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End of the IP exemption era: repeal of the IP exemption from competition laws

Section 51(3) of the Competition and Consumer Act 2010 (CCA) contained an exemption for transactions involving licensing or assignment of certain intellectual property rights from certain prohibitions against anti-competitive conduct.
Legislation has been passed that repeals the intellectual property exemption from section 51(3), effective from 13 September 2019. The repeal comes from recommendations made by the Productivity Commission’s Intellectual Property Arrangements Inquiry Report in December 2016 and the Harper Competition Policy Review (March 2015).
How will the repeal affect you?
The result of the repeal is that any conditions of licences, assignments, contracts, arrangements or understandings relating to intellectual property will now be subject to competition laws in the same manner as any other commercial transactions.
It is important to note that the removal of section 51(3) does not only affect IP related arrangements entered into on or after 13 September 2019. It also includes those entered into before the repeal is effective. This means that conditions in arrangements relating to IP that were in place before 13 September 2019 may expose a business to substantial fines for being in breach of the CCA.
Businesses should review their IP arrangements to ensure that any restrictions or conditions do not contravene the anti-competitive conduct prohibitions in the CCA.
If it is not feasible to amend an offending provision, it is possible for affected businesses to apply to the ACCC for authorisation of conduct that could contravene the CCA. In doing so, notification and authorisation can provide immunity from competition law in cases where the particular arrangement or conduct is likely to result in a net benefit to the public. However, the ACCC may take up to six months to make a decision, so there is a risk that offending conduct will be unlawful during any period that it subsists without authorisation.
The ACCC have published guidelines on the repeal that set out general principles that the ACCC will consider when proceeding to investigate and enforce Part IV in relation to conduct involving intellectual property rights. The guidelines also set out the types of previously exempt conduct and provide examples of conduct the ACCC considers is likely or unlikely to contravene the CCA.
Penalties
The repeal may impact the lawfulness of existing IP arrangements. For each breach of the competition provisions in the CCA, the maximum civil penalties are:

for individuals – $500,000
for corporations – the greatest of:

$10 million
if the Court can determine the ’reasonably attributable‘ benefit obtained from the conduct – three times that value
if the Court cannot determine the size of the benefit – 10% of annual turnover in the preceding 12 months.

Other penalties, such as criminal penalties, may also apply for certain conduct.
What you need to do
In light of the repeal, it is important that businesses consider any IP arrangements that involve conditions that were not contrary to the CCA because of the application of the exemption in section 51(3) – for example, provisions that:

prevent, restrict or limit the supply of intellectual property
fix, control or maintain the price of intellectual property
restrict a licensee from the resupply of intellectual property to certain customers or in certain territories
restrict a licensor from supplying intellectual property to certain persons or territories
limit use of patented inventions in a defined field
divide or allocate customers, suppliers, or territories among the parties to the arrangement
seek to settle intellectual property dispute arrangements by requiring a competitor to delay the entry of their products into the market or to grant a licence over the intellectual property rights.

Please contact the team at Cooper Grace Ward if you would like our assistance in this regard or have any further questions.
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“It’s a Discretionary Trust…I Can Do What I Want”

“It’s a discretionary trust… I can do what I want”
Trusts law. Just uttering those words to some people and you see their eyes start to glaze over.
Trusts are in abundance in Australia. 
Only a few years ago, national income from trusts in one year alone exceeded $340 billion. It’s estimated that there will be over one million trusts in existence in Australia within the next 2 – 3 years.*
As prevalent as they are, it would be a fairly safe bet that most Trustees and beneficiaries have a fairly limited understanding as to exactly what the Trustee can and cannot do. 
A significant proportion of the trust disputes we see come about due to that lack of understanding.**
For example, let’s take a trust where the Trustee has the discretion to decide which beneficiary will receive income from the trust. 
It is a common misconception that the Trustee (particularly of family trusts) can do ‘whatever they want’, so long as the trust deed permits it.
Wrong.
Even Trustees with discretionary powers have several duties, including:

The duty to act in good faith: The Trustee must put the interests of the beneficiaries first, and act without regard to self-interests.
The duty to consider how best to exercise their discretion: This includes obtaining relevant information and considering for example why the trust was made in the first place, or any new circumstances that might have arisen. 
The duty to avoid dictation: The Trustee must resist being dictated to by, for instance, certain beneficiaries.

