The Bulletin - Law Society of South Australia

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CONTENTS

PROTECTION

6 Regulating the ‘buy now, pay later’ industry – By Alexandra Douvartzidis

8 Laws that shape the real estate landscape in A – By Dini Soulio

10 Helping small businesses resolve disputes – By Nerissa Kilvert

14 Consumers remain front and centre in credit enforcement

By Sarah Court

16 Resolving complaints about financial services – By Alexander Mackey

22 Protecting private data: How consumer law can play a role

By Joel Lisk

Executive Members

President: J Stewart-Rattray

President-Elect: J Marsh Vice President: A Lazarevich Vice President: M Tilmouth Treasurer: F Bell Immediate Past President: R Sandford Council Member: M Mackie Council Member: E Shaw

Metropolitan Council Members

T Dibden M Tilmouth

A Lazarevich M Mackie E Shaw J Marsh C Charles R Piccolo

M Jones G Biddle

Country Members

S Minney (Northern and Western Region) P Ryan (Central Region)

J Kyrimis (Southern Region)

Metropolitan Council Members

D Colovic E Fah

N Harb L MacNichol

L Polson M Young

Junior Members

A Douvartzidis

A Kenny

Ex Officio Members

The Hon K Maher, Prof V Waye, Prof T Leiman

Prof J McNamara

24 Collective bargaining exemptions in commerce for SMEs

By Alexander Mackey

28 Pelvic mesh, patient harm, consumer law & a clash of culture

By Joel Grieger

FEATURES & NEWS

18 Event wrap-up: Legal Profession

Dinner

34 After 26 years at the Society, Chief Executive Stephen Hodder bows out with pride

36 Access to justice for survivors of family and domestic violence means getting the first response right, every time –

By Dr Sarah Moulds

REGULAR COLUMNS

4 From the Editor

5

President’s Message

12 Risk Watch: The importance of keeping your experts independent

By Kate Marcus

26 Concerns about deductibility of self-education expenses incurred by employees – By Andrew Shaw

32 Wellbeing & Resilience: Rejecting the myth of the gladiator litigator

By Bec Sandford

KEY LAW SOCIETY CONTACTS

Acting Chief Executive Rosemary Pridmore rosemary.pridmore@lawsocietysa.asn.au

Chief Operations Officer

Dale Weetman dale.weetman@lawsocietysa.asn.au

Member Services Manager Michelle King michelle.king@lawsocietysa.asn.au

Director (Ethics and Practice) Rosalind Burke rosalind.burke@lawsocietysa.asn.au

Director (Law Claims) Kiley Rogers krogers@lawguard.com.au

Manager (LAF) Annie MacRae annie.macrae@lawsocietysa.asn.au

Programme Manager (CPD) Natalie Mackay Natalie.Mackay@lawsocietysa.asn.au

Programme Manager (GDLP) Desiree Holland Desiree.Holland@lawsocietysa.asn.au

THE BULLETIN

Editor

Michael Esposito

bulletin@lawsocietysa.asn.au

Editorial Committee

A Bradshaw P Wilkinson

S Errington D Sheldon

J Arena A Douvartzidis

C Borello B Armstrong D Misell M Ford

The Law Society Bulletin is published monthly (except January) by:

The Law Society of South Australia, Level 10-11, 178 North Tce, Adelaide

Ph: (08) 8229 0200

Fax: (08) 8231 1929

Email: bulletin@lawsocietysa.asn.au

All contributions letters and enquiries should be directed to

The Editor, The Law Society Bulletin, GPO Box 2066, Adelaide 5001.

Views expressed in the Bulletin advertising material included are not necessarily endorsed by The Law Society of South Australia. No responsibility is accepted by the Society, Editor, Publisher or Printer for accuracy of information or errors or omissions.

PUBLISHER / ADVERTISER

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Privacy reforms in spotlight after Optus hack

MICHAEL ESPOSITO, EDITOR

The Optus hack that has affected millions of Australians serves as yet another reminder about how seriously we should take our cybersecurity.

Even if the onus of protecting private data should be placed on the companies that collect it, we can also put measures in place to mitigate the damage if data is compromised.

A number of organisations, such as the Office of the Australian Information Commissioner, have published helpful tips for individuals to protect their personal information.

One particularly useful tool is credit monitoring. Credit monitoring agencies can look for changes in your credit report, and therefore identify mistakes relating to your personal records or possible breaches by bad actors. Optus have offered some customers a free 12-month subscription to credit monitoring firm Equifax but I would encourage everyone to investigate whether a credit monitoring service might assist them in protecting the integrity of their credit score and personal data.

The Optus saga has also raised questions about the adequacy of Australia’s privacy laws. The Privacy Act (Cth) is under review. Federal Attorney General Mark Dreyfus has suggested that one of the key reforms should be provisions that require companies to safely delete personal identification data once

collected, unless they absolutely need to hold on to it.

This would theoretically limit the amount of personal data that is vulnerable to attack.

The European Union has the most stringent privacy laws in the world, with harsh penalties for companies that don’t comply with privacy requirements, a broad definition of personal information, strict obligations on collecting data, and a right for consumers to request personal data be erased.

The Law Society has also called for a right to take legal action against parties for serious privacy breaches. While some commercial entities have argued that allowing people to sue for invasions of privacy could lead to frivolous or vexatious claims, the Society has suggested that this could be addressed by ensuring the threshold to trigger a potential action is suitably high enough to only capture serious breaches of privacy or failure to adequately protect privacy.

It is almost impossible to function in a modern society without entrusting government agencies, workplaces, businesses, or almost any other organisation with our personal information. In return, we should expect these entities to protect our information with best practice cybersecurity systems, and have laws that are robust enough to ensure these practices are being followed.

Getting the model right on litigation funding

JUSTIN STEWART-RATTRAY, PRESIDENT

Given the scale of the data breach, it is almost certain some readers of this column will have received an email from Optus informing them that their personal details were now in the hands of a cyber thief.

With millions of Optus customers being affected by the cyber-attack, Slater and Gordon has announced it is considering a class action against the telco.

Class actions are increasingly being used as a legal tool to settle disputes, especially in consumer protection matters involving a large volume of affected consumers.

Class actions are often bankrolled by litigation funders, and there has long been a philosophical debate about the role that litigation funding plays in access to justice.

Since 2006, litigation funding for class actions have significantly increased, and this has caused State and Federal Governments to grapple with how to deal with this emerging legal funding model.

Litigation funders would generally fund matters that have a high chance of success, and take a portion of the overall proceedings.

On one hand, litigation funding can be extremely beneficial as it enhances access to justice, enabling claimants to take action where they otherwise would not be able

to, and achieving some sort of remedy for one’s losses is surely better than no remedy at all.

On the other hand, the compensation to litigants is obviously diminished by the proportion that the litigation funder usually receives. There is very little regulatory oversight of litigation funding, meaning there is no real effective mechanism to evaluate the reasonableness of a litigation funding arrangement. In addition there is also often a lack of transparency for claimants around the details of settlements.

Many adversely affected consumers have relied on litigation funders to advance their rights. The value of litigation funders in enabling claimants to be justly recompensed is well recognised, but it is important that claimants are not exploited by these models.

The Federal Government is consulting on proposed Regulations that would reverse measures that were introduced by the previous Government which removed exemptions under the ‘managed investment scheme’ (MIS) provisions of the Corporations Act and required litigation funders to hold an Australian Financial Services License.

On 23 September 2022, the Society provided a submission to the Law Council of Australia with regards to the exposure

regulations, arguing that it was appropriate that litigation funders be exempt from MIS obligations, noting a recent Federal Court judgment that a third party funded class action was plainly not a managed investment scheme.

However, the Society made some further points about ensuring that the legal funding landscape prioritised access to justice and did not unfairly disadvantage the legal profession. The key points included:

• There needs to be some appropriate oversight of litigation funders;

• The Courts should have suitable powers to regulate class action funding;

• Law firms that bear the costs of litigation, thus effectively providing the same service as a litigation funder, would be subject to the same regulations and apply the same uplift fees as matters financed by litigation funds; and

• Non-profit litigation funders such as the Society’s Litigation Assistance Fund, should be exempt from the regulation of litigation funders.

It is clear that litigation funding is here to stay, and it plays an important role in facilitating access to justice. If we get the model right, we can maximise just outcomes for deserving claimants. B

Regulating the ‘buy now, pay later’ industry: Should BNPL products will regarded as credit?

ALEXANDRA DOUVARTZIDIS, ASSOCIATE, HWL EBSWORTH LAWYERS

We (arguably) live in a market driven by consumerism, and with that, we have seen the rise of new electronic instalment payment arrangements, known as “buy now, pay later” (BNPL) services. In recent years, we have seen a significant increase in the use (and acceptance of) these services in Australia.

BNPL services allow customers to purchase goods and services by paying part of the purchase price at the time of purchase. Consumers are subsequently given a period of time to make instalments to pay off the entire amount.1 What is distinguishable from the traditional lay-by method is that the consumer receives the purchase immediately, whereas the traditional lay-by model was that a consumer would not usually be allowed to have the product and/or service until the amount had been paid in full.2 Most BNPL services provide an app which automatically deducts the instalment amount from the customer. One of the main appeals of the BNPL service is that they often do not charge interest or fees if the customer pays on time.3

The growth of the industry has led to many consumer and financial groups calling for tighter regulations of the BNPL industry. CPA Australia’s digital economy policy lead, Dr Jana Schmitz noted that, ‘in Australia, there are almost 6 million accounts across a variety of buy now pay later platforms, and users made an average of 16.6 transactions at an average value of $151 last year”.4

The features of the BNPL services (such as only charging low and/or flat fees (rather than interest) to consumers) means

that BNPL services and providers currently fall outside the scope of the National Consumer Credit Protection Act 2009 (NCCPA). However, BNPL services do fall within the scope of ASIC’s relatively recent design and distribution obligations (Part 7.8A of the Corporations Act 2001 (Cth)), which require the industry to design fitfor-purpose products that meet consumer needs, and ensure that their products are reaching the right consumers.5

In an interview with the Australian Financial Review in February 2021, Financial Counselling Australia chief executive Fiona Guthrie stated that BNPL providers “run a mile at the mention of the word ‘credit’, telling their customers the service is all about better budgeting. What they tell retailers, however, is much closer to the truth – that [buy now, pay later] encourages people to spend more.’6 Ms Guthrie felt that what BNPL providers were really doing was turning a loophole in the law into a ‘gaping hole’.7

But not everyone sees the BNPL industry as necessarily problematic. The National Online Retailers Association (NORA) considers BNPL services as an improvement on the traditional ‘layby’ model. Amongst other things, NORA noted that one of the benefits was the reduction or absorption of Card Not Present fraud (which is possible when buyers give credit card details, for example online or by phone or email, and do not present their card).8 Others argue that the interest-free finance aspect is a win for consumers and allows them the flexibility to purchase larger items and pay over a set period of time.

How is the industry currently regulated?

As indicated previously, BNPL services currently fall outside of the scope of the NCCPA - meaning the industry is considered to be largely unregulated.

Currently, there is the BNPL Code of Practice (BNPL Code), which was voluntarily established in 2021 in response to a Senate inquiry which called for self-regulation to improve safeguards for customers, (with version two of the BNPL Code released in March this year).9 The BNPL Code is aimed at providing good consumer outcomes across the diverse range of business models operating in the BNPL industry, based on 2018 and 2020 reports prepared by ASIC.10

Despite the establishment of the BNPL Code, consumer advocates, including Financial Rights Legal Centre, Financial Counselling Australia, Consumer Action Legal Centre and CHOICE were of the view that the BNPL Code was insufficient for bringing the BNPL sector under Australia’s credit laws.11

Gerard Brody, CEO of Consumer Action Law Centre, said the BNPL Code had many deficiencies, including, amongst other things, that the BNPL Code did not appear to adequately address issues such disputed transactions, non-provision of product or goods and refund rights, or faulty or unsatisfactory goods and refund rights.12

Furthermore, the suitability provisions in the BNPL Code “don’t seem to be considering defaults, late fees, or consumer harm associated with going into default on other commitments as part of this requirement”.13

Regulating the industry in 2023

The consumer groups called on the Government to regulate the industry, highlighting that BNPL services were leading to an increased ‘number of people who end up in unaffordable debt through using them, poor industry hardship practices and excessive late fees. While the promise of BNPL is that they do not charge interest, for some people the cost of late fees or account keeping fees can be just as expensive as a credit card. BNPL providers also charge a fee to retailers of between 3% – 6%. These costs will be passed on to all consumers.’14

Come mid-2023, credit products will be regulated under the NCCP Act,15 with an announcement from the Minister for Financial Services, Stephen Jones, in June 2022 that BNPL will be regulated under in the NCCP Act.16

Mr Jones recently told the Australian Financial Review that bringing BNPL products within the scope of the NCCP Act “doesn’t mean that every single existing provision” would apply to the BNPL sector.17

Mr Jones indicated while he did not want to stop BNPL products from continuing to be used by Australians as a good way of managing cash flow and their purchases from payday to payday, he wanted to ensure that “it’s a safe product, and it’s appropriately marketed and provided”.18

Mr Jones went on to make several statements to the Guardian regarding BNPL services, noting that “Products like Zip and Afterpay, [are] a good innovation in the credit market,” and that he wanted

to stop arguing about whether BNPL providers are credit or not, noting it was “a dead-end street.”19 Mr Jones wants to focus on regulating BNPL providers within the credit space, and welcomed the fact that they have worked to establish the BNPL code - which they intend to “move to legislate it and fill any gaps.”20

So what happens from here?

