Can an employer decide to make an influenza (or COVID-19) vaccination an inherent requirement of the role and if so, is this a lawful and reasonable direction?
 
Protecting the health and safety of clients, colleagues and the community involves change. Individual behaviours often need to change in order to make positive improvements in the community or the workplace.
The challenges that COVID-19 presented in 2020 required substantial changes to individual behaviours. We all had to adopt new behaviours around “social distancing”, isolation processes, face-mask etiquette and correct hand sanitation practices (to name a few!).
In 2021 the challenge of change will be around vaccinations (for both influenza and COVID-19) and the case law is starting to develop in this area.
Childcare Sector
In 2020, childcare provider Goodstart Early Learning Centre decided it would make influenza vaccinations for all employees mandatory and issued a direction to all employees requiring them to be vaccinated by 29 May 2020. The direction provided a process by which employees with medical reasons for not being vaccinated could seek an exemption. Goodstart felt their policy was necessary to meet its duty of care requirements with respect to protecting children they cared for. Exemptions were provided for staff with health or medical conditions.
An employee, Ms Arnold objected to being vaccinated on grounds which did not include a medical or health related issue. Ms Arnold was subsequently dismissed on the basis that she had refused to comply with a lawful and reasonable direction.
Ultimately the case was dismissed on a jurisdictional ground however not before Deputy President Asbury noted the childcare business had a vaccination policy that was:
“…lawful and reasonable in the context of its operations which principally involve the care of children, including children who are too young to be vaccinated or unable to be vaccinated for a valid health reason”.
Therefore, the Childcare Centre’s policy was:
“… necessary to ensure that it meets its duty of care with respect to the children in its care, while balancing the needs of its employees who may have reasonable grounds to refuse to be vaccinated involving the circumstances of their health and/or medical conditions”.
“It is also equally arguable that the employee [Ms Arnold] has unreasonably refused to comply with a lawful and reasonable direction which is necessary for her to comply with the inherent requirements of her position…” – Arnold v Goodstart Early Learning Limited [2020] FWC 6083, 18 November 2020 at [32].
Aged Care Sector
In April 2020, Ozcare a residential aged care provider, in an attempt to protect clients and help stop the spread of COVID-19, updated their Employee Immunisation Policy to make influenza vaccinations mandatory for all employees working in residential aged care facilities and all community care services.
For 10 years previously, 64-year-old Care Assistant Ms Maria Glover had declined the annual vaccination due to her suffering anaphylaxis immediately after receiving the influenza vaccine at the age of seven, whilst she was a resident of the Philippines. Over these 10 years, Ozcare permitted her to continue in her role. In April 2020, Ms Glover again refused to be vaccinated.
Ozcare did not permit her to resume work and Commissioner Hunt found her employment was subsequently terminated by Ozcare in October 2020. Glover v Ozcare [2021] FWC 231, 18 January 2021.
Ms Glover refused to seek or provide any medical advice regarding her capacity to safely have the vaccination. The Commission pointed out that it had been 57 years since her last vaccination and there had been considerable medical advancements in that time. When asked if she would consider seeing a medical specialist Ms Glover confirmed she will never have a vaccination as she believes it would be a risk to her life and she was not agreeable to meet with a medical specialist to discuss the matter further.
The matter will now progress to a hearing by the Fair Work Commission on the fairness of the termination.
The question to be determined in 2021 is, can employers mandate a COVID-19 vaccine for their employees?
In light of Australia’s impending roll out of a COVID-19 vaccine in March, a major consideration for employers will be whether they can direct their employees to have the vaccine? Alternatively, can employers terminate or restrict their employees from entering the workplace if they refuse to take the vaccine.
If working from home arrangements, social distancing measures and regular cleaning practices cannot manage this risk alone then the vaccination will need to be considered as part of the solution. Whether this can be mandated depends on the specific circumstances of each individual employee.
In the absence of a government or Health Department, directive employers will generally not have an unfettered right to require their employees to be vaccinated against COVID-19.
However, at common law employees have an obligation to comply with the lawful and reasonable directions of their employer. The critical issue for determining whether a direction to receive the vaccine is “lawful and reasonable” will depend on a number of considerations, such as the nature of work that needs to be performed, the nature of clients/customers and other stakeholders, whether employees can work remotely, the local health advice and requirements of the Government at that point in time.
Does industry make a difference?
The possibility of employers being able to enforce a mandatory COVID-19 vaccine for their workplace will also vary depending on the industry that they work in. Obviously, people who work in health or with vulnerable members of the community might be viewed as more of a risk, and so as a result a requirement that they have the vaccine is likely to be considered lawful and reasonable to assist in ensuring their health and safety, and that of others around them, in their workplace. For example, it is already a requirement for people working in aged care facilities to receive the flu vaccination and there has been considerable discussion that this same requirement should apply for the COVID-19 vaccine. There has also been discussion that it should be mandatory for hotel quarantine workers to receive the vaccine due to their exposure to returned travellers.
There is also the possibility that it could be a Government requirement for employees in certain sectors to receive the vaccine. However, the situation is likely to be very different for those workplaces where the risk of infection is low.
Watch this space
With the Morrison Government hoping to administer the vaccination as early as March, this issue is sure to surface in a lot of workplaces. Industrial Relations Minister Christian Porter says that talks will soon start with employers and unions to work through the complex legal and workplace safety issues surrounding the rollout of COVID-19 vaccines.
Porter has said “preliminary discussions” had already begun “with key unions and employers from the health and aged care sectors about a vaccine roll-out and wider consultation with stakeholders from the broader economy will begin soon, with the first meeting scheduled for 1st February…Naturally there are a number of complex legal issues that need to be considered in preparation for the roll-out of a vaccination, some of which will be unique to particular workplaces and it should be noted that the largest area of legal responsibility for workplace safety is fundamentally a state responsibility.”
The Employment group at McCabe Curwood are available to assist employers with this developing area of workplace law and will provide further client updates in the coming weeks ahead.
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McCabe Curwood has been recognised as a leading Australian law firm with two divisions ranked in the latest edition of the Asia Pacific Legal 500.
 
The firm’s Litigation and Dispute Resolution group and Insurance division have both been ranked in the annual directory, which analyses the legal marketplaces of 25 Asia Pacific jurisdictions.
“We are thrilled to be included in the Asia Pacific Legal 500,” says Managing Principal, Andrew Lacey.
“It is great to have the hard work and dedication of our firm advocated by such a highly regarded research programme.”
A series of criteria is analysed to highlight firms that provide the most innovative advice to corporate counsel.
The research is based on a number of factors, including feedback from around 300,000 clients worldwide.
“The team at McCabe Curwood is well-equipped to handle disputes arising in relation to corporate law, consumer law issues and antitrust matters,” the report said of the firm’s Dispute Resolution group.
It also noted the Insurance team “provides timely, useful, and pragmatic advice in an easily digestible format”.
A number of McCabe Curwood lawyers were specifically recommended in the Legal 500 guide:

Litigation and Dispute Resolution group: Andrew Lacey, Chiara Rawlins, and Foez Dewan
Insurance group: Stuart Windybank, Scott Kennedy, Andrew Gorman, Peter Hunt, Mathew Kaley, Francesca Menniti, Leighton Hawkes, Richard Johnson, and Paul Garnon.

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In March 2020, the Australian Government introduced a suite of changes to the federal insolvency and bankruptcy laws in response to the economic impact of COVID-19. These measures were initially implemented for a six-month period and included increased protections for businesses and individuals who faced the threat of insolvency or bankruptcy by reason of the economic pressures impacted by the COVID-19 health restrictions.
 
Those interim measures were initially scheduled to come to an end in late September 2020. However, the Government provided further relief by extending the interim measures until 31 December 2020.
With the year now 2021, here’s an update on the status of those interim protections.
Insolvency

Bankruptcy

Safe harbour
The temporary safe harbour relief for directors came to an end on 31 December 2020.
For those who aren’t aware, company directors are under a duty to prevent insolvent trading by their company. Prior to COVID-19, a director would be personally liable for insolvent trading:

for the business incurring a debt when it was insolvent (or is made insolvent by reason of that debt); and
the director had reasonable grounds to suspect the company was insolvent at the time (or would be made insolvent by the incurring debt).

Part of the Government’s interim measures included an interim safe harbour defence for directors from liability arising by reason of insolvent trading during that period.
However, directors who engaged in dishonest or fraudulent conduct during that interim period that would attract criminal penalties, were not relieved by the interim safe harbour defence.
Future outlook
Notwithstanding the Government’s announcement to amend the bankruptcy regulations such that the monetary threshold to issue a bankruptcy notice is increased to $10,000, that threshold amount remains well below the COVID-19 interim monetary threshold.
This change, coupled with the reversion of pre-COVID-19 bankruptcy and insolvency laws, means that we will most likely see a sharp increase of creditor petitions and winding up proceedings commencing on and from the next few weeks.
If you or your business will be affected by these insolvency changes and you are looking for advice, please get in touch with our Litigation and Dispute Resolution team today. We have extensive experience in advising large to small companies as well as directors, liquidators, creditors and other stakeholders of companies in an insolvency context and would be more than happy to assist.
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In Greenaway v Prestige Helicopters Pty Ltd [2020] WADC 159 the appellant sought to argue, amongst other things, that an uninsured working director can still nonetheless claim compensation from a “principal” pursuant to section 175(1) of the Workers’ Compensation and Injury Management Act 1981 WA (the Act).
 
