Sheryl Quartermaine v Carnarvon Medical Service Aboriginal Corporation

[2020] FWC 341

[2020] FWC 341

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394—Unfair dismissal

Sheryl Quartermaine
v
Carnarvon Medical Service Aboriginal Corporation
(U2019/11128)

DEPUTY PRESIDENT BEAUMONT PERTH, 31 JANUARY 2020

Application for an unfair dismissal remedy - Interlocutory - Disagreement over who has authority to speak on behalf of the Respondent.

[1] On 2 October 2019, Ms Quartermaine lodged an application pursuant to s 394 of the Fair Work Act 2009 (the Act) alleging she had been unfairly dismissed by Carnarvon Medical Service Aboriginal Corporation (CMSAC). The matter was listed for a directions hearing on 2 December 2019. However, leading up to the directions hearing it was evident that a vehement disagreement existed between CMSAC and the Geraldton Regional Aboriginal Medical Service (GRAMS) about which organisation had authority to speak on behalf of CMSAC in the proceedings.

[2] Ms Quartermaine was informed around mid-September 2019 that her position of HACC Program Manager was redundant and whilst the redeployment opportunities she had suggested had been considered, there were not any positions, and as a consequence she was dismissed with notice.

[3] However, in the correspondence provided to Chambers from Ms Oakley, Secretary and Director of CMSAC, it appeared from the CMSAC Board Meeting Minutes that the CMSAC Board had, as of 30 October 2019, decided Ms Quartermaine had been discriminated against and treated unfairly by its organisation(30 October Board Minutes). 1 The 30 October Board Minutes set out that the Board had agreed for Ms Oakley to contact and notify the ‘Industrial Commission’ that nobody was to represent CMSAC in this matter and Ms Quartermaine was to be reinstated to her position as the ‘HACC Co-ordinator’ with CMSAC.

[4] However, representatives of GRAMS, namely Mr Cook, and Mr Chibale, GRAMS HR Advisor, did not agree that Ms Oakley had authority to speak on behalf of CMSAC. It should be said at this juncture that GRAMS had been undertaking the financial and administrative management of CMSAC since 1 January 2019. By letter of 27 November 2019 to Mr Davies, GRAMS Board Chairperson, the legal representative for CMSAC acknowledged it had to hand an open letter from GRAMS in which it was asserted ‘GRAMS Board through its Chief Executive Officer has authorise[d] Mr Davies Chibale and Mr Les Cook to follow through matter U2019/1128 and any related matters thereof; [sic] on behalf of Respondent CMSAC’.

[5] In its letter of response to Mr Davies of 5 December 2019, the legal representatives for CMSAC stated:

No one is entitled to speak on behalf of CMSAC except the board of CMSAC and people authorised by the board of CMSAC to do so. We confirm that GRAMS is not and never has been authorised to speak on behalf of CMSAC. Further, any alleged authorisation on which GRAMS may seek to rely is hereby revoked.

[6] While Ms Quartermaine, CMSAC and GRAMS have indicated an interest in participating in a conciliation conference before the matter proceeds to arbitration – understandably such course is fraught with difficulty when confusion reigns as to whom has authority to speak on behalf of the Respondent employer. It must be said that there is at least consensus that CMSAC is the employer.

[7] The parties, including both CMSAC and GRAMS, have, for the purpose of this matter, asked that the Commission determine who has authority to speak on behalf of CMSAC. All were content to have the matter determined on the papers, and given the matter is unable to proceed as it currently stands, the course requested was taken.

Background and the case for GRAMS

[8] According to GRAMS, CMSAC is an Aboriginal Community Controlled Health Service. 2 Established in 1986, it provides health and medical services to Aboriginal people living in Carnarvon and the surrounding areas.3 It is entirely reliant on government funding.4

[9] CMSAC purports that it is an Aboriginal and Torres Strait Islander Corporation (Aboriginal Corporation) registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Aboriginal Corporations Act). 5 Attached to the affidavit of CMSAC’s legal representative, Mr Matthew Keating, was an extract from the Office of the Registrar of Indigenous Corporations (ORIC) that stated that CMSAC was registered with ORIC, and that Ms Oakley was a Director and Secretary of CMSAC.6