It’s likely that BNPL providers will lobby against any significant change beyond the current scope of the voluntary BNPL Code, and will undoubtedly maintain its position that BNPL services are not ‘credit’. Other groups within the financial services industries and consumer groups will likely continue to push for tighter regulation in line with the NCCPA, including credit checks for amounts under $2,000 and tighter regulations on the amount of BNPL transactions a person can have at one time. B

6 Consumer groups attack the new buy now, pay later code of conduct, Australian Financial Review, James Eyers (24 February 2021) (https://www.afr. com/companies/financial-services/consumergroups-attack-the-new-buy-now-pay-later-codeof-conduct-20210224-p575ey) (accessed 27 September 2022).

7 Ibid.

8 Mrs Sandra Blake, Financial Counsellor, Financial Counselling Australia, Committee Hansard , 12 December 2018, p. 3.

9 Copy of the BNPL Code can be accessed here: https://afia.asn.au/files/galleries/AFIA_Code_ of_Practice_for_Buy_Now_Pay_Later_Providers. pdf

10 https://asic.gov.au/regulatory-resources/find-adocument/reports/rep-672-buy-now-pay-later-anindustry-update/

11 Buy now pay later sector must be regulated by Government not itself (https://consumeraction.org.au/buy-nowpay-later-sector-must-be-regulated-by-governmentnot-itself/) (accessed 27 September 2022).

12 Above n 6.

Ibid.

14 Ibid.

15 ‘If it looks like a duck’: Buy now, pay later to be treated as credit, Australian Financial Review, Michael Rapport (9 June 2022) (https://www.afr.com/politics/if-itlooks-like-duck-buy-now-pay-later-to-be-treatedas-credit-20220609-p5asfq)

Endnotes

1 Developments in the Buy Now, Pay Later Market, by Chay Fisher, Cara Holland and Tim West (18 March 2021).

Ibid.

Ibid.

4 Buy now, pay later needs greater regulation, says CPA, Accountants Daily, Josh Needs (August 2022) (https://www.accountantsdaily. com.au/regulation/17375-buy-now-pay-laterneeds-greater-regulation-says-cpa) (accessed 27 September 2022).

5 Buy now, pay later, regulate soon, James Morris, Rajaee Rouhani, Shen Low (June 2022) (https:// www.nortonrosefulbright.com/en/knowledge/ publications/9fd68114/buy-now-pay-laterregulate-soon) (accessed 27 September 2022).

Ibid.

Ibid.

Ibid.

Embattled buy now, pay later sector to be regulated under credit laws, The Guardian, Ben Butler (8 June 2022) (https://www.theguardian. com/business/2022/jun/08/embattled-buy-nowpay-later-sector-to-be-regulated-under-creditcard-laws) (accessed 27 September 2022) & One in seven buy now, pay later customers had more than 20 loans last year, Choice survey shows, The Guardian ( 16 September 2022) (https://www.theguardian. com/australia-news/2022/sep/16/one-in-sevenbuy-now-pay-later-customers-had-more-than-20loans-last-year-choice-survey-shows) (accessed 27 September 2022).

Ibid.

Laws that shape the real estate landscape in SA

DINI SOULIO, COMMISSIONER FOR CONSUMER AND BUSINESS SERVICES

The process of buying or selling real estate is complex and as such there are four key pieces of legislation administered by Consumer and Business Services (CBS) to help ensure that the real estate sales process is open and transparent.

CBS is keeping a sharp eye on the real estate industry this year to ensure compliance with legislation. Real estate has been identified by CBS as one of six key compliance priority areas for 2022/23 due to:

• the high volume of real estate transactions in South Australia

• the significant amount spent by purchasers of real estate and the potential risk to buyers and vendors if real estate agents operate outside the law

• intelligence gathered by CBS through compliance monitoring programs and complaints received from the public. Legal requirements regardless of whether a real estate professional has been engaged

The Land and Business (Sale and Conveyancing) Act 1994 sets out certain requirements for all land and property sales, including sales managed by real estate professionals and sales managed by vendors themselves. This includes disclosure requirements.

A Form 1 (vendor’s statement) must be available to interested buyers, providing information about things such as the property’s title, mortgages on the property, easements, zoning, tenancy lease details (where applicable) and the buyer’s cooling off rights. A buyer may be able to take legal action if information in the Form 1 is incorrect or insufficient.

A Form R3 (buyer’s information notice) must also be available. This is a checklist of things that could affect the buyer’s enjoyment, safety or value of the property

– e.g. asbestos, energy efficiency, rainwater connections, possible illegal additions and proximity to a live music venue.

Together the Form 1 and Form R3 assist prospective buyers to make an informed decision about whether to purchase a particular property.

Requirements for real estate professionals

The Land Agents Act 1994 sets out registration requirements for people working in real estate.

• Anyone who carries on business, or holds themself out, as a land agent must be registered as a land agent.

• Anyone who acts as a real estate sales representative must hold registration either as a land agent or as a real estate sales representative.

• Real estate auctioneers must be registered as a land agent or sales representative with the auctioneer condition added to their registration. Applicants must meet certain criteria in order to be granted registration – e.g. qualification requirements, police clearance and financial probity (for land agents).

The Land Agents Act also outlines a number of requirements for receiving and dealing with trust money.

The Land and Business (Sale and Conveyancing) Act stipulates that before an agent can act for a vendor, there must be a written contract (sales agency agreement) between the agent and the vendor. Before such an agreement can be made, the agent must provide the vendor with:

• a written guide explaining the vendor’s rights and obligations under such an agreement, and

• the agent’s estimated selling price of the property and information to support how the agent arrived at the estimate – e.g. recent sales data of similar properties.

Land valuation

A formal valuation may be required in certain circumstances, such as where an agent has made unsolicited contact with a vendor and subsequently entered into an agreement to sell the property without public advertising, or where an agent or associate wants to buy the property they are commissioned to sell (this is also known as beneficial interest or 24G). A formal valuation must be completed by a land valuer who has been approved by CBS. The approved valuer must ensure that the valuation is not biased in any way.

Land valuers are regulated under the Land Valuers Act 1994.

Auctions

The Land and Business (Sale and Conveyancing) Act sets out the rules for auctions, such as:

All bidders must be registered, and proof of identity is required as part of the registration process

Dummy bidding is prohibited. A vendor or a person acting on their behalf must not place a bid. However, up to three “vendor bids” can be made by the auctioneer provided they are less than the reserve price and clearly announced as a vendor bid.

Australian Consumer Law (ACL)

The Australian Consumer Law applies nationally in all States and Territories and to all Australian businesses. The ACL is administered in SA by CBS and forms part of SA’s Fair Trading Act 1987. Under the ACL it is unlawful for real estate agents to:

• give a false impression or lead buyers to a wrong conclusion or impression

• omit important information – e.g. in fine print disclaimers

• make false or inaccurate claims – e.g. about the price of a property, its location, characteristics or how the land can be used.

Enforcing the legislation

CBS has a proactive monitoring and compliance program for the real estate sector which includes unannounced visits to open inspections and auctions. CBS also conducts desktop monitoring and acts on reports from members of the public or industry participants by assessing and/or investigating potential breaches.

During 2021/22 there were 63 enforcement outcomes related to real estate conduct including:

• registration issues – e.g. persons working unregistered or outside the scope of their registration, not being fit and proper to hold registration, or agents employing a person who did not hold appropriate registration

• trust account and auditing breaches

• misrepresenting the price of a property, misleading or deceptive conduct

• acting improperly, negligently or unfairly

• business not being properly managed

• contract issues – e.g. failure to have a written contract, failure to sign an agreement, or failure to provide a signed agreement to a vendor

• non-compliant advertising – e.g. providing incorrect or misleading information, or failing to provide the agent’s registration number in advertisements

• failure to disclose a beneficial interest in the purchase of property.

Where there is a potential breach, the action CBS takes depends on many factors including the nature and extent of the activity, and potential or actual detriment suffered by vendors or purchasers.

Action taken in relation to the potential breaches during 2021/22 includes:

• 42 written warnings and 1 verbal warning

• 17 reminder letters

• 1 registration being cancelled, where

the person had committed an indictable offence

• 1 registration being downgraded, where the person was bankrupt and therefore unfit to hold registration to run a real estate business

• 1 written assurance received from a land agent who sold a property to a relative of an employee of the agency without obtaining approval from the Commissioner for Consumer Affairs. The agency provided a written assurance to CBS that it will comply with all its obligations under section 24G of the Land and Business (Sale and Conveyancing) Act (i.e. the beneficial interest provisions).

Assurances received are publicly available on the assurances register on the CBS website, along with the names of other traders who have provided written assurances that they will not engage in certain unlawful conduct. Failing to comply with an assurance is an offence (under section 81 of the Fair Trading Act) and the trader may be prosecuted.

Other enforcement tools are available to CBS and have been used previously, including public naming, expiation, disciplinary action or prosecution.

Past areas of concern to CBS were largely dealt with by major reforms to the Land and Business (Sale and Conveyancing) Act in 2008. This addressed practices such as dummy bidding at auctions and overquoting by agents to secure property listings with vendors. At the time a major education campaign was run for the real estate industry and a high level of compliance followed. Since then, CBS has run industry education campaigns around specific issues such as beneficial interest, underquoting and registration requirements.

The two strategic priorities for CBS compliance in relation to the

real estate industry this year concern misrepresentations about the price of properties and trust account issues. CBS wants to ensure that anyone engaging in unlawful real estate behaviour is identified and CBS welcomes reports from vendors, buyers or members of the public with information about a potential breach. Please report online at cbs.sa.gov.au/ contact-us or call CBS on 131 882.

CBS is committed to ensuring that all consumers have fair and honest dealings with those working in SA’s real estate industry.

Form 1 Review

Over the years the amount of information disclosed to purchasers via the Form 1 has increased significantly, making it long and complex. Vendors and purchasers struggle to understand it and many forms contain errors.

CBS engaged the University of South Australia to conduct a wholesale review of the form. The review sought to explore fresh approaches to ensuring purchasers receive all the information needed to make an informed decision within a reasonable time, while avoiding unnecessary burdens on vendors, real estate professionals and others who prepare the forms.

The final review report is currently under consideration by the Government and further information will be provided on the CBS website in due course.

More information

More information about the requirements for people who work in real estate is available at https://www.sa.gov. au/topics/business-and-trade/licensing/ real-estate

For more information about CBS’ compliance and enforcement priority areas please visit www.cbs.sa.gov.au/ compliance-priorities B

Helping small businesses resolve disputes

NERISSA KILVERT, SMALL BUSINESS COMMISSIONER

The value of the small business sector from an economic perspective is resoundingly clear.

Small businesses contribute around $45 billion into the South Australian economy annually and complement the activity of the State’s larger employers. They make a significant contribution to employment within our state, with the South Australian Centre for Economic Studies reporting that Small and Medium Sized Enterprises account for 45 per cent of employment across the State.

Small businesses account for more than a quarter of the State’s wages and salaries and almost a third of sales and service income.

But, just as importantly as the economic contribution, the small business sector plays a vital role in building, fostering and maintaining the social fabric and connection within our communities.

Small businesses have faced unprecedented challenges in recent years. Long lasting impacts of COVID-19 are still being experienced on a daily basis, and now small business owners are up against a perfect storm of balancing these with a raft of other issues:

• Many businesses are facing pressures from the rising costs of material, overheads and supply chain issues.

• Skills and labour shortages are affecting more than half of South Australian small businesses.

• Rising inflation, increases in interest rates and wage increases are creating stress and worry for small business owners.

As an independent voice, the Small Business Commissioner is an avid supporter and advocate for South Australian small businesses.

To step into the role of Small Business Commissioner at such a challenging time for the small business sector brings with it an even greater sense of responsibility to deliver on the mandate of the South Australian Office of the Small Business Commissioner (SASBC):

• to facilitate low-cost alternative dispute resolution processes between small businesses, and between small businesses and state or local government;

• to amplify the views, challenges and experiences of small business operators on issues that impact their ability to do business, including assisting them navigate complexity & challenges in dealings with state and local government bodies;

• to collaborate and engage with small business operators, governments, industry and the community to create a thriving business environment.

The types of enquiries and disputes that the SASBC can help with are far-reaching and include:

• tenancy disputes between small business operators and landlords (eg repairs and maintenance)

• business transactional issues (eg late or non-payment for goods and services, issues with the quality of goods supplied, non-delivery of goods)

• problems with business related motor vehicles and equipment

• franchising matters, and

• payment disputes.

The SASBC has a dedicated team of dispute resolution officers who work with small business owners and act as a conduit to negotiate an outcome with the other party to resolve their issue.

Where a dispute is not able to be resolved with the assistance of one of our dispute resolution officers, the SASBC can facilitate a more formal mediation with an independent mediator. Our panel of mediators are experienced in assisting parties to explore flexible, creative and business driven options to achieve a quick resolution of their dispute by agreement.

