Industrial Relations Commission of New South Wales CITATION: Krystyna Wrzosek v Rainbow Nominees Pty Ltd ACN 000 774 774 (Receivers and Managers Appointed) trading as The Bernly Private Hotel [2006] NSWIRComm 1155 APPLICANT Krystyna Wrzosek PARTIES: RESPONDENTS TO THE NOTICE OF MOTION Rainbow Nominees Pty Ltd ACN 000 7474 (Receivers and Managers Appointed) trading as The Bernly Private Hotel Charles Negrine Quentin Olde Ian Francis FILE NUMBER(S): IRC 6813 of 2005 CORAM: McKenna C Unfair dismissal - notice of motion to join additional respondents, namely (1) sole director of respondent company; and (2) the receivers and managers of respondent company - Director not relevantly involved in the termination of employment - Notice of motion dismissed as it concerns joining the director as a respondent CATCHWORDS: Applicant submitted the receivers and managers should be joined as they may have personal liability as respondents: (1) as applicant's actual employer, because they took action exercisable only by an employer in terminating employment; (2) deriving from s419 of the Corporations Act; (3) given the case law developing on joint employment or apportioning liability to the effective employer; (4) if they acted in some quasi-tortious way, or in an otherwise unlawful way - Applicant found to have an arguable case in relevant respects - Receiver and managers joined as additional respondents to the proceedings - Matter adjourned for conciliation Receiver and Manager Industrial Relations Act 1996 s68, 84, 86, 89(5), 99, 170(1), 210, 357(1), 400 Industrial Relations Commission Rules 1996 (NSW) r83(c), 84(1) Corporations Act (2001) (Cth) s210, 419, 420, 556 Companies (Receiver and Manager) Act 1959 (NSW) s8 LEGISLATION CITED: Employment Protection Act 1982 (NSW) s22 Occupational Health and Safety Act 1983 (NSW) s50 Occupational Health and Safety Act 2000 (NSW) AWARDS Motels, Accommodation and Resorts (State) Award cl11 Advance Glass Technologies of Australia Pty Limited (Receivers & Managers Appointed) v Building Workers Industrial Union of Australia, New South Wales Branch (1993) 51 IR 50 Allders Department Stores Ltd and other companies, Re [2005] EWHC 172 (Ch), [2005] 2 All ER 122 Allert v Grabowski (1988) 48 SASR 196 Antonakopoulos v State Bank of NSW (1999) 91 IR 385 AOS Group Australia Pty Ltd (in liq) v Arrogante (2004) 135 IR 44 Associated Newspapers Ltd v Grinston (1949) 66 WN (NSW) 211 Australian Iron and Steel Pty Ltd v Banovic (1989) 168 CLR 165 Australasian Meat Industry Employees' Union, New South Wales Branch v Peter Stoitse Transport Pty Ltd and Workforce on Tap [2002] NSWIRComm 185 Australian Insurance Employees Union v WP Insurance Services Pty Ltd (1982) 1 IR 212 Brian Rochford Ltd (Administrator Appointed) v Textile Clothing and Footwear Union of NSW (1998) 85 IR 332 Dalgety Farmers Ltd t/a Grazcos v Bruce and Another (1995) 12 NSWCCR 36 Damevski v Giudice (2003) 202 ALR 494 Deyes v Wood [1911] 1 KB 806 Expo International Pty Ltd (Receivers and Managers Appointed) (In Liq) and Another v Chant and Others [1979] 2 NSWLR 820 Fisher v Madden as Receiver and Manager of Dataflow Computer Services Pty Ltd (2002) 54 NSWLR 179 Gomba Holdings v Homan [1986] 1 WLR 1301 at 1305 Government Cleaning Services (Privatisation) Award, Re (1993) 51 IR 167 Griffith v Secretary of State for Social Services [1974] QB 468 Healy v Johnston (unrept, Sheehy J, 142 of 1976, 11/03/1977) Hollis v Vabu Pty Limited (2001) 207 CLR 21 Huddersfield Fine Worsteds Limited, Re [2005] EWCA Civ 1072 Inspector Elizabeth Benbrow v Robert Michael Scales [2002] NSWCIMC 184 International Harvester Export Co v International Harvester Australia Ltd [1983] 1 VR 539; 7 ACLR 391; 1 ACLC 580 James Miller Holdings v Graham (1978) ACLR 604 Joyce v Hendricks Pty Ltd & Anor [2006] NSWIRComm 1068 Layfree Piri Puruto v Linfox Logistics Pty Ltd (unrept, Cambridge C, IRC02/6719, 13/11/2003) Love v The Image Centre Pty Ltd (1991) 33 AILR 406 Marlborough Harbour Board v Goulden [1985] 2 NZLR 378 CASES CITED: Matthews v Cool or Cosy [2003] WAIRC 10399 McClusky v Karagoizis [2002] FCA 1137, (2002) 120 IR 147 McEvoy v Incat Tasmania Pty Ltd [2003] FCA 810 Mead v New England Seed Traders Pty Ltd [1972] WCR 113 Morgan v Kittochside Nominees Pty Ltd (2002) 117 IR 152 Nagle (T/as W D and J L Nagle & Sons) v Tilburg (1993) 51 IR 8 Nguyen v A-N-T Contract Packers Pty Ltd and Anor (2003) 128 IR 241 Nicoll v Cutts [1985] BCLC 322 Nokes v Doncaster Amalgamated Colleries Ltd [1940] AC 1014 at 1026 Layfree Piri Puruto v Linfox Logistics Pty Ltd (unrept, Cambridge C, IRC02/6719, 13/11/2003) Mack Trucks (Britain) Ltd, Re [1977] 1 All ER 977 Office Co Furniture Pty Ltd, Re [1999] QSC 63 Pacific Coast Syndicate Ltd, Re [1913] 2 Ch 26 Pitcher v Langford (1991) 23 NSWLR 142 (CA) Polkey v AE Dayton Services Ltd (1988) ICR 142 Powdrill v Watson [1995] 2 All ER 65, [1995] 2 AC 394 Price v Price (1904) 29 VLR 719 Rich River Golf Club v Power [1975] NSWIRComm 75 Seymour v Stawell Timber Industries Pty Ltd (Receiver and Manager Appointed) (1985) 13 IR 289 Shop Distributive and Allied Employees' Association, New South Wales v Smithkline Beecham (Australia) Pty Ltd (unrept, Tabbaa C, IRC2001/1639, 11/06/2002) Sipad Holding ddpo v Popovic (1995) 19 ASCR 108, (1996) 14 ACLC 307 Sowman v David Samuel Trust Ltd [1978] 1 WLR 22; [1978] 1 All ER 616 Springer and Ors v Information Solution Works Pty Ltd (In Liquidation) (Receiver and Manager Appointed) (Receiver Appointed) unrept decision of Shelly DP, Tas IRC, 23/4/04, T11321 Staff Aid Services v Bianchi (2004) 133 IR 29 Steman v Salamon [2004] NSWIRComm 1126 Tom, Wendy, Sally and Andrew Chapman v R H Heywood-Smith and J M Morgan as receivers and managers of Binalong Pty Ltd and the Marina Services Co Pty Ltd [1995] SAIRComm 46 Swift Placements Pty Ltd v Workcover Authority of NSW (Inspector May) (2000) 96 IR 69 at 84 Whitton v ACN 003 266 886 Pty Ltd (Controller Appointed) (In Liq) (1997) 42 NSWLR 123 Winter Star v Dixon (1994) 55 IR 187 HEARING DATES: 12 September 2006 DATE OF JUDGMENT: 10/13/2006 APPLICANT ON NOTICE OF MOTION Mr S Coleman of counsel Mr M Charles, solicitor - Boyd House & Partners, Solicitors RESPONDENTS TO NOTICE OF MOTION Mr C Negrine, in person LEGAL REPRESENTATIVES: Mr M Rosenblatt, solicitor - Abbott Tout, Lawyers . Rainbow Nominees Pty Ltd ACN 000 7474 (Receivers and Managers Appointed) trading as the Bernly Private Hotel . Quentin Olde . Ian Francis DECISION: INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES McKENNA C 13 October 2006 Matter No IRC 6813 of 2005 KRYSTYNA WRZOSEK AND RAINBOW NOMINEES PTY LTD ACN 000 774 774 (RECEIVERS AND MANAGERS APPOINTED) TRADING AS THE BERNLY PRIVATE HOTEL Application by Krystyna Wrzosek re unfair dismissal pursuant to section 84 of the Industrial Relations Act 1996 DECISION [2006] NSWIRComm 1155 1 This is an application made pursuant to s84 of the Industrial Relations Act 1996 in which the applicant, Krystyna Wrzosek, alleged she was harshly, unreasonably or unjustly dismissed by Rainbow Nominees Pty Ltd ("Rainbow") trading as The Bernly Private Hotel ("the Bernly"). The company is now styled as Rainbow Nominees Pty Limited ACN 000 774 774 (Receivers and Mangers Appointed) trading as The Bernly Private Hotel. 2 A notice of motion filed by the applicant on 16 August 2006 has been allocated to me for hearing. It seeks to join three additional respondents to the unfair dismissal proceedings, namely: (1) a director of Rainbow named Charles Negrine; and (2) Rainbow's receivers and managers, Quentin Olde and Ian Francis. The notice of motion relevantly read: A. The applicant will [at a time and date to be fixed] move the Commission for: Orders, pursuant to s170(1) of the Industrial Relations Act 1996, and rules 83(c) and 84(1) of the Industrial Relations Commission Rules 1996 that: 1. Quentin James Olde and Ian Charles Francis, be joined as a respondent to the application, and 2. An order that Charles Negrine be joined as a respondent to the application. B. Grounds and reasons: 1. Quentin Olde and Ian Francis are the Receivers and Managers. 2. The Receivers and Managers employed, or may have employed or re-employed the Applicant at the time she was terminated. 3. The receivers may have terminated the Applicant. 4. The receivers may be liable for the decision to terminate, or for the termination, pursuant to s419 of the Corporations Act 2001. 5. Charles Negrine was for many years the actual and declared employer of the Applicant. 6. On the multiple indicia test Charles Negrine may have been the employer at the time the Applicant's employment was terminated, and may have been culpably associated with that termination. 7. The above grounds go to matters of fact which would be necessary for the Commission to determine in order to find the true employer, and any subsequent entitlement if the termination is found to be unfair. Background 3 The applicant was employed as a housekeeper at the Bernly from 16 July 1987 to 5 December 2005. The applicant understood that Mr Negrine was the owner and manager of the Bernly, and that he had employed her. However, it appears from Mr Negrine's submissions that the applicant was employed by a company named Hadabel Pty Ltd. It further appears that on some indeterminate date around 2000, the applicant's employment was transferred, without her knowledge or consent, from Hadabel to Rainbow. 