[2014] FWCFB 888

FAIR WORK COMMISSION

DECISION


Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Melanie Millington
v
Traders International Pty Ltd
(U2013/8345)

VICE PRESIDENT HATCHER
DEPUTY PRESIDENT ASBURY
COMMISSIONER SIMPSON

SYDNEY, 23 APRIL 2014

Application for relief from unfair dismissal - jurisdictional issue - bankrupt status.

Introduction

[1] Ms Melanie Millington, the applicant in this matter, lodged an application for an unfair dismissal remedy on 9 April 2013. Traders International Pty Ltd, the respondent, raised a jurisdictional objection to the application, namely that it was not Ms Millington’s employer at the time of the dismissal the subject of the application. This jurisdictional objection was rejected by the Commission (Asbury DP) in a decision issued on 10 December 2013. 1 In the course of the hearing of that jurisdictional objection, it emerged in the evidence that Ms Millington was an undischarged bankrupt. The Deputy President considered, in the light of some previous Commission decisions (to which we will refer later), that this fact raised an issue of jurisdictional significance. The Deputy President brought that issue to the attention of the President of the Commission who, on 11 December 2013, referred it for determination by this Full Bench pursuant to ss.582 and 615 of the Fair Work Act 2009 (the Act).

[2] With the consent of the parties, the matter has proceeded before us on the basis of written submissions filed by the parties and without the need for a formal hearing. Upon the matter being referred to us, we considered that the date upon which Ms Millington became a bankrupt needed to be established factually in order for the jurisdictional issue to be properly determined. Accordingly on 8 January 2014 we issued an order pursuant to s.590(2)(c) of the Act requiring the parties to provide to the Commission any documents, records or other information in their possession identifying the date upon which Ms Millington became a bankrupt. In response to this order, Ms Millington provided us with an extract from the National Personal Insolvency Index which showed that she was entered as insolvent on that index on 16 June 2011. No material to any contrary effect was produced by the respondent. Therefore we will proceed on the basis that Ms Millington became a bankrupt on or about 16 June 2011 - well before her application for an unfair dismissal remedy was lodged.

The Bankruptcy Act

[3] The Bankruptcy Act 1966 (Cth) contains provisions which may have the effect of preventing an undischarged bankrupt from commencing or continuing litigation. These provisions fall into two categories. Firstly, there are provisions which apply to undischarged bankrupts generally. Section 58 of the Bankruptcy Act relevantly provides:

[4] The expression “the property of the bankrupt”, as relevant to the above-quoted provisions, is defined in s.5(1) as follows:

[5] “Property” itself is defined in s.5(1) in the following way:

[6] What constitutes “property divisible among the bankrupt’s creditors” for the purpose of the definition of “the property of the bankrupt” is then explained by s.116, which relevantly provides:

[7] The second category of provisions in the Bankruptcy Act specifically pertains to litigation that is commenced by a person who subsequently becomes a bankrupt. Section 60 relevantly provides:

....

[8] It may be observed that in the first category of provisions, anything which meets the description of “property divisible among the bankrupt’s creditors” (whether it is property acquired before or after the bankruptcy), including any rights and powers in relation to property that would have been exercisable by the bankrupt if he or she had not become a bankrupt, vests in the trustee of the bankrupt’s estate, with the result that it is placed beyond the control of the bankrupt person. Thus where any litigation commenced or continued by a bankrupt person is concerned, the relevant questions will firstly be whether the right to commence or continue that litigation is “property divisible among the bankrupt’s creditors”, and secondly, if so, whether the exception in s.116(2)(g) applies. The first of these questions in particular is one of some complexity, as the cases to which we will refer demonstrate.

[9] However, where the provisions in the second category apply - that is, where the bankrupt person has become bankrupt after having commenced litigation - the question is a somewhat different one. The litigation will be automatically stayed pending the election of the trustee to continue or discontinue the litigation (with a failure to make an election within 28 days deemed to be a discontinuance), if the litigation can be characterised “a civil proceeding, whether at law or in equity”, and does not fall within the exception in s.60(4).

The leading cases

[10] There are four leading cases which address the major issues concerning the operation of s.58 (and its associated definitional provisions) and s.60. Because of the complexity of those cases and the associated difficulty in deriving consistent principles from them, it is necessary to address them in some detail.

[11] In Daemar v Industrial Commission of NSW 2, the NSW Court of Appeal considered whether s.60 operated to stay proceedings in which relief in the nature of prerogative writs was sought, in circumstances where the claimant had become a bankrupt subsequent to the commencement of the proceedings. The relief sought was in respect of a decision of the Industrial Commission of NSW which had, in the exercise of its jurisdiction under the then s.88F of the Industrial Arbitration Act 1940 (NSW), declared void a contract to which the claimant was a party and ordered the claimant and another party to pay a specified monetary amount in connection with the voided contract. The Court concluded that s.60 operated to stay the proceedings, since the claimant’s application was plainly an “action” for the purpose of s.60(2), and did not fall within the exception provided in s.60(4) in that the action was not in respect of a “personal injury or wrong” done to the claimant. In the latter respect the Court (in the judgment of Kirby P, with whom Samuels JA and Clarke JA agreed) applied the “classic expression” of Dixon J in Cox v Journeaux (No 2)3 as follows:

[12] One of the claimant’s submissions which was considered by the Court in Daemar raised the difficulty that s.58(1) and s.60(2) operated according to different criteria. The claimant submitted that “action” in s.60(2) should be given a narrow construction in order to avoid a “serious disharmony” between that provision and s.58 which might produce different outcomes depending upon whether a litigant became a bankrupt before or after he or she commenced the litigation. 4 Kirby P, with whom Samuels JA and Clarke JA agreed, rejected this submission in the following terms5:

[13] This issue of potential disharmony of outcomes was also discussed in the Full Federal Court decision in Fuller v Beach Petroleum NL. 6 That case involved an appeal against an order made against the appellants for the payment of damages and indemnity costs. The respondents to the appeal moved for the dismissal of the appeal as incompetent, on the basis that the appellants had become bankrupts shortly before the first instance judgment had been delivered and that the appellants’ appeal rights had as a result vested in the trustee of their estates under s.58 of the Bankruptcy Act. The Full Court majority (Gummow and Whitlam JJ) granted the motion and dismissed the appeal, holding that the statutory right of appeal conferred by s.24 of the Federal Court of Australia Act 1976 (Cth) fell within the meaning of the expression “personal property of every description” within the definition of “property” in s.5 of the Bankruptcy Act.7 In the course of their judgment, Gummow and Whitlam JJ identified the relevant question as being whether “the temporal conjunction of circumstances which renders s.60(2) inapplicable” (because the appeal rights arose and the appeal was instituted after the appellants became bankrupt) meant that the respondents were exposed to an appeal by bankrupt persons who would be unable to pay their costs if unsuccessful. In considering this question, their Honours said8:

[14] That “odd result” was avoided by the approach taken by the majority to the exception to “property divisible amongst the creditors of the bankrupt” in s.116(2)(g). Noting the concordance between that provision and the exception to s.60(2) contained in s.60(4), Gummow and Whitlam JJ said 9:

[15] That contextual indicator was taken into account in considering the definition of “property” in s.5, and supported their Honours’ conclusion that the definition encompassed rights and interests “which would not be defined as proprietary by traditional conveyancing law”, including unassignable rights. 10

[16] A dissenting judgment was delivered by Hill J. Hill J emphasised that in order for property to vest in the trustee under s.58, it had to be “property divisible amongst the creditors of the bankrupt” 11, and he did not accept that the meaning of that expression in s.116(1)(a) was to be regarded as widened by virtue of the exclusion provisions in s.116(2)(g). A merely personal right, or a bare right to litigate which would not be an asset for the payment of debts and was not capable of being turned to profit, would not constitute such property. Hill J did not consider that the fact that a successful action might carry with it an order for costs did not make any difference, because the right to have the court exercise a judicial discretion in favour of the winning party could not be characterised as a right of property. Hill J found it unnecessary to determine whether the appellants’ appeal was an “action” to which s.60(2) would have applied if the appellants had become bankrupts after, rather than before, the institution of their appeal.

[17] The appellants having been granted special leave appealed the Full Court’s decision to the High Court. Before the High Court delivered its decision (Cummings v Claremont Petroleum 12), another Full Federal Court decision was issued which considered the issues which had been discussed in Fuller. In Griffiths v Civil Aviation Authority13 the Full Court considered an appeal from a first instance decision14 in which the trial judge (Kiefel J) had summarily dismissed an appeal from a decision of the Administrative Appeals Tribunal which had affirmed a decision of the respondent to vary the appellant’s commercial pilot’s licences such that he could no longer follow his occupation as a pilot. The appellant had become a bankrupt because of his incapacity to follow his occupation shortly before the Administrative Appeals Tribunal had issued its decision. Kiefel J had determined, in accordance with Fuller, that the appellant’s right of appeal to the Federal Court under s.44 of the Administrative Appeals Tribunal Act 1975 (Cth) fell within the definition of “property” in s.5(1) of the Bankruptcy Act and accordingly vested in the trustee under s.58(1). However her Honour had concluded her judgment by saying:

[18] The Full Court (Spender, Einfeld and Cooper JJ) unanimously allowed the appeal and dismissed a motion challenging the appeal’s competence. Each member of the Court issued a separate judgment. Spender J stated that he agreed generally with the reasons of Einfeld J and Cooper J, but stated some observations of his own. His Honour distinguished Fuller on the basis that it involved a right of appeal in respect of a money judgment, but went on to say 15:

[19] The above passage appears to implicitly reject the reasoning of the majority in Fuller that ss.58 and 116 were to be interpreted so as to produce outcomes consistent with those under s.60(2). In a similar fashion to Einfeld J, he characterised the appellant’s pilot’s licences, and the capacity to take proceedings in respect of those licences, as personal rights and not “property divisible amongst the creditors”. Spender J also rejected as a “red herring” the question of costs of the proceeding commenced or continued after bankruptcy, on the basis that any costs order made against the appellant would not affect the administration of the estate because it would not be provable against the estate, being a debt which arose after the date of sequestration.

[20] Einfeld J, by reference to a number of authorities including the judgment of Isaacs J in Commissioner of Stamp Duties (NSW) v Yeend 16 and that of Brennan J in Australian Capital Television Pty Ltd v Commonwealth17, distinguished actions which may be characterised as “personal to the bankrupt” and having no implications for the bankrupt’s estate from property vesting in the trustee under s.58. The characteristics of a pilot’s licence as being a non-transferable right conferred under statute on a person based on his or her personal fitness meant that any action taken by a bankrupt person which had as its subject matter such a licence was personal to that person and did not vest in the trustee under s.58 of the Bankruptcy Act. Einfeld J agreed with Kiefel J that the ratio of the majority in Fuller was not correct, but that the point did not need to be decided.