The goal of mediation is to help small businesses resolve issues and disputes in a way that is quick, low cost and efficient and help small businesses avoid the court system.

Another core function of the SASBC is to assist small business owners by

amplifying their views, challenges and experiences on issues that impact their ability to do business.

This can take on many different forms. It can include assisting small business owners navigate complexity & challenges in dealings with state and local government bodies or providing a foot in the door on matters involving government departments, through to providing independent advice and recommendations regarding small business issues to the Government of the day.

To wrap up, the most rewarding type of work is when you have a clear sense of making a difference, and as the SA Small Business Commissioner, I am fortunate enough to have a very unique opportunity to work with small business owners to do this through assisting them when they are faced with issues that affect such a major aspect of their lives and livelihood. I feel privileged and excited to be entrusted with this responsibility and am committed to serving and assisting small business owners by listening to their issues, amplifying their views, recommending strategies and solutions in response to challenges they face and facilitating low-cost dispute resolution when issues arise.

Nerissa completed a Bachelor of Laws and Legal Practice and is admitted to practise as a solicitor and barrister of the Supreme Court of South Australia and the High Court of Australia. She has also completed a Bachelor of Behavioural Science and a Diploma in Project Management.

Nerissa worked as a solicitor at the Crown Solicitor’s Office and in private practice, before working within regulatory environments.

Immediately prior to commencing as the Small Business Commissioner, she headed up the Regulatory Service section at Consumer and Business Services where she was responsible for achieving agreement with industry and other stakeholder groups on legislative reform proposals and managing the agency’s strategic engagement activities. B

The importance of keeping your experts independent

KATE MARCUS, RISK & CLAIMS SOLICITOR, LAW CLAIMS

The recent Federal Court case of New Aim Pty Ltd v Leung [2022] FCA 722 serves as a timely reminder as to the importance of the independence of experts and how interference from the solicitor instructing the expert can have a consequence of the entirety of a report being rejected. In this case it was further found that the entirety of the oral evidence provided by the expert should also be rejected. Consequently, the applicant was unable to prove a central issue in the dispute, and the applicant’s case failed. The case also serves to remind practitioners that experts have a paramount duty to remain independent and assist the courts impartially.

FACTS

New Aim Pty Ltd (the applicant) conducted a large-scale e-commerce business in Australia and sourced its products from a range of suppliers in China. The claim centred on the use of confidential information acquired by former employees during the course of their employment with the applicant and which had allegedly been provided to the other respondents. It was claimed that there had been a breach of the ex-employees’ equitable and other obligations not to reveal or use confidential information acquired during the course of their employment.

Queries in relation to independence of witnesses arose during the course of the trial. Ms Fangyun (Lindy) Chen was engaged as an expert witness for the applicant on account of her relevant industry experience and knowledge.

Whilst her evidence was objected to by the respondents the Judge admitted her report dated 8 March 2022 after ruling on the objections to it. The judge subsequently however rejected each of the statements of fact and the expression of opinions contained in the report.

Attached to Ms Chen’s witness statement of 8 March 2022 was her initial report. The witness statement indicated that the purpose of her engagement was to act as an independent expert witness engaged by the law firm Corrs for the applicant in the proceeding. The witness statement said, in part:

“When I was retained, Corrs provided me with a copy of the Federal Court of Australia Expert Evidence Practice Note (GPNEXPT), which includes the Harmonised Expert Witness Code of Conduct (Code).

I confirm that I have read, understood and complied with the Code in providing expert assistance in the proceeding (including in making this witness statement), and agree to be bound by it. A copy of the Code is annexed to the retainer letter I received from Corrs on 21 February 2022...” [at 46]

Attached to the witness statement were a number of documents which included a retainer letter from Corrs dated 21 February 2022, an instruction letter from the firm dated 7 March 2022 and her expert report dated 8 March 2022 (i.e. the day after receiving the letter of instruction).

The ability of Ms Chen to produce a detailed expert’s report which comprised 16 pages and 60 paragraphs within such a short timeframe was queried.

During cross-examination, Ms Chen initially indicated that she had prepared the report “within 24 hours”, but then disclosed that she had “a couple of conversations” with the applicant’s solicitors in the months prior to her letter of instructions. She further indicated that she had forwarded drafts of her proposed report for comments and that she had received comments from the applicant’s solicitors during a video conference. She conceded that she had received emails suggesting that she make changes to her draft report and in fact that portions of her report had been drafted for her. In further cross-examination Ms Chen accepted that her report was in fact a collaboration between her and the applicant’s solicitors.

REJECTION OF EXPERT EVIDENCE

Justice McElwaine indicated that in some circumstances it may be appropriate for an expert’s report to be settled in admissible form by someone else. This may arise if an expert is unfamiliar with the form and content requirements for an expert report. His Honour further indicated that the fact that an expert witness may agree with a form of words put to them may not detract from the expert’s independence or the reliability of the opinion expressed in some circumstances [at 61].

In this matter however Justice McElwaine said he was left in a state of uncertainty as to who was responsible for the drafting of which portions of Ms Chen’s report, and that it appeared

that most of the report was the product of drafting by the lawyers. The evidence indicated that

“most of the report was, at least initially, the product of drafting by the lawyers for the applicant, albeit in reliance upon some material of a non-specific nature that Ms Chen provided to the lawyers” [at 70]

Accordingly, Ms Chen’s report was rejected on the basis that it could not be relied upon. His Honour was not

“satisfied that the opinions expressed in the report by Ms Chen truly represent her honest and independent opinions and that no matters of significance [had] been withheld.” [at 77].

As a consequence, his Honour rejected all opinions and other factual material as set out in Ms Chen’s report of 8 March 2022. This had flow on consequences as to whether findings of fact could be made based on Ms Chen’s oral evidence. Justice McElwaine determined

“I have no confidence in the ability of Ms Chen to give credible, untainted and independent evidence and it would be quite wrong for me, having rejected the entirety of her written opinion evidence, to then proceed on the basis that I may, selectively, make findings of fact in accordance with her oral evidence. I cannot have confidence that her oral evidence was untainted by the factual material and the opinions expressed in her written report and the manner of its preparation. I will not make any finding of fact based on any of her evidence.” [at 78]

CONCLUSION

His Honour concluded that the case “went far beyond the permissible scope of involvement of lawyers who retain an independent expert in order to give evidence in a proceeding.” [at 76]

As a result, the applicant had insufficient evidence to prove its case and its action was dismissed.

On the issue of disclosure, he also added that:

“Even if in some circumstances it is proper for lawyers to draft an independent expert witness statement for consideration by the putative expert, that fact must be disclosed in the expert report. Moreover, all correspondence relating to the manner of preparation of the report should be disclosed and, to the extent that oral advice is conveyed to the expert, the substance should be documented and disclosed.”

Justice McElwaine emphasised the importance of ensuring experts’ independence and reiterated (by reference to the Federal Court’s Expert Evidence Practice Note and the Harmonised Expert Witness Code of Conduct) that an expert witness is not an advocate for a party and has a paramount duty to assist the Court impartially. Here, he considered the requirement of impartiality was “substantially undermined” by the applicant’s failure to disclose the methodology of preparation of the expert report. He also held that the lawyers’ conduct was “misleading”, given their letter of instruction dated 7 March 2022 suggested Ms Chen would prospectively consider the questions raised therein,

whereas the lawyers at the time were already aware of the answers and the form in which they would be expressed. The consequences for the lawyers involved are unknown, but it would not be surprising if the applicants, having had their case dismissed because of the lack of admissible evidence, sought to make a professional negligence claim against their solicitors.

Key takeaways

• experts have a paramount duty to remain independent and assist the courts impartially;

• expert evidence should be, and should be seen to be, the independent product of the expert, uninfluenced by the engaging solicitors;

• solicitors may assist experts to express opinions effectively and in accordance with evidentiary requirements, however an expert’s evidence must be the expert’s own opinions;

• it is important that all dealings between solicitors and experts are transparent and that all relevant communications are disclosed;

• solicitors must not invite the expert to misstate facts or proffer opinions not honestly held by the expert. Likewise, a solicitor should not influence the expert such that the report and potentially the expert’s evidence loses independence;

• if a court determines that determines that an expert report has been prepared beyond a permissible scope of solicitor involvement, then the court may reject the report. This may also see the oral evidence of the expert deemed tainted and similarly rejected.

Consumers remain front and centre in credit enforcement

SARAH COURT, DEPUTY CHAIR, ASIC

Australians have experienced a range of financial pressures in recent years, from the uncertainty of the COVID-19 pandemic to the increased costs of living spurred by rising inflation and interest rates.

Indeed, our research shows that between April and June this year, 12 per cent of those we surveyed reported experiencing financial stress in the last 12 months.

While nearly 80 per cent of Australians hold at least one credit product, and more than 40 per cent already hold two or more, current economic conditions suggest that consumer demand for credit products such as credit cards, personal loans and short-term credit arrangements are likely to increase. The kinds of credit products available to consumers continues to evolve, and new products are emerging all the time.

Consumer protection against poor product design and distribution and exploitation of consumers, particularly during periods of financial vulnerability, is at the forefront of ASIC’s work in consumer credit. We have identified the protection of financially vulnerable consumers who may be impacted by predatory lending practices or high-cost credit as an enforcement priority.

ASIC has a range of regulatory and enforcement tools available to assist us respond to misconduct. In addition to court-based outcomes, we can issue stop orders, product intervention orders or intervene using the new design and distribution obligations regime. These new obligations place the onus on a product issuer or distributor to ensure that a credit product is designed for and distributed to an appropriate target market.

As we look toward 2023 and consider the rising cost of living and pressures on household budgets, ASIC’s work to protect consumers when they access credit becomes even more important. This work centres around a fair, strong and efficient financial system for all Australians. Some of our recent surveillance and enforcement work in this area is outlined below.

PROTECTING VULNERABLE CONSUMERS

We are concerned by business models that we consider have been structured to circumvent important consumer protection provisions in the Credit Act.

In two sets of recent proceedings, against companies Rent4Keeps and Layaway Depot, we have alleged that certain arrangements with consumers are credit contracts which properly fall within the auspices of the credit protection legislation. In particular, we are concerned that amounts charged to financially vulnerable consumers under arrangements with these providers exceeded the 48 per cent annual cost rate cap that applies to credit contracts under the Credit Act.

The effect of this alleged conduct means Rent4Keeps and Layaway Depot customers, who are often on low incomes or Centrelink benefits, pay significantly more for electronics and whitegoods than they lawfully should. For example, one consumer on Centrelink benefits paid almost $2,500 for a fridge which retailed at $365, another paid $1,200 for a mobile phone which retailed for just $249.

Rent4Keeps and Layaway Depot deny ASIC’s allegations and both proceedings are being defended.

These enforcement actions are part of our work to protect vulnerable consumers

and to make sure consumer protections, as part of the Credit Act, are effective.

PREDATORY LENDING

In 2020, ASIC undertook a review of the ‘small amount credit contract’ market and its participants. These businesses offer credit contracts to consumers up to $2000 and often are easy to access online. Our review examined the fees charged in association with these small loans and whether the fees were permitted under the Credit Act. This project was especially important during the COVID-19 pandemic, noting the high cost of these loans and the financial vulnerability of consumers that need them.

ASIC launched civil penalty proceedings against Ferratum Australia Pty Ltd in 2021 for allegedly charging prohibited fees and overcharging consumers who paid off their loans early. We allege this was in breach of the Credit Act. We were particularly concerned that the alleged conduct harmed consumers with low incomes and low bank account balances.

Earlier this year we took further enforcement action resulting from the review, with civil penalty action against Sunshine Loans Pty Ltd. We allege Sunshine Loans collected over $320,000 in fees it was prohibited from charging, such as fees when consumers sought to reschedule or amend the payments of their contracts.

We took on both cases to ensure that credit providers comply with the Credit Act and we will be seeking Court orders and penalties if successful in the proceedings. Both sets of proceedings are being defended.

PRODUCT INTERVENTION POWERS

We have also taken significant steps recently in the use of our product intervention powers. These powers enable ASIC to temporarily intervene in a range of ways, including to ban credit products where there is a risk of significant consumer detriment. In July, we reinforced consumer protections by prohibiting the provision of unlicensed short-term credit and continuing credit contracts which involved unreasonably high fees charged to retail clients, in excess of the cost caps in the Credit Act.

This latest product intervention follows a series of proceedings between ASIC, Cigno and BHF Solutions Pty Ltd. In September 2020, ASIC commenced proceedings against Cigno and BHF Solutions seeking declarations and injunctions alleging that both the companies had engaged in unlicensed credit activities in contravention of the Credit Act in relation to their continuing credit product. In June 2022, ASIC was successful in its appeal before the Full Federal Court, which reversed Cigno and BHF Solutions’ appeal to the Federal Court in June 2021.

ASIC continues to monitor the shortterm credit and continuing credit contracts markets and will take further regulatory and enforcement action, as necessary, to address the risk of significant detriment and harm arising from the design and operation of these or similar products.

