Fair Work Act 2009

s.394 - Application for unfair dismissal remedy

Hopgoods Bus Service P/L T/A Hopgoods Bus Service P/L

Application for an unfair dismissal remedy - jurisdictional issue raised - application out of time - exceptional circumstances - extension of time granted

[1] Mr Bruno Morale has lodged an application under section 394 of the Fair Work Act 2009 (the FW Act) in relation to the termination of his employment with Hopgoods Bus Service Pty Ltd (Hopgoods). Hopgoods operates a private bus service in Mount Gambier, South Australia. It employs less than 15 employees.

[2] Mr Morale is 55 years of age and was employed as a bus driver for approximately 11 years 9 months. He was dismissed in April 2017 for misconduct following a verbal altercation with another bus driver adjacent to a school.

[3] There is a dispute about when the dismissal took effect. Hopgoods say it was on 11 April. Mr Morale says it was 3 April. Based on documentary and oral evidence before me, I make the following findings:

• Mr Morale met his employer Mr Angus Hopgood on 3 April. At the end of that conversation, he was told by Mr Hopgood that his employment would be terminated due to his conduct on 31 March. He was asked to return his keys, which he did. Mr Morale left that meeting believing his employment ceased and he would be paid final entitlements. He did not work again for the company.

• Between 3 April and 11 April Mr Hopgood sought advice on the termination. Mr Hopgood decided to confirm the termination in writing. He drafted and posted a letter to Mr Morale. The letter, dated 11 April, said in part "your employment termination is effective 11 April". The letter was received by Mr Morale on or around 20 April.

• In evidence, Mr Hopgood agreed that he had told Mr Morale on 3 April that he was dismissed. He said that the letter referred to 11 April because he had reviewed the matter in the preceding days and had decided to proceed, and because he wanted to pay Mr Morale entitlements up until 11 April.

[4] In the circumstances, I find that Mr Morale was dismissed on 3 April 2017. Notwithstanding the terms of the letter of 11 April, the dismissal took immediate effect. He was paid until 11 April, together with statutory entitlements.

[5] Mr Morale's application was lodged with the Fair Work Commission (the Commission) on 10 July 2017. That is 98 days after his dismissal took effect. Applications under section 394 of the FW Act must be made within 21 days from the day a dismissal takes effect. The application is 77 days out of time. The merits of Mr Morale's application cannot be heard and determined unless the Commission grants an extension of time. If the merits were to be determined, the issue would be whether the dismissal was consistent with the Small Business Fair Dismissal Code.[1] Hopgood's opposed an extension of time.

[6] On 24 July 2017 my Associate corresponded with both Mr Morale and Hopgoods advising that the extension of time issue would be considered in a telephone hearing on 16 August 2017. Information about an extension of time under the FW Act was provided to the parties. Mr Morale was directed to provide a witness statement and a copy of any document relied upon relevant to the extension of time issue by 7 August. The employer was given an opportunity to file written material in response by 10 August. Materials were received from Mr Morale on 2 August and from Hopgoods on 10 August.

[7] Mr Morale participated in the telephone hearing on 16 August with the assistance of his sister, Ms Alba Kraatz. Hopgoods was represented by Mr Mahoney of the Motor Trade Association of South Australia and its manager Mr Angus Hopgood. A sound file recording of the telephone hearing was made by the Commission.

[8] Two witnesses gave evidence in support of Mr Morale's extension of time application, Mr Morale himself and Ms Kraatz. Mr Hopgood gave evidence for the employer.

[9] I found all witnesses to be honest and reliable within the bounds of their recall. Mr Morale is unwell and was vague on some details. Ms Kraatz, who played an active role in bringing the matter before the Commission, had a good recall. Mr Hogood's evidence, though more restricted in scope, was also clear. Most matters of fact are not in dispute. However, the content of a discussion between Ms Kraatz, Mr Morale, Mr Hopgood and Mr Hopgood's father on 19 April is in dispute. I consider that later in this decision.

[10] The evidence in this matter concerns issues of a deeply personal nature and of profound human sadness. I appreciated the manner in which all parties sought to diligently and respectfully bring forward the evidence and test its veracity.

