Nick Schwenke v Recoila International Pty Ltd

[2015] FWC 7978

[2015] FWC 7978

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Nick Schwenke
v
Recoila International Pty Ltd
(U2015/6489)

DEPUTY PRESIDENT GOOLEY MELBOURNE, 20 NOVEMBER 2015

Application for relief from unfair dismissal.

[1] Mr Nick Schwenke lodged an application alleging the termination of his employment by Recoila International Pty Ltd (Recoila) was unfair. Recoila filed an objection to Mr Schwenke’s application on the grounds that Mr Schwenke was not its employee.

[2] As a result of that objection Mr Schwenke’s legal representative sought to substitute the employer’s name on the application from Recoila to Strata Group (Aust) Pty Ltd t/as Recoila (Strata). Recoila did not consent to the alteration and submitted that Mr Schwenke should institute new proceedings and the current proceeding should be dismissed.

[3] Recoila submitted that it was registered on 19 June 2015 and it does not want to be on the record as being a party to any wrongdoing. It had never employed Mr Schwenke and there was no basis on which he could have commenced proceedings against it. Mr Schwenke is represented by a lawyer and he should have been aware if he had conducted a company search prior to commencing the proceeding that Recoila could not have been Mr Schwenke’s employer. This is not a simple amendment.

[4] I caused to be sent to Mr Schwenke a letter which advised that Recoila objected to the application. In that correspondence I noted that attached to his application was a termination letter from Strata and his payslip was issued by Strata. That Recoila took over the business on 1 July 2015 did not make Recoila his employer. He was directed to file material in support of his claim that Recoila was his employer, in the alternative he could lodge an application to amend the original application. He was advised that if he took this course a hearing would be conducted to determine the matter.

[5] As a result Mr Schwenke filed an application to amend his original application.

[6] He stated that there was confusion created by the employer about who was the employer. He relied upon an email sent to customers advising that a new company had been established and it would operate the Recoila Reeler business from 1 July 2015. That correspondence advised that there would be no change to the management team or the service and delivery team. The letter advised that all invoices issued up to 30 June 2015 should be paid to Strata and all purchase orders issued after 1 July 2015 will be in the name of Recoila and should be paid to Recoila.

[7] It was said that the respondent employer seeks to obfuscate and it was not in the interests of justice to permit an employer to refuse to pay an applicant’s entitlements as a result of a legitimate confusion as to the identity of the employer. The companies are essentially the same people/directors and it was not subject to a sale or share transfer.

[8] Recoila and Strata were directed to file submissions in opposition to the application. The correspondence was directed to Mr Michael Pawson who is a director of both Recoila and Strata.

[9] ReCoila filed submissions in opposition to the application. Strata did not file any submissions. However, for the purpose of this decision I will take the submissions as having been made by both entities.

[10] Recoila submitted that regard should be had to the decision of Commissioner Williams in Djula v Centurian Transport Company. 1 However that decision was subject to an appeal and the decision was quashed. The Full Bench held that “in reaching a finding that s.586 did not provide the power to amend the application in the manner sought the Commissioner was in error.”2

[11] The Full Bench said that “an applicant for such an amendment will need to call evidence sufficient to persuade the Commission that it clearly weighs in favour of the grant of the amendment sought.” 3

[12] Recoila submitted that this is not merely a change of name but the commencement of a completely different proceeding against a different entity. Mr Pawson accepted that he was a director of both companies but Recoila and Strata are separate legal entities witch different shareholders and financial capital structure.

[13] Recoila submitted that Mr Schwenke had a written contract of employment with Strata and was an employee of Strata until his employment was terminated. It says that Mr Schwenke was provided with a copy of his contract of employment. Mr Schwenke was never offered employment with Recoila. Each pay slip was issued by Strata and had Strata’s name on the payslip. Mr Schwenke’s wages were paid by Strata.

[14] In early 2015 Recoila was formed and Strata sold some but not all of its assets and business to Recoila. Mr Pawson said he told staff, including Mr Schwenke of the sale agreement prior to settlement.

[15] Mr Pawson said that he discussed this personally with Mr Schwenke and never told him that he would be employed by Recoila when his employment was with Strata. Recoila submitted that the email relied upon by Mr Schwenke was sent to customers and did not address employment contracts. Further, while it stated that there would be no change to the management team Mr Schwenke was not part of the management team.

[16] Recoila submitted that Mr Schwenke knew when he commenced proceedings that Strata had sold its assets and business and would cease trading. He was also aware that Recoila had purchased the business and was trading and had more assets that the Respondent. 4 It submitted that this application is a cynical attempt to access the deep pockets of Recoila and avoid evidence from Strata about his poor performance.

[17] Recoila submitted that Mr Schwenke was represented by a lawyer from the commencement of the proceedings and that it was impossible for Recoila to be Mr Schwenke’s employer as it was only incorporated on 19 June 2015. No latitude should be afforded a represented applicant.

[18] Recoila submitted that Mr Schwenke was attempting to circumvent the statutory requirements in particular the 21 day time limit for lodging applications. It further submitted that the application had no merit.

[19] Mr Schwenke relied upon S.64 of the Civil Procedure Act 2005 (NSW) in relation to amending proceedings. There was no explanation as to the relevance of this legislation to a proceeding before the Fair Work Commission.

[20] Mr Schwenke submitted that in February 2015 he asked for a copy of his signed employment agreement and he was only given a blank copy.

[21] Mr Schwenke submitted that his employment ended on 3 July 2015 not 30 June 2015 as alleged by Recoila. Mr Schwenke relies on an undated email to support this claim. It was submitted that for a minimum of two days he was employed under Recoila’s name used Recoila’s assets; managed Recoila’s clients; and represented to the clients that he was from Recoila.