[10] GRAMS submit that around 2014, the Commonwealth Department of Health (Department) notified CMSAC of its intention to terminate CMSAC’s operations due to its inability to properly perform its function. 7 According to GRAMS the Department provided CMSAC with the alternative option of having another organisation act as its administrators.8

[11] In or around July 2015, for a period of approximately three years, the Aboriginal Health Council of Western Australia (AHCWA) took over the complete control and management of CMSAC. 9 It is GRAMS’s position that it was approached by the Department to take over CMSAC’s administration from AHCWA.10

[12] A board meeting was said to have taken place on 17 July 2018, which was attended by representatives of CMSAC, GRAMS, AHCWA, and the Department. 11 The account GRAMS gives is that at the board meeting it was noted that the AHCWA Board, which had been acting as the administrator of CMSAC, would be transitioned over to GRAMS within six months.12 In GRAMS’s view, it was evident that CMSAC understood that:

a) unless CMSAC transitioned over the ‘contracts, managements [sic] and administration of the service delivery’ to GRAMS, the Department would cease to support the operation; and

b) there was no time limit as to when the arrangement would cease. It would only be handed back to CMSAC if and when the Minister and Department were confident there was capacity within CMSAC’s governance and structure – to do so. 13

[13] The minutes of the board meeting of 17 July 2018 confirm that representatives were present from the Department, AHCWA, CMSAC, GRAMS and the WA Country Health Service (Government of Western Australia). The minutes record that Ms Oakley opened the meeting and thereafter handed over to the AHCWA Chairperson. While the minutes are heavily redacted, part of the minutes read:

…the AHCWA Board hoped to have a transition over to GRAMS within that 6 months, so that become [sic] 1^st January 2019, the contracts are in GRAMS’s name, and not AHCWA’s name. That will mean, AHCWA people have to sit down with GRAMS[‘s] people, and go through the finances, clinical, HR , contracts etc sooner rather than later. It may mean GRAMS start managing CMSAC within the next 2 months… 14

[14] The minutes of 17 July 2018 thereafter report that the Director of the Department noted that it was the ‘preferred option to keep it Aboriginal community controlled, through GRAMS’s. The Director is purported to have continued:

We will not set a time now, like GRAMS will have it for 6 months or 18 months and then hand back. It will only be handed back, if and when, the Minister and the Department feels confident, that there is capacity within the governance and the structure of CMSAC to take it on. That will require changes to occur with the Rule Book, the Board and governance capacity increased, rules, issues, a whole range of things. Moving to the GRAMS option, the preferred option, to us it will not be short term, it will be for as long as it takes, until everyone is confident that everything has changed, and then one day it may be handed back to the Carnarvon Board. The critical thing now is just to get it moving forward. 15

[15] It is recorded in the minutes of 17 July 2018 that there was a break where the CMSAC ‘[B]oard meet without the others present’. The minutes then stated that at ‘5.15pm – Meeting recommenced. Ms Oakley advised, the Board are happy to proceed with what was discussed today.’ The Board passed a resolution – ‘Resolution: 17072018/01 The CMSAC Board unanimously agree to support GRAMS’s proposition to take on management and financial control of CMSAC. CARRIED – ALL IN FAVOUR’. 16

[16] A further CMSAC board meeting was held on 12 November 2018. 17 In that meeting the board was advised about the content of the deed that would reduce in writing the agreement between CMSAC and GRAMS.18 The minutes stated ‘[R]esolution 13112018/01 The CMSAC Board resolved to accept and endorse the transition deed prepared on behalf of AHCWA, GRAMS and CMSAC by Gilbert and Tobin as tabled…. All-in-Favour CARRIED’.

[17] GRAMS reports that in or around November 2018, CMSAC, GRAMS and AHCWA entered into a ‘Transition Deed’ that transferred the services previously provided by AHCWA to CMSAC over to GRAMS (Transition Deed). The ‘Background’ part of the Transition Deed stated:

A AHCWA currently provides the Services to CMSAC and manages certain CMSA-related government funding streams.

B The parties wish to transfer the responsibility (and associated funding) for providing the Services from AHCWA to GRAMS.

D Various State and Commonwealth Government entities have agreed to the transition of Service provision from AHCWA to GRAMS and for the associated funding streams to be directed by AHCWA to GRAMS, for GRAMS to administer.

