In a judgment handed down on 26 June 2020, the Full Federal Court of Australia in the case of Australian Securities and Investments Commission v Westpac Banking Corporation [2020] FCAFC 111 dismissed an appeal by the Australian Securities & Investments Commission (ASIC) in respect to a decision by a single judge of the Federal Court of Australia in August 2019.
The appeal was heard by the Full Federal Court, with Justices Middleton, Gleeson and Lee presiding. The judgment was not unanimous on all the issues.  Justices Gleeson and Lee dismissed the appeal, while Justice Middleton found in favour of ASIC.
The reasoning of Justice Middleton on responsible lending requirements is preferable, but he was in the minority. Justice Middleton considered that more comprehensive enquiries should have been made.
It is difficult to know where ASIC will go with responsible lending and Regulatory Guide 209 having regard to the adverse finding by the Full Federal Court.  Given that the decision of the Full Federal Court was not unanimous, ASIC might seek leave to appeal to the High Court. Alternatively it may seek amendments to legislation or it could just do nothing and accept the result in the Full Federal Court. The latter course is unlikely.
Based on the judgment, the current position would seem to be that:

In making reasonable enquiries about the borrower’s financial circumstances, a credit provider is able to rely upon a borrower’s declared living expenses and match that information against a relevant benchmark (such as The Household Expenditure Measure (HEM)).  Taking such steps is an adequate discharge of a credit providers obligation to make “reasonable enquiries” pursuant to the provisions of section 130 of the National Consumer Credit Protection Act 2009 (Cth).
Certainly, in relation to home loan lending, a credit provider is not required to specifically analyse each and every borrower expense and then seek to verify those expenses, nor is a credit provider required to use all the financial information provided by applicants.
Credit providers still need to identify and verify income in the currently acceptable manner.

Whether similar requirements will apply to other types of lending, such personal loans and small amount credit contracts is unclear.  We suspect that where the loan is smaller and the financial circumstances of the borrower more tenuous, that more enquiries are required to be made to establish and verify the financial situation of the borrower.  However, that is still to be decided.
The Full Federal Court also made some findings in relation to how to account for the expense of home loans with an interest only period.
Even though ASIC, in its latest iteration of Regulatory Guide 209 (Responsible lending conduct)  issued in December 2019, attempted to anticipate an adverse decision from the Full Federal Court, that Guide is inconsistent with this new decision and RG 209 needs to be amended.
The Full Federal Court judgment made some points of interest:
Making reasonable enquiries is a “standalone” obligation
Justice Middleton stated, at paragraph 8 of the judgement, that the obligation to make reasonable enquiries is a stand-alone obligation, a view with which the other justices agreed.

Role of declared living expenses
What Westpac did in assessing the serviceability of a loan was to obtain from applicants their declared living expenses divided into various categories and then apply a rule, referred to as the “70% Ratio Rule” to determine whether an applicant’s declared expenses were more than 70% of verified income.  If their expenses were more than 70% of verified income, then the loan application would be taken out of the automated decision-making process and subjected to manual assessment.
The majority of the Court accepted that Westpac did not need to examine each individual expense and verify those expenses, and acknowledged that expenses were difficult to verify.  Nor did the majority consider that Westpac was required to rely on declared living expenses in making its final assessment. Refer to commentary on these issues at paragraphs 141, 142, 153, 154 and 160 of the judgement.
Use of the HEM
The court accepted that use of the Household Expenditure Measure was appropriate in order to assess whether or not a borrower could afford to service a loan. Justice Lee commented:

173: This was an unusual case, being a case alleging a serious want of compliance with responsible lending norms, divorced from consideration of any facts about any specific consumers. It was Westpac’s job to assess suitability and although not determinative, for my part, it is far from intuitively odd that Westpac would focus on independent, objective data as represented by the HEM Benchmark and use the Declared Living Expenses in the way it did (through the use of the “70% Ratio Rule”).
Credit provider free to determine how to assess “unsuitability” of a loan
It is clear from the judgement that the court accepted the credit provider is free to determine how to assess whether a credit contract will be unsuitable for the customer.  At paragraph 171:

171: Although the evident purpose of the process is to protect the consumer from entering into an unsuitable credit contract, this is achieved by requiring (s 128(c)) an assessment “in accordance with section 129”, that is, an assessment as to whether the credit contract “will be unsuitable for the  customer”, in a manner left up to a fully informed licensee.

With interest only loans “full term method” is an acceptable measure to determine serviceability
The Full Federal Court was unanimous in determining that the “full term method” was an acceptable way for home loan lenders to assess serviceability in relation to loans with an initial interest only period.
The full term method is a method under which the credit provider calculates an amount equal to the monthly repayments of principal, interest and fees that would repay the loan by the end of the proposed term, using the original interest rate applicable. This calculation method ignores that repayments due in the interest only period are lower than after the end of the interest only period.
Justice Middleton stated in relation to the full term method that:

79          As indicated already, Westpac used the Full Term Method. In my view, the Full Term Method was part of an assessment of the particular credit loan being applied for by the consumer, even though it can be readily contrasted to a PIF (principal, interest and fees) Loan. This does not matter. The monthly repayment under the Full-Term Method was in fact derived from the terms of the proposed credit contract and served as an estimate for repayments over the life of the loan. The approach of the primary judge was correct; to approach the assessment otherwise would not in fact view the consumer’s financial situation as it may vary from the repayments during the initial interest period and the expected repayments in the future at the expiry of that period.

Where to next?
The ball is now in ASIC’s court. ASIC never says “die” – this is unlikely to be the end of the matter. That much was indicated in ASIC media release 20-149MR issued on the day the judgement was handed down.

ASIC notes today’s majority judgment and will review each of the separate decisions carefully – including what additional measures or clarification may be required to support compliance with the Credit Act,’ said ASIC Commissioner Sean Hughes.  As is ASIC’s usual practice, we will carefully consider the Court’s determination and any revisions that are necessary to our guidance (responsible lending guidance)
Stayed tuned.
ASIC loses its responsible lending appeal to the Full Federal Court of Australia | Hunt & Hunt Lawyers

Hunt & Hunt continues to successfully manage the many health had economic challenges of the COVID 19 pandemic.
Jim Harrowell AM, Managing Partner NSW said, “Whilst there will be ongoing challenges for NSW as health restrictions are ease and we rebuild the economy, Hunt & Hunt remains ready to assist its clients as they remerge from the pandemic. We are optimistic about the future and delighted to announce five key changes to our NSW team. It is significant that all staff below commenced their legal careers at Hunt & Hunt; these promotions confirm that we are committed to providing support and encouragement to all our staff and a career path with the firm.”
The new promotions and appointments are:
Matt Gauci appointed a Partner.
Since joining Hunt & Hunt in 2013 as a graduate, Matt has been valued member of our litigation and dispute resolution team who works with both private and our long-standing government clients.
Daniel Murray promoted to Special Counsel.
Since joining Hunt & Hunt as a graduate in 2015, Daniel has formed strong relationships with many long-term clients, including prominent charities, health funds, government agencies and international corporations.
Anthea Tronson has been promoted to Special Counsel.
Starting her career as a graduate with Hunt & Hunt in 2002, Anthea now practices in general and commercial litigation, with a focus on estate litigation.
Tim Story has been promoted to Special Counsel.
Tim joined Hunt & Hunt as a law clerk in 2007, graduated in 2014, and was promoted to Senior Associate in 2018, and worked closely alongside Ian Miller and Mark Byers with many key clients.
Ian Miller appointed Senior Consultant following his retirement as Partner on 30 June.
Since joining as a Clerk in 1976, Ian has made an extraordinary contribution to the management of the firm as a Board member and as the Managing Partner of our offices at Eastwood and North Ryde. Ian has followed the strong tradition of community service which has been part of the Hunt & Hunt culture since it was established over 90 years ago in various diverse roles.
Latest round of promotions announced at Hunt & Hunt | Hunt & Hunt Lawyers

