There has not been any reform of the Defamation Act since it was introduced in 2005. The Council of the Attorneys General of each of the States and Territories of Australia has however now agreed to the enactment of a number of important amendments to the legislation. The proposed amendments include the following namely:-

The introduction of the test of serious harm as an element of a cause of action for defamation;
The provision of a concerns notice as a pre-requisite before the commencement of defamation proceedings;
Amendment to the defence of contextual truth;
Incorporation of a defence of publication of matter concerning an issue of public interest;
Introduction of a defence concerning scientific or academic peer reviewed material;
Provisions pertaining to the maximum amount of damages for non-economic loss;

The test of serious harm
Previously in actions for defamation, it was not necessary to prove loss. Once defamation was established, then loss was assumed.
Upon the introduction of the amendments to the legislation, as a threshold issue, a plaintiff will now have the onus of proving that the publication of the defamatory matter has caused or is likely to cause serious harm to his/her reputation. As a trade-off, the defence of triviality is to be repealed.
The determination of the serious harm issue is required to be determined either as a pre-trial issue or during the trial on the court’s own motion or on the application of a party.
The necessity of a concerns notice prior to the commencement of legal proceedings
The Act as it presently stands already makes provision for concerns notices, however currently such notices are not compulsory. However, by virtue of the intended amendments to the Act, it will now be mandatory for an aggrieved party to give a concerns notice to a publisher prior to the institution of defamation proceedings.
Pursuant to such a notice a publisher will have 28 days in which to consider his/her position and whether to make an offer of amends. The applicable 28 period can be extended in circumstances where a publisher makes a request for further particulars.
If a publisher chooses to make an offer to make amends then pursuant to the intended amendments to the Act it will be necessary for the offer to remain open for acceptance for a minimum of 28 days.
Amendments to the defence of contextual truth
The defence of contextual truth enables a defendant to raise a defence that in addition to the defamatory meanings relied upon by a plaintiff in order to found a claim, the defamatory material gives rise to other defamatory imputations (the contextual imputations) and therefore by virtue of the truth of the same no further harm is done to the plaintiff’s reputation.
However pursuant to the decision in the matter of Kermode v John Fairfax Publications it was determined that by virtue of the wording of the Act in order to rely upon such a defence a defendant had to be in a position to plead additional imputation/s in addition to that relied upon by the plaintiff. Prior to the introduction of the Act in 2005 the practice had become known as pleading back a plaintiff’s imputations.
The amendments as contemplated will overcome this difficulty and specifically allow defendants to rely on imputations complained of by a plaintiff.
The defence of publication of matter concerning an issue of public interest
The defence of qualified privilege under section 30 of the Act was intended to respond to circumstances where there was not necessarily a reciprocity of duty and interest between publisher and recipient, however, it has largely been unsuccessful. It has not been successfully applied in mass media matters.
With the proposed amendments to the legislation, it is now contemplated that it will be a defence to a claim of defamation if it can be proven that the defamatory matter pertained to an issue of public interest, and the defendant reasonably believed that the publication was in the public interest. Further, the amendment lists various factors that a court may take into account in determining the question of reasonableness.
Interestingly one of the factors that is specified is whether the source of information in the matter published is a person whose identity is required to be kept confidential.
Another factor is listed as the importance of maintaining “freedom of expression in the discussion of issues of public interest”.
Defences concerning scientific or academic peer-reviewed material
Under the amendments it is contemplated that it will now be a defence to defamatory matter if it can be proven that the matter was published in a scientific or academic journal and the matter relates to a scientific or academic issue and an independent review of the matter was carried out prior to publication by persons with appropriate expertise.
Such a defence is defeated if the plaintiff proves that the defamatory matter or assessment was not published honestly for the information of the public or the advancement of education.
Provisions pertaining to the maximum amount of damages for non-economic loss
Under the Act damages for non-economic loss is capped. At the present time damages in defamation matters are capped at $407,500 for non-economic loss. There is also provision in appropriate cases for awards of aggravated damages. The cap imposed in respect of damages for non-economic loss was intended to ensure parity with awards of damages in other legal matters as for instance in personal injuries cases.
However, there have been some inconsistencies in the approaches taken by various courts when assessing damages. For example the damages awarded in cases such as Bauer v Wilson (No 2) and Rush v Nationwide News.
The amendments now sought to be made to the Act specify that the maximum amount for non-economic loss is only to be awarded in the most serious cases. Further, it is now contemplated that if aggravated damages are to be awarded then any such award is required to be separate and distinct from awards specified for damages for non-economic loss.
These are just some of the extensive amendments that are proposed to be made to the Defamation Act.
If you would like to learn more about the changes to the Act, or if you are seeking defamation advice, please contact Mark Jones.
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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In 2019, ASIC received a new product intervention power as part of the Federal Government’s response to the Financial System Inquiry.  This power allows ASIC to intervene, including to ban or set restrictions on financial and credit products in the interest of consumer protection.  This applies even if there is no demonstrated or suspected breach of any law, allowing ASIC to address apparent deficiencies in the statutory law, in the interest of protecting consumers.
It didn’t take long for ASIC to put its new power to use against unlicensed lenders who sought to circumvent the National Credit Code on the basis of a technicality.
In September 2019, ASIC targeted an unlicensed lender offering short term loans which met the Code exemption criteria, but which were coupled with separate side agreements from a related entity that provided for the of balance fees and charges as services from the related entity.  Now in August 2020, ASIC again proposes to use the same power against the same lender to ban certain continuing credit contracts structured in the same manner.
ASIC Commissioner Sean Hughes said in 2019: “ASIC is ready and willing to use the new powers that it has been given. The product intervention power provides ASIC with the power and responsibility to address significant detriment caused by financial products, regardless of whether they are lawfully provided.”
ASIC was unsuccessful in civil proceedings in the Federal Court in 2014 to ban the same side agreement short term lending model used by other lenders at that time.  This was on the basis that the Code had not been breached and the Court noted that it was a matter for Parliament to modify the Code to correct any loopholes that might exist.  Well, the Federal Government wasn’t going to have any of that.
What happened this time?
Subsection 6(5) of the National Credit Code exempts from the application of the Code continuing credit contracts (eg. credit cards and overdrafts) if the total charged for providing the credit:

is a periodic or fixed charge that does not vary according to the amount of credit provided; and
does not exceed the amount prescribed by regulation, which is currently $200 for the first year and $125 for each subsequent year.

This means that a lender offering a facility of this kind to a consumer does not need to comply with the Code and does not need to be licensed and have a membership with AFCA.
An unlicensed lender sought to take advantage of this exemption by offering a continuing credit facility that meets the low fee pre-requisites, coupled with a side service agreement from a related entity under which the customer is charged fees for services such as processing drawdowns or fast-tracking advances.
These additional fees are not minimal amounts.  ASIC identified that in certain cases, consumers would pay some 220% to $490% of the loan amount in total fees and charges.
To make matters worse, ASIC states these facilities are targeted at vulnerable consumers and advertised as ‘payday loans’, ‘Centrelink loans’, ‘bad credit loans’, ‘emergency’ or ‘fast cash’ facilities.  They appear to incentivise the customer to choose higher fee options for a faster advance.  They have uncapped default fees and direct debit arrangements which may result in additional overdraw fees and charges to the customer’s account.
AFCA is rightly concerned that it has no jurisdiction in these facilities if not covered by the Code, and that consumers entering into these arrangements will have no recourse to AFCA’s external dispute resolution and determination process.  It strongly supports ASIC’s use of product intervention power to ban this product offering.
Lessons to be learned
ASIC’s product intervention power is found in Part 7.9A of the Corporations Act 2001 and Part 6-7A of the National Consumer Credit Protection Act 2009 and allows ASIC to intervene in exactly this type of case, where no law has technically been breached.
ASIC’s proposed order, in this case, will confirm that lenders cannot hope to circumvent the National Credit Code with side services agreements and will prohibit continuing credit contracts in circumstances where the total of fees and charges charged by the lender, together with any other party under any collateral contract or arrangement, exceed the maximum charge stipulated by the Code.
The use of ASIC’s product intervention power, in this case, highlights that lenders can no longer hope to get by based purely on the letter of the law.  Lenders, including unlicensed lenders, will need to consider the intent of the Credit Code and the effect of their products and services on consumers, in light of the possibility that their products and services could be banned or restricted, irrespective of their apparent legitimacy.
If you would like to learn more, please contact Nadia Sabaini or book your complimentary 15-minute discussion via LawTap today.
 