In the past, there was a general view that courts were reluctant to interfere with an exercise of a Trustee’s discretionary power, but that’s not necessarily the case today. 
Take for instance the recent court decision in Re Marsella** which involved a blended family. There, the trust was a superannuation fund established for Mrs Marsella. She and her Daughter were Trustees. 
Mrs Marsella passed away, survived by a husband from a second marriage (“the Husband”). At that time, the fund had a balance of around $450,000.
The Daughter (who was now sole Trustee) put her own husband in as co-Trustee and they proceeded to ‘exercise their discretion’ by paying all death benefits to the Daughter. 
The Husband argued that the Trustees breached their duty to give proper consideration of how best to exercise their discretion, and the Court agreed. The Trustees were removed and the Daughter was ordered to return funds to the Trust.
Being Trustee of a discretionary trust does not mean the Trustee has been given carte blanche to do what they like.
If there are beneficiaries with concerns as to how a Trust is (or was) administered, they should seek legal advice as there could be remedies available to them, depending on the circumstances.
Meanwhile, Trustees (and their advisors) need to be very careful. If a Trustee is unsure whether a possible action might be in breach of their duties, legal advice should be sought. Otherwise, if a court finds that the Trustee breached their duty, they could have their decision reversed, powers removed and be hit with a very large costs order.
 
 

* https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/General-research/Current-issues-with-trusts-and-the-tax-system/
**The next most common reason for the trust disputes we see relate to the trust deeds, due to them being decades old and/or having been drafted by some ‘clever’ person doesn’t know trust law from a can of beans.
** Re Marsella; Marsella v Wareham (No.2) [2019] VSC 65
Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
The post “It’s a Discretionary Trust…I Can Do What I Want” appeared first on Bennett and Philp Lawyers.

Kimberley College Ltd v Thomson & Ors [2019] QSC 227

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – GENERALLY – where the plaintiff alleges a variety of types of misconduct against the defendants – where the defendants contend that the statement of claim is insufficiently particularised and should therefore be struck out – where the plaintiff contends in reply that there are matters solely within the knowledge of the defendants or unknown third parties – where the plaintiff otherwise relies upon lengthy and detailed financial reports created by forensic accountants – whether the plaintiff’s statement of claim is insufficiently particularised – whether the statement of claim should be struck out in whole or part – whether the plaintiff should provide further and better particularsPROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – INHERENT AND GENERAL STATUTORY POWERS – TO PREVENT ABUSE OF PROCESS – GENERALLY – where the plaintiff alleges a variety of types of misconduct against the defendants – where the plaintiff further alleges that the defendants have been attempting to dispose of certain chattels and real property – where the plaintiff contends that a commercially prudent person would infer a danger of default on behalf of the defendants – whether a freezing order should be made

MacGowan v Klatt [2019] QSC 222

SUCCESSION – FAMILY PROVISION – PROCEDURE – TIME FOR MAKING APPLICATION – EXTENSION OF TIME – ELIGIBLE APPLICANTS – CHILD – where the applicant seeks an extension of time, pursuant to s 41(8) of the Succession Act 1981 (Qld), in which to claim family provision – where the applicant’s claim is made on the basis that she is the adopted child of the deceased testator as the result of a customary adoption in Vanuatu – whether a ceremony in which the testator took part with the applicant’s mother and her extended family amounted to a customary adoption in accordance with the customary law of Tongoa Island and recognised by Vanuatu law – whether the testator as a foreign national could adopt an indigenous child in custom – whether any adoption was effective under Vanuatu law and capable of being recognised under s 293 of the Adoption Act 2009 (Qld)SUCCESSION – FAMILY PROVISION – PROCEDURE – ORDERS AND OTHER PROCEDURAL MATTERS – COSTS – GENERALLY – where the applicant was unsuccessful in her application for an extension of time in which to make a claim for family provision – where the applicant was not eligible to make the claim – where the estate’s worth is in excess of $5,000,000 – where the applicant had a moral claim arising out of her relationship with the testator, although not a legal one – where the applicant has three young children, limited ability to earn income, and lives in poverty – where an adverse costs order is likely to mean the loss of the modest property devised to her – where the testator in his will had asked that his executors consider the applicant’s well-being – whether costs should follow the event or another order should be made

Regulations for WA Work Health and Safety

The public consultation phase for the Work Health and Safety Act for Western Australia (WHS Act (WA)) ended on 31 August 2018.
On Tuesday 27 August 2019, Western Australian Industrial Relations Minister Bill Johnston announced that they are now seeking submissions on the introduction of three sets of Work Health and Safety (WHS) regulations to support the WHS Act (WA). These regulations are:

WA WHS Regulations – this will be based on the National Model WHS regulations and will apply generally to workplaces (including the mining industry and petroleum and geothermal operations);
WHS (Mines) Regulations – this will apply to mines only; and
WHS (Petroleum and Geothermal Energy Operations) Regulations – this will apply to petroleum and geothermal energy operations only.