Customs famously went to the High Court arguing that the interpretation of the Australian tariff classification legislation should be interpreted consistently with the French version of the harmonised system (HS) for tariff classification.  The High Court agreed, but Customs still lost that case.  Now in an ironic twist, the Administrative Appeals Tribunal (AAT) has relied on the French translation of the HS code to find against Customs in a classification case concerning steel pipes.
In Smoothflow Australia Pty Ltd and Comptroller-General of Customs [2020] AATA 1890 the issue was whether steel pipes imported for building fire sprinkler systems should be classified to 7306 (general steel pipes) or 7308 (structures and parts of structures).  The relevant pipes were 5.8 metres in length and had printed on them information showing that the goods met standards applying to pipes used in fire protection systems.  The Tribunal found that the goods would be put to use in fire sprinkler systems in buildings.
Customs assessed the goods to heading 7306.  If correct, the ABF argued that the goods were subject to dumping duties applying to hollow structural sections.  The same duties did not apply to goods classified to heading 7308.
The English wording of heading 7308 included the following “Structures … and parts of structures … of steel; … tubes and the like, prepared for use in structures of iron or steel“.  However, the French version of the heading translated to “…tubes and similar … steel, prepared for use in the construction industry“.
Following the High Court decision in Pharma-Care, the Tribunal felt that it had to interpret the Australian wording in a way that was harmonious with the French wording.  The AAT interpreted the Australian wording as not requiring the pipes be used in the structure, but merely in connection with the structure.
The AAT also found that pipes of 7308 do not need to necessarily for part of the structure or structures involved.
The AAT found that the pipes were at the time of importation prepared for use in connection with the building of structures.  It was relevant that the pipes complied with the mandatory standards for the relevant buildings.
Interestingly, Customs argued that the interpretation went against the explanatory notes.  However, the Tribunal said that the explanatory notes could only be used where the headings were unclear.  In this case the Tribunal said that the heading was not unclear and the explanatory notes could not be used to create uncertainty.
Ultimately, the pipe could fit into either heading 7306 or heading 7308.  The Tribunal applied the interpretation rules and classified to pipes to 7308 being the more specific of the two headings.  The heading was held to be more specific as it applied to pipes prepared for a particular purpose, not merely “pipe”.
This case shows the practical implications of the approach adopted by Customs in the Pharma-Care case.  It was easily foreseeable that arguing that the interpretation of Australian legislation should be influenced by the French text would lead to uncertainty.  This recent case shows that tariff classification will now involve consideration of both the English and French text of the tariff headings and relevant section/chapter notes.  This will create additional administrative burden for both Australian Border Force and customs brokers at a time when the Government is trying to lower the regulatory burden of international trade.
This decision is particularly important for importers that have been subject to a large dumping duty demand on steel pipes and tubes (HSS) to be used in the building industry.  Following this decision, there may now be grounds to argue that the dumping duty was incorrectly claimed.
Please contact Russell Wiese if you would like to discuss this development in greater detail.
Steel pipe classification case decided against Customs based on French translation of HS Code | Hunt & Hunt Lawyers

1. Business Booming
2. AFCA gives more time to resolve complaints
3. Significant Event Response Plans – Is AFCA prejudging the Issue?
4. Two recent cases consider AFCA powers
5. Did the making of a decision by AFCA involve an impermissible exercise of judicial power contrary to the Constitution? – An important decision of the Full Federal Court of Australia
6. Another case illustrates just how hard it is to appeal AFCA determinations – IEL Case
7. Remit of AFCA in relation to loans made under Coronavirus SME Guarantee Scheme limited. (SMEG Loans)
8. Complaints about business loans repayment deferrals due to Covid 19 excluded from AFCAs Remit.
9. What happens when loan deferral periods end?
1. Business Booming
Speaking at a recent online forum the Chief Operating Officer of the Australian Financial Complaints Authority (AFCA), Justin Untersteiner, reported that AFCA had received over 3180 COVID-19 related financial complaints since the pandemic was declared in March 2020.
The breakdown is:

banking and finance complaints – 1430
general insurance complaints – 1070
superannuation complaints – 610

680 of the banking and finance complaints relate to financial difficulty issues.
The majority of the complaints are in the areas to be expected, namely:

loan break costs, where borrower seek to exit fixed rates in favour of lower variable rates;
requests to extend payment terms;
denial of travel insurance claims, and
delays in early release of superannuation.

One outlier category of claim relates to disputed transactions which at first blush does not appear to be COVID 19 related. However, this could reflect an increase in the amount of scams and fraud. Alternatively, this merely reflects that people now have more time to actually examine their transaction records and with less money available – every dollar counts!
AFCA is predicting receiving more financial difficulty complaints in the next six to 18 months as Government support is wound down. Mr Untersteiner said:
“We expect to see more complaints from vulnerable consumers or others who struggle to repay mortgages or other debts as Government and sector support initiatives come to an end,” he said. “This won’t just be an issue for banking and finance, many will turn to their insurance policies to look for help, and in some cases, they will not be covered which will lead to disputes.”
“We also expect to see an increase in responsible lending complaints, disputes relating to scams, and a rise in business interruption insurance complaints, and additional complaints relating to early access to superannuation from June to September.”
2. AFCA gives more time to resolve complaints
Somewhat old news now, but it is important to be aware that AFCA has given consumers, small businesses and financial firms extra time to respond to complaints due to the COVID-19 pandemic.
Financial firms had 21 days to respond when notified by AFCA that a complaint had been lodged. That time period has been extended to 30 days.
In addition, when a matter reaches case management stage, AFCA is also providing as standard, a 21-day timeframe to provide an initial response.
The changes are a temporary measure which AFCA anticipates will be in place for up to six months but subject to review.
Internal dispute resolution timeframes remain unchanged.
3. Significant Event Response Plans – Is AFCA prejudging the Issues?
AFCA seems to have developed a liking for announcing and implementing “significant event” response plans.
It is understandable that AFCA did so in relation to the bushfire crisis late last year and early this year. But it is less understandable in relation to both:

Coronavirus (COVID-19) being declared an “insurance catastrophe” in March 2020, and
AFCA publicising that it had activated its significant event response plan in connection with the recent problems at ME Bank concerning the redraw issue on certain legacy loan products.