4 On 17 March 2005, Rainbow obtained a $5.55m loan from Abacus Finance Pty Ltd. From that time, the Bernly continued to be owned by Rainbow, but under a real property mortgage over the Bernly held by Abacus. The Bernly was Rainbow's only substantial asset. 5 Some issues arose concerning the loan. In the result, on 25 November 2005, Mr Olde and Mr Francis, of Taylor Woodings - Chartered Accountants, were appointed joint and several receivers and managers of Rainbow pursuant to a fixed and floating charge in favour of Abacus. They were also appointed under a real property mortgage as receivers and managers of the Bernly (I will refer to them compendiously as "the receivers"). The receivers subsequently took control of the Bernly and appointed a hotel management company named Nomads World Hotels Pty Ltd to conduct a review and to operate the Bernly. 6 Upon receiving certain recommendations from Nomads, the receivers decided, among other matters, to terminate the applicant's employment. On 2 December 2005, Mr Olde wrote to the applicant in the following terms advising of her impending termination of employment: Dear Madam Rainbow Nominees Pty Limited ACN 000 774 774 (Receivers and Managers Appointed) trading as The Bernly Private Hotel ("the Bernly") As you are aware Mr Ian Charles Francis and I, Quentin James Olde were appointed Joint and Several Receivers and Managers of the Bernly on 25 November 2005. As a result of the Receivership, your position with the Bernly has become redundant and I hereby terminate your employment effective 5 December 2005. Should you have any queries regarding the above please contact Mr Andrew Peros of this office on [telephone number]. Yours faithfully Q J Olde Joint and Several Receiver and Manager 7 There was no discussion with the applicant about any matter concerning the receivers' decision to terminate her employment. The applicant understands that, at the time of her termination of employment, work was still available at the Bernly. 8 On 23 December 2005, the applicant filed this application alleging she had been harshly, unreasonably or unjustly dismissed by Rainbow. The Registry allocated a date of 18 January 2006 for conciliation before Tabbaa C. On 12 January 2006, before the scheduled listing, Mr Olde wrote to the Industrial Registrar concerning the notification: Dear Sirs Rainbow Nominees Pty Limited ACN 000 774 774 (Receivers and Managers Appointed) trading as The Bernly Private Hotel ("the Company") I refer to your correspondence sent on 3 January 2006 (File Number 6813 of 05) which was received at this office on 10 January 2006. As you are aware Mr Ian Charles Francis and I, Quentin James Olde were appointed Joint and Several Receivers and Managers of the Company on 25 November 2005. Attached is a copy of the notice of appointment for your information. Please find attached completed forms that were enclosed with your abovementioned correspondence. Notwithstanding the completion and lodgement of these forms, I would like to bring the following to your attention: 1. As Receiver and Manager I have taken control of the Bernly Private Hotel ("the Bernly") and continue to trade the business with a view to selling it in the near future. To assist this process, I have engaged a hotel management group to conduct the day-to-day management of the hotel. 2. In consultation with the management group it was deemed necessary to restructure the cleaning function from a staff position to contract out the entire function including the provision of additional services and supplies. 3. As a result of this action Ms Wrzosek's position as Housekeeper at the Bernly became redundant, accordingly her employment was terminated effective Monday, 5 December 2005. I understand that Ms Wrzosek may have accrued employee entitlements during her employment tenure however I am yet to quantify these. Any claim that Ms Wrzosek has against the company in relation to Employee Entitlements would be recognised as being unsecured with the appropriate priority from any distribution afforded to it in accordance with s556 of the Corporations Act. It is not clear at this stage if the sale of the Company's assets will be sufficient to discharge the debt owed to the secured creditor and therefore if there will be funds available to pay a dividend to unsecured creditors and employees. The matter has been listed for conciliation and directions on 18 January 2006, however, given the above circumstances I request that no further action be taken against the Company and the matter be struck out so as to avoid unnecessary costs. Should you have any queries regarding the above please contact Mr Andrew Peros of this office on [telephone number]. Yours faithfully Rainbow Nominees Pty Limited (Receivers & Managers Appointed) Q J Olde Joint and Several Receiver and Manager 9 The initial listing on 18 January 2006 was vacated by Tabbaa C consequent upon this advice from Mr Olde. The proceedings then went into abeyance until relistings on 19 April and 29 June 2006. On those occasions, the applicant foreshadowed that a notice of motion would be filed to join further respondents to the application. The discussions in proceedings before Tabbaa C concerned not only the allegedly unfair dismissal but also the alleged underpayments. I note, in passing, in this respect, that Mr S Coleman of counsel submitted the applicant is owed a "great deal" of money. It appears there are insufficient funds in Rainbow to pay the applicant's unpaid entitlements. Moreover, as Rainbow has not been wound-up in liquidation and continues to trade, the applicant is not eligible to make an application under the General Employee Entitlements and Redundancy Scheme, the federal scheme for employees who have lost their job and entitlements due to employer insolvency or bankruptcy. 10 Before turning to consider the submissions in relation to the notice of motion, I should note that Mr Negrine commenced proceedings in the Supreme Court against a number of parties, namely, Abacus Finance Pty Ltd; Taylor Woodings, Chartered Accountants; Abbott Tout, Lawyers; and Gray Perkins, Lawyers. In short, Mr Negrine considers the receivership and consequential activities were invalid. That case was listed before the Supreme Court on 3 October 2006. 11 I should also note that it was common ground that the appointment of a receiver and manager does not raise leave issues of the type considered in Brian Rochford Ltd (Administrator Appointed) v Textile Clothing and Footwear Union of NSW (1998) 85 IR 332. Consideration 12 The issue to be determined is whether the respondents to the notice of motion, namely Messrs Negrine, Olde and Francis, should be joined as respondents to the principal application alleging that the applicant was harshly, unreasonably or unjustly dismissed. 13 Chapter 2 Pt 6 of the Industrial Relations Act is, within terms, concerned with the harsh, unreasonable or unjust dismissal of an "employee" by an "employer". That is, s84(1) of the Industrial Relations Act specifically provides: "If an employer dismisses an employee and the employee claims that the dismissal is harsh, unreasonable or unjust, the employee may apply to the Commission for the claim to be dealt with under this Part". Although s84 refers to employers and employees, a number of unfair dismissal cases and other cases involving industrial matters have examined questions of: (1) who, or which entity, was the real or effective employer for the purposes of relief claimed by an employee; (2) whether there was joint employment or joint liability between respondents with respect to an employee's claims for relief; and (3) whether orders should be made jointly and severally against corporations and individuals. Against the background of such cases, Mr Coleman submitted his client had an arguable case that the receivers or Mr Negrine were the actual employers or otherwise had personal culpability in the applicant's termination of employment. Alternatively, a joint employment arrangement existed as between Rainbow, Mr Negrine and the receivers. Mr Negrine submitted he should not be joined as a respondent. Similarly, Mr M Rosenblatt, solicitor, submitted the receivers should not be joined as respondents. Should Mr Negrine be joined as a respondent? 14 According to the applicant, she was employed by Mr Negrine in 1987 and he directed her in her employment in every real and practical way, until the receivers were appointed. However, Mr Negrine submitted the applicant was originally employed by a company named Hadabel Pty Ltd and worked for that company until around 2000. It appears the applicant's employment was then transferred to Rainbow. Another entity was also named in some annexures to the applicant's affidavit, namely "The Rainbow Nominees Settlement t/a The Bernly Private Hotel" - but the status of that entity was not developed in the proceedings. There was nothing to suggest the applicant consented to any transfer of her employment. 