The appellant was represented by Graham Droppert SC and the respondent was represented by David Burton and Bryan Ullinger of McCabe Curwood.
Facts
The relevant facts were that Mr Timothy Greenaway (the deceased) was the sole director and only shareholder of Auspray Pty Ltd (Auspray).
Relevant to the determination of the above issue, Flynn DCJ found that Auspray had entered into a contract for services with Prestige Helicopters Pty Ltd (Prestige).
When providing the services to Prestige, the deceased was involved in an industrial accident where he unfortunately passed away.
Law
For working directors, the Act establishes a scheme whereby a company purchases insurance for the director in accordance with section 160 of the Act. If the company purchases insurance for the benefit of the director pursuant to section 160, and if the director then suffers an injury, the director will be regarded as a “worker” for the purposes of the Act.
It follows that if insurance is not purchased pursuant to section 160 then an injured working director is not a “worker”. If there were doubt about this, then section 10A(7) says: “if a company (other than a company that is, or is one of a group employers that is, exempt under section 164) does not comply with section 160 on the basis that a working director of the company is a worker, then, for the purposes of this Act, the working director is not a worker.” (our emphasis added).
Argument
The deceased’s estranged wife argued that despite not taking out a working director’s policy of insurance pursuant to section 160 of the Act, the deceased may still be regarded as a worker and entitled to workers’ compensation payments from Prestige.
The appellant argued that section 10A(2) limited the effect of section 10A(7).  Section 10A(2) says: “despite anything in section 5, a director of a corporate body is not a worker of that corporate body for the purposes of this Act, unless and to the extent that this section makes the director a worker” (our emphasis added). The appellant argued that section 10A(2) limited the effect of section 10A(7) to saying that the deceased was not a worker of Auspray, however, could still be regarded as a worker for the purposes of section 175 of the Act and claim compensation from Prestige.
Decision of Flynn DCJ
Flynn DCJ rejected the appellant’s argument and in doing so emphasised the distinction between a liability and an entitlement.
He explained that section 18 of the Act creates both an entitlement of a worker to compensation and a liability to pay the entitlement upon an employer. “The entitlement and liability crystallise upon an injury to the worker”.
In rejecting the argument, Flynn DCJ said that: “section 175 of the Act does not create an entitlement to compensation. It is concerned with identifying the parties who have liability to pay the entitlement that is created by section 18”.
The effect of section 175(1) is that the liability of Prestige was the same as Auspray’s liability. Given that Auspray had no liability to the deceased (because the company did not purchase insurance under section 160) then Prestige had no liability to pay compensation under section 175 of the Act.
Conclusion
This was a very good outcome for an uninsured respondent.
This is the first case that has offered an interpretation of the combination of sections 160, 10A(2) (7) and section 175 of the Act. It highlights the obvious task when confronted with questions about liability of asking what is the entitlement and what is the source of liability.
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The NSW Court of Appeal has recently dealt with the issue of whether leave should be granted to allow proceedings to continue to final orders in a situation where administrators were appointed after publication of the Court’s reasons, but before final orders were made.
 
Section 440D of the Corporations Act (Act) prevents proceedings from being commenced or continued during the period of administration of a company, except:

with the administrator’s written consent; or
with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

The purpose section 440D of the Act is to stay (or freeze) proceedings against a company which is in voluntary administration, so that the administrator is not distracted by litigation against the company.
This section of the Act was relevant to a recent NSW Court of Appeal proceedings in which McCabe Curwood successfully represented the appellants, being the case of Lianos v Order of AHEPA NSW Inc (No 2) [2020] NSWCA 304. The appeal concerned the validity of changes to the constitution of Order of AHEPA NSW Inc (the Association), and resolutions purportedly passed in general meetings by members, a number of whose membership was also in dispute.
What was unique about this case is that the Association went into voluntary administration shortly after the Court of Appeal published its reasons, but before orders were made by the Court of Appeal to give effect to such reasons.
The administrators did not provide consent to the proceedings being continued.
As such, the Court had to decide whether to grant leave under section 440D(1)(b) of the Act to proceed to make final orders to give effect to its reasons.
In exercising the Court’s discretion, it was noted that there was nothing before the Court to suggest that the financial position of the Association changed materially simply by reason of the Court’s decision, as it must have been foreseen as a possibility that the appeal might be upheld, with whatever consequence that may have had on the liabilities of the Association.
Importantly, the Court also noted, “where a dispute concerns governance of an association, as is the present dispute, there would be every reason for leave to be granted to ensure certainty in relation to the administration or the winding up.”
Having determined to grant leave, the Court then proceeded to make final orders and declarations in the form proposed by the appellants, including a costs order against the Association.
This is an interesting decision in the context of the operation of section 440D of the Act, as unlike other occasions, the Court had to consider whether leave should be granted for proceedings to continue in a situation where a company or association goes into voluntary administration in the period of time after publication of the Court’s reasons, but before final orders were made.
The decision is important, given the clarity it provides in approach the Court is likely to take on the question of granting leave under this section on matters concerning corporate governance, especially if it helps in providing certainty in relation to the administration or the winding up of a corporation.
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The NSW Supreme Court has ruled in favour of Perisher Blue, characterising skiing as a ‘dangerous recreational activity’ for the purposes of section 5L of the Civil Liability Act 2005 (NSW) (CLA). This joins a plethora of recent cases that help define the scope of obvious risks in the context of dangerous recreational activities.
 
Authors: Gerry Tzortzatos, Anthony Anisseh
Judgment date: 20 November 2020
Citation: Castle v Perisher Blue Pty Limited [2020] NSWSC 1652
Jurisdiction: NSW Supreme Court
Principles

Skiing is now recognised as a dangerous recreational activity
A significant risk of physical harm can be found to arise, even if the risk of that harm materialising is low
An obvious risk defence is more likely to be accepted when the risk is framed generally
Risk warnings that are too broad and generic do not satisfy the section 5M defence.

Background
The plaintiff was skiing down the Olympic Run at Perisher Blue when she collided with another skier coming from the upslope. The other skier was a ski instructor employed by Perisher Blue, who was instructing another skier at the time of the incident.
The plaintiff sustained injury to her right hand, left shoulder and left knee, and alleged ongoing disability in those areas.
Decision
The primary judge1 accepted that the collision was caused by the negligence of the ski instructor and that Perisher Blue was vicariously liable for his actions.  He did not consider that there was any contributory negligence on the part of the plaintiff.
Judgment was entered for the defendant because the statutory defence of the materialisation of an obvious risk of a dangerous recreational activity (s 5L of the CLA) was found to apply.
When assessing whether the risk was ‘obvious’, the primary judge decided the issue ought to be framed generally. Although the plaintiff attempted to specify the risk as a collision of two experienced and competent skiers, his Honour determined the risk was, put generally, the risk of two skiers colliding.
Skiing was found to be a ‘dangerous recreational activity’ under section 5K of the CLA. In determining this, the primary judge adopted the objective test previously applied by the Court of Appeal2 to assess whether skiing involved a significant risk of physical harm, disregarding the circumstances and experience of the plaintiff and the ski instructor. At the same time, statistics showing that the rate of collisions per skier was minimal were not determinative of the significance of the risk, as the potential for the activity to cause catastrophic harm also had to be considered. The risk was significant because skiing at speed in close proximity to trees and rocks can likely result in catastrophic harm, despite this being an infrequent occurrence.
Perisher Blue argued that it did not owe the plaintiff a duty of care pursuant to section 5M of the CLA as its Terms and Conditions contained the following risk warning:
“RISK WARNING: RECREATIONAL ACTIVITIES (INCLUDING SKIING, SNOWBOARDING AND SNOW TUBING) INVOLVE A SIGNIFICANT RISK OF PHYSICAL HARM OR PERSONAL INJURY INCLUDING PERMANENT DISABILITY AND/OR DEATH TO PARTICIPANTS.” 3
The primary judge determined that this risk warning was too broad and generic and therefore did not fit within the definition under section 5M of the CLA. Risk warnings must specify the risks involved in the recreational activity in greater detail, even if those risks are obvious.
Finally, the Court dismissed the plaintiff’s claim for breach of the statutory guarantee under section 60 of the Australian Consumer Law (ACL), which requires services to be rendered to a consumer with due care and skill. Essentially,  his Honour found that the ski instructor was not providing any services to the plaintiff at the time of the accident, and there was no evidence that the services provided by Perisher Blue to the Plaintiff (such as the slopes, chairlifts and other facilities) were not provided with due care and skill.
Why this case is important
This case demonstrates the challenges plaintiffs face in successfully pursuing claims for injuries arising from dangerous recreational activities. Practitioners and insurers are increasingly relying on this statutory defence to dispute liability.
However, it is no slippery slope. The decision reiterates that obvious risk must be carefully approached on a balance of generality – precise enough to capture the harm which resulted from the risk, but not so specific to include the personal characteristics of the persons involved in the incident. An obvious risk defence is more likely to be accepted when the risk can be broadly characterised.
For further reading, see our article on the decision of Menz v Wagga Wagga Show Society Inc [2020] NSWCA 65.4

1  Cavanagh J
2 Fallas v Mourlas (2006) 65 NSWLR 418 per Ipp JA at [13]
3 [195].
4 https://mccabecurwood.com.au/complete-defence-obvious-risk/
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In the judgment of In the matter of Order of AHEPA NSW Incorporated [2020] NSWSC 1626, the NSW Supreme Court has provided helpful guidance to administrators as to whether the Insolvency Practice Schedule (Corporations) (IPSC) and the Insolvency Practice Rules (Corporations) 2016 (IPR) apply to the administration of incorporated associations.
 
