North Western Health Care Network v Health Services Union of Australia, 164 ALR 147

APPLICANT Ms C Howell of Counsel LEGAL REPRESENTATIVES: New South Wales Independent Education Union RESPONDENT Ms E Devine, Employers Federation of New South Wales

JUDGMENT:

• 37 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

Notification under section 130 by the New South Wales Independent Education Union of a dispute with Allambia Pty Limited trading as Cuddly Possums re payment of award entitlements

1 By notification, pursuant to s130 of the Industrial Relations Act 1996 ("the Act"), the New South Wales Independent Education Union advised of a dispute with Allambia Pty Ltd ("Allambia") trading as Cuddly Possums, in respect to award entitlements for its member, Ms Tania Rue. 2 The notification was lodged on 16 June 1999 and was expressed as follows: The dispute arises in relation to the award entitlements not being provided on the termination of employment to Ms Tanya Rue, a member of the union. Ms Rue commenced employment on 24 November 1995 as an early childhood teacher. Her position was made redundant on 4 April 1999 due to falling enrolment numbers. The Centre changed owners in October 1998, when the business was sold to the previous owner's brother. During the period of the change of owners, the centre continued to operate from the same premises, the same children attended the service and all the staff continued to work in the same way. The day to day running of the centre was and still is being conducted by the previous owner. Ms Rue's employment was terminated at the conclusion of her shift on 4 April. She was provided with four weeks payment in lieu of notice, and one week's pro rata annual leave. At no time were the provisions of Part C - Redundancy of the award applied in relation to notification and discussion with either the Union or Ms Rue. Payment of severance pay in accordance with Part C - Redundancy, has not occurred despite there being more than 15 employees employed by Allambia Pty Ltd at the time Ms Rue's position was made redundant. Annual leave entitlements accrued before the transfer of business have not been made, despite being nominated on the employment separation certificate. Superannuation payable under both the Award and the federation (sic) legislation has not been paid since July 1997. Payments were being made to a non approved fund and when Ms Rue sought to have payments made to her nominated fund in accordance with the award all payments ceased. A complete statement of service has not been provided. A statement of service is an award entitlement and is essential for establishing the appropriate classification of Ms Rue in future employment. Allambia Pty Ltd are maintaining they do not have any responsibility in relation to Ms Rue's employment prior to the transmission of business on 16 October 1998. The relevant industrial instrument is the Teachers (Non Government Early Childhood Service Centres other than Pre Schools) (State) Award. 3 Compulsory conference proceedings were listed for 25 June 1999, at which time Ms Moore appeared for the notifier and Mr Morphett (Agent) with Mr Clarke appeared for the respondent. Following preliminary submissions, I directed the parties to confer and report back on 3 September 1999. The Commission chaired private conferences with the parties on 21 October, following which I issued the following statement and directions: In this matter the Commission has chaired conferences with the parties and has been asked by the respondent for time to allow the respondent's legal advisers to consult with their client as to the future of this matter. I am prepared to accede to the request and allow fourteen days for that to occur. I require the respondent to advise the outcome of those discussions within fourteen days and if there is no resolution of the matter I will issue the appropriate certificate of attempted conciliation and, in anticipation of the matter not resolving, I propose to tentatively set the matter for hearing and issue directions. I direct: 1) That the notifier of the dispute file and serve any affidavit material upon which the notifier relies by 4.00pm on 23 December. The material that is to be filed by the notifier is to include draft orders that the notifier will be requesting the Commission to approve. 2) The respondent is to file and serve any affidavit material and such other evidence upon which it relies by 4.00pm on 19 January 2000. 3) That the notifier file and serve any material in reply by 4.00 pm on 3 February. I shall set the matter down for hearing commencing at 10.00am on 10 February and continuing at 10.00am on 11 February, 2000. I also issue the following recommendation: The Commission is of the view, having heard the parties privately on this matter, and in view of the various exchanges of settlement that have been made, that it would be a great pity if this matter could not be resolved by mutual agreement. The issues that are to be determined are complicated but I also observed both privately and I do so now on record, that the employee concerned has certain rights which cannot be extinguished in circumstances of company take-overs. While the true legal position is yet to be determined - and may well be determined in the respondent's favour - the rights of the employee concerned in this dispute must be protected by this Commission and the true employer must be held responsible.

4 The dispute remained unresolved and I issued a s135 certificate of attempted conciliation, confirmed my earlier directions and set the matter for hearing on the dates tentatively allocated. 5 On the first day of hearing, Ms Howell of Counsel appeared for the notifier and Ms E Devine from the Employers' Federation of New South Wales, now represented the respondent. 6 Despite some preliminary procedural difficulties, the hearing proceeded on 10, 11 February and 9 March. 7 Ms Howell called evidence from: Ms Tanya Rue Child Care Worker Ms Jacqueline Groom Union Official

8 Ms Devine called evidence from Mr John Clarke Director - Allambia Pty Ltd Mr Graeme Brown Liquidator, employed by A R Nicholls & Co

1. Ms Tanya Rue commenced employment as a child care worker under the Teachers (Non Government Early Childhood Service Centres Other Than Preschools) (State) Award in November 1995. She was employed by a company known as Coralpalm Pty Ltd ("Coralpalm") which operated three child care centres in regional New South Wales. During this time she worked for two child care centres, Tired Teddy's at Orange and, from 20 January 1998, Cuddly Possums at Blayney. She worked as a teacher director and authorised supervisor.

2. On 18 August 1998 Coralpalm was placed in liquidation by order of the Supreme Court of New South Wales and A R Nicholls & Co ("the liquidator") was the Court appointed liquidator.

3. Between 19 and 21 August, the liquidator was engaged in negotiations with various interests in respect to the sale of the business owned by Coralpalm.

4. A meeting involving the liquidator and the employees, including Ms Rue, was held on Wednesday, 19 August 1998. Details of what was said, and by whom, at this meeting are in dispute, although it is agreed that Ms Rue, and others, were told to continue to attend for work, although Coralpalm was not responsible for their wages.

5. On 24 August, the liquidator entered into a temporary agreement with Allambia, wherein Allambia would operate the child care centres and meet all operating expenses, including wages of the staff.

6. On or about 16 October 1998, the contract of sale was entered into, in which Allambia purchased Coralpalm's business for $25,000. The sales document refers to the $25,000 as being for goodwill. Debts of the former company were re-negotiated with the creditors in the context of the sale.

7. Ms Rue continued to work uninterrupted for Allambia until 9 April 1999, at which time she was terminated by reason of redundancy.