[21] In his judgment, Cooper J identified the critical conclusion in the majority judgment in Fuller as follows:

[22] Cooper J disagreed that any bare right of action constituted “property” for the purpose of s.58. His Honour characterised the statutory object of the Bankruptcy Act in the following way 18:

[23] Relying upon a number of English and Australian decisions, Cooper J stated that “Claims by or against the bankrupt which do not affect the estate of the bankrupt in any way or interfere in the due administration of it are of no interest to the trustee”, and that the exceptions in s.60(4) and s.116(2)(g) were not intended to be “an exhaustive statement of the rights of action to be excluded from the property of a bankrupt which was to pass to the trustee”. On the basis of those propositions, Cooper J held that statutory rights of appeal being sought to be exercised by the appellant did not fall within the definition of “property” in s.5(1) of the Bankruptcy Act, since they did not affect any property which formed part of the bankrupt’s estate and vested in the trustee. His Honour rejected the relevance of the possibility of a costs order being made against the bankrupt appellant for the same reasons as did Spender J.

[24] Significantly, Cooper J’s approach was similar to that of Gummow and Whitlam JJ to the extent that he considered that ss.58, 60 and 116 needed to be interpreted in a fashion which gave rise to a consistency in outcomes regardless upon when bankruptcy occurred. However, unlike them, his Honour preferred to read down s.60(2) by reference to his more constrained approach to the notion of “property”:

[25] In Cummings v Claremont Petroleum the High Court unanimously affirmed the orders made by the Full Federal Court majority in Fuller. However, the judgment of the plurality (Brennan CJ, Gaudron and McHugh JJ) determined the matter on a basis quite different to that of Gummow and Whitlam JJ. Their judgment initially made it clear that, had the appellants’ appeals been instituted before they became bankrupts, s.60(2) would have operated to stay the appeals. Their Honours said 19:

[26] However, the plurality went on to conclude that the appellant’s appeal was not “property” which vested in the trustee under s.58(1) of the Bankruptcy Act. They said 20:

[27] That conclusion made it unnecessary to consider the argument that the appellants’ right of appeal was a purely personal right which did not vest in the trustee. 21 The judgment of the plurality went on to conclude that the appellants did not have standing to institute the appeals because, insofar as the judgment against the appellants created or evidenced a provable debt, the bankrupt had no financial interest in the judgment because their bankruptcy had divested them of their interest in the property and their liability for provable debts.22 To the extent that findings of fraud in the judgment sought to be appealed affected the personal interests of the appellants, it was open to them to apply to the Court under s.178 of the Bankruptcy Act for an order addressing any failure by the trustee to pursue an appeal.

[28] Dawson and Toohey JJ took a different view, although as earlier stated their conclusion as to the disposition of the appeal was the same. They concluded that the appellants’ right of appeal was “property” as defined in s.5(1) of the Bankruptcy Act which vested in the trustee. Their Honours rejected a reading of “property” as limited to that which could be turned to profit for the payment of debts, and in reasoning to this conclusion referred to the comment of Gummow and Whitlam JJ, earlier quoted, that it would be an odd result if the bankrupt’s capacity to institute and continue appeal proceedings were greater if the appeal was instituted after rather than before bankruptcy. They also relied (similarly to Gummow and Whitlam JJ) upon the “narrow scope of the exceptions to be found in s.116(2)(g)”.

[29] It follows from the conclusion reached by the majority in Cummings that, contrary to the approach taken by Gummow and Whitlam JJ in Fuller, a legal proceeding before a court or tribunal may not necessarily be “property” for the purpose of the vesting provisions in s.58(1) even if it would be an “action” for the purpose of s.60(2), and that the interpretation of the definition of “property” in s.5(1) is not to be conditioned by a perceived need for consistency of outcomes in the application of s.58(1) and s.60(2). That is consistent with Daemar, and with the approach taken by Spender J in Griffiths. The distinct operation of s.58(1) and s.60(2) has been affirmed in decisions issued since Cummings. For example, in Sarkis v Moussa the NSW Court of Appeal (Beazley JA) stated that what constituted “property” within the meaning of s.58 so as to vest in the trustee was a different question from what constituted an “action” within the meaning of s.60. 23

[30] Applying Daemar, it would almost certainly be the case that had Ms Millington become bankrupt after having lodged her application, this proceeding would be stayed by operation of s.60(2) of the Bankruptcy Act (the exception in s.60(4)(a) not being applicable on the basis of Dixon J’s “classic expression” in Cox v Journeaux (No 2)). However that has no bearing on the question of whether, in the actual circumstances of this case, Ms Millington’s application was “property” for the purposes of s.58(1) - that is, “property” as defined in s.5(1) that is “property divisible amongst the creditors of the bankrupt” under s.116(1). In that connection, the authorities discussed above - in particular Griffiths and Cummings - identify two relevant propositions:

Employment cases

[31] We now turn to a number of cases in which courts have considered the applicability of ss.58 and 60 in the context of legal proceedings concerning employment.