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Bennett & Philp Lawyers is happy to announce that Business Advisory Director, Nadia Sabaini, has been named as a finalist in the Women in Finance Awards 2020 for Banking and Finance Lawyer of the Year.
The Women in Finance Awards showcases the industry’s most prestigious accolades recognising excellence across the entire financial services industry. The awards pinpoint professional development and innovation, showcasing the female individuals leading the way in the industry. Award recipients represent a true cross-section of the financial services industry, recognising the contributions of the profession’s most senior ranks through to its rising stars.
Women in Finance Awards
The finalist list, once fully released, will feature over 240 high-achieving professionals across 28 submission-based categories.
“This year’s Women in Finance Awards is our biggest yet, with new categories introduced to capture a wider demographic of outstanding female talent,” said Emma Ryan, deputy head of content at Momentum Media.
“The event represents a fantastic opportunity to shine a spotlight on those going above and beyond for their respective organisations, all while breaking down barriers and cementing themselves as among the top professionals across Australia.
“On behalf of the team, I’d like to congratulate all of the finalists. We look forward to celebrating your success.”
Nadia joined Bennett & Philp Lawyers in 2009 as a Commercial Lawyer. During her time here, Nadia has always strived to achieve more and has developed herself as a skilled and reputable practitioner in the areas of banking and finance law.
Nadia is humbled to be recognised and proud to be named alongside many other female industry leaders and innovators.
On behalf of the whole team at Bennett & Philp, congratulations on your inclusion in the shortlist, Nadia!
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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 A number of changes were recently made to the Associations Incorporation Act (‘Act’) some of which we have highlighted in previous articles.
Recent changes
One particular change which appears to have been quietly added in is an additional section 91B of the Act. There appears to have been little commentary or discussion around this change, but Members must be aware that they are now potentially open to new claims for personal liability when managing an Association facing financial difficulties.
Section 91 previously stated that the winding up of an association is to be done in accordance with Part 5.7 of the Corporations Act 2001.
The new Section 91B now provides that both parts 5.7 and 5.7B, divisions 1 and 2 of the Corporations Act are applicable procedures for associations looking to be wound up.
This might seem like a very boring and minor amendment, but it has some very serious potential changes for Associations and committee members (“Members”).  
As set out in our previous article, Justice Jackson declared in Robson v Commissioner of Taxation[1] that part 5.7B of the Corporations Act (“Part 5.7B”) did not apply to the winding up of incorporated associations. The impact of this decision meant that liquidators could not pursue voidable transaction claims such as unfair preference claims, unreasonable director related transactions and other voidable transaction against Members.   
Facts of the case
The facts of that case are:

the liquidator was pursuing the Australian Tax Office (“ATO”) for unfair preferences paid by the association;
the ATO was claiming that it was entitled to be indemnified by the members which meant any amount it had to pay to the liquidator the members would be personally liable to the ATO for;
the only issue at trial was whether or not part 5.7B applied, if it did then the ATO would be liable to the liquidator and the members would be personally liable to the ATO;
it is only due to the finding by Justice Jackson that part 5.7B did not apply that allowed the members to avoid this personal liability.

Justice Jackson’s comments
Justice Jackson further commented at paragraph [63] of his judgement that:
the possible conclusion is that the effect of the current statutory provisions was unintended and is a mistake. The effect could be reversed if s 91(2) of the AIA were amended to provide or construed to mean:
(2) The winding-up of an incorporated association under section 90 is declared to be an applied Corporations legislation matter for the Corporations (Ancillary Provisions) Act 2001, part 3, in relation to the Corporations Act, part 5.7 and part 5.7B, subject to the following changes to the provisions of part 5.7 and part 5.7B…”
It appears that the legislature has done exactly as Justice Jackson suggested and the position for Associations has now been reversed.
From our reading of the amendments, it appears clear that if those provisions had been in effect at the time Justice Jackson handed down his decision the members would have been liable to pay a substantial amount personally to the ATO.
Unlike the insolvent trading provisions which are not expected to start until June 2021 these amendments are already in force.
Based on our experience when dealing with SME businesses a Member is far more likely to be pursued for this sort of indemnity claim by the ATO than they are for insolvent trading by a liquidator.  
Conclusion
Members of associations must be aware of potential personal liabilities claims made pursuant to Part 5.7B which apply now.
Members and Associations facing financial difficulties should seek advice as soon as possible to get their affairs in order and consider taking action such as appointing a voluntary administrator or winding up the Association voluntarily to avoid becoming personally liable.
[1] [2015] QSC 76
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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On commercial projects when a subcontractor is not being paid by the builder they have several options including:

Continue to do the work and hope they get paid;
Make an adjudication application under the Building Industry Fairness Act (“BIF”) which may ultimately result in the works being suspended; or
Lodge a subcontractor’s charge under BIF (“Charge”).

What are the advantages of a Charge?
They have several important advantages over other actions, as it requires the developer to retain money to be paid from the builder to pay the amount of the Charge.  This means that the builder doesn’t get those funds and then spend them on other debts or expenses.
The Charge also gives the subcontractor security over the funds that are payable to the builder.  Even if the builder goes into liquidation the Charge will still require the developer to retain those funds.
This security also means that if the subcontractor gets paid by the Charge and then the builder goes into liquidation the liquidator will not be able to pursue the subcontractor for an unfair preference to have the money paid back.
Despite all these advantages, lodging one is the least likely action a subcontractor will take.  Usually, this is because the builder will promise that payment is coming soon once they have been paid. They will also threaten the subcontractor that if they lodge a Charge the builder will never engage them again.
Consequences of failing to lodge 
In our experience, this failure to lodge a Charge can have serious consequences to a subcontractor including:

The final payment has already been made to the builder as they took too long to lodge a Charge;
They are out of time to lodge a Charge when the builder goes into liquidation (as strict timelines apply);
They do not get paid for the work they have done when the builder goes into liquidation;
They do get paid but then end up having to pay back all the money (or a substantial amount of it) as the liquidator sues them for an unfair preference after the builder goes into liquidation; and
In the worst cases, the subcontractor has ended up in liquidation themselves.

If the subcontractor had lodged a Charge these consequences might have been avoided.
Given the forecasts of a significant number of businesses going into insolvency soon, subcontractors should be closely looking at the builders who have not paid them and obtaining advice about lodging subcontractor charges to protect their cash flow and their business.
If you would like to discuss in more detail, please contact Tony Mylne or Andrew Lambros.
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
 
 
 
 
 
 
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Unfortunately, even the most well-managed charities and associations may face the inevitability of bringing things to an end. Managers who find themselves in this situation should be aware of the new legal obligations they face.
Previously in Queensland, the courts have held that members of management committees (“Members”) of incorporated associations (“Associations”) cannot be liable for insolvent trading.[1]
From 30 June 2021 (the expected commencement date), this will change as Members will be liable for damages and penalties for insolvent trading.
There are now also new options available to Members and Associations such as voluntary administration (not previously available) which can be used to avoid liability for insolvent trading.
In our earlier article, we highlighted some of the changes passed by the Queensland Parliament in relation to the legislation governing associations in ‘The Associations Incorporation and Other Legislation Amendment Act 2019 (“Act”)’.    This article takes a closer look at the implications of these amendments if an Association is facing financial difficulties.
Insolvent Trading
From 30 June 2021, Members will face similar duties to those of company directors which includes hefty penalties and damages for insolvent trading.
The use of the phrase “insolvent trading” is a bit confusing as:

The offence is actually for incurring a liability when the Association is already insolvent;
or the Association becomes insolvent as a result of incurring that liability;
This means the Association doesn’t have to be “trading” for a Member to become liable under these provisions.

The Queensland government has stated that the reason for these provisions is to bring the duties of Members into line with directors of companies.
While these additional duties originally come from the Corporations Act, the provisions are not exactly the same.
Most significantly, the defences available under the safe harbour provisions in the Corporations Act which allow directors to seek appropriate professional advice and consider the options for the company to avoid being liable for insolvent trading are not available for Members.
The defences that are available for Members are:

The debt was incurred without their express or implied authority or consent; or
At the time the debt was incurred, because of illness or for some other good reason, they did not take part in the management of the Association; or
At the time of the debt was incurred, they had reasonable grounds to expect, and did expect, that the Association was solvent even if it incurred that debt and any other debts that it incurred at that time.

