Industrial Relations Commission New South Wales Medium Neutral Citation: McDiarmid v Shoalhaven City Council [2013] NSWIRComm 1024 Hearing dates: 20 November 2013 Decision date: 22 November 2013 Jurisdiction: Industrial Relations Commission Before: Newall C Decision: Application for extension of time pursuant to s.85 allowed Catchwords: UNFAIR DISMISSAL - application made out of time - principles - whether matters set out in s.85(3) a comprehensive code - proper meaning of 'conduct of the employer' within subs. 85(3)(c) - matters to be considered in exercise of discretion - illness - representative error - employer at all times on notice that application would be made hardship to employee and to employer weighed - application granted Legislation Cited: Industrial Relations Act 1996 s.84, s.85(3) Cases Cited: Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 Clark v Ringwood Private Hospital (1997) 74 IR 413 Director-General of Education and Training v Bond [2009] NSWIRComm 40 Green v Mayne Nickless t/as Armaguard (unreported, Cambridge C, IRC2945 of 1997, 11 February 1998) Griffith Ex-Services Club Limited v Federated Liquor and Allied Industries Employees Union of Australia (NSW Branch) (1993) 51 IR 186 Hurrell v Queensland Cotton Corporation Limited (2003) 125 IR 145 Jess v Scott (1986) 12 FCR 187 at 195 McClymont and Thomson Financial Pty Ltd [2002] NSWIRComm 283 Rainey v Retirement Solutions Pty Ltd (unreported, Cambridge C, 2494 of 1997, 24 October 1997) Category: Interlocutory applications Parties: Mr Stephen McDiarmid (Applicant) Shoalhaven City Council (Respondent) Representation: Mr A Howell (Applicant) Counsel Mr M Marelic (Respondent) Local Government NSW File Number(s): IRC 741 of 2013 DECISION 1In this interlocutory proceeding the applicant, Mr Stephen McDiarmid, seeks, pursuant to subsection 85(3) of the Industrial Relations Act 1996, ('the Act') that the Commission accept an application under s.84 of the Act that is made out of time. 2Mr McDiarmid was dismissed from his employment by the respondent on 31 May 2013. The application before the Commission was lodged on 6 September 2013. The present application is therefore 77 days out of time. Statutory framework 3It is of value to set out once again the relevant legislative provisions. Section 85 of the Act provides as follows: 85 Time for making applications (1) An application under this Part must be made not later than 21 days after the dismissal of the employee. (2) The Commission is required to accept an application that is made out of time if the applicant has previously made a similar application under Commonwealth law relating to the same dismissal and: (a) the similar application was made within the time required by that Commonwealth law, and (b) the similar application has not been settled or determined, and (c) the application under this Part is made not later than 21 days after the similar application is withdrawn, or is declined because of the existence of an alternative remedy under this Part. (3) The Commission may accept an application that is made out of time if the Commission considers there is a sufficient reason to do so, having regard in particular to: (a) the reason for, and the length of, the delay in making the application, and (b) any hardship that may be caused to the applicant or the employer if the application is or is not rejected, and (c) the conduct of the employer relating to the dismissal. 4It is immediately apparent that the Act makes it mandatory that applications pursuant to s.84 be made within 21 days of the dismissal occurring. 5Subsection 85(2) then provides for circumstances where an application that is made outside the required time must be accepted by the Commission. 6Subsection 85(3), in contrast to subsection (2), provides no more than that the Commission 'may' - that is as a matter of discretion - accept an application which is made out of time but which is not required to be accepted for the reasons set out in sub-section 85(2). 7The discretion exercisable under subsection 85(3) is not unfettered. Its exercise in favour of an application requires that the Commission consider that there is 'a sufficient reason to do so' before accepting an application that is out of time. That discretion in turn is a guided discretion, in that the Commission is directed, in considering whether there is a 'sufficient reason to do so', to have regard in particular to the matters set out in subsection 85(3). 8It is apparent from the wording of subsection 85(3) that the matters set out in sub-subsections 85(3) (a), (b) and (c) are not an exhaustive list of the matters that may go toward the exercise of the discretion involved in determining whether there is 'a sufficient reason' to admit a late application, but rather are only those matters to which the Commission is to have particular regard. 