[11] Mr Morale provided a number of reasons for the delay. In summary they are:

• He was unaware of a right to lodge an application or of a time limit until about 5 days before lodgement;

• He was suffering personal distress (due to news of his daughter's suicide, preparation for her memorial service, being served divorce papers and then news of a brother's death);

• He was suffering anxiety and depression (due to his dismissal, grief and personal circumstances);

• He was medically unfit due to a heart condition and then heart surgery;

• He was dependent on advice, support and action by Ms Kraatz (but she was overseas until 16 April).

[12] Hopgoods opposed the extension of time on the following grounds:

• The delay was extensive;

• The reasons for delay do not explain inactivity during the whole period of delay;

• Mr Morale was capable of seeking legal advice and did so during this period concerning his divorce;

• Mr Morale was provided full reasons for dismissal but did not dispute those reasons;

• Witness evidence at a hearing would be prejudiced by the delay.

[13] This decision about the extension of time issue is reached on the basis of all of the documentary material, submissions and oral evidence placed before me.

[14] Section 394 of the FW Act relevantly states:

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

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

(3) The 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."

[15] Mr Morale's application can only proceed to a full hearing and determination if he can establish that "exceptional circumstances" exist within the meaning of section 394(3). I have considered the provisions of section 394(3) as they apply to this matter in the context of the Full Bench decision in Nulty v Blue Star Group Pty Ltd[2] which stated:

"[10] It is convenient to deal first with the meaning of the expression "exceptional circumstances" in s.366(2). In Cheval Properties Pty Ltd v Smithers a Full Bench of FWA considered the meaning of the expression "exceptional circumstances" in s.394(3) and held:

"[5] The word "exceptional" is relevantly defined in The Macquarie Dictionary as "forming an exception or unusual instance; unusual; extraordinary." We can apprehend no reason for giving the word a meaning other than its ordinary meaning for the purposes of s.394(3) of the FW Act."

[11] Given that s.366(2) is in relevantly identical terms to s.394(3), this statement of principle is equally applicable to s.366(2).

[12] The ordinary meaning of the expression "exceptional circumstances" was considered by Rares J in Ho v Professional Services Review Committee No 295, a case involving in s.106KA of the Health Insurance Act 1973 (Cth). His Honour observed:

"23. I am of opinion that the expression 'exceptional circumstances' requires consideration of all the circumstances. In Griffiths v The Queen [1989] HCA 39; (1989) 167 CLR 372 at 379 Brennan and Dawson JJ considered a statutory provision which entitled either a parole board or a court to specify a shorter non-parole period than that required under another section only if it determined that the circumstances justified that course. They said of the appellant's circumstances:

'Although no one of these factors was exceptional, in combination they may reasonably be regarded as amounting to exceptional circumstances.'

24. Brennan and Dawson JJ held that the failure in that case to evaluate the relevant circumstances in combination was a failure to consider matters which were relevant to the exercise of the discretion under the section (167 CLR at 379). Deane J, (with whom Gaudron and McHugh JJ expressed their concurrence on this point, albeit that they were dissenting) explained that the power under consideration allowed departure from the norm only in the exceptional or special case where the circumstances justified it (167 CLR at 383, 397).

25. And, in Baker v The Queen [2004] HCA 45; (2004) 223 CLR 513 at 573 [173] Callinan J referred with approval to what Lord Bingham of Cornhill CJ had said in R v Kelly (Edward) [1999] UKHL 4; [2000] QB 198 at 208, namely:

'We must construe "exceptional" as an ordinary, familiar English adjective, and not as a term of art. It describes a circumstance which is such as to form an exception, which is out of the ordinary course, or unusual, or special, or uncommon. To be exceptional a circumstance need not be unique, or unprecedented, or very rare; but it cannot be one that is regularly, or routinely, or normally encountered.'