8. Allambia paid all Ms Rue's accrued entitlements from the time of the temporary agreement, 24 August 1998 until termination (Tp 26-27).

9. Allambia does not accept any liability for Award entitlements, including redundancy benefits, for Ms Rue's employment by Coralpalm, from November 1995 to 24 August 1998.

10. The notifier makes an application for orders under s380 of the Act and for such application to be dealt with under s379. The claim is recorded in Ex'5' as: 1. The amount of $7,171.20 as severance payment on the redundancy pursuant to Part C of the Teachers (Non Government Early Childhood Service Centres Other than Pre Schools) (State) Award . 2. The amount of $747.65 as payment of annual leave loading on the termination of employment pursuant to clause 7, Annual Leave Loading of the Teachers (Non Government Early Childhood Service Centres Other Than Pre Schools) (State) Award . 3. The amount of $4,272.27 as payment of annual leave entitlements on the termination of employment, pursuant to section 4(1) of the Annual Holidays Act 1944.

11. In view of the limitation of $10,000 in s379(3) the notifier seeks only the maximum amount allowable by this section.

The Evidence 9 To the extent that much of the evidence related to uncontested factual material, I do not repeat it. However, the areas of disagreement largely concern the content of conversations between Ms Groom and Mr Brown and conversations between Ms Rue and the owners of Coralpalm, Allambia and the liquidator. 10 Ms Rue's affidavit, Ex'6', refers to a conversation with the manager and directors of Coralpalm, Mr Craig Wotton and Mrs Judy Wotton. Mrs Wotton was responsible for the financial affairs of the business. Ms Rue had become aware of the company's financial problems in August 1998 and had contacted Mrs Wotton. 11 Mrs Wotton had told her not to say anything to the parents and advise staff to "keep quiet on the issue". She had said words to the effect of "there is nothing to worry about ... there is no threat to your jobs so long as the centre stays open" (para 7 of Ex'6'). Mr Wotton had given her a similar assurance. 12 In respect to the meeting of staff with the liquidators on 19 August, Ms Rue said that Mr Brown from Nicholls & Co had attended with Mr Wotton. Mr Brown had told the meeting that Coralpalm was to be wound up, that a potential buyer had been found, but the only asset was goodwill. He had said that so long as the centre remained open, its licence from the Department of Community Services would not be cancelled. He also told the staff that wages would be paid by the Wottons until a new owner took over. Mr Brown also said that "if the sale goes through all your entitlements will be preserved". He had mentioned annual leave and superannuation.