9Each case in which subsection 85(3) is invoked is decided on its own facts and circumstances. Previous decisions are authorities not on factual circumstances, but on principles: Jess v Scott (1986) 12 FCR 187 at 195. Consistent with that premise, there is no prescription in the statute or in decided cases as to what constitutes a 'sufficient reason to do so': Griffith Ex-Services Club Limited v Federated Liquor and Allied Industries Employees Union of Australia (NSW Branch) (1993) 51 IR 186 at 190. 10Given that the prima facie position is that an application brought out of time is excluded by subsection 85(1), an applicant bears the positive burden of demonstrating that the justice of the case requires an extension: Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 553 per McHugh J; Lucic v Nolan (1982) 45 ALR 411 at 416. 11The law as to the approach to the exercise of the discretion under subsection 85(3) is well settled: Director-General of Education and Training v Bond [2009] NSWIRComm 40 at [14], citing what was said in Hurrell v Queensland Cotton Corporation Limited (2003) 125 IR 145 at [12] - [13]: [12].... The discretion to accept an application out of time involves balancing a range of considerations, including an applicant's ignorance of the relevant time limit, whether an applicant has an arguable case and the applicant's prospects of success. In Griffith Ex-Services Club Ltd v Federated Liquor and Allied Employees Union of Australia (NSW Branch) on behalf of Vian (1993) 52 IR 186, the Full Commission considered the predecessor provisions to those now contained in s 85 of the Act concerning late applications for relief from unfair dismissal (see s 246(3)-(4) of the Industrial Relations Act 1991 (NSW)) in this way: "Those subsections, in our view, are procedural and expressly grant the Commission the discretion to allow the lodgement of applications beyond the 21 days prescribed in s 246(2). The applicant employee carries the burden of showing why the Commission should exercise its discretion to grant such an extension: Lucic v Nolan (1982) 45 ALR 411 at 416. The discretion, however, requires the formation of the view that there is a "sufficient reason". Factors going to the formation of a view of a sufficient reason are outlined in 2.564(4) (a) to (d). It is not appropriate to formulate any definition of what constitutes a "sufficient reason": see Martin v Nominal Defendant (1954) 74 WN (NSW) 121. However, the evidence of the proceedings before the Commissioner was relevant to be considered pursuant to the statutory requirements in regard to the formulation of the view." [13] Similarly in Skelly v Prouds Jewellers Pty Ltd (1994) 53 IR 3 at 6, in the context of an application for the extension of time to appeal, the Full Commission emphasised the need to take all relevant factors into account in determining an extension of time application; see also the decision of Walton J, Vice-President, in Brady v Kennedy (t/as Sardines) (1999) 91 IR 258. In our view, the considerations discussed in those decisions are apposite to the exercise of discretion under s 85(3) of the Act. In particular, we would adopt the observations of the Vice-President in Brady, that "the ultimate exercise of discretion is governed by the requirements of justice in a particular case". 12It should at this point be noted that, as Mr Marelic for the respondent submitted, the 'conduct of the employer' within the meaning of subsection 85(3)(c) is the conduct of the employer so far as it might be relevant to the delay in the applicant filing his application pursuant to s.84. That sub-section does not invite - or allow - an exercise of discretion in favour of an applicant for reason that the Commission regards the dismissal itself as unfair: McClymont and Thomson Financial Pty Ltd [2002] NSWIRComm 283 at [40]; Green v Mayne Nickless t/as Armaguard (unreported, Cambridge C, IRC2945 of 1997, 11 February 1998). 13There is a place within the exercise of the discretion under subsection 85(3) for consideration of the fairness of the dismissal itself, but it is within the consideration of the prospects of success of the application under subsection 85(3)(b), as set out in Hurrell supra. 14The overarching principle, as Mr Marelic again submitted, is therefore that in exercising a discretion as to whether to accept proceedings instituted out of time, the requirements of justice in a particular case, considered within the statutory structure, is paramount: Hurrell loc cit at [13]. 15And fundamental to consideration of the statutory structure within which the discretion is to be exercised is this: the Parliament has chosen to identify 21 days as the period in which a claim under s.84 is to be made. This limitation period, as limitation periods generally, is not an arbitrary cut-off date unrelated to the demands of justice or the welfare of society. Rather, '[i]t represents the legislature's judgment that that the welfare of society is best served by causes of action being litigated within the limitation period, notwithstanding that the enactment of that period may often result in a good cause of action being defeated.' Brisbane South Regional Health Authority v Taylor loc cit at 553. Facts 16I now turn to the facts in this matter. 