26. Exceptional circumstances within the meaning of s 106KA(2) can include a single exceptional matter, a combination of exceptional factors or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional. Thus, the sun and moon appear in the sky everyday and there is nothing exceptional about seeing them both simultaneously during day time. But an eclipse, whether lunar or solar, is exceptional, even though it can be predicted, because it is outside the usual course of events.

27. It is not correct to construe 'exceptional circumstances' as being only some unexpected occurrence, although frequently it will be. Nor is it correct to construe the plural 'circumstances' as if it were only a singular occurrence, even though it can be a one off situation. The ordinary and natural meaning of 'exceptional circumstances' in s 106KA(2) includes a combination of factors which, when viewed together, may reasonably be seen as producing a situation which is out of the ordinary course, unusual, special or uncommon. And, the section is directed to the circumstances of the actual practitioner, not a hypothetical being, when he or she initiates or renders the services."

[13] In summary, the expression "exceptional circumstances" has its ordinary meaning and requires consideration of all the circumstances. To be exceptional, circumstances must be out of the ordinary course, or unusual, or special, or uncommon but need not be unique, or unprecedented, or very rare. Circumstances will not be exceptional if they are regularly, or routinely, or normally encountered. Exceptional circumstances can include a single exceptional matter, a combination of exceptional factors or a combination of ordinary factors which, although individually of no particular significance, when taken together are seen as exceptional. It is not correct to construe "exceptional circumstances" as being only some unexpected occurrence, although frequently it will be. Nor is it correct to construe the plural "circumstances" as if it were only a singular occurrence, even though it can be a one off situation. The ordinary and natural meaning of "exceptional circumstances" includes a combination of factors which, when viewed together, may reasonably be seen as producing a situation which is out of the ordinary course, unusual, special or uncommon."

[16] I now consider each of the factors set out in section 394(3) of the FW Act.

[17] There are five reasons for delay advanced by Mr Morale. I make the following findings concerning each.

[18] Mr Morale's evidence was that he only became aware of a legal right to challenge his dismissal when a friend mentioned it to him in a casual conversation in early July. He immediately told Ms Kraatz.

[19] Ms Kraatz's evidence was that she then immediately searched for information on-line and found reference to unfair dismissal rights. She believes this was on or about 5 or 6 July. She then went to the "Fair Work Office in Mount Gambier" and was told that she had the wrong place and should make an application to the Fair Work Commission on-line. She was told then that there was a 21 day time limit. She said this was the first she or Mr Morale knew of a time limit. She was provided the Commission's web-site address. She then told Mr Morale about the information she had acquired, including the 21 day requirement. She then accessed the on-line application, assembled the documents needed to complete it, and produced a hard copy application for Mr Morale to sign. He signed it on 10 July. She then lodged it.

[20] I accept this evidence. I find that Mr Morale was not aware of his litigation rights or of the time limit until about 5 July 2017. I find that with the assistance of Ms Kraatz he lodged an application within 5 days of becoming aware.

[21] The Commission does not generally regard the lack of awareness of litigation rights to be a sufficient reason for an extension of time.[3] However, each particular case must be considered on its merits. Mr Morale speaks English, but not well. For reasons mentioned below, he is not in good health. He depends heavily on Ms Kraatz acquiring information and providing advice.

[22] I conclude that this particular reason for delay is a factor that weighs against granting an extension.

[23] Mr Morale's evidence was that on 10 April, a week after his dismissal he learned by a text message from his estranged wife that his 20 year old daughter had recently committed suicide. He also learned in the same text that she had already been cremated and her ashes scattered at sea.

[24] He was shocked and profoundly upset by this news. Although reliant for support and care from his sister Ms Kraatz, she was overseas at the time. He spoke to her by telephone. She advised that she would return on 16 April.

[25] After Ms Kraatz returned to Australia, she and Mr Morale decided to hold a memorial service for his late daughter. This was scheduled for 17 June. Mr Morale and Ms Kraatz said they were preoccupied with their grief and preparing the memorial service until that date.

[26] In late May, Mr Morale was served divorce papers by his estranged wife. Although he had been estranged for some time and had settled some affairs, the divorce papers were unexpected. It exacerbated his personal distress.