The public consultation period will end on 26 November 2019.
The proposed regulations will include unique provisions from the existing Occupational Safety and Health Regulations 1996 but will exclude union right of entry provisions which will be left in the Industrial Relations Act 1979 (WA).  Dangerous goods and major hazard facilities will also be excluded and instead will remain under the dangerous goods legislation. This approach will be reviewed within two years of the WHS Act (WA) being introduced to see whether dangerous goods, including major hazard facilities, should be brought under the WHS Act (WA).
Minister Johnston encourages ‘the community to have their say on the modernisation of WA’s work health and safety laws, which is long overdue’.
In addition, the Western Australian government proposes to invest $12.9 million to increase the amount of full time equivalent staff by 24, this will include an introduction of another 21 inspectors. Western Australia will match New South Wales and Queensland’s ratios with one full time equivalent inspector per 10,000 employees. Inspectors will also be able to carry out more workplace inspections with the government announcing it will fund 16 new vehicles.
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Deferring Add-on Insurance – Treasury releases proposal paper

The Financial Services Royal Commission recommended in February that Treasury develop an “industry-wide” Deferred Sales Model for the sale of all Add-on Insurance products. Treasury’s Proposal Paper, released on 9 September 20191, sets out details of the model.
 
Treasury’s proposal is to apply a simple, uniform Deferred Sales Model to all types of Add-on Insurance across all channels through which they are distributed, and subject to very limited exceptions.
The Model will operate as follows:

Insurance information is not to be put to the consumer until they have made a financial commitment to purchase the primary good or service, or to arrange finance over that good or service.
The distributor can then provide prescribed information about the Add-on Insurance product to the customer.
A four-day deferral period must then pass before the distributor is able to contact the customer.
The customer will be entitled to reduce the deferral period to a single day at their initiative. In order to do so, the customer would need to contact the distributor to complete the purchase of the insurance product.

Let’s look at some of the points coming out of this.
What products are caught?
The Model is to apply to all “Add-on Insurance”, other than where it has been expressly exempted. As such, it is important that we have clarity on what is meant by Add-on Insurance. Treasury suggests the following definition:
“Those insurance products that are offered or sold at the same time as when a consumer purchases the primary product or finance for which the insurance covers associated risks.”
The Code Governance Committee’s June 2018 report into general insurance2 provides a good analysis of what might fall within such a definition. It identified 28 different types of Add-on Insurance products. Examples of those sold outside of motor vehicle dealers and financial institutions included:

travel insurance;
ticket event/cancellation insurance;
mobile phone insurance;
pet insurance;
marine pleasurecraft insurance;
rental bond insurance;
rental vehicle excess insurance;
transit insurance; and
jewellery insurance.

Distribution channels for these products could take a wide variety of forms. Examples would include travel agents, airlines, ticket sellers, mobile phone retailers, real estate agents and transport companies. Significantly, Treasury refers to it including online sales, where that sits alongside the sale of the primary product or service.
Obviously, some of the products referred to above are also sold in circumstances where they would not be Add-on Insurance, for instance through direct sales. Treasury accepts that this will occur and provides an example in its paper. It notes that pet insurance will be Add-on Insurance if it is offered “at the same time or in conjunction with” the purchase of a pet that it covers, or services provided in relation to that pet (eg. veterinary services), but not if it is sold on a standalone basis.
Are any Add-on Insurance products exempt?
Treasury envisages that some Add-on Insurance products will be exempt from a deferred sales period3, though it warns that that will only be the case where there is strong quantitative evidence of product value and consumer understanding. Treasury proposes that ASIC will take the lead role in determining exemptions, having regard to matters such as:

historical good value for money;
strong competition;
high risk of underinsurance; and
well understood by customers.

The Royal Commission expressly noted that comprehensive motor insurance should not be subject to a deferred sales period. Any other exemptions would presumably need to have similar characteristics.
How will the customer’s “financial commitment” trigger work?
Treasury’s proposal to use the customer’s “financial commitment” to purchase the primary product or service, or to take out finance, as the trigger for providing insurance information is a middle ground between options previously put to and considered by ASIC. What constitutes that “financial commitment”, though, needs to be clear.
Overall, Treasury says that what is needed is a “concrete” decision by the customer. Plainly, payment for a product or service would meet the test. Treasury states that paying a deposit would also be enough. In relation to finance, it says that lodging an application form would be an appropriate trigger. No doubt there will be other situations which might need clarification; for instance, would the reservation of a flight, held for a period without payment, trigger the right to provide insurance information?
What “prescribed information” will need to be given?
Treasury has proposed that ASIC would also determine what needs to be given to the customer, though it states that this could include:

basic product information such as premium, policy duration and details of significant features and benefits, significant and unusual exclusions or limitations;
information regarding when the customer can purchase the product;
the product claims ratio;
a notice that the product is sold by other distributors; and
a link to the ASIC MoneySmart website page on the product if available.