17Mr McDiarmid gave evidence in his own case and provided supporting documents. Mr Stephen Crerar, Human Resources Manager, gave evidence for the Respondent and provided further supporting documents. Mr McDiarmid was pressed in cross-examination on certain facts, Mr Crerar was not, but I found no reason to disbelieve the evidence given by either man. Indeed, the evidence so far as it went to this interlocutory application was essentially not in contest, the contest rather being the inferences to be drawn from it. 18From the totality of the evidence the following factual summary, which I confine to relevant matters, may be drawn. 19Mr McDiarmid had, at the time of the termination of his employment on 31 May 2013, worked for the respondent for some ten years. He is 50 years of age. His whole working life has been in local government town planning. 20He was dismissed on the basis of allegations of fraud in relation to the use of mobile telephones, and on the basis of 'erratic and inappropriate' behaviour in the workplace. It was said that the employment relationship had irretrievably broken down. 21I was not obliged to form a view on the merits of these matters, and have not done so. They are serious matters. Without a full examination of all the relevant evidence it would not be possible to say whether they would be made out or not and I have not attempted do so. 22On 23 April 2013, before his dismissal, Mr McDiarmid received what can be described as a 'show cause' letter making a number of allegations and requiring him to attend a meeting. 23The next day, 24 April, he consulted with his industrial association. His association that day contacted the respondent seeking further details and asking for time to consider them. Some details were provided. 24On 3 May Mr McDiarmid provided a reasonably lengthy written response to the matters raised in the letter of 23 April. He contested all the matters raised against him. 25The respondent advised him by letter that a meeting would be held on 16 May 2013 to discuss the matters raised in the show cause letter. 26On 13 May Mr McDiarmid's association gave him certain advice. He decided to consult independent solicitors. He did so the same day, 13 May 2013. In that conference he told solicitors that he was consulting them '...mainly to handle my unfair dismissal claim if I am dismissed as I expect I will be.' 27On that day also he consulted his GP, Dr Ghani. Dr Ghani formed the view that he was suffering from acute anxiety and depression and said so in a certificate issued on that day, which further said that Mr McDiarmid would not be fit to attend the meeting on 16 May. 28Later on 13 May Mr McDiarmid wrote an email to his solicitors in which he instructed them 'Please advise on whether you are confident in preparing an 'Unfair Dismissal' case on my behalf?" 29Mr McDiarmid's solicitors wrote to the respondent the next day, 14 May 2013. They said, inter alia, that Mr McDiarmid was in no fit state to give instructions, and forwarded a letter from Dr Ghani to that effect also dated 13 May. 30They further said that they write 'urgently so as to protect our client's rights until such time as he is able to attend a meeting'. They add: 'If you terminate our client's employment, we will have no other option than to commence proceedings ...' 31Mr Creran was asked about this letter in cross-examination and very properly agreed that this letter had put the employer on notice that a dismissal would be contested. 32The respondent wrote back on 15 May saying that it was prepared that the 16 May meeting go over to 23 May and offering Mr McDiarmid the opportunity to provide comment in writing if he so wished. 33On 23 May solicitors for Mr McDiarmid again wrote to the respondent, addressing workers' compensation matters but also asking for particulars of the matters raised against Mr McDiarmid and canvassing the possibility of a mutual separation. They end by reserving in terms Mr McDiarmid's rights if he were terminated, by reference to the Fair Work Act. Mr Creran gave evidence that he understood this letter to have the effect that if the respondent were to terminate the employment of Mr McDiarmid, proceedings would be instigated. 34The respondent wrote back on 23 May 2013 saying that a meeting would definitely be proceeded with on 31 May. Mr McDiarmid's solicitors provided that letter to him. 35Mr McDiarmid did not attend any meeting with the respondent on 23 May or 31 May. 36 On 31 May the respondent terminated Mr McDiarmid's employment. That decision was confirmed in a registered letter to Mr McDiarmid, copied to his lawyers, on 31 May. In addition, the respondent sought to have the letter delivered to Mr McDiarmid's house and attempted to telephone him. 37Mr McDiarmid's evidence was that he neither received the letter, which would necessarily have been sent to his Post Office box as his residence did not have a letterbox, did not receive (or answer) any phone calls and was unaware of anyone attending his residence. He also said that he did not look at any emails. 