In considering the “reasonable grounds” it will be reasonable (unless the contrary is shown) for a Member to rely on another Member, an officer, employee or professional adviser to the Association who prepared information and advice.
However, the Member must show that they relied upon this information in good faith and made an independent assessment of the information and advice.
These defences are similar, but not the same, as defences available to directors.  It remains to be seen if the courts will decide if these defences are effectively the same as those set out in the Corporations Act.
It should be noted that these defences have been hard to establish in the court and the onus of proof will be on the Member to establish one of these defences.
Voluntary Administration and Liquidation
Other amendments under the Bill provide new options to Members if their Association is in financial difficulty.
Firstly, an Association can now enter into voluntary administration or voluntary liquidation using the procedure for companies set out in the Corporations Act.  This is in contrast to the previous method of having to apply to the Supreme Court for the appointment of a liquidator.
These procedures commenced on 22 June 2020 and are available to Associations now.
The ability to use the voluntary administration procedure allows Members to carry out appropriate restructuring of the Association which may enable the Association to continue rather than just liquidating the Association.
Conclusion
It is more important than ever that Members remain on top of the Association’s state of financial affairs given they will be personally responsible for insolvent trading claims from 30 June 2021.
Given the risks of insolvent trading, Members should make sure they obtain early independent advice on the financial position of their Association and their legal options.
The ability to put the Association into voluntary administration, if done early enough, will allow the Members to avoid having to face an insolvent trading claim.  This will be particularly important given Members will not be able to use the safe harbour provisions that are available to directors of companies.
Given voluntary administration is available now for Associations and insolvent trading will not apply until June 2021, Members should use the time they have to get the affairs of their Associations in order before this personal liability for insolvent trading commences.
[1] Robson & Ors v Commissioner of Taxation [2015] QSC 76 which held that the insolvency recovery provisions are not incorporated into the Act and therefore do not apply
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In a very recent decision of the New South Wales Court of Appeal, a professional jockey who suffered from serious injuries in a fall whilst racing has failed in his personal injuries against another jockey who had been found guilty of careless riding by stewards in relation to the incident.
Hari Singh was a professional jockey who was seriously injured whilst taking part in a race meeting at the Tamworth Racecourse on 14 August 2012. He was 27 years old when his injuries occurred.
The defendant/respondent to his claim, Mr Glenn Lynch was another jockey participating in the race.
Mr Singh (by his wife as his next friend) alleged that his injuries were caused by Mr Lynch riding his horse in such a manner so as to push the horse alongside him into the path of Mr Singh’s horse, resulting in Mr Singh’s fall and subsequent injuries.
Mr Lynch’s actions were investigated by the Racing Stewards and he was charged with careless riding contrary to the Australian (horse) Racing Rules. The Appeal Panel of Racing New South Wales upheld the Racing Stewards’ findings.
Mr Singh’s claim failed at first instance, with Justice Fagan of the NSW Supreme Court finding that Mr Lynch did not breach his duty of care to Mr Singh and that Mr Singh’s injuries were caused by the materialisation of an ‘obvious risk’ which arose in the course of a ‘dangerous recreational activity’ pursuant to section 5L of the Civil Liability Act 2002 (NSW) (‘the NSW Act’). Accordingly, Justice Fagan found that Mr Lynch was not liable in negligence for the harm suffered by Mr Singh.
Mr Singh appealed to the New South Wales Court of Appeal. The main issues subject to appeal by Mr Singh were:

The finding that professional horse racing is a ‘dangerous recreational activity’;
Whether Mr Singh’s injury was the result of the materialisation of an ‘obvious risk’ which occurred in the course of a dangerous recreational activity (and therefore provided Mr Lynch with a complete defence to any established negligence under section 5L of the NSW Act); and
Whether Mr Lynch breached the duty of care he owed to other participants in the horse race.

Professional horse racing as a recreational activity
By majority, the NSW Court of Appeal found that the NSW Act did not by its language, structure nor legislative history provide a basis for excluding professionals involved in a sporting activity from the exemption from liability (i.e. complete defence) provided by section 5L of that Act. It is worthwhile noting that the definition of ‘recreational activity’ in section 5K of the NSW Act includes ‘any sport (whether or not the sport is an organised activity)…’
Further, by majority, the NSW Court of Appeal found that the statutory definition of ‘recreational activity’ cannot be read down by reliance on the ordinary meaning of ‘recreational’.
Materialisation of an obvious risk which occurred in the course of a dangerous recreational activity
By majority, the NSW Court of Appeal found that whilst the trial judge was wrong to conclude that Mr Lynch’s riding was merely careless and not reckless, thus making him liable in negligence, the risk of such riding was still obvious.
It is worthwhile noting that two of the appeal judges (Justice McCallum and Justice Simpson) found that the subject riding of Mr Lynch was aggressive and not merely careless, involving deliberate and persistent riding by him which caused Mr Singh’s fall and as such the defence under section 5L of the NSW Act was not established.
Breach of the duty of care owed to other jockeys
The Court of Appeal variously found that the riding by Mr Lynch was unsafe or grossly negligent.
Three of the five appeal judges found that the consequence of Mr Lynch’s breach of duty was that the defence under section 5L of the NSW Act was engaged and provided him with an exemption from liability in negligence.
By dissent, Justice McCallum and Justice Simpson each found that as the defence under section 5L of the NSW Act was not established, Mr Lynch was liable in negligence for Mr Singh’s injuries.
In summary, the Court of Appeal refused to depart from its earlier reasoning in Goode v Angland [2017] NSWCA 311, a case also involving an injured jockey who failed (also at first instance and on appeal) in claiming damages against another jockey involved in the same race whom he alleges breached his duty of care, resulting in Mr Goode’s injuries.
Application to Queensland claims
Section 19 of the Civil Liability Act 2003 (Qld) (‘the Qld Act’) contains an almost identical provision to section 5L of the NSW Act.
Whilst there have been other cases involving recreational activities, to date, there has not been any judicial consideration of the exclusion/defence within section 19 of the Qld Act in the context of injuries suffered due to the negligence of another athlete/participant during a semi-professional or professional sporting activity.
Whilst each case turns upon its own facts, it will be interesting to see if the Queensland Courts follow the reasoning of the majority in the New South Wales Court of Appeal.
Bennett & Philp Lawyers
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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On 20 March 2020, the Transport and Public Works Committee tabled its report into the Building Industry Fairness (Security of Payment) and Other Legislation Amendment Bill 2020 and the Government has now accepted 11 out of the 12 recommendations for amendment which is reflected in the legislation passed on 15 July.
This communication is meant to bring your attention to the important amendments that will have some effect on the below webinar which was conducted earlier this year. The webinar is still a good resource subject to reading the changes which are outlined within this article.
Timetable for introduction Project Trust Accounts
Rather than the timetable of the introduction of phases outlined at slide 6 the new timetable (that will be effected by proclamation) has considerable flexibility bearing in mind the COVID – 19 uncertainties. The Minister intends to introduce changes incrementally over an extended period as detailed in his second reading speech as follows: –

Phase 2 – State Government building contracts between $1 million and $10 million – 1 March 2021.
Phase 3 – from 1 July 2021 State Government and Hospital and Health Services building contracts in excess of $1 million.
Phase 4 – from 1 January 2022 all private-sector building contracts with Statutory Authority, Local Government and Government-owned Corporations worth $10 million or more.
Phase 5 – from 1 July 2022 all building contracts with any Statutory Authority, Local Government and Government-owned Corporations worth $3 million or more.
Phase 6 – from 1 January 2023 – all eligible building contracts be they Government or private of $1 million or more.

Definition of “Building”
The bill previously defined “building” as “includes a fixed structure” (refer to slide 7). This has been tightened considerably as a fixed structure could include a multitude of structures. The new definition provides that “building” means “a fixed structure that is wholly or partly enclosed by walls or is roofed”. This narrows the definition as to what is “Project Trust Work” that requires a statutory trust to be set up.
Exempt Contracts
The exemption for contracts dealing with Building Work Services has been tightened to only apply to advisory work or design work carried out by registered architects, registered professional engineers, building designers or landscape architects. Contract administration is also exempted so long as the engineer etc wholly or partly designed the building. There are also anti-avoidance provisions set out in amendments to clause 15F in respect to contracts less than 90 days until practical completion.
Omission of section 53BA and section 53BB
At slide 23 we commented concerning the controversial inclusion of these sections which made unlicensed Executive Officers of the company liable in respect of compliance with Minimum Financial Requirements. There were significant penalties which would have been able to target the “mum” of the “mum and dad” builder for non-compliance issues. Lobbying by sections of the industry has thankfully excluded this abhorrent portion of the proposed legislation.
Withholding payment provisions – resident owners
At slides 25 and 26 we referred to the withholding payment provisions in section 97A to H where the holder of an adjudication decision could deliver notices to parties higher up the chain to effectively withhold monies to secure payment to a claimant. The amendment makes these provisions not applicable to a resident owner who is higher up the chain. This is consistent with a history of security of payment legislation not involving “mum and dad” resident owners.
New section 123A – Developers
In accordance with the wish of the Committee, the Minister has committed to reviewing the role of Developers in the industry and will appoint a panel with the terms of reference to be supplied by the Minister.
New section omitting exemption – QBCC Act schedule 1A section 8
This QBCC provision exempted an unlicensed builder from liability under section 42 (penalties for unlicensed building) in circumstances where the construction was not residential, and they contracted with a licensed party to undertake the building works. These matters were not originally any matters that were reviewed by the review panel, which was the genesis of the original Project Trust Account amendments. They arose in the committee stage as a result of submissions apparently made complaining that unlicensed parties were undermining the intention of the Act and that such an exemption was unnecessary as most large infrastructure projects where builders may not have been licensed in Queensland are dealt with under other exemptions. Contractors who had used this exemption to avoid multiple licenses with a group will need to review their current practices and contracting entities so as to avoid any unintentional non-compliance.
Aside from the above provisions, the amendments are not considerable when compared to the original Bill.
The thrust of the original Bill concerning the introduction of Project Trust Accounts, Administration and Audit are largely unchanged. While the State election is due in October this year, the state opposition supported the Bill (although supported complaints of Industry concerning costs of implementation). We would assume if they were successful they would likely give the Act some chance to have an effect, before any further change. In the circumstances, a review of the linked webinar would be useful to increase understanding and compliance.
Construction Briefing Webinar – April 2020