DESIGN AND DISTRIBUTION OBLIGATIONS

The design and distribution obligations, or DDO, are important reforms that took effect in October 2021. They require firms to design

financial products that meet the needs of consumers and to distribute their products in a targeted manner. Through our surveillance work we collect data and information from credit providers, including information about poor consumer outcomes, and use the design and distribution obligations to seek product, or product governance, changes to address these issues.

ASIC considers the DDO regime to be a gamechanger for the regulation of financial product design and distribution. In the credit area, we will shortly be conducting surveillance of product governance arrangements in the small amount credit and buy now pay later sectors and expect regulatory outcomes will result.

CONSUMER CREDIT INSURANCE

Many credit products are sold with add-on consumer credit insurance. The selling, or mis-selling, of consumer credit insurance as an add-on insurance product has been an area of concern for ASIC for some time. ASIC surveillance and reports in 2011 and 2019 revealed that consumers were being let down by the design and sale of consumer credit insurance. We found the insurance was poor value, was being sold in a harmful way, and that many consumers were either being charged for something they were not aware of or did not need. Others did not meet the eligibility criteria at the time of sale to be able to claim on the policy at all.

Our industry wide review in 2019, and evidence of poor consumer outcomes, showed that changes needed to be made to ensure Australians stopped being sold consumer credit insurance they did not

want or could not use. ASIC went on to secure over $270 million in remediation across the sector for over 630,000 customers harmed by the mis-selling and banned the unsolicited ‘cold call’ telephone sales of CCI. In addition to the review, remediation and ban, we took enforcement action against both Westpac and the Commonwealth Bank.

In April this year, the Federal Court ordered Westpac Banking Corporation pay a $1.5 million penalty for mis-selling consumer credit insurance with its credit cards and Flexi Loans to customers. The Court found that even though customers had not requested the product, a Westpac letter to customers asserted the right to payment of insurance premiums and then went on to debit payments from their credit cards. This Court outcome was important to demonstrate that Westpac had no right to these payments and customers did not have to pay them.

ASIC has also pursued the mis-selling of consumer credit insurance criminally, with the Commonwealth Bank facing 30 criminal charges of making false or misleading representations to 165 customers when selling consumer credit insurance. This matter is still before the Court.

Consumer credit insurance misconduct has declined in recent years, with reforms to defer the sale of add-on insurance, which introduced a mandatory four-day pause between the sale of a principal product or service and the sale of add-on insurance, and reforms to the anti-hawking regime. The implementation of DDO, and improvements to product design, sales systems and practices, and monitoring and oversight, are also expected to result in better outcomes for consumers. B

Resolving complaints about financial services: A deliberately non-legal approach

ALEXANDER MACKEY, LEGAL COUNSEL, HOMESTART FINANCE

Commencing operations on 1 November 2018, the Australian Financial Complaints Authority (AFCA) is the organisation that resulted from the amalgamation of several prior dispute resolution services, namely the Financial Ombudsman Service Limited (FOS), Credit and Investments Ombudsman (CIO) and the statutory Superannuation Complaints Tribunal (SCT).

AFCA’s purpose is to operate the compulsory external dispute resolution scheme (EDR Scheme) for its member firms. Financial firms (as AFCA members are sometimes called) are businesses that require an Australian financial services license, and membership of AFCA is a condition of the license.1 (The system is member funded, so a healthy and stable membership group is essential).

The EDR Scheme exists to resolve complaints made by a member’s customers.

The Scheme is required to meet some essential operational requirements as follows:

• the complaints mechanism must be accessible to persons who have a complaint

• complaints must be resolved in a way that is fair, efficient, timely and independent

• complaints can be resolved by a determination that is binding on financial firms but not complainants

• reasonable steps must be taken to ensure compliance by members of the scheme with determinations.2

AFCA itself is accountable to ASIC3 and while it has the power to determine complaints it has limited powers to enforce those determinations – such matters must be referred to the Australian Prudential

Regulatory Authority (APRA), ASIC or the Commissioner for Taxation.4

WHAT ARE THE RULES?

Much like courts and tribunals AFCA publishes Complaint Resolution Scheme Rules for what is essentially an arbitration service where the context is fairness of outcome rather than the determination of legal rights and liabilities.

Without delving into all the details, the essential criteria for a complaint to be received by AFCA include the fact that the complaint must arise from a customer relationship (noting some special provisions for superannuation complaints and ‘other’ types of complaints).5

There are some categories of complaint that are subject to automatic exclusion, for example:

• complaints that are only about the level of a fee, premium, charge, rebate or interest rate,

• complaints about the allocation of a benefit to competing beneficiaries, and

• complaints that have been previously determined by either AFCA or some other dispute resolution process including previous schemes, courts, or tribunals.6

In terms of complaints about credit providers, AFCA must exclude complaints concerning the Financial Firm’s assessment of the credit risk posed by a borrower, the security to be required for a loan and complaints about small business credit facilities exceeding $5 million.7 There are also equivalent or similar exclusions relating to insurance, investment and superannuation complaints.8

Furthermore, AFCA has some discretionary power to exclude complaints:

• if another organisation or institution is a more appropriate forum for the complaint,

• if the complaint relates only to the existence of a financial firm’s practice or policy and does not involve any allegation of misapplication of policy or maladministration, or

• if the complaint is frivolous, vexatious, misconceived, or lacking in substance.9

There are a range of remedies available for the different types of complaints across the superannuation, insurance, and credit facility categories but the general monetary compensation limit is around $540,000. Non-superannuation complaints can also attract more variety, where remedies can include anything from the forgiveness of a debt through to an apology.10

Rules A.1.3 and A.1.4 explain that the complaint resolution process is free, and by no means compulsory, for complainants.

Rule A.8 sets out the complaint resolution approach which begins with facilitating negotiations between the parties then moves to conciliating a complaint, providing a preliminary assessment, or proceeding to determination of the complaint.

It is during this process that AFCA can also decide that there is no merit to the complaint, that there has been no loss suffered, or no error made, and it can elect to not continue considering the complaint as a result.

The preliminary assessment and determination phases of course proceed after there has been an information gathering and sharing process and the opportunity for both sides to provide written submissions about the matters in issue.11

Except for a couple of details specific to superannuation complaints that are set out in Rule A.14.1, when determining any other complaint, the AFCA Decision Maker must follow Rule A.14.2 and do what the AFCA Decision Maker considers is fair in all the circumstances having regard to:

• legal principles,

• applicable industry codes or guidance,

• good industry practice and

• previous determinations of AFCA or Predecessor Schemes.

This is sometimes referred to as AFCA’s fairness jurisdiction and it is what sets the scheme apart from every other form of dispute resolution. It is a system which (to the horror of many) allows AFCA to make determinations that bind a financial firm and that do not necessarily align perfectly (or sometimes at all) with the law or the parties’ contractual rights and obligations.

It is the genius of the design.

Legal reasoning has its place, but it lacks flexibility. Courts are bound by statutes, case law, and judges prefer not to be overturned on appeal. Legal reasoning can also be artificial, permit technicality to overrule “common sense” and thereby produce outcomes that do not match community expectations. But the problems do not start there.

To pursue litigation, an aggrieved party needs resources, the process takes time and even if the complainant wins, the financial firm may well appeal.

Right minded consumers do not readily choose to take on those risks.

CRITICISMS OF THE SCHEME

At the top of the list of criticisms of the Scheme is that the existing legal rights,

duties and liabilities of the parties are not given priority. This is, however, openly and unapologetically acknowledged. They are not ignored; they are part of a list of several factors given consideration.12

From a financial firm’s perspective AFCA determinations, even if wrong in the conclusion according to law, are not reviewable, except for any evident unreasonableness in the Wednesbury sense of the word 13

A central issue in one challenge to AFCA’s legitimacy was that giving it the power to make determinations contravenes Ch III of the Constitution by conferring judicial power on a non-judicial body.14 It does not.

This is the case for two main reasons:

• Judicial power is about determining the existence of rights and liabilities by the application of law, and

• The exercise of judicial power results in binding and conclusive determinations of rights and liabilities that are immediately and independently enforceable.15

These are not features of the AFCA Scheme. Opinions may well be formed and expressed about the legal principles and the facts as they relate to the law, but those are merely steps toward arriving at what is the true determination – that is, what is fair and reasonable in all the circumstances. Then, once the fairness determination is made, it is not truly enforceable without the exercise of further independent (and real) judicial power.16

One further indication that AFCA does not exercise judicial power is that it can decline to make a determination, including on the ground that it considers the complaint might be more appropriately dealt with by a court 17

CONCLUSION

The space allowed for this short article does not permit the author to indulge in a venting of all the petty frustrations and grievances that financial firms have about the operation of the Scheme. And rest assured there are some. It is not a perfect system. But then again, none are.

On balance however it must be acknowledged that the EDR Scheme levels the playing field and gives complainant’s a realistic option for dispute resolution when the legal answer and the “right result” are possibly two different things. B

Endnotes

s 912A(1)(g) Corporations Act 2001

s 1051(4) Corporations Act 2001

ss 1052 – 1052D Corporations Act 2001

s 1052E Corporations Act 2001

see AFCA Rules A.4.3(a), B.1 and B.2

see AFCA Rule C.1.2

see AFCA Rule C.1.3

see AFCA Rules C.1.4, C.1.5, and C.1.6

see AFCA Rule C.2.2

see AFCA Rule D.2.1

see AFCA Rules A.9 and A.10

Patersons Securities Ltd v Financial Ombudsman Services Ltd (2015) 108 ACSR at 501 at [95] and Investor Exchange Limited v Australian Financial Complaints Authority Limited and Lornette Pty Ltd ATF Lornette Superannuaiton Fund [2020] QSC 74

Investor Exchange Limited v Australian Financial Complaints Authority Limited and Lornette Pty Ltd ATF Lornette Superannuaiton Fund [2020] QSC 74 at [21] and [27]. Bad faith, bias fraud, dishonesty or a misconception of the task required by the decision maker are also grounds for review at [30].

QSuper Board v Australian Financial Complaints Authority Limited [2020] FCAFC 55 at [2]

Ibid at [107] and [109]

s 1052E(1)(d) Corporations Act 2001 provides that the matter is referred to APRA, ASIC or the Commissioner of Taxation to pursue in the appropriate forum.

QSuper Board v Australian Financial Complaints Authority Limited [2020] FCAFC 55 at [150]

NIGHT OF CELEBRATION AT LEGAL PROFESSION DINNER

Dancing made a welcome return as almost 300 guests revelled in the freedom to network, mingle and hit the floor at the Legal Profession Dinner on 19 August.

Adelaide Oval’s William Magarey Room played host to the South Australian legal profession’s marquee awards night, which was MC’d by Society President Justin Stewart-Rattray.

After the 2020 Legal Profession Dinner was cancelled due to a State-wide lockdown, and last year’s dinner under significant covid-based restrictions, guests relished the opportunity to celebrate without the types of constraints that most of us have been subjected to during the majority of the past two years.

In a slight twist to the traditional guest speaker format, Mr Stewart-Rattray interviewed Roger Rasheed, best known for coaching tennis players such as Lleyton Hewitt and Gaels Monfils. Mr Rasheed gave a fascinating insight into his childhood as a Lebanese born Australian, his methodologies for getting the best out of high performers, and his program to help vulnerable communities through sport.

It was a delight to have State Attorney General, The Hon Kyam Maher attend the event, make a toast to the profession, and present the awards.

The awards presented on the night were:

Justice Award – Mark Douglas

Mark has worked over many years to promote access to justice for socially and economically disadvantaged South Australians, particularly those living with a disability. He’s shown commitment over many years to equality and diversity in the law, through direct advocacy, education of the public and the profession including by sharing his lived experiences and mentoring junior practitioners, particularly female barristers.

Mark has chaired the Society’s Equality, Diversity and Inclusion (EDI) Committee

since its establishment in 2016, and has for several years been a member of the Law Council of Australia’s Equal Opportunity Committee.

He has also been the key driver in the Society’s efforts to increase accessibility in the South Australian Courts and the justice system in SA. Mark has pushed for improved accessibility to the Courts, including to address restricted accessibility to courtrooms 1 and 2 for people with physical disabilities

Young Lawyer of the Year - David Kelly

David began his career as an Associate to Justice Peek of the Supreme Court of South Australia and since entering practice, he has acted for diverse clients in the Magistrates, District, Supreme, Federal Circuit, Federal, and High Court, including as an instructing solicitor in the longest running civil case tried in South Australia in 2018-2019.

David has undertaken an Adelaide University sponsored research project on whether pre-action protocols have assisted matters to settle earlier, and reported on over 100 court decisions. David mentors senior law students and recent graduates and contributed to a guide for emerging lawyers about managing expectations when transitioning to the profession.

David has been an active member of the Society’s Civil Litigation Committee since 2015.

Mary Kitson Award (sponsored by legalsuper) - Ruth Beach

Ruth has been a champion for equality for women in the law since her admission in 1993. She was a Member of the Society’s Women Lawyers’ Committee for 15 years, including a three-year term as the Chair, and a member of the Women Lawyer’s Association (SA). Ruth also represented the Society on the Law Council’s Equalising Opportunities in the Law Committee for four years. This was a formative time for initiatives to address gender inequity.