38Mr McDiarmid attributed this inactivity to depression, the illness from which Dr Ghani had certified that he was suffering from 13 May. 39The fact of his suffering that illness was not called into question. 40Mr McDiarmid said that on the morning of 31 May he called his solicitors and told them that he was considering admitting himself to hospital. His solicitors did not tell him that he had been dismissed, unsurprisingly as his account of the conversation he had with his solicitors places this call before in time the meeting on that same date which gave rise to the letter of termination. 41On Mr McDiarmid's evidence he was so unwell between 31 May and 11 June that he barely left his residence. He did not collect his mail and he did not check his emails. On 11 June he was admitted to South Coast Private Hospital and remained there until 17 June as an inpatient. 42On 12 June his solicitors wrote to the respondent saying that they were unable to get instructions because of Mr McDiarmid's illness but saying that their instructions had always been to file an unfair dismissal application in the event that Mr McDiarmid's employment was terminated, and reserving his rights. Specifically, they said that if they did not file the application within the required period (wrongly identified as 14 days) they would rely on the instant correspondence in respect of any application to seek leave in respect of a late application. 43On 17 June he went to his lawyers' offices to inquire about the matters he had put in their charge. They told him that he had been dismissed. He became distressed and 'strongly suicidal' and returned to hospital where he was 'sectioned', that is, involuntarily committed. 44While he was in attendance at his lawyers on 17 June, he was told by Mr Welch, solicitor, 'Don't worry about your unfair dismissal application, we can deal with that when you get out of hospital and are in a better state.' Mr Welch also informed Mr McDiarmid that on advice from the Law Society solicitors did not propose to take instructions from him while he was in his present mental state. 45Mr McDiarmid was released from hospital on 25 July. He was prescribed and took two forms of medication which left him in difficulty dealing with the practical matters of living. 46Mr McDiarmid's solicitors wrote to him on 30 July and again on 6 August. Mr McDiarmid said that he could not recall receiving those letters. 47They wrote again on 14 August. Mr McDiarmid says he did receive that letter and he responded quickly to it. He arranged a meeting with his solicitors as early as possible, which turned out to be on 16 August. He attended that meeting. He gave further instructions to press an unfair dismissal claim. He was asked to prepare materials, went home and did so, providing that material by email on 20 August. In my view that step was unnecessary but Mr McDiarmid was not to know that. On 20 August he was told by Mr Welch 'We now have what we need to prepare your unfair dismissal claim. If we need anything more we will get back to you.' 48It might have been thought that Mr McDiarmid's solicitors would file the claim that day or the next. Instead, they wrote to the respondent on 20 August saying they were instructed to file proceedings in the Fair Work Commission, and stated that they considered a late application would be admitted as Mr McDiarmid had been hospitalised at the time the 21 day time limit expired, and that the respondent was not prejudiced as it had early been put on notice of Mr McDiarmid's intention to file an application in respect of his termination. 49On that day solicitors for the respondent council responded in short form to Mr McDiarmid's solicitors. 50On 30 August Mr McDiarmid's solicitors wrote to solicitors for the respondent, enclosing a lengthy, indeed unnecessarily lengthy, draft application pursuant to s.84 of the Act and inviting settlement discussions. 51On Tuesday 3 September they wrote again to the respondent's solicitors saying that they were to meet with Mr McDiarmid on Thursday 5 September, and if they had not heard back by then would file the s.84 application. 52The s.84 application was filed on Friday 6 September 2013, thus being, as the parties agreed, 77 days out of time. Consideration 53I have set out above the statutory provisions and the fundamental principles to apply to an application pursuant to s.84 that is brought late. 54The Commission, in exercising its discretion to depart from the prima facie position and accept an application which is brought out of time, must, in considering whether there is 'sufficient reason to do so', consider the matters set out in sub-subsections 85(3) (a) (b) and (c) of the Act. Each of those matters must be considered discretely if the discretion is properly to be exercised. Length of and reason for the delay 55First, the Commission must have regard to the length of and reason for the delay. 