15 The lack of consultation and advice about the transfer of employment are obviously unsatisfactory in terms of the employment relationship between the applicant and companies associated with Mr Negrine. It is a fundamental basis of employment law that an employee cannot be transferred from one employer to another without the consent of the affected employee – the rationale lying, in part, in the personal nature of the employment relationship and the fact an employee cannot be forced to transfer to the employment of a different person or entity: Nokes v Doncaster Amalgamated Colleries Ltd [1940] AC 1014 at 1026. 16 Arguably, the applicant's employment relationship with Hadabel continued to exist, given that the purported unilateral transfer of employment by Mr Negrine or one of his companies may be ineffective: McClusky v Karagoizis [2002] FCA 1137, (2002) 120 IR 147. Arguably also, the applicant was entitled to treat the transfer as a repudiation of the initial contract of employment. However, there is no evidence to suggest Hadabel continued to exist as at the date of the termination of employment. In any event, if there was a unilateral transfer from Hadabel to Rainbow, it is likely to have amounted, for the purposes of accrued entitlements, to a transfer under Ch 2 Pt 8 of the Industrial Relations Act (Protection of entitlements on transfer of business), albeit that may not affect the repudiatory effect of the initial transfer. 17 Mr Negrine signed the deed of fixed and floating charge with Abacus in the capacity of "Sole Director and Secretary" of Rainbow. Given that Mr Negrine was a "one man company" and did not inform the applicant that he or his company had unilaterally transferred her employment, there may be cause to consider whether Mr Negrine should be joined personally as a respondent to the proceedings. Certainly, Mr Coleman submitted that if Mr Negrine was in reality the applicant's employer he may be liable personally, or liable as a director, for any compensation orders concerning the termination of employment, particularly as the applicant did not consent to any transfer of employment. 18 The jurisdiction to join parties to proceedings derives principally from s170 of the Industrial Relations Act and rule 83(3) of the Industrial Relations Commission Rules 1996. The Commission occasionally pierces the corporate veil to join individuals or directors as respondents to proceedings in unfair dismissal applications or other industrial matters: e.g. Winter Star v Dixon (1994) 55 IR 187 citing Australian Insurance Employees Union v WP Insurance Services Pty Ltd (1982) 1 IR 212. See also Healy v Johnston - unreported decision of Sheehy J, 142 of 1976, 11 March 1977. While the Industrial Relations Act and the Rules empower the Commission to join additional respondents to proceedings, the question of whether the application should be granted is a matter of discretion. In this case, I do not consider there would be any utility in joining Mr Negrine personally as a respondent to the application. It is common ground that Mr Negrine had no relevant involvement in the decision to terminate the applicant's employment, putting aside any question of whether that termination amounted to a harsh, unreasonable or unjust dismissal. Given the receivership, Mr Negine's own powers as a director/employer were effectively suspended when the applicant's employment was terminated. Moreover, Mr Negrine was highly aggrieved about how the receivers acquired control of Rainbow and the way he perceived they treated the applicant. 19 I do not consider a case has been established that Mr Negrine should be joined personally as a respondent to this unfair dismissal application, given his lack of involvement in the termination of employment on 5 December 2005. As such, the notice of motion as it concerns joining Mr Negrine as a respondent is dismissed. Should the receivers be joined as respondents? 20 The question that next arises is whether Mr Olde and Mr Francis should be joined as personal respondents to the proceedings. So far as the parties' research has revealed, this may be the first case in which consideration has been given to whether receivers and managers should be joined personally as respondents to an application under s84 of the Industrial Relations Act. 21 The powers and role of a receiver appointed out of court are set out in the charge document and the Corporations Act 2001 (Cth). In this respect, it seems to be the case that any actions by the receivers in terminating the applicant's employment ordinarily would be regarded as being those of Rainbow itself, with the receivers acting as Rainbow's agents - and this is emphasised in this case in the terms of the receivers' appointment. For example, cl 9 of the deed of fixed and floating charge provided as follows: 9.3 Receiver's status (a) Subject to paragraph (d), each Receiver is the agent of the Chargor. (b) The Chargor is responsible for the Receiver's acts, defaults and remuneration. … 22 By way of elaboration, the position concerning receivers and managers generally seems to be as follows. The appointment out of court of a receiver and manager normally has no effect on a company's commercial contracts. Moreover, ordinary contracts of employment will not be affected because the receiver and manager is treated as the agent of the company, with the result that the legal personality of the employer remains unchanged and the company remains the employer: James Miller Holdings v Graham (1978) ACLR 604; Re Mack Trucks (Britain) Ltd [1977] 1 All ER 977. Moreover, a receiver and manager generally will not be personally liable for employment contracts entered before appointment, albeit this may depend on the circumstances of the case: Associated Newspapers Ltd v Grinston (1949) 66 WN (NSW) 211; Sipad Holding ddpo v Popovic (1995) 19 ASCR 108, (1996) 14 ACLC 307. However, the law concerning the effect of the appointment of a receiver and manager on a contract of employment is "[s]urprisingly, … still in a state of uncertainty": McEvoy v Incat Tasmania Pty Ltd [2003] FCA 810 at [6] per Finkelstein J. 23 The primary position of the receivers in any arbitration of the claim, as foreshadowed in Mr Rosenblatt's submissions concerning the notice of motion, would be that the applicant's termination of employment amounted to a bona fide redundancy and, as such, could not be regarded as an unfair dismissal. If, however, the circumstances of the termination of employment were found by the Commission to amount to a harsh, unreasonable or unjust dismissal, there still would be no proper basis to join the receivers as personal respondents - because, on the authorities, they could be regarded only as having acted as Rainbow's agents when effecting the termination of the applicant's employment. Following from the usual proposition that the receivers were Rainbow's agents, it would follow that no proper purpose would be served by joining the receivers - because any compensation order in the applicant's favour would, in any event, be borne by Rainbow under ordinary principles of agency, indemnity and lien. In that context, Mr Rosenblatt submitted that the application to join the receivers as personal respondents may be viewed as having an ulterior purpose of seeking to leverage either a settlement amount or an arbitrated amount from the receivers, in circumstances where there was no real prospect of obtaining payments from Rainbow. 24 Mr Coleman submitted the receivers should be joined as personal respondents to the proceedings as there is an arguable case the receivers themselves had unfairly dismissed the applicant and, arguably also, some personal liability may fall on them with respect to any orders that may be made by the Commission in the applicant's favour. Mr Coleman developed his submissions in this respect in four principal areas: (1) the receivers may have been the applicant's actual employer, because they acted as an employer and took action exercisable only by an employer in terminating the applicant's employment; (2) the receivers may be found to have liability for the unfair dismissal under s419 of the Corporations Act , which provides for personal liability for certain circumstances; (3) the receivers may be found to have some personal liability, given the case law developing around the concept of joint employment or apportioning liability to the effective employer; (4) the receivers may have acted in some quasi-tortious way, or in an unlawful way, in connection with the termination of employment and thereby attracted some personal liability. Personal liability of the receivers - actual employer? 