[18] The Transition Deed set out, amongst other matters, that:

2.1 Transfer

(a) The parties agree to use all reasonable endeavours to transfer the Services, the Records and any associated Transferring Contracts from AHCWA to GRAMS as soon as possible after the Commencement Date and in any event no later than the Transition End Date, and GRAMS agrees to accept the transfer (Transfer)….

(b) CMSAC agrees and acknowledges that:

…

(ii) it will not contact AHCWA in relation to the Services, the Records or any Transferring Contracts after the Transition End Date, and will instead address all such queries to GRAMS…

(e) The parties agree that the way GRAMS chooses to deliver the Services to CMSAC may differ from the way AHCWA delivers the Services and that such arrangements are to be agreed between GRAMS and CMSAC under a separate agreement. ACHWA is not responsible or liable for the arrangements between GRAMS and CMSAC or for the performance of either CMSAC or GRAMS in connection with that arrangement…. 19

[19] The word ‘Services’ was defined in the Transition Deed as:

…the funding administration and management services provided to CMSAC to ensure its service continues to operate and provide culturally appropriate primary healthcare services to Carnarvon/Gascoyne community, including provision of assistance in relation to CMSAC’s executive management function, clinical governance, human resource and finance support and governance compliance. 20

[20] Attached to GRAMS’s submission was an email dated 12 December 2019 from Mr Tunney, Director of Community Grants Hub, Western Australian State Office, Department of Social Services, to Mr Sandy Davies, GRAMS Chairperson; Mr Cook, Director CMSAC; and a Ms Woods. The email stated:

… As discussed yesterday, this email confirms that no Commonwealth Department of Health primary health care funding or Medicare generated funds can be used to pay sitting fees to the CMSAC Board. This is because:

•  From 1 January 2019, the Department will have a Funding Agreement in place with the GRAMS Board, not the CMSAC Board.

•  The GRAMS Board has total responsibility for the funding and administration of CMSAC. As such, the Department will have a funding relationship with the GRAMS Board and not the CMSAC Board with regards discussing health service issues regarding the CMSAC service.

•  The CMSAC Board has no responsibility with regards the operations or decision-making of the CMSAC service.

•  The CMSAC Board may still have to meet to fulfil their obligations under ORIC and their Rule Book as an Aboriginal Corporation, but it will not involve meeting to discuss the health service.

Basically, as the CMSAC Board has no responsibility for or say over the running of the CMSAC health service, as it is now under GRAMS, no Commonwealth Health funding should be paid to them in sitting fees / travel or any other costs they my [sic] believe they are entitled to.  21

[21] GRAMS submitted that it took control over CMSAC’s business as ‘administrators’ on 1 January 2019. It says that since that date it has assumed total control for CMSAC, including receipt of all funding, operation of ‘Services’, payment of all expenses (including staff wages), and human resources. 22

The case for CMSAC

[22] It is CMSAC’s view that in light of s 274.1(2) of the Aboriginal Corporations Act its directors may exercise all the powers of the corporation except any powers that the Aboriginal Corporations Act or its constitution requires the corporation to exercise in a general meeting. CMSAC therefore submits that its directors have the power to speak on its behalf and the GRAMS’s officers may only do so at the pleasure of CMSAC’s directors.

[23] CMSAC contends that GRAMS’s Officers have adopted a position that they are acting as administrators of CMSAC and have relied upon three documents to support their position, whilst not expressly identifying the legal basis by which the documents are said to have effect. According to CMSAC there are specific bases by which a company may be placed in administration as set in the Corporations Act 2001, which are not satisfied in this case. 23

[24] There is, according to CMSAC, no dispute that GRAMS was engaged by CMSAC to providing ‘funding administration and management services’ on a day to day basis. However, CMSAC contends that there is nothing in the Services Agreement (i.e. the Transition Deed), that shifted the powers or responsibilities from CMSAC directors to the directors of GRAMS. Such an outcome, would, in CMSAC’s view, be contrary to both the Aboriginal Corporations Act and CMSAC’s Constitution. 24 Further, said CMSAC, the Transition Deed expressly provided at cl 9.7(b) that nothing allows GRAMS to bind CMSAC. Therefore, GRAMS undertakes functions subject to the supervision and authority of CMSAC.