56The application is 77 days out of time. That is a considerable period, in circumstances where the legislature has chosen to set a relatively short time period of 21 days. There is, clearly, no fixed rule as to what length of delay is unacceptable, but this is not a negligible or insubstantial delay. 57The central issue, particularly when the delay is of that length, is the reason for the delay. 58Put simply, the delay in Mr McDiarmid's application being filed can be divided into five segments of time with different conditions operating in respect of each. 59First, no action was taken between 31 May and 17 June 2013 because Mr McDiarmid did not know he had been dismissed. Of course, on 17 June when he did learn that, he was still within time to make a s.84 application. 60But on 17 June when he learned of his dismissal, he fell into a state of mental incapacity sufficiently extreme for him to be sectioned. 61Moreover, on that day, 17 June, he instructed his solicitors in express terms to bring an unfair dismissal application. His solicitors declined to accept those instructions, acting they said on advice from the Law Society. They also told him 'Don't worry about your unfair dismissal application, we can deal with that when you get out of hospital and are in a better state.' 62Mr McDiarmid accepted that advice. 63In the period 17 June to 25 July Mr McDiarmid was in hospital and his solicitors considered they could not take instructions from him, even had he been able to give those instructions. They did not give effect to his earlier instructions to file an unfair dismissal claim. They did however write to the respondent during this time repeating that they had those instructions. 64In the period 25 July to 13 August Mr McDiarmid was incapacitated by, first, the prescription medications he was taking and, from 6 August on, significant invasive dental surgery which left him with ongoing pain. He did not, on his evidence, receive the two letters his solicitors wrote him in this period. 65On 14 August he acted when he did receive a letter from his solicitors. He attended them on 16 August and had completed his instructions to them by 20 August, a delay attributable to the solicitors rather than to Mr McDiarmid. 66In the period 20 August to 6 September, on which day the application was filed, he left the matter with his solicitors, who had told him that they would get back to him if they needed more material. During that time solicitors corresponded with the respondent on 3 occasions concerning the termination of Mr McDiarmid's employment. 67In my view, in respect of each segment of time, and in respect of the time overall, a sufficient reason has been advanced for the delay. The medical illnesses suffered by Mr McDiarmid were on the evidence debilitating. I am able to take notice of the fact that depression, which illness Dr Ghani certified Mr McDiarmid to be suffering, is an illness which renders persons, amongst other things, unable to act decisively even in their own interests. 68I accept, as it was said in Clark v Ringwood Private Hospital (1997) 74 IR 413, that responsibility for pursuing a matter lies with an applicant, and simply putting a matter in solicitor's hands and leaving it will not of itself provide a sufficient excuse for the delay. But that is not what happened here; Mr McDiarmid early instructed solicitors and within the capacities left to him by his illness, pressed them to pursue the matter. 69The period of delay to which I have given closest scrutiny is indeed the period between 20 August and 6 September. In my view solicitors aware of a time limit and aware that it had expired ought have acted more expeditiously than they did. On the other hand it is not the case that they did nothing, or, importantly, that the respondent was left thinking that nothing was happening in the matter; on the contrary, solicitors on three occasions in that period told the respondent in writing that a claim was forthcoming. 70Ultimately, however, it is my view that that delay cannot be sheeted home to Mr McDiarmid. He had done what he could and he trusted his solicitors to act on his instructions; they chose to pursue a course of trying to resolve the matter by agreement before filing, in the course of which process the respondent knew that an application was forthcoming. One might be critical of solicitors in respect of their conduct - surely the better approach in the circumstances was to file a claim and then discuss it - but it would simply not be correct to lay the blame for that delay at Mr McDiarmid's door. 71I have had regard to the totality of the delay and the reasons for it, and to the reasons that are said to underpin each period of the delay. In my view Mr McDiarmid is not to blame for the delay or any one of the segments of time that constitute the delay; in regard to each a reason has been advanced which I view as satisfactory. 