[27] Ms Kraatz's evidence was that his grief was compounded in June by news received from an acquaintance that their brother had died in Sicily, Italy in April 2017, and that they had been unaware of his passing until then.

[28] I accept the aforementioned evidence. From at least 10 April, Mr Morale experienced unforeseen and unforeseeable personal circumstances that created deep and compounding distress. I conclude that this particular reason for delay is a factor strongly in favour of granting an extension.

[29] Mr Morale produced a number of medical certificates issued by his treating general practitioner, Dr Michael Nashed. These indicate that:

• on 10 April, the day he learned of his daughter's suicide, Mr Morale was treated by his medical practitioner for grief induced depression and severe anxiety[4];

• by certificate dated 18 April, Mr Morale was certified unfit from 18 April to 18 May on account of "grief symptoms"[5];

• by certificate dated 15 May, Mr Morale was certified unfit from 16 June until 16 September on account of symptoms which include "multiple symptoms of severe anxiety"[6];

• in a letter addressed to the Fair Work Commission, Dr Nashed advises, amongst other things, that the alleged "unfair dismissal from his job as a bus driver...has unfortunately further contributed to his symptoms of anxiety and distress and is therefore detrimental to his heart condition."[7]

[30] Dr Nashed was not called to give evidence. I am not in a position to make specific findings about Mr Morale's capacity in the period between his dismissal and 10 April, and in the period for which I was not provided medical certificates between 18 May and 16 June. Nonetheless, I am satisfied that from at least 10 April until the date of lodgement Mr Morale was suffering from depression and anxiety associated with the suicide of his daughter. It was apparent from the evidence he gave at the hearing that Mr Morale continues to struggle with his grief. The extent to which this actually impacted his capacity to lodge an application during the whole of part of the three month period of delay is not clear from the evidence.

[31] I conclude that this particular reason for delay is a factor marginally in favour of granting an extension.

[32] The evidence of Mr Morale and Ms Kraatz was that on 30 May Mr Morale suffered symptoms of a pre-existing heart condition. He was diagnosed by a cardiologist on 7 June as requiring an urgent coronary angiography which was performed in Adelaide on 14 June. This was confirmed in Dr Nashed's letter.

[33] Against medical advice but with the support of Ms Kraatz he self-discharged after surgery to attend the memorial service for his daughter in Mount Gambier on 17 June.

[34] Dr Nashed's letter of 27 July further states that "Mr Morale continues to suffer from symptoms of heart failure and is due for further cardiac evaluation and echocardiography in August".

[35] While I did not receive specific evidence from his treating doctors, I am satisfied that from at least 30 May to the date of lodgement Mr Morale was suffering from a pre-existing heart condition that required surgery on 14 June and a period of recovery.

[36] I conclude that this particular reason for delay is a factor in favour of granting an extension.

[37] The evidence of Mr Morale and Ms Kraatz is that Mr Morale is dependent on his sister for care and support. This was particularly the case following news of his daughter's suicide and following his heart surgery. I am satisfied that they both grieved the death of Mr Morale's daughter and news of the death of their brother, as well as being anxious about Mr Morale's general health.

[38] I am also satisfied that Mr Morale depended on Ms Kraatz to secure information about his legal rights and help him assert those rights, including rights following his dismissal. I am satisfied that this was the case from the date of dismissal until the date of lodgement. It was apparent from the manner in which he gave evidence at the hearing that this remains the case. I am further satisfied that, in the circumstances, it was not an easy task for Ms Kraatz, as a lay family member, to become informed about legal matters.

[39] I further find that Mr Morale did not have access to the care and support of Ms Kraatz in the days immediately following his dismissal and in the days immediately following news of his daughter's suicide. She was overseas until 16 April. He had that support from 16 April.

[40] I conclude that this particular reason for delay is a factor marginally in favour of granting an extension.

[41] On the facts in this case, the reasons for delay, when considered as a whole, favour granting an extension of time.