As a South Australian Director of Australian Women Lawyers she played a crucial role in drafting the Equitable Briefing Policy.

Ruth has also been a member of the Women’s Legal Service committee both in Queensland and South Australia, is the inaugural Women Lawyers Association Support Person on bullying and harassment, and has mentored many women lawyers from culturally diverse backgrounds.

Bulletin awards

Bulletin Article of the Year - Madi McCarthy & Professor Tania Leiman

The article “Sex with Robots: How should the law respond?” examines the development of technology that facilitates new forms of intimate connection, surveys the moral and ethical landscape surrounding the technology, and looks at how the law is starting to grapple with this issue and how it might deal with it as it becomes more integrated into modern life.

Special Interest Article of the YearAmy Nikolovski

Amy’s deeply personal article “It’s ok to grieve, and to reach out for support” recounts the heartbreak of having a miscarriage and is sure to inspire more people to talk about their own experiences of grief, which will, in turn, help them to find the support they need to help them through times of immense loss and suffering.

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Justin Stewart-Rattray (left) with Young Lawyer of the Year David Kelly, Bulletin Article of the Year co-author Madi McCarthy, The Hon Kyam Maher MLC, Bulletin Article of the Year co-author Prof Tania Leiman, and Justice Award winner Mark Douglas.

Nick Gormley (left)from Notable Imprint, Angie Nguyen from Sympli, guest speaker Roger Rasheed, Ali Kerr from Wine Direct, Law Society President Justin Stewart-Rattray, Andrew Proebstl from legalsuper and Peta Brown from BankSA | Westpac.

Attorney General, The Hon Kyam Maher MLC (middle anked by Law Society President Justin Stewart-Rattray and Law Society Chief Executive Stephen Hodder.

Roger Rasheed being interviewed by Justin Stewart-Rattray

DINNER 2022: PHOTO GALLERY

PROTECTING PRIVATE DATA: HOW CONSUMER LAW CAN PLAY A ROLE

JOEL LISK, RESEARCH ASSOCIATE – SPACE AND REGULATION, JEFF BLEICH CENTRE FOR THE US ALLIANCE IN DIGITAL TECHNOLOGY, SECURITY AND GOVERNANCE, FLINDERS UNIVERSITY

In July of 2019, the Australian Consumer and Competition Commission (ACCC) delivered its final report following its inquiry into digital platforms such as Google, Facebook and Twitter.1 The Inquiry, constituted in 2017 by thenTreasurer Scott Morrison, was directed at investigating the ‘impact of digital search engines, social media platforms and other digital content aggregation platforms … on the state of competition in media and advertising service markets’ as well as the ‘impact of [the] information asymmetry between platform service providers, advertisers and consumers’.2

The ACCC, as part of both its Final Report and Preliminary Report (issued in July 2019 and December 2018, respectively), examined the relationship between digital platforms and consumers in great detail.3 One of the most prominent findings set out in the Preliminary Report was that privacy policies only provided ‘consumers with an opaque view of privacy and data protections while simultaneously outlining broad discretions for digital platforms to collect, use and disclose consumer data’, suggesting the existence of a significant information and power imbalance between the platform and consumers.4 The ACCC concluded their review digital platforms in their Preliminary Report by publicly stating their intent to investigate whether Australian Consumer Law (‘ACL’) protections can apply to the collection, use and disclosure of personal information, and privacy policies.5 As part of the ACCC’s conclusions in its Final Report, it indicated that it was investigating several digital platforms for potential breaches of the ACL in connection with their data collection and handling practices.6

Traditional approach to data

When considering the regulation of personal information and data, most would think of the Privacy Act 1988 and the Australian Privacy Principles (‘APPs’)

therein. The APPs are detailed and cover the lifecycle of personal information held by an organisation.7 Despite being perceived as comprehensive, the APPs and the Privacy Act have limitations. The APPs only apply to ‘personal information’ (information or opinions that are about an individual)8 and, subject to limited exceptions, the APPs only apply to businesses with an annual turnover greater than $3 million.9 The enforcement procedures under the Privacy Act are also somewhat limited, with individuals required to undertake a specific dispute resolution process with no immediate recourse to courts in the case of an alleged breach of the APPs. Many of these limitations were recognised by the previous Federal Government as part of an ongoing review of the Privacy Act Across the Pacific

Unlike Australia, the United States does not have nationally consistent laws applicable to all consumer data. Individual statutory regimes apply to certain types of personal information (such as the Health Insurance Portability and Accountability Act’s (commonly known as “HIPAA”) application to health information)10 and many states have their own laws applicable to personal information (such as the Californian Consumer Privacy Act).11 Despite this, the Federal Trade Commission (“FTC”) regularly brings successful actions against large corporations (including Facebook, Google and Uber) for their data and personal information related practices.

How does the FTC bring these actions? Title 15 of the United States Code provides for consumer protection in the United States.12 The FTC is empowered by the United States Code to enforce and police consumer protection and anti-trust legislation.13 One of the FTC’s powers is the ability to bring actions against entities that are engaged in ‘unfair or deceptive acts or practices

in or affecting commerce’.14 Since the mid-1990s, the FTC has acted as a privacy and data security enforcement body using this consumer-focused power. There is no express legislation that empowers the FTC to act in respect of data matters, but the United States 3rd Circuit Court of Appeals upheld a decision of a lower court that permitted the FTC to pursue companies for allegedly deceiving consumers in respect of privacy practices.15

As mentioned above, the FTC has pursued (and been successful in doing so) several major technology companies in connection with these data practices. In most instances, FTC matters are resolved prior to court proceedings commencing. In 2018, the FTC brought an action against Uber Technologies Inc (‘Uber’), alleging that Uber had mislead customers as to its data security practices on multiple occasions.16 Uber’s servers were breached on two separate occasions in 2014 and 2016. This saw high volumes of consumer data accessed by unauthorised persons. The data breaches were associated with administrator credentials being found on public forums. Prior to the data breaches taking place, Uber had made public statements testifying to their use of ‘the most up to date technology and services to ensure that’ consumer data is protected, that Uber is ‘extra vigilant in protecting all private and personal information’, and that data is ‘kept secure and encrypted to the highest security standards available.’17 Despite these statements, the FTC alleged that there was no information security program in place, personal information was stored in ‘clear, readable text’ instead of an encrypted form, and a number of common data security practices were not complied with.18

Another notable FTC proceeding saw Facebook pay a fine of US$5 billion for contraventions of a previous FTC order related to deceptive conduct in the use and handling of personal information.

The proceeding and fine arose out of the events involving the use of Facebook data and the now defunct business, Cambridge Analytica.19 The Australian proceedings arising out the same circumstances are still before the Federal Court.20

At the core of these proceedings (and dozens more like them) were allegations that something a businesses did, said or represented in connection with their data handling processes was liable to deceive an individual. It is also worth noting that the FTC also uses its ability to bring actions for ‘unfair conduct’ – a cause of action the ACCC has previously argued for.21

The Consumer Law and Data

Recent events have seen the role of the ACCC with respect to data rapidly expanded. The introduction of the Consumer Data Right (“CDR”) into the Competition and Consumer Act in 2018 saw the ACCC take the role as the lead agency for the regime (supported by the Office of the Australian Information Commissioner and the CSIRO’s Data61) and its introduction to the banking sector (with other sectors to follow in the future).22

Since the conclusion of the Digital Platforms Inquiry, the ACCC has commenced proceedings against both Google and Facebook (now, Meta Platforms) for misleading or deceptive conduct in connection with the representations connected to data collection and handling.

In April 2021, the Federal Court delivered a judgment finding that Google had contravened ss 18, 29 and 34 of the ACL in connection with representations related to the collection of location information on Android phones.23 By way of summary, the Federal Court found that the settings and options presented to users on Android phones misrepresented the extent to which location information was being collected by the phone and ultimately Google. This led to the conclusion that Google had misled

consumers as to the extent of the personal information the tech giant was collecting. The Federal Court imposed a $60 million penalty for this conduct earlier this year.24

In 2020, the ACCC also commenced proceeding against Google for allegedly misleading consumers to obtain consent for the collection and aggregation of personal information, and Facebook for allegedly misleading or deceptive conduct associated with how information would be protected on its Onavo application – a VPN service. Both matters are still before the Federal Court.25

In the three instances discussed above, many would typically only consider risks under the Privacy Act and APPs, not the potential application of the ACL and concepts such as misleading or deceptive conduct (despite their somewhat natural application). The recent steps into the realm of data collection and processing by the ACCC, much like how the FTC has acted in this space for some time, appears to be natural and significant. The recent proceedings reflect a need for organisations to take their privacy compliance programs seriously – there is the need for a privacy policy to be in place as required by the Privacy Act, but it is just as important to ensure that the policy accurately and genuinely reflects the business’ practices in connection with handling of information. It appears that when it comes to data, the Privacy Act will continue to govern collection, use, handling, storage and deletion, but consumer law will play a role in ensuring what is said about these steps is correct and reflective of actual practices. B

Endnotes

1 Australian Competition and Consumer Commission, Digital Platforms Inquiry: Final Report (June 2019) (“Final Report”).

2 Ministerial Direction from Treasurer to Mr Rod Sims (Chair, ACCC), 4 December 2017 <https://www.accc.gov.au/system/files/ Ministerial%20direction.pdf>.

3 Final Report, see ‘Chapter 7 Digital Platforms and Consumers’; Australian Competition and Consumer Commission, Digital Platforms Inquiry: Preliminary Report (December 2018) (“Preliminary Report”), see ‘Chapter 5: Digital Platforms and Consumers’.

4

Preliminary Report, 204.

5 Preliminary Report, 239.

6 Final Report, 501.

7 Privacy Act 1988 (Cth) sch 1.

8 See, e.g. Privacy Commissioner v Telstra Corporation Ltd (2017) 249 FCR 24; Attorney-General’s Department, Privacy Act Review: Discussion Paper, Australian Government (October 2021), 21 – 29.

9 Privacy Act 1988 (Cth) ss 6C – 6EA.

10 Health Insurance Portability and Accountability Act of 1996, Pub L No 104-191, 110 Stat 1936.

11 Californian Consumer Privacy Act of 2018, 2018 Cal Stat ch 55 (A.B. 375).

12 15 USC (2022); Federal Trade Commission, ‘About the FTC’ <https://www.ftc.gov/about-ftc>.

13 15(2) USC §§ 41, 45 (2022).

15(2) USC § 45(a) (022).

15 Federal Trade Commission v Wyndham Worldwide Corporation 799 F 3d 236 (3rd Cir, 2015).

16 In the Matter of Uber Technologies, Inc: Complaint, FTC Matter 152 3054 (25 October 2018) <https://www.ftc.gov/system/files/documents/ cases/152_3054_c-4662_uber_technologies_ revised_complaint.pdf>.

17 In the Matter of Uber Technologies, Inc: Complaint, [17].

18 In the Matter of Uber Technologies, Inc: Complaint, [18]; The Australian Information Commissioner reached a decision on the same facts in 2021: Commissioner Initiated Investigation into Uber Technologies, Inc. & Uber B.V. (Privacy) [2021] AICmr 34.

19 Federal Trade Commission, “FTC Imposes $5 Billion Penalty and Sweeping New Privacy Restrictions on Facebook” (Media Release, 24 July 2019) https://www.ftc.gov/news-events/ news/press-releases/2019/07/ftc-imposes-5billion-penalty-sweeping-new-privacy-restrictionsfacebook

20 See, Australian Information Commissioner v Facebook Inc, Federal Court of Australia (NSD246/2020).

21 See, Final Report, 498 – 501.

22 See generally, Competition and Consumer Act 2010 (Cth) pt IVD.

23 Australian Competition and Consumer Commission v Google LLC (No 2) (2021) 391 ALR 346.

24 Australian Competition and Consumer Commission v Google LLC (No 4) [2022] FCA 942.

25 See, Australian Information Commissioner v Google LLC, Federal Court of Australia (NSD816/2020); Australian Information Commissioner v Meta Platform Inc., Federal Court of Australia (NSD246/2020).

Collective bargaining exemptions in commerce for SMEs

ALEXANDER MACKEY, LEGAL COUNSEL, HOMESTART FINANCE

The following article summarises a presentation given at the Commercial Law Conference on 26 August 2022, the presenters were Thomas Cadd (Barrister), Miriam Kolacz and David Hatfield (both of the Australian Competition and Consumer Commission) with the session chaired by Andrew Bampton of Bampton Law.

Until recently exemptions for collective bargaining were only possible on a case-by-case basis using the notification process under section 93AB or the authorisation process under section 88 of the Competition and Consumer Act 2010

A review of competition policy in 2017 resulted in a deregulatory approach, providing the ACCC with the ability to make class exemptions for specific types of conduct.1

In June of 2021 the ACCC issued a class exemption that is available for three classes of businesses. It enables members of those classes to engage in collective bargaining arrangements with other businesses, such as suppliers and business customers.2

The class exemption that has been created is for:

• a business or independent contractor to participate in collective bargaining, provided the business or independent contractor had an aggregated turnover of less than $10 million in the most recent financial year prior to joining the group, and

• any franchisee or fuel retailer, regardless of turnover, to participate in collective bargaining with their franchisor or fuel wholesaler.3

Businesses that are within the scope of the class exemption have automatic protection from the risk of breaching competition laws designed (in part) to prevent or deter collective bargaining (i.e. Part IV of the Act).