It is not that AFCA internally implements a significant event response plan to manage allocation of staff resources within the AFCA organisation. The concern is that by publicising such internal resourcing decisions this could well be interpreted by the public as a case of AFCA rejudging the issues involved.
With the insurance catastrophe declaration made by AFCA in March 2020 one could be forgiven for mistakenly believing that AFCA is actually touting for business. In the updated note from AFCA, reference is not only made to insurance disputes, but the release then goes on to consider other types of issues that may justify complaints made, such as financial hardship caused by lost credit cards and problems accessing cash through to being unable to make loan repayments. See below extracts:
Have you been affected?
If you have been affected by coronavirus (COVID-19), we encourage you to contact your insurance company.
For help with the claims process, or if you are unable to contact your insurance company, please call the Insurance Council of Australia disaster hotline on 1800 734 621.
How we can help you
AFCA offers free and accessible dispute resolution services to consumers and small businesses impacted by this event. If you have raised a complaint with your insurance company but you have been unable to resolve the matter, you can then come to us for assistance. Please note, we are only able to consider your complaint once you have raised the matter with your insurer.
If you encounter difficulties relating to your insurance claims which you are unable to resolve directly with your insurer, you can register your complaint with us using our online complaint form or by calling 1800 931 678. More information about the process we follow to resolve complaints is available on our website.
Financial hardship
People affected by pandemics can experience both short-term and long-term financial difficulties, ranging from lost credit cards and problems accessing cash through to being unable to make loan repayments. Banks and other financial services providers generally provide assistance to customers in cases of genuine hardship.
If you encounter difficulties relating to a financial hardship application, you can make a complaint to us online, or call us on 1800 931 678.
In the ME Bank announcement, AFCA explains the rationale for declaring significant event response plans:
The significant event response plan is activated for events that can potentially result in significant numbers of related complaints coming to AFCA. It provides for early communication with relevant stakeholders and a more streamlined, expedited process for the resolution of related complaints.
To a reasonable person reading the AFCA announcement, the clear impression is created that AFCA is likely to uphold any complaints made. This may have the effect of reducing the likelihood of the financial firm and the consumer resolving matters direct and may also create unrealistic expectations on the part of the consumer.
AFCA states that by activating a significant event response plan, it is seeking early communication with relevant stakeholders and a more streamlined expedited process for the resolution of related complaints. However, this surely can be done effectively by consultation by AFCA direct with the financial firm/s and does not need to be broadcast to the world at large. If AFCA is concerned about the internal dispute resolution procedures of the financial firm then AFCA is able to consult direct with the firm/s without needing to involve consumers at a preliminary stage.
If, as AFCA states, AFCA activates a significant event response plan because AFCA believes that the event can potentially result in significant numbers of related complaints coming to AFCA, then that is an internal management matter for AFCA and again does not need to be broadcast to the world at large. In fact, by broadcasting the declaration to the world at large, all that AFCA is likely to do is to increase the number of complaints thereby compounding AFCAs resourcing problems.
AFCA needs to proceed with more caution when considering whether or not to publish to the world at large a decision made by it to implement a significant event response plan.
4. Two recent cases consider AFCA powers
There have been 2 recent court decisions which have upheld determinations made by AFCA.
These cases illustrate the limited grounds upon which financial firms may challenge APRA decisions. Under the AFCA rules Financial Firms agree to severely limit their right to appeal decisions made by AFCA.
These two cases are examined below.
5. Did the making of a decision by AFCA involve an impermissible exercise of judicial power contrary to the Constitution? – An important decision of the Full Federal Court of Australia
This was the issue that had to be decided in QSuper Board v Australian Financial Complaints Authority Limited [2020] FCAFC 55. (QSuper)
The issue in the QSuper case related to a Dr Lam who lodged a complaint against QSuper with AFCA claiming that he overpaid premiums for death and total and permanent impairment cover which he had acquired through his superannuation fund and was entitled to a refund. Dr Lam claimed that when QSuper introduced its new “professional” occupational rating on 1 July 2016 he wasn’t given adequate notice of the change, depriving him of the opportunity to avail himself of the new rating – thus saving on premiums.
AFCA ruled in favour of Dr Lam, finding that the changes made by QSuper were not adequately brought to Dr Lam’s attention and he was not given guidance on how he could take up the benefit of the reclassification.
Initially, it appeared that QSuper was asserting that AFCA’s decision was invalid because the powers purportedly exercised under s 1055 of the Corporations Act 2001 (Cth) (Corporations Act) contravened Chapter III of the Commonwealth of Australia Constitution Act 1901 (Cth) (the Constitution) by conferring the judicial power of the Commonwealth on a non-judicial body. Section 1055 of the Corporations Act sets out the powers of AFCA in relation to superannuation complaints.
That assertion then led to the intervention in the appeal of the Attorney General (Commonwealth) which happens as a matter of course when constitutional issues are raised.
QSuper later clarified its submission stating that it did not assert directly that Section 1055 contravened the Constitution, but instead that AFCA had impermissibly exercised the judicial power of the Commonwealth in that it made a decision on the issue of whether QSuper had complied with the notice (of change in policy terms) requirements of section 1017B(4) of the Corporations Act.
The Court considered upon what basis AFCA actually made its decision. It found that it did not make its decision based on whether there had been compliance with the notice provisions under section 1017B(4) Instead AFCA made its decision on whether QSuper had been unfair or unreasonable in its dealings with Mr Lam.
That was sufficient to decide the appeal, but the Court went further and examined what would have been the position had AFCA directly examined whether or not QSuper had complied with the notice of change provision contained in section 1017B(4) On this issue the Court concluded (at paragraphs 186 and 187) that:
186 Even if it could be said that AFCA determined that QSuper’s Notice contravened s 1017B(4) and that was the sole and underlying reason for its conclusion that it ought exercise its powers under s 1055, it cannot be said that it was exercising judicial power. Its determination exhibited none of the indicia of judicial power. Moreover, the legally relevant circumstances of this case are indistinguishable from those which pertained in Breckler and the same result necessarily follows.
187 That being so it cannot be said that AFCA’s decision of 1 August 2019, was or involved an exercise of the judicial power of the Commonwealth. Nor can it be said that any of the provisions of the CA which establish the AFCA scheme and grant AFCA power to make determinations offend Ch III of the Constitution.
The effect of this decision is likely to be that AFCA will be freer to consider specifically whether legislative provisions have been complied with by a Financial Firm as part of its deliberative process in making a Determination, in addition to the issue of fairness.
6. Another case illustrates just how hard it is to appeal AFCA determinations – the IEL Case
This case illustrates yet again how difficult it is to challenge a decision of AFCA (and its predecessor FOS) The case Investors Exchange Limited v Australian Financial Complaints Authority Limited & Anor [2020] QSC 74 (IEL) involved a situation where AFCA made a determination that IEL pay over $60,000 compensation to a complainant.
IEL has failed to pay in accordance with the Determination and AFCA applied to the Court seeking specific performance of the Determination. IEL in response sought a declaration that the Determination was invalid, an order setting it aside or an order permanently restraining or staying AFCA from enforcing it.
AFCA succeeded in its application – IEL failed.
This case adopted prior decisions of courts in relation to AFCA’s predecessors. The Court made some useful observations on the limited grounds upon which decisions of AFCA may be reviewed. The Court also referred to the 1947 UK case of Associated Provincial Picture Houses Ltd v Wednesbury Corporation (Wednesbury case) Relevant observations made by the Court on this issue include those identified at the various paragraphs extracted below:
[24] A determination by AFCA is not susceptible to judicial review on administrative law grounds. AFCA is not exercising a public duty. Its power to make a determination is derived solely from the parties’ contract.
[27] The contract does not impose on the decision-maker an obligation of reasonableness of the kind implied in building and engineering contracts and some other commercial contracts. Instead, the applicable standard is unreasonableness in the Wednesbury sense. …The Wednesbury standard applies ……. the Court will intervene in the case of a decision which is so irrational or unreasonable that no reasonable body could properly have come to it on the evidence.
[28] It is not sufficient to engage unreasonableness in the Wednesbury sense that the decision-maker made an error of fact or law (such as an error in construing a
document) leading to an erroneous decision. It is not sufficient that the Court concludes that the decision is wrong. This is so even if the Court concludes that AFCA has misconstrued some legal rule in the process of reaching its decision.
[29] In simple terms, the decision can only be set aside on the grounds of Wednesbury unreasonableness if it is “one to which no reasonable tribunal could properly come on the evidence”.
[30] Other grounds may arise because the decision is inconsistent with the contract upon which it depends for its authority. This will be so, for example, if the decision is the result of bad faith, bias, fraud or dishonesty or is the product of a breach of the rules of natural justice. A determination is also amenable to court intervention if the decision-maker misconceived the task it was required to undertake or made an error which shows that the determination was not made in accordance with the contract. This last ground is not engaged simply because the decision-maker made an error in the process of reasoning or made a finding or conclusion which was unreasonable in some general sense of that word.
Despite the long line of cases validating AFCA’s interpretation of the scope of its powers and the basis on which those power may be exercised (including the importance of concept of “fairness”), challenges will no doubt continue to be made through the Courts. This is because the monetary amount of many determinations is often significant, providing an economic incentive to challenge. Further, many financial firms have not yet grasped fully the import of the concept of “fairness” in AFCAs decision making process. As a consequence of this failure, many financial firms will continue to believe that some determinations made by AFCA are “so irrational or unreasonable that no reasonable body could properly have come to it on the evidence”.
7. Restrictions on remit of AFCA in relation to loans made under Coronavirus SME Guarantee Scheme (SMEG Loans)
Following the issue of a notifiable instrument by the Federal Treasurer on 24 April 2020 which amended AFCA’s authorisation conditions, AFCA was required to amend its Rules. ASIC then directed AFCA to make the required amendments to its Rules without public consultation, given the urgency of the Government’s COVID-19 economic responses.
A new Section G has been inserted into the AFCA Rules. The new requirements apply to complaints received by AFCA in relation to loans made under the SMEG Scheme from 25 April 2020.
The rule changes sideline any issues relating to responsible lending obligations in relation to SMEG loans and excludes the possibility of AFCA considering any systemic error issues arising from SMEG loans.
New rules G2.2 and G2.3 provides:
G.2.2 When considering the complaint, AFCA and the AFCA Decision Maker must not take into account any decision made by the lender which relates to:
a) a decision to provide the SMEG Loan to the borrower; or
b) the amount of the SMEG Loan
G.2.3 In relation to decisions which AFCA and the AFCA Decision Maker can consider, they must consider the complaint on the basis that:
a) the lender was permitted to disregard the impact of COVID-19 when determining the financial situation of the borrower; and
b) the purpose of the SMEG Act is to encourage the quick and efficient provision of loans to borrowers as a response to the economic impact of COVID-19 on individuals, businesses and the Australian economy; and
c) the lender is required to comply with the terms of the SMEG Act (and any instruments, rules or conditions made as a consequence of that Act) in providing SMEG Loans to borrowers; and
d) the considerations in paragraphs (a) to (c) must be given priority by AFCA and the AFCA Decision Maker over other matters when making any preliminary assessment or determination.
8. Complaints about business loans repayment deferrals due to Covid 19 excluded from AFCAs Remit.
On 21 April 2020, the Federal Treasurer also amended AFCA’s authorisation conditions and required AFCA to amend its Rules to effectively limit the right of customers who have a business loan to complain about repayment deferrals agreed to by lenders due to the impact of COVID-19.
The changes are set out at section G.3 of the AFCA Rules.
The changes affect “business loans” which are defined to mean a loan provided to a small business (as defined in the AFCA Rules) which was not regulated under Chapter 3 of the National Consumer Credit Protection Act 2009 at the time the loan was made.
Note that Chapter 3 refers to “responsible lending” obligations.
The exclusion of business loans from AFCA’s jurisdiction applies in the following circumstances:

a Business Loan (other than a SMEG Loan) was made by a lender to a borrower on or before 1 January 2020; and
the lender agrees to provide the borrower with a deferral of loan repayments at any time in the period of 12 months after 25 April 2020, because the borrower has advised  the lender that their business has been impacted by COVID-19 (Repayment Deferral); and
the borrower accepts, and makes use of, the Repayment Deferral; and
the borrower, or a person who was a guarantor in relation to the loan makes a complaint to AFCA in relation to a decision about a Repayment Deferral for the Deferral Loan.

In those circumstances AFCA may not consider any matters relating to the decision to grant the repayment deferral nor any systemic issues arising from or indicated by that decision (unless AFCA becomes aware that a serious contravention of a law may have occurred). Refer in this regard to Rules G.3.2 and G3.3.
9. What happens when loan deferral periods end?
Loan deferral periods will start ending in September 2020. What happens after that?
Because repayments were deferred, unless future repayments are increased, the loan term will necessity be extended. Will consumers be receptive to requests made by Financial Firms to increase repayments to keep the loan within its original term?
If a consumer is still suffering financial hardship, an application will no doubt be made by the consumer to the financial firm for relief. If the financial firm does not grant further relief, the consumer will be entitled to complain to AFCA. If the financial firm agrees the further deferral request, but on conditions, the imposition of those conditions can be challenged.
Unlike the situation with SMEG and business loans, AFCA has jurisdiction to consider complaints relating to the original decision by the financial firm to grant a repayment deferral in relation to a consumer loan and to investigate systemic issues arising from that decision. Many financial firms granted loan deferrals to consumers without seeking much information. How that approach will be regarded by AFCA long term remains to be seen.
Granting further deferrals is not a given, especially with a loan where there is a high loan to valuation ratio.
Enforcement action by financial firms after the loan deferral period ends will be difficult.
At this time there are no answers to these issues. However, one thing is certain, if a consumer cannot resume repayments at the end of the loan deferral period they will be likely to lodge a complaint with AFCA if the financial firm does not agree to grant further hardship relief.
At the start of the pandemic, the Council of Financial Regulators issued a statement of approach and AFCA aligned its approach to handling COVID-19 related complaints to be consistent with that approach. Prior to September 2020, a further statement and guidance will need to be issued by the Council of Financial Regulators and AFCA will again need to align its approach to complaint handling so that it acts consistently.
Latest Updates from AFCA | Hunt & Hunt Lawyers

