1
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:
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DECISION
E AUSTRALIA FairWork Commission
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(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.
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(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.
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[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.
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[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
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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
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[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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