I would expect that development of a useful and uniform approach to presenting this summary information will take some thought; past attempts to provide valuable summaries of insurance product terms have proved challenging.
Whether the Product Disclosure Statement and Financial Services Guide (or policy wording for non-retail products) are also to be provided at this point is unsaid. Presumably, it would be useful for consumers to also have those documents made available to them during the deferral period.
If a claims ratio is to be included for the product, customers would likely benefit from an explanation of what it means in the context of the product concerned.
How is the four-day deferral period to be counted?
Based on a diagrammatic representation of the Model in Treasury’s paper, the day on which the consumer is given prescribed information about the product will be counted as day one. The distributor will be entitled to contact the customer on day four so, in fact, the deferral is for two clear days.
It is noteworthy that the four-day deferral period is less than the seven-day period recommended by the Productivity Commission4, and considerably less than other proposals considered. Treasury’s position on this recognises the risk that, if left for too long, customers might disengage altogether from the decision whether to purchase insurance, with the risk that they will end up without insurance that they need.
How can the customer be contacted after the deferral period?
Treasury has proposed that contact with the customer after completion of the deferral period be limited to one approach in writing. This might be done, for instance, through an email. If this does not evince a response, no further approach can be made.
The UK experience
The proposed model is similar to the one implemented in 2015 for guaranteed asset protection (GAP) insurance in the United Kingdom. The Financial Conduct Authority carried out a review of that model’s effectiveness in 20185 and found:

The model reduced Add-on Insurance sales materially, though with evidence of improved customer outcomes.
Standalone market sales increased, though by less than expected. Consumers did not seek out alternatives as much as had been hoped.
Product prices fell and loss ratios rose, though again by less than expected.

This is not to say, of course, that the Australian experience will be the same.
Observations
To finish, here are a few thoughts on the implications of the Model:

The Model will be easier to implement in situations where the process for purchasing the primary product or service takes at least a few days, as would normally be the case for new motor vehicles, than where the sale is made on a single occasion.
Its impact is likely to be material for online sales, where many transactions are instantaneous. Consumers who know they want insurance are unlikely to wait for a deferral period when other providers are only a click away.
It may be challenging to comply with the Model at all for some Add-on Insurance products (for instance, travel insurance benefits attached to credit cards).
It will likely become more difficult for consumers to include insurance premiums in their finance arrangements. To do so would presumably involve an adjustment to the loan (or at least the loan application) after completion of the deferred sales period.
Insurers and distributors will need systems capable of capturing the key elements of the Model, including the occurrence of a financial commitment trigger, provision of prescribed information and records of subsequent consumer communications. These may form part of the broader systems and processes currently being implemented to meet Product Design and Distribution requirements.
Compliance with distribution conditions needed to meet Product Design and Distribution requirements, such as asking consumers knock-out and qualifying questions, will in many cases need to follow completion of the deferred sales period. This could result in some consumers being advised that they are outside of the target market for the product after completion of that period.
It is possible that implementation of the Deferred Sales Model will result in the growth of direct competition to some products which traditionally have only been sold as Add-on Insurance. Based on the UK experience, though, this might need an innovative approach to distribution.

Next steps?
Treasury has invited submissions on its proposal, though has offered only a short period, asking for them to be made by 30 September 2019. Treasury notes that feedback should be focussed on how the measure can best be implemented, not on whether it should be implemented.
Draft legislation is to be introduced into Parliament by 30 June 2020. Treasury has signalled that that will include a transition period, though without stating how long that will be.
For more information on how Treasury’s proposed Deferred Sales Model will apply to Add-on Insurance products, please contact insurance advisory principal, Mathew Kaley.

1 Treasury Proposal Paper, Reforms to the sale of add-on insurance products, 9 September 2019
2 General Insurance Code Governance Committee, Who is selling insurance?, June 2018, pp 20-22
3 Treasury refers to these as Tier Three products. Tier Two products will be subject to the Deferred Sales Model. Tier One products are those which cause “significant consumer detriment”, so are to be addressed by ASIC using its product intervention power.
4 Productivity Commission Inquiry Report, Competition in the Australian Financial System, 29 June 2018
5 FCA Report, Evaluation Paper 18/1: An evaluation of our guaranteed asset protection insurance intervention, July 2018
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How do costs work in a medical negligence claim?

Understandably, one of the most common questions that people ask when considering whether to pursue a medical negligence claim is “how much is this going to cost.” It can be difficult at the beginning of a matter to provide an exact estimate of costs because at that time it can be difficult to know exactly what the work will involve.
Legal costs are usually made up of professional costs and disbursements.

Professional costs represent the fee charged for the work performed.
Disbursements are those fees which are incurred in the investigation and running of your claim. For example, doctors and hospitals usually charge a fee for providing copies of your medical records and experts will charge a fee for providing an opinion with respect to whether a doctor breached their duty of care, or the extent of harm that you suffered.