[32] In Geia v Palm Island Aboriginal Council 24 the Queensland Court of Appeal (Pincus and Thomas JJA and Jones J) considered an appeal from a decision of the Queensland District Court to dismiss an action on the basis that the plaintiff was a bankrupt whose cause of action had vested in the trustee under s.58(1) of the Bankruptcy Act. The plaintiff’s claim was for monetary damages for wrongful termination of a contract of employment. The Court proceeded on the basis that no aspect of the plaintiff’s claim concerned recovery of payment for services already rendered.

[33] In the Geia appeal, it does not appear to have been in contest that the plaintiff/appellant’s claim was a chose in action constituting property vesting in the trustee under s.58(1). Further, the appellant conceded in the appeal that the exception in s.116(2)(g) did not apply. The appellant’s argument was rather that s.116(2)(g) was not intended to be an exhaustive statement of actions which were excepted from the concept of “property divisible amongst the creditors of the bankrupt”, and that the “common law of bankruptcy” excepted the appellant’s action from the general vesting provisions.

[34] The Court rejected this argument. After considering the effect of the primarily English authorities relied upon by the appellant, the Court concluded that there was no proper basis for the provisions of the Bankruptcy Act to be read as “subject to unstated exceptions, because of doctrines worked out in the older cases, under English statutes”. The Court then stated the following conclusion:

[35] Pelechowski v NSW Land & Housing Commission 25 concerned an application to the Federal Court/Industrial Relations Court26 for review of a decision by a Judicial Registrar dismissing a claim by the applicant in respect of the alleged unlawful termination of his employment with the respondent. The judgment of the Court (Madgwick J) records that the applicant had been made bankrupt by an order of the Federal Court in separate proceedings on 17 April 1998. Although this is not recorded in Madgwick J’s judgment, it can be discerned from the decision of Walker JR which was the subject of the review application27 that the date of bankruptcy was after the date the applicant had originally commenced proceedings in respect of his termination of employment28, but before he had lodged his application for review of Walker JR’s decision.29

[36] In his judgment, Madgwick J treated the application before him as one to which s.60(2) of the Bankruptcy Act applied, notwithstanding that review application post-dated the bankruptcy. His Honour said:

[37] It is important to observe that the above reasoning concerns s.60(4)(a), and not whether the action in question would have constituted property vesting in the trustee under s.58(1). It may also be noted that Madgwick J’s conclusion that an employment contract involves property rights must, with respect, be regarded as contestable in the light of other authorities referred to in this decision.

[38] One of those other authorities is Perfection Dairies Pty Ltd v Finn 30, a decision of a Full Bench of the Industrial Relations Commission of NSW (Wright J, President, Staff J and Stanton C). The matter concerned an application that the respondent to the appeal had made under s.84 of the Industrial Relations Act 1996 (NSW) seeking a remedy with respect to what he alleged was his unfair dismissal by the appellant employer. The respondent was an undischarged bankrupt at the time that he made his s.84 application. He was successful at first instance in obtaining orders that he be reinstated to his employment and that he be paid an amount equating to the remuneration he would have received but for his dismissal from the date of his dismissal to the date of his reinstatement. The appellant submitted that because of his bankruptcy (which it only discovered after the hearing at first instance) the respondent had no standing to commence the proceedings, the respondent’s right to commence the proceedings being property which vested in the trustee under s.58(1) of the Bankruptcy Act, with the result that the first instance decision was beyond the authority of the decision-maker.

[39] The Full Bench began its consideration of the appellant’s submission by referring to a number of authorities to which we have also referred such as Griffiths, Daemar, Fuller, and Geia. They also referred 31 to the decision of the Federal Court (French J, as he then was) in Re Heenan; Ex parte Collins32, in which his Honour, in the context of a discussion of the common law origins of the exceptions to the vesting rule found in s.116(2)(g), quoted with approval the following passage from the English Court of Appeal decision in Ex parte Vine; re Wilson33 (emphasis added by the Full Bench):

[40] The Full Bench then went on to say:

[41] The Full Bench then analysed the unfair dismissal jurisdiction under the Industrial Relations Act in the context of the bankruptcy question in the following way:

[42] In Randall v The Deputy Commissioner of Taxation 34 the applicant applied to the Federal Court for judicial review of the decision to terminate his employment in the Australian Public Service pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) and for constitutional writs under the Judiciary Act 1903 (Cth). The specific relief sought by the applicant were declarations and orders (including certiorari) to quash the decision to terminate his employment, a declaration concerning his ongoing employment in the Australian Public Service, an order in the nature of a writ of mandamus requiring the applicant’s reinstatement, and further orders directed at resumption of his employment duties and the receipt of his salary and other entitlements. The respondents sought the dismissal of the application on the basis that, because the applicant was an undischarged bankrupt (bankruptcy having occurred prior to the commencement of the employment), the proceeding fell within s.116(1)(b) (being one which involved the capacity to exercise powers in respect of property as might have been exercised by the bankrupt for his own benefit) and thus vested in the trustee under s.58(1). The respondents contended that none of the exceptions in s.116(2), in particular s.116(2)(g), applied. They relied in particular upon Geia and Pelechowski.