13 Ms Rue said that at no time was she told her employment had been terminated, even though she knew staff at Tired Teddy's had received termination letters. Mrs Wotton had said "There is no need for all that". 14 On 2 September 1998, Ms Rue received notice from Nicholls & Co of a creditors' meeting to be held on 15 September. Ms Rue appointed her union official, Ms V Groom as her proxy and lodged a proof of debt claim with the liquidator for annual leave, annual leave loading and severance payments (Tp 17). Through the sale process, Ms Rue said that it was "business as usual". All staff remained employed and Mrs Wotton continued to operate the Centre. She was subsequently advised that Mrs Wotton's brother, Mr John Clarke, had purchased the business. 15 There was a meeting in November 1998 between Mr and Mrs Clarke and Ms Rue, at which Mrs Clarke was asked about the employees' accrued holidays. She had replied that her "entitlements were lost during the liquidation". Ms Rue had no further contact with Mr Clarke until she was terminated by him on 9 April 1999 for reasons of redundancy. 16 In oral evidence, Ms Rue attested that her employment conditions did not change after 24 August 1998. She had worked continuously from 18 August 1998 until 9 April 1999, with no change in the opening hours of the Centre. 17 In cross examination, Ms Rue denied that she was told by either Mr Nicholls, or Mr Brown (the liquidators) that her employment contract had been terminated as a consequence of the Supreme Court order. However, she was aware that if the sale did not go ahead, the centre would close. She agreed that she was uncertain, whether or not, she would receive her entitlements. She assumed if the business was sold, her entitlements would be protected. 18 Ms Rue acknowledged receiving the liquidator's report (dated 27 October 1998) which said in Pt 5, dealing with employee's unpaid holiday pay and superannuation, totalling $58,963.48, that there were insufficient funds to allow for distribution to be made to the employees. This was confirmed by the new employer in November 1998. 19 Ms Jacqueline Veronica Groom is an organiser for the NSW/ACT Independent Education Union, who has responsibility for the South-east and Central-west of New South Wales. In her affidavit evidence, marked Ex'7', Ms Groom describes various conversations with Mr Brown (the liquidator). In two conversations, on or about 19 August 1998, Ms Groom said that Mr Brown had told her that the staff could continue working and they would be paid. In the week commencing 24 August, Mr Brown told her that he knew of a buyer interested in purchasing the centres and, in the meantime, the centres would remain open and the employees would be paid. 20 Ms Groom had said that if the centres were sold, the employees' entitlements would be protected by s102 of the Industrial Relations Act. Mr Brown had replied "yes, but if the prospective purchaser knows this then the sale will not go through". Ms Groom attested that the substance of this conversation was repeated in several other telephone calls and at the meeting of creditors on 15 September. She reaffirmed this evidence in the witness box. 21 Ms Groom had advised members to complete a proof of debt form in order to ensure outstanding entitlements (including redundancy benefits) were taken into account by the liquidator. 22 Ms Groom said she did not receive a copy of the minutes of the 15 September creditors' meeting until some months later. The minutes were not a true and correct record of the meeting as they did not record discussion of s102 of the Act. 23 In oral evidence, Ms Groom contested Mr Brown's version of the conversation at the meeting of creditors on 15 September. She accepted that there was "considerable uncertainty" as to whether the businesses would close. She further said it wasn't her place to go along with the liquidator deceiving the prospective purchaser by not revealing obligations under s102. 24 Mr John William Clarke is a director of Allambia. He provided affidavit evidence (Ex'A') and gave oral testimony. He described the details of the purchase, in October 1998, of the three child care centres previously owned by Coralpalm. Attached to his affidavit is the Sales Agreement between Coralpalm (in liquidation) - the vendor, and Allambia as the purchaser. He said it was a term of the agreement that all employees of Coralpalm were terminated by the vendor on 18 August as a consequence of its liquidation (Cl 6.1). 25 Mr Clarke attests that he became aware of the winding up of Coralpalm through his sister, Judy Wotton, then a director of Coralpalm. He had offered to the liquidator, Nicholls & Co, that Allambia take over running the three child care centres on a caretaker basis in order for prospects of sale to be explored. He became aware that the only asset of Cuddly Possums Long Day Centre (and the others) was its goodwill and that if the centres closed - even for a day - they would lose their Department of Community Services licences. Mr Clarke subsequently entered into a licence arrangement to run the three centres effective from 24 August 1998. 26 Mr Clarke attests that this caretaker arrangement was on the understanding that he was not responsible for any of Coralpalm's liabilities prior to 24 August, and that while retaining all the employees, their employment had been terminated on 18 August. Mr Clarke employed his sister, Mrs Wotton, as manager of the centres. 27 Between 24 August and 16 October, Mr Clarke, along with several other parties, discussed purchasing the businesses with the liquidator. Agreement was finally reached for Allambia to purchase the centres from Coralpalm. He subsequently wrote to all employees confirming their new employment. 28 In April 1999 Ms Tanya Rue was made redundant as the number of children had dropped and the choice had been to make a teacher position redundant, or close the centre. Ms Rue's termination entitlements were calculated from 24 August 1998 to 9 April 1999. Mr Clarke says that Ms Rue was overpaid annual leave in the amount of 40.33 hours. She did not receive severance pay as her employment was less than one year. 29 He assumed the reference to twenty days' annual leave in the separation certificate was a clerical error made by his sister whose signature appears on the certificate. 30 In oral evidence, Mr Clarke says he was informed by Mr Brown (the liquidator) that all the employees had been terminated on 18 August 1998. 31 He described the sale process as "a very messy affair" and there was considerable doubt as to whether he would be the successful purchaser. 32 In cross examination, Mr Clarke confirmed that the temporary licence arrangement was verbally entered into and operated until the sales agreement was finalised. The agreement incorporates both the licensing agreement effective from 24 August, and the terms of sale as at 16 October. Mr Clarke was shown a letter dated 24 August 1998 from the liquidator to Mr Clarke's solicitor, which disclosed that the purchase of the goodwill at that time was contemplated at $90,000. The eventual sale price was $25,000. Mr Clarke gave evidence that since August 1998, Allambia had sold both Cuddly Possums, Blayney and Cheeky Cherubs at Parkes. He said that he had sold Cuddly Possums for $32,000 for plant and equipment and $6,000 for goodwill. 33 Mr Graeme Brown, is the manager of A R Nicholls & Co and was the Court appointed liquidator of Coralpalm. In his affidavit, Ex'B', Mr Brown said that on 19 August 1998, he, Mr Nicholls and Mr Wotton visited the three child care centres, then owned by Coralpalm. He said, at each centre, either he, or Mr Nicholls, informed employees that as a result of the liquidation their employment contracts were automatically terminated and that existing entitlements may, or may not be paid, depending on whether the businesses were sold, and how much was paid for them. 34 Mr Brown confirmed that a caretaker arrangement was entered into with Allambia on 24 August 1998. On 2 September 1998, Mr Brown wrote to all potential creditors, including employees, advising of a creditors' meeting on 15 September and enclosing a summary of the company's affairs, forms for the appointment of proxies and proof of debt forms. Ms Groom attended as a proxy for Ms Rue. Mr Brown attests that Ms Groom had asked about the employees' status and had acknowledged his reply that all employment contracts had been terminated and the new employer would accept no responsibility of employee entitlements due by Coralpalm. Annexure B, the minutes of the meeting, disclose this exchange. The total of outstanding employee entitlements and superannuation was $58,963.48. 35 In respect to the sale process, Mr Brown attests that between 18 August and 16 October, there was "considerable uncertainty" as to whether a sale would take place. There needed to be an agreement between the potential purchaser, the liquidator and other charge holders. The agreement took effect on 16 October 1998. 36 Mr Brown confirmed Mr Clarke's understanding of Allambia's liabilities arising only from 24 August 1998. He said that, after distribution of sale funds, there was no funds to distribute to unsecured creditors, including the unpaid employee entitlements owed by Coralpalm. In his report to creditors of 27 October 1998, Mr Brown had advised that the company had traded whilst insolvent. However, the liquidator had decided not to take action against the Coralpalm directors, but the creditors might seek to do so. 37 In reply to Ms Rue's affidavit, he said it was Mr Nicholls, and not himself, who spoke at the meeting on 19 August with the employees. He said that he had spoken to Ms Groom on various occasions and stressed to her that employee entitlements would only be paid if a sale eventuated. After the sale, he informed her that there were insufficient funds to meet the employees' entitlements. Mr Brown said Ms Groom acknowledged the situation and had even said "at least they've still got their jobs". 38 Mr Brown said that Ms Rue was informed that her employment was terminated at the meeting on 19 August, in the letter to creditors of 2 September and through her proxy, Ms Groom, at the meeting of creditors on 15 September 1998. 39 In oral evidence Mr Brown described the process of liquidation and how it applied to Coralpalm. He said that the centres were costing about $18,000 a week to run and that the liquidator was not in a position to assume the operating role. Its role was to close the centres down, gather the assets and sell them. However, Mr Craig Wotton put it to the staff that they would continue to be paid by him as there may be somebody interested in buying the business; but the sale would take some time to put in place. 40 Mr Clarke became involved in temporarily running the centres by assuming the running costs and employing the existing staff. The Department of Community Services was content with Mr Clarke doing so as he already had a licensed child care centre at Orange. 41 Mr Brown said that the company had no assets, as the centres, equipment and furniture were all under lease to ESANDA and the ANZ Bank. Initially, Mr Clarke had agreed to purchase the goodwill for $130,000. He had, in fact, paid a deposit of $13,000 into the liquidator's trust account. One of the charge holders, a Mr Samra, was to be paid $50,000 by Mr Clarke and the sale price was re-negotiated to $90,000. ESANDA and the ANZ had also negotiated favourable terms with the liquidator. However, the Samra deal fell through and Mr Clarke withdrew his offer. Mr Brown sought to prevail on him and finally the liquidator was left with no choice but to accept an offer of $25,000 out of which Mr Samra was paid $10,000. 42 Mr Clarke had spent close to $100,000 in running costs to this point. The liquidator only had goodwill to sell. The implications of not reaching an agreement was that the centres would close. 43 In cross examination, Mr Brown described his recollection of various conversations with Ms Groom. He said that on 20 August 1998 he had told her the employees had been terminated. He recalled that she had said she could not sanction her members working without pay. However, he was aware, Mr Wotton had made arrangements for the staff to be paid, but as far as the liquidator was concerned, they were working on a voluntary basis. Mr Brown did not recall saying, in a conversation with Ms Groom, in the week of 24 August, that he knew of a buyer for the centres and in the meantime the centres were to remain open and the staff would continue to be paid. He said Ms Groom had never mentioned s102 of the Act and he denied saying that, if the prospective purchaser knew of the obligations under s102, the sale would not go through. He also denied that this was said at the meeting on 15 September. 44 Mr Brown said it was his understanding that the order of the Supreme Court of 18 August 1998 automatically terminated the employees' employment. While stating that the company, Coralpalm, was thereby dissolved, he conceded a winding up order doesn't always lead to dissolution. A liquidator may carry on the business as far as may be necessary to wind it up, so long as funds are available to do so. This was not the position with Coralpalm, as no funds were available. 45 In respect to the temporary licence arrangement, Mr Brown conceded that the reference to it in the final sales agreement was because verbal approval had been obtained beforehand. The Department of Community Services had reluctantly agreed to the temporary arrangement, after Mr Brown had discussed it with them.

