Fair Work Commission|2023-10-27

Lydon McKay v Blend and Pack Pty Ltd [2023] FWC 2751 (27 October 2023)

s.394 - Unfair dismissal

Application for an unfair dismissal remedy - extension of time - extension of time not granted.

[1] Mr Lydon McKay (the Applicant/Mr McKay) has made an application to the Fair Work Commission (the Commission) for an unfair dismissal remedy under s 394 of the Fair Work Act 2009 (the Act) in relation to the termination of his employment by Blend and Pack Pty Ltd (under external administration).

[2] The application was filed by a paid agent, Mr Brian Newman of 1800Advocates Pty Ltd, and dated 12 September 2023. The Commission's record indicates that the application was lodged by email on 18 September 2023.

[3] Before determining whether the dismissal was unfair, the Commission must be satisfied that an application was made within time or allow a further period of time under s 394.

[4] The application form F2 discloses in response to question 1.4 of that form that the dismissal took effect on 23 August 2023. For reasons detailed further in this decision, this was not the date the dismissal took effect.

[5] The Applicant's evidence and documentation revealed that the Applicant's employment was terminated by email notification on 1 May 2023, with the end date of 31 May 2023. If this date is taken to be the date that the dismissal took effect, then the statutory period of 21 days ended at midnight on 21 June 2023, and the application lodged by email with the Commission on 18 September 2023 was 89 days after the end of the statutory period.

[6] There is the further possibility that the Applicant's employment continued for a short period of time after 31 May 2023. The Applicant's evidence is that he last worked for the Respondent on 9 June 2023. If this date is taken to be the date that the dismissal took effect, then the statutory period of 21 days ended at midnight on 30 June 2023, and the application lodged on 18 September 2023 was 80 days after the end of the statutory period.

[7] Having considered the evidence and submissions of the parties, and the factors in s 394(3) of the Act, I am not satisfied that there are exceptional circumstances to allow a further period for the application to be made. Therefore, the application is dismissed. My detailed reasons follow.

[8] The Applicant commenced full-time employment as Quality Manager with the Respondent on 15 April 2018.

[9] On 1 May 2023, the Applicant was notified by email that the Respondent was terminating his employment with one month's notice and the last date of employment would be 31 May 2023. The notice was provided within the body of an email sent at 1:03pm and also attached a letter of termination in similar, but not exact, terms. The email indicated that the Applicant was on garden leave from 2 May 2023 but may be required to work by the Board of Directors and that the Applicant was to be reachable for the handover of job duties.[1]

[10] The Applicant challenged the termination by email on 2 May 2023.[2]

[11] On 5 May 2023, the Respondent required the Applicant to return to work but reiterated that the employment ended on 31 May 2023.[3]

[12] On 22 May 2023, the Applicant and Respondent exchanged emails. The Respondent offered to extend the Applicant's notice period until 30 June 2023 or withdraw the termination of the Applicant's employment. Ultimately, the Applicant rejected the Respondent's suggestions.[4]

[13] After this date, the Applicant and the Respondent entered into without prejudice discussions. The without prejudice correspondence was submitted to the Commission as evidence.[5]

[14] The result of the correspondence was that the Applicant continued to work for a short further period of time. The Applicant's evidence is that he last worked for the Respondent on 9 June 2023.[6]

[15] On 18 September 2023, the Commission received a Form F2 - application for unfair dismissal remedy dated 12 September 2023 and filed on behalf of Mr McKay by paid agent, Mr Brian Newman of 1800Advocates Pty Ltd.

[16] On 4 October 2023, Worrells Solvency and Forensic Accountants (Worrells) wrote to my chambers to inform us that Con Kokkinos and Nathan Deppler were appointed as Voluntary Administrators of the Company on 3 October 2023. Worrells provided Letters of Appointment and referred to s 440D of the Corporations Act 2001 regarding the impact upon civil proceedings.

[17] The above correspondence stated that:

I note that pursuant to Section 440D of the Corporations Act 2001 ("the Act"), after the passing of the resolution for the voluntary administration, no action or other civil proceeding is to be proceeded with or commenced against the Company except by leave of the Court and subject to such terms as the Court imposes. Accordingly, the proceedings are stayed by virtue of Section 440D of the Act against the company unless and until the applicants obtain the leave of the Court to proceed with the action. I have notified the applicants of this position accordingly.