A recent Federal Court decision could serve as a guide when incorporating unilateral variation clauses into standard-form contracts with small business and consumers. ASIC successfully obtained orders declaring void and varying “unfair terms” in a small business loan contracts used by the “Delphi Bank” and “Rural Bank” business units of the Bendigo and Adelaide Bank (Delphi and Rural)
Unilateral variation rights
Clauses providing one party with the right to unilaterally vary the terms of their contract are common in standard form contracts with small business and consumers. This decision discusses features that render such a clause “unfair” (and so, voidable), and also provides guidance as to when a unilateral variation clause may not necessarily be “unfair”.
Unfair unilateral variation rights
In this instance, Justice Gleeson found that the unilateral variation clauses (amongst others) in these contracts were “unfair”, as they:

created a significant imbalance in the parties’ rights and obligations because they:

did not give the other party sufficient notice, having regard to the nature of the terms being varied;
permitted termination by Delphi and Rural if the variation was not accepted by the customer; and

did not provide the other party with a corresponding right;
would have caused detriment if relied upon, as the customer would have incurred higher fees and charges if it accepted the change;
were not countered by other provisions of the loan contracts which mitigated the unfairness of the unilateral variation terms; and
the unilateral variation clauses were not, in the case of the Rural loan document, sufficiently transparent, as they were located, in some instances, in a section of the loan document titled “Use of facility”.

“Fair” unilateral variation rights
Usefully, Justice Gleeson’s orders included variations to each of the unfair terms, including the unilateral variation clauses. Notable features of the replacement unilateral variation clauses include:

limitations that unilateral variation rights may only be exercised “reasonably” and “to the extent reasonably necessary to protect [Rural’s] legitimate business interests”;
minimum notice periods, of variable length having regard to the nature of the change and whether the change is likely to have an adverse impact on the other party (i.e. a shorter notice period is permissible where a change does not have an adverse impact on the other party’s rights); and
provision for the customer to terminate the contract in the event of an exercise of the unilateral variation right, without being charged “discharge fees”.

Application beyond financial products
Notwithstanding that this decision was made under the Australian Securities and Investments Commission Act 2001 (ASIC Act), which governs standard form small business contracts relating to financial products (including credit) and services, the regime applied is the same as in Chapter 2, Australian Consumer Law, Schedule 2 to the Competition and Consumer Act 2010 (ACL) – which, generally speaking, applies to the supply of goods and services.  That is to say, if a business’ activities are regulated by the ACL, Justice Gleeson’s findings would apply equally outside of the financial products context.
If your standard form contracts contain unilateral variation clauses, to reduce the likelihood of those clauses being voidable (and so, unenforceable) consider revisiting and amending  these provisions so that they more closely align with those clauses forming part of Justice Gleeson’s orders.
We’d be happy to review your standard form contracts to assess whether amendments may be advisable. Contact us for more information.
Court orders variation of unfair contract terms – lessons when using unilateral variation clauses | Hunt & Hunt Lawyers

In Schembri v State of Victoria, the Court of Appeal rejected the appellant’s claim that the jury’s verdict for the defendant both in relation to his claim for negligence and breach of statutory duty was against the evidence and the weight of the evidence.
Appeals against a jury’s verdict are notoriously difficult. In order to succeed, an appellant has to show that the verdict “is against the evidence in the sense that the evidence in its totality preponderates so strongly against the conclusion favoured by the jury that it can be said that the verdict is such as reasonable jurors could not reach”. (See Calin v. Greater Union Organisation Pty Ltd [1991] HCA 23.)
Mr Schembri was an experienced youth justice worker at the Malmsbury Youth Justice Centre.
On 21 May 2013, there was a ‘Code Black’ emergency initiated by the conduct of one of the inmates. As a result, inmates were directed to return to their rooms. All of them seemed to have done so, save for the inmate causing the disruption and another inmate referred to as TVD. The officer in charge at the time, Ms Thomas, directed Mr Schembri to escort TVD back to his room while accompanied by another youth justice worker. Mr Schembri wanted to sit down and talk to TVD and establish a rapport with him, as he thought that this would be preferable to effectively forcing him to return to his room. His request to do so was denied by Ms Thomas who directed him and a fellow employee to immediately escort TVD back to his room.
In accordance with these directions, Mr Schembri and a fellow employee were taking TVD back to his room when he lashed out and kicked Mr Schembri in his knee, allegedly causing him to sustain a damaged anterior cruciate ligament. The respondent claimed that other incidents may have been implicated in the knee injury, although the medical evidence suggested otherwise.
TVD had a history of bad behaviour and Mr Schembri had dealt with him on numerous occasions in the past. Various incident reports, handover notes, daily service advices and client service plans and recommendations had not been brought to the attention of either Ms Thomas or Mr Schembri. The appellant relied upon these failures in both the negligence and breach of statutory duty claims.
The respondent answered these allegations by noting that TVD’s behavioural issues were well known by all staff regardless of any information in reports, advices and plans. Secondly, even if all of that information had been made available prior to the incident, in the difficult circumstances that prevailed Ms Thomas would not have done anything differently.
The Court of Appeal concluded that the jury were entitled to conclude that any procedural failure on the employer’s behalf didn’t have any causal consequences and that Ms Thomas’ directions to the applicant were reasonable in all the circumstances. Accordingly, the applicant was unable to show that on the most favourable evidence available for the respondent, the jury could not have reasonably reached its verdict. Similarly, when taking the view of the evidence most favourable to the respondent, it remained open to a jury to conclude that the risk of escorting TVD could never have been eliminated by reasonably practicable means and what occurred on the day of the incident was a reasonably practical method of reducing the risk of a musculo-skeletal disorder. As such, the claim based upon a breach of the Occupational Health and Safety Regulations also failed.
As a consequence of the court’s findings, leave to appeal was refused.
Comments
At trial, the jury clearly took a pragmatic approach to the problem and came to a conclusion which was difficult to attack on appeal particularly given the high standard required to overturn a jury decision. A cynic might suggest that the common sense exhibited by the jury in this case is a good argument for the retention of jury trials.
Case Note: Court of Appeal again finds against worker | Hunt & Hunt Lawyers