46 Mr Brown said that Coralpalm retained the temporary licence as Allambia could not take it over until the appropriate checks had been made and the Coralpalm licence was cancelled. Despite this, he said that Allambia had taken over responsibility for the licence from 24 August 1998. 47 Mr Brown accepted that the centres continued to trade as Coralpalm from 18 August, through to 20 August. He said he assumed Mr Wotton had paid the employees for this period. 48 Mr Brown said that the amount of $58,963.43, referred to in his report as outstanding employee entitlements, only referred to annual leave and superannuation. It was not the total amount. He didn't know why the other amounts owed were not included. In re-examination, he said it was unnecessary to disclose the full amount owing, as there were no funds available anyway. 49 In respect to the employee meeting on 19 August, Mr Brown said he had not heard what Mr Nicholls had said; but the purpose of the meeting was to "inform staff that their employment was terminated". 50 In further cross examination, Mr Brown agreed Ms Groom had raised s102 of the Act at the meeting of creditors on 15 September 1998. He denied again that he had said that if the purchaser knew of s102, the sale would not go through. 51 Mr Brown described the Federal Government funding for the centres amounted to some 80% of the income. He said that he wasn't aware if Allambia received funding for the period after 24 August, although he was aware the company had applied for funding.

52 He said in re-examination that Ms Rue spoke to him on Friday, 21 August and he explained the position with Coralpalm and its liabilities for employee entitlements. Ms Rue had also expressed a view that, as she didn't get on with Ms Wotton, she didn't want her running the centre.

SUBMISSIONS 53 Ms Howell, for the notifier, submitted as follows:

1. Ms Rue is a transferred employee for the purposes of s101 of the Act and, as such, entitlements were preserved when there occurred a transfer of business between Coralpalm and Allambia.

2. Establishing whether there was a transfer of business is assisted by considering comparable legislative provisions under the Workplace Relations Act 1996;

3. The Federal Court has given a broad and beneficial interpretation of the Federal Act's provisions. It is necessary to look at the nature of the work performed and the substance of the transaction rather than strict legal forms (see North Western Health Care Network v Health Services Union of Australia , 164 ALR 147).

4. Application of these principles to the present case discloses that: (a) the totality of the activities of Coralpalm were transferred to Allambia; (b) the temporary licensing arrangements were in place until the sales process was complete, and were designed to protect the purchaser's interests; (c) Ms Rue was transferred to Allambia and was a transferred employee. She worked at the same child care centre, performing the same duties, receiving the same salary. The only thing that changed was the employer; (d) The fact that Coralpalm was in liquidation at the time of transfer is not material.

(e) The effect of the liquidation order was to give notice of termination, not to effect the termination - See General Rolling Stock Company (1866) 1 Eq 346 .

(f) In any event, the liquidator permitted the employees to continue to work on 19 August and expressly requested them to continue on the 20 and 21 August, despite the Supreme Court order of 18 August. (g) Modern employment law requires reasonable notice to be given before a termination of employment has legal effect.

(h) s101 of the Act is not concerned with notice, but when the employment relationship is terminated. Ms Rue's termination with Coralpalm occurred at close of business on 21 August 1998 and not earlier;

(i) Coralpalm continued to be the employer on 19, 20 and 21 August. This must be so because: i. It continued to hold the licence and be responsible for the licence obligations under the Centre Based and Mobile Child Care Services Regulation (No 2) 1996. ii. The fact that Coralpalm did not pay wages with respect to 20 and 21 August is not material. See AIEU v WP Insurances 42 ALR 598 at 606. iii. It was never suggested to Ms Rue that any entity, other than Coralpalm, was her employer for this period. iv. Ms Rue's evidence of what she was told at the meeting of 19 August should be preferred, particularly when Mr Brown was not in attendance for all of the meeting. v. Coralpalm received child care fees for this period.

vi. Coralpalm was responsible for Workers' Compensation during this period.

5. The terms of the contract between Coralpalm and Allambia cannot oust or override the provisions of the statute.

6. Costs and interest were sought. 54 Ms Howell tendered two extracts from Australian Corporate Insolvency Law, Butterworths, chapters 9 and 12, as to the effect of liquidation orders on employees. 55 In opening her case, Ms Devine submitted that:

1. Ms Rue was not a transferred employee for the purposes of s101(2) of the Act.

2. Ms Rue's employment was terminated as a matter of law pursuant to the liquidation order of the Supreme Court of 18 August 1998.

3. For s101(2) to operate there must be an intention to avoid the operation of the section by the circumstances of the termination. It is the applicant's onus to prove such intention to avoid.

4. There were insufficient funds following the sale process and the payments to secured creditors and the liquidator, for employees' accrued entitlements to be paid. They remain, nevertheless, debts against the liquidated company.

5. At all times from 19 August, the employees were aware of considerable uncertainty as to whether the business would be sold.

6. Allambia accepted all its obligations and met them from the time it entered a temporary arrangement to operate the Centres from 24 August, 1998. 56 In reply to the applicant's case, Ms Devine submitted:

1. That both sub paragraphs (a) and (b) of s101(2) need to be satisfied for the applicant's case to succeed. She conceded that sub para (a) is met but sub para (b) requires the applicant to prove that there was an intention to avoid the operation of this Part.

2. There is no evidence of any intention, of any of the parties, to collude in order to avoid the operation of the Part.

3. The two months between late August and early October was a period of great uncertainty as to whether the business would close. The final sale price of $25,000 was the only way to keep the business open and for some recovery of monies owed to creditors. Certainly, it wasn't inevitable that Allambia would purchase the business. Indeed, the evidence is to the contrary.

4. While the sale proceeds did not secure the employees' entitlements, it did secure their jobs and two hundred child care places in three country towns.