[18] The correspondence did not correctly reference the Corporations Act. Section 440D of the Corporations Act provides:

(1) During the administration of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with, except:

(a) with the administrator's written consent; or

(b) with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

[19] The relevant provisions in the Corporations Act providing that no actions or other civil proceeding is to be proceeded with or commenced against the Company except by leave of the Court is contained within s 500(2) of the Corporations Act, which provides:

(2) After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.

[20] The advice of Worrells clearly indicated that they were appointed as Voluntary Administrators. They also included a Form 505 'External Administration or Controllership; Appointment of an administrator or controller.' There was no information relating to a resolution of voluntary winding up.

[21] My chambers corresponded with Worrells referring to the Unfair Dismissals Bench Book in relation to this matter as follows:

Thank you for your email. I direct you to the following paragraph, available on our website here:

"The Commission is not a 'Court' and therefore the stay prescribed in s.440D of the Corporations Act does not stop an employee from making or proceeding with an application for unfair dismissal.[6] The Member hearing a matter has a discretion as to whether that application will proceed for determination or be adjourned.[7]"

Commissioner Tran will continue with the mention listed for this afternoon. I attach the Notice of Listing, should you wish to attend.

[22] On 19 October 2023 (the date of the hearing), I also performed company searches via publicly available search engines ASIC Connect and ASIC Insolvency Notices. I found no information relating to a resolution of voluntary winding. ASIC Insolvency Notices provided a Notice of Appointment of an Administrator which indicated that the appointment was made under s 436A of the Corporations Act. Section 436A provides for a Company to appoint an administrator if the board thinks it is or will become insolvent.

[23] I conclude, therefore, that the Respondent is in administration and s 440D applies.

[24] The Commission is not a 'court' for the purposes of s 440D of the Corporations Act, as determined by the Full Bench of the Australian Industrial Relations Commission (a predecessor to this Commission) in Smith et al v Trollope Silverwood & Beck Pty Ltd (In liquidation)[7] and applied in numerous decisions of this Commission (most recently in the matter of Jean-Louis, Vallery v Mt Eliza Home Services Pty Ltd T/A My Home Residential Cleaning).[8]

[25] Unfair dismissal proceedings are therefore not a proceeding in a court and do not require the written consent of the administrators or leave of the Court under s 440D to continue.

[26] Directions were issued for the filing of materials on 2 October 2023. The Directions required:

the Applicant to file its materials (being outline of argument, statement of evidence and a document list) relating to the extension of time by no later than noon on Monday 9 October 2023

the Respondent to file materials in reply (if any) by noon on Monday 16 October 2023.

[27] A mention was held on 4 October 2023. The Applicant's representative, Mr Brian Newman of 1800 Advocates Pty Ltd, failed to attend, despite requesting (and such request being granted) appearance by telephone earlier that day. My chambers attempted to telephone Mr Newman for the mention but was unable to reach him. The Applicant attended the mention. There was no appearance from the Respondent nor its administrators.

[28] Mr McKay filed materials prior to the hearing.

[29] A hearing was held via Teams on Thursday 19 October 2023. Mr McKay attended and provided further submissions and oral evidence in support of his application.

[30] Mr McKay's representative did not attend, but had earlier corresponded with Chambers providing reasons for his absence.

[31] Neither the Respondent nor their administrators attended the hearing. They did not provide any correspondence to my Chambers other than the earlier referred to correspondence of 4 October 2023.

[32] Some of the evidence produced by Mr McKay included without prejudice correspondence. This was an email dated 2 June 2023 and marked 'without prejudice and strictly confidential', and subsequent correspondence on the same subject matter.[9] Many aspects of that correspondence do squarely come within what is considered without prejudice - that is correspondence entered into for the purpose of resolving anticipated or actual legal proceedings.[10]

[33] As the Respondent was not in attendance at the hearing, it could neither assert nor waive its privilege to the exclusion of that without prejudice correspondence.

[34] I formed a view that the correspondence would assist me in this matter.

[35] I accepted it into evidence for the purpose only of determining whether there were exceptional circumstances including the reason for the delay. I do not have regard to the contents of the correspondence with respect to the question of the merits of the substantive unfair dismissal application.