Ordinarily, it would be illegal for competitors to work together to try to negotiate better prices or terms, the rationale being that such activity would

typically lessen competition and be counter to the interests of the consumer, hence the need for cartel conduct provisions in the Act.

However, it is also the case that certain instances of collective bargaining can, as it turns out, support competition and benefit the consumer, hence the existence of Part VII of the Act containing the authorisations and notifications regime (including for collective bargaining).

Where collective bargaining by competing businesses with suppliers and business customers about terms and conditions or prices would be good for competition and consumers, it can be allowed by an authorisation or notification.

The ACCC’s experience was that the vast majority of voluntary small business collective bargaining arrangements were in the public interest.

The introduction of a targeted, automatic, class exemption was therefore the next step.

How do the Options Compare?

Now that the class exemption power has been created and used, there is an avenue for automatic protection that involves fewer administrative steps, lower cost and quicker turnaround than the traditional notification and authorisation options under Part VII.

For comparison purposes the relevant provisions of the Act are s 88 (Authorisation), s 93AB (Notification of Collective Bargaining) and s 95AA (Class Exemptions).

Under s 88 (Authorisation) if a person wants to engage in conduct to which Part IV of the Act would (or might) apply, the person can apply to the ACCC for an authorisation to engage in that conduct. The Commission may grant authorisation(s) for any or all conduct specified in an application. The application process and other matters are covered in s 89. The application fee is $7,500.4

Under s 93AB (Notification of Collective Bargaining) a corporation can

enter contracts that contain cooperation provisions, with one or more other persons about the supply or acquisition of goods or services from another party (the target), not exceeding $3,000,000 in one 12-month period (subject to giving a collective bargaining notice in the approved form5 and paying the prescribed fee of $1,000).6

Restrictions exist for notices that are the subject of an application for authorisation under s 88, relate to an application for an authorisation that has been dismissed, or given by a trade union on behalf of a corporation.7 The ACCC can also object to a collective bargaining notice if the perceived benefits to the public are outweighed by the harm that has or would likely result from the relevant provisions. 8 A collective bargaining notice is also generally only valid for 3 years from the date it was given.9

Under section 95AA (Class Exemptions) the ACCC can determine that Part IV of the Act does not apply to conduct that does not (or would be unlikely to) lessen competition or where the public benefit outweighs public detriment. The determination can also be limited to persons, circumstances or conduct of a specific kind which creates a class to which the exemption applies. There is also no fee, a simplified notice procedure and the class exemption can be in force for up to 10 years.10

During the conference presentation the ACCC’s representatives explained that the $10M aggregated annual turnover was selected as the turnover threshold that each group member could not exceed for a few reasons:

1. It is broad enough and simple enough to be useful

2. It avoids the inclusion of big business, where collective bargaining has greater potential to raise competition concerns

3. It is an ATO threshold for certain small business tax concessions, so most businesses will know whether they are under or over it.

In summary, the options compare as follows:

SECTION 88 (AUTHORISATION)

• Fee $7,500

• In force for period of authorisation subject to variation or revocation

• Prescribed form, information, and documentation

• Any matters relevant to Part IV of the Act

• Determination to be made within 6 months

SECTION 93AB (NOTIFICATION)

• Fee $1,000

Safe harbour 3yrs < 10yrs

• Notification period then reapply

Can include a collective boycott

Contract value <$3M with target business

• Can become effective after 14 days

Franchisees and fuel retailers are included because, even though they may often be over the $10M threshold, they are typically in a weak bargaining position compared with their respective franchisors and fuel suppliers.

The class exemption is not without its restrictions. For instance, the provisions do not operate to permit a collective boycott11 (an authorisation or notification is still required for that), the sharing of information is limited to what is reasonably necessary to facilitate the collective bargaining process,12 and protection will not extend to conduct for which the ACCC has previously denied or revoked protection.13

Commentary

The views of the panel reflected the idea that the benefits for business in the class exemption determination include simpler, quicker, cheaper notification process, comprising a 1-page notice with no fee, that provides automatic protection (compared to a potential 6 month wait for an authorisation).

The introduction of the class exemption may also encourage the take up of (permitted) collective bargaining and provide the ability to realise the benefits of collective bargaining sooner, reducing time and costs, creating opportunities for SMEs to secure better terms and conditions and

SECTION 95AA (CLASS EXEMPTIONS)

• No fee

Effective to 30 June 2030

• 1 page form

Excludes collective boycotts

• Group member <$10M aggregate annual turnover

Automatically effective

prices with all the benefits to supply chain and distribution that such things bring.

The ACCC’s first class exemption is a simple stream-lined process, and the previous authorisation and notification regime is still available for other situations or as an alternative.

From the perspective of the ACCC, take up is going well and it has created operational efficiency for the team handling authorisations and exemptions.

The session chair, Andrew Bampton, observed that class exemptions are a dramatic step forward to level the playing field for small business and with increases to the cost-of-living becoming topical, some suppliers may be opportunistically “gilding the lily” with price hikes that do not necessarily match inflation. He observed that class exemptions could act as a check and a balance against that sort of behaviour.

An issue also arose about whether separate collective bargaining groups in different areas could share information and the view was “no they can’t”. The focus is on sharing information only within the collective bargaining group, and inter-group sharing would require a broader authorisation. Confidentiality provisions in contracts may also prevent the sharing of that information anyway.

A further observation was made by the ACCC presenters that collective bargaining does not always correct disproportionate bargaining power; it is just another tool in the toolbox. Indeed, Thomas Cadd reminded those in attendance that regulating competition is not about everyone having the same price or the same thing all the time, it is about ensuring there is the capacity for prices to rise and fall and contractual terms to change under appropriate market conditions.

After just over twelve months of operation it seems that when it comes to facilitating collective bargaining the class exemption determination is a practical alternative to the traditional Part VII regime.

Many thanks to the presenters and the session chair who volunteered their time to speak on this topic at the conference and review this article. B

Endnotes

Competition and Consumer Amendment (Competition Policy Review) Act 2017 received Royal Assent on 27 October 2017 and inserted Part VII, Division 3 – Class exemptions, into the Competition and Consumer Act 2010

Collective Bargaining Class Exemption Guidelines, ACCC, June 2021, https://www.accc. gov.au/publications/small-business-collectivebargaining-guidelines

see Competition and Consumer (Class Exemption Collective Bargaining) Determination 2020 and the Collective Bargaining Class Exemption Guidelines, see note 2

Schedule 1B Competition and Consumer Regulations

s 93AB(1) Competition and Consumer Act 2010

s 93AB(6) of the Act and Schedule 1B of the Regulations

s 93AB(8) and (9)

s 93AC(1)

s 93 AD(3)

s 95AA of the Act and ss 4 and 7 of the Competition and Consumer (Class Exemption Collective Bargaining) Determination 2020

s 8 of the Competition and Consumer (Class Exemption Collective Bargaining) Determination 2020

Ibid s 13

Ibid s12(3)

Concerns about deductibility of selfeducation expenses incurred by employees

ANDREW SHAW, PRINCIPAL, SHAW LAWYERS

“But the point isn’t that they follow the rules; They got an education and they all been in school; Tell me one more time people – what do you say? Without an education, you might as well be dead.” – James Brown “Don’t Be A Dropout” (1966).

Arecent

decision of the Administrative Appeals Tribunal (AAT) raises concerns about disallowance of tax deductions for self-education expenses incurred by an employee: YDXM and Commissioner of Taxation 1

Self-education expenses:

Section 8-1 of the Income Tax Assessment Act 1997 (C’th) provides that: “You can deduct from your assessable income any loss or outgoing to the extent that: (a) it is incurred in gaining or producing your assessable income” and it is not a loss or outgoing of a capital, private or domestic nature.

To be deductible, expenditure must have the “essential character” of a loss or outgoing incurred in gaining assessable income. There must be a “nexus” such that the outgoing is “incidental and relevant” to the gaining of assessable income. It is necessary to determine the connection between the outgoing and the operation by which the taxpayer more directly gains or produces his or her assessable income.2

In Commissioner of Taxation v. Finn (1961) 106 CLR 60, the High Court held that expenditure incurred by a government architect on an overseas tour, of his own volition, devoted to the study of architecture and to advance his architectural knowledge and skills, was an allowable tax deduction. Windeyer J stated: “Generally speaking, it seems to me, a taxpayer who gains income by the exercise of his skill in some profession or calling and who incurs expenses in maintaining or increasing his learning, knowledge, experience and ability in that profession or calling necessarily incurs those expenses in carrying on his profession or calling.”3

In Federal Commissioner of Taxation v. Wilkinson (1983) 83 ATC 4295, the taxpayer was an air traffic controller employed by the Department of Aviation. He claimed a tax deduction for the cost of taking flying lessons. Flying experience was not

a prerequisite for his job as an air traffic controller, nor for promotion. Nonetheless, the Supreme Court of Queensland found that the taking of flying lessons would make it “inherently likely” that the taxpayer would be promoted and receive a higher salary. Importantly “one of the main motives (if not his sole motive) was to improve his prospects of promotion and advancement in grade and salary”. The taxpayer became “better equipped to carry out the duties of his employment”. His conduct and expenditure were reasonably calculated to produce that result. Those matters in combination provided a foundation for the conclusion that the expenditure was incurred in gaining the taxpayer’s assessable income and was therefore deductible.

In Federal Commissioner of Taxation v. Studdert (1991) 33 FCR 75 the Federal Court held that a flight engineer was entitled to a deduction for expenses incurred on light aircraft flying lessons leading to a pilot’s licence. Hill J found that the expenses were relevant and incidental to the activities as flight engineer that directly produced the taxpayer’s income.

The flying lessons improved the taxpayer’s proficiency as a flight engineer (which was the accepted purpose of incurring the expenditure, even if the expenditure also paved the way for retraining as a flight officer should the taxpayer wish to do so). The lessons also improved his prospects for promotion. Those two findings “made [the taxpayer’s] case virtually unassailable”.4

ATO position:

The ATO’s position is contained in its public ruling TR 98/9 – Income Tax: deductibility of self-education expenses incurred by an employee or a person in business. 5 TR 98/9 sets out five principles of deductibility of self-education expenses:6

1. A deduction is allowable for selfeducation expenses if the taxpayer’s income-earning activities are based on the exercise of a skill or some specific knowledge and the subject of self-education enables the taxpayer to maintain or improve that skill or knowledge.

2. A deduction is allowable for self-

education expenses if the subject of self-education leads to, or is likely to lead to, an increase in the taxpayer’s income from current income-earning activities.

3. Expenses relating to improving knowledge or skills are not of a capital nature.

4. A deduction is not allowable for self-education expenses if the subject of self-education is designed to get employment, to obtain new employment or to open up a new income-earning activity.

5. The intention or purpose in incurring the expense may be an element in determining whether the expense is allowable.

TR 98/9 gives the following examples of self-education expenses that are allowable deductions to an employee: course or tuition fees incurred in attending an educational institution or work-related conferences or seminars, student union fees, professional and trade journals, stationery, reference books and textbooks, and some airfares, accommodation and meals expenses including overseas study tours, sabbaticals, work-related conferences or educational institutions (subject to substantiation and additional compliance rules).7

Decision in YDXM and Commissioner of Taxation:

The applicant had been employed as a General Services Officer (GSO) in the Australian Army since 2012. From 2018 he studied and completed a Juris Doctor degree (a post-graduate law degree undertaken at Masters level). He was not a legal officer in the Army and had no intention of becoming one. He was promoted from the rank of Captain to Major in January 2022. His studies were supported by his employer but were not a “requirement” for promotion to senior ranks. He claimed work-related self-education expenses of $6,594 (2018) and $14,834 (2019). The AAT accepted that these were tuition fees for the units studied, plus a small amount for textbooks.8

The AAT framed the relevant test for deductibility of self-education expenses by reference to TR 98/9:9

be such a connection,

Applicant

self-education

of

following

Did the self-education undertaken by the Applicant improve his skills or knowledge necessary to perform his role as a GSO (Tax Ruling, para [13]); or

Could the self-education undertaken by the Applicant have led to an increase in income for the Applicant in his role as a GSO (Tax Ruling, para [145])?”

Unfortunately for the taxpayer, the AAT decided that that there was an insufficient connection between the taxpayer’s expenses incurred in obtaining his Juris Doctor degree and his income earning activity as a GSO in the Army. Therefore, his selfeducation costs were not deductible.

The AAT found that the taxpayer’s position as a GSO was “a leadership and policy-based position in the Australian Army” and that “[h]e infrequently performs some tasks that may be enhanced by a general knowledge of the law, but his core role is not legal in nature”. The AAT then concluded “Whilst Juris Doctor studies may enhance his skills in a general sense, that is not enough to establish a relevant and incidental connection with the gaining or producing of [the taxpayer’s] assessable income”.10

The AAT also found that the taxpayer’s studies could not be regarded as having led to the increase in his income because they were not “required” as part of his promotion application, even though his studies were viewed favourably by his

employer and were one of many factors considered in his promotion. However, it could not be said that the taxpayer “spent money to earn more”.11

Conclusions:

• The decision of the AAT, and the Commissioner’s decision to disallow the taxpayer’s claims at objection stage which led to the taxpayer’s application to the AAT for review, suggest a narrower view was taken about deductibility of self-education expenses than what might have been assumed.

