or wrong or the death of such a person.

[5] Her Honour made the following observations about these provisions:

Sections 58 and 116 of the Bankruptcy Act, together with the s.5 definition concerning “property”, appear, amongst other things, to vest in the trustee of the estate of the bankrupt rights of action required by a bankrupt after becoming a bankrupt and before the bankruptcy is discharged, excepting rights of action exempt by s.116(2) [of the Bankruptcy Act].

[6] Her Honour also observed that:

Further, in Williams v Genel Investments Pty Ltd, a full bench of the Commission upheld a first instance decision that [an unfair] application was not an action in respect of any personal injury or wrong doing to bankrupt, notwithstanding that an element of the application related to pain and humiliation experienced by the Applicant.

[7] On Her Honour’s reasoning it was necessary to conclude there was no valid application before her because the application concerns the applicant’s “property, and it is not property which is subject to s.166(2) of the Bankruptcy Act, it follows that [the applicant’s] right of action under [the Act as it then was] is vested in the trustee of his estate in bankruptcy. Accordingly, [the applicant] lacks standing to make the [...] application relevant to this matter.”

[8] I see no difference of substance between the application before me and that before Her Honour. Though Her Honour’s decision was made under the Workplace Relations Act 1996, there have been no changes to the relevant provisions that affect her reasoning or the application of the relevant statute. The Applicant here was a bankrupt prior to the application and her relevant affairs were and continue to be in the hands of her trustee.

[9] While that may be the case, the judgment of Jarrett FM (as he then was) in Brown v Premier Pet [2012] FMCA 830 (13 September 2012) (Re: Brown v Premier Pet) goes against Her Honour’s decision in some important respects, but particularly in respect of the meaning of “property” under the Bankruptcy Act.

[10] There, in essence, Jarrett FM (as he then was) held that property which is not divisible amongst the bankrupt’s creditors is not property of the bankrupt which vests in the bankrupt’s trustee. In this sense, an application seeking reinstatement as a remedy would not be a matter in which the trustee had an interest for reasons that there would be no property in the result which would be divisible amongst the applicant’s creditors.

[11] That is, if a trustee was to bring an action for purposes of the review of a decision to dismiss an employee (who is a bankrupt) and the decision was quashed, there would be no divisible property that would result as a consequence nor would the right have been exercised beneficially for the creditors.

[12] The Federal Magistrate (as he then was) went on to comment that the decision:

in Re: Hampson [...] (as cited above) do[es] not seem to take account of the differing forms of release available in the application [...]. In the present case, three forms of release have been claimed and each is available in the application that is permitted by the s.539 (2) of the Fair Work Act 2009. In my view, it matters not that different forms of release are permitted in the one application or cause of action.

To the extent that the proceedings seek to exercise the right to an order for reinstatement that the Court might grant pursuant to s.545(2)(c), Mr Brown is not exercising a right in respect of property for the purposes of s.116(1) of the Bankruptcy Act 1966.

[13] Following the reasoning of Lander J in Randall v the Deputy Commissioner of Taxation 2008 FCA 1939, 2008 174 FCR 441 (Re: Randall, which is discussed below), the (then) Federal Magistrate continued that the right to seek reinstatement, and thereby to be put back in a position to earn income through personal exertion, remains with the bankrupt applicant.

[14] The applicant’s trustee, therefore, has no interest in seeking reinstatement of the bankrupt former employee, and could not in any event exercise any decision-making, regardless, about whether any such offer of employment would be taken up by a person to whom it was acting as trustee. Generally, as stated above, the right to seek an order to reinstatement is not a right which can be exercised beneficially for the relevant creditors.

[15] This is the very point made by Lander J in Re: Randall cited above (at paragraph 76 thereof):

The right to seek a review of the respondent’s decision to terminate the applicant’s employment remains with the applicant.  The trustee has no interest in seeking a review of that decision.  The trustee, for example, could not ensure that if the decision were reversed that the applicant would resume employment.  If the trustee was interested in the proceeding and brought the proceeding and the decision was quashed as the applicant seeks in this proceeding, there would be no property in the result which would be divisible among the applicant’s creditors.  The right to seek an order quashing the decision of the respondent to terminate the applicant’s employment is not a right which can be exercised beneficially for the creditors, even in circumstances where the applicant seeks the further orders which may result in a sum of money being paid to him by way of compensation. 

[16] Federal Magistrate Jarrett (as he then was) concluded in Re: Brown v Premier Pet that the application before him in so far as it sought compensation and the imposition of a pecuniary penalty had to be dismissed, because these remedies concerned property of the type in which the creditors will have a beneficial interest, and, thus, are in the control of the trustee. But the balance of the application – which concerned reinstatement – remained on foot.

[17] I note that there are differences between the orders the Court and the Commission can make.