25 The cases make it reasonably clear that the appointment of a receiver and manager does not necessarily terminate existing employment relationships with the company in question, although this will depend on the circumstances of the case. That is, questions will sometimes arise as to whether receivers have personally "adopted" the employment contract of an existing employee. Unfortunately, there appears to be no agreed definition of what constitutes the "adoption" of an employment contract to assist in the resolution of this aspect of the parties' submissions. Issues surrounding adoption have been given some attention in English cases, but those cases involve consideration of insolvency legislation. In Employee Claims in Insolvency: Corporate Rescues and Preferential Claims (1994) Industrial Law J Vol 23 141, Paul Davis, in reviewing the then recent English cases concerning adoption, wrote: What, then, constituted adoption? The Court of Appeal, essentially following the views expressed by Professor Goode that the whole purpose of the statutory changes in 1986 was to reverse the decision in Nicoll v Cutts , held that the continued employment of the staff after the fourteen day period amounted to the adoption of the contracts of employment and that no more positive act than that on the administrator's part was required for the court to conclude that adoption had occurred. … Although [ Powdrill v Watson [1995] 2 All ER 65, [1995] 2 AC 394] concerned an administrator, its reasoning seems equally applicable to receivers, who constitute in fact the more common method of effecting rescues. For further discussion, see also Adopted Employees in Insolvency – Orphans No More (1995) Industrial Law J, Vol 24 at 141. In that article, David Pollard characterised the issues presented by some English cases on adoption as they concerned financial liability for different classes of employee claims as showing "the British system of law making at its worst". 26 The question of whether employment contracts have been "adopted" by receivers and managers in Australia seems to be a question of fact. And in this case, Mr Rosenblatt submitted, the receivers did nothing to adopt or vary the applicant's employment. They allowed the employment to continue only for a short period, during which time they gained access to the premises and engaged Nomads. As the receivers did not adopt or vary the employment contract, there was no change in the personality of the employer. As such, there is no basis on which any act of an employer could be attributed to the receivers, because they were only ever agents of Rainbow. Mr Rosenblatt further submitted that the receivers were not personally liable for the purported unfair dismissal, any more than they were liable for the payment of the applicant's unpaid accrued entitlements. Any construction which seeks to apply liability to the receivers ignores the concept of agency applicable to receivers appointed out of court. He submitted the Legislature had the opportunity to make provision that receivers would be liable in circumstances such as those in this case rather than the limited circumstances contemplated in s419 of the Corporations Act, but had not done so. The commercial system involving receivers and managers would not work, he submitted, if those appointed to such roles were held to the sort of liability being claimed by the applicant, either by common law or statute. 27 On the other hand, Mr Coleman submitted that the receivers did not need to "adopt" the applicant's employment contract to become her employer; questions of who is an "employee" and who is an "employer" are matters to be determined on the facts, against the background of familiar indicia in employment law. Within established employment law precepts, the receivers may be found to have been the effective or actual employer for the purposes of any liability on the termination of employment. Once the facts were marshalled in the hearing, the Commission would be able to consider who the employer was for the purposes of any order. Here, the receivers retained the applicant in her employment at the Bernly between 25 November and 5 December 2005, and paid her wages for that period. Moreover, they had not merely allowed the pre-existing employment to continue. The receivers had terminated the applicant's employment in circumstances, Mr Coleman contended, amounting to a harsh, unreasonable or unjust dismissal. The receivers were the employer, and acted as only an employer could in terminating the applicant's employment. Mr Coleman submitted that the receivers therefore may be liable for any compensation order as they incurred a new and personal liability. 28 Although I consider there is an arguable case that the usual indicia of an employment relationship existed as between the applicant and the receivers, my preliminary view is that such considerations may well be tempered, as Mr Rosenblatt submitted, by the agency principles ordinarily applicable to the role of receivers and managers. That is, the particular agency created by the documents binding Rainbow and Abacus may controvert the indicia otherwise indicative of an employment-like relationship between the applicant and the receivers. The sheer weight of authority countering money claims by pre-existing employees against receivers and managers may well dispatch the applicant's claim of unfair dismissal against the receivers personally in the substantive hearing of this claim. For even if the usual indicia of an employment relationship were found to have existed as between the applicant and the receivers, it may be the case that the receivers should properly be taken to have been acting as the agents of Rainbow. Nonetheless, as Mr Coleman submitted, a full examination of the facts under the usual employment tests may reveal the receivers were, in fact, the applicant's effective employer - and it is necessary to look at the facts of each case. Personal liability of receivers – s419 29 Section 419 of the Corporations Act provides that receivers have personal responsibility in relation to certain classes of liabilities. The section reads as follows: Liability of controller (1) A receiver, or any other authorised person, who, whether as agent for the corporation concerned or not, enters into possession or assumes control of any property of a corporation for the purpose of enforcing any charge is, notwithstanding any agreement to the contrary, but without prejudice to the person's rights against the corporation or any other person, liable for debts incurred by the person in the course of the receivership, possession or control for services rendered, goods purchased or property hired, leased, used or occupied. (2) Subsection (1) does not constitute the person entitled to the charge a mortgagee in possession. (3) Where: (a) a person (in this subsection called the controller ) enters into possession or assumes control of property of a corporation; and (b) the controller purports to have been properly appointed as a receiver in respect of that property under a power contained in an instrument, but has not been properly so appointed; and (c) civil proceedings in an Australian court arise out of an act alleged to have been done by the controller; the court may, if it is satisfied that the controller believed on reasonable grounds that the controller had been properly so appointed, order that: (d) the controller be relieved in whole or in part of a liability that the controller has incurred but would not have incurred if the controller had been properly so appointed; and (e) a person who purported to appoint the controller as receiver be liable in respect of an act, matter or thing in so far as the controller has been relieved under paragraph (d) of liability in respect of that act, matter or thing. 30 Ford's Principles of Corporations Law (12th ed) by R P Austin I M Ramsay describes at [26.030] the purpose of s419 of the Corporations Act as being to guard against possible abuses by receivers, e.g., such as if a receiver ordered goods or services, failed to pay for them and realised the company's possibly enhanced property for the benefit of the chargeholder - while leaving the seller or provider to sue a company with no assets. 31 Mr Coleman submitted that s419 of the Corporations Act may provide a head of personal liability for the receivers in connection with the applicant's termination of employment. Mr Coleman pointed out that the applicant's claim for relief under s84 of the Industrial Relations Act does not concern (and could not concern) a claim for unpaid remuneration accrued during the pre-receivership period when the Bernly was managed by Mr Negrine; and nor does it concern unpaid remuneration relevant to the short period of time when the Bernly was managed by the receivers (apparently the remuneration for that period has been paid in full). Mr Coleman emphasised that the application before the Commission concerned something different from a claim for an amount in the nature of unpaid remuneration, namely, a claim for statutory compensation for an allegedly harsh, unreasonable or unjust dismissal. He further submitted that, arguably, it was the receivers themselves who dismissed the applicant in this manner and thus, within the scope of s419 of the Corporations Act, may have some personal liability in this respect. 