• The decision seems to turn on the fact that the taxpayer’s self-education expenses related to a post-graduate law qualification even though the taxpayer was not employed in a legal role, and that obtaining a Juris Doctor degree was not “required” for promotion. It does not appear to take into account the wider range of skills that may be gained from a legal qualification which would enhance the skills (or “improve the proficiency”, to use Hill J’s terminology in Studdert) of the recipient even in non-legal roles (e.g., analytical skills, risk assessment, communication skills, problem solving, dispute resolution, etc), or that his studies undoubtedly enhanced his opportunities for promotion.

• On my reading, the decision seems at odds with authorities such as Finn, Wilkinson and Studdert above, but others may take a contrary view. Hopefully the decision does not dissuade employees

from seeking to increase their learning, knowledge, experience and ability through self-education.

By Andrew Shaw of Shaw Lawyers. Tax Files is contributed by members of the Taxation Committee of the Business Law Section of the Law Council of Australia. B

Endnotes

1 [2022] AATA 2382 (27 July 2022). Decisions by the AAT on deductibility of self-education expenses are important because disputes typically turn on their particular facts and the AAT is often the final arbiter.

2 Ronpibon Tin NL v. FC of T (1949) 78 CLR 47, at 56; Lunney v. FC of T; Hayley v. FC of T (1958) 100 CLR 478 at 497-498.

3 Windeyer J, at 70. The case concerned a deduction under what was then the equivalent provision to section 8-1.

4 Studdert, at para 33.

5 TR 98/9 has been updated since its issue in 1998. The current consolidated version was published on 13 July 2016.

6 TR 98/9, at Explanations, Part A, paragraphs (a) to (e).

7 TR 98/9 at paras 23, 84 – 92.

8 The study units included Australian Legal System, Legal Analysis and Problem Solving, Contract Law, and Dispute Resolution. There was no suggestion that the applicant had claimed anything beyond genuine tuition fees; in fact, the AAT noted that he had not claimed reimbursement of his costs from the Defence Assisted Study Scheme because the Scheme had limited funds and he thought it unfair to draw on those funds when other defence force members without undergraduate degrees may wish to apply for funding for their studies. Nor did he claim the first $250 of his costs because he thought the legislation said something about the first $250 not being claimable.

9 At paragraph 15.

10 At paragraph 40.

11 At paragraph 45.

PELVIC MESH, PATIENT HARM, CONSUMER LAW & A CLASH OF CULTURE: ETHICON SÀRL V GILL

Previously touted as Australia’s “largest women’s health class action,”1 the title is now official. The pelvic mesh proceedings against Johnson & Johnson subsidiaries have become Australia’s largest settlement for a product liability class action.2 Subject to Federal Court approval, a $300 million compensation settlement was reached in September 2022. Addressing two class action claims, it will hopefully provide some relief to the many women suffering life-altering complications from faulty medical devices.

From a legal perspective, these proceedings are particularly interesting as they combine different practice areas. Whilst pelvic mesh, surgical implantation, medical complications, and patient harm may be familiar terms in medical law or personal injury, less clear is their relevance to consumer law. Indeed though, this decision is part of an emerging body of cases applying consumer provisions to resolve medical disputes. It also exposes deeper issues of competing interests at the intersection of business and healthcare (commercial incentives v patient wellbeing). This results in a ‘clash of culture’, and exacerbated risk of patient harm.

Background

The settlement concerns the recent judgment of the Full Court of the Federal Court in Ethicon Sàrl v Gill (2021) (Ethicon v Gill), on appeal from Gill v Ethicon Sàrl (No 5) [2019] (Ethicon (5)).3 Ethicon (5) was a representative class action brought by three applicants (Applicants), all suffering complications caused by medical devices manufactured and sold by Ethicon Sàrl, Ethicon Inc. and Johnson & Johnson Medical Pty Ltd (together, ‘Ethicon’ – all subsidiaries of multinational pharmaceutical company Johnson & Johnson). The nine devices in question (being mesh or tape)

were made of knitted polypropylene, surgically implanted to treat stress urinary incontinence or pelvic organ prolapse.

The pelvic devices were considered a new use of existing technology. The polypropylene material was initially developed for sutures, before adaptation to mesh for hernia treatment. As an existing technology the approval process was less rigorous, despite use in a different anatomical location (female pelvis, not abdomen), with different physiological requirements. At risk of simplification, this change in use – without appropriate testing or warnings – caused many of the complications associated with the devices. These included: chronic inflammatory reaction; extrusion or erosion of mesh into surrounding organs; infection; chronic pain; avoidance of sexual intercourse; difficulty voiding; offensive vaginal discharge; incontinence; damage to surrounding organs, nerves, ligaments, tissue, blood vessels; haemorrhage; and reoperation due to complications.4

The Applicants’ case was that the devices could cause these potentially serious complications, and that Ethicon: a) failed to undertake the necessary investigations to identify the risks and act; and b) failed to adequately disclose the risks that they were aware of.5 As the devices were designed to permanently embed into the surrounding tissue, subsequent removal often proved difficult or impossible.

The judicial process was hardly expeditious. This was despite Ethicon, out of necessity towards the end of trial, conceding that from the time the devices were first sold, Ethicon were aware of all complications 6

Proceedings began in the Federal Court October 2012 and culminated in a lengthy seven-month trial (July 2017 to February 2018). The decision in Ethicon

(5) (November 2019) favoured the Applicants for all claims. Ethicon appealed unsuccessfully to the Full Court (Ethicon v Gill, March 2021), and followed with a special leave application to the High Court. This was dismissed November 2021.

Meanwhile Shine Lawyers (the Applicants’ solicitors) filed an additional class action (April 2021), involving participants treated after 4 July 2017. They were ineligible for Ethicon (5) as their surgeries occurred after the trial commenced. The Federal Court ordered (April 2022), with consent of the parties, that a claims resolution process commence so compensation could begin. This settlement applies to both class actions.

It is still unknown how many group members will share in the settlement. At the start of Ethicon (5), 700 participants had registered. As it was an open action, more claimants have since joined. While awaiting Court approval, Shine Lawyers will continue assessing eligibility. Given approximately 90,000 relevant devices were sold in Australia, final numbers are expected in the thousands.

Claims

Pleadings in Ethicon (5) were framed within two different regimes: common law, and statutory. Liability was established in common law negligence. Ethicon owed the Applicants a duty of care. By failing to appropriately evaluate the devices (before or after release), nor properly informing the Applicants (or surgeons) of the inadequate evaluations about, and the risks of, the kinds of complications the Applicants later suffered, Ethicon failed to meet the expected standard of care.7 Causation needed to be satisfied individually, which the Applicants did.

Negligence is a ‘usual’ way of litigating medical disputes. The Applicants’ choice

JOEL GRIEGER, SESSIONAL TEACHERM ADELAIDE LAW SCHOOL; M.PHIL. CANDIDATE, UNIVERSITY OF ADELAIDE

of statutory claims however, from the Trade Practices Act 1974 (Cth) (TPA) and Schedule 2 to the Competition and Consumer Act 2010 (Cth), the Australian Consumer Law (ACL), are perhaps more ‘novel’. While ACL provisions were considered in Ethicon (5), it was the comparable TPA provisions primarily applied; most of the conduct occurred prior to 1 January 2011, when the TPA was in force.

While there are numerous differences between the statutes, they were predominantly inconsequential to Ethicon (5). 8 There are however wording variations between comparable provisions, including: ‘defect’ and ‘safety defect’; ‘merchantable quality’ and ‘acceptable quality’; and ‘particular purpose…made known’ and ‘disclosed purpose’.

Ethicon (as ‘manufacturers’)9 owed statutory duties to ‘consumers’ (‘individuals’ for defective goods claims), including the Applicants as patients. As all respondents carried on business in Australia, the provisions applied. This was despite two respondents being incorporated overseas, with no ‘place of business’ here.

Despite differing in nature from common law negligence, the same foundational question applies; did the Applicants suffer identifiable harm because of the act (or omission) of Ethicon? It was held that Ethicon breached all claimed provisions, as the devices and accompanying ‘Instructions For Use’ (IFUs) were of unacceptable quality. Although each provision contains multiple elements, for efficiency this analysis limits identification to the main points.

Defective goods

Ethicon contravened defective goods provisions,10 in that the devices had a defect, causing the complications.11 A ‘defect’ exists if device safety is not

‘such as persons generally are entitled to expect’;12 an objective standard13 considering surrounding circumstances, including: marketing, instructions, warnings, use of ‘marks’, and packaging. Essentially, what Ethicon said, or failed to say, about the devices. The defect does not need to affect everyone; devices could be defective even if only some people were affected.14

The Applicants did not purchase surgical mesh directly from Ethicon, nor make their choice alone, relying instead on advice from their treating surgeon. This however did not limit Ethicon’s duty to inform the Applicants of potential risks. That would contradict the legislation, designed to protect consumers; manufacturers are envisaged informing the learned intermediaries.15 Although how the duty is discharged may change, the obligation to warn does not.16

All devices had defects due to the nature and extent of the risks, the deficient IFUs, how the devices were promoted, and the clinical evaluation shortcomings.17 There is a defence if, at the time of supply, the state of scientific or technical knowledge did not enable discovery of the defect.18 ‘Knowledge’ is not limited to the manufacturer, instead requiring that no-one could have reasonably discovered the defect at the time.19 Given Ethicon conceded knowing all risks prior to first supply, this defence failed. Like negligence, clear connection between the act (or omission) and the harm is needed. This was satisfied for each of the Applicants. Merchantable quality & fitness for purpose

The devices were unfit for purpose20 and lacked merchantable quality.21 For unfitness for purpose, the Applicants mainly needed to show that: (1) when acquiring the devices, they did so for

a particular purpose (made known to Ethicon); (2) the devices were not reasonably fit for that purpose; and (3) the Applicant suffered loss or damage because of that.22

For ‘particular purpose’, precedent exists in some cases that a manufacturer may be presumed to know a consumer’s purpose,23 and that applied here. The Court also stated the TPA intended matters like this (goods commonly acquired for a particular purpose) to be covered by s 74D (merchantable quality), not s 74B (unfit for purpose); it was unnecessary to bring claims in both.24 Whether the devices were fit for the particular purpose was objective; what would a reasonable person in the Applicants’ position expect?25 It was up to Ethicon to demonstrate that the Applicants did not rely on the manufacturer’s skill and judgment.26

Unmerchantable quality on the other hand requires Applicants to prove: (1) the devices were not of merchantable quality; and (2) the Applicants suffered loss or damage because of this.27 This will be the case if the devices are not fit for the purpose that goods of its kind are commonly bought (considering description, price and all other relevant circumstances). This is based on what could objectively be expected at the time of supply in the circumstances,28 and it may be enough to demonstrate risk of device failure, rather than proving actual failure.29 The Court found it reasonable to expect a device to not carry risks that were not disclosed.30

As the Applicants succeeded with the defective goods claim (s 75AD), the claims under ss 74B and 74D also succeeded,31 as each of the Applicants individually proved causation.32

Misleading or deceptive conduct

Ethicon’s actions breached the provisions protecting against misleading or deceptive conduct,33 as the devices were promoted in ways which failed to contain proper disclosures or warnings of the potential complications and their gravity. Despite noting several issues with the form of these pleadings, the Court found in favour of the Applicants, agreeing the behaviour was either misleading or likely to mislead.34

Why apply both Negligence & ACL?

So, why would a plaintiff complicate matters and initiate proceedings under both regimes? Beyond protection from one claim failing, it provides an increased range of remedies; the options are far broader with ACL claims compared to common law (in medical negligence, the primary remedy is damages).35 In Ethicon (5) the Applicants succeeded in all claims, each electing to receive damages pursuant to common law.36 Because the statutory claims were also successful though, some additional ACL remedies were available. While equitable remedies such as injunctions are possible, though rare, in common law, the ACL in contrast provides a suite of possible remedies. Depending on the cause of action, they include damages (s 236), adverse publicity orders (s 247), other compensatory orders (s 237) or pecuniary penalties (s 224), non-punitive orders including compliance programs (s 246), and a range of other orders as the court sees fit (s 243).

Further observations

Ethicon (5) displays the competing interests of business and healthcare –profit v patient wellbeing – and the risks that follow. There is a ‘clash of culture’ occurring at the intersection, repeatedly identified in medico-legal decisions involving patient harm, often resulting from commercial entities placing their interests before the patient.

It was the underlying systemic driver of behaviour in Ethicon (5), routinely prioritising commercial interests over

patient safety. This affected many important decisions, from device development through to distribution. Rather than provide appropriate disclosure, patients were misled because Ethicon ‘did not consider it was in their commercial interests to be full and frank with the public about the risks associated with their products.’37 They were driven by their commercial interests and motivated by a ‘sales-driven culture,’38 reflected in the non-compliance with IFU standards.

