WESTERN AUSTRALIAN INDUSTRIAL MAGISTRATES COURT

CITATION : 2017 WAIRC 00016

DELIVERED : Thursday, 12 January 2017

FILE NO. : M 117 OF 2015

Claimant

AND

Baker Hughes Australia Pty Ltd (ABN 20 004 752 050)

Respondent

Catchwords : Application to dismiss claim following the determination of a preliminary issue - Whether any real issue remains to be tried.

Legislation : Industrial Magistrates Courts (General Jurisdiction) Regulations 2005
Fair Work Act 2009
Long Service Leave Act 1958
Corporations Act 2001

Result : Claim dismissed

Representation:

Claimant : Ms J. Knoth instructed by MDC Legal for the claimant.

Respondent : Mr A. K. Sharpe instructed by K & L Gates for the respondent.

REASONS FOR DECISION

1         On 11 August 2015 the claimant commenced this proceeding in which he claims that the respondent has, by failing to pay him $81,086.74 for 23.01 weeks long service leave accrued pursuant to s 8 of the Long Service Act 1958 (LSL Act), contravened s 44 of the Fair Work Act 2009 (FW Act). He asserts that he has completed 26.64 years of service with ‘Baker Hughes’.

2         On 31 August 2015 the respondent lodged its response denying the claim. It contends that the claimant is not entitled to what he seeks because he has failed to meet the qualifying criteria for long service leave. It says that it employed the claimant for less than the seven years required to enliven such entitlement.

3         On 7 January 2016 the following consent order was made:

The Court determine the following preliminary issue, in accordance with Regulation 7(1) of the Industrial Magistrates Courts (General Jurisdiction) Regulations 2005 (WA):

“Is the applicant’s prior employment with related body corporates (as that term is defined in section 50 of the Corporations Act (Cth)) of the respondent, and his subsequent employment with the respondent ‘continuous employment with one and the same employer’ for the purposes of calculation long service leave entitlements under section 8(1) of the Long Service Leave Act 1958.”

4         On 16 March 2016 I conducted a hearing in respect of the preliminary issue and on 13 April 2016, delivered my reasons for concluding that the answer to the preliminary question was ‘yes’.

5         The respondent appealed the decision to the Full Bench of the Western Australia Industrial Relations Commission (Full Bench) on 26 April 2016. The appeal was heard on 7 June 2016. Written submissions were provided to the Full Bench on 8 July 2016 and 12 August 2016.

6         On 26 October 2016 the Full Bench delivered its reasons (Full Bench Decision) for upholding the appeal. It remitted the matter to me for further hearing and determination according to law.

7         On 14 December 2016 the respondent applied to dismiss the claim. The respondent’s application is made pursuant to regulation 7(1)(j) of the Industrial Magistrates Courts (General Jurisdiction) Regulations 2005 (the IMC(GJ) Regulations) which provides:

7. Court’s powers to control and manage cases

(1) A Court may do all or any of the following for the purposes of controlling and managing cases and trials –

…

(j) give judgment against a claim after a decision is made on a separate trial of a preliminary issue;

  …

8         The application is opposed.

Determination

9         In the Full Bench Decision Smith AP, with whom Scott CC agreed, said:

90      When regard is had to all of these textual indications in the LSL Act is it plain that the words continuous employment with ‘one and the same employer’ means continuous employment with a single employer. As the appellant points out in its supplementary submissions, this meaning is consistent with the definition of the phrase ‘one and the same’ in The New Shorter Oxford English Dictionary on Historical Principles (4th ed, 1993) which is ‘one and the same’ (arch.) the selfsame the same, the ‘identical’. As the appellant points out the words ‘one and the same’ are words of limitation; that is, those words limit the meaning of the word ‘employer’

91      Consequently, there is no room to read the words qualifying continuous employment in s 8(1) of the LSL Act with ‘one and the same employer’ when the employer is a company, as encompassing and including any related bodies corporate.

11      It is clear that the majority of the Full Bench concluded that in answering the preliminary question posed, I should have answered ‘no’ instead of ‘yes’.

12      Having considered that issue, the majority of the Full Bench went on to consider the question of whether the LSL Act leaves open a factual analysis of whether by application of the doctrine of piercing the corporate veil there is no separate legal entity between related bodies corporate.