Background
The Order of AHEPA NSW (AHEPA) is an incorporated association and not-for-profit organisation which seeks to foster Australian and Greek relations through the promotion of Hellenic culture. The association has been involved in a number of internal disputes. One such dispute relating to the validity of amendments made in respect of AHEPA’s constitution, culminated in litigation in the NSW Court of Appeal.
On 8 September 2020, following a judgment of the Court of Appeal against AHEPA, it was placed into voluntary administration. The administrators then applied to the NSW Supreme Court for orders under s 90-15 of the IPSC and 447A(4) and 447C(1) of the Corporations Act 2001 (Cth) confirming the validity of their appointment, and if confirmed, seeking declarations that they were justified in proceeding on the basis that the IPSC and IPR apply to the administration of an incorporated association.
Application of the IPSC and IPR to incorporated associations
The central issue in the case, was whether various provisions of the IPSC and IPR could apply to incorporated associations, an issue which has previously only been considered in relation to co-operatives (see Re University Co-Operative Bookshop Limited (admins apptd) [2019] NSWSC 1898, Re University Co-Operative Bookshop Limited (admins apptd) [2020] NSWSC 97, and Re Australian Wine Consumers Co-Operative Society Limited trading as The Wine Society (admin apptd) [2020] NSWSC 1437).
In deciding the issue, Black J followed the reasoning in the decisions relating to co-operatives to apply the complex statutory regime as follows:

Firstly, section 54 of the Associations Incorporations Act 2009 (NSW) is applied to declare an association to be an applied Corporations legislation matter for the purposes of Part 3 of the Corporations (Ancillary Provisions) Act 2001 (NSW) in relation to the provisions of Part 5.3A and Part 5.9 Div 3 of the Corporations Act subject to specified modifications.
Once an association is declared to be an applied Corporations legislation matter, Part 5.3A and Part 5.9 Div 3 of the Corporations Act operate as State legislation in respect of incorporated associations. This is because of the operation of sections 14 and 15 of the Corporations (Ancillary Provisions) Act 2001 (NSW).
The issue then arises that the above approach does not automatically apply the IPSC and IPR to incorporated associations, because section 54 of the Associations Incorporations Act 2009 (NSW) does not apply Part 5.4 Div 4 of the Corporations Act (which authorised the introduction of the IPSC). Further, the Associations Incorporations Act 2009 (NSW) does not expressly incorporate the IPSC or the IPR.
Accordingly, regard must be had to section 68 of the Interpretation Act 1987 (NSW) which provides that a reference to a provision of a repealed or re-enacted Act, extends to the corresponding provision of the re-enacted Act.
This has the effect that if specific provisions in the IPSC and IPR correspond to earlier provisions in the former Corporations Act, they will apply to incorporated associations through the application of the process referred to above. Directions under s 90-15 of the IPSC can then be made to reflect same.
If, however, there is no corresponding provision in the former Corporations Act, orders are required to be made under s 447A of the Corporations Act to apply specific provisions to incorporated associations.

Effect of the judgment
The effect of the judgment is that administrators can now proceed on the basis that the below provisions of the IPSC and IPR apply to the administration of incorporated associations:
IPSC (pursuant to directions made under s 90-15 of the IPSC)

Subdivision B of Div 60, other than sections 60-5(2), 60-10(2) and 60-15 (remuneration);
Sections 70-5, 70-6, 70-15 and 70-25 (lodgement and audit of administration returns);
Div 75, other than sections 75-20 to 75-40 (meetings);
Section 80-35  (committees of inspection); and
Sections 90-15 and 90-20 (review of external administration).

IPR (pursuant to directions made under s 90-15 of the IPSC)

Rules 70-35 and 70-45, other than rule 70-45(4) (remuneration);
Div 75, other than rules 75-120 and 75-135 (meetings); and
Rules 80-5(2) and (7) (committees of inspection).

IPSC (pursuant to orders made under s 447A(1) of the Corporations Act)

Subdivision E of Div 60 (statutory no profit rule);
Div 65 (funds handling);
Sections 70-10, 70-20, 70-30 to 70-45, 70-55, and 70-65 to 70-90 (information requests);
Sections 75-20 to 75-40 (meetings);
Div 80 other than s 80-35 (committees of inspection);
Div 85 (directions by creditors);
Sections 90-5, 90-10 and 90-21 (inquiry by Court);
Subdivision C of Div 90 (review by registered liquidator);
Subdivision D of Div 90 (removal of external administrator by creditors); and
Sections 100-5 and 100-6 (other matters).

IPR (pursuant to orders made under s 447A(1) of the Corporations Act)

Div 60 of the IPR (statutory no profit rule);
Rules 70-1 to 70-15, 70-30, 70-55 and 70-60 (information requests);
Div 80 other than rules 80-5(2) and (7) (committees of inspection); and
Div 90 (review by registered liquidator).

There is no need for administrators of incorporated associations to seek directions as to the application of the provisions in the IPSC and IPR which correspond to former provisions in the Act in the future, since as Black J stated, they may well be entitled to proceed in accordance with the conclusions reached by his Honour in this case. It may however be necessary for them to seek an order under s 447A of the Act in respect of those provisions that would not apply, because they do not correspond to previous provisions in the Act.
This article is not legal advice. It is intended to provide commentary and general information only. Access to this article does not entitle you to rely on it as legal advice. You should obtain formal legal advice specific to your own situation. Please contact McCabe Curwood if you require advice on matters covered by this article. McCabe Curwood has extensive experience advising administrators, company directors, heads of incorporated associations, and creditors in an insolvency context.
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The Australian Competition and Consumer Commission (ACCC) was recently successful in its action against Oscar Wylee Pty Ltd (Oscar Wylee), with the Federal Court ordering a $3.5 million penalty for its contraventions of Schedule 2 to the Competition and Consumer Act 2010 (Cth) (the Australian Consumer Law or ACL).
 
Background
Earlier this year, the ACCC commenced proceedings against the national eyewear retailer, alleging that it had misled its consumers about its charitable initiatives. To find out more about the allegations, as a precursor to this article, please read our short article “Not seeing through its charitable promises? The ACCC takes national eyewear retailer to court“, published earlier this year.
Despite initially denying the allegations, three weeks before the scheduled hearing, the parties had reached an agreement meaning that the ACCC’s application would no longer run contested. Oscar Wylee accepted liability, resulting in an agreement as to the facts and joint submissions were made, including on Oscar Wylee’s conduct and orders on pecuniary penalties.
The admitted contraventions
Katzmann J of the Federal Court found that between the period of 13 January 2014 and 31 December 2018 (the Relevant Period), Oscar Wylee had breached sections 18, 29(1)(h) and 33 and of the ACL by engaging in the following conduct.
Pair for a Pair Representations
Oscar Wylee represented in multiple ways that for each pair of glasses purchased, it would donate an additional pair of glasses to someone in need (Pair for a Pair Representations). The Court found that this was a “deliberate marketing choice” and was a “substantive feature of the Oscar Wylee website and its marketing” during the Relevant Period.
However, Oscar Wylee failed to meet its ‘pair for a pair’ promise as it sold 328,010 glasses, but only donated 3,181 frames (that is, without prescription lenses). It was only until after the Relevant Period that Oscar Wylee started to make substantial donations, as in 2019, 333,404 frames were donated to charities and other organisations, and $80,000 was donated to charitable causes.
Accordingly, Oscar Wylee admitted that it engaged in conduct that was:

misleading or deceptive, or likely to mislead or deceive (s 18 of the ACL); and
liable to mislead the public as to the quantity of the goods being donated (s 33 of the ACL).

Rose Charities Representations
Oscar Wylee represented in multiple ways that it was closely affiliated, and had “partnered”, with Cambodian charitable organisation, Rose Charities (Rose Charities Representations). However, only $2,000.00 and 100 pairs of frames (again, without prescription lenses) had been donated to Rose Charities, and those donations had ceased entirely by the end of 2014.
By at least June 2013, a director of Oscar Wylee was aware that some of Oscar Wylee’s marketing contained inaccurate images and information in respect of its charitable donations and affiliations.
Accordingly, Oscar Wylee admitted that it engaged in conduct that was:

misleading or deceptive, or likely to mislead or deceive (s 18 of the ACL); and
false or misleading to the public as to a particular affiliation (s 29(1)(h) of the ACL).

Katzmann J accepted and described Oscar Wylee’s admissions as “well-founded”.
The orders
In assessing the proposed agreed orders, Katzmann J accounted for the fact that Oscar Wylee had not previously contravened the ACL, they were co-operative with the ACCC during the investigation, and also noted that the charitable donations they made in 2019.
However, notwithstanding Oscar Wylee’s cooperation and belated donations, Katzmann J took the appropriate opportunity to describe Oscar Wylee’s conduct:

“Oscar Wylee improperly exploited the good nature of consumers to its advantage by contriving to enhance the value of its brand by falsely associating it with altruistic pursuits”;
“Its conduct was a betrayal of that promise”.

A summary of some of the key orders is as follows.
Pecuniary relief
The parties jointly submitted that Oscar Wylee pay $3.5million in pecuniary penalties under s 224(1) of the ACL, which comprised of:

$2,100,000 in respect of the Pair for Pair Representations for contravening s 33 of the ACL; and
$1,400,000 in respect of the Rose Charities Representations for contravening s 29(1)(h) of the ACL.

In reaching that number, the parties had accounted for the multiple contraventions of s 29(1)(h) and s 33 through various platforms (i.e. website, social media, direct emails to consumer, and promotional merchandise) when forming the figure.
Katzmann J accepted the “accuracy of the parties’ agreement” and that the total amount was “just and appropriate” to deter Oscar Wylee from re-offending and others from following suit.
Corrective notice
Oscar Wylee was also ordered under s 246(2)(d) of the ACL to publish a clearly visible corrective notice on its primary forms of online marketing, being the homepage of its website, Facebook and Instagram pages, for a period of at least 30 days.
Compliance training
In relation to the ongoing competition and consumer compliance training, the Katzmann J ordered under s 246(2)(b) that Oscar Wylee must, for a period of three years and at its own expense, have its existing ACL compliance program reviewed annually by an independent expert in the field of competition and consumer law. It is required that the independent expert:

not be involved in designing or implementing Oscar Wylee ACL compliance programs;
was never employed by or a director of Oscar Wylee;
had never consulted Oscar Wylee in any matters relating to competition or consumer law other than conducting the review required by Katzmann J’s orders;
has no significant shareholding or other interest in Oscar Wylee.