72So far as the length of and reason for the delay is concerned, I am satisfied that there is a 'sufficient reason' for the application to be admitted. But that is not all that the Commission must consider. I now turn to the other statutory considerations. Hardship to the applicant 73The Commission is required to have regard, pursuant to subsection 85(3)(b), to any hardship that may be caused to the applicant or the employer if the application is or is not rejected. 74If Mr McDiarmid's claim is not accepted he will not be able to pursue his unfair dismissal claim. That is a hardship, of course, which every out of time applicant suffers if his application is rejected. 75In this case, however, it has some particular ramifications. First, Mr McDiarmid is 50 years old and has worked his whole life in local government town planning. To obtain other work is likely to be difficult. That difficulty is exacerbated when it is considered that he has been dismissed for serious misconduct, to wit fraud, in circumstances where, as I am prepared to accept due to illness, he was not able to do more to defend himself against those accusations than write the letter of 3 May that he wrote. 76It is also relevant in my view that these circumstances exist in a smaller community; the availability of work and the notoriety of events being in the first case reduced and the second magnified by that circumstance. Hardship to the employer 77The statute next requires me to consider hardship to the employer. 78A party is entitled to believe that, a limitation period having expired, it faces no action from a person who might have acted within the limitation period. I accept too, as was observed by the High Court in Brisbane South Regional Health Authority v Taylor loc cit at 553, that public institutions have a significant interest in knowing they have no liabilities beyond a definite period. 79In this matter, however, the employer has been on notice since before the dismissal that if a dismissal was effected, it would be contested. It was aware of Mr McDiarmid's illness. It had a significant body of regular correspondence from solicitors for Mr McDiarmid who repeatedly stated that an application of this sort would be made. It is not to the point that they identified the wrong statutory basis for that action; the intention to proceed was clear. 80The period of time which has elapsed, although as I say above considerable when measured against a 21 day time limit for applications, cannot be thought - and in fairness to the respondent, was not argued - to have caused loss of records or witness memory. 81Of course the employer would not wish to have to defend a matter that is brought outside the time limit, but that would operate against the discretion ever being granted at all if it was on its own to be determinative of applications of this kind. Conduct of the employer relating to the dismissal 82Thirdly, I have regard to the conduct of the employer related to the dismissal. That is, as I set out above, to be viewed insofar as it has any bearing on the lateness of the application. 83I do not see that the employer's relevant conduct had any bearing on the lateness of the application. It did what it could reasonably be expected to do to advise Mr McDiarmid and his representatives of both the possibility of a dismissal and then of the fact of the dismissal itself. Summary and conclusion 84In my view, on the facts as they are before the Commission in this interlocutory application, a sufficient reason has been established, in the light of the statutory criteria set out in subs.85(3), to each of which have had regard as I set out above, for the Commission to exercises its discretion to accept Mr McDiarmid's application. 85I will make an order to that effect. I propose to then bring the parties before the Commission for directions for the conduct of this matter. 86I emphasise that I have not formed any view that Mr McDiarmid has a good case, or anything of that sort. I have not been required to form any concluded view on the merits of the case; I have merely formed the view that if the case is as he asserts, he does not have a hopeless or misguided case. It remains to be seen what emerges when he is tested on his case, which the respondent was not of course able to in this interlocutory proceeding. Orders 87The application made by Mr Stephen McDiarmid pursuant to s.84 of the Industrial Relations Act 1996 is accepted. PETER NEWALL Commissioner 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. Decision last updated: 22 November 2013