[25] With respect to the resolution set out in the minutes of the board meeting of 17 July 2018, outlining that GRAMS take on the day to day management and financial responsibilities of CMSAC, CMSAC submitted that the resolution:

a) did not purport to relinquish ultimate control of CMSAC;

b) would be invalid if it did purport to relinquish ultimate control, as it would be contrary to CMSAC’s Constitution;

c) was an internal resolution of CMSAC’s board, therefore it could not be enforced by GRAMS irrespective of the meaning of its words (and noting that it clearly was not a resolution of the type prescribed in s 236A of the Corporations Act 2001 in substance or in form); and

d) did not contain any words to the effect that it was irrevocable – and if CMSAC ever granted ultimate control to GRAMS (which CMSAC denies for the reasons thus far cited), the grant would have been revoked by no later than 5 December 2019.

[26] To support its contention regarding the revocation of the resolution ‘by no later than 5 December 2019’, CMSAC referred to the letter sent by its legal representatives of 5 December 2019 to Mr Davies, in which it was stated ‘…an alleged authorisation on which GRAMS may seek to rely is hereby revoked’.

Consideration

[27] Central to the dispute before me is whether GRAMS has authority to speak on behalf of CMSAC concerning the proceedings on foot. It would appear both CMSAC and GRAMS agree that the Transition Deed embodies the agreement between them concerning the provision of Services. There is no evidence of a collateral contract. However, essentially there are divergent views whether the scope of the Services extends to GRAMS making managerial decisions – such as the decision to dismiss an employee or provide instruction in legal proceedings.

[28] When it comes to interpreting the terms of a commercial contract, it is uncontroversial that the meaning of those terms is to be determined by what a reasonable businessperson would have understood those terms to mean. As the High Court stated in its decision of Electricity Generation Corporation (trading as Verve Energy) v Woodside Energy Ltd, 25 ‘appreciation of the commercial purpose or objects is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”’ (footnote omitted).26 In short – not only will the language used ‘require consideration’ but so too will the surrounding circumstances and the commercial purpose or objects’.27

[29] GRAMS reports that in or around November 2018, CMSAC, GRAMS and AHCWA entered into the Transition Deed that transferred the services previously provided by AHCWA to CMSAC over to GRAMS.

[30] Section 274-10 of the Aboriginal Corporations Act sets out that unless an Aboriginal Corporation’s constitution provides otherwise, the directors of an Aboriginal Corporation may by resolution delegate any of their powers to ‘any other person’. The phrase appears to be of broad import. The Acts Interpretation Act 1901 makes it clear that the word ‘person’ includes an individual, body politic, or more importantly here – a body corporate as well. Aboriginal Corporations are explicitly included in the meaning of ‘corporation’ at s 57A(3) of the Corporations Act 2001.

[31] Similarly, the CMSAC Constitution at cl 7.17 sets out at paragraph (a):

Directors may, by a vote of the majority of Directors and subject to relevant laws and legislation, delegate their powers to:

(i) Another Director; or

(ii) A committee consisting of at least one Director; or

(iii) An employee of the Corporation; or

(iv) Any other person.

[32] I seen no reason to ascribe to the word ‘person’ in cl 7.17 of the CMSAC Constitution a meaning divergent to that provided for on reading the Acts Interpretation Act 1901, Aboriginal Corporations Act and the Corporations Act 2001. This is particularly the case when cl 7.17 of the CMSAC Constitution reflects in substance s 274-10 of the Aboriginal Corporations Act, and the delegation power in the Aboriginal Corporations Act is not a replaceable rule.

[33] Clause 7.17(b) of the CMSAC Constitution prescribes that the delegate must exercise the powers delegated in accordance with any directions of the Directors, and at clause 7.17(c) there is clarification that the exercise of a power by a delegate is as effective as if the Directors had exercised it.

[34] Similar to the Aboriginal Corporations Act the CMSAC Constitution includes a clause specifying the requirements for the execution of documents. In the absence of a common seal CMSAC may execute a document if the document is signed by two directors. 28 CMSAC may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with cl 9.3(a) or (b) (two directors signing or common seal respectively).