32 Mr Rosenblatt submitted that while s419 of the Corporations Act is concerned with ensuring the receiver does not take advantage of some benefit without having to compensate for it, the provision would not reasonably extend to developing liability for a redundancy that was commercially required on behalf of the company in question. He submitted there would be no proper basis in law, on a proper construction of s419, to join the receivers as respondents to the proceedings. Mr Rosenblatt submitted that the receivers were not personally liable for the purported unfair dismissal any more than they could be held liable for the payment of the applicant's unpaid accrued entitlements. 33 Both Mr Coleman and Mr Rosenblatt referred, in support of their respective arguments, to Company Receivers and Managers (2nd ed); O'Donovan J, LBC Sydney, 1992 - noting the author's comments at [11.360] that: A receiver does not incur a personal liability to employees for services rendered by them simply by continuing to take advantage of their services under existing contracts of employment. This personal liability arises only where the receiver assumes personal responsibility under contracts of employment by variation, novation or otherwise. It is submitted that a receiver and manager who merely allows the employment to continue into the next pay period should not be taken to have adopted the contract of employment and incurred a personal liability for these services rendered. For his part, Mr Rosenblatt submitted that the quote restated the ordinary position concerning existing employees and receivers, and supported the receivers' contentions they could have no liability in the circumstances of this case. He submitted there has been no case where liability for a termination of employment has been ascribed to a receiver and manager. He also submitted that it would represent a misreading of Professor O'Donovan's work to include a termination of employment in the meaning of "or otherwise", when s419 is concerned with liability for a continued benefit not for a termination. 34 On the other hand, Mr Coleman submitted that personal liability had arisen under s419 because the receivers had not simply allowed the applicant's pre-existing contract of employment to continue without change. As contemplated in the quote from Professor O'Donovan, the personal liability had potentially arisen in circumstances of "variation, novation or otherwise". It was the nature of the receivers' decision to terminate the applicant's employment which gave rise to "a brand new head of damage" in the category of "or otherwise". The receivers' action in effecting the termination of employment, he submitted, may have given the receivers personal responsibility under s419 and may provide a basis for the Commission to deal with the claim against them. 35 I accept Mr Coleman's submission that the application before the Commission raises an issue concerning the liability of the receivers which is qualitatively different from the type considered in the employment-related cases to which the parties adverted. The cases and authors I have read in connection with the preparation of this decision do not really provide assistance in determining the issues raised in this case because they turn on different considerations. That is, the Australian cases concerning s419 of the Corporations Act and cases related to similar principles in English cases focus on disputes about indebtedness concerning the provision of goods and services, and, in employment-related cases, to liability for debts such as unpaid wages, redundancy payments and the like. For example, in Incat, the employees had relied on s419 as an alternative source of liability on the receiver to pay accrued annual leave and long service leave entitlements as well as any retrenchment entitlements which may have accrued since the receivers appointment. Referring to Nicoll v Cutts [1985] BCLC 322 and Sipad, Finkelstein J said he could not find the receiver liable for payment of the entitlements. Similarly, Sipad itself, referred to by both parties, concerned a receiver's liability for payment of employment-related entitlements. Other examples include Whitton v ACN 003 266 886 Pty Ltd (Controller Appointed) (In Liq) (1997) 42 NSWLR 123, Love v The Image Centre Pty Ltd (1991) 33 AILR 406; Re Office Co Furniture Pty Ltd [1999] QSC 63; Fisher v Madden as Receiver and Manager of Dataflow Computer Services Pty Ltd (2002) 54 NSWLR 179; Re Allders Department Stores Ltd and other companies [2005] EWHC 172 (Ch), [2005] 2 All ER 122; Re Huddersfield Fine Worsteds Limited [2005] EWCA Civ 1072. Simply stated, cases of this ilk do not appear to be in point, for none concerned the same type of claim now before the Commission - which involves an allegation that a termination of employment amounted to a dismissal which was statutorily harsh, unreasonable or unjust and that it was the conduct of the receivers themselves, as actual employers or quasi-employers, which had visited the unfairness on the employee. (For a comprehensive review of Australian developments in more general cases involving employee entitlements in situations such as corporate collapses, see the very informative paper recently released by the Corporate Law and Accountability Research Group (Monash University), namely, Working Paper No 1 - The New Corporate Law, by Stephen Bottomley and Anthony Forsyth.) 36 There was insufficient material before me at this stage of the proceedings to determine whether the receivers had, in allowing the applicant's period of employment to continue between 25 November to 5 December 2005, adopted the employment contract. For instance, there was no evidence as to what work, if any, the applicant performed during this period at the direction of the receivers. It is similarly unclear whether the decision of the receivers to terminate the applicant's employment in circumstances alleged to be unfair, after the applicant was kept-on in her employment by the receivers between 25 November to 5 December 2005, potentially resulted in an accrual of personal liability under s419 of the Corporation Act. It may be that s419 is concerned not only with liabilities such as debts simpliciter incurred in the ongoing management of a company's assets but also liabilities such as compensation orders stemming from personal default by receivers in the management of employees of the business concerned; I was not taken to any cases one way or the other in this respect. Moreover, the parties did not address on whether a compensation order under s89(5) of the Industrial Relations Act may amount to a "debt" within the meaning of s419 of the Corporations Act. I do note, however, that in a South Australian case named Tom, Wendy, Sally and Andrew Chapman v R H Heywood-Smith and J M Morgan as receivers and managers of Binalong Pty Ltd and the Marina Services Co Pty Ltd [1995] SAIRComm 46 (10 March 1995) the applicants sought a finding against the receivers and managers personally. Although no employment relationship was found to exist in that case, Hampton DP made an observation which may be apposite to any further consideration of this matter in arbitration: I do not take s419 of the Corporations Law to determine the identity of the employer, and I am not required to decide who is liable for "debts" of the company nor whether s210 applies to any order of this Commission. In the context of s420 of the Corporations Law, the employer must be ascertained by reference to the particular facts of the case. 37 Issues concerning the adoption of employment, and rights in the event of some employee complaint against a receiver, administrators and liquidators other than underpayments simpliciter are sometimes defined by legislation. For example, s8 of the Companies (Receiver and Manager) Act 1959 (NSW) appears to have formerly provided receivers and managers with a blanket exemption from liability to any person for any acts or omissions. In Britain, certain rights and obligations arise under present-day insolvency legislation if an administrator continues an employee's employment for more than a fortnight. In other jurisdictions, such as Canada, applications may be made for receivers to be treated as "successor employers" within the meaning of employment legislation: see discussion in an internet report titled, Supreme Court of Canada opens the door to labour relations proceedings against insolvency administrators (www.mondaq.com). However, as I have not been referred to clear authority based on Australian statute law or case law concerning the liability of a receiver and manager in a claim for statutory compensation in an allegedly unfair dismissal, it would seem to me, as submitted by Mr Coleman, that the applicant may have an arguable case in relation to liability deriving from s419 of the Corporations Act. Personal liability of the receivers – joint employment? 