[43] The Court (Lander J) framed the question to be determined in the following way:

[44] After concluding that the proceeding was not one contemplated by s.116(2)(g), Lander J analysed the nature of the applicant’s application. He observed that because the basis of the application was that the applicant had been denied procedural fairness and subjected to an improper exercise of power, he could succeed only to the extent of having the decision to terminate his employment quashed and the matter remitted to the decision-maker to be determined according to law. That meant that, even if the applicant was successful, no property rights would accrue to him and therefore to his estate. In relation to the relief claimed in respect of salary, Lander J observed that since the Court was not entitled to inquire into the merits of the decision to terminate the applicant’s employment, it was hard to see how such an order could be made.

[45] Lander J also pointed to the scheme of provisions in Division 4B of the Bankruptcy Act under which the trustee was empowered to require the bankrupt to pay part or whole of the bankrupt’s income into the bankrupt’s estate as demonstrating that the Bankruptcy Act did not, apart from the operation of that scheme, recognise the bankrupt’s income as part of the bankrupt’s property. This was, his Honour observed, consistent with the longstanding principle that the bankrupt’s personal income and earnings after bankruptcy were regarded as the property of the bankrupt, as recognised in decisions such as Nette v Howarth 35 and Federal Commissioner of Taxation v The Official Receiver36. This led to the following conclusion:

[46] Lander J went on to conclude:

[47] In reaching that conclusion, Lander J referred with approval to Griffiths and Perfection Dairies. His Honour distinguished Pelechowski on the basis that it was a case concerned with the operation of s.60, not with what constituted the property of the bankrupt. He also distinguished Geia on the basis that it involved a claim for damages, not for loss of wages.

[48] Brown v Premier Pet 37 concerned a claim by the applicant that he had been dismissed from his employment in contravention of certain of the general protections provisions contained in Part 3-1 of the Act. The applicant, who had become a bankrupt prior to the commencement of the employment the subject of the application, claimed as remedies reinstatement to his employment, compensation and the imposition of a pecuniary penalty upon the respondent. The respondent moved to have the application dismissed on the basis that the right to bring the proceedings was property which had vested in the trustee under s.58(1) of the Bankruptcy Act.

[49] In his consideration of this motion, the Court (Jarrett FM, as his Honour then was) started with the proposition that a “claim for compensation arising out of a wrongful or unlawful dismissal from employment is generally seen as “property” for the purposes of the Bankruptcy Act”. His Honour cited Daemar and Geia as authorities for this proposition. We would interpose at this point that Daemar does not appear to us to support this, since it was concerned with an application for prerogative relief, but it may be accepted that Geia stands for this proposition. His Honour also referred to paragraph [5] of Pelechowski in its reference to proceedings for illegal termination of employment as being connected with contractual or quasi-contractual rights that were in the nature of property rights. On the basis of those authorities, Jarrett FM concluded that a general protections claim for compensation under the Act was property which vested in the trustee. He came to the same conclusion with respect to the pecuniary penalty claim, and referred in that connection to Leaman v The Salvation Army (Victoria) Property Trust as Trustee for The Salvation Army (Vic) Social Work 38, a case which likewise involved a claim for a pecuniary penalty for alleged contravention of the Act’s general protections provisions. However, with respect to the reinstatement claim, Jarrett FM relied on Perfection Dairies and Randall to support the conclusion that the right to seek an order for reinstatement did not involve the exercise of a right in respect of property for the purpose of s.116(1) of the Bankruptcy Act. His Honour concluded:

[50] We consider that the following propositions may be derived from the above cases:

Decisions concerning unfair dismissal rights under the Workplace Relations Act and the Fair Work Act

[51] A number of decisions by this Commission and its predecessors have considered whether an application for a remedy in respect of a dismissal alleged to be unfair constitutes property which vests in the trustee under s.58 of the Bankruptcy Act. Three different approaches may be identified. In K Hampson v Circuit Finance Australia Limited 39 the Australian Industrial Relations Commission (Acton SDP) considered whether an application for relief in respect of termination of employment under s.170CE(a)(a) of the Workplace Relations Act 1996 constituted property vesting under s.58. In that case, the applicant had become a bankrupt prior to his dismissal and the lodgement of his application. The Commission took the view that the entire application vested in the trustee under s.58, and did not fall within the exception in s.116(2)(g). Her Honour said:

[52] In the course of her decision, her Honour referred 40 to an earlier Full Bench decision, Williams v Genel Investments Pty Ltd41, which had affirmed a first instance decision42 in which the Commission (Watson SDP) had considered whether an application made under s.170CE of the Workplace Relations Act was stayed by operation of s.60(2) of the Bankruptcy Act in circumstances where the applicant had become a bankrupt subsequent to the lodgement of his application for relief. His Honour determined that the proceeding was stayed, since it was “an action” for the purpose of s.60(2) and was not an action in respect of “any personal injury or wrong done to the bankrupt, his spouse or a member of his family” such as to fall within the exception in s.60(4)(a). Although this decision is not directly on point in that it was a case where s.60 rather than s.58 was invoked (that is, the bankruptcy post-dated, not pre-dated, the making of the application), its reasoning concerning s.60(4)(a) is relevant insofar as the exception in s.116(2)(g) is cast in similar (but not identical) terms to that in s.60(4). His Honour, after analysing the relevant authorities, said:

[53] The Full Bench which heard the appeal from Watson SDP’s decision (Polites and Kaufman SDPP and Whelan C) refused leave to appeal, stating the decision was “clearly correct” 43. However, the Full Bench regarded Watson SDP’s decision as confined to a consideration of the operation of s.60(4), and expressed no view as to whether the unfair dismissal claim would concern or constitute property for the purpose of s.58(1).