5. Ms Rue's redundancy is to be regretted, but arose through cutbacks to Federal Government funding.

6. Ms Rue was aware the company was to be wound up, sought advice as to its implications, acknowledged uncertainty as to whether the business was to be sold and whether her entitlements would be paid.

7. Ms Groom's evidence insofar as it conflicts with Mr Brown's, as to what she was told by him, should not be accepted. Mr Brown had no interest, other than that of a liquidator.

8. Ms Rue was mistaken as to the extent of her outstanding entitlements, particularly in regard to annual leave.

9. Ms Devine was unable to say who was the employer between 18 August and 24 August. It may have been Coralpalm, or it may have been Mr Wotton personally. She said it couldn't be Allambia or the liquidator.

10. There should be no improper conclusion drawn as to the handwritten amendments to the contract of sale disavowing Allambia's liability for the employees' entitlements.

11. Reliance on decisions under the Workplace Relations Act 1996 is not appropriate as Award respondency is an issue here.

12. All aspects of the Corporations Law were complied with by the liquidator and the fact that employees missed out on their entitlements is not an intention to avoid the obligation under the Part, but a lawful outcome of the liquidation itself.

13. Costs should be awarded against the applicant. 57 In respect to the effect of the winding up order on employees, Ms Devine relied on extracts from the Australian Corporation & Securities Law Reports - Volume 2, CCH Australia and Australian Labor Law Reports - Volume 2, CCH Australia Ltd. 58 Ms Devine put further written submissions in reply in respect to the operation of s101(2). She said that even on the applicant's own evidence - that she was terminated at the close of business on 21 August and accepting that the transmission of business occurred, on or after 24 August - s101(2) must be attracted in this case.

The Evidence 59 In my view, much of the evidence advanced by the respondent is sketchy and confusing. I am not satisfied that the Commission was provided with full details surrounding the sale of Coralpalm to Allambia. The Commission is left to speculate on certain aspects of the sale and to wonder why persons materially relevant to the events, namely Mr and Mrs Wotton and Mr Nicholls, were not called to give evidence. The principles discussed in Jones v Dunkel (1959) 101 CLR 298 arise in such circumstances. This comment, I hasten to add, does not infer any criticism of Ms Devine, who, I should say, acquitted herself admirably in difficult circumstances. 60 There are obvious conflicts of evidence between Ms Groom and Mr Brown. The primary conflict relates to the following matter: Whether Mr Brown, in phone conversations with Ms Groom, had said that the sale would not go through if the prospective purchaser knew of the protection of employee entitlements under s102 of the Act. 61 It would seem extraordinary that Mr Brown, as a Court appointed liquidator, would withhold such information from a prospective purchaser. In any event, it would be most unlikely that a prospective purchaser, particularly acting upon legal advice, would not know, or not ask, about such liabilities. It would appear Mr Clarke was subsequently told about it, and gave instructions for the sales agreement to be amended accordingly (see the handwritten amendment to cl 6.1 of the Sales Agreement (Ex'A' Annexure A). 62 Per contra, Mr Brown concedes Ms Groom raised the matter of s102 of the Act, at the meeting of creditors on 15 September. Amazingly, the minutes Mr Brown prepared make no reference to such inquiry. Not surprisingly, it was a matter of some significance. 63 Against this background, I am left in some doubt that Mr Brown's recollections of conversations with Ms Groom are accurate. 64 I find other aspects of Mr Brown's evidence to be curious. For example, he said that it was either he, or Mr Nicholls, who told employees on 19 August that their employment had been terminated. He later conceded that he wasn't in the meeting at the time and he assumed Mr Nicholls had told the employees. 65 Mr Brown's report to creditors (Ex'B' Annexue D) only identified outstanding employee entitlements in respect to annual leave and superannuation. He accepts this was not the total amount - claims for redundancy payments were not included. He said that he didn't know why the total amount wasn't included and then, in re-examination, said it was unnecessary because there were no funds to pay any of the entitlements anyway. In my view, the report, at the very least, misrepresented the true state of the company's indebtedness. 66 I later make findings of credit in respect to Ms Rue's version of the meeting of 19 August. 67 However, another aspect of conflicting evidence, relates to Ms Rue's entitlements to accrued annual leave. Ms Rue disputes the respondent's contention that she is only owed 96.46 hours. Ms Devine relied on Ex'D' as evidence of this figure. However, Ex'D' discloses that the period of accrual to which 96.46 hours applied, is "for the period 1/1/98 and 14/8/98". No records were produced for the period prior to 1 January 1998. 68 In light of this evidence, I am perfectly satisfied that Ms Rue's oral testimony is to be preferred to that of Ex'D'; the expressed terms of which does not cover the entire period of employment. I find accordingly.

Legislative Framework 69 In determining this matter, it has been necessary to consider the provisions of ch 2, Pt 8 of the Act - Protection of Entitlements on Transfer of Business. The relevant provisions are s101 and s102:

101 Definitions (1) In this Part: industrial relations legislation does not include the Annual Holidays Act 1944. transfer of business means the transfer, transmission, conveyance, assignment or succession, whether by agreement or by operation of law, of the whole or any part of a business, undertaking or establishment. transferred employee means a person who becomes an employee of an employer ( the new employer ) as a result of the transfer of business to that employer from another employer ( the former employer ). (2) A person is to be regarded as a transferred employee even if the person's employment with the former employer is terminated before the transfer of business, so long as: (a) the person is employed by the new employer after the transfer of business, and

(b) the circumstances of that termination and employment indicate an intention to avoid the operation of this Part. In that case, the termination of employment of such a transferred employee is to be disregarded for the purposes of this Part. 102 Continuity of service for determining entitlements (1) This section applies for the purpose of determining a transferred employee's entitlements as an employee of the new employer under an industrial instrument or the industrial relations legislation. (2) For the purpose of determining those entitlements:

(a) the continuity of the employee's contract of employment is taken not to have been broken by the transfer of business, and (b) a period of service with the former employer (including service before the commencement of this section) is taken to be a period of service with the new employer. (3) Service with the former employer includes service that because of this section or a former Act is taken to be service with that employer as a result of a previous transfer of the business. 70 Comparable predecessor provisions are to be found in the Industrial Arbitration Act, 1940 - Pt VIIIB Div 2, and the Industrial Relations Act, 1991 ch 2 Pt 2 Div 6. 71 These provisions are intended to ensure protection of employees' entitlements when businesses are transferred from one employer to another. In practice, it is usual for one of two outcomes to result. Either the former employer pays out all accrued entitlements before, or around the same time, it ceases to be the employer. Alternatively, the new employer acknowledges, and accepts the liabilities for the entitlements accrued prior to the transfer. In other words, the service with the former employer is counted as service with the new employer. In short, continuity of service is retained for all purposes. 72 In either instance, the employees' accrued entitlements are not lost in a transfer of business. Thus, the beneficial intent of the legislation is not subverted or avoided. 73 While I readily acknowledge that this is not a usual case, the reality is that neither circumstance occurred and the employees' accrued entitlements evaporated, with no entity assuming or accepting responsibility.