The seminar discusses the essential and detailed consideration of:

Overview and history of Building Industry Fairness (Security of Payment) Act
Phases of introduction
Who do Trusts apply to?
Which contracts exempt?
When is amount liable to be paid to a subcontractor?
Statutory Trusts – Administration, Deposits, Payments, Dissolution, Shortfall, Notices
Retention Trust Accounting, Admin, Charges
Training
Powers obligations and restrictions on Trustees
QBCC Powers
Security under PPSA
Personnel liability of executives
Amendments S75 – Supporting statements
Withholding payment
Charges over property
Amendments to Security of Payment Provisions and QBCC Act, s42E, Excluded no site supervisors licence

Find below a schedule prepared to accompany our webinar and which sets out all penalties under the project trust account provisions. This should assist in identifying risk areas of administration, and possible liabilities for executives, corporations and business owners dealing with the anticipated legislation.
If you would like further updates, please contact us.
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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Allegations of misconduct in the carrying on of small to medium businesses are common. In many cases, such allegations occur in two shareholder companies in which one of the shareholders (typically a majority shareholder) has the day-to-day running of the banking and accounting of the business and may even be the sole director.  
Such a shareholder is able to manipulate the finances of the business so that funds that would otherwise be available to shareholders in the form of dividends paid on profits are diverted to the majority shareholder. Even where the other party is a director, they may have little understanding of accounting matters and simply ‘sign off’ on tax returns or transactions.
While civil and criminal remedies are available in relation to such conduct, for many shareholders in small businesses the cost of pursuing redress is out of proportion to the value of the loss suffered, or even obtaining the evidence to prove that there has been misconduct.
In most cases, only the most egregious of circumstances results in criminal proceedings.  
Commercial Property Cleaners case
A recent matter in which Richard Gordon MacKenzie was committed to stand trial on charges of fraud and theft related to the manner in which the defendant ran the business of a small business, Commercial Property Cleaners, in which one of the directors had died and the remaining director was unavailable due to injuries and a mental breakdown.
The allegations include MacKenzie, the former CEO of the company, among other things, increasing his pay from $10,000 to $25,000 and misappropriating company monies. All told it is alleged that MacKenzie stole in excess of $3.3 million and brought the business to its knees.
While this case does not involve misconduct on the part of a director, it still raises important questions about fraud prevention in the absence of a director or other key person. 
Important takeaways
Regardless of the outcome of those proceedings, there are some important takeaways for corporate governance in any business – particularly one that is heavily reliant on one or two people for decision making and approval processes:

Put in place a fraud prevention plan, systems and policy for the absence of a key person. 

Identify the potential risks of fraud.
Who would have authority and oversight in relation to the running of the business in your absence?  
Do they clearly understand those responsibilities?   
Have they had the necessary training?

Consider how you might place limits on the powers of any person who is tasked with running your business in your absence.

Put in place specific transaction limits on access to electronic funds transfers.  
Provide for a process where any larger transactions require two or more signatories (in these days of increasing email hacking and cyber crime this should be a critical part of your business).

If it is not practical to limit those powers, consider whether there are any ways for other parties to exercise oversight.  

Dangers may arise where only one person has the day to day access to the company’s banking records or accounting systems.
These might be mitigated where, for example, another person who has a close understanding of the day to day business of the company has read-only access to bank or accounting records (such as a trusted family member who is financially literate, bookkeeper or accountant) or such information is subject to periodic review by such a third party.  

Have you granted powers of attorney to any person who may be able to exercise those powers in your absence?
Minority shareholders should ensure that any shareholder agreement provides for a right of access to the books and records of the company and that they exercise this right from time to time. If the shareholder is not themselves financially literate, an accountant or auditor may perform this role in their stead.
Directors must ensure that they fully understand their fiduciary obligations and ensure that they exercise the necessary oversight in respect of the financial position of the company.  
Ensure that relevant staff are trained in identifying potential fraud. Consider to whom an employee may report a fraud being perpetrated against the business.

It can be difficult to stop fraud entirely. However, fraud is more likely to be identified and reported and its outcomes minimised in companies that have strong internal systems and a culture that encourages employees to speak out about their concerns.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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In the post-apocalyptic world following the recent Financial Services Royal Commission (Enquiry), I have dealt with a number of superannuation companies and their insurers concerning insurance held by one of their members. It has been revealing.
One of the recommendations that came out of the Enquiry was for “stale” superannuation policies to cease having insurance premiums deducted from them. Many people who work in industries such as the construction or hospitality industries can accumulate several superannuation policies as they move from employer to employer. There might be a few thousand dollars sitting in a policy which over time gets eaten away by the insurance premiums normally associated with that policy.
There was certainly some logic to the recommendation to protect those smaller superannuation sums from being further eroded by insurance premiums. But there are exceptions.
By way of example, I am acting for a client who had no less than 7 separate policies at the point in time when he suffered what is most likely a career-ending injury. So, in his case, it turned out to be advantageous for him to have multiple policies that he could claim upon in his time of need.
After his injury, he then closed all of those superannuation policies except one and consolidated them (i.e. rolled them over) into the one policy. That was sensible. But then I needed to establish what insurance coverage he had with each superannuation company at the time of his injury.
The experience of accessing details of those policies for my client has been “enlightening” to say the least. One would have thought that in the post-Enquiry era the financial services industry would be cleaning up its act and perhaps it has in some respects, but in other circumstances, there is a long way to go. The superannuation funds and insurers I have been dealing with are those that everyone would have heard of or seen on television.
Time and again, barriers are thrown up by them – usually under the guise of privacy issues. Of course, privacy is a serious issue, particularly in recent times when there has been fraudulent activity on superannuation accounts during the COVID-19 crisis. But my client had closed all his accounts but one, so it was obvious I was not seeking to extract any superannuation funds – my enquiries were simply about his insurance coverage in existence at the relevant time when he became incapacitated for work.
After initially requesting details of his insurance coverage in January of this year, one company had still not provided me with details of my client’s policy by May, despite having been provided with certified copies of identification of my client and signed authorities to release information to me.
Despite writing to their nominated contact addresses in Sydney, Melbourne and Brisbane, three companies asserted they had not received or had lost my communications. How can that be? In no case, was it an incorrect address.
The standard of reading and comprehension displayed by some of the company representatives has left a lot to be desired. An extract from my diary note of one conversation is:
She said she didn’t understand what I want in my letter dated 30 January 2020. I had a look at my letter. I read out my requests [verbatim] in that letter to her. Strangely, she then seemed to understand.
One company, after me writing to it a second time after receiving no response for 5 months, did provide a perfectly good response but sent it to an incorrectly typed email address. It was only after lodging a complaint with the Australian Financial Complaints Authority (AFCA) that I eventually received its email.
In another instance, my client could find no record of his Member Number. I explained that to the company in correspondence and sent various identifying documents and authorities. Despite that, it kept sending emails saying that it required 3 matching points of identification. But no attempt was made to explain what was missing. After a sort of guessing game on my part, it turned out to be the Member Number which was missing but which I had already explained could not be recalled.
I was directed by the same company to lodge documents by way of its website. When I attempted that, it did not work. It was hard not to feel that this company was being obstructive and unhelpful rather than seriously being concerned about my client’s privacy.
Another thing I found galling was receiving emails from companies with no identification of the author of the communication. Usually combined with that is no direct telephone line (or email address) to contact the person involved but a generic 1300 style number – which might be fine if one has half a day to waste waiting to be answered, answering “privacy” questions and being redirected from person to person.
This is common but thankfully not the case across the board.
In fact, a few of the companies have been prompt with their responses and quite reasonable to deal with. Others have been unhelpful to the point of being obstructive, despite having self-serving statements repeated in their written correspondence such as “we are here to help” which are meaningless and largely untrue.
Despite having a signed authority advising that I act, one insurance company attempted to cut me out of the process by communicating directly with my client. Some of the information it was seeking from him was irrelevant and inappropriate.
I am quite sure that the superannuation and insurance industries have improved some aspects of their operations since the Enquiry, but there is clearly still a long way to go. Communications with members, claimants and their representatives ought to be clear and concise, not obstructive and not filled with irrelevant and generic statements.
In my view, to avoid superannuation funds and insurers reverting back to their old pre-Enquiry ways, there ought to be added to their latest Code of Practice a requirement to provide appropriate, readily assessable contact details for the person representing the superannuation or insurance company. If I can do it, they can do it. These are some of the wealthiest businesses in Australia earning profits from their members, so there is no excuse that they cannot afford the resources.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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Leading Adelaide commercial Firm, DMAW Lawyers has been selected to be South Australia’s representative firm for Meritas, the premier global alliance of independent law firms.
DMAW Lawyers will become an integral part of the Australia & New Zealand network of firms as well as the worldwide network of 191 law firms located across 96 countries.
This alliance will enhance DMAW Lawyers’ ability to support South Australian business interests both nationally and internationally.
DMAW’s Lawyer’s Managing Director, Mr Leo Walsh said “One of most attractive benefits of belonging to this network was the opportunity for our lawyers to participate in national and global conversations on business and legal issues. Not only does this expand our thinking, and add to our technical skills, but it help our lawyers build trusted, reliable relationships with lawyers in the regions that matter to our clients. Already we’ve participated in meetings with Insolvency experts across the country and with Senior Partners in Shanghai and Tokyo.”
Mr Mike Worsnop, Partner with Martelli McKegg in New Zealand and Co-Chair of Meritas ANZ: “We are delighted to have DMAW Lawyers join our group. Not only was their quality apparent but they’ve been very easy and responsive to deal with during our discussions.  They clearly demonstrated the type of service clients look for when using a firm in a different market.”
“DMAW Lawyers had to meet the rigorous requirements to become members of Meritas, the only law firm alliance with a Quality Assurance Program that ensures clients receive the same high-quality legal work and service from every Meritas firm.”
Meritas membership is extended by invitation only, and firms are regularly assessed for the breadth of their practice expertise and client satisfaction.
“In today’s environment having a commitment to a reliable network is more important than ever. Independent law firms, Corporate Counsel, Business Owners and their Commercial Advisors, all choose their portfolio of trusted legal relationships to match the issues and the markets they want to navigate. For 30 years, Meritas has cultivated a group of the best firms for this purpose.”
Ms Sona Pancholy, Meritas CEO
About DMAW Lawyers
DMAW Lawyers was established in Adelaide in 2002. The firm has ten Principals and a team of 50 staff.
The firm focuses on three areas of specialization being Corporate, Transactions, and Disputes for Business Clients
About Meritas
Founded in 1990, Meritas is the premiere global alliance of independent law firms. As an invitation-only alliance, Meritas firms must adhere to uncompromising service standards to retain membership status. With 192 top-ranking law firms spanning 96 countries, Meritas delivers exceptional legal knowledge, personal attention and proven value to clients worldwide.
In Australia and New Zealand Meritas is represented by leading independent commercial law firms in each of these six major capital cities:
In New Zealand