Within one month after the completion of each review, Oscar Wylee must ensure that any changes considered necessary by the expert are implemented, and that the ACCC are notified in writing identifying the changes and confirming that they have been made.
Costs
Katzmann J accepted the order that Oscar Wylee contribute $30,000 to the ACCC’s costs of the proceedings, on the basis that its cooperation justified the discount.
Key takeaways

This case serves as an important warning to businesses that any claims regarding philanthropic efforts in marketing material (including on social media and online marketing) need to be able to be substantiated to avoid contraventions of the ACL.  You can get ‘ahead of the curve’ by making detailed and contemporaneous records of your timely donations.
Backtracking on your charitable promises won’t get you out of trouble. Ensure your donations are made as promised, and in a timely manner.
Carefully consider how the public may reasonably construe your charitable promise. It is best practice to make the public clearly aware of the terms of all promotions, not just your charitable promises. In relation to its Pair for Pair Representations, Oscar Wylee should have clearly explained to the public that frames without prescription lenses would be donated and adjusted the marketing of its promotion accordingly.
As described in our earlier article, the ACCC have wide-spanning information gathering powers through its s 155 notice, which it may have deployed to obtain the information from Oscar Wylee giving rise to these proceedings. Head to our article “Facing the music of the ACCC’s section 155 notice” to read more about the tool.

The Litigation and Dispute Resolution group at McCabe Curwood have conducted competition and consumer law training programs with businesses of different sizes and operate within varied industries. We have also been engaged to facilitate an ACL compliance program, as part of a Federal Court judgment. Feel free to get in touch with us to find out more about our competition and consumer law offering.
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The Australian Competition and Consumer Commission has commenced proceedings before the Federal Court of Australia against AA Machinery Pty Ltd (trading as Agrison), alleging breaches of the Australian Consumer Law (ACL) for making false or misleading representations to their customers. Agrison supplies a range of farming equipment to Australian customers, including branded tractors and wheel loaders, which sell for between $18,000.00 and $60,000.00.
 
What are consumer guarantees?
Consumer guarantees are a set of rules which apply to all goods and services purchased by consumers under the ACL. They apply automatically, regardless of any voluntary or extended warranty provided by a seller or a manufacturer of goods or services. They cannot be contracted out of.  If a product is sold which fails to meet a guarantee, the customer is entitled to a remedy.
For businesses, it is guaranteed that the goods they sell:

are of acceptable quality;
are fit for purpose;
have been accurately described;
match any sample or demonstration model;
satisfy any express warranty;
have a clear title (unless advised otherwise), have a right to possession and have no hidden security interest against them;
have spare parts and repair facilities reasonably available for a reasonable period of time (unless advised otherwise).

For manufacturers and importers, it is guaranteed that their goods:

are of acceptable quality;
have been accurately described;
satisfy any manufacturer’s express warranty; and
have spare parts and repair facilities reasonably available (unless advised otherwise).

Guarantees by Agrison
The ACCC investigated Agrison’s conduct after receiving a number of complaints from customers that their machinery had serious defects which they were unable to get repaired. Since August 2017 Agrison has made numerous warranties on their website, in print and on social media about their after-sales service network, accessibility to spare parts and the availability of timely after sales services where Tractors need repairs. The ACCC has alleged that all of these warranties were false and misleading.
The representations made by Agrison include:

Tractors come with a five-year nationwide warranty.  In the event that a tractor is defective, it would be repaired at no cost to the customer, regardless of their location in Australia.
Agrison has a national service network which is available to customers requiring after-sales service or repair staff throughout all of Australia.
Agrison offers timely after-sales service to customers in the event of a defect or problem with a tractor.
Customers can obtain all necessary tractor spare parts within a reasonable period of time (Parts).

What are the alleged breaches?
The ACCC alleges that by making the representations listed above, Agrison engaged in conduct that was either misleading or deceptive, or false or misleading for the following reasons:

In relation to the five year warranty, this was limited to the replacement of parts only and did not include all parts.
The national service network was not available to provide after-sales service or repairs throughout Australia.
Agrison had no national service network available to provide after sales service or repairs throughout Australia and had no training, policy, guidance or instructions in place for employees relating to requests for after-sales support, nor did they keep track of records or notified defects. Some customers were unable to obtain service for their tractors within a reasonable time frame or at all.
Agrison did not record the number of units of each spare part in stock at any given time and certain customers were unable to obtain the requested spare parts in a reasonable time frame or at all.

As a result of the above, the ACCC is seeking orders including declarations, injunctions, pecuniary penalties and costs.
Reap what you sow: what can you learn from the ACCC’s allegations?
The matter is yet to be heard by the Court and we will provide an update once the matter is resolved.
In order to avoid the risk that the ACCC will pursue your business for a breach of a guarantee, it is important to remember that:

Any misleading claims about the availability of spare parts or the effect of any warranty will be a breach of the ACL.
Failure to meet consumer guarantees will entitle consumers to a remedy, whether this be in the form of repair, replacement, refund or compensation for any consequential loss.

McCabe Curwood’s Litigation and Dispute Resolution group has experience in advising our clients in relation to their obligations under the Australian Consumer Law, including statutory guarantees, to ensure that you minimize the risk of being pursued by the ACCC. Get in contact with us today.
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In a recent win for insurers, the NSW Supreme Court considers whether a watercraft-related accident can trigger a defendant’s home and business policy. The decision provides useful commentary on the requirements to join insurers to proceedings as well as how courts will interpret common insuring clauses.
 
Authors: Gerry Tzortzatos, Renee Magee
Judgment date: 24 November 2020
Citation: Tasker v Munro [2020] NSWSC 1674
Jurisdiction: NSW Court of Appeal
Principles

The requirements to join insurers to proceedings is three-fold: an arguable case against the defendant, an arguable case a policy responds, and the defendant’s inability to meet a judgment: section 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (the Act)
While the threshold to grant leave under s 5 of the Act is low, the Courts are averse to do so where claims are clearly excluded from the policy based on undisputed facts or where the case against the defendant is untenable

Background
The principal proceedings involved a negligence claim brought by the plaintiff for catastrophic injuries he sustained after diving into shallow water from the defendant’s houseboat at Nambucca River. As the defendant was impecunious, the plaintiff sought leave to join the defendant’s home insurer, NRMA, as well as his business insurer, Liberty, to the proceedings.
The NRMA policy provided cover for “injury to someone else… in an incident that takes place in your home or at the site for which you or your family is responsible as an owner or occupier of your home or the site”. The plaintiff argued NRMA’s home policy ought to respond as the act of negligence (failing to warn of the risks of diving into water of unknown depth) occurred at the defendant’s home prior to boarding the houseboat.
The Liberty policy provided cover for “injury as a result of an occurrence in connection with the insured’s business”. The Plaintiff argued that because the houseboat carried the same name as one of the defendant’s defunct registered business names and may have been used to promote his business, this ought to fall within the policy’s meaning of an injury incurred “in connection with” the business.
In respect of similar watercraft exclusion clauses in both policies, the plaintiff argued the houseboat was not in use at the time of the accident as it was moored and the liability arose from the defendant’s failure to adequately warn and control his passengers rather than the use of the houseboat.
NRMA opposed the joinder for three reasons. Firstly, it argued the insuring clause was not triggered as the accident had not occurred at the defendant’s property, but rather several kilometres away. Secondly, the policy contained an exclusion clause for accidents arising out of the use or ownership of watercraft. Finally, there was no case to meet as the risk of harm was obvious. The plaintiff ought to have known diving into water of unknown depth carried a risk of injury, especially when he knew the boat was moored in shallow water.
In denying its policy responded, Liberty maintained the defendant’s business (sand extracting) had nothing to do with the plaintiff diving off the houseboat. In any event, its policy also contained a watercraft exclusion clause similar to NRMA’s that would have excluded cover for the accident.
Decision
The Supreme Court1 refused to grant the plaintiff leave to join NRMA and Liberty to the proceedings as it found not only did neither policy respond but there was also no arguable case against the defendant. The substance of the plaintiff’s case, namely that the defendant had a duty to warn him of an obvious risk of diving into water of unknown depth2, was untenable.
In relation to the NRMA policy, the Court found that the territorial limitation in the policy would not be overcome by the fact that a breach of duty of care occurred at the home if the incident did not also occur at the home.
As for the Liberty policy, while there was insufficient evidence to suggest the business was connected to the use of the houseboat on this occasion, the Court held this was ultimately a matter to be determined at trial where all of the evidence on this issue could be heard.
With regards to the exclusions, the Court found that irrespective of whether the insuring clauses were triggered the watercraft exclusions would have operated to exclude cover. The Court rejected the plaintiff’s contention the boat had ceased to be a watercraft by virtue of it being stationary noting that, of its very nature, use of a watercraft contemplates recreational activities in any form upon the adjacent waterways.
Why this case is important
Insurers should be reassured that Courts are not minded to grant joinders as simply a matter of course. The Act is intended to safeguard insurers from being unjustifiably joined to proceedings. Whilst the threshold to join insurers may be low, an often ill-considered and over-simplified requirement is for the plaintiff to prove it has an arguable case against the defendant.
The case also demonstrates the correct interpretation of a common form of insuring clause in home policies.  Specifically, there is a geographic prerequisite regarding the location of the incident which caused the injury, rather than negligence which caused the incident.
The authors acted for NRMA in these proceedings.