38 The third principal area of Mr Coleman's submissions in relation to joining the receivers as respondents to the proceedings focussed on the concept of joint employment or, viewed another way, proper apportionment of liability. That is, industrial courts and tribunals are taking an increasingly pragmatic approach to the question of where liability should lie in triangular employment relationships involving an employee, a nominal employer and a third party who is, or which is, in reality, the effective decision-maker; or where a third party operates "in effect a co-determinative control over the work and the conditions of employment": Morgan v Kittochside Nominees Pty Ltd (2002) 117 IR 152. The cases in this area have typically focussed on two areas, namely, (1) businesses operating through related entities, such as service companies: e.g. AOS Group Australia Pty Ltd (in liquidation) v Arrogante [2004] NSWIRComm 80, (2004) 135 IR 44; and (2) labour hire arrangements: Nguyen v A-N-T Contract Packers Pty Ltd and Anor (2003) 128 IR 241; Damevski v Giudice (2003) 202 ALR 494. 39 The approach in cases such as these has been to examine the reality of the working relationship rather than examining merely the legal constructs and labels assigned to the relationship. For example, in Matthews v Cool or Cosy [2003] WAIRC 10399 (24/12/03), Sharkey J, President, said this in a decision of the Full Bench: [291] I observe that facts may ground an inference of an implied contract of service, even though the parties thereto may not be conscious of what they may have done so that the law will spell out a contract from their dealings (see Swift Placements Pty Ltd v Workcover Authority of NSW (Inspector May) (2000) 96 IR 69 at 84, citing Mead v New England Seed Traders Pty Ltd [1972] WCR 113 at 117). This situation was, it should be understood, not a traditional employment situation but was a contemporary situation now not uncommonly encountered in the business world so that new and evolving techniques require the law to continually evaluate its approach to the characterisation of relationships and rights and obligations which may flow from them. [292] In determining disputes concerning the existence of employment arrangements, the proof of "paper documentation" (sic) is relevant but not determinative (see Pitcher v Langford (1991) 23 NSWLR 142 (CA)). [293] The court is entitled to consider the reality of the purported contractual arrangements and may do so even though it was not argued that the arrangements were a sham (see Dalgety Farmers Ltd t/as Grazcos v Bruce and Another (1995) 12 NSWCCR 36 at 46-48). Apart from the decisions referred to earlier in Kittochside , Nguyen and Damevski see also in this respect: Shop Distributive and Allied Employees' Association, New South Wales v Smithkline Beecham (Australia) Pty Ltd ( Tabbaa C, IRC2001/1639, 11 June 2002); Australasian Meat Industry Employees' Union, New South Wales Branch v Peter Stoitse Transport Pty Ltd and Workforce on Tap [2002] NSWIRComm 185; Staff Aid Services v Bianchi (2004) 133 IR 29; Joyce v Hendricks Pty Ltd & Anor [2006] NSWIRComm 1068; Steman v Salamon [2004] NSWIRComm 1126; Hollis v Vabu Pty Limited (2001) 207 CLR 21. 40 Periods of receivership and management, involving the ongoing employment of employees by a receiver, can be short or indefinitely long. In Gomba Holdings v Homan [1986] 1 WLR 1301 at 1305, Hoffmann J noted that a receiver and manager "is no ordinary agent". Nonetheless, it would seem an odd and inequitable result if receivers, as agents of a company and wearing the hat of an employer, could treat employees in a manner inconsistent with employment laws and reasonably-expected industrial standards - without any recourse against them where they, rather than any officer of the company, were the personal transgressors. It would seem similarly inequitable if receivers sheeted home to the company their inappropriate or unlawful conduct when, in truth, the company had no relevant involvement (and, for instance, would otherwise have treated its employees in a lawful or otherwise industrially appropriate and fair manner). Any such lack of accountability for receivers and managers in relation to their conduct concerning employees would hardly encourage best practice in industrial matters. 41 In Australia, company directors owe their duties principally to the corporation and are generally not required to consider the interests of employees when making corporate decisions; and, similarly, receivers and managers owe their primary duty to the secured creditor rather than employees. Employers of all descriptions are, however, obviously also under obligations in relation to employees to ensure they or the business, or both, are not in breach of employment laws, occupational health and safety requirements, general duties of care and the like. It would seem appropriate that if a receiver intends to operate a business for either a short or longer term the receiver should - like any employer - be apprised of employment-related duties (and of the risks he or she is willing to assume personally or as an agent of the company by failing to apply appropriate standards and conditions). For example, given the financial exigencies typically accompanying the appointment of a receiver and manager to a company, it is often the case that terminations of employment may be necessitated. The preponderance of authority suggests that a termination of employment without procedural fairness would ordinarily be unfair, even in the absence of some award-based consultation requirements: Antonakopoulos v State Bank of NSW (1999) 91 IR 385. Indeed, the House of Lords in Polkey v AE Dayton Services Ltd (1988) ICR 142 noted the right of an employee, save in exceptional circumstances, to be consulted before being dismissed notwithstanding that consultation would make no difference to the decision to dismiss - relevantly, a failure to consult an employee who was likely to be made redundant would almost certainly render the dismissal unfair. Similarly, in New Zealand, the Court of Appeal in Marlborough Harbour Board v Goulden [1985] 2 NZLR 378 noted (at 383): [T]here are few, if any, relationships of employment, public or private, to which the requirements of fairness have no application whatsoever. Very clear statutory or contractual language would be necessary to exclude this elementary duty. 42 Given the approach of courts and tribunals to matters such as consultation concerning termination of employment, it would seem reasonable to expect that consultation with the affected employees (or their union) may very well be appropriate in any terminations of employment proposed to be effected by receivers and managers. If award-based requirements for discussion applied, consultation would not only be appropriate, it would be required as a matter of law. 43 As Sharkey J noted in Matthews v Cool or Cosy, employment law concepts need to adjust to take into account the nature of contemporary employment relationships, and expanding characterisations may be needed to deal with atypical relationships. I can think of no good reason why the types of considerations that have been applied by courts and tribunals in the burgeoning area of employment law which examines the identity of the effective employer could not be at least considered in the context of receivers and managers, notwithstanding the principles of agency ordinarily applicable to receivers and managers appointed out of court. Here, as Mr Coleman submitted, there was no controversy between the parties that the receivers decided to effect the termination of the applicant's employment, notwithstanding the fact they took this action as receivers and managers appointed under instruments which specified that they were Rainbow's agents. I accept there is an arguable case the receivers may be found to have been the decision-makers concerning the applicant's termination of employment and, hence, may have some form of liability if they were the real or effective employer, or were otherwise exercising co-determinative control in any allegedly harsh, unreasonable or unjust dismissal. 44 On a consideration of the approach increasingly being adopted in industrial jurisprudence to the question of the identity of the effective employer, and the examination of the role of third parties in employment matters, I am satisfied there is a further basis to conclude that the receivers should be joined as respondents to the proceedings. Personal liability of the receivers – other grounds? 45 Receivers and managers have a number of general responsibilities, including the duty to exercise their powers in good faith and according to law. Provided such responsibilities are met, receivers are entitled to indemnification for liabilities legitimately incurred in the ordinary course of the receiver's duties: Price v Price (1904) 29 VLR 719. However, the indemnity and reimbursement rights are typically forfeited if a receiver acts in a manner contrary to law, just as an agent is not entitled to indemnity and reimbursement for liabilities incurred in consequence of personal default outside the scope of his or her authority: Deyes v Wood [1911] 1 KB 806. Moreover, action may be available against a receiver for the improper discharge of duties owed to the company in question: cases in this resect were considered by Needham J in Expo International Pty Ltd (Receivers and Managers Appointed) (In Liq) and Another v Chant and Others [1979] 2 NSWLR 820. 