Francisco Edward Guivarra and National Aboriginal & Torres Strait Islander Employer Association Limited [1994] IRCA 38

INDUSTRIAL RELATION COURT OF AUSTRALIA VI 820 of 1994 VICTORIA DISTRICT REGISTRY B E T W E E N: FRANCISCO EDWARD GUIVARRA Applicant A N D NATIONAL ABORIGINAL & TORRES STRAIT ISLANDER EMPLOYER ASSOCIATION LIMITED Respondent Written Reasons for Decision of 31st August 1994 PARKINSON JR This application by motion on notice was made by Mr. Guivarra, who was employed by the respondent as National Industrial Relations Manager until 10th June, 1994. On that day his employment was terminated by letter signed by the Chief Executive Officer of the respondent. It was common ground between the parties that no payments of outstanding entitlements or notice have been made to the applicant by the respondent. The applicant alleges pursuant to S170EA of the Industrial Relations Act 1988 that his termination was without valid reason and was harsh, unjust and unreasonable, and seeks remedies pursuant to S170EE of the Act. Application was made on notice dated 30th August, 1994 by the applicant in these proceedings for interlocutory orders directed to the respondent. The motion was listed as a motion of urgency for hearing on 31st August, 1994. After hearing the parties I advised them of my decision on the application, and that the orders sought would be made that day. I advised the parties that written reasons for my decision would be issued, and these are those reasons. Orders were sought: 1. Restraining the respondent from transferring or disposing of any funds, property or other assests until further order of the Court; 2. Restraining the respondent from entering into any agreement or arrangement with its creditors or any other claimant until further order of the Court; 3 . Such further order or orders or directions as the Court may deem fit. At the hearing leave was granted to the applicant to amend the orders sought in the notice of motion as follows: " 3. That a receiver be appointed to the respondent in accordance with the procedures set out in Order 26 of the Industrial Relations Court Rules. 4. Such further or other order or orders or directions as the Court may deem fit. " The affidavit material filed by the applicant alleged a real risk that the funds, property and assets of the respondent would be dealt with in a manner which would have a likely result of stultifying the judgment sought by the applicant for compensation pursuant to S170EA. I am satisfied on the material before me that there is such a risk. The respondent has been progressing or entering into arrangements with creditors other than the applicant with absolute disregard for any outstanding entitlements of the applicant pursuant to his contract of employment or pursuant to the Act. It is clear that the respondent's directors have taken steps or are intending to take steps to wind up the company. I am further satisfied that these arrangements are being progressed without any regard to any possible priority the applicant may have pursuant to the Corporations law. It appears that there are at this point in time some assets remaining in the respondent, but the solicitor for the respondent was not able to identify the nature of those assets or their extent. I am satisfied that this Court has power by virtue of S419 of the Industrial Relations Act to make the interlocutory orders sought by the applicant. In this regard I have considered the decision of his Honour the Chief Justice in Dunham v Randwick Imaging Pty Ltd (1994) 122 ALR 323 at 331, wherein the following observation on the operation of S419 and S170EE(4) was made: " I find s.170EE(4) puzzling. I can understand why the drafter thought it necessary to say that nothing in s.170EC limits the Court's power to make an interim or interlocutory order in relation to an application under s.170EA. Otherwise, it might have been thought that the Court could not make even an interim order before referring a matter to the Industrial Relations Commission for conciliation; and it might sometimes be important to make an interim order, for example to preserve the assets or records of the respondent. It would not have been surprising if a provision such as s.170EE(4) had been appended to s. 170EC.... Whatever the reason for s170EE(4), one thing is clear: it is a savings provision, it does not confer a power. The power must be found elsewhere. So understood, the subsection still has work to do. Section 419 enables injunctions to be made in relation to s.170EA applications; although not injunctions restraining a proposed termination." Whilst the provisions of S170EE have been amended since that decision, S170EE(6) is identical in its terms to S170EE (4) which was the subject of consideration in that decision. In determining whether orders such as those sought ought be made, I have considered whether in the circumstances the applicant had identified that it had a strongly arguable case on the merits of its application. Having regard to the apparent failure of the respondent to give any notice to the applicant of intention to terminate his employment, and its failure to make any payment to the applicant in lieu of notice, I am satisfied that a strongly arguable case exists that the applicant's employment was terminated in contravention of Section 170EA of the Act. Having determined that the applicant does have a strongly arguable case, it is necessary to apply what is generally referred to as the "balance of convenience" test to the interests of both the applicant and the respondent. Both Counsel put argument to me in relation to this matter. Mr. Lawrence, having given the usual undertaking as to damage on behalf of his client, submitted that the manner in which assets had been dealt with thus far, together with correspondence from the respondents relying upon likely insolvency as a basis to negotiate lesser settlement terms with the applicant, as well as the matters I have referred to earlier herein, demonstrated that the balance of the convenience was clearly with his client. Mr. Rinaldi submitted that the making of such orders would be likely to prejudice creditors other than the applicant, including other ex-employees who had already entered into agreements with the respondent. No material was put before me to identify why greater weight ought be given to the interest of creditors of the respondent than those of the applicant. Nor was it suggested by Mr. Rinaldi that the operations of the respondent would be in any way prejudiced by the making of the orders sought. Indeed it is clear that the respondent has ceased to trade or operate. In view of these matters I was satisfied that the balance of convenience rests with the applicant in these proceedings, and consequently the orders sought, other than amended order 3, were made. Mr. Lawrence did not press the making of amended order 3 in the motion, which if made would have resulted in the appointment of receivers to the respondent. Leave was granted to the parties to apply in this regard. A further matter raised by Mr. Lawrence was the possibility of referring the entirety of this application including the outstanding matters in the notice of motion to a court appointed mediator. Mr. Rinaldi supported this approach and whilst no order was made in this regard the court indicated that such orders would be made on application by the parties. For the reasons set out in this decision the following orders were made on 31st August, 1994: 1. This Court orders and restrains the respondent from transferring or disposing of any funds property or other assets until further order of this Court. 2. This Court orders and restrains the respondent from entering into any agreement or arrangement with its creditors or any other claimant until further order of this Court. 3. That order number 3 as amended in the Notice of Motion be adjourned to a date to be fixed upon application to the Court. I certify that this and the six (6) preceding pages are a true copy of the reasons for judgment of Judicial Registrar Parkinson. Associate: Dated: 2 September 1994 Solicitors for the Applicant: Capogreco & Associates Counsel appearing for the Applicant: Mr. B.D. Lawrence Solicitors for the Respondent: Freehill Hollingdale&Page Solicitor appearing for the Respondent: Mr. M. Rinaldi Date of hearing: 31 August 1994 Date of judgment: 2 September 1994