The effect of s101(2) 74 In my opinion, the correct construction of s101(2)(a) and (b) is to protect an employee's entitlements where there has been a termination of employment prior to a transmission of business and where the termination is viewed as an intention to avoid the effect of the Part. So much so must be the case, by the deliberate use of the word "and" linking subparas (a) and (b). Accordingly, I accept Ms Devine's contention, that to have effect, s102 must be satisfied in respect of both (a) and (b) and not one or the other of the subparagraphs. However, in my view, the facts in this case point to a conclusion to which Ms Devine's submission is not relevant. 75 Ms Devine argued that s101(2) is attracted in this case as the transferred employee was terminated before the transfer of business. In these circumstances, both the provisos in sub paras (a) and (b) need to be satisfied. The onus rests, she said, with the applicant to prove there was an intention to avoid the operation of the Part. It followed, she submitted, that as there was no proven case of "intention to avoid" the applicant's case against the respondent, being the new employer - Allambia, must fail. 76 Ms Howell on the other hand, argued that s101(2) is not attracted as the employee was not terminated before the transfer of business. I shall give consideration to the question of the date of transfer shortly. 77 There can be no doubt that the proper construction of s101(2) means that sub paras (a) and (b) can only arise in circumstances where the employment is terminated before the transfer. It cannot arise otherwise. Ipso facto, if the termination occurs after the transfer, s101(2) cannot be invoked. 78 In view of my later findings as to the date of transfer, ie on or about 19 August, and the fact that there was no termination of employment at least before 21 August, it follows that s101(2) is nihil ad rem, and has no application. I find accordingly.

Was there a transfer of business? 79 The Commission was referred to two authorities which are relevant to this question. While decided under s149(1)(d) of the Workplace Relations Act 1996, to my mind, both decisions reflect what is the generally accepted principles, under Federal and State law, applicable to the circumstances of business transfers. 80 In North Western Health Care Network v Health Services Union of Australia, Nicholson J said at 157: In my opinion the focus in s149(1)(d) on the business or part of a business in the context "of an employer who was a party to the industrial dispute" results in the reference to "the business or part of a business" taking its colour from the activity in which the employer was involved and in relation to which the industrial dispute arose. The inability of succession, assignment or transmission to occur in respect of a business (although possible in respect of part of a business) suggests the paragraph intends a general and not legally specific characterisation. This is supported by reference to the definition of "employer" and in terms of s149(1A). There is a long history of understanding of the paragraph in this way. Section 170LB is a definition for the specific purpose of a single business and should be confined to that circumstance. It is an inadequate change to set aside the prior understandings. There is no reason why "outsourcing" or "mainstreaming" from government to private enterprise should attract a different application of the section in itself. 81 And in Finance Sector of Australia v PP Consultants Pty Ltd [1999] FCA 1251, the Federal Court reaffirmed the policy considerations discussed in North Western Health Care Network v Health Services Union of Australia. At p12 of the unreported decision the Full Bench of the Federal Court said: The policy considerations supporting this approach were touched on in North Western Health Care Network , especially by Madgwick J Section 149(1)(d) is designed, among other things, to protect employees against a loss of their award entitlements following a transfer of the business, or the part of the business, in which they are employed. That being so, it is logical to focus on the nature of the activities undertaken by the two employers and the question whether there is any material change in the nature of the employee's duties or working conditions. This is more pertinent to the underlying policy of the paragraph than the characterisation of the detail of the legal arrangements between the two employers. 82 These authorities confirm that strict legal tests as to the successor arrangements between two employers should not stand in the way of a logical focus on the work performed. This is necessary to ascertain the extent of the similarity of the work and whether there has been any material change or alteration. 83 To use a rather quaint saying, If it looks like a duck, walks like a duck and quacks like a duck - it probably is a duck. It is hard to imagine what the sale of Coralpalm to Allambia was, if not a transfer of business. The sale displays all the conventional ingredients found in a typical transfer of business. 84 In my view, this is a classic and unremarkable example of a seamless transfer of business. I arrive at this conclusion by referring to the following factual circumstances.

a) there was no alteration of the business - it continued to operate as a child care facility. In that sense, it was a transfer of the whole of the business;

b) there was no interruption to the provision of the child care services;

c) all employees were retained on identical terms, with the same conditions, entitlements and responsibilities.

Termination of employment and the transmitted employee 85 A termination of employment can occur in a number of ways. Authorities abound which have considered a variety of different circumstances. A termination of employment may be a direct repudiation of the employment contract, such as an employer giving written notice of termination or summary dismissal, or a resignation by the employee. The employer and employee may mutually agree to end the employment contract or there may be a frustration of contract. Other less direct examples include abandonment of employment, or notions associated with the concept of constructive dismissal. 86 Usually, however a termination of employment will disclose one, or more characteristics, which can reasonably be described as a direct or indirect repudiation of the employment contract by, either the employer, or employee. 87 A contract of employment may be brought to an end by either party initiating the termination of employment. The initiating party is often difficult to identify. Obviously, there is no suggestion here that the employment was terminated at the initiative of the employee. It is convenient at this point, to refer to Allison v Bega Valley Council (63 IR 68). While this case primarily concerned itself with what constituted a "constructive dismissal", it is authority for the principle that it is necessary to carefully examine all the relevant facts as to whether the termination was initiated by the employer or employee. At p72 the Full Bench said: In order to undertake the necessary analysis it is necessary to look carefully at all the relevant facts. It is necessary to determine whether the actual determination was effectively initiated by the employer or by the employee particularly where the dynamics within a factual situation may change.