[54] In Dubow v Aboriginal and Torres Strait Islander Legal Service (Qld) Ltd t/a ATSILS 44 the Commission (Richards SDP) considered the position of an applicant for an unfair dismissal remedy under the Act who had become a bankrupt prior to the lodgement of her application and prior to the dismissal the subject of that application. Richards SDP’s conclusion was different to that of Acton SDP; he took the view that, insofar as the applicant sought the remedy of reinstatement, it did not vest in the trustee under s.58, but that insofar as it sought any form of compensation, it did vest in the trustee. After referring to Hampson, Brown and Randall, his Honour then said:

[55] His Honour went on to identify some practical considerations that might arise from the approach he had preferred, saying:

[56] In James Hutchinson v Monash Health 45 the same issue was considered by the Commission (Smith DP), but a different view again was taken, namely that no aspect of an application for an unfair dismissal remedy under the Act vested in the trustee under s.58 of the Bankruptcy Act. The reasoning in that decision was as follows:

The unfair dismissal regime under the Fair Work Act

[57] It is next necessary to consider the relevant provisions of the regime of provisions contained in Part 3-2 of the Act in the light of the bankruptcy issue. Firstly s.394(1) identifies who may apply for an unfair dismissal remedy as follows:

[58] Thus the right to apply belongs to “a person who has been dismissed”. Section 386 defines when a person has been dismissed for the purpose of Part 3-2. Section 386(1), which operates subject to certain exceptions in s.386(2) and a further qualification in s.386(3), provides:

[59] The application must be lodged within 21 days after the dismissal took effect, or within such further period as the Commission may allow: s.394(2).

[60] In respect of an application properly lodged in accordance with the above provisions, s.390(1) provides that the Commission may order a person’s reinstatement or the payment of compensation to a person, if firstly the Commission is satisfied that the person was “protected from unfair dismissal” at the time of being dismissed, and secondly if the person has been unfairly dismissed. The requirements for a person to be “protected from unfair dismissal” are specified in s.382; those requirements relate to the period in which the person had been employed and whether the person had been covered by a modern award, an enterprise agreement, or the person’s annual rate of earnings had been below an identified amount. Section 385 identifies what constitutes an unfair dismissal in the following terms:

[61] Sections 391 and 392, which set out requirements which apply to the award of the remedies of reinstatement and compensation respectively, provide:

[62] Section 390(3) however conditions when compensation may be ordered under s.392 as follows:

[63] Additionally, s.381, which sets out the object of Part 3-2, provides in paragraph (1)(c) that part of the object of the Part is “to provide remedies if a dismissal is found to be unfair, with an emphasis on reinstatement” (underlining added).

[64] Some relevant observations may be made about this legislative scheme. Firstly, the Act does not contemplate that any person other than the dismissed employee may make an application in respect of that person’s dismissal. The right to make an application is personal to the dismissed employee and is not assignable.

[65] Secondly, the Act does not confer upon anybody a right to relief, but only a right to make an application (provided that specified statutory criteria are satisfied) and, once made, to have it determined according to law. The determination as to whether a dismissal is harsh, unjust or unreasonable involves the making of a discretionary decision (in the sense discussed by the High Court in Coal and Allied Operations Pty Limited v Australian Industrial Relations Commission 46). The making of a remedial order upon a finding being made that a dismissal is harsh, unjust or unreasonable involves the making of a further discretionary decision. The fact that such a finding is obtained by an applicant does not entitle the applicant to a remedy, and indeed it is possible for the Commission in the exercise of its discretion to refuse a remedy entirely. This is consistent with the position that Part 3-2 of the Act is not concerned with the enforcement of existing rights but rather the creation of new rights in certain circumstances.

[66] Thirdly, the Act requires primary consideration to be given to reinstatement before any monetary order can be made. An order to restore lost pay under s.391(3) can only be made as a consequence of the making of a reinstatement order under s.391(1). Further, a compensation order can only be made under s.392 upon a finding being made pursuant to s.390(3)(a) that reinstatement is inappropriate, and such an order is, under s.392(1) made “in lieu of reinstatement”. We respectfully adopt the analysis in this respect of Vice President Lawler in DP World Sydney Limited v Mr Stephen Lambley 47 as follows:

[67] Fourthly, in making an order for compensation under s.392, the Commission must take into account the matters specified in s.392(2), including under paragraph (c), in effect, the earnings which the applicant had lost as a result of the unfair dismissal. To this extent, a s.392 compensation order bears some analogy to an order for damages for wrongful dismissal, although it will principally relate to the time the applicant would have remained in employment and the wages he or she would have earned in that time, discounted for various contingencies. However, the other factors which must be taken into account under s.392(2), together with the requirement in s.392(3) to reduce by an appropriate amount the quantum of compensation that might otherwise be ordered to take into account any misconduct by an applicant that contributed to the decision to dismiss the applicant and the cap upon compensation prescribed by s.392(5), may mean that any compensation order made by the Commission under s.392 ultimately bears little resemblance to an order for damages for wrongful dismissal.