Martelli McKegg, Auckland

In Australia

Swaab, Sydney
Madgwicks Lawyers, Melbourne
Bennett & Philp, Brisbane
DMAW Lawyers, Adelaide 
Williams+Hughes, Perth 

Learn more about our affiliation with Meritas and how your business can benefit from it by clicking here.
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A recent decision of the Queensland Magistrates’ Court provides a stark reminder to lawyers that their first duty is to the court and the administration of justice rather than to their clients. 
In Kim v Han and AAI Limited M4136/8, a magistrate considered the issue of legal costs to be awarded in the aftermath of judgement having been given against a plaintiff after a failed compulsory third-party motor vehicle personal injury claim.
The court was critical of both the plaintiff and his lawyers regarding the way the litigation was conducted, for attempts to hide or destroy critical evidence and for the running of the case at all.
The magistrate found that the plaintiff had downplayed injuries suffered in earlier accidents.
He had deleted social media posts in a deliberate attempt to conceal critical evidence.
The magistrate found that the case was prosecuted in a flagrant disregard of the plaintiff’s obvious capacity to perform tasks which he said were beyond his physical ability. 
The magistrate found, as the case developed, that it was clear that the plaintiff suffered no compensable injury.
The magistrate was also critical of the plaintiff’s lawyer’s conduct in having apparently completed a claim document after it had been signed by his client.
The magistrate found that from the outset, the claim must have appeared dubious to the plaintiff’s lawyers. This was compounded by the lawyer’s failure to disclose relevant Instagram posts, the lawyer’s apparent knowledge of the plaintiff’s true physical activity and capacity, and the lawyer’s close personal association with the plaintiff.
The magistrate accepted the defendant’s submission that a solicitor who unreasonably initiates or continues a court proceeding which a solicitor knows, or ought to have known, has no reasonable prospects of success may be subject to an order for payment of the other party’s costs.
The magistrate made an order that the plaintiff’s legal firm and the directors of the firm personally pay the insurer’s indemnity costs in the sum of $140,000.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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Unfortunately, over fifty percent of relationships break down, and most of these involve children. 
Whether your relationship is a marriage or a de facto relationship, separation is not something that most people plan for and when it happens, the added stress of talking to your children about separation can be daunting.
Even though we live in a world where you can Google anything at any time, having access to a colossal amount of information does not make talking to your children about a separation any easier.  For most, your children are your number one priority and you will want to talk to them in a gentle way where you’re able to make informed decisions about what you say and how you say it.

“I have my mother’s mouth and my father’s eyes;
on my face they are still together.”
Warsan Shire, Poet

Whilst divorce is not a simple subject for any parent to discuss with their children, it is important to remember that children rely upon certainty and knowing that they are safe, loved and well cared for is a big part of this certainty.
If you are in a position where it is time to speak gently to your children about separation, we hope that the following suggestions will help you:
 
1. Plan
It is ideal if both you and your spouse are on the same page before you talk to your children about your separation.  If you can talk to the children together with your spouse, then you can work out together how to tell them.
It is important to include the following:

The relationship between you and your spouse is ending, not the relationship with your children;
Your children are still loved by both you and your spouse and that will not change.

You should also give some consideration to what questions your children may ask and pre-prepare answers for them.
One (Toddler) to Five
Children under the age of five are self-focused and rely upon their parents for absolutely everything including: food, water, shelter, love, strength and stability.
Children of this age may perceive the separation between you and your spouse to be ‘their fault’ and it is easy for them to make the jump from “dad left mum” to “dad left me”. 
Offer plenty of reassurance and reinforce that they are, and will be, loved and cared for by both of their parents.
Five to Twelve (Tween)
Between the ages of five and twelve, your children will begin to be able to process bigger emotions, but separation is still a difficult concept for them to grasp.
Children in this age group are still likely to blame themselves for the separation and it will help if you are able to talk to them about what they’re thinking and come up with ideas and strategies to help them to process the separation and manage their feelings about the changes that will occur in their lives.
Thirteen Plus (Teenagers)
Teenagers have the benefit of a greater understanding of separation and divorce, but in their mind, they may also feel that they have the most to lose. Most likely, your teenagers have spent their entire life under one roof and separation will change their whole life as they know it and they most likely have a good idea of how significant that change will be.
Give your teenager a clear explanation of what it means to separate and talk openly about how their time with you and your spouse will work moving forward.
Teenagers will likely ask more in-depth questions and they should be provided with truthful answers.  In saying this, they may need to be sheltered from some information if it is not age appropriate, so a degree of common sense will need to be applied.
As always, never forget to mention that their relationship with you will not change. No matter how old they are, it does not hurt to remind them that separation is an adult concept and you are separating from your spouse, not them.
 
2. Work Together
If you and your spouse are comfortable to talk to your children together and present a united front, then you should do this.
No matter what age your children are, they will need time to digest the information and ask questions.
Talk to your children gently and let them know what life will be like moving forward. Talk to them about what time they will spend with each of you and where they will live.
Try not to overload your children with too much information.
Focus Only On Your Children
Whist you and your spouse may have feelings of hurt toward each other, remember, your children most likely do not feel the same way about either of you.  Your announcement will likely be unexpected, and your children need you to be mature and supportive of them.
Do not make your children feel like they need to take sides by involving them in your hurt or negative emotions.
 No Blame, No Game
 Do not blame your spouse for your separation.
Remember, it is not about you and it is expected that your children love both you and your spouse.  Your separation is not a competition and your spouse probably loves the children just as much as you do.
Destructive games and the appalling growing trend of destruction and denigration in family law matters is unnecessary and detrimental to achieving your desired result. Games do nothing but hurt you and your children and prevent you from ever having a workable relationship with your spouse.
The smallest decisions and actions, consistently made, have far reaching and significant consequences. Demonstrate what is possible to your children by being an example.
Reinforce The Constants
Remind your children of the things that will not change for them.  For instance:

Both you and your spouse love them just the same;
Both you and your spouse will spend time with them.