In the high-profile sequel to the Skene decision, another “casual” labour-hire worker has won the right to paid leave entitlements usually reserved for permanent employees.
The Full Bench of the Federal Court handed down its decision in WorkPac Pty Ltd v Rossato on 20 May 2020.  WorkPac had launched this case in lieu of an appeal in the 2018 Skene case.
However, the move backfired for the company, since the Court rejected WorkPac’s argument that Ms Rossato was a casual employee.  Instead the Court found he was a permanent employee under the NES and his enterprise agreement and was entitled to paid annual leave, paid sick/carer’s leave, paid compassionate leave and payment for public holidays.
The most significant aspect of Rossato, and where it moves the conversation forward from Skene, was the Court’s finding that Workpac could not rely on the 25% casual loading paid to Mr Rossato to set-off the value of the leave entitlements it now owed him.
This decision will have a significant impact on the Australian industrial landscape.  Employer associations have warned that 1.6 million casuals could now bring claims for up to $8 million for annual leave alone. There are a number of class actions backed by litigation funders and unions which were stayed pending the decision which will now go ahead.  The Morrison Government is considering supporting an appeal and is looking at further legislative reform.
The facts
Mr Rossato was employed between 2014 and 2018 by WorkPac who supplied his labour to the Glencore Group in its coal mines in Central Queensland. He worked continually under six employment contracts and showed up to every rostered shift.  He never took sick leave, except to care for his partner for a brief period shortly before he retired.
After he retired, Mr Rossato demanded payment of leave entitlements, based on the Skene decision that had just been handed down.  WorkPac then brought the matter to the Court seeking declarations to support its argument that Mr Rossato was casual and that it did not owe him paid leave.
The legal arguments
WorkPac argued that that when someone is employed under a written employment contract, the contract must include an express “firm advance commitment as to the duration of the employees employment or the days (or hours) the employee will work” and if it does not, then the contract is for casual employment.  It said Mr Rossato’s contracts did not contain the requisite “firm advance commitment”.
On the other hand, Mr Rossato argued that:

his contracts were not wholly in writing;
in any event, even if they were, there was a “firm advance commitment” in the form of long set rosters sometimes for up to twelve months;
to determine if the engagement was casual, it was necessary to assess the conduct of the parties (not just the original contract), to get to “the real substance”, “the practical reality” and “the true nature” of the relationship.

In his judgement, Bromberg J described these positions as raising a “conceptual divide”.  He accepted Mr Rossato’s position and concluded that the whole and evolving employment relationship, not just the starting point of the original contract, will determine the nature of the engagement. He stated that “substance” will “trump over form in the search for the reality of what has been created or agreed, even where a contract is wholly in writing”. The other members of the Full Bench also found that the manner in which the contracts were performed pointed against the characterisation of Mr Rossato’s employment as casual.
WorkPac’s employment arrangements with Mr Rossato are distinguishable from the arrangements that some employers have with their casuals on the basis that they were:

organised, structured, ongoing, regular and predictable (there was a commitment to utilise Mr Rossato’s services on long term rosters; and
there was no mechanism for Mr Rossato to elect to reject an allocated shift.

WorkPac’s Set-Off Claim
WorkPac’s back-up argument was that, if the Court found that Mr Rossato was a casual, then it had already paid his entitlements through the casual loadings in his weekly payments. The loading should set-off his leave entitlements, since it was paid to him in lieu of them.
The Court rejected this argument, saying there was no correlation between the purpose of the wages paid to Mr Rossato and his leave entitlements.  Wheelahan J found that the wages were never meant to compensate for his leave entitlements.
WorkPac sought to rely on changes to the Fair Work Regulations that the Federal Government had made in December 2018 – after the Skene decision – to avoid “double dipping”.  The new regulations were supposed to allow an employer to take the loading into account in determining any amount payable to an employee in lieu of NES entitlements such as leave.
In this case, the regulations did not assist WorkPac because the Court said that what WorkPac owed to Mr Rossato was his actual NES entitlements, not an amount in lieu of them.
Lessons
The Rossato decision has underlined Skene and confirmed how Courts will approach the categorisation of casual employees and when NES and enterprise agreement entitlements are due to employees.
Significantly, it also highlights limitations in the ability to set-off casual loadings against leave entitlements.
The intentions of parties at the beginning of the employment relationship, the content of their written employment contracts, and indeed responses to casual conversion provisions in modern awards, are only some factors among many that determine whether an employee is casual or permanent.  Adding to the complexity, employment relationships can evolve over time, so that what starts as “irregular” and “ad hoc” may become “regular and systematic” employment and move from casual to permanent, without planning.
Pending an appeal in this case or legislative reform, employers should carefully review their engagement and rostering practices.  They should ask whether the use of casuals really gives them the flexibility they are looking for and reconsider their true exposure to leave entitlements, as well as other costs and risks such as unfair dismissal claims and redundancy payments.
It may be that permanent part-timers, properly rostered and properly consulted and managed, can provide more certainty.
Our team of Employment Law professionals can assist you to ensure your causal employee engagements are best suited to your business needs.
WorkPac’s gamble to double-down doesn’t pay off on double-dipping – Court confirms casual employees may not be as ‘casual’ as you think | Hunt & Hunt Lawyers

Introduction
On 27 May 2020, the Federal Court of Australia handed down its judgments in three separate unfair preference proceedings instituted by the liquidators of Gunns Limited (in liq)(receivers and managers appointed)(“Gunns”).[1]  The liquidators were successful in each proceeding.
The Gunns proceedings represent the first time an Australian court has been asked to consider the “peak indebtedness rule” post the decision of the New Zealand Court of Appeal in Timberworld Ltd v Levin [2015] 3 NZLR 365 (“Timberworld”).  The Court confirmed the continued operation of the rule in Australia.
While the Court also usefully considered the circumstances in which a running account may be terminated, and confirmed its discretion to reduce an amount otherwise payable as an unfair preference, it did not clarify the vexed question of whether set-off under s.553C of the Corporations Act 2000 (Cth)(“Act”) applies in the context of unfair preference claims.
Peak indebtedness rule
The “peak indebtedness rule” allows a liquidator to choose the highest point of indebtedness in a running account during the relation back period as the starting point to calculate the amount of any unfair preference:
Peak indebtedness – Debt due on relation back day = Value of preference claim
All three defendants argued that previous Australian cases which applied the “peak indebtedness rule” were wrongly decided and should not be followed. The defendants relied on the reasoning of the New Zealand Court of Appeal in Timberworld, which held that the equivalent New Zealand provisions do not give a liquidator the right to disregard transactions which form part of a continuing business relationship.
The Court disagreed with the reasoning in Timberworld, and confirmed the continued operation of the “peak indebtedness rule” in Australia.
Running account
In two of the proceedings,[2] the Court found that payments made during a period when services were suspended did not form part of the running account. This was despite the fact that, in respect of one of the defendants, the suspension was initiated by Gunns (pursuant to a force majeure clause).[3]
The Court found each defendant required Gunns’ outstanding debt to be reduced significantly before recommencing supply, and that the parties were “looking backwards rather than forwards” and “to the partial payment of old debt rather than the provision of continuing services.”  This undermined the essential feature of the continuing business relationship, namely, that payments are made in the mutual expectation of future supply.
Discretion
One of the defendants argued that the Court should not order repayment of any of the preferences, in the exercise of its discretion under s.588FF of the Act.[4] The defendant argued the payments were substantially for Gunns’ benefit, and allowed the defendant to continue providing valuable services to Gunns.
While accepting that its powers under s.588FF are discretionary, the Court maintained that discretion must be exercised in light of the objectives of Part 5.7 of the Act. In the circumstances, the defendant was unable to convince the Court to exercise its discretion in the defendant’s favour.
Set-off
In two of the proceedings, the defendants argued an entitlement to set-off amounts owing to them by Gunns against any amount found to be owing by them as an unfair preference, pursuant to s.553(C) of the Act.[5]
The Court found it ultimately did not have to decide the issue of whether or not set-off is available in the context of unfair preference claims.  This was because of the Court’s finding that the defendants had notice that Gunns was insolvent at the time of the payments within the meaning of s.553C(2) of the Act.
While the Court did not provide clarity around the issue of set-off, it cited numerous authorities which support the proposition that set-off is not available in unfair preference claims (while acknowledging some cases which suggest the contrary).
Binti Prasad
Principal
Melbourne
Helen Hodgins
Lawyer
Melbourne