If a firm has offered to act for you on a “no win, no fee” basis in medical negligence claim, this generally means that you will not have to pay any upfront professional costs. You may still be required to contribute to disbursements, such as funding an initial expert opinion, depending on your situation. The remainder of the costs will usually be deferred until the successful completion of your matter.
Solicitor/Client costs
Solicitor/client costs are the costs that are charged by the lawyer to you (the client) and includes both professional costs and disbursements.
Party/Party costs
The Court can order one party to pay another parties costs in a medical negligence matter and this usually follows the success of a matter. This is known as “ordered costs” or “party/party costs.” Generally, the solicitor/client costs will be more than the party/party costs, as these costs are only what the Court considers to be appropriate and reasonable for the successful party to be awarded. For example, in a medical negligence case, a plaintiff may be awarded $150,000 for their injuries and solicitor/client costs may be $50,000. The defendant may have to pay $30,000 towards the plaintiff’s costs and this means that the plaintiff only has to pay the gap of $20,000.
Get in touch with us
At Turner Freeman we have lawyers who specialise in medical negligence claims. Our Sydney Partner, Sally Gleeson, along with her team of lawyers, have a dedicated practice in medical law.
If you or someone you know has suffered as a result of medical negligence, including a situation in which you have suffered injury as a result of inadequate treatment, or a lack of treatment at a public hospital, we encourage you to call us on 13 43 63 to speak with one of our medical law experts.
The post How do costs work in a medical negligence claim? appeared first on Turner Freeman Lawyers.

E&S: Biometric scanner dismissal unfair

In April, we reported on Jeremy Lee being granted permission to appeal after he was dismissed for refusing to use a biometric scanner in the workplace. The Full Bench of the Fair Work Commission (the FWC) has since decided the dismissal was unfair.

E&S: FWC finds dismissal for Facebook post unfair

The Fair Work Commission (the FWC) recently decided that while an employee’s Facebook post breached her employment contract and her employer’s social media policy, her dismissal was harsh because it didn’t take into account her medical condition, her length of service and the lack of any previous pe

E&S: Full Court decides what’s in a ‘day’

In a decision with far-reaching implications for employers, the Full Court of the Federal Court has decided that employees who work 12-hour shifts spread over a 36-hour week are entitled to 10 days of their shifts each year for personal/carer’s leave.

A costly decision for self-represented solicitors and barristers: High Court rules the “Chorley exception” is not part of the common law of Australia

In the recent decision of Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29, the High Court ruled the Chorley exception, which allows self-represented litigants who are solicitors to recover costs incurred for their professional services in acting for themselves in any litigation, does not extend to barristers and, more broadly, is not part of the common law of Australia.
 
Background
The respondent, a barrister, was retained by the appellant, an incorporated legal practice, to appear in a family provision matter in the Supreme Court of New South Wales. At the conclusion of the proceedings, a dispute arose between the parties about professional fees, as the appellant paid the respondent only part of her fees.
In the first instance, the respondent sued the appellant for the balance of her fees in the Local Court of New South Wales but was unsuccessful. She then appealed to the Supreme Court of New South Wales where the appellant was ordered to pay the respondent the balance of the respondent’s fees, as well as her costs for both the Local Court and Supreme Court proceedings.
Pursuant to the costs orders, the responded forwarded a memorandum of costs to the appellant, which included costs incurred on her own behalf. The appellant refused to pay the costs claimed for work undertaken by the respondent herself and made an application for assessment of costs. The costs assessor decided in favour of the appellant and rejected the respondent’s claim for the costs of work she had performed herself on the ground that in New South Wales the Chorley exception does not apply to barristers. The respondent was unsuccessful in both her appeal to the Review Panel, and then to the District Court of New South Wales.
The respondent sought judicial review of the District Court decision in the Court of Appeal. The Court of Appeal held that the respondent, as a barrister, was entitled to rely on the Chorley exception as her costs were quantifiable by the same processes as solicitors.
The appellant appealed the decision of the Court of Appeal to the High Court of Australia.
The Chorley exception
The general rule is that self-represented litigants are not able to recover costs for any time or work performed in the course of the litigation. However, an exception to this rule, commonly referred to as “the Chorley exception,” is that self-represented litigants who are solicitors may be able to recover their professional costs of acting in the litigation.
The two principal issues determined by the Court was whether the Chorley exception applies to barristers who represent themselves in legal proceedings and, more broadly, whether it should be recognised as part of the common law of Australia.
The Chorley exception is not part of the common law in Australia
In the lead judgment of Kiefel CJ, Bell J, Keane J and Gordon J, their Honours determined the Chorley exception should not be recognised as part of the common law of Australia for reasons including the following:

As recognised by the majority in Cachia v Hanes (1994) 179 CLR 403, the Chorley exception is “anomalous” as it does not treat all litigants in the same manner. The exception affords a privilege to solicitors only, which is inconsistent with the principle that all persons are equal before the law. Further, because the exception is “anomalous”, the Court held that it should not be extended, by judicial decision, to apply to barristers.
If self-represented solicitors are permitted to recover costs for work undertaken themselves, there is the possibility a solicitor may profit for his or her participation in the litigation. This is contrary to the principle of costs orders, which are awarded by way of indemnity and not to compensate for lost earnings or reward a litigant’s success.
The Chorley exception is also inconsistent with the statutory definition of “costs” under s 3(1) of the Civil Procedure Act, which is a “means and includes” definition. The “means” part of the definition purports that costs are awarded for professional services actually incurred, and the “includes” part of the definition, which refers to “remuneration”, encompasses remuneration for professional services rendered under a contract for services. “Remuneration” does not cover the concept of payment to a person by himself or herself for services performed by himself or herself. Accordingly, as the definition of “costs” is otherwise exhaustive, it does not allow for self-represented solicitors to recover costs incurred on their own behalf.

What about a solicitor employed by an incorporated legal practice of which they are its sole director and shareholder?
It is well established that where in-house lawyers employed by governments and other agencies represent their employers in legal proceedings, the employer is entitled to recover costs in circumstances where an ordinary party would be so entitled by way of indemnity.
However, as the Court in these proceedings highlighted, there is still a question whether this view would also apply to solicitors employed by an incorporated legal practice of which he or she is its sole director and shareholder. As the Court noted, the resolution of this question may require close consideration of the legislation which provides for incorporation of solicitors’ practices and the intersection of that legislation with the provisions of the Civil Procedure Act in light of the general rule. Ultimately, the Court held that this is a matter for the legislature.
Implications
As the Chorley exception is not recognised as part of the common law of Australia, a self-represented litigant who happens to be either a barrister or solicitor will not be able to recover his or her professional costs for acting for himself or herself in any litigation.
Solicitors and barristers should now think twice about representing themselves in litigation. While solicitors may have in the past chosen to self-represent to save costs, this will not necessarily be the cost-effective option as they will no longer be recompensed for their time and effort by way of costs orders. Besides, as the Court highlighted, it is often undesirable of legal practitioners acting for themselves in legal proceedings. This is because a self-representing solicitor, lacking impartial and independent advice, may also lack objectivity due to self-interest.
It will be interesting to see if the legislature would follow the course which has been taken in England and abolish the general rule to allow self-represented litigants, whether legal practitioners or not, to recover costs for their time and effort in litigation. Any such change, in my view, is unlikely.
McCabe Curwood’s litigation and dispute resolution team is experienced in advising on and acting in all aspects of litigation, and regularly represents members of legal and other profession in disputes in different Courts. Do not hesitate to contact us if you require any assistance.
This article is not legal advice. It is intended to provide commentary and general information only. Access to this article does not entitle you to rely on it as legal advice. You should obtain formal legal advice that is specific to your particular circumstances.
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Resetting the stopwatch for setting aside statutory demands: how long do you have?

Like many areas of insolvency law, statutory demands have strict procedural requirements as to the timing by which documents must be served. But how is the passage of time calculated? If something is required to be done “21 days after” a document is served, is this intended to be inclusive or exclusive of the day the document was served? The Supreme Court of NSW recently grappled with this issue in Verimark Pty Ltd v Passiontree Velvet Pty Ltd [2019] NSWSC 455 and has provided clarity for lawyers and insolvency practitioners alike.
 