Think of other things that are constants for them, for instance: school, friends, relatives, family events, sport and extra-curricular activities etc.  Your children thrive on structure and they need to know that not everything in their lives is going to change and that everything will be ok.
Making Informed Decisions
As this situation is normally a first time for all involved, it certainly helps to get some advice from a professional. A family lawyer can consider your circumstances and outline a likely path for you moving forward so you can make informed decisions about what you want to do and ensure certainty for your children. The sooner you obtain professional legal advice, the better equipped you will be to make this life transition for you and your children.
The separation and divorce process is one of the most emotional times in your life and our goal at Bennett and Philp Lawyers is to make the transition for you and your family a positive one, so please reach out if you need help.
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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Many businesses engage contractors to carry out work rather than taking on additional employees. There are many reasons for this – the work may be inconsistent and not regular, and the employer does not want the burden of an underutilised workforce. The question is, are business owners liable for casual employee leave entitlements. 
In recent times this practice has become widespread even to the extent that the contractors may be working almost exclusively for the one business.
The business has seen this as worthwhile even though it would typically pay the contractor up to 25% more than an employee in wages to avoid incurring the employee entitlement liabilities such as annual leave and long service leave.
In acquiring the owner of a business (usually a company), the buyer also acquires its liabilities. Those liabilities, especially in the case of contingent liabilities for “casual employees” would probably not be disclosed on the company’s balance sheet because the business, until now, has not been liable for them.
All this may have been changed by the recent decision of the Full Court of the Federal Court of Australia in WorkPac Pty Ltd v Rossato (WorkPac decision) [1] which considered whether an employer (WorkPac) may have liability for unpaid annual leave, public holidays and personal/carer’s leave entitlements accrued by “casual employees” (i.e contractors).
The Decision – Summary
The WorkPac decision comprising 183 pages, including the Court’s summary, in short, found that:

the description given by the parties as to the nature of the relationship is relevant, but not a conclusive consideration;
the parties had agreed on the employment of indefinite duration which was stable, regular and predictable such that the required firm advance commitment was evident in each of his six contracts considered by the Court (bolding by the author);
the absence of a firm advance commitment as to the duration of the days/hours the employee will work is not conclusive that the employment was casual. The firm advance commitment may be assessed by regard to the employment contract as a whole, including by considering whether it provided for the work to be regular or intermittent, whether it permitted the employer to elect whether to offer employment on a particular date, whether it permitted the employee to elect whether to work and the duration of the employment;
WorkPac Pty Ltd could not set-off or claim restitution of the 25% casual staff loading against its liability for the payment of the above-mentioned leave entitlements;
WorkPac Pty Ltd could not rely upon regulation 2.03A of the Fair Work Regulations 2009 (Cth).

The Appeal 
The WorkPac decision is being taken on appeal to the High Court but will probably not be heard for some time.  It is also possible that the Government will introduce remedial legislation.
In the meantime, however, persons who were thought to be casual employees and remunerated as such may, in fact, have claims against the business to leave entitlements stretching over many years. Even if no claim is made against the business by the casual employees, these potential claims should be taken into account in any contract to sell the business or the company which owns it. H
In the circumstances, it is imperative that the parties to a buy/sell contract particularly the buyer should take legal advice before committing to the contract.
[1] WorkPac Pty Ltd v Rossato (2020) FCAFC 84
Please contact Greg Moroney if you require further information pertinent to your situation.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
The post Are Business Owners Liable for Casual Employee Leave Entitlements? appeared first on Bennett and Philp Lawyers.

On 12 June 2020, the Federal Government passed legislation which will have the effect of introducing a register of directors of Australian companies.  Each director will be required to register and be issued with a Director Identification Number (DIN).
Why a registration system for directors?
This change is part of a number of laws passed to continue the Federal Government’s scrutiny of corporate governance in the wake of the Banking Royal Commission.  The relevant Bill, in this case, is the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2019.
The Directors Identification Number regime is aimed at tackling phoenix activity and aid in the prosecution of offences by directors, but in essence, it boils down to the verification of the identity of company directors and the streamlining of the system, which will have other flow-on benefits including to combat director identity fraud, avoid discrepancies and errors in Government registers, and improve efficiency including in insolvencies.
The Directors Identification Number regime is, in fact, being introduced as part of the Government’s Modernising Business Registers (MBR) program aimed at merging various business registers into one new register overseen by a Commonwealth body to be appointed.
Unfortunately, it will add another layer of red tape to the system, and there will no doubt be pushback by those concerned about the privacy of data in the streamlining of Government services, which has been an ongoing topic of discussion.
Attempts to introduce legislation of this kind failed before, but it seems the Government has now been able to see these laws across the line.  Whether this was with the aid of, or in spite of, the COVID-19 pandemic is for political commentators to decide.
When to register for a Director Identification Number?
The DIN regime will come into operation on a date to be named, which is expected to be in the first half of 2021, but which could be delayed depending on the Government’s priorities in light of the COVID-19 emergency.
From commencement there will be a transition period of 12 months during which:

existing directors will need to register within the period prescribed on the announcement; and
new directors will need to register within 28 days of their appointment.

Following the transition period, new directors will be required to register before they are appointed.
The DIN regime will also extend to directors of foreign companies registered in Australia.
Director Identification Number (DIN) impact on business
Whilst the introduction of the DIN system will be welcomed by ASIC staff and accountants everywhere combatting minor discrepancies in director names and details on various documents and registers, there are some important things for directors to be aware of.
Directors who fail to register within the requisite period may be removed from the ASIC register. They may also be subject to penalty.
Directors applying for multiple DINs or misrepresenting their DIN could be liable for up to 12 months imprisonment.  Any other person involved in such an offence can be liable for a civil penalty fine as an accessory.
Companies will need to amend their procedures to ensure identity verification and DIN issue for directors before they are appointed.
The verification of identity requirements are yet to be seen but are likely to raise the usual procedural concerns including for persons who do not have the more common forms of identification, foreign persons and those overseas at the time of introduction of the regime.
Watch this space for more information when the regime commences and critical dates are announced.
If you would like to discuss the new legislation, please contact Nadia Sabaini.
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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The sentencing in the District Court of Queensland on 11 June 2020 in The Queen v Brisbane Auto Recycling Pty Ltd and Hussaini and Karimi [1] is the first time the industrial manslaughter provisions of the Work Health and Safety Act 2011 (WHS Act) have been applied.
The sentences handed down for industrial manslaughter provide a salutary lesson for employers and their officers who are not “protecting workers and other persons against harm to their health, safety and welfare through the elimination or minimisation of risks arising from work or from particular types of substances and plant”[2] “.
In short, the court recorded a conviction after guilty pleas by each defendant and fined the company the sum of $3 million. It also recorded convictions against both Hussaini and Karimi and sentenced each to 10 months imprisonment but in respect of each ordered that the whole of the term of imprisonment be suspended for an operational period of 20 months.
The WHS Act provides for a maximum penalty of 100,000 penalty units ($10 million) for an offence of industrial manslaughter committed by a body corporate [3] and for a category-1 offence committed by an individual as an officer of a person conducting a business or undertaking, a fine of 6,000 penalty units ($600,000) or 5 years imprisonment [4].
The charges resulted from the workplace accident involving Barry Willis on 17 May 2019 and the death of Mr Willis on 29 May 2019. Brisbane Auto Recycling Pty Ltd employed Mr Willis. Hussaini and Karimi were directors of the company and had hands-on supervision of work activities at the company’s Marshall Road workplace. On the day in question, Mr Willis was standing near the tilt tray of a truck which he had been driving when he was struck by a forklift being driven by one of the company’s other workers. The impact was severe and regrettably, Mr Willis did not recover.
The following sentencing remarks of Judge A J Rafter SC are informative of the penalties imposed:

he (Hussaini) made admissions to the effect that there were no written safety policies or procedures within the workplace;
when asked who managed the safety of workers, he (Hussaini) said that he advises them verbally to be safe and look after themselves. He said that forklift operators are required to be licensed, although he had not seen workers’ licences and simply relied on what he was told;
the investigation revealed that Brisbane Auto Recycling Pty Ltd had no safety systems in place. In particular, there was no traffic management plan at the worksite, across which a number of forklifts operated constantly in close proximity to workers and members of the public;
the investigation also disclosed that the driver of the forklift did not hold a high-risk work licence to operate a forklift. Brisbane Auto Recycling Pty Ltd had made no sufficient enquiries to confirm whether he held one. The driver was inexperienced, and there was no sufficient assessment of his competency to operate a forklift;
officers of corporations and unincorporated bodies have a duty to exercise due diligence to ensure that the person conducting the business or undertaking meets its work, health and safety obligations [5];
the prosecution did not allege that the offending by Hussaini and Karimi caused the death of Mr Willis;
culpability would turn upon an overall evaluation of various factors, which may pull in different directions. Culpability is reasonably high because, even if the event which occurred might not be expected to occur often,
the seriousness of the foreseeable resultant harm is extreme and the steps to be taken to avoid it, which were not even assessed, were straightforward and involved only minor inconvenience and little, if any, cost;
the imputed conduct of Hussaini and Karimi led to the death of Mr Willis, as did the conduct of the forklift driver which flowed from the prolonged failures;
there was no real attempt to assess and control the risks posed by mobile plant.