[68] Fifthly, the prohibition in s.392(4) upon a compensation order including any component of compensation for “shock, distress or humiliation, or other analogous hurt” caused by the manner of the dismissal means that such a compensation order is not one which compensates for any personal injury or wrong done to the applicant.

Conclusions

[69] Having regard to the authorities to which we have referred, the propositions which we have derived from those authorities, and the relevant provisions of the Act, we consider that an application for an unfair dismissal remedy is not “property” which vests in the trustee under s.58 of the Bankruptcy Act. It follows that we prefer the approach taken in James Hutchinson over the differing approaches taken in Hampson and Dubow.

[70] The critical question for the purpose of assessing whether s.58 of the Bankruptcy Act applies is whether Ms Millington’s application constitutes property divisible amongst her creditors under s.116(1) of the Act. Her former employment is not itself property that belonged to her at the time of her bankruptcy or was subsequently acquired by her under s.116(1)(a); therefore the capacity under the Act for Ms Millington to commence unfair dismissal proceedings in respect of that former employment does not constitute property as defined in s.116(1)(b). That leaves therefore only the question of whether her application for an unfair dismissal remedy is itself property divisible amongst her creditors under s.116(1)(a).

[71] As earlier discussed, the right under the Act to make an application for an unfair dismissal remedy is personal to the dismissed employee. The Act does not confer a right to a remedy, but only a right to make an application and have it heard according to law. The right is therefore best characterised as a bare, non-assignable right of action. Such rights of action are not, outside the constitutional context, usually regarded as being in the nature of “property”. 48

[72] The “primary remedy” under Part 3-2 of the Act is reinstatement. Reinstatement is something entirely personal to the applicant for an unfair dismissal remedy. Whether that remedy is granted or not in relation to a dismissal found to be unfair depends to a large degree upon an assessment of the dismissed employee’s personal suitability to return to his or her former position (or another position that is no less favourable), including the capacity for a working relationship to be re-established between the dismissed employee and the former employer. These are matters entirely personal to the dismissed employee. The capacity to seek the remedy of reinstatement is not something that can be turned to the benefit of creditors by the trustee. The trustee could not by process of law require the dismissed employee, if a reinstatement order is made, to re-commence employment and continue in such employment thereafter as envisaged by such an order. The earnings that the dismissed employee would receive as the result of a reinstatement order would not constitute property divisible amongst the creditors under s.116(1) and therefore vesting in the trustee under s.58, although such earnings would be subject to the scheme of provisions contained in Division 4B of the Bankruptcy Act.

[73] The capacity under s.391(3) to seek an order for pay lost or likely to have been lost as a result of the dismissal cannot be equated to an action for damages for wrongful dismissal. An order under s.391(3) can only be made if an order for reinstatement is made under s.391(1); it is therefore entirely ancillary to and not severable from the personal remedy of reinstatement. Further, there is no right to a lost pay order even where reinstatement is ordered; a lost pay order may only be made where the Commission “considers it appropriate to do so” and is therefore discretionary in nature. The Commission and its predecessors have not infrequently declined to make lost pay orders even though reinstatement has been ordered. 49

[74] The position in respect of compensation orders under s.392 is somewhat more problematic. As earlier observed, s.392(2)(c) requires the Commission to take into account in making such an order the remuneration that the dismissed employee would have received or would be likely to receive if the person had not been dismissed. To that extent, the remedy may be said to be analogous to an action for damages for wrongful dismissal. However, that analogy fails on a full analysis of the position under the Act. Compensation is secondary to the primary remedy of reinstatement; thus the Commission having found a dismissal unfair, it may only consider the making of a compensation order once reinstatement has been considered and found to be inappropriate, and such an order can only be made in lieu of reinstatement. The making of a compensation order is discretionary, in that it may only be made where the Commission considers such an order to be “appropriate in all the circumstances of the case”.

[75] Even where the Commission determines that it is appropriate to make a compensation order, the monetary quantum of that order may be shaped by the range of matters required to be taken into account under s.392(2) and the requirement in s.392(3) to reduce the quantum by reference to contributory misconduct by the dismissed employee to such a degree that it has little or no relationship to an order for damages that a court might make in an action for wrongful dismissal. We do not consider therefore that Geia is applicable to an analysis of the remedial provisions in Part 2-3 of the Act. The position here is, rather, highly comparable to the statutory unfair dismissal scheme in the NSW Industrial Relations Act which was determined in Perfection Dairies not to give rise to rights in the nature of property that could vest in the trustee.

[76] In Dubow, Richards SDP identified two matters in his analysis which we think demonstrate why, with respect, the conclusion his Honour reached is not the correct one. His Honour firstly contrasted the remedial powers of the Federal Court and the Federal Circuit Court under s.545 of the Act (as applied to the proceedings in Brown) to the Commission’s powers to grant a remedy in response to an unfair dismissal application. As his Honour pointed out, the court under s.545 “can order any discrete outcome”, including “any order that it considers appropriate once it reaches the required level of satisfaction in respect of a claim”; this was in contrast to the “more conditioned” powers of the Commission, under which the Commission was not empowered to make any order it considered appropriate, and could only grant certain remedies once certain matters had been taken into account. 50 We agree with the distinction, but we disagree with his Honour that it is a distinction without substance.51 An applicant seeking a civil remedy under Part 4-1 may in the application for relief plead the particular remedy that is sought under s.545, and in determining that application the court can grant that remedy independent of any consideration concerning potential alternative remedies not sought by the applicant. In consequence it is possible under Part 4-1 of the Act for an application for the remedy of reinstatement to be “severed” from an application for a compensatory order, so that (as contemplated in Brown) a bankrupt employee could bring the former application and the trustee could separately and independently bring the latter. However, this is not possible with respect to an unfair dismissal application, because as we have discussed the remedy of compensation is intertwined with and is not severable from consideration of reinstatement.