Background
Verimark commenced proceedings against Passiontree in the local court at Burwood for breach of contract, claiming approximately $40,000 in damages. During the proceedings, Passiontree was successful on two interlocutory applications and Verimark was ordered to pay Passiontree’s costs on these motions.
Passiontree had their costs assessed, and obtained certificates of determination in the sum of approximately $25,000. These certificates were lodged with the Local Court, and judgment was entered for that sum. Passiontree then served a statutory demand on Verimark for the judgment debt.
The statutory demand was served on Verimark on 1:30pm on 21 February 2019. At 4:00pm on 14 March 2019, Verimark filed an application with the Supreme Court of NSW to set the statutory demand aside.
Passiontree argued that the Court did not have jurisdiction to hear the application, as it was not served in time.
The issue in dispute
Pursuant to section 459G of the Corporations Act 2001 (Cth), an application to set aside a statutory demand “may only be made within 21 days after the demand is so served”. Section 105 of the Act also reads:
Without limiting subsection 36(1) of the Acts Interpretation Act 1901, in calculating how many days a particular day, act or event is before or after another day, act or event, the first-mentioned day, or the day of the first-mentioned act or event, is to be counted but not the other day, or the day of the other act or event.
Passiontree submitted that the reference to the first-mentioned day in section 105 is a reference to the date of service of the statutory demand (being 21 February 2019) and accordingly it is to be counted in the 21 day period set out in section 459G.
If Passiontree was right about this construction, the deadline to file an application to set aside the statutory demand expired on 13 March 2019 and accordingly the Court did not have jurisdiction to hear Verimark’s application to set aside the statutory demand.
Verimark submitted that the correct interpretation of section 459G is that the 21 days started counting from the first day after service, being 22 February 2019. On this construction, their time to file the application expired on 14 March 2019 and accordingly they filed within time.
The Court’s lap around the Interpretation Acts
The matter was heard by Ward CJ in Equity. Her Honour considered section 36 of the Acts Interpretation Act 1901 (Cth), which provides that if a period of time is expressed to begin after a specified day, then the period of time does not include that day. Her Honour also noted section 36(1) of the Interpretation Act 1987 (NSW), which states that “if in any Act or instrument a period of time, dating from a given day, act or event is prescribed for any purpose, the time shall be reckoned exclusive of that day or of the day of that act or event”.
This supports Verimark’s construction of section 459G. Her Honour also applied the case of Autumn Solar Installations Pty Ltd v Solar Magic Australia Pty Ltd [2010] NSWSC 463. In that case, Barrett J similarly found that where a section is phrased in terms of 21 days “after” a specific day, then one is to leave out of account the specified day itself.
Accordingly, her Honour held that Verimark’s submission that the days were to be calculated from the day after the service of the statutory demand was correct.
But what of section 105? Her Honour found that the Commonwealth and NSW Interpretation Acts can be read consistently with section 105 of the Corporations Act. This is because the particular event referred to in section 105 is the making of the application to set aside the statutory demand. Therefore, the “first mentioned event” (being the service of the application) is to be counted, but not the other event (being the service of the statutory demand).
In finding that the Court had jurisdiction to hear the application, her Honour went on to find that the statutory demand ought to be set aside as there was a genuine dispute as to whether it is payable, and that there is a genuine off-setting claim based on the damages claimed in the Burwood Local Court Proceedings.
Take home lessons
Statutory demands are an area of law where the courts take a strict approach with respect to procedural requirements, such as the deadlines for filing applications to set them aside. Procedural defects can lead to the parties incurring significant costs in trying to rectify the error, or may simply lead to their rights being prejudiced. Therefore, it is essential that the statutory time periods are followed strictly.
In this case, the passage of a single day was all that was required to trigger a dispute to the Supreme Court of New South Wales as to the jurisdiction for the application to set aside the statutory demand. The law is now absolutely clear that, in calculating the passage of time, it is the day after service of the statutory demand from which the 21 days are to be calculated.
Lawyers and insolvency practitioners alike should commit this rule to the forefront of their minds when they are diarising dates after the service of a statutory demand. These strict rules also emphasise the importance of ensuring that a statutory demand (and an application to set it aside) are served on the other party in such a manner that the exact time of service are precisely ascertainable so that there can be no dispute as to when the documents are served.
McCabe Curwood has experience in acting for insolvency practitioners and creditors in insolvency disputes, including prosecuting and defending applications to have them set aside.
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Tender of the amount of a statutory demand before a winding up order is made

It is well known that a company served with a statutory demand has 21 days to comply. If the recipient fails to pay the amount of the demand (or obtain a court order extending the period for compliance) within the period of 21 days after the demand is served, the creditor may rely on the failure as a basis to apply for the company to be wound up in insolvency. But what if the company pays, or seeks to pay, the amount of the statutory demand after the 21 day period has expired? Can the creditor still apply to have the company wound up in insolvency, and if so, what are the prospects of the Court making such an order?
 
The above issues have been considered in two 2019 decisions of the Supreme Court of Victoria.
In the matter of HGC Properties Pty Ltd [2019] VSC 202 (25 March 2019)
An Owners Corporation obtained judgment against HGC Properties Pty Ltd (“the Company”) for a total $240,638.02 in respect of unpaid fees and levies. In the meantime another party had filed an application to wind up the Company in insolvency. At the first return of the matter, the plaintiff was given leave to withdraw from the proceeding on the basis it had been paid its underlying debt. The Owners Corporation then filed an interlocutory process to be substituted as applicant for the Company to be wound up.
At the next return of the matter, the Company’s counsel produced a bank cheque and sought to tender it as payment of the entire amount of the judgment debt. Payment was refused by the Owners Corporation. However, the Court ordered that the bank cheque be paid into Court pending the resolution of the proceeding. In addition, the defendant made payments to the Owners Corporation in respect of interest on the judgment debt.
One of the questions for the Court was whether in all the circumstances the Owners Corporation should be prevented from being substituted as plaintiff, in the exercise of the Court’s discretion.
The Court observed as follows at [24]: “The object of a tender is not to end all controversy between the parties but to “throw the risk of further controversy upon the other party”.  So long as a defendant is able to show that he or she was willing to unconditionally pay the entirety of an amount falling due, then tender will be effective”. Other relevant principles referred to by the Court included that:

a valid tender and payment into Court does not eliminate the debt itself, that is, the creditor’s status is preserved;
a tender may be valid even if proffered “without admissions” or “under protest”, provided only it is unconditional; and
the creditor’s reasons for refusal of payment, and specifically whether the creditor has acted unreasonably in refusing payment, is a matter relevant to the exercise of the court’s discretion.