As noted, it was found that the failures of the defendants were extreme.
Steps Employers Should Implement to Comply
What steps then should an employer implement to comply with the WHS Act and other legislation containing the offence of industrial manslaughter [6]?

review your work health and safety policies and document same;
ensure that all new workers are familiarised with such policies at the time of induction and orientation to your workplace;
ensure that all workers have formal training and refresher courses on a regular basis;
undertake and document regular reviews of workplace practices to identify risks to workers’ safety and implement any remedial action and risk minimisation procedures required;
ensure all workers have the correct clothing and equipment to fully protect them;
ensure all workers are properly trained in the use of the equipment they require to undertake the duties;
keep written records of each of the matters referred to in A to F above; and
above all, from the Board to the hands-on worker, instil a culture of safety first.

The above list is not meant to be exhaustive of what an employer may undertake to protect its workers and each employer should look to its own industry peculiarities and standards.
If the above has raised any concern with you on your exposure under the relevant legislation we are happy to discuss with you the legislation and the steps that you may take to avoid breaching the relevant Act and/or assist you in documenting your policies and procedures
Please contact Greg Moroney if you require further information pertinent to your situation.
 
[1] The Queen v Brisbane Auto Recycling Pty Ltd v Hussaini, Asadullah and Karimi, Mohammad Ali Jan (2020 )QDC 113
[2] Section 3(1)(a) Work Health and Safety Act 2011 (Qld)
[3] Section 34C Work Health and Safety Act 2011 (Qld) and Penalties and Sentences Act 1992 (Qld)
[4] Section 31(1) Work Health and Safety Act 2011 (Qld)
[5] Section 27 Work Health and Safety Act 2011 (Qld)
[6] Part 2B Electrical Safety Act 2002 (Qld) and Part 2A Safety In Recreational Water Activities Act 2011 (Qld)

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).

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Mark Rowson, a 52-year-old prisoner in Port Phillip prison, Victoria, sought an order releasing him from prison, under strict conditions, to live with his mother. He suffered from a number of health complaints including chronic atrial fibrillation, angina, asthma, poor blood pressure and decreased renal function which he submitted would place him at a greater health risk if he was infected by COVID-19.
Mr Rowson was serving a sentence for fraud offences and he was not otherwise eligible for parole until March 2022.
Expert evidence was presented about the epidemiology of COVID-19. 
About 60% of reported infections were classified as being acquired overseas. It was estimated that 44% of transmissions occurred before symptoms presented. At the time of the application, the number of confirmed cases in Victoria was 0.02% of the population (or 1 in 4,740) with the projection being that it would drop to 0.006% to 0.013% (or 1 in 7,880 – 15,760). 
There had been no cases reported amongst prisoners or prison employees in Victoria. The risk of infection to a prisoner was considered lower than the risk of infection in the community but the risk was higher if there was an outbreak within the prison. The risk of Mr Rowson presenting a severe case of COVID-19 was 10% and his estimated risk of dying was around 30%.
The court accepted that the prison authority owed Mr Rowson a duty to take reasonable steps to ensure that he did not suffer serious injury or death from COVID-19.
The prison had adopted safety policies designed to combat COVID-19 including health assessments and a 14-day quarantine period for new prisoners. Any prisoners displaying symptoms were to be isolated and tested.
Mr Rowson was, however, able to point to a number of breaches of the COVID-19 policy measures within his unit. Surfaces such as touchscreen kiosks in common areas and gym equipment were touched numerous times a day without being cleaned. Cells weren’t cleaned or sanitised for new prisoners. 
Access to cleaning and disinfectant supplies was limited. Hand sanitiser wasn’t available. There was limited scope for social distancing. There was no temperature testing. There was limited education about prevention and management measures
The court ultimately declined to make an order that Mr Rowson be released from prison. There had been no COVID-19 cases in prison. Additional measures had been taken to prevent the entry of the virus into the prison or to control it if it did. Mr Rowson was in jail for serious offences and on public policy grounds, he should serve his sentence.
Although not making specific factual findings, there was evidence of hygiene breaches which combined with the absence of a risk assessment could have been sufficient to establish a prima facie case that the prison authority breached its duty of care to Mr Rowson which exposed him to a risk of injury. A risk assessment was ordered.
The case has potentially wider ramifications in workplaces generally, particularly as employees start to return to the workplace, in terms of risk management assessments and implementation and enforcement of protective measure to keep employees safe from COVID-19.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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In recent months, the Titles Registry has introduced new processes for survey plans and related approval and consent forms, which aim to “facilitate electronic approvals and simplified and automated workflows.”[1]
Electronic Lodgement (eLodgement) of survey plans is now available to users who are subscribed to the eLodgement service and the new Titles Registry forms must be used.
Survey Plans for Community Title Schemes or Specified Act Developments are not yet able to be lodged electronically and must continue to be lodged in paper at the Titles Registry.
In this article, ‘Planning Body’ means the relevant local government or the Minister for Economic Development Queensland or the Coordinator-General, where applicable.
New Titles Registry Forms
The new Titles Registry forms which have been introduced are:

Planned Body Approval – Form 18B;
Registered Owner Consent – Form 18A;
Plan Cover Sheet – Form 21Z.

These forms are described in more detail below and can be found on the Titles Registry website.
Prior to the new forms being introduced, a Planning Body was required to provide their “seal” or approval, and a Registered Owner was required to provide its consent, with a wet signature on the survey plan administration sheet (Form 21B version 1).
The new forms instead allow a Planning Body’s approval and a Registered Owner’s consent to be provided on a modified version of the Form 18 Consent.
Planning Body Approval (Form 18B)
If a survey plan requires Planning Body approval, that Planning Body can now give its approval to the image of a survey plan (for example, if the image was sent to the Planning Body via email) if that approval and transmission mechanism meets the Planning Body’s requirements and is authoritative. The Planning Body would need to identify which approval processes it will accept and communicate their requirements to any persons seeking their approval.
The Planning Body has the option to sign the Form 18B electronically, and electronically transmit it back to the surveyor, lawyer or developer as necessary. The Planning Body also has the option to “wet sign” the Form 18B based on an electronic copy of the survey plan.
Registered Owner Consent (Form 18A)
A Registered Owner can now provide their consent to a survey plan on a new Form 18A which can be signed either electronically or on paper.
Plan Cover Sheet (Form 21Z)
The Plan Cover Sheet has been updated and the new form must be used with both paper and electronic lodgement of survey plans. A Form 21Z must be used for all survey plans which are lodged for registration electronically.
Plan Administration Sheet (Form 21B version 2)
The Plan Administration Sheet (Form 21B) has been revised to remove the panel containing the registered owner’s consent and the planning body approval. Version 2 of the Form 21B is required when the new approval process is used.
Transition Period
The Titles Registry has advised that the pre-existing processes and forms in relation to Survey Plans will be accepted by the Titles Registry for at least the next six to twelve months.
The exception to this is the transition period for the Plan Cover Sheet – Form 21Z. The Form 21Z does not require a signature and the completion of this form is straightforward. Therefore, a short transition period of one month will apply.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
[1] Titles Registry Alert 168 dated 24 April 2020.
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Premier Palaszczuk has announced a further $100 million allocated funding for a second round of the $10,000 Small Business COVID-19 Adaptation Grant available from next month.
In this second round, the Qld Government will be dividing the available Grant funding equally between small businesses in regional areas and those in South East Queensland.
If you missed out on the Grant in the last round, this could be your chance.
In this article, we outline important information for you to prepare yourself to apply.
When to Apply
Applications will be open from 1 July 2020 via the Qld Government dedicated Business Queensland website.
Applications are only available to businesses who did not receive a Grant in round 1. If you applied in round 1 but have not heard back, you can apply again in round 2.
You can only make one application for one business that you own, if you operate more than one business, choose the most appropriate.
You must apply for your Grant personally and cannot have a supplier apply for the Grant on your behalf.  Please watch out for scams!
Identify if you are a Regional or SE Qld Business
You will need to identify if you are a regional business or a South East Queensland business.
You are a South East Queensland business if your principal place of business is located in the following areas:

Brisbane City Council
City of Gold Coast
Ipswich City Council
Lockyer Valley Regional Council
Logan City Council
Moreton Bay Regional Council
Noosa Shire Council
Redlands City Council
Scenic Rim Regional Council
Somerset Regional Council
Sunshine Coast Council
Toowoomba Regional Council

All other areas are considered regional.
Eligibility Criteria
It is important that you check that you meet the eligibility criteria.
For your business to be eligible it must (quoted from Qld Government website):

have been subject to closure or otherwise highly impacted by the shutdown restrictions announced by Queensland’s Chief Health Officer on 23 March 2020;
demonstrate that business revenue has experienced a significant decline since 23 March 2020 over a minimum one-month period due to the onset and management of COVID 19;
employ staff and have fewer than 20 employees at the time of applying for the grant (these employees should be in addition to the business owners and be employed on the business’s payroll);
have a valid Australian Business Number (ABN) active as at 23 March 2020;
be registered for GST;
have a Queensland headquarters;
have an annual turnover over $75,000 for the 2018-19 or 2019-20 financial year or provide financial records that indicate that this will be met for recently started small businesses;
have a payroll of less than $1.3 million; and
not be insolvent or have owners/directors that are an undischarged bankrupt.