[1] Bryant, in the matter of Gunns Limited (in liq)(receivers and managers appointed) v Badenoch Integrated Logging Pty Ltd [2020] FCA 713 (“Badenoch”); Bryant, in the matter of Gunns Limited (in liq)(receivers and managers appointed) v Edenborn Pty Ltd [2020] FCA 715 (“Edeborn”); Bryant, in the matter of Gunns Limited (in liq)(receivers and managers appointed) v Bluewood Industries Pty Ltd [2020] FCA 714 (“Bluewood”).
[2] Edenborn and Bryant.
[3] Edenborn.
[4] Edenborn.
[5] Bluewood and Badenoch.
All Gunns blazing – Federal Court affirms peak indebtedness rule post-Timberworld | Hunt & Hunt Lawyers

The legal fight for pet ownership rights in strata buildings has just taken a major setback. In a series of highly contentious matters, the New South Wales Civil & Administrative Appeals Panel (‘Appeals Panel’) has overturned previous NCAT decisions that gave lot owners a ‘basic habitation right’ to keep pets in strata buildings.
Background
On 27 May 2020, the Appeals Panel handed down its decisions in Cooper and Roden.
The appeals were brought by major strata towers being The Horizon, Darlinghurst and The Elan, Rushcutters Bay to challenge the tribunals decision that by-laws which entirely prohibited pet ownership were ‘harsh, unconscionable and oppressive’ and therefore invalid.
It also sought to challenge that such by-laws were contrary to an owner’s basic habitation rights, their use and enjoyment of their lot.
Can the Owners Corporation ban pet ownership?

Generally, the Owners Corporation may pass by-laws at their annual general meeting that deals with pets. They can also expect the lot owners to comply with those by-laws. However, there are numerous restrictions on the content by-laws are passed such as it cannot be harsh, unconscionable or oppressive.
See section 139 (1) of the Strata Schemes Management Act 2015
A tribunal has the power to invalidate a by-law if it believes the Owners Corporation did not have the power to make that by-law or that the by-law is harsh, unconscionable or oppressive.
See section 150 of the Strata Schemes Management Act 2015

Factors considered by the Appeal Panel
The Appeal Panel recognised that a by-law which has a blanket ban on pet ownership can be considered harsh, unconscionable or oppressive for the purposes of section 139 (1). But it is an objective test that is determined on the following factors:

the terms of the by-law.
the history of the by-law.
the circumstances in which the by-law came to operate on various lot owners (including the circumstances in which any lot owner acquired a legal interest in property in the strata scheme); and
the particular circumstances of the applicant that might otherwise demonstrate the by-law is harsh, unconscionable or oppressive.

In the Roden Appeal, the by-law that prohibited pet ownership was validly passed in 2013 by an absolute majority (81%). But The Horizon’s body corporate accepted that circumstances had occurred which made it appropriate for those with existing animals to be able to retain them. However, moving forward, new animals would not be permitted.
In the Cooper Appeal, it was revealed that Mrs Cooper knew, before she purchased her lot, of the existence of a by-law preventing the keeping of animals. Evidence was accepted that the dog was concealed in a bag when entering and leaving the building and was caught urinating on common property by a surveillance device.

The outcome
The Appeals Panel found in favour of the two strata towers. It accepted that:

the fact a by-law prohibits the keeping of animals does not, of itself, mean that the by-law is harsh, unconscionable or oppressive.
there is a variable scale of severity, whether the expression “harsh, unconscionable or oppressive” is read collectively or disjunctively and/or whether the section operates in different circumstances.
the degree of severity is higher than the standard of “unreasonable”.

What does this mean for pet owners in strata schemes?

If you are looking to purchase a lot in a strata scheme, it is important that you get legal advice before you exchange contracts, to ensure that you are aware of all the by-laws that could affect your happiness and way of living.
If you are already living in a lot where a strata scheme applies, you should familiarise yourself with the by-laws that apply to your pets and raise any concerns at the Owners Corporations next annual general meeting.

What does this mean for Owners Corporations?
Whilst these decisions may encourage you to pass by-laws that prohibit pet ownership, it is still open for a tribunal to find them unjust if it does not satisfy the objective test.
The circumstances of your strata scheme may be distinguishable from these decisions.
Get in touch
If you are a pet owner or you are managing a strata scheme and would like to know more about how this affects you, please contact us.
 
Author – George El-Mourani, Graduate At Law
Landmark decisions add controversy to pet ownership in strata schemes | Hunt & Hunt Lawyers

In March, Australian businesses faced the impacts of Covid-19 and Government restrictions aimed at combatting the spread of the virus, which were being introduced quickly and before the JobKeeper scheme and other initiatives to support the economy could catch up.
Employers hurried to protect both cash flow and their workforce, but existing IR options were more limited and blunter than the JobKeeper directions which became available after 9 April 2020. You can see our earlier pieces on JobKeeper stand down directions and the other more flexible options available to employers participating in the wage subsidy regime.
Back in March, employers looked to their enterprise agreements or section 524 of the Fair Work Act and wrestled with industrial stand down provisions which were clearly not designed with Covid-19 in mind.
On 25 May 2020, the Fair Work Commission handed down its first decision arising from a stand-down dispute in the Covid-19 era.
It has important lessons for employers who were forced to move before JobKeeper was introduced, and for employers who (for one reason or another) are not participating in the scheme.  It also provides a signpost for what to expect after the JobKeeper scheme ends on 27 September 2020, unless extended or replaced.
Facts
On 26 March 2020, Coral Expeditions – a cruise operator in the heavily-hit tourism sector – stood down one of its Marine Superintendents. This was part of a 50% workforce reduction with the hope of returning to normal operations in June.
Due to government regulations to combat the spread of the virus, Coral Expeditions was no longer able to conduct its business: revenue had dropped to zero and it had made several refunds for cancelled cruises.
The Marine Superintendent performed a range of tasks, and was primarily “responsible for the overall performance of the Marine Division. This extends to vessel maintenance, crewing and compliance to company and legislative requirements pertinent to the operation of the vessels.”
He argued that although cruises had been cancelled, his administrative responsibilities meant his role was still required, so there was no stoppage of work for him. He claimed that there was still work he could do, and that some of his duties were being performed by others, so he sought to be re-engaged by Coral Expeditions.
Interpretation of s 524 Fair Work Act
In this case, Deputy President Lake identified the three primary criteria which must be satisfied for a stand down to be lawful under s 524(1) of the Fair Work Act 2009:

The employee must be stood down during a time in which they cannot be usefully employed.
Secondly, one of the three sub-criteria must be present. The one the Company relied on was that there had been a stoppage of work for which the employer could not be held responsible.
The employee cannot be usefully employed because of the stoppage.

