Neil McBryde and Secretary, Department of Employment
[2014] AATA 434
•2 July 2014
[2014] AATA 434
Division GENERAL ADMINISTRATIVE DIVISION File Number
2014/1468
Re
Neil McBryde
APPLICANT
And
Secretary, Department of Employment
RESPONDENT
DECISION
Tribunal Mr R G Kenny, Senior Member
Date 2 July 2014 Place Brisbane The Tribunal affirms the decision under review.
.....................[Sgd]...................................................
Mr R G Kenny, Senior Member
CATCHWORDS
EMPLOYMENT LAW – Company in liquidation - Claim by employee for an advance under the Fair Entitlements Guarantee Act 2012 (Cth) – Applicant’s brother a director of and employee of the company – On that basis, applicant excluded from making a claim - Decision under review affirmed
LEGISLATION
Corporations Act 2001 (Cth) s 556
Fair Entitlements Guarantee Act 2012 (Cth) ss 10, 11, 14
SECONDARY MATERIALS
Explanatory Memorandum, Fair Entitlements Guarantee Bill 2012 (Cth)
REASONS FOR DECISION
Mr R G Kenny, Senior Member
2 July 2014
BACKGROUND
Mr Neil McBryde (“the applicant”) was employed by McBryde Corporations Pty Ltd (“the company”) from December 2006 until 7 August 2013. On 7 August 2013, the company was placed under external administration and, on 3 September 2013, a liquidator was appointed. Mr Mark McBryde (“Mr McBryde”) is the applicant’s brother. He was a director of, and an employee of, the company from 2007 until 7 August 2013. On 22 August 2013, the applicant made a claim for an advance under s 14 of the Fair Entitlements Guarantee Act 2012 (Cth) (“the Act”). This was in respect of unpaid wages, regular allowances, annual leave payment, payment in lieu of notice and redundancy payment. On 26 November 2013, a delegate of the respondent determined that the applicant was not eligible for assistance under the Act. On 25 February 2014, another delegate of the respondent affirmed that decision.
ISSUE AND LEGISLATION
Persons eligible for an advance under the Act are set out in s 10 of the Act. Under
s 556 of the Corporations Act 2001 (Cth) (“the Corporations Act”) certain persons are “excluded employees”. That provision reads:
556 Priority payments
…
(2) In this section:
…
“excluded employee”, in relation to a company, means:
(a) an employee of the company who has been:
(i) at any time during the period of 12 months ending on the relevant date; or
(ii) at any time since the relevant date;
or who is, a director of the company;
(b) an employee of the company who has been:
(i) at any time during the period of 12 months ending on the relevant date; or
(ii) at any time since the relevant date;
or who is, the spouse of an employee of the kind referred to in paragraph (a); or
(c) an employee of the company who is a relative (other than a spouse) of an employee of the kind referred to in paragraph (a).
It is not in dispute in this matter that s 556 of the Corporations Act was applicable. That provision deals with prioritising classes of creditors for payments when a company has gone into liquidation. The applicant’s claim under the Act was rejected because the respondent found that he was an excluded employee and, because of the terms of s 11 of the Act, was therefore not eligible for an advance. That provision reads:
11 Exclusion for personal connection with employer
(1) A person is not eligible for an advance for the person’s employment by an employer if:
(a) section 556 of the Corporations Act 2001 applies to the winding up of the employer; and
(b) the person is an excluded employee under that section in relation to the employer.
…
(4) This section has effect despite section 10.
The issue for the Tribunal is whether the applicant is eligible for an advance under the Act.
SUBMISSIONS
The applicant conceded that his brother, Mr Mark McBryde, was a director and an employee of the company for the 12 months before the company was placed under external administration on 7 August 2013 (“the relevant date”), that the company was in liquidation and that Mark was an excluded employee within the definition under s 556(2)(a) of the Corporations Act. The applicant also conceded that he (the applicant) was an excluded employee under the definition in s 556(2)(c) of the Corporations Act. The applicant also conceded that, on the clear terms of s 11 of the Act, he was not eligible to claim an advance.
As I understand his submission, the applicant contended that, despite those concessions, he was, nevertheless, entitled to make the claim. He referred to paragraph 12 of
the Explanatory Memorandum, Fair Entitlements Guarantee Bill 2012 (Cth)(“the Memorandum”) which reads:
Corporations Act 2001
12. References to the ‘Corporations Act’ in the Bill are to be read broadly. References to the Corporations Act or a provision of that Act, for the purposes of the Bill, includes references to that Act as it is applied (with or without modification) by another law of the Commonwealth, a State or a Territory. Examples of this include the Commonwealth’s Corporations (Aboriginal and Torres Strait Islander) Act 2006 and State and Territory Acts relating to incorporation of associations and cooperatives.
In particular, the applicant referred to the introductory words of paragraph 12 that “[r]eferences to the ‘Corporations Act’ in the Bill are to be read broadly”. He submitted that a broad interpretation requires that the exclusions in s 11 of the Act only apply if the person affected has an alternative source for him to recover the monies owed to him.
The applicant submitted that he had no such alternative source and that, accordingly, he should be able to make a claim under the Act for an advance. He also submitted that the Tribunal had the jurisdiction to vary a provision of the Act to give effect to that broad interpretation.
The applicant submitted that paragraphs 141 and 144 of the Memorandum serve to give a discretion to the respondent to vary or set aside a decision made under the Act. Those paragraphs, which relate to cl 37 of the Bill and now form part of the Act under s 37, read:
Clause 37 – Review on the Secretary’s own initiative
141. Subclause 1 provides that if the Secretary is satisfied that there is sufficient reason, the Secretary may review a decision about whether a person is eligible for an advance, or a decision about the amount of the advance.
…
144. Subclause 4 provides that after reviewing the decision made under subclause 1, the Secretary can make a ‘review decision’ which can affirm the decision, vary the decision or set aside the decision and substitute a new decision.
The applicant also submitted that the final paragraph of the Memorandum requires decisions made under the Act to comply with human rights principles. It reads:
Conclusion
The Bill is compatible with human rights because to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate.
For the respondent, Mr Tigiilagi Eteuati submitted that the Tribunal is required to apply the terms of the Act as they stand and that the various submissions of the applicant have no application. He submitted that the terms of s 556 of the Corporations Act and s 11 of the Act are unambiguous and operate in a manner that exclude the applicant from making a claim and that the decision under review ought be affirmed
CONSIDERATION
I do not accept the submissions made by the applicant. There is no capacity in the Tribunal to ignore the clear terms of the Act and to adopt some form of broad interpretation which allows the exclusions in s 11 of the Act to be rendered nugatory. While paragraph 144 of the Memorandum refers to a discretion vested in the Secretary to vary or set aside a decision, paragraph 141 thereof provides that this is not at large but limited to circumstances where there is sufficient reason to do so. The last paragraph of the Memorandum serves as a declaration from the Minister that the Bill is compatible with human rights.
I accept Mr Eteuati’s submission that s 556 of the Corporations Act and s 11 of the Act are unambiguous. I am satisfied that the applicant is an excluded employee under
s 556 of the Corporations Act and that, in accordance with s 11(1) of the Act, the applicant is not eligible to make a claim under the Act.
DECISION
The Tribunal affirms the decision under review.
I certify that the preceding 13 (thirteen) paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member .....................[Sgd]...................................................
Associate
Dated 2 July 2014
Date of hearing 24 June 2014 Applicant In person, assisted by Mr Alan King Solicitors for the Respondent Mr Tigiilagi Eteuati, Clayton Utz
0
2