[18] The power vested in the Federal Courts to make orders under the Fair Work Act 2009 are as follows:

545 Orders that can be made by particular courts

Federal Court and Federal Magistrates Court

(1) The Federal Court or the Federal Magistrates Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.

Note 1: For the court’s power to make pecuniary penalty orders, see section 546.

Note 2: For limitations on orders in relation to costs, see section 570.

Note 3: The Federal Court and the Federal Magistrates Court may grant injunctions in relation to industrial action under subsections 417(3) and 421(3).

Note 4: There are limitations on orders that can be made in relation to contraventions of subsection 65(5), 76(4), 463(1) or 463(2) (which deal with reasonable business grounds and protected action ballot orders) (see subsections 44(2), 463(3) and 745(2)).

(2) Without limiting subsection (1), orders the Federal Court or Federal Magistrates Court may make include the following:

(a) an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;

(b) an order awarding compensation for loss that a person has suffered because of the contravention;

(c) an order for reinstatement of a person.

[19] The court can order any discrete outcome. It may make any order that it considers appropriate once it reaches the required level of satisfaction in respect of a claim.

[20] The jurisdiction of the Commission is somewhat more conditioned. The Commission does not have scope to make any order that it considers appropriate. It may only do certain things for the purposes of remedy, and then only when various matters have been taken into account. These include, by way of s.390 of the Act:

• Reinstate or appoint the applicant to a new position, if the Commission considers it appropriate to do so;



• Make an order for the maintenance of continuity of a person's employment where the person is reinstated or appointed to another position;



• Make an order to restore lost pay when a person is reinstated or appointed to another position; or otherwise



• Make an order for compensation in lieu of reinstatement (subject to various conditions being met).

[21] Section 381(1)(c) states that one of the objects of the Part is to provide remedies if the dismissal is found to be unfair, with an emphasis on reinstatement.

[22] While the scope to make orders differs between the Commission and the Court, and the Commission has no accrued jurisdiction to select at its own volition an applicable form of relief, I do not think this gives rise to any issue of substance. An application can be accepted by the Commission and be determined to the extent that it complies with the Commission’s jurisdiction.

[23] I see no bar to an applicant who is bankrupt making an application for a remedy of reinstatement (or reappointment to an alternative position) only (inclusive of continuity of service). This is not a concern in which a trustee will have an interest (or be able to act in respect of on behalf of the bankrupt applicant). Nor will it constitute divisible property in which the bankrupt’s beneficial creditors will have an interest.

[24] However, in so far as an application might seek an order for “lost pay” (s.391 of the Act) or compensation (s.392(1) of the Act), the Commission would have no jurisdiction to entertain such a claim, as the claim for lost pay or compensation would constitute after-acquired property and would vest in the trustee (pursuant to s.58 or s.116(1) of the Bankruptcy Act). That is, neither the lost pay order nor the compensation order would be wages earned before the termination by the efforts of the Applicant and owed to her as a consequence.

[25] Given this discussion, I would adopt the approach of Jarrett FM and accept and hear the application in relation to all matters in which a bankrupt applicant’s creditors had no interest and in respect of which there would be no divisible property in which the relevant creditors would have a beneficial interest. This would extend to determining whether a dismissal was harsh, unjust or unreasonable, and whether, if so, a bankrupt applicant should be reinstated or reappointed to another position (if appropriate). But the balance of any application, in so far as it constituted property for the defined purposes, would be beyond jurisdiction.

Conclusion

[26] In the particular circumstances before me now and on the basis of the jurisdiction established, the Applicant can proceed to have her application for relief under s.394 of the Act heard and determined by the Commission. But in the event there is a finding that the Applicant was harshly, unjustly or unreasonably dismissed, because she is a declared bankrupt, her application for a remedy is only jurisdictionally competent to the extent that consideration is given to her reinstatement or reappointment to an alternative position (including continuity of service), but not otherwise. The application will now be brought on for hearing and determination to the extent it is jurisdictionally competent.

[27] Having so concluded, I do not think the chain of reasoning that has led to this conclusion is without its practical difficulties. One such practical difficulty that comes to mind is what implication would arise - in both the Court and the Commission - if a bankrupt’s trustee made an application in its own right for a remedy relevant to the interests of the creditors in relation to the bankrupt’s dismissal in addition to an application having been made by the bankrupt former employee him or herself seeking reinstatement? Both parties would be jurisdictionally competent to make their respective applications.

[28] Reasonably, where a trustee had cause to make an application (which would require the bankrupt former employee’s evidence to be adduced) it would do so in coordination with the former employee.

SENIOR DEPUTY PRESIDENT

Appearances:

Ms Y. Dubow, Applicant

Ms G. Sheppard of Barry Nilsson Lawyers, for the Respondent

Hearing details:

By telephone

2013

26 August

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