[36] The application form F2 dated 12 September 2023 and received by the Commission on 18 September 2023 discloses in response to question 1.4 of the form that the dismissal took effect on 23 August 2023. In oral evidence, Mr McKay indicated that the information was incorrect, he had not completed the form and did not recall having seen the form.[11]

[37] The Applicant's evidence and documentation revealed that the Applicant's employment was terminated by email notification on 1 May 2023, with the end date of 31 May 2023.

[38] There is the further possibility that the Applicant's employment continued for a short period of time after 31 May 2023. The Applicant's evidence is he resumed work with the Respondent, doing effectively the same kind of work as prior to 31 May 2023, and that he last worked for the Respondent on 9 June 2023.[12]

[39] I conclude that the date that the Applicant's dismissal took effect was this last day of work on 9 June 2023.

[40] The statutory period of 21 days ended at midnight on 30 June 2023, and the application lodged on 18 September 2023 was 80 days after the end of the statutory period.

[41] Section 394(2) of the Act provides that an application for an unfair dismissal remedy must be made:

(a) within 21 days after the dismissal took effect; or

(b) within such further period as the FWC allows under subsection (3).

[42] Section 394(3) of the Act provides that:

[t]he FWC may allow a further period for the application to be made by a person under subsection (1) if the FWC is satisfied that there are exceptional circumstances, taking into account:

(b) whether the person first became aware of the dismissal after it had taken effect; and

(c) any action taken by the person to dispute the dismissal; and

(d) prejudice to the employer (including prejudice caused by the delay); and

(f) fairness as between the person and other persons in a similar position.

[43] The legislation is clear that the power to extend time is discretionary, but may only be exercised if first satisfied that there are exceptional circumstances.

[44] Exceptional circumstances are not defined in the Act, but the case law as summarised in Nulty v Blue Star Group Pty Ltd [2011] FWAFB 975 at [13] establishes the following:

the Commission must consider all of the circumstances;
the phrase's ordinary meaning means out of the ordinary, or unusual, or special, or uncommon;
but the phrase does not require circumstances to be unique, nor unprecedented, nor even very rare;
a single event can be exceptional;
a combination of factors or events which, individually are not exceptional, but viewed together could be viewed as out of the ordinary, unusual, special, or uncommon;

[45] The matters in s 394(3) are factors to be taken into account in ascertaining whether there are exceptional circumstances. The factors themselves do not have to be exceptional.

[46] The final conclusion about whether there are exceptional circumstances requires a consideration of all the relevant matter, assigning appropriate weight to each: Stogiannidis, Periklis v Victorian Frozen Foods Distributors Pty Ltd T/A Richmond Oysters.[13]

[47] Mr McKay states that the reason for the delay was that he had expected a payment subject to an arrangement entered into after the termination of his employment, and the payment was never made.

[48] In answer to my questions, Mr McKay indicated that he was aware of the 21 day statutory time period around the time that he received notice of the termination of his employment, that is in May 2023. He did not make an application at that time, as he had reached an arrangement with the Respondent. He sought out advice after the Respondent failed to fulfil their part of the arrangement, and instructed his representative, Mr Brian Newman of 1800Advocates Pty Ltd, on 11 September 2023.[14]

[49] In effect, the arrangement reached was a settlement of Mr McKay's potential unfair dismissal application.

[50] I accept that this was a reasonable explanation for the delay, being the settlement reached and Mr McKay's attempts to enforce the settlement: see Murray v Flamestop Corporate Services Pty Limited T/A Flamestop Corporate Services Pty Limited.[15]

394(3)(b) - whether the person first became aware of the dismissal after it had taken effect

[51] Mr McKay first became aware of the dismissal on 1 May 2023 and that it was to take effect on 31 May 2023. He was also aware of and clear about when his last date of work was.

[52] I consider that this factor does not weigh in favour of extending time.

394(3)(c) - any action by the person taken to dispute the dismissal

[53] Mr McKay disputed his dismissal immediately, and prior to it taking effect. He disputed it so successfully, it resulted in the settlement arrangement.

[54] I consider that this factor weighs in favour of extending time.

394(3)(d) - prejudice to the employer (including prejudice caused by the delay)

[55] The Applicant submitted that the application should not impact the Respondent, as they had changed owners and had entered into voluntary administration.

[56] The Respondent did not file materials or attend the hearing.

[57] I consider this factor neutral in my determination of this matter.