Decision
The Deputy President commented that the concept of a “stoppage of work” had not been the subject of significant judicial commentary. His Honour looked at decided cases for guidance and determined:

The Fair Work Act required the identification of some event which involved work being consciously halted for some reason and ordinarily for some identified period of time.
A mere reduction in available work cannot constitute a stoppage.
Where an employer’s business in not trading but there are still limited functions that can be performed, then this is a stoppage of work because there has been a cessation of trade. His Honour stated that Coral Expeditions’ business activities had:

“entirely halted and should, therefore, be properly characterised as a stoppage of work. This continues to be the case regardless of whether some administrative or caretaker functions of the business continue to be required – these functions do not properly represent the ‘activity’ of the business.”
It was then necessary for the Deputy President to consider whether the Marine Superintendent could be usefully employed, despite the stoppage of work.  His Honour stated that the test of “useful employment” comprised of two parts:

An assessment of the work available – “it must be determined if there is useful work and then the number of employees required to perform that useful work.”
A more general analysis of the conduct of the employer against notions of good faith and fairness, including the economic consequences to the employer.

Analysis – applying the law to the facts
The fact that 107 employees, or 50% of the workforce had been affected, and that the business also took a range of other measures to reduce overheads – including reallocation of duties, a hiring freeze, delaying scheduled maintenance – showed that the decision to stand down the Marine Superintendent was not malicious and was taken in “good faith”.
The Marine Superintendent’s tasks had largely diminished, since his HR duties reduced when the ship crew was halved and maintenance and attendances with regulatory bodies were delayed. This meant his remaining tasks could be reallocated.
The Deputy President concluded with some excellent maritime metaphors:
“This case concerns a cruise line that has had no opportunity but to lay up all its ships and halt all voyages: Coral Expeditions has stood down its employees in an attempt to stay afloat. Australia, and the rest of the world, continues to sail through the uncharted waters of a pandemic not seen for 102 years and the Respondent has made a genuine attempt to salvage their operation against crushing financial conditions. To eschew economic considerations in a time such as this would be contrary to both the case law and notions of fairness. These facts constitute a total and government mandated stoppage of work and epitomise the purpose of Part 3-5 of the Act. In these circumstances, I find that the Applicant is not capable of useful employment and the claim is therefore dismissed.“
This case is significant because it relates to actions that the employer took to deal with the COVID-19 pandemic.  In coming months there will likely be more, including in the areas of genuine redundancy, unfair dismissal, under payments (e.g. interpretation of the JobKeeper subsidies) and breach of contract.
We will continue to provide updates as developments unfold. If you have any questions or for assistance with specific issues, please don’t hesitate to get in touch.
Michael Marson v Coral Expeditions [2020] FWC 2721 (25 May 2020)
 
 
Man Overboard! – Stand Down in the Time of Covid-19 | Hunt & Hunt Lawyers

The COVID-19 Omnibus (Emergency Measures) (Electronic Signing and Witnessing) Regulations 2020 were introduced on 11 May 2020 and can be accessed here. These were issued following the introduction of the COVID-19 Omnibus (Emergency Measures) Act 2020 in response to the COVID-19 pandemic.
The Regulations will have effect for a six month period and provide alternative methods for signing and witnessing documents during the COVID-19 pandemic period. The Regulations apply from 29 March 2020 – 29 September 2020. The changes will make it significantly easier to sign documents whilst maintaining physical distancing during the pandemic period.
The changes do not limit existing methods of witnessing documents, so long as witnessing that is carried out in person is carried out in safe circumstances in accordance with Government restrictions.
Below is a brief summary of the changes to relevant legislation, however we recommend seeking further legal advice if you are unsure how to comply with the changes.
Oaths and Affidavits Act 2018
Where the Oaths and Affidavits Act 2018 requires a signature, an electronic signature will now be permitted. This applies to statutory declarations and affidavits. If a person is required under the Act to do something in front of another, they are permitted to do so via audio visual link. The effect of this will allow witnesses, deponents and affidavit takers to comply with the Act without needing to be physically present. Furthermore, where the Act requires an original copy of a document to be signed, signing a scanned hard copy, or an electronic copy of a document will satisfy the requirements.
If an affidavit taker signs the document electronically, or witnessing is done via audio or audio visual link, the affidavit taker must include a statement in the jurat that indicates the document was signed electronically, or was witnessed via audio or audio visual link in accordance with the Regulations.
Furthermore, if a person cannot comply with the requirements, the court may nonetheless admit the document into evidence if they consider it to be in the interests of justice. The document must include the reasons why it was not practicable to comply with the Act, but this is ultimately a decision of the Court whether or not to admit the document.
Powers of Attorney Act 2014
Enduring and non-enduring powers of attorney can be executed and witnessed by audio visual link, if the requirements set out in the Regulations are followed. However, all witnesses must still fulfil their existing obligations under the Act. These Regulations do not apply to Advanced Care Directives or to appointments of Medical Treatment Decision Makers.
If a witness observes the signing of a Power of Attorney remotely, the following steps must occur:

the principal, or person directed to sign, signs the document whilst any remote witness observes the signing via audio visual link.
if there are any witnesses physically present, they must sign the document.
a copy of the document is then transmitted to the remote witness.
the witness may then sign the document electronically, or sign a hard copy.
the witness must write on the document that it was witnessed in accordance with the regulations.
if there are any further remote witnesses, the document must be transferred to the next witness.
once all witnesses have signed, the document must be returned to the principal or directed signer.
this person must then write that the copy is a true copy of the Power of Attorney in accordance with the Regulations.

The end result will mean that there is one copy of the Power of Attorney that has all signatures and statements of the witnesses. The above steps must all occur on the same day.
Where the above steps refer to ‘transmission’ of the document, the Regulations state that the method of transmission does not matter. For example, a document may be transmitted by emailing, faxing, or scanning it to the required party.
Wills Act 1997
The execution, alteration and revocation of a will by a testator that must generally be done in the presence of a person may now take place if parties are present by audio visual link. The steps that a witness is required to fulfil are:

the testator signs the document.
if there are any witnesses physically present, they must sign the document.
a copy of the document is then transmitted to the remote witness.
the witness may then sign the document electronically, or sign a hard copy.
the witness must write on the document that it was witnessed in accordance with the regulations.
if there are any further remote witnesses, the document must be transferred to the next witness and the above process repeated.
once all witnesses have signed, the document must be returned to the testator.
the testator must then write that the copy is a true copy of the will in accordance with the Regulations.

Deeds and mortgages
The Regulations also allow for electronic signature in relation to deeds and mortgages. The changes allow each signatory to sign either the document, or a copy of a document which may be either electronic or hard copy. The changes also allow witnessing to occur via audio-visual link where required.
Where a person signs electronically, they must include a statement to the effect that the document was electronically signed in accordance with the Regulations.
A person witnessing the signing of a document must also include a document to indicate that it was witnessed by audio-visual link in accordance with the Regulations.
The person who will receive the document is required to give their consent that the document be executed electronically. However, the fact that a person proposes to electronically sign a document is not a sufficient reason to withhold consent under the Act.
Need more guidance?
If you would like to discuss anything mentioned in this article, or need guidance or assistance to ensure compliance with the changes, please contact us for further information.
 

Emily Clapp
Graduate-at-Law
COVID-19 Omnibus Regulations – Electronic signing of documents | Hunt & Hunt Lawyers

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