1 Justice Harrison
2 Following from cases such as Wyong Shire Council v Vairy [2004] NSWCA 247 and Laoulach v Ibrahim [2011] NSWCA 402
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On 19 November 2020, the ACCC commenced Federal Court proceedings against Australasian Food Group Pty Ltd, trading as Peters Ice Cream (Peters), alleging it engaged in conduct in contravention of section 47(1) of the Competition and Consumer Act 2010 (Cth) (the Act), which hindered or prevented competition for the supply of single-wrapped ice creams to national petrol and convenience (P&C) retailers.
 
As all Australians would be aware, Peters is one of the largest suppliers of single serve ice cream products in Australia, including brand names such as “Drumstick”, “Maxibon” and “Frosty Fruits”. Peters uses PFD Food Services Pty Ltd (PFD), along with its frozen transport trucks, to distribute its ice-cream products to P&C retailers throughout Australia – including, for example to Woolworths, Coles Express, Caltex and 7-Eleven.
The alleged conduct
The ACCC allege that between about November 2014 and December 2019 (the Relevant Period), Peters engaged in exclusive dealing by entering into and giving effect to a distribution agreement with PFD, in which Peters supplied its ice cream products on the condition that PFD would not distribute competing ice cream products to other areas in Australia (without Peters’ consent).
During the term of the distribution agreement, PFD made requests to distribute competing ice cream products, but these requests were rejected by Peters. In its Concise Statement filed to commence these proceedings, the ACCC referred to the example of Regal Cream Products Pty Ltd (Bulla), who during the Relevant Period had sought to obtain distribution from PFD to Caltex and Woolworths. Allegedly, PFD told Bulla that, after checking with Peters, it was unable to distribute Bulla’s products due to the exclusive arrangement with Peters. Bulla was then unable to find another commercially viable way to distribute its products, and accordingly did not distribute its products to national P&C retailers. ACCC argues that “but for the exclusive dealing agreement, other new entrants, such as Bulla, would or would likely have entered or expanded in the market and competed substantially against Peters.”
The ACCC alleges that, for new entrants in this market, PFD was the only distributor capable of distributing single-wrapped ice cream products to national P&C retailers on a commercially viable basis (as other distributors did not have a national frozen food route to these retailers). Therefore, new entrants would incur the substantial cost of establishing their own distribution network to distribute these types of products nationally. ACCC argues that this conduct effectively raises the barriers of entry, hindering or preventing potential new entrants into the market.
It is also alleged that a substantial purpose of Peters engaging in this conduct was to protect its market position from competitors, being one of only two major suppliers of single-wrapped ice creams, who together held a combined market share of over 95% during the Relevant Period.
As the ACCC Chair Rod Sims stated in the ACCC’s media release, “We allege that this conduct reduced competition, and may have deprived ice cream lovers of a variety of choice or the benefit of lower prices when purchasing an ice cream at one of these stores”.
The legal position
As per section 47(1) of the Act, a company is not, in trade or commerce, to engage in the practice of exclusive dealing.
Exclusive dealing arises if the company supplies, or offers to supply, goods or services (including set at a particular price or offered as a discount, allowance, rebate or credit) on the condition that the supplier (or a related body corporate of the supplier):

Will not (or will not to a certain extent), acquire or re-supply goods or services directly or indirectly from a competitor of the supplying company;
Will not (or will not to a certain extent), re-supply goods or services to:

any person;
to a particular persons or classes of persons; or
in particular places or classes of places.

However, the above will only be classified as exclusive dealing in contravention of section 47(1) if the company’s conduct has the purpose, or has or is likely to have the effect, of substantially lessening competition (including if the conduct, in addition with other conduct of the same or similar kind, together has this effect).
As outlined above, it is the ACCC’s position that Peters’ contravened section 47(1) of the Act by its conduct in the Relevant Period having the purpose of substantially lessening competition (satisfying the criteria in section 47(10) of the Act) and engaged in exclusive dealing by:

offering to supply and/or supplying its ice-cream products to PFD on the condition that PFD would not re-supply/acquire its ice cream products to/from Peters’ competitors.
offering to acquire and/or acquiring distribution services with PFD on the condition that PFD would not supply distribution services for ice-cream products that competed with Peters to:

suppliers that distributed competed with Peters’ products; and/or
particular classes of places, namely the locations as defined in the distribution agreement.

Key takeaways
A contravention of section 47 of the Act for exclusive dealing can lead to high pecuniary penalties, being a maximum of:

$10,000,000 for corporations. However, noting that if the Court can determine that a “reasonably attributable” benefit was obtained, the Court can order a penalty of up to 3 times this value ($30,000,000), or if the Court cannot determine a benefit, can rather order a penalty of 10% of the corporation’s annual turnover in the preceding 12 months.
$500,000 for individuals.

Accordingly, ensuring your current business practices (such as your contractual arrangements) are not anti-competitive is incredibly important to avoid the scrutiny of the ACCC and the high penalties that can be imposed.
We await Peters’ response to the ACCC’s allegations and whether it concedes that it’s conduct was anti-competitive or what arguments it raises in its defence – so watch this space.
McCabe Curwood has extensive experience in assisting clients in relation to their obligations under the Competition and Consumer Act 2010 (Cth). Please get in touch with our Litigation and Dispute Resolution Group today to discuss any of the issues raised in this article.
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When a person becomes a bankrupt, they are legally obliged to fill out and submit a statement of affairs to their trustee in bankruptcy, for the purpose of disclosing all of the bankrupt’s assets, liabilities and recent transactions. This is designed to assist the trustee to identify realisable assets and to identify creditors who may be entitled to receive a dividend in the bankruptcy. But what happens when a bankrupt simply refuses to comply with this obligation?
 
The recent Federal Court decision of Quinn as trustee of the Bankrupt Estate of Philip Chill [2020] FCCA 2652 has reaffirmed the circumstances where the Court will make an order pursuant to s146 of the Bankruptcy Act 1966 (Act), permitting a trustee to distribute dividends to creditors who have proven their debts in the bankrupt estate, effectively dispensing with the requirement to obtain a statement of affairs from a bankrupt.
The facts
On 23 January 2020 a sequestration order was made in relation to the bankrupt’s estate. The trustee had written to the bankrupt requesting that he complete and file a statement of affairs, as required by s54(1) of the Act. The bankrupt refused to do this, arguing that the sequestration order had been made in circumstances involving fraud and collusion.
The trustee made a successful application to the Official Receiver requesting the issue of a s77CA notice on the bankrupt, compelling the bankrupt to file and serve a statement of affairs within 14 days of the notice being issued. The notice was served on the bankrupt on 26 February 2020. Failure to comply with a s77CA notice is an offence that is punishable by imprisonment for up to 12 months.
Having still not complied with the s77CA notice, and after the trustee had recovered $143,200 from the bankrupt’s bank account, the trustee was forced to file a Court application seeking an order that the administration of the bankrupt estate could proceed without a statement of affairs, and that payment could be made to the creditors identified at that point in time.
The amount recovered from the bankrupt’s bank account was such that all known creditor claims, and the trustee’s fees, could be paid in full.
Relevant principles
In reaching its decision to allow the distribution to proceed without a statement of affairs, the Court referred to the following as important principles which underscore the importance of proper disclosure by a bankrupt to the administration of an estate:

Where a sequestration order is made against a person in bankruptcy proceedings, the bankrupt has a legal obligation to complete a statement of affairs within 14 days.
A failure to do so results in a delay to the administration of the estate and additional unnecessary costs will be incurred by the trustee, which reduces the amount available to creditors. As such, the delay operates to the prejudice of known creditors.
An order made under s146 of the Act enables the distribution of dividends amongst the creditors of a bankrupt estate as if the bankrupt had filed a statement of affairs and named those creditors.
Adequate notice had been provided to the bankrupt of his obligation to provide a statement of affairs and of the trustee’s intention to file a Court application in the event that the bankrupt did not comply.

In this instance, and having considered the above principles, the Court was satisfied that an order pursuant to s146 of the Act should be made. The trustee’s costs in bringing the application were ordered to be paid from the bankrupt’s estate.
Takeaways
A trustee is obliged to take appropriate steps to recover property for the benefit of creditors and to administer the estate as efficiently as possible, including by avoiding unnecessary expense. However, in the case of non-compliant bankrupts, Court intervention may be unavoidable.
It should be noted that, ordinarily, if a bankrupt refuses to complete a statement of affairs, the three (3) year bankruptcy period does not start to run. This means that it is possible for a bankrupt to remain in bankruptcy for an indefinite period of time. In this particular case, an amount sufficient to pay all creditors and the trustees fees was recovered, which meant that there was no justification for the bankruptcy to remain on foot and it could be annulled.
This article is not legal advice. It is intended to provide commentary and general information only. Access to this article does not entitle you to rely on it as legal advice. You should obtain formal legal advice specific to your own situation. Please contact us if you require advice on matters covered by this article.
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The NSW Court of Appeal has considered the playing field of s 3B(1)(a) of the Civil Liability Act 2002 (NSW) (CLA) and confirmed that recklessness is insufficient to meet the threshold which requires subjective intent to cause injury.
 
Author: Demi McGowan
Judgment date: 18 November 2020
Citation: Dickson v Northern Lakes Rugby League Sport & Recreation Club Inc [2020] NSWCA 294
Jurisdiction: NSW Court of Appeal
Principles

Section 3B(1)(a) of the CLA is a two-limbed test. The first limb requires that the person does an intentional act. The second limb requires actual, subjective and formulated intention, that an act is done with the intent to cause injury or death.
If proved by the plaintiff, s 3B(1)(a) of the CLA provides an exclusion of the operation of the CLA and therefore, the operation of the statutory defences.
aThe Court has confirmed that recklessness is insufficient to meet the threshold that a person intended to cause injury.