[58] Mr McKay's clear and persuasive evidence is that, when he received the email notification of termination of his employment, he was "taken aback" and it was wholly "unanticipated". He had no prior discussions or warnings relating to his performance or any matter that could have resulted in termination of his employment, and no indication that his employment was at risk.[16]

[59] Mr McKay was of the view that there was no reason for the termination of his employment, and if the only information about the termination was the email and its attached letter (which was in substantially the same terms), the email and letter did not disclose any reasons.

[60] As such, the merits of the application are high.

[61] However, following the termination of his employment, Mr McKay challenged it and achieved an arrangement he indicated in his submission was a settlement.

[62] I find that the arrangement was a settlement agreement, taking into account the legal principles of a binding agreement as outlined by a Full Bench of this Commission in Singh v Sydney Trains [17], relevantly being:

intention to be bound must be determined objectively;

conduct of the parties after making the agreement is relevant to determine whether the prior dealings gave rise to a binding contract.

[63] The first two aspects are clear from the email correspondence regarding the settlement arrangement. Indeed, Mr McKay replies to a written offer stating, "Thank you for the email. I accept this offer."[18] Mr McKay was satisfied, at the time of entering into the arrangement, that it dealt with his substantive matter about the termination of his employment.

[64] Mr McKay performed his part of that arrangement. Unfortunately, the Respondent did not perform its part of that arrangement. Correspondence relating to the Respondent's failure to perform its part of that arrangement did not disclose that it did not consider the arrangement binding, but that it was of the view that certain terms had not been met.

[65] It is not for me to determine any rights or obligations under the arrangement. Relevantly for this matter, I conclude that the arrangement was a binding settlement agreement. As a result, the substantive matter relating to the fairness or otherwise of Mr McKay's dismissal was therefore disposed of by way of that settlement agreement: see Azar v Canterbury Surrey Hills Community Finance Limited.[19]

[66] I consider that this factor does not weigh in favour of extending time.

394(3)(f) - fairness as between the person and other persons in a similar situation

[67] This factor relates to fairness between the Applicant and other persons in a similar situation, and is concerned with the consistent application of principles in matters of a similar kind. The Commission may have regard to matters that are currently before the Commission or have been decided in the past: Green v Bilco Group Pty Ltd.[20]

[68] The Applicant did not make any submissions relevant to this factor.

[69] There have been matters before the Commission in which unfair dismissal applications are attempted to be re-agitated after a settlement agreement is reached. To the best of my knowledge, none have been successful. I have also referred to the decided matters of Murray and Azar, above, where extensions of time have been sought for which the delay related to a settlement agreement. Again, those applications have not been successful.

[70] I consider that this factor does not weigh in favour of extending time.

[71] I have much sympathy for the difficult position that Mr McKay finds himself in. Had he been better advised, he may have expended his valuable time and energy to achieve what it is that he is seeking.

[72] I have however formed the view that there were not exceptional circumstances such as to allow me to exercise a discretion to extend time.

[73] I therefore dismiss the Applicant's application for an unfair dismissal remedy.

[1] Email of S Chan dated 1 May 2023 (Exhibit A4).

[2] Email of L McKay dated 2 May 2023 (Exhibit A2).

[3] Email of S Chan dated 5 May 2023 (Exhibit A2).

[4] Email of L McKay dated 23 May 2023 (Exhibit A5).

[5] Email of S Geng dated 2 June 2023 (Exhibit A6) and further correspondence dated 2 June 2023 to 24 August 2023 (Exhibit A8).

[9] Email of S Geng dated 2 June 2023 (Exhibit A6) and further correspondence dated 2 June 2023 to 24 August 2023 (Exhibit A8).

[10] See s 131 Evidence Act 2022 (Cth) and Silver Fox Company Pty Ltd v Lenard's Pty Ltd (No 3) [2004] FCA 1570.

[11] Transcript of Proceedings, PN46-48.

[12] Transcript of Proceedings, PN37-40; PN48.

[15] [2016] FWC 6232 per Bissett C at [27].

[18] Email of S Geng dated 2 June 2023 (Exhibit A6).

[19] [2023] FWC 697 per Bell DP at [48].

[20] [2018] FWC 6818 per Gostencnik DP at [31].

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Lydon McKay v Blend and Pack Pty Ltd [2023] FWC 2751

At a glance

Court

Decision date

Source

Judgment (120 paragraphs)

Lydon McKay v Blend and Pack Pty Ltd [2023] FWC 2751 (27 October 2023)

Parties

Legislation Cited (1)

Cases Cited (1)