[35] The evidence before me includes the minutes of the CMSAC board meeting of 17 July 2018, which show that the CMSAC board passed ‘Resolution: 17072018/01 The CMSAC Board unanimously agree to support GRAMS’s proposition to take on management and financial control of CMSAC’. 29 There was no evidence to indicate that there were inaccuracies with the minutes, and it appeared that a majority of CMSAC board members accepted the passing of the resolution, and thereafter Resolution 17072018/01 was acted upon as evinced by the preparation of the Transition Deed.

[36] CMSAC has remonstrated about the enforceability of the resolution of 17 July 2019. The CMSAC Constitution sets out requirements specific to ‘resolutions’. Clause 7.24 provides:

(a) Unless otherwise specified in this Constitution or by law, a resolution of the Directors must be passed by a majority of the votes cast by Directors entitled to vote on the resolution.

(b) The chairperson shall have a casting vote if necessary in addition to any vote they have as a Director.

(c) The Directors may pass a resolution without a Directors’ meeting being held if all the Directors entitled to vote on the resolution sign a statement that they are in favour of the resolution set out in the document.

(d) Separate copies of a document under clause 7.24(c) may be used for signing by Directors if the wording of the resolution and statement is identical in each copy.

(e) A resolution under clause 7.24(c) is passed when the last Director signs.

With respect to Resolution: 17072018/01 and the Resolution passed on 12 November 2018, whereby the CMSAC resolved to accept and endorse the Transition Deed prepared on behalf of AHCWA, GRAMS and CMSAC by Gilbert and Tobin, neither party adduced evidence to show that at the time the resolutions were passed, the Transition Deed prepared, or on execution of the Transition Deed that there was any issue regarding the substance, form, or enforceability of the Resolutions.

[37] In any event, cl 5 of the Transition Deed provided that each party represented and warranted that it had full power and authority to enter into and perform its obligations under the Transition Deed, and had taken all necessary action to authorise the signing, delivery and performance of the Transition Deed in accordance with its terms. The Transition Deed was stamped with the CMSAC’s Common Seal and appears to have been signed by two directors of CMSAC. I have therefore concluded that there appears to be no issue regarding the enforceability of the Transition Deed.

[38] The Transition Deed sets out the agreement between the parties to the Transition Deed in respect to GRAMS providing the Services. Clause 2.1(a) obliges the parties to the Transition Deed to use ‘all reasonable endeavours to transfer the Services, Records and any associated Transferring Contracts from AHCWA to GRAMS as soon as possible after the Commencement date…and GRAMS agrees to accept the transfer’. Subsequent clauses speak to the way GRAMS will deliver the Services 30 and the standard of the Services. With respect to the way that GRAMS chooses to deliver the Services to CMSAC, if it differs to the way AHCWA delivered the Services then there was to be a separate agreement.31 No separate agreement was tendered into evidence.

[39] The word ‘Services’ is defined in the Transition Deed as:

…the funding administration and management services provided to CMSAC to ensure its service continues to operate and provide culturally appropriate primary healthcare services to Carnarvon/Gascoyne community, including provision of assistance in relation to CMSAC’s executive management function, clinical governance, human resource and finance support and governance compliance. 32

[40] Primarily it can be seen that the ‘Services’ are the funding administration and management services provided to CMSAC. The definition does not expressly illuminate who is authorised to make executive or managerial decisions on behalf of CMSAC. However, the provision of the services is to occur to ‘ensure’ CMSAC services continue to operate. When one considers the Transition Deed as a whole, the obligation to provide the Services clearly rests upon GRAMS and they are to provide such Services at a specified standard. Yet, while the remainder of the definition of ‘Services’ speaks to providing ‘assistance’ it is difficult to reconcile this word ‘assistance’ – denoting ‘to give support, help or aid to in some undertaking or effort’, 33 with GRAMS’s obligation to provide funding and managements services to CMSAC to ensure CMSAC’s continuation of service to its local community. The question arises: how is GRAMS to ensure this occurs if it is absent the authority to make managerial decisions?

[41] To understand what is meant by the definition of ‘Services’ in the Transition Deed, it is important to consider the broader context of surrounding circumstances and the commercial purpose or objects of the Transition Deed.