Background
Mr Dickson (the plaintiff) sustained significant head injuries when he was subjected to a spear tackle by Mr Fletcher during a rugby league game. The plaintiff commenced proceedings in the District Court of NSW against Mr Fletcher and also North Lakes Rugby League Sport & Recreation Club Inc (the Club) alleging that the Club was vicariously liable.
Notwithstanding Mr Fletcher conceded that the spear tackle was an intentional act, the primary judge found that the plaintiff failed to establish that Mr Fletcher intended to cause injury.
The plaintiff appealed against the fundamental finding that Mr Fletcher had not been shown to have acted with intent to cause injury. The question the Court of Appeal had to answer was whether Mr Fletcher intended to cause injury and therefore, whether the operation of the CLA was excluded by reason of s 3B(1)(a).
If s 3B(1)(a) was applicable, the relevant provisions of the CLA including the obvious risk of a dangerous recreational activity defence under s 5L would not be available to Mr Fletcher and the Club.
Decision
The Court of Appeal upheld the primary judge’s decision that Mr Fletcher did not intend the injury sustained by the plaintiff. Although evidence established that Mr Fletcher acted recklessly, the Justices of the Court of Appeal, in separate judgments, all found that recklessness was not sufficient to establish intent to injure.
Usefully, her Honour Simpson AJA held that intent to cause injury “means, at least, “actual, subjective”… [“formulated] intention”, to which the defendant has turned his or her mind. It does not include recklessness. It does not include imputed or presumed intention.” 1
Why this case is important
The decision adds clarity to the construction of s 3B(1)(a) of the CLA with the intent to cause injury being an actual subjective intent. Recklessness is insufficient.
If intent to cause injury in s 3B(1)(a) has a lower threshold such as recklessness or presumed intention, many sports or other recreational activities to which the CLA is clearly designed to apply would not be afforded the protection of s 5L.

1 [186]
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In another victory for the obvious risk defence, the Court of Appeal delivers a judgment that highlights the importance of correctly formulating the risk of harm when distinguishing between foreseeable and obvious risk.
 
Author: Renee Magee
Judgment date: 23 October 2020
Citation: Tapp v Australian Bushmen’s Campdraft & Rodeo Association Ltd [2020] NSWCA 263
Jurisdiction: NSW Court of Appeal
Principles

The broader a risk of harm can be characterised, the more likely the obvious risk defence will prevail
The risk of harm must be characterised with enough particularity to include the source of potential injury (whether the risk is foreseeable) as well as the reason that injury occurred (whether the risk is obvious to a reasonable person in the plaintiff’s position)
Liability will attach where the kind of risk of harm that materialised was foreseeable to the recreational provider but not obvious to the participant.

Background
The plaintiff was an experienced rider competing in a campdraft event organised by the defendant when she fell from her horse and suffered severe injuries. She alleged her fall was caused by a deterioration in the arena’s surface which the defendant knew to be slippery and unsafe.
The primary judge concluded the plaintiff was engaged in a dangerous recreational activity within the meaning of s 5L of the Civil Liability Act 2002 (NSW) and found the defendant had no reason to warn the plaintiff of the risk of falling from her horse whilst she was competing. The risks and inherent complexities involved in campdrafting – an activity that sees a rider manoeuvre cattle across a course – were obvious.
The primary issue on appeal was whether the defendant was in breach of its duty of care and if the risk of harm was indeed obvious.
Decision
In a 2-1 majority, the Court of Appeal upheld the primary judge’s decision.  It found the plaintiff failed to demonstrate precisely what had caused the surface to deteriorate, making it unclear what precautions the defendant should have taken. Whilst other competitors had fallen from their horses earlier in the day, it was not known if these were caused by the surface’s condition or some other means. As the cause of the fall had not been properly identified, there was nothing to suggest the risk was foreseeable or that the defendant had breached its duty of care.
In relation to the obvious risk defence, the Court stated that even if the plaintiff had shown how the surface had deteriorated, it ought to have been obvious to a seasoned campdrafter that the ground would have worn away after other competitors had ridden through the arena, increasing the risk of a horse slipping and falling.
In a dissent judgment, McCallum JA considered there were various reasons why someone may fall off a horse that are unlikely to be obvious to a person in the plaintiff’s position, particularly when the plaintiff was only nineteen at the time and less likely to be attuned to the risks involved. He thought there was sufficient evidence the defendant was aware the ground was unsafe and ought to have been found in breach of its duty of care.
Why this case is important
The decision follows a recent line of obvious risk cases where the Court of Appeal has adopted a broad interpretation of the obvious risk defence. Recreational providers should be reassured by the Courts reluctance to impose liability where it can be reasonably expected for participants to discern the risks of harm involved and bear their own responsibility. With that said, it is important providers and their insurers keep in mind this will not extend to circumstances where (without the benefit of hindsight) the kind of risk of harm was foreseeable to the provider but not obvious to the participant. In these cases, liability is likely to be imposed.
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The Federal Court of Australia considered what conduct can constitute a breach of the duty of utmost good faith in the recent decision of Australian Securities and Investments Commissions v Youi Pty Ltd [2020] FCA 1701.
 
Authors: Priya Paquet, Mark Frewen-Lord
Judgment date: 26 November 2020
Citation: Australian Securities and Investments Commissions v Youi Pty Ltd [2020] FCA 1701
Jurisdiction: Federal Court of Australia
The decision concerned the conduct of Youi Pty Ltd (Youi) in managing a property damage claim and subsequent delays which followed. While not disputing its failure to act reasonably in the circumstances, Youi had its conduct become the subject of a declaration that it breached s13 of the Insurance Contracts Act 1984 (ICA) relating to its handling of a claim and use of builders the subject of several complaints.
Principles

Dishonesty is not a prerequisite to establishing a breach of the duty of utmost good faith imposed on parties to a contract of insurance by s13 of the ICA. Complying with s13 requires something more than simply acting honestly or acting with mere good faith.
An insurer’s statutory obligation to act with utmost good faith requires an insurer to act consistently with commercial standards of decency and fairness with due regard to the interests of an insured.
The Federal Court has power under s21 of the Federal Court of Australia Act 1976 (Cth) to grant declaratory relief to parties without considering its powers under the Corporations Act 2001 (Cth).

Background
Ms Murphy and Mr Orr (together referred to as the claimants) held a policy for home building and contents insurance with Youi for their home in Broken Hill (the property). The property was the subject of severe hail damage which affected the claimants’ roof, veranda and contents on 11 November 2016.
They made a claim under the policy on 25 January 2017, following which Youi requested that ProBuild Australia Pty Ltd (PA) assess the damage and provide a quote for rectification. A property inspection report was provided by PA to Youi on 10 February 2017.
Youi received three complaints between 6 February 2017 and 3 May 2017 from two other claimant parties regarding the quality of work and delays with respect to repairs carried out by PA in the Broken Hill area. As a result of the complaints, Youi suspended the use of PA’s services as of 19 May 2017 but failed to remove PA from this particular claim.
PA did not commence work on the property until 4 October 2017 and failed to carry out those repairs properly, which further delayed the process. The claimants lodged a complaint on 2 November 2017 which went unaddressed until 18 May 2018.
ASIC, in its capacity as the statutory regulator, brought proceedings against Youi seeking declaratory relief for breaches of its duty of utmost good faith pursuant to s13 of the ICA. ASIC alleged that Youi failed to handle the claim with full and frank disclosure, fairness, and in a timely manner.
Decision
As Youi had made formal concessions as to its conduct and the legal consequences, the primary question in issue concerned the appropriate form of declaratory relief.
Allsop CJ followed the findings in CGU Insurance Ltd v AMP Financial Planning Pty Ltd [2007] HCA 36 that acting consistently with commercial standards of decency and fairness was most apt to inform why Youi had breached its duty of utmost good faith in the circumstances.
On that basis, declaratory relief was granted to ASIC in that Youi was declared to have breached s13 of the ICA for failing to:

take reasonable steps to inform the claimants that PA was the subject of numerous complaints and was no longer an acceptable repairer to Youi;
give the claimants an opportunity to request a repairer other than PA;
terminate the engagement of PA;
take reasonable steps to ensure builders commenced repairs on the property;
take reasonable steps to effect make safe works to the property;
respond to the claimants in a timely manner, thereby delaying the repairs.

Why this case is important
Delays in the claims process are not unusual but insurers can fall foul of s13 of the ICA if they do not ensure that care is taken to ensure that its agents or subcontractors’ actions do not lead to a breach. Insurers can avoid such action by ensuring that their insureds are provided full and frank disclosure and repairs are undertaken in a timely manner.
This case also serves as a reminder that ASIC has the power to bring an action against an insurer as the statutory regulator. While the Corporations Act 2001 provides for such powers, s14A of the ICA gives ASIC the specific power to bring an action against an insurer who failed to comply with the duty of the utmost good faith in the handling or settlement of a claim or potential claim.
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In the recent case of Carnemolla v Arcadia Funds Management [2020] NSWCA 308, the NSW Court of Appeal considered the duty of a shopping centre manager to maintain a dry floor surface.
 
Author: Demi McGowan
Judgment date: 27 November 2020
Citation: Carnemolla v Arcadia Funds Management [2020] NSWCA 308
Jurisdiction: NSW Court of Appeal
Principles

An occupier of commercial premises owes a duty to take reasonable care to avoid a foreseeable risk of injury to a lawful entrant who is using reasonable care for his or her own safety.
The duty of an occupier of a commercial premises is to take reasonable steps to ensure that the floor surface is dry and not slippery which necessitates an adequate system for identifying and cleaning up of spillages.
The plaintiff bears the onus of proving that a floor surface such as terrazzo is unsuitable and should be replaced. This requires an assessment of s 5C(a) of the Civil Liability Act 2002 (CLA).