Ultimately the Court concluded that even assuming the Owners Corporation had not acted unreasonably in refusing to accept the tender, as a matter of discretion and having regard to all of the surrounding circumstances, it should not be substituted as applicant for the Company to be wound up. In reaching this decision the Court accorded great weight to the Company’s actual payment into Court.
In the matter of Vitamin Co Pty Ltd [2019] VSC 540 (23 August 2019)
In this more recent case, the statutory demand issued by the plaintiff claimed the “relatively trivial” amount of $2,372.36 (being only slightly higher than the prescribed statutory minimum). The solicitors for the defendant wrote to the plaintiff’s solicitors confirming that they held an amount referable to the statutory demand in their trust account.  They also stated that they were instructed to pay that amount to the plaintiff in satisfaction of the debt on the basis that: (a) the debt remained disputed; and (b) “[t]he payment is made under protest and will be the subject of recovery proceedings for damages in due course”.
The plaintiff declined to accept payment because of a concern that the defendant was insolvent. The defendant sought and was given leave to pay the relevant funds into Court.  It then did so. The Company opposed the winding up application on various grounds including that it had sought to pay the debt.
In these circumstances the Court held that the tender was unconditional (whilst the solicitor’s reference to the payment being the subject of separate proceedings for damages was “inelegantly worded”, the Court accepted that it “simply evinced an attempt to reserve the defendant’s rights”). Further, the potential for the payment to constitute a voidable transaction was not a sufficient basis to refuse the tender. The Court held at [71]:
“I am satisfied that the defendant has demonstrated valid tender in respect of the amount of the statutory demand. That amount has been paid into Court and the defendant remains willing to discharge the debt. These are matters which strongly weigh in favour of the Court exercising its discretion to refuse to make a winding up order”.
The Court ultimately declined to make a winding up order against the defendant notwithstanding that it had tried, but failed to displace the statutory presumption of insolvency.
Points to take away
If a company fails to comply with a statutory demand within the 21 day period (thus giving rise to a presumption of insolvency) all is not lost, particularly if the company subsequently becomes able to pay the amount of the demand.
The company should attempt in the first instance to unconditionally tender the debt to the creditor which issued the demand.
If the creditor refuses to accept the tender, and subsequently applies to have the company wound up in insolvency, the company should seek leave to pay the relevant funds into Court then (assuming leave is granted) do so. It should also thereafter manifest a continued readiness and willingness to pay the same to the creditor, together with interest.
A valid tender and payment into Court will be a matter relevant to the exercise of the Court’s discretion to substitute the applicant for a company to be wound up, and to make a winding up order.
McCabe Curwood has extensive knowledge and experience when it comes to bankruptcy and insolvency matters. Do not hesitate to contact us if you require any assistance in these areas.
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Laurie James Retirement Notice

Laurie James AM began his career long association with Kott Gunning as an articled clerk in 1963. Evidently he was recognised as a clever young man, as he was made Partner in 1967. Not that surprising perhaps for a first class honours graduate, although those few who achieve that degree of academic excellence do not always enjoy the same measure of success as a lawyer.  Laurie, however, throughout his career was also recognised as an outstanding practitioner and for many years, pre-eminent in the field of building and construction law, which was his main area of expertise.
Laurie’s contribution to every facet of the business of Kott Gunning over the years has in truth been phenomenal.  As well as leading Kott Gunning’s building and construction team for many years, Laurie has been lead partner in commercial litigation and local government, an invaluable advisor to our insurance team and a much sought after arbitrator.  He has served a managing partner and as senior partner during the period prior to his retirement.
Laurie’s presence in the office will be missed enormously at a personal level by all members of the team who have had the good fortune to work with or support him.  Everyone in the team though, will miss Laurie’s good humour and equanimity as well as his remarkable intellect and capacity for dispassionate logical analysis of virtually every type of legal problem.
Vidal Hockless (managing partner from 1997 to 2005) noted:
“Laurie was my first boss when I joined KG.  He knew everything – which was great, because I knew next to nothing and had a lot of questions.  I never got over his amazing ability to manage his working environment and not succumb to the more usual formula of files and paper everywhere.  There was just never anything but one file on his desk, something I have always wished to emulate but have never got anywhere near achieving.”
Laurie’s personal decency, fairness, humour, and honesty have been an example to everyone in the firm, both past and present for over 50 years, and continue to represent the qualities that we would all like to be known for.  Laurie is a lawyer/partner/colleague who has left his mark and will be greatly missed.
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