This extract from an unfair dismissal decision of the Fair Work Commission explains the legal principles about the liquidation of companies and proceedings against them in the Fair Work Commission.
“Adcon in liquidation
- On 17 June 2024, Mr Paul Langdon (Liquidator for the Respondent) wrote to my Chambers advising that Adcon had been placed into liquidation by an Order of the Supreme Court of Queensland on 19 April 2024 and that he was appointed Liquidator by the Court. Mr Langdon also suggested that under Section 471B of the Corporations Act 2001, a person cannot bring an action against Adcon except with leave of the Court. He also informed me he was without funds in the liquidation to participate in any legal proceedings and that as Mr Smith was terminated prior to his appointment he would not be attending the Hearing. Mr Langdon also advised that he did not consent or object to Mr Smith proceeding against the Respondent.
What are the issues in this case?
- There are three central issues to this case. First, can Mr Smith’s application proceed even when Adcon is in liquidation and not prepared or with capacity to participate in this matter. Second, if it can proceed, then was Mr Smith unfairly dismissed. Third, if he was unfairly dismissed, how should he be compensated in circumstances where he cannot be reinstated.
- I consider each issue in turn below.
Issue 1: Can Mr Smith’s application proceed?
- Section 440D (Stay of Proceedings) of the Corporations Act 2001 provides that during the administration of a company, a proceeding in a court against the company cannot be begun or proceeded with, except with the administrators written consent or leave of the Court. In Smith and Ors v Trollope Silverwood and Beck Pty Ltd (in liquidation)1 the Full Bench of the Australian Industrial Relations Commission (AIRC) considered s.471B of the Corporations Act 2001 and held that the reference to “proceeding in a court” did not include the AIRC and that, therefore, court leave was not needed for AIRC proceedings to commence or continue.
- Various decisions of the Commission have confirmed that the Full Bench’s construction of s.471B in Smith was equally applicable to s.440D, holding that where a company is in administration or court ordered liquidation, leave of a court for Commission proceedings against the company to commence or continue is not required because the Commission is not a court.2
- I rely on these authorities and determine that despite Mr Langdon’s correspondence, the Commission retains jurisdiction to determine Mr Smith’s unfair dismissal application. “
Smith v Adcon Admin Pty Ltd [2024] FWC 2775 delivered 4 October 2024 per Connolly C