Background
The plaintiff claimed damages for injuries sustained when she slipped and fell on terrazzo tiles outside a public bathroom at Neeta City Shopping Centre, Fairfield on 29 September 2016. The plaintiff, by her mother as tutor, commenced proceedings in the District Court of NSW against Arcadia Funds Management Ltd (the defendant) as the manager and occupier of the Shopping Centre. At the time of the plaintiff’s accident, the defendant engaged Asset Cleaning Services Pty Ltd (Asset) to provide cleaning services. Asset was not a party to the proceedings.
The primary judge found no liability on the part of the defendant and concluded that the plaintiff did not fall on water, or alternatively, did not discharge her burden to establish that she did. The plaintiff’s claim was dismissed with costs reserved.
The plaintiff appealed the primary judge’s findings on liability and the refusal of the primary judge to consider future attendant care services. The plaintiff argued that she experienced difficulties in giving evidence due to her intellectual disability and psychological impairment.
Decision
The Court of Appeal upheld the primary judge’s decision and found that the primary judge was entitled to reject the plaintiff’s claim that there was water on the floor and in the alternative, if there was water, it was not a result of a breach on the part of the defendant.
In dismissing the Appeal, the Court reasoned that in the absence of direct evidence from the plaintiff or her mother that the plaintiff slipped on water and that a contemporaneous incident report made no reference to water being present following an inspection within two minutes of the plaintiff’s accident, the primary judge was justified in concluding that there was insufficient evidence of the cause of the plaintiff’s accident. The Court also considered this in light of the plaintiff’s evidence of the mechanism of her fall being inconsistent with a slip and that there were no previous incidents in the area.
The Court clarified that the duty of the defendant as occupier was to take reasonable steps to ensure that the floor was dry and not slippery which necessitated a system for identifying and cleaning up of spills. There was no criticism of the cleaning system by the plaintiff and further it was admitted to be adequate. In this respect, the Court gave particular regard to a Notice to Admit issued by the defendant prior to the trial seeking admissions in respect of the adequacy of the cleaning system and the timing of the plaintiff’s fall in respect of the last inspection.
The plaintiff’s liability expert, Mr Ian Burn agreed that the terrazzo floor surface on which the plaintiff slipped was appropriate if the surface was kept dry and was universally used in shopping centres in NSW. Should the plaintiff have attempted to advance an argument that the terrazzo flooring was not suitable in a common area, the Court concluded that the evidence of the costs and burden of replacing the terrazzo floor would be required, of which there was none.
Why this case is important

This case reaffirms that when determining questions of breach, the Court must have reference to s 5B of the CLA and the plaintiff carries the onus.
We are reminded what is required by an occupier of a shopping centre is not a duty to keep the floor dry at all times but rather, to take reasonable steps to minimise the risk of harm by ensuring an adequate cleaning system is in place. The frequency of inspections required will depend on the inherent likelihood of spillages to occur.
If an argument of the suitability of the floor is advanced, the plaintiff bears the onus of providing evidence of the burden of taking these precautions in line with the decision of Mercouris v Westfield Shopping Centre Management Co Pty Ltd (2000) NSWCA 79.

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Can a party be found to have breached a duty of care in the absence of evidence as to specific precautions which should have been taken to obviate or reduce the risk of injury? The Court of Appeal recently explored this issue in Bauer Media v Khedrlarian [2020] NSWCA 288.
 
Author: Candice Ingleton & Leighton Hawkes
Judgment date: 18 November 2020
Citation: Bauer Media v Khedrlarian [2020] NSWCA 288
Jurisdiction: New South Wales Court of Appeal
Principles

Section 5B of the Civil Liability Act 2002 (NSW) provides that a person is not negligent in failing to take precautions against a risk of harm unless the risk was foreseeable, the risk was not insignificant and, in the circumstances, a reasonable person in the person’s position would have taken those precautions.  Such precautions need to be clearly identified by a plaintiff.
To establish breach, it is necessary to provide evidence as to specific precautions which should have been taken which would have obviated or reduced the risk of injury to an acceptable level, whilst considering the burden of taking those specific precautions.
Admissibility issues arise where an expert liability report fails to identify, with precision, the nature of the precautions which should have been taken, and with reference to how they may have been successfully implanted, particularly in a ‘system of work’ case.

Background
The plaintiff was employed by a labour hire company known as Demand Personnel Pty Ltd (Demand).  Demand entered into a contract with Bauer Media Pty Ltd (Bauer), whereby Demand provided to Bauer the services of various of its employees.  Bauer’s business involves the publishing, collating, packing and transporting of printed material, including magazines.
The plaintiff worked at Bauer’s premises filling orders for magazines to be dispatched to newsagents.  Her role primarily involved selecting the number of magazine titles required for each order and placing them on a conveyor belt.  She otherwise spent time on a manual bench lifting and moving piles of magazines to a stationary workbench from a nearby pallet.
It was alleged that during her employment with Demand, she developed a sudden onset of pain in her neck and right shoulder, and subsequent injury to both arms and wrists, from repetitively lifting bundles of magazines.
In 2016, the plaintiff commenced proceedings against Bauer and Demand (substituted by the Workers Compensation Nominal Insurer) in the NSW District Court.  The question in the proceedings was whether Bauer, Demand, or both, breached the duty of care each owed to the plaintiff.
The earlier decisions
In 2017, an Acting Judge of the District Court (the First Judge) directed the entry of judgment in favour of the plaintiff against both Bauer and the Insurer, apportioning two thirds liability to Bauer and one third liability to Demand.  In essence, the First Judge made findings as to the system of work implemented based on speculative evidence from an expert, who only interviewed the plaintiff and did not conduct any form of view of Bauer’s premises.  Bauer appealed the orders made by the First Judge.
In 2018, the NSW Court of Appeal ordered that Bauer’s appeal be allowed and set aside the orders made by the First Judge.  It held that the plaintiff failed to establish evidence of a breach of duty by Bauer based on its system of work, but did not consider it was in sufficient position to decide the matter.  The proceedings were remitted back to the District Court for retrial.
In 2019, a different Acting Judge of the District Court (the Primary Judge) again directed the entry of judgment in favour of the plaintiff against both Bauer and the Insurer, apportioning 85% liability to Bauer and 15% liability to Demand.  Once again, the decision was primarily based on the same expert opinion considered by the First Judge.  Bauer again appealed the orders made by the Primary Judge.
The 2020 appeal
Bauer appealed primarily on the basis that the Primary Judge erred in concluding on the available evidence that there were breaches by Bauer of its duty of care owed to the plaintiff and that any injury suffered by the plaintiff was caused by any such breach.
Over the objection by Bauer, the Primary Judged admitted into evidence an expert liability report concerning the systems in place at Bauer’s premises and the proper safe work systems that should have been in place during the plaintiff’s employment.
The plaintiff sought to support the findings of the Primary Judge that the system of work created a risk because it permitted repetitive work by the plaintiff without implementing “job rotation”, which was one of the precautions recommended in the expert report.
Bauer submitted that it was necessary for the plaintiff to propound a particular regime of “job rotation” that, if followed, may have obviated or minimised the risk of injury and that that was necessary in order that the further question of causation might be addressed by medical evidence.
Although the Primary Judge was not persuaded by this argument, the Court of Appeal accepted that the expert report should have been rejected as it failed to identify with precision the nature of the precautions which should have been taken by Bauer.
The Court of Appeal also accepted that the Primary Judge failed to explain what was meant by “job rotation” when he found the absence of such “job rotation” rendered the system of work unsafe.  Neither the expert report nor His Honour explored precisely what rotation was feasible, or whether the adoption of such “job rotation” would have prevented the plaintiff’s alleged injuries.  Additionally, there was no examination of the question of the cost to either defendant of such “job rotation”.
In essence, the Court accepted Bauer’s contentions (made consistently since the hearing before the First Judge) that the expert had failed to consider all of the available evidence, including that from Bauer, and instead relied on assumptions obtained from interview with the plaintiff, which ultimately could not be substantiated.  As such, his views were no more than mere speculation.
In the absence of evidence capable of supporting a finding that any reasonable precaution would have averted the risk of injury from repetitive work, the Court of Appeal held that the Primary Judge erred in concluding that there was a breach by either Bauer of any duty owed to the plaintiff, and further erred in concluding that there was a causal connection between any breach of duty and the injuries alleged to have been suffered by the plaintiff.
The Court of Appeal unanimously dismissed the plaintiff’s claim against Bauer (and also against Demand) and ordered the plaintiff to pay its costs of the entire proceedings.
Why this case is important
This case serves as a reminder that breach of a duty of care will not be established where the principles in section 5B of the Civil Liability Act 2002 (NSW) are not met.  A defendant will not be found to have breached the duty it owed where a plaintiff is unable on the evidence to establish what precise ‘precautions’ it ought to have adopted.
It also highlights the importance of expert liability reports identifying, with precision, the nature of the precautions which should be taken to obviate or reduce the risk of injury to an acceptable level.  Vague and unsupported theories as to what precautions may have alleviated a risk is not sufficient, the precautions need to be articulated with reference to how they may have been successfully implemented by a defendant, particularly as occurred here, in a system of work case.

The authors acted for Bauer in each of the proceedings, including the successful appeal.
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A recent decision in the Federal Court of Australia shows the importance of properly considering the particular wording used in a trust deed when exercising a power under it, and the adverse consequences that may flow if the rules of a trust are not followed to the letter.
 