It is trite to observe that this was one case where the dynamics of the situation were not only changing, but were changing rapidly. It is even more important, in such cases, to closely and carefully examine all the relevant facts, in order to ensure no miscarriage of justice occurs. 88 I would observe that merely telling an employee of the termination of the employment contract is an insufficient basis for a conclusion that the contract is at an end. Indeed, the alleged termination, if effected in these circumstances, might well be subsequently found to be unlawful, arising from a finding of unfair dismissal. 89 It is even more doubtful that a termination has been effected when the person advising the employee, is not even the direct employer. 90 Even, if I was to accept Mr Brown's evidence - about which I have some doubt - that the employees, including Ms Rue, were told they were terminated by virtue of the order of the Supreme Court, it would make no sense in logic or law, if for all other practical purposes, the employment continued on. A fortiori, where it continued on without interruption and unaltered in any way, whatsoever. 91 The evidence which I now recount demonstrates beyond doubt that Ms Rue continued working, albeit with some uncertainty, as if nothing at all had changed:

i) there is no evidence that the employer, whether it be Coralpalm, Allambia or the liquidator, initiated the termination of employment at any time in the week commencing 17 August 1998. Indeed, the factual situation is that the liquidator at the behest of either Mr Wotton, Mr Clark, or both of them, positively encouraged the employees to continue working without loss of benefits or wages.

ii) Ms Rue was asked by the liquidator to continue working on the 19th, 20th and 21st August and again on the 24th August, following the weekend;

iii) there was no break in the continuity of employment;

v) her duties and responsibilities remained the same;

vi) her salary and conditions remained exactly the same and under the same award;

vii) no letter of termination, or even notice of termination, was provided at any time. This was despite Ms Rue being aware that at Tired Teddy's - another centre involved in the transfer - the staff had been given letters of termination. 92 In my view, the evidence of Ms Rue insofar as she said she was never told that she was to be terminated should be accepted. The respondent advanced no evidence to the contrary. Despite Mr Brown's belief she would have been told, it is not corroborated by the person who was said to have told her, ie Mr Nicholls. Thus, Ms Rue's direct testimony is to be preferred to Mr Brown's unsupported assumptions. 93 In reviewing these circumstances, one might wonder whether there was a termination of employment at all. However, I am satisfied, from closely examining the facts of this case, that there was no termination of employment prior to 21 August 1998. It follows from my findings as to the date of transfer, that to the extent there was an effective termination of employment with Coralplam, it was subsequent to the transfer of business.

The date of transfer 94 Determining this question is somewhat more Gordian and complex than my findings that there was a transmission of business and Ms Rue was a transferred employee. The competing positions were: For the applicant, Ms Howell submitted that Allambia became the effective employer on 24 August, the date the temporary licence became effective;

For the respondent, Ms Devine submitted that it may have been either : - 16 October, when the sale of the business was consummated, or: - 24 August, when the temporary licence became effective. 95 I can readily dispose of the 16 October by making these observations. The actual date of sale of business is not relevant to determining when a transfer of business has taken place. It is trite to observe that the definition of transfer of business in s101 makes no reference to "sale" and uses the words "transfer, transmission, conveyance, assignment or succession". Of course, any number of these terms might include a full or partial sale. In rare cases, a transfer of business might occur in which nothing at all is bought or sold. For example, where a person or entity inherits a business from another, or where one person gives a business gratis to another. In either case, no sale is effected, but a transfer of business would undoubtedly have taken place.

Thus, the sale agreement of 16 October, per se , cannot be held to be the definitive point at which the transfer occurred.

i) Allambia was managing the child care centres, in name and fact, well before 16 October;

ii) Allambia had advised employees on 22 or 23 August that it was the new temporary owner of the business from 24 August (see Mr Clarke's letter to staff, Ex"A" annexure D);

iii) it was evident that Allambia was receiving fees from parents. It subsequently claimed funding from the Commonwealth for the period 24 August to 16 October. There is no evidence as to whether this claim was paid;

iv) the temporary licence arrangements with Department of Community Services commenced on 24 August 1998. 96 However, establishing the effective date of transfer is clouded by the fact that at least for some purposes, Coralpalm - despite being in liquidation - seems to have retained certain responsibilities for the Department of Community Services licence and its associated legislative requirements beyond 18 August. 97 Even more curious is the arrangements for paying the employees between 18 and 24 August. The evidence points to Mr Wotton, a former director of Coralpalm, as the helpful benefactor. 98 Ms Devine made no concessions as to who the employer was for the period between 18 and 24 August. She insisted that it wasn't her client, Allambia - so who was the effective employer? 99 Presumably on Ms Devine's submission, some unnamed and unknown entity assumed complete responsibility for the business. This cannot possibly be the correct analysis. 100 The Commission was helpfully referred to a number of authorities which have identified key criteria which will be evident when determining who is the effective employer. Such criteria includes: 1. The true employer will be in control of the business, thus giving directions or instructions and exercising other management functions. See Australian Insurance Employees Union v WP Insurance Services Pty Ltd, 42 ALR 598 and RES Logging Co Pty Ltd v Bridge (1969) 69 AR 604; 2. There will be able to be established a "substantial identity" between the work performed, and activities conducted, by the old and the new employers. See Re Australian Industrial Relations Commission and Ors; ex parte Australian Transport Officers Federation and Ors. (1990) 171 CLR 216; 3. The fact that wages might be paid by another person or company, is not conclusive evidence that it is the employer. Such arrangements might merely be for financial convenience and may not assist in determining the correct legal position. See Australian Insurance Employees Union v WP Insurance Services Pty Ltd and RES Logging Co Pty Ltd v Bridge ; 101 Despite the obvious overlap, I am convinced, on the balance of probabilities, that Allambia was the effective employer from 19 August 1998. I have arrived at this conclusion having regard for the following:

i) the family relationship between the directors of both companies demonstrated that they were working together to protect what value the businesses retained. The value was the licence from the Department of Community Services. Effectively this meant that the centre could not be closed without putting the licence at automatic risk;

ii) the liquidator would not have told the employees to keep attending for work, if it wasn't aware that a prospective purchaser was in the offing. In my view,the liquidator was aware that the purchaser was almost certainly Mr Clarke;

iii) A person or persons associated with Coralpalm, and most probably, Mr Wotton, continued to pay for the staff. The fact that neither of the Wottons were called to give contrary evidence convinces me that this was the case. However, why would Mr Wotton do so, if his company was in liquidation and the employees had been terminated? The only logical reason was to keep the Department of Community Services licence alive to protect his brother-in-law's future interests.

iv) transitional arrangements were necessary to ensure the licence was preserved and Mr Clarke's interests were protected until the sales agreement had been effected.

v) no formal transitional agreement was entered into. This is consistent with the verbal understanding reached between the liquidator, Coralpalm and Allambia;

vi) I am convinced that Allambia was aware of its responsibility for the continuity of the employee's service from at least 19 to 24 August. It wasn't until the sales agreement was negotiated some time later, that it disavowed any liability for employees' service with Coralpalm.

vii) the evidence was Mrs Wotton, Mr Clarke's sister, was an employee of Allambia and was giving directions as a manager of Cuddly Possums from 18 to 24 August and subsequently. 102 Having applied the principles earlier mentioned to the factual circumstances in this case I find that: 1. Allambia was in control of the business exercising the full range of management functions from 19 August 1998; 2. The "substantial identity" test is more than satisfied. The only aspect of the employment relationship which changed was the identity of the employer; 3. The payment of wages by Mr Wotton between 19 August and 21 August was an arrangement for "financial convenience". 103 It follows therefore, I am satisfied that for the period from 19 August 1998, Allambia was the effective employer in law and fact.

