Re Life Insurance Act 1945-1959; Re Order to Wind Up Associated Dominions Assurance Society Pty Ltd [1962] HCA 46

Briefly, the evidence shows that an order was made on 10th December 1953 for the winding-up of the company under the provisions of the Life Insurance Act 1945-1950 Cth and some six days later an order was made defining the powers of the liquidators. These powers included a power to carry on the business of the company so far as might be necessary for the beneficial winding-up thereof. Mr. Hayes had commenced his service with the company (or its "transmittor" or "prior transmittor" - as to which see s. 4 (11) (c) of the Long Service Leave Act, 1955) in 1921 and after occupying various positions in its employ became general manager of the company. There is evidence that some little time before the winding-up order was made a resolution of the board of directors of the company was passed which purported to appoint him managing director of the company but upon consideration of the articles of association I have formed the view that this resolution was not effective and that Mr. Hayes' claim ought to be considered on the basis that he remained general manager of the company, at least until the winding-up order was made. It is said that at that time the liquidators terminated the employment of most of the employees of the company but retained the services of certain key employees. Included among these was Mr. Hayes and he was in the company's employment from the date of the winding-up order until September 1959.

There is no question that Mr. Hayes was not entitled to any long service leave at the time when the winding-up order was made for the Long Service Leave Act did not come into operation until the end of 1955. But pursuant to s. 4 (1) every worker (which term was so defined as to make it applicable to Mr. Hayes) became entitled, in accordance with the provisions of the Act, to long service leave on ordinary pay in respect of his service with his employer and the sub-section directed that service with the employer before the commencement of the Act as well as service with the employer after such commencement should be taken into account for the purposes of the section. By sub-s. (11) (a) of the same section the service of a worker with an employer was defined to mean the period during which the worker has served his employer under an unbroken contract of employment. At no time has Mr. Hayes enjoyed any long service leave and the question with which the application is concerned arises in relation to sub-s. (5) (a) of s. 4. This sub-section provides that where the services of a worker are terminated otherwise than by his death and any long service leave to which the worker was entitled has not been taken, or accrues to the worker upon such termination, the worker shall be deemed to have entered upon the leave from the date of such termination and the employer shall forthwith pay to the worker in full his ordinary pay for the leave less any amount already paid to the worker in respect of that leave. It will be seen, therefore, that although a worker may during the course of his employment become entitled to long service leave he does not become entitled to any money payment in lieu thereof until his employment has been terminated, so that if in September 1959 Mr. Hayes became entitled to payment in lieu of long service leave the amount in question would constitute part of the expenses of the winding-up.

The immediate question is, of course, whether the period between 1921 and September 1959 constituted a period during which Mr. Hayes served the company under an "unbroken" contract of employment. There is abundant authority for the proposition that a compulsory winding-up order and its publication is equivalent to the dismissal of a company's servants: In re General Rolling Stock Company (Chapman's Case) [1] ; MacDowall's Case [2] and Reid v. Explosives Company [3] . But to say that a winding-up order is equivalent to the dismissal of the company's servants does not justify the further conclusion that a dismissal so brought about, also, ipso facto, terminates the contract of employment itself. No doubt where a servant is wrongfully dismissed and excluded from his employment it is not possible for him to keep the contract on foot and, from time to time, to sue for his wages or salary. But this is because, except in special circumstances, service is a condition precedent to the right to receive wages and from a practical point of view the only remedy of a servant wrongfully dismissed is to accept the repudiation involved in the dismissal and sue for damages for the employer's breach of the contract. The principles upon which these propositions rest were the subject of discussion in this Court in Automatic Fire Sprinklers Pty. Ltd. v. Watson [1] and in the Supreme Court of New South Wales in Consolidated Press Ltd. v. Thompson [2] . In the present case, therefore, it is I think proper to assume that the making of the winding-up order and its publication did not of its own force terminate the contract of employment between Mr. Hayes and the company. Of course, if he had been excluded from his employment he might well have brought an action for wrongful dismissal. But, although he was not excluded from employment with the company, the question for examination is whether the arrangement which was made between him and the liquidators upon the making of the winding-up order resulted in a continuance of his existing contract with the company or in the making of an entirely new contract under which he assumed quite different rights, duties and functions.

1. (1866) L.R. 1 Eq. 346. 2. (1886) 32 Ch.D. 366. 3. (1887) 19 Q.B.D. 264. 4. (1946) 72 C.L.R. 435. 5. (1952) 52 S.R. (N.S.W.) 75; 69 W.N. 75.

Were it not for an unusual circumstance it would, I think, be proper to leave the question of Mr. Hayes' rights to be determined in proceedings instituted in the ordinary way. But it is suggested that reference to a number of provisions of the Act, and in particular to s. 12, indicates that the function of deciding whether a worker has become entitled to a sum of money in lieu of long service leave is committed exclusively to the tribunals therein indicated. This jurisdiction, however, is subject to some limitation for the authority conferred upon these tribunals is to make an order for the payment of any amount which has become due and payable under the Act at any time during a period of two years immediately preceding the date of the application. As more than two years have elapsed since Mr. Hayes' employment was terminated he is not now in a position to make an application under s. 12. He did, however, make a claim upon the liquidators immediately upon the termination of his services in September 1959 and it seems clear that in reliance upon the liquidators' then announced intention to seek the directions of this Court upon the matter, he accepted their implicit request to forebear to make any application in the ordinary way. But the liquidators did not make their application to this Court until 8th May 1962, that is to say a little over a month before this application came on for hearing and at that time more than two years had elapsed since the termination of his employment. In those circumstances I do not think it would be proper to allow Mr. Hayes' claim to be defeated by the limitation which it is suggested is imposed by s. 12 and, upon the principles enunciated in Ex parte James; In re Condon [3] and later cases, I propose to disregard the suggested limitation. That being so, I propose to say briefly that having considered the whole of the evidence now before me concerning the character and incidents of Mr. Hayes' employment during the period after the winding-up order was made there was, for all practical purposes, no break in the continuity of his employment as general manager. This is not quite the language of s. 4 (11) which equates " service of a worker with an employer" to "the period during which the worker has served his employer under an unbroken contract of employment". The language of this sub-section presents a number of constructional difficulties but I do not propose to attempt to resolve them in an application of this character. It is, I think, sufficient for the purposes of this case to say that it was not suggested that Mr. Hayes' contract of employment did not remain "unbroken" as he progressed in the company's employment from 1921 until the commencement of the winding-up and I am satisfied that, thereafter, it remained unbroken notwithstanding the winding-up order. I, therefore, propose to instruct the liquidators, pursuant to s. 67 (4) of the Life Insurance Act, that they will be justified in meeting Mr. Hayes' claim.