13      In that regard, the majority of the Full Bench said:

119   In this matter, there is nothing in the text of the LSL Act construed within its context and purpose upon which it could be found an intention to override the common law doctrine which in an appropriate case on the facts could allow the learned Industrial Magistrate to lift or pierce the corporate veil and find that a corporate body is in fact the employer of an employee, despite the fact that another company claims to be the employer of the employee.

120   The agreed facts before the learned Industrial Magistrate are insufficient for any determination of whether it would be appropriate to embark upon a hearing to consider on the facts whether the veil between the appellant and its related body corporate, Baker Hughes Incorporated, or any other related body corporate, be lifted or pierced. If this is not a matter that the respondent says could be raised on the facts it alleges, it would necessarily follow that the application before the learned Industrial Magistrate in M 117 of 2015 be dismissed.

14      Courts have lifted or pierced the corporate veil in circumstances where a subsidiary has been found to be a mere manifestation of the parent company or agent of the parent company where the parent company has such a degree of control over its subsidiary, the acts of the subsidiary have been found to be the acts of the parent company. An employee could be found to be an employee of a former employer on grounds that, when a contract of employment was entered into by the second company, the second company did so as agent of the former employer. Whether or not such a relationship of agency can be found to exist depends upon the facts of each particular case.

15      In this matter it is not suggested that the claimant was moved in his employment between subsidiaries in Australia in order to avoid payment of long service leave. Rather, the pleadings indicate that the claimant’s work history was that he worked in the United Kingdom from 1988 until 2005 at which time he relocated to China where he worked until 2008. He then commenced employment with the respondent in Australia on 30 July 2008.

16      Those pleaded facts do not provide any basis for the lifting of the corporate veil.

17      I observe, however, that even if the pleaded facts permitted the consideration of the lifting of the corporate veil, that the proper respondent would not be the named respondent, but rather Baker Hughes Incorporated.

18      The claimant resists the application on the basis that s 8(1) of the LSL Act requires a factual enquiry in deciding the issue of whether or not the corporate relationships described by s 50 of the Corporations Act 2001 are in the abstract, descriptions of circumstances in which multiple entities are ‘one and the same’. It is suggested that the factual enquiry required by s 8(1) of the LSL Act must be undertaken once the evidence is known and, in this case, there was not sufficient ‘known as a result of pleadings to complete the enquiry’. In that regard, the claimant relies heavily on what was said by Matthews C in the Full Bench Decision.

19      I am of the view that the learned Commissioner’s observances are of little assistance to the claimant because the parties agreed that the resolution of the preliminary question would be determinative with respect to the issue of whether the claimant qualified for long service leave (see transcript 16 March 2016 per Mr Sharpe at page 3 and Mr Cox at page 4).

20      In the end result, the issue was determined by the Full Bench.

21      The claimant’s claim is based on his contention that he worked with the respondent and its related bodies corporate for a combined term of more than seven years. Section 8(1) of the LSL Act read with s 8(3) of the LSL Act establishes that an employee is entitled to long service leave for continuous employment with one and the same employer of at least seven years.

22      The parties agree that the claimant commenced employment with the respondent on 30 July 2008 and that his employment was terminated on 16 July 2015, which was a period of less than seven years. Therefore, unless the claimant succeeded on the preliminary issue, he would not be entitled to any long service leave under s 8 of the LSL Act and his claim cannot succeed.

23      Given that the Full Bench has determined the preliminary issue against the claimant, he cannot possibly succeed in his claim because his pleadings do not disclose any alternate cause of action.

24      The resolution of the preliminary issue has effectively undermined his claim.

25      Relevantly, reg 5 of the IMC(GJ) Regulations provides:

5. Court’s duties in dealing with cases

(1) A Court is to ensure that cases are dealt with justly.

(2) Ensuring that cases are dealt with justly includes ensuring –

(a)     that cases are dealt with efficiently, economically and expeditiously;

(b)     so far as is practicable, that the parties are on an equal footing; and

(c)      that a Court’s judicial and administrative resources are used as efficiently as possible.

26      The respondent submits that the resolution of the difficult legal question posed and determined as a preliminary issue leaves the claimant without a cause of action and that this court’s judicial and administrative resources would be wasted if the claim were allowed to proceed further. I agree with that submission.

27      It follows that in order to give effect to reg 5 of the IMC(GJ) Regulations the claim should be dismissed.

G. Cicchini

INDUSTRIAL MAGISTRATE