[22] Mr Schwenke submitted that no one was offered a contract with Recoila prior to his termination and he said he was not aware of the sale or advised of any employment changes.

[23] Mr Schwenke submitted that the payslip relied upon by Mr Pawson was misleading as the pay date says 30/6/2015 when his termination date was 3 July 2015 and this is when the monies were paid into his account.

[24] Mr Schwenke accepts that he is seeking monies owed but denies any ulterior purpose in lodging his unfair dismissal application. Mr Schwenke submitted that his true position was that of Business Development Manager and he was not originally employed as a sales representative but as an Account Manager.

[25] Mr Schwenke submitted that this is a simple application to substitute the Respondent.

Consideration.

[26] The power to order the change of name of the Respondent to a proceeding is discretionary. There was nothing put in the submissions of the Respondent that Strata would suffer any prejudice if the name of the Respondent was altered. Further, it is clear that Strata have been on notice, through its director Mr Pawson, since the application was first filed that Mr Schwenke alleged his dismissal was unfair.

[27] Irrespective of the date on which Mr Schwenke was terminated it is clear that he was not offered and he did not accept employment with Recoila. He was offered and accepted employment with Strata. While he sought a copy of his contract in February 2015 there was no issue at this time about the identity of his employer. His payslips were issued in Strata’s name. His letter of termination came from Strata.

[28] His superannuation was said to come from Recoila but that does not support Mr Schwenke’s claim that there was any confusion about his employer because the majority of those payments were made before Recoila was incorporated in June 2015 and Recoila was the business name used by Strata.

[29] In T De Silva-McKay v EQ Life Pty Ltd  5 Senior Deputy President Watson held that s.586 of the Fair Work Act 2009 (the Act) provides a power for the Commission to amend the name of the Respondent.6 His Honour exercised his discretion to allow the amendment because there had been a transfer of business to Equal Media Pty Ltd and the termination of Ms De Silva by EQ Life Pty Ltd came about informally, was not documented and was inconsistent with her contract of employment which required written notice of termination of her employment. She performed the same work under the same conditions for both employers and her termination letter referred to her employment with both entities. In addition there was a clear commercial relationship between both businesses and Equal Media Pty Ltd knew of the application as its representative gave evidence in the hearing.

[30] In Ms Kataryzna Wybranski v Telstra (Contracted by Regent Recruitment)  7 Commissioner Roe permitted the name of the respondent to be amended. He held that:

“[24] Taken as a whole, the circumstances and the material before me amply demonstrate that the Applicant was seeking to make an unfair dismissal Application against her employer and that she had a reasonably based belief that there was a hybrid employment situation involving Telstra and the labour hire firm Regent Recruitment. I accept that the identification she used “Telstra (Contracted by Regent Recruitment)” was intended to identify that Regent Recruitment had hired the Applicant and that she had worked under an arrangement with and for Telstra.

[25] Telstra is not and never was the Respondent. The Applicant simply failed to accurately specify the Respondent and put in a hybrid name.” 8

[31] In Djula v Centurian Transport Co Pty Ltd 9 (Centurian) the Full Bench allowed the amendment finding that:

“[19] Although Centurion was Mr Djula’s employer when he was first engaged, at the time he was dismissed his employer was CFC Consolidated. We note that a copy of some PAYE payment summaries were in evidence and the earliest is dated 6 July 2010. It records the “Payer’s name” as “CFC Employment Trust.” It contains no reference to CFC Consolidated.

[20] ASIC records showed that Centurion and CFC Consolidated have a common director, Mr Marco Cardaci, the same registered office address and the same principal place of business address. The two companies have separate management and operational structures. Centurion operates in the north west of Western Australia and the Perth metropolitan area and CFC Consolidated operates across the country in a range of different interests.” 10

[32] In that matter Centurion had filed an employer response and had not suggested it was not Mr Djula’s employer.

[33] It found the facts those weighed in favour of permitting the proposed amendments.

[34] In all these cases there was genuine confusion as to the identity of the employer. In two of the cases there had been a transfer of employment and the applicants in both cases had identified their original employer on the application form.

Weighing against the exercise of my discretion in this matter is that:

[35] Mr Schwenke submitted that he was never offered employment with Recoila.

[36] Mr Schwenke’s payslips, termination letter, and other documents were signed by Mr Pawson as director of Strata. There is no evidence on which I could find that Mr Schwenke transferred to Recoila. In fact by making this application Mr Schwenke has accepted that this did not occur. I do not understand how Mr Schwenke or his legal representative made this error when all the documents they attached to Mr Schwenke’s application identify Strata as the employer.

Weighing in favour of the exercise of my discretion in this matter are;

[37] Mr Schwenke did not name Recoila International Pty Ltd on his application form but Recoila International. The identification of Recoila International Pty ltd was made by the Commission.

[38] Mr Schwenke continued to perform work in the name of Recoila International after it took over the business albeit for a very short period of time.

[39] Strata have been on notice since the application was lodged that Mr Schwenke disputed his dismissal. Mr Schwenke was dismissed on 3 July 2015. He lodged his application 15 July 2015.

[40] There is no submission that Strata would suffer any prejudice if this matter were to proceed.
[41] While I consider this case fairly evenly balanced I am prepared to exercise my discretion to permit Mr Schwenke to amend the name of the Respondent. An order to that effect will be issued. The application will be referred to arbitration.

DEPUTY PRESIDENT

 1   [2015] FWC 790

 2   [2015] FWCFB 2371 at [30]

 3   Ibid at [31]

 4   The use of the term Respondent in this case must be Strata

 5   [2013] FWC 9203

 6   Ibid at [10]

 7   [2012] FWA 2566

 8   Ibid at [24]-[25]

 9   [2015] FWCFB 2371

 10   Ibid at [19]-[20]

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