Awareness of the dismissal taking effect (section 394(3)(b))

[42] I have found that Mr Morale was dismissed on 3 April and that notwithstanding the terms of the termination letter of 11 April, the dismissal took immediate effect from that date. Mr Morale's evidence is that he believed this to be the case. I am satisfied that, at all relevant times, Mr Morale was fully aware that his dismissal had taken effect from 3 April.

[43] On the facts in this case, I consider this to be a factor that weighs against granting an extension.

Action taken to dispute dismissal (section 394(3)(c))

[44] Hopgood's case is that Mr Morale knew the reason for dismissal from the day his dismissal took effect, and did not dispute the grounds until lodging his application three months later. In a strict sense, I accept that the evidence supports this finding. A meeting was attended by Ms Kraatz and Mr Hopgood on 19 April concerning an Employment Separation Certificate required by Centrelink. The evidence of both Ms Kraatz and Mr Hopgood was that at this meeting Mr Hopgood offered to designate the dismissal as a redundancy but that Ms Kraatz insisted that the Employment Separation Certificate record the reasons for dismissal as a verbal altercation.

[45] However, Ms Kraatz's evidence is that during this discussion she and Mr Morale questioned the fairness of the investigation conducted by Mr Hopgood and in particular the extent to which he accepted the contents of an email report from the school concerning the altercation. Mr Hopgood's evidence was that the dismissal was not disputed at the meeting, but conceded that Ms Kraatz did question the accuracy of one aspect of the school report.

[46] I am satisfied that Ms Kraatz, on 19 April and on behalf of Mr Morale, conveyed to Mr Hopgood disagreement with at least one aspect of the material on which he relied to make his decision. To that extent Mr Hopgood was on notice that an element of his decision making process was in dispute, albeit not the dismissal as a whole.

[47] On the facts in this case, I consider this to be a factor that weighs marginally in favour of granting of an extension.

[48] As a general principle, an employer is entitled to arrange its affairs and organise its resources on the basis that claims of this nature can no longer be made beyond the lodgement period, except in exceptional circumstances.

[49] In this matter, the employer is a small business in a regional location. It is required to operate buses regularly and continuously. Its business and contractual requirements compelled it to find alternate drivers to complete Mr Morale's rostered shifts immediately after his dismissal. This employer cannot hold positions open or in abeyance. Any delay creates prejudice, and the length of delay adds to prejudice.

[50] It is also likely that a lengthy delay, such as this, will create prejudice in accessing and obtaining reliable recall from persons who witnessed the altercation. This is particularly as some are said to be students, while others are employees of the school. Mr Morale himself struggled to recall details at the extension of time hearing.

[51] On the facts in this case, I consider this to be a factor that weighs against granting an extension.

[52] Mr Morale's dismissal was conduct related. I have not heard evidence about the verbal altercation or its impact on the relationship Hopgoods have with the school. As a small business, the dismissal will not be unfair if it complied with the requirements of the Small Business Fair Dismissal Code. The primary issue to be determined will be whether Hopgoods had reasonable grounds to believe the conduct was sufficiently serious to warrant dismissal. This is a different and more precise test, than a general assessment of harshness.

[53] On the facts in this case, I consider this to be a neutral factor, noting though that if Hopgoods were to satisfy this criteria at a hearing then Mr Morale's claim will fail.

Fairness between persons in similar position (section 394(3)(f))

[54] No evidence or submissions from Mr Morale or Hopgoods raise issues of fairness with and between other persons.

[55] On the facts in this case, this is not a relevant factor.

[56] The delay in lodgement is substantial, three months after dismissal. The circumstances and conduct of Mr Morale throughout the whole period of 98 days are relevant.[8]

[57] I have no difficulty concluding that the combination of personal circumstances which befell Mr Morale from 10 April until his daughter's memorial service on 17 June were, in the words of the Full Bench in Nulty v Blue Star Group Pty Ltd, "a situation which is out of the ordinary course, unusual, special or uncommon". Indeed, they were tragic, and the consequences on Mr Morale's health and mental state remained until and beyond lodgement.

[58] Mr Morale's lack of awareness of his litigation rights until the week prior to lodgement is not a reason for granting an extension. However, it is explained by the fact that he was largely reliant on Ms Kraatz for support and advice. That dependency is a relevant factor which marginally weighs in his favour.