[77] The second matter identified by Richards SDP demonstrates that this is the case. His Honour recognised the “practical difficulty” which would arise from the conclusion he had reached if the dismissed employee applied for reinstatement and the trustee separately made an application for compensation under Part 3-2. That “practical difficulty” is, we consider, insoluble in nature, in that having regard to the provisions of the Act to which we have referred it would be impermissible for the Commission to consider the making of a compensation order independent of the question of reinstatement. We agree with and respectfully adopt the conclusion of Smith DP in James Hutchinson 52 that the concepts of reinstatement and compensation are “joined” and may not be “segmented”.

[78] We note from written submissions filed on behalf of Ms Millington on 1 October 2013 that it appears that Ms Millington does not seek the remedy of reinstatement, but only a compensation order under s.392. That does not, we consider, alter the position because regardless of that submission the Act requires the Commission, in the event that Ms Millington’s dismissal is found to be unfair, to give primary consideration to the remedy of reinstatement as we have earlier explained.

[79] Because Ms Millington’s application does not, we conclude, constitute property divisible amongst her creditors under s.116(1) of the Bankruptcy Act, it follows that it does not fall within the definition of “the property of the bankrupt” in s.5(1) of the Act, and so does not vest in the trustee under s.58(1). That conclusion means that it is unnecessary for us to determine to finality whether Ms Millington’s application would fall within the exception in s.116(2)(g)(i); but we observe that Dixon J’s dictum in Cox v Journeaux (No 2) would strongly suggest that the exception would not apply, and we find the analysis of Watson SDP in Williams v Genel Investments, affirmed on appeal, persuasive in this respect.

[80] We would also observe that had Ms Millington’s bankruptcy post-dated the making of her application, it is highly likely that her application would have been stayed by operation of s.60(2); but again that is not a matter we need to determine to finality.

[81] The jurisdictional objection to Ms Millington’s application based upon her prior bankruptcy is dismissed.

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VICE PRESIDENT

Final written submissions:

For Melanie Millington, 1 October 2013

For Traders International Pty Ltd, 8 October 2013

 1   [2013] FWC 9679

 2   (1988) 12 NSWLR 45; 24 IR 370

 3   (1935) 52 CLR 713 at 721

 4   (1988) 12 NSWLR 45; 24 IR 370 at 377.

 5   Ibid at 379

 6   (1993) 117 ALR 235

 7   Ibid at 242

 8   Ibid at 239

 9   Ibid at 241

 10   Ibid at 241-2

 11   Ibid at 249

 12   (1996) 185 CLR 124

 13   (1996) 137 ALR 521

 14   [1994] FCA 1528

 15   Ibid at 523

 16   (1929) 43 CLR 235 at 245-6

 17   (1992) 177 CLR 106 at 166

 18   Ibid at 540

 19   Ibid at 130

 20   Ibid at 133

 21   Ibid at 136

 22   Ibid at 137-8

 23   [2012] NSWCA 136 at [29]

 24   [1999] QCA 389, (1999) 152 FLR 135

 25   [2000] FCA 23

 26   Madgwick J at [1] expressed some doubt as to which Court was hearing the matter.

 27   Karl Pelechowski v NSW Land & Housing Corp [1999] FCA 1110

 28   Ibid at [1]

 29   The date of Walker JR’s decision was 13 July 1999, so the application for review could only have been filed after that date.

 30   [2006] NSWIRComm 137, (2006) 151 IR 197

 31   Ibid at [33]-[34]

 32   (1992) 116 ALR 146

 33   (1878) 8 Ch D 364 at 366-7

 34   [2008] FCA 1939, (2008) 174 FCR 441

 35   (1935) 53 CLR 55

 36   (1956) 95 CLR 300

 37   [2012] FMCA 830

 38   [2011] FMCA 1037

 39   PR967475

 40   Ibid at [11]

 41   PR902342

 42   Print T4278

 43   At [11]

 44   [2013] FWC 6171

 45   [2013] FWC 8173

 46   (2000) 203 CLR 194 at 204-5 [19] per Gleeson CJ and Gaudron and Hayne JJ)

 47   [2013] FWCFB 9230. Vice President Lawler dissented as to the outcome in that appeal but not in a way which affected the correctness of the quoted passage.

 48   Georgiadis v Australian & Overseas Telecommunications Corporation [1994] HCA 6; (1994) 179 CLR 297 at 314 per Dawson J; Hepples v Federal Commissioner of Taxation (1990) 22 FCR 1 at 23

 49   E.g. Ismail Gurdil v The Star Pty Ltd [2013] FWC 6780 at [104]; Regional Express Holdings Limited t/a REX Airlines v R. Richards [2010] FWAFB 8753 at [29]; Dale Cook v ACI Operations Pty Ltd [2012] FWA 140 at [32]-[33].

 50   [2013] FWC 6171 at [17]-[20]

 51   Ibid at [22]

 52   [2013] FWC 6171 at [30]

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