[42] The evidence shows that CMSAC were in a somewhat dire predicament regarding ongoing viability. The Chairperson of GRAMS had clearly delineated a pertinent issue at the CMSAC board meeting of 17 July 2018, concerning the overreach of Boards. Mr Davies, Chairperson of GRAMS, is quoted as having said ‘[T]he majority of Aboriginal organisations is [sic] this country that have failed, it’s because Boards don’t only want to be Boards, they want to run the organisation as well. It is not our responsibility to run the organisation, we set the policies, structures, and put all those things in place, and that is why we pay CEO’s and finance and HR people, to run the organisation’. 34 It was put to the CMSAC Board that it was required to make a decision around whether it was to transition over to GRAMS the contracts, management and administration of the service delivery. It was at that same CMSAC board meeting of 17 July 2018, that the CMSAC Board resolve to support GRAMS’s proposition to take on management and financial control of CMSAC.

[43] I consider it unnecessary to labour the point further. Having appreciated the commercial purpose or objects concerning the relationship between GRAMS and CMSAC, and having reflected on the genesis of the Transition Deed, the background, and the specific circumstances in which CMSAC and GRAMS are operating, I have concluded that in respect to this matter GRAMS has the authority to speak on behalf of CMSAC. It does so on the basis that an agreement is in place between GRAMS and CMSAC regarding the provision of ‘Services’. I have concluded that the term ‘Services’ includes the provision of assistance in the realm of managerial and human resources, to the extent that GRAMS has authority to speak on behalf of CMSAC regarding this matter. While the legal representative of CMSAC sought in its letter of 5 December 2019, to revoke any authorisation on which GRAMS relied upon regarding this matter, I consider that ineffectual in light of the Transition Deed, and the Constitution of CMSAC.

[44] Given Ms Quartermaine, CMSAC and GRAMS entrusted this Commission to arrive at a decision for the purpose of this matter, it is expected that the parties will comply with subsequent directions issued. I also observe that while GRAMS has the authority to speak on behalf of the CMSAC concerning this matter, it is not the case that a representative of CMSAC is unable to be present for the purpose of subsequent conferences or a hearing.

DEPUTY PRESIDENT

On the papers

Printed by authority of the Commonwealth Government Printer

<PR716099>

 1   CMSAC Board Meeting Minutes Wednesday 30 October 2019.

 2 GRAMS’s Outline of Submissions [5].

 3 Ibid [5].

 4 Ibid [5].

 5 CMSAC’s Outline of Submissions [3].

 6   Affidavit of Matthew James Keating sworn 13 December 2019 (Keating Affidavit) [1] – [2] Annexure MJK1.

 7 GRAMS’s Outline of Submissions [6].

 8 Ibid [6].

 9 Ibid [7].

 10 Ibid [8].

 11 Ibid [9].

 12 Ibid [9].

 13   Ibid [9(a) an (b)].

 14   Ibid [10], Attachment 1.

 15   Ibid [10], Attachment 1.

 16   Ibid [10], Attachment 1.

 17 Ibid [12].

 18   Ibid [12] (a) – (h).

 19   Ibid [11], Attachment 2.

 20   Ibid [11], Attachment 2.

 21   Ibid [14], Attachment 4.

 22 Ibid [18].

 23 By force of s 521.5 of the Aboriginal Corporations Act, provisions of the Corporations Act 2001 are adopted in respect of ‘administration’.

 24 CMSAC’s Outline of Submissions [10].

 25 [2014] HCA 7.

 26 Ibid [35].

 27   Stratton Finance Pty Limited v Webb [2014] FCAFC 110; Mainteck Services Pty Ltd v Stein Heurtey SA[2014] NSWCA 184; The Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited[2014] FWCFB 7447 [29].

 28   CMSAC Constitution cl 9.3(b).

 29   GRAMS’s Outline of Submissions [10], Attachment 1.

 30   Transition Deed, clause 2.1(e).

 31   Ibid, clause 2.1(e).

 32   GRAMS’s Outline of Submissions [11], Attachment 2.

 33   Macquarie Dictionary (online ed, at 30 January 2020) ‘assist’.

 34   CMSAC / AHCWA / GRAMS Board Meeting Minutes 17 July 2018.