What you can apply for
You can apply for a Grant sum between $2,000 to $10,000 towards payment of a quotation or invoice for an eligible purpose.
The eligible purposes are the following (quoted from Qld Government website):

financial, legal or other professional advice to support business sustainability and diversification;
continuing to meet business operation costs, including utilities, council rates, rent, telecommunication charges, insurance fees, licensing or franchise fees;
strategic planning, financial counselling or business coaching alighted to business development and diversification;
building the business through marketing and communication activities (eg. content development – web pages, mobile apps, visual and audio media etc.);
digital/technological strategy development;
digital training or re-training and up-skilling employees to adapt to new business models;
capital costs associated with meeting COVID-19 safety requirements; and
specialised digital equipment or business-specific software to move business operations online (eg. logistics program for online ordering).

You cannot apply the grant towards:

goods and services purchased prior to 23 March 2020 (your invoice or project start date should be after 23 March 2020);
activities for a total cost of less than $2000 + GST (you cannot apply the Grant to GST);
business costs covered by another Qld or Cth financial assistance measure;
salaries or wages for employees including superannuation or WorkCover;
services to be provided in kind (you must pay for the services);
purchase of business assets such as stock or fleet vehicles/machinery (but note you can apply for software);
fees for services or goods provided by a related party/related entity (it must be from an independent supplier);
for activities involving direct-selling businesses (eg. party plan and network marketing);

If you are unsure, there is no harm in applying, so long as your intended purpose is clearly stated and not misrepresented. If the project involves multiple items, we recommend you apportion the funding between purposes or projects, including by obtaining an invoice or quotation that shows the apportionment.
The project to which funding will be applied must be completed (and you must have paid at least the Grant amount) within 6 months. You will need to complete and lodge an acquittal report with copies of supplier and proof of purchase invoices. The Qld Government will also survey successful businesses in 6 months time.
What information to supply with your Application
When making your application online, you will need to supply the following materials which you should have prepared and ready to upload:

Grant Requirement
Information to Supply

Business details

Have ABN ready
Check your principal place of business is correct with ASIC
Have your financial reports for 2019/2020 ready to enter business information quickly
Have your bank account details ready

Minimum Annual Turnover ($75,000)

Have ready to supply turnover evidence in the form of:

BAS statements; or
Tax return for business (2019); or
CPA Accountant’s letter declaring turnover

Employee Headcount & Payroll
(less than 20 & $1.3m)

Check your employee headcount (PAYG employees only – business owners excluded)
Have ready to supply payroll evidence. Eg. PAYG evidence, CPA accountant certified information.

Impact of COVID-19
(minimum 30% downturn)

Be prepared to answer how COVID-19 has impacted your business in terms of:

Staff reductions
Lost trading
Financial losses
Have data and statistics ready
Have ready to upload evidence of reduction in sales in the form of:
BAS showing reduction eg. BAS submissions over two quarters; or
Financial reports clearly showing reduction; or
CPA Accountant’s letter declaring impact.

Use of Grant
(minimum $2000 + GST)

Have prepared ‘a statement describing how the funding will contribute to your small business during the COVID-19 crisis in terms of employment retention or outcomes, business capability and resilience, continuity (including the ability to continue to meet operating expenses), diversification, and/or digital capability of the business’
Have ready to supply:

invoice and/or receipt of purchase if related to the purchase of specialised digital equipment or business-specific software on or after 23 March 2020;
invoices and/or receipts as evidence of operating expenses (wages, super and WorkCover excluded); and/or
quotes or invoice for services related to an eligible project (check eligible purposes).

We recommend that your quotations and invoices:

be addressed to your business not yourself personally;
be dated after 23 March 2020;
sufficiently describe the project to identify the eligible purpose;
be apportioned if necessary or desirable;
state the project duration or completion date if applicable (will need to be within 6 months);
be on official supplier letterhead listing the supplier’s details including ABN.

You should supply official evidence where possible, for example, certified information from your accountant, bank statements and PAYG statements, not your own MYOB printouts or excel spreadsheets except where supplemental.
As with any grant application, your application should clearly identify value for money, including the impact COVID has had on your business, and how the project/Grant will make a significant improvement or impact in your business.
Other important information
Your Grant will be assessable income to your business and you will need to pay tax on the Grant unless exempted under any particular law. Please ensure that you tell your accountant if you receive the Grant.
For more information about the Grant, we recommend that you read the following resources available from the Business Queensland website.

Small Business COVID-19 Adaptation Grant – Round 2 Guidelines;
Small Business COVID-19 Adaptation Grant – FAQs; and
Small Business COVID-19 Adaptation Grant – Application Tips.

 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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Competition and Consumer (Industry Codes) Amendment (New Vehicle Dealership Agreements) Regulations 2020 (“NVDA Regulations”) were passed by the Australian Parliament on 29 May 2020 to take effect on and from 1 June 2020.
The NVDA Regulations are the result of the Australian Competition and Consumer Commission (“ACCC”) making a number of recommendations aimed at addressing concerns within the new car retailing market which were leading to suboptimal outcomes for consumers and hindering effective competition. The ACCC also noted that some of the competition concerns within the new car retailing market stem from the power imbalance in the commercial relationships between the large car manufacturers and two other groups, namely new car dealers and independent repairers.
The NVDA Regulations addressed these issues by amending Schedule 1 of the Competition and Consumer (Industry Codes – Franchising) Regulation 2014 (Code) in the following manner:
1.  Definitions
Introducing a number of new definitions, namely:

new light goods vehicle
new passenger vehicle
new vehicle
new vehicle dealership agreement.

New vehicle dealership agreement means a motor vehicle dealership agreement relating to a motor vehicle dealership that predominantly deals in new passenger vehicles or new light goods vehicles (or both)”.
By application of the new light goods vehicle and new passenger vehicle definitions, NVDA’s involving passenger cars up to nine seating positions including that of the driver and vehicles with a gross vehicle mass not exceeding 3.5 tonnes will be affected;
2. End of Term Provisions
Introducing a new Part 5 Division 2 – End of Term Provisions the effect of which is to:

mandate end of term obligations for an NVDA of 12 months or longer;
require each of the franchisor and the franchisee to give notice to the other if it intends to extend the agreement or enter into a new agreement at least 12 months before the end of the term of the agreement;
require the franchisor to give notice to the franchisee if it intends to enter into a new agreement that the franchisee may request a disclosure document under clause 16 of the Code require the franchisor and the franchisee if either does not intend to enter into a new agreement or to extend the agreement to include in its notice to the other reasons for its intention;
in the event that either party does not intend to extend the agreement or intend to enter into a new agreement the parties must agree to a written plan (with milestones) for managing the winding down of the dealership, including how stock (including new vehicles, spare parts service and repair equipment) will be managed over the remaining term of the agreement. The parties must work together to reduce stock at the remaining term of the agreement.

3. Capital Expenditure
Regulate capital expenditure and for that purpose:

Inserts Part 5 Division 3 – Capital expenditure containing a new definition for “significant capital expenditure” as follows:

“(2) for the purpose of subclause (1), significant capital expenditure excludes the following:

expenditure that is disclosed to the franchisee in the disclosure document that is given to the franchisee before:

entering into or renewing the agreement; or
extending the term or scope of the agreement;

if expenditure is to be incurred by all or a majority of franchisees-expenditure approved by a majority of those franchisees;
expenditure incurred by the franchisee to comply with legislative obligations;
expenditure agreed by the franchisee.”

mandates that a franchisor does not require a franchisee to undertake significant capital expenditure (as defined) in relation to a franchised business during the term of the franchise agreement
imposes an obligation on the franchisor to include in a disclosure document as much information as practicable about expenditure including such things as the rationale for the expenditure, the amount, timing and nature of the expenditure and the anticipated outcomes and benefits of the expenditure;

4. Resolving Disputes
In addition to the dispute resolution provisions of the Code Inserts Part 5 Division 4 – Resolving disputes whereby two or more franchisees who each has a dispute of the same nature with the franchisor to ask the franchisor to deal with the franchisees together about the dispute.
The amendments affected by the NVDA Regulations have application on and from various dates and accordingly franchisors and franchisees will need to check the Regulation to ascertain what provisions are relevant and from what date.
Please call us if you require further information pertinent to your situation.
 
1 Explanatory Statement on NVDA Regulations 2020 issued by the authority of the Minister for Industry, Science and Technology for the Treasurer 29/05/2020.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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