46 Mr Coleman submitted there may be an argument, given how the Bernly was run by the receivers, that the termination of employment was not motivated by appropriate considerations for a receiver and some form of quasi-tortious liability may have arisen or that the termination of employment may have been tainted by some form of unlawfulness. Mr Coleman submitted that receivers are obliged to carry out their responsibilities in accordance with the terms of their appointment, but they are also obliged to ensure any decisions do not breach other statutes such as industrial legislation, occupational health and safety legislation, anti-discrimination legislation and awards. Mr Coleman submitted that if receivers unlawfully or unfairly dismissed an employee, this would not be acting as agent. He submitted that any such actions would be "a frolic of their own". As such, he submitted, any liability for penalties or compensation would "fix" on the receivers. Mr Rosenblatt submitted there was nothing at all untoward in the receivers' decision to terminate the applicant's employment on the recommendation of a hotel management group; such action could be regarded as an ordinary incident of the role assigned to the receivers. 47 I accept it may well be the case that it would be an ordinary incident of appointment as a receiver and manager to effect terminations of employment, but terminations of employment nonetheless properly should be effected in accordance with applicable industrial laws. See, for example, The Laws of Australia, LBC, where the authors noted in Vol 4.4 (Receivers and Managers) at [18]: The power to discharge employees is not unfettered. First, to the extent that a contract of employment is properly terminated, the employee has a preferential entitlement to the receiver's appointor for payment out of assets the subject of a floating charge of any claims for unpaid wages or holiday pay as well as redundancy pay. Secondly a receiver is required to observe any legislation regulating unfair dismissals: Allert v Grabowski (1988) 48 SASR 196; Bennetts KJ, 'Unfair dismissal proceedings in company liquidation and receiverships' (1990) CSLJ 158. Thirdly, a receiver appointed by the court and, arguably a receiver appointed by a secured creditor, must observe any relevant industrial award regulating the relationship between a company to which the receiver has been appointed and its employees: International Harvester Export Co v International Harvester Australia Ltd [1983] 1 VR 539 [7 ACLR 391; 1 ACLC 580]. 48 In the proceedings, I canvassed a number of hypothetical situations involving some unlawful or otherwise improper conduct on the part of a receiver and manager in connection with a termination of employment. Examples might include receivers dismissing an employee contrary to various provisions of the Industrial Relations Act, e.g., s68 (termination of employment because of pregnancy or parental leave), s99 (dismissal of an injured worker), s210 (freedom from victimisation). Other examples might include breaches of law in relation to the selection of employees for redundancy on a ground prohibited by State or federal anti-discrimination laws: Australian Iron and Steel Pty Ltd v Banovic (1989) 168 CLR 165. Engaging in breaches of such laws in connection with a termination of employment would, as I understand it, take a receiver's actions outside the scope of agency - because it could not be an ordinary or reasonably-expected role of a receiver to act contrary to law, and nor could breaches of the law be within the scope of explicit or implied authority of an agent. 49 There is nothing before the Commission as to which industrial instrument, if any, applied to the applicant's employment. In the absence of any suggestion that Rainbow was the subject of federal regulation and noting the applicant's remuneration level, it nonetheless seems likely the applicant's minimum employment conditions as a housekeeper would have been covered by a common rule award of this Commission. In the context of compliance with awards, I note that awards invariably contain minimum rights and obligations in the event of ordinary dismissal and termination of employment by redundancy. Moreover, it is clear that receivers must comply with awards and other instruments with respect to employees: Seymour v Stawell Timber Industries Pty Ltd (Receiver and Manager Appointed) (1985) 13 IR 289; Springer and Ors v Information Solution Works Pty Ltd (In Liquidation) (Receiver and Manager Appointed) (Receiver Appointed) unrept; Shelly DP, Tas IRC, 23/4/04, T11321. 50 Most awards specify the minimum periods of notice to be given to a permanent employee whose employment is terminated for reasons other than serious and wilful misconduct. Typically, there is a graduated scale, based on matters such as length of service and age, e.g., see cl 11 of the Motels, Accommodation and Resorts (State) Award. In this case, the receivers sent correspondence to the applicant dated 2 December 2005, advising of termination of employment effective on 5 December 2005. If the applicant was given only a few days' notice, as the letter suggests, it may be the case that the applicant was not afforded award minima concerning notice. Similarly, the applicant gave uncontested evidence that, "[T]here was no discussion with me as to continuing employment, or in relation to the termination". If the redundancy provisions of an award applied to the applicant (the number of employees was not in evidence), there may have been a breach of matters such as consultation requirements. 51 Mr Rosenblatt submitted that in employment-related matters, liabilities would usually fall on the company itself rather than on the receiver and manager other than in the circumstances contemplated in s419 of the Corporations Act. Nonetheless, a receiver and manager may be personally liable for statutory offences arising out of the conduct of the receivership: Re Pacific Coast Syndicate Ltd [1913] 2 Ch 26. In a comparatively recent NSW example, Robert Scales, of Ernst & Young Chartered Accountants, who had been appointed as receiver and manager of Presswell Holdings Pty, was prosecuted under the Occupational Health and Safety Act 1983. The then Chief Industrial Magistrate, Mr G Miller, found that Mr Scales was a "person concerned in the management of the corporation" within the meaning of s50 of that statute. (Provisions having similar effect have been re-enacted in the Occupational Health and Safety Act 2000). The decision dealt with submissions concerning the role of receivers and managers in the following way: A factor raised by [counsel for Mr Scales] Mr Britt was the impact of a conviction upon receivers generally. Mr Britt suggested that a conviction in a matter such as this may lead to persons refusing to act as receivers/managers. Another potential impact upon receivers is that receivers in a situation of a company with problems may make a preliminary decision to shut the business down to reduce the potential risk for receivers being exposed to obligations under the Occupational Health and Safety Act . The impact of closing businesses down would impact on employees and cause damage to the business with consequent impact upon creditors and employees. I place little weight upon these later submissions because quite clearly it is a situation where receivers/managers must obey the occupational health and safety laws. This can be simply met by them applying all due diligence to the performance of their duties. Mr Scales entered a plea of guilty, but no conviction was recorded. He was ordered to pay WorkCover's costs: Inspector Elizabeth Benbrow v Robert Michael Scales [2002] NSWCIMC 184. 52 In the context of statutory offences, I note that s357(1) of the Industrial Relations Act provides for the imposition of a civil penalty for breaches of industrial instruments. Further, s400 of the Industrial Relations Act provides that penalties may be imposed on each person who (a) is a director of the corporation; or (b) is concerned in the management of the corporation. Following from the approach adopted in Inspector Elizabeth Benbrow v Robert Michael Scales, receivers and managers may be persons "concerned in the management" of a corporation for the purposes of s357(1) of the Industrial Relations Act and thus be liable personally for penalties on award breaches. Provisions of the type found in s357 of the Industrial Relations Act are far from unique in employment-related laws, e.g., see s22 of the Employment Protection Act 1982. 