This is something to keep in mind currently, as many rush to amend their trust deeds to exclude foreign persons as beneficiaries in order to avoid a land tax surcharge before the 31 December deadline.
The decision
The decision was Advance Holdings Pty Limited atf The Demian Trust v Commissioner of Taxation [2020] FCA 1479. One of the issues in the case was the Appointor’s power to appoint a trustee, with the Court taking a strict approach as to the wording used in the trust deed.
The relevant clause was:
“The Principal may at any time by notice in writing to the Trustee remove from office any or all of the Trustees or Trustee for the time being of this Deed and may by Deed appoint a new Trustee in its or their place to be the Trustee“
The Appointor tried to use this power to appoint a company called Advanced Holdings to act as an additional trustee of the trust, however the Court took the view that the power in the trust deed “requires one or more trustees to be removed and, that having happened, permits one or more trustees to be appointed”.
As no trustee was removed before Advanced Holdings was appointed as an additional trustee, the Court found that Advanced Holdings was never validly appointed as a trustee. On this basis, assets that were believed to be transferred to and held by Advanced Holdings as trustee of the trust were deemed to actually be held by Advanced Holdings in its own right and, as a result, income derived from the assets was assessable to Advanced Holdings as the taxpayer. The ability to distribute the income between the beneficiaries of the trust was lost, resulting in adverse tax consequences.
An example of a recent trust deed we worked on
In a recent matter we worked on, a client asked us to amend a trust deed to exclude foreign persons as beneficiaries of the trust.
The relevant amendment clause in the trust deed was:
“The Trustee may at any time by deed vary any provision of this Deed.”
We took the view that this power allowed the trustee to vary a provision already contained in the trust deed, but did not allow the trustee to add or remove a provision. As we were required to add a clause defining “foreign persons” as well as a clause excluding those foreign persons as beneficiaries of the trust, we first amended the amendment power to state that:
“The Trustee may at any time by deed vary any provision vary, revoke or add to the provisions of this Deed.”
Only once the amendment power was varied did we proceed to add the relevant clauses required to exclude foreign persons as beneficiaries of the trust.
Key takeaway
Ultimately, the Advanced Holdings decision shows that the Court will take a strict approach when interpreting a trust deed, and highlights the need to seek expert advice as to the particular wording of a trust deed when exercising a power under it. This is particularly important in relation to significant trust decisions, such as removing and appointing trustees or amending a trust deed.
The Private Clients group at McCabe Curwood specialise in advising clients in relation to discretionary trusts, such as amendments to exclude foreign persons as beneficiaries to avoid paying the foreign person land tax surcharge.
We are here if you would like to discuss your trusts or any other concerns, so please feel free to contact one of the solicitors in our Private Clients group. Alternatively, you can email Terry McCabe, the Principal of the group, directly at [email protected].  
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These days, it seems like every second person you speak to has a “side hustle”.  They’re driving a rideshare vehicle, selling essential oils, skincare or make-up, have an artisan stall at the local markets or online, create and deliver Instagram worthy share platters, provide graphic design services, or take photographs of newborn babies.  The gig economy has made these means of secondary income accessible to the masses via social media and other online platforms.  Gone seem to be the days of bartending or waiting tables on the weekend after your “day job”, although it is inevitable that this still occurs.
 
But can an employee lawfully engage in other gainful activities if they already have a job?  The answer depends on the nature of the employee’s employment and whether the side business or secondary work competes or otherwise interferes with it.
The Fair Work Commission recently determined that a regional accountancy and financial advisory firm was entitled to dismiss an employee who was conducting a consultant paraplanning business on the side on the basis that the undisclosed side business involved the provision of financial services similar to the operations of the primary employer.  Similarly, an employee who was dismissed after sending a LinkedIn message indicating that he was expanding his side hustle to a full-time practice was found to have breached the obligations he owed to his employer by virtue of soliciting work from their current clients.  Notably, the LinkedIn message sent to a number of his employer’s key clients stated that they could get his “prior big business experience at small business rates”.
By contrast, the dismissal of an employee for carrying on secondary employment while on annual leave was considered to be unfair, given no conflict of interest arose. In that case, a driver for a glass manufacturer performed freelancing driving work for a client of his employer, a supplier and installer of aluminium window and door installer, during 2 weeks of annual leave.  Despite the connection between the businesses and the fact the driver had been introduced to the opportunity to drive for the client during the course of his primary employment, there was no evidence that the driver’s work for the client would have otherwise been given to his employer and he did not perform the work on his employer’s time.
If an employee’s side hustle impacts their work performance or represents a safety risk due to fatigue or distraction, this may also give an employer cause to take action. The Fair Work Commission has previously found that a newspaper publisher was within its rights to terminate a newspaper machinist who refused to submit a secondary employment request form for the purposes of determining if it was unreasonable for him to drive an Uber outside of his work hours on the basis that the additional work may create a health and safety risk if he was tired when working night shifts on the printing machines.
Typically, undertaking secondary employment which does not encroach on the employer’s business does not contravene the implied contractual term of fidelity and good faith. However, often employment contracts contain a clause expressly prohibiting the employee from engaging in other work without the prior written permission of the employer. Should the employee then engage in secondary work, without first seeking permission, the employer could look to rely upon such a clause to discipline the employee for breach of contract.  Clauses of this kind will, however, typically be enforceable only to the extent that the prohibition on the secondary work is reasonably necessary to protect the business interests of the employer, for example from competition or the misuse of confidential, etc.
If an employer suspects that an employee is conducting a side business or undertaking other secondary work, it is necessary that they assess the nature of the conduct, and whether it amounts to grounds for disciplinary action. In order to make this assessment, it is necessary to establish the nature of the secondary work, including the products and services they offer, who their clients or customers are likely to be, when and where the work is conducted, and whether the employee uses any of the employer’s property, including confidential information or intellectual property.
Subject to the answers to the above questions, an employer may have a right to discipline, including terminate, an employee who carries on a side business or engages in secondary work.  But, typically, Australian employment law protects an employee’s right to carry on a business or engage in other work so long as it is not in competition with their employer’s business, they do not use their employer’s property, or it does not otherwise impact on their employment (because of, for example, implications for the employee’s or anyone else’s health and safety or because it interferes with their work for their primary employer).
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In April this year, the Fair Work Commission (FWC) published two contrasting decisions regarding applications by employers to reduce the amount of redundancy pay due to their incapacity to pay. These decisions were the first two of their kind since the COVID-19 pandemic (see our article here for further information). However, the FWC has recently quashed a decision to reduce a $12,000 redundancy payment for an award-covered employee to nil, ruling that the “incapacity to pay” provisions in the Fair Work Act 2009 (FW Act) do not apply when the entitlement to a redundancy payment arises from an alternative source such as an award.
 
Redundancy pay provisions in the FW Act
An employee whose position has been made redundant is ordinarily entitled to redundancy pay reflective of their period of continuous service with their employer, as prescribed under section 119 of the FW Act. That said, under section 120 of the FW Act, an employer may apply to the FWC to reduce the amount of redundancy pay payable to an employee, including to nil, if the employer cannot pay the amount (the “incapacity to pay” provisions).
However, the FW Act further provides that employees to whom an industry-specific redundancy scheme in a modern award or enterprise agreement applies are not covered by the redundancy pay provisions in the FW Act.
The JFM Civil Contracting decision
Background
JFM Civil Contracting Pty Ltd (JFM) operates in the building and construction industry and is covered by the Building and Construction General On-site Award 2010 (Award). Mr Fraser was employed by JFM under the Award for more than four years.
JFM experienced a severe reduction in business last year when it failed to renew contracts with Gold Coast City Council. On 11 November 2019, JFM issued a notice of redundancy to its employees advising the employees that they may be made redundant five weeks after the date of the notice.
More than five weeks after the date of the redundancy notice, Mr Fraser resigned from JFM as he was able to take up some casual work with another employer. Shortly after taking up work with the other employer, Mr Fraser requested his eight-week redundancy entitlement under the Award.
In the first instance,1 Commissioner Spencer granted a reduction of the $12,000 eight-week redundancy entitlement to zero pursuant to section 120(2) of the FW Act. The Commissioner found that even though Mr Fraser left JFM on his own accord, he was still entitled to redundancy pay given the industry specific redundancy scheme that is contained in the Award. This is due to clause 17.6 of the Award, which provides that an employee who leaves their employment once notice of termination has been given (due to redundancy) will still be entitled to a redundancy payment as if the employee had worked until the end of the notice period. However, JFM did not need to make this payment due to evidence which demonstrated its “stark incapacity to pay and to remain operational”.
On appeal
On appeal,2 the Full Bench of the FWC stated that the ability to make a reduction to redundancy pay under section 120 of the FW Act does not apply to employees covered by an award, but rather only employees to whom section 119 of the FW Act applies. The Full Bench held that as Mr Fraser’s entitlement to redundancy pay came from the Award and not section 119 of the FW Act, it had no authority to reduce his entitlement.
The FWC ultimately upheld the appeal and quashed the original decision.
What does this mean for employers?
The JFM appeal decision has provided further clarity on when an employer can make an application to reduce redundancy pay.
The FWC has confirmed that its powers under section 120 of the FW Act to reduce a redundancy entitlement are limited to employees whose redundancy entitlements arise under section 119 of the FW Act. Many awards simply provide that the redundancy provisions in the award reflect those in the National Employment Standards (i.e. the provisions in s119 to s123 of the FW Act) and in those cases given the entitlement to redundancy pay comes from the FW Act, an application under section 120 to reduce a redundancy payment would still be valid.
Whilst industry specific redundancy schemes in awards are relatively uncommon, given the number of redundancies that are occurring in the current environment and the difficulties some employers may have in being able to fund redundancy payments, it is important  before making a role redundant, that employers check whether the employee is covered by an award or enterprise agreement and, if so, whether that award or agreement contains an industry-specific redundancy scheme. If they do, employers will not be able to apply to the FWC to reduce a redundancy payment in these situations.
If you have any questions regarding your obligations to your employees in the wake of COVID-19, including any advice on redundancies, please get in touch with McCabe Curwood’s Employment group.

1 JFM Civil Contracting Pty Ltd v Mr Cameron Fraser [2020] FWC 2546.
2 Cameron Fraser; Construction, Forestry, Maritime, Mining and Energy Union v JFM Civil Contracting Pty Ltd [2020] FWCFB 4866.
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