[59] In the first week after dismissal, before news of his daughter's suicide, Mr Morale did nothing to dispute his dismissal or ascertain his rights other than telephone Ms Kraatz who was overseas. She told him to await her return and remain calm. This was understandable advice at the time. Neither was to know that events would worsen days later. His inaction in the first week is explicable.

[60] I take into account the evidence that Mr Morale did, with Ms Kraatz's assistance, access an initial free of charge interview with a private lawyer in late May or early June to advise on the divorce papers which had been served on him. Their evidence was that they did not discuss his dismissal with the lawyer as it was not the object of their consultation. However, I accept the submission by Hopgoods that this demonstrated a capacity to ascertain private legal rights despite the impact of grief induced depression. The failure to use this or a similar opportunity to inquire about his post-dismissal rights is conduct that weighs against an extension of time. It would not have resulted in the application being lodged in time, but it quite likely would have been lodged about one month earlier than occurred.

[61] I have also considered the fact that after the 17 June memorial service neither Mr Morale nor Ms Kraatz pursued their grievance over the dismissal until prompted by a friend. The dismissal wasn't a sufficient priority to motivate action on their part. However, they were grappling with other priorities. Mr Morale was recovering from heart surgery and both were coping with grief and its consequences. The inaction during this period may be explicable but the medical evidence does not establish a clear relationship between Mr Morale's poor health and the extent to which it rendered him incapable of lodging an application.

[62] Taking all these factors into account, and especially the combination of factors that created personal distress, I conclude on balance that exceptional circumstances exist.

[63] However, the Full Bench in Nulty observed that "even when "exceptional circumstances" are established, there remains discretion to grant or refuse an extension of time. That discretion should be exercised having regard to all the circumstances including, in particular, the matters specified in paragraphs 366(2)(a) to (e) and will come down to a consideration of whether, given the exceptional circumstances found, it is fair and equitable that time should be extended."[9]

[64] In deciding whether it is fair and equitable to grant the extension, I weigh the factors in section 394. This is a lengthy delay. I take into account the observation of Dr Nashed that "the dismissal has further contributed to his symptoms of anxiety and distress and is therefore detrimental to his heart condition." Unfortunately Dr Nashed was not called to give evidence whether the pursuit of litigation about the dismissal is likely to have the same detrimental effect. My observations from the extension of time hearing are that Mr Morale is in poor health and dependant on Ms Kraatz to recall events and to assemble his case. A full hearing is quite likely to magnify those difficulties.

[65] On balance, I exercise my discretion in favour of granting an extension of time. The application will be re-listed for a directions hearing. An Order giving effect to this decision will be issued.

[66] In light of these reasons, I encourage the parties to renew dialogue with a view to exploring the potential for settlement without the need for the cost, delay or disruption of a full hearing. The Commission will make available to the parties, if they so choose, a further process of member-assisted conciliation.

Mr B. Morale, on his own behalf, and Ms A. Kraatz, for the Applicant.

Mr C. Mahoney and Mr A. Hopgood, for the Respondent.

[2] [2011] FWAFB 975

[3] Nulty v Blue Star Group Pty Ltd [2011] FWAFB 975 at [14]: "Mere ignorance of the statutory time limit in s.366(1)(a) is not an exceptional circumstance."

[4] Letter from Dr Michael Nashed of Village Medical Centre to Deputy President Anderson dated 27/7/2017

[5] Centrelink Medical Certificate from Dr Michael Nashed of Village Medical Centre dated 18/4/2017

[6] Centrelink Medical Certificate from Dr Michael Nashed of Village Medical Centre dated 15/5/2017

[7] Letter from Dr Michael Nashed of Village Medical Centre to Deputy President Anderson dated 27/7/2017

[8] Cheval Properties Pty Ltd (t/as Penrith Hotel Motel) v Smithers [2010] FWAFB 7251; (2010) 197 IR 403 at 408-409

[9] [2011] FWAFB 975 at [15]

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