53 The receivers' letter of termination to the applicant advised: "As a result of the receivership, your position at the Bernly has become redundant". However, the termination of the applicant's employment was not an automatic corollary to the receivership, because the appointment of a receiver does not necessarily automatically terminate existing contracts of employment: International Harvester Export Company v International Harvester Australia Limited [1983] 1 VR 539; Griffith v Secretary of State for Social Services [1974] QB 468. Moreover, the Bernly continues to trade. The receivers appointed Nomads to conduct a review of operations at the Bernly. It is unclear whether the receivers accepted all Nomads' recommendations, or whether recommendations were implemented selectively. In any event, it was open to the receivers to accept, reject or modify Nomads' recommendations as they concerned the applicant's employment. For instance, it was open to the receivers to reject a recommendation that the applicant's employment should be terminated or they could have discussed mitigating the effects of the termination by, for example, the possibility of on-going employment with the incoming contractors. It was also encumbent on the receivers to effect any termination of employment consistently with any applicable award-based minima, such as notice requirements. 54 The nature of the agency applicable to receivers and managers has been described as "logically untidy": Sowman v David Samuel Trust Ltd [1978] 1 WLR 22 at 29; [1978] 1 All ER 616 at 622. The logical untidiness of the construct is amplified in this matter given that Mr Negrine, the sole director of the company which formerly employed the applicant, was opposed entirely to the course the receivers took. He submitted forcefully that the receivers were not acting as his agent when they dismissed the applicant – notwithstanding the terms of the documents concerning the agency. Putting that issue aside, I doubt - as a general proposition - that it could be within the actual, apparent, express or implied scope of proper authority of a receiver and manager to effect a termination of employment in a manner which did not apply award-specified minima or which was otherwise, within the meaning of the Industrial Relations Act, harsh, unreasonable or unjust. 55 While it is quite clear that the Commission would not be concerned in proceedings under s84 of the Industrial Relations Act with any issue concerning enforcement of entitlements or penalty for any award breaches, it is equally clear that a failure to implement award-specified conditions of employment may be a relevant consideration in determining whether a dismissal was harsh, unreasonable or unjust. It is clear that no authority can be given to an agent to do an unlawful act, which would include breaching an award, and an agent cannot recover remuneration or indemnity against a principal for unlawful acts. Award breaches are not only an offence under the Industrial Relations Act, any such breaches may also render a dismissal effected contrary to award-based requirements harsh, unreasonable or unjust within the meaning of s84 of the Act: Rich River Golf Club v Power [1975] NSWIRComm 75; Layfree Piri Puruto v Linfox Logistics Pty Ltd unrept decision of Cambridge C, IRC02/6719, 13/11/2003 at para [31]. Furthermore, I also note it is well-established in industrial jurisprudence that a termination of employment may amount to both a redundancy and an unfair dismissal: Outboard World Pty Ltd v Muir (1993) 51 IR 167; Re Government Cleaning Services (Privatisation) Award (1993) 51 IR 167 at 182. In Outboard World, the Full Bench said this (at p182): [T]he defence of [the respondent] includes the proposition that the former employee's position was redundant and thus incapable of constituting a dismissal of a kind with which Part [6] is concerned. We consider that submission to be untenable. While in the ordinary case it may be that a redundancy genuinely occurring would not come within the parameters of Part [6], Unfair Dismissals, it takes little imagination to apprehend a situation which is both a redundancy and a harsh, unreasonable or unjust dismissal. 56 The dates involved in the letter of termination suggest the notice period was from 2 December to 5 December 2005, which would be shorter than the period usually provided in awards. There was insufficient evidence at this stage of the proceedings to allow any conclusion as to whether there had been any potential award breaches involved in the termination of the applicant's employment. If the receivers did not act in accordance with award minima in effecting the termination of the applicant's employment and this, collaterally, resulted in a harsh, unreasonable or unjust dismissal, the receivers may not be shielded by the protections ordinarily applicable to receivers - for the usual position is that an agent who commits a wrongful act may be personally liable to any third person who suffers loss or damage. 57 Alternatively, it may be the case that Rainbow and the receivers could be jointly and severally liable in relation to a compensation order with respect to a finding of harsh, unreasonable or unjust dismissal, as contemplated in the following extract from Halsbury's Laws of England (4th ed): [847] Where an act complained of is not expressly authorised by the principal, the principal is, while the agent is acting within the scope of his apparent or ostensible authority, jointly and severally responsible with the agent, however improper or imperfect the manner in which the authority is carried out. Conclusion 58 The question of whether the receivers should be joined as respondents may be considered in the context of different hypothetical scenarios. The first scenario presupposes the receivers acted in an entirely unremarkable manner in promptly terminating the applicant's employment by way of a bona fide redundancy, acting on the advice of a hotel management company that contractors should be used rather than directly-employed workers. If this were the case, it would seem unlikely there would be a finding of harsh, unreasonable or unjust dismissal: Advance Glass Technologies of Australia Pty Limited (Receivers & Managers Appointed) v Building Workers Industrial Union of Australia, New South Wales Branch (1993) 51 IR 50. In any event, even if there was an order in the applicant's favour, the receivers would, in this scenario, have been agents of Rainbow and any liability for a compensation order would lie with Rainbow because the receivers did not adopt the applicant's employment contract during the short transitional period. If there are insufficient funds in Rainbow to meet the order, the applicant would not actually receive the compensation - but that is a matter beyond the proper scope of relevant considerations in determining the joinder application. 59 The second scenario presupposes the receivers acted in a way which was, in a statutory sense, harsh, unreasonable or unjust. If that is the case, the receivers may have attracted some personal liability which may not be the subject of indemnification under usual agency principles or orders against the receivers themselves may be open. 60 On either scenario, I have been satisfied there is utility to joining the receivers as respondents to the proceedings because one of the questions that needs to be considered, on the applicant's submissions, was whether it was the receivers who had, in reality, harshly, unreasonably or unjustly effected her dismissal. I have concluded earlier there would be no good purpose in joining Mr Negrine as a respondent to these proceedings because he had neither personal involvement nor involvement as a director in the decision to terminate the applicant's employment. On the other hand, Mr Olde and Mr Francis were joint and several receivers and managers of Rainbow from 25 November 2005, and they decided to effect the termination of the applicant's employment. It may be that in so doing, they accrued some personal liability. As Mr Coleman submitted, there is a arguable case in relation to compensation orders against the receivers and I note that cases such as Nagle (T/as W D and J L Nagle & Sons) v Tilburg (1993) 51 IR 8 emphasise that a cautious approach needs to be adopted concerning preliminary jurisdictional issues at the early stages of proceedings. 61 I consider the applicant has established a case that Mr Olde and Mr Francis should be joined as additional respondents to the proceedings, and order accordingly. 62 Section 86 of the Industrial Relations Act requires the Commission to "endeavour, by all means it considers proper and necessary, to settle the applicant's claim by conciliation". Conciliation of the unfair dismissal application has not previously formally involved the additional respondents. Therefore, the next necessary step will be to relist this matter so the additional respondents may be involved in conciliation. If the matter does not resolve, the fuller issues concerning the facts and applicable law can be fully ventilated in any arbitrated hearing on the substantive application. 63 This matter was allocated to me to deal only with the notice of motion. As such, I will now remit the file so it may be allocated and listed for conciliation. These proceedings will now be adjourned to a date to be fixed for a conciliation conference. ____________________ 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.