The effect of the liquidation 104 By order of the Supreme Court of New South Wales, Coralpalm was wound up, and Nicholls & Co was appointed as liquidator on 18 August, 1998. 105 Ms Devine argued that the effect of this order was to terminate the contracts of employment effective from that date. She relied, as did Mr Brown, on General Rolling Stock Company. With respect, I do not agree. The correct interpretation of this case can give no comfort to the respondent's argument. 106 Both parties referred me to various text book interpretations of the effect on employees of liquidation orders. Ms Howell, submitted correctly, in my view, that General Rolling Stock Company, is authority for the proposition that the liquidation order is one which gives notice to terminate. It does not give effect to the actual termination. The reference is short and succinct: The winding up order, which is advertised in the newspapers is notice to all the world of the winding up. 107 Ms Howell referred me to an extract from Australian Corporate Insolvency Law at p313, which is directly applicable to the set of circumstances which pertain here: ... under s477(1)(a), the liquidator has the power to carry on the business of the company to the extent that it is necessary to do so for the beneficial winding up of the company. Often the carrying on of the business of the company facilitates the realisation of the assets of the company as the company can be sold as a going concern. 108 In my opinion, if s477(1) of the Corporations Law allows the liquidator to carry on the business, then it must logically mandate the liquidator to carry on the contracts of employment so as to ensure the business itself is able to continue. In such circumstances, the practical effect of the liquidation order would be to do precisely the opposite to what Ms Devine contends. It would extend the contracts of employment where they might otherwise have been terminated upon notice. 109 Even without the correct interpretation of General Rolling Stock Company, it would, in my opinion, be inimical to the precepts of contemporary labour law, that liquidation orders of the Supreme Court would have the effect of unilaterally, and instantly, terminating employment contracts. 110 Principles of industrial justice would be gravely compromised; particularly in circumstances where employees have absolutely no idea or warning that such orders would have the immediate effect of cancelling their employment contracts. 111 Except in circumstances of justified summary dismissal, employees have a right to receive notice of termination and employers have an obligation to give such notice.

Concluding Consideration 112 The Commission has been troubled by many aspects of this case. Some matters are strange and perplexing; others are absent of any plausible explanation. For example:

A) The sale price - the final sale price of the business fell dramatically in a short time, from an agreed $130,000 to $25,000. A ten percent deposit of the original agreed sum was paid into the liquidator's trust account.

B) The debt to Mr Samra - Mr Samra was a major creditor of Coralpalm. He had a loan arrangement with Coralplam's directors. Mr Samra had rejected a $50,000 offer of settlement in the early negotiations over the sale. Strangely, however, a few weeks later he settles on a figure of $10,000.

C) Termination of Employment - there is no evidence that the employees were ever told that their employment was terminated. There were no letters of termination and only Mr Brown's assumption that they were told. Ms Rue's consistent evidence is to the contrary. There is a letter from Mr Brown to Mr Clarke of 22 April 1999 (Ex'A' Annexure B) which, inter alia , says that the contracts of employment were terminated on

18 August 1998. It is odd that such a letter, would be written some eight months after the event and well after these proceedings were initiated.

D) Wages for the week of 17 August - No person, persons or entity were identified as paying the wages of the employees for the week commencing 17 August. Is it not reasonable to ask who paid the wages and why? If it was Mr Wotton, what was his motivation for doing so?

E) The Employment Separation Certificate - the certificate prepared by Allambia and signed on 21 April 1999, discloses twenty days owing in annual leave. Mr Clarke gave evidence that this was wrong and that Ms Rue only had 5.76 days owing in annual leave. He said it was a clerical error. I ask rhetorically, how could twenty days be Allambia's annual leave liability for less than six months employment? The twenty days is entirely consistent with my earlier findings that, from 19 August, to the amendment to the Sales Agreement at cl 6.1, Allambia understood it would be liable for Coralpalm's obligations. It recognised this obligation on the Employment Separation Certificate.

F) The amendment to clause 6.1 of the Sales Agreement - No explanation was provided as to who made the handwritten amendment to cl 6.1 of the Sales Agreement, and when. Was it made on instructions? What was the motivation for doing so?

G) Other liabilities - why were some liabilities to creditors assigned to Allambia and not others? For example, it would seem ESANDA's leasing arrangements were assigned to Allambia in the lead up to the sale agreement (see Tp118).

FINDINGS 113 The Commission makes the following findings:

1. Coralpalm Pty Ltd transferred the whole of its business to Allambia Pty Ltd.

2. The real and effective transfer of business occurred on 19 August 1998. Allambia directed and managed the business from this date.

3. The Supreme Court liquidation order of 18 August 1998 did not automatically terminate the employees' contracts of employment.

4. The liquidator took positive steps to ensure the continued operation of the business and encouraged the ongoing employment of Ms Rue, and other employees, beyond 18 August.

5. Ms Rue's employment with Coralpalm Pty Ltd was terminated on 21 August 1998. She commenced employment with Allambia Pty Ltd on identical terms and conditions, at the same location, on the next working day, 24 August 1998.

6. Ms Rue was therefore a transferred employee for the purposes of s101 of the Act.

7. s101(2) is not attracted in the foregoing circumstances.

8. Allambia Pty Ltd is lawfully obliged to make payments to Ms Rue, with interest, according to her accrued entitlements from 24 November 1995 to 9 April 1999, based on the redundancy and annual leave loading provisions of the Teachers (Non Government Early Childhood Services Centres Other Than Preschools) (State) Award and outstanding accrued annual leave pursuant to s4(1) of the Annual Holidays Act . Such payments will be less payments already made.

8. Ms Rue is entitled to an order pursuant to ss 379 and 380 of the Act, subject to the statutory ceiling in s379(3).

9. Any application for costs will require the filing of an appropriate notice of motion.

The parties are directed to confer and prepare draft orders consistent with the Commission's conclusions and findings.

Such draft orders are to be filed within seven (7) days of today.

The payments specified in the draft orders are to be paid within twenty-one (21) days hereof.

Liberty to apply is available to the parties within seven (7) days.

Any notice of motion as to costs is to be filed within fourteen (14) days of today.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.