The level of influence that Ethicon’s marketing department had in developing and wording the IFUs was troubling, given it is an important technical document. Greater concern was given to how the devices were perceived, rather than disclosing known risks. This caused the Court to ponder: ‘Why, I ask rhetorically, was this a matter for a marketing manager,’39 before resolving ‘[i]t is difficult to avoid the conclusion that marketing considerations prevailed to the potential detriment of patient safety.’40

When it next comes time to balance competing interests, Ethicon (5) provides: ‘persons generally are entitled to expect that commercial considerations are not prioritised over patient safety.’41 Healthcare providers should take note, and perhaps consider this a $300 million warning. B

Endnotes

1 Jerome Doraisamy, ‘High Court dismisses appeal in “largest women’s health class action in Australia’s history”’, Lawyers Weekly (online, 5 November 2021), <https://www.lawyersweekly. com.au/biglaw/32952-high-court-dismissesappeal-in-largest-women-s-health-class-action-inaustralia-s-history>.

2 ‘Settlement Reached In Mesh Class Actions’, Shine Lawyers (webpage) <https://www.shine.com.au/ media-centre/media-releases/settlement-reachedin-mesh-class-actions>.

3 The Ethicon decisions, particularly Ethicon (5) at 1,500 pages, are detailed and lengthy. Comprehensive analysis of either is beyond the scope of this article, as are detailed analysis of the considerations of the Court for each pleading. For further information, perhaps start with: Joel Grieger, Mark Giancaspro and Bernadette Richards, ‘Consumer Law, Technology and Health Care: A

Shift in Focus, a Panacea or a Confounder?’ (2020)

Journal of Law and Medicine

Okninski and Joel Grieger, ‘Evolving Law: Further Developments Concerning MAID in Canada-Bill C-7 Receives Royal Assent and Revisiting Ethicon Sàrl’ (2021) 18(3)

Gill v Ethicon Sàrl (No 5) (‘Ethicon (5)

Ibid [5].

Ibid [189].

Ethicon Sàrl v Gill ALR 494 (‘

Ethicon (5)

See TPA s 74A; ACL s 7.

TPA s 75AD; ACL s 138.

Ethicon (5)

TPA s 75AC; ACL s 9.

Ethicon (5) (Australia) Pty Ltd v Peterson [191] (‘Merck

Pty Ltd [2004] FCA 853; (2004) ATPR 42-014, [186] (‘Carey-Hazell (2004)

Ethicon (5)

Ethicon (5)

Ibid [3223].

Ibid [3413], [3458], [3496]-[3500].

TPA s 75AK(1)(c); ACL s 142(c).

Ethicon (5)

TPA s 74B; ACL s 55.

TPA s 74D; ACL s 54. Note that ACL s 54 utilises the language of ‘acceptable quality’.

TPA s 74B; equivalent, which has some slight variances, is s 55.

Ethicon (5) [212]; Merck

Ethicon (5)

Ibid [3525]; Oysters Pty Ltd v Ryan [536].

Although initially raised as a defence by the respondents, it was later abandoned: 4) [3527].

Ethicon (5)

Medtel Pty Ltd v Courtney (‘Medtel’).

Ibid [72]-[74].

Ethicon (5)

Ibid [3544].

Ibid [4429], [4498].

TPA s 52(1); ACL s 18.

Ethicon (5)

New South Wales v Stevens 106, 110 (McColl JA); [2012] NSWCA 415

Gill v Ethicon Sàrl (No 6)

Ethicon (5)

Ibid [5].

Ibid [3327].

Ibid [3337].

Ibid [3377].

Rejecting the myth of the gladiator litigator

WELLBEING &

“I begin with a question: Why is it that we never talk about mental health and litigation in the same conversation? I think it’s partly because mental health, like physical health, is common to everyone. We don’t think of mental health as something we all experience. Instead, we think mental health means mental illness or poor mental health, and that both undermine one’s ability to be a litigator. Mental illness is stigmatized by our society and by our profession. Stereotypical thinking about mental health in the legal profession associates poor mental health or illness with an inability to control emotions or thoughts, a lack of judgment, the inability to work hard or withstand pressure, and unreliability. By contrast, the stereotypical barrister is held in high esteem: a fearless gladiator, wielding a razor-sharp intellectual broadsword. Always in control of their emotions. Erudite and articulate. Powering through long hours of work with pride and not breaking a sweat under pressure. Sometimes wounded, but never defeated. Suffering in silence and quietly bandaging their own wounds, ready to fight another day. And able to “play hard” as well as “work hard”. The grip of these two myths on our profession – that mental health is something that affects others, not us, and the gladiator litigator myth – means that we rarely discuss mental health in the same conversation as litigation because we believe one precludes the other. For too long, members of our profession have been beholden to the idea that our experiences in navigating mental health challenges, whatever they may be, are incongruous with a successful career in litigation. We have internalized the myth that only the invincible are successful. We need to call out these myths – not only because they are false, but also because they send the wrong message about who “belongs” in litigation.

And because they cause terrible suffering for those who believe that they cannot or do not measure up to the gladiator ideal.”

S

o says the Chief Justice of Ontario, Justice Strathy, in his recent paper “The Litigator and Mental Health”.1

Though his Honour discusses his experience of the Canadian legal system over the last few years, the points made are equally reflective of Australian experiences, including within the South Australian legal profession.2 His Honour is certainly also correct to say that “the lesson from these numbers is that the mental health and well-being of the legal professions is a serious institutional issue”, that “mental health is a societal issue and a professional issue”, and that “talking about mental health must be accompanied by action to improve workplace functioning and the well-being of legal professionals”.

Chief Justice Strathy recommends a “less obvious” strategy to help litigators navigate the “inherently stressful activity” that is modern legal practice - namely, to “reject the myth of the gladiator litigator”. His Honour suggests this means we should “acknowledge the role experience plays over innate talent and avoid inapt comparisons between the inexperienced litigator and the experienced”, but another facet of this myth is the image of a litigator as a sovereign, heroic gladiator who operates entirely independently. This fable ignores the reality of what it takes behind the scenes to get to that moment of glory in the ring (or the Courtroom).

Just like gladiators couldn’t succeed without preparation and help from teams of experts each skilled in their respective crafts (trainers, doctors, armourers and the like), even a highly accomplished

barrister’s work isn’t done in isolation, and we cannot undertake our roles effectively without proper support. This means legal workplaces must do more than deliver cupcakes once a year, whilst placing the ongoing burden of responsibility for mental health and wellbeing care on the individual at the same time as promoting work practices which fail to accommodate and support those needs. It means embedding in all legal workplaces a professional culture which prioritises effective teamwork, where diversity is not just encouraged but required, wellbeing is a central focus in decision making, and each team member is fully supported to undertake their work to the best of their ability. That in turn requires reassessing what we value and reward, and how we operate within the structures and organisations that make up our legal system.

Chief Justice Strathy advises senior practitioners to “take a hard look at their workplace cultures, their leadership styles, and how they treat their partners and associates farther down the food chain. They need to ask themselves whether they are protecting and preserving their most important assets. And they need to develop strategies to do so and put senior people in charge of making those strategies work.”

Some strategies to consider, specifically in a litigation context, might include allowing for recovery time and counselling support to manage vicarious trauma impacts during and after difficult matters; actively discouraging intimidation tactics and bullying in litigation3 and rewarding empathetic and collaborative approaches instead; recognising that work may need to be refused, shared, re-assigned or differently resourced to improve workplace

REBECCA

functioning and wellbeing, and acting to do so when needed; and adopting realistic timeframes and deadlines which do not require litigators to regularly give up sleep, connection or healthy eating to meet their obligations.

A structural approach to mental health challenges and needs isn’t just good for individual lawyers within the system, but consistently leads to better client outcomes and more efficient use of public resources.

Mental health and wellbeing remains an individual journey,4 with key steps we must take independently, including to eat well, rest, and recover from work stresses in the company of our loved ones. However, acknowledging that victory - a successful legal career - comes from developing experience and resilience, rather than some mythic inherent capacity for gladiatorial invincibility, will help ensure

those operating in these high stakes, high pressure environments do so both effectively and sustainably. In that context, the importance of legal workplaces providing meaningful, appropriate, human-centred support (so we can actually undertake the actions required to best care for ourselves and others, including our clients) cannot be overlooked.

Endnotes

1 Available at https://www.ontariocourts.ca/coa/ about-the-court/publications-speeches/thelitigator-and-mental-health/

2 Last year, the Society surveyed SA practitioners about their mental health and wellbeing. 47% of respondents advised that working in the legal profession negatively impacted their wellbeing, and almost 60% admitted to considering leaving the profession in the last two years because of mental health issues related to workload or work pressures. Key wellbeing threats include workload pressures, billing stress and profit-centric

workplace cultures, bullying and harassment concerns, vicarious trauma (especially for those working in family, criminal and personal injury), perfectionism, compliance and regulatory stress, isolation, and difficulties switching off or sleeping - with over 70% of respondents reporting fatigue or disrupted sleep.

3 Including effective pathways to address such behaviour at the judicial level - see, for example, discussion in https://barnews.nswbar.asn.au/ winter-2021/44-inappropriate-courtroomconduct/

4 That said, please remember that support and guidance is available - all practitioners should seek assistance (including from GPs or psychologists) as required, without guilt or shame. Law Society support services include LawCare, the Professional Advice Service, Young Lawyers’ Support Group and Complaint Companion Service. See President’s message, June 2021 for more details about these services as well as links to other resources such as the National Mental Health Commission’s evidence-based guidance for creating Mentally Healthy Workplaces, and Beyond Blue’s ‘Heads Up’ program.

After 26 years at the Society, Chief Executive bows out with pride

Stephen Hodder’s first interaction with the Law Society was not under the most pleasant of circumstances.

Working as an insolvency accountant, he had engaged the services of a legal practice in relation to the liquidation of a company he was administering, but, due to the matter going substantially out of time he was forced to other than to report the matter to the (then) Legal Practitioners Conduct Board and Law Claims.

At that stage, he would never have imagined a future as an administrator in the legal profession, let alone becoming one of the Law Society’s longest serving chief executives.

But a lack of job satisfaction in his then workplace and the Law Society’s decision to conduct an organisational review forged a path for Stephen to make an unlikely career change.

Stephen, like many of his colleagues at the time, was a loser of a merger between the firm he worked for. He went from being the national training manager and national discipline officer to “just another one of the boys” – spending most of his time trying to maximise returns for creditors – a task he came to view as thankless.

He decided it was time to get out – not only from his workplace but of practising as an accountant

Fortuitously, the Law Society was advertising for a newly created deputy position, after the Executive and Council of the Society had recognised the role of executive director (as it then was) had simply become too large

Stephen applied for the job, faced intense panel interviews and psychological testing, and was hired.

“It was a newly created position so I was really lucky in that I could shape it how I wanted to,” he said. “(Then Executive Director) Barry Fitzgerald and I worked fabulously as a team.”

Stephen spent 15 years in the role of deputy before being appointed executive director (now called Chief Executive) following Jan Martin’s retirement.

By this time, Stephen was already fully acquainted with the challenges ahead and had an intimate knowledge of how the Society operated.

What did surprise Stephen was the level of altruism and service among the legal profession.

“I was quite stunned when I first stepped into the role,” he said. “I could not believe how incredibly generous the profession was, both to the profession itself and the Law Society, and how much people went to such great lengths give of themselves for the benefit of others and did not expect anything in return.”

“Coming from an accounting background that was a really marked difference and one of the things that made me really enjoy working with the legal profession.”

When Stephen was first employed, the Society had financial reserves of about $60,000. The Society now holds reserves of about $4.5 million. The financial health of the Society, and its strength as an organisation that provides real benefit to members, is what Stephen if most proud of.

Stephen has overseen the sale and lease back of the former Waymouth St headquarters, as well as the relocation to the present, fit-for-purpose premises on North Terrace.

“The Society is now in my view, properly and adequately resourced and staffed with the appropriate staff structure,” he said. “It is a modern and functional organisation with fantastic loyal, compassionate and capable staff with a great culture.”

“The culture is customer focused with a true passion for serving the profession. The Society that will be inherited by my successor is a significantly better one than when I first commenced. That is my proudest achievement.”

“I have also had some really proud moments mentoring and watching younger staff members and some younger members of the profession grow and develop and grow.”

Stephen puts the Society’s substantially improved balance sheet down to sound financial management, including finding income streams in addition to memberships subscriptions, prudent and appropriate allocation of costs among business units to ensure each unit was

accountable and not subsiding other units, and price structuring that that makes non-members pay significantly more for services than Members do.

Ultimately, revenue generated must be used for an appropriate and relevant purpose, and every dollar needs to be accounted for.

Stephen has been particularly committed to ensuring the Society remains relevant thought the entirety of a practitioner’s career, starting with their undergraduate studies.

“I worked hard to create a plan so the Society was relevant to a law student, then have specific services and benefits aimed at practitioners through all stages of their career, from just starting out, intermediate level, and senior level,” he said.

Stephen was particularly proud of establishing Platinum life membership for practitioners who have been Members of the Society for 30 continuous years, which has been extremely well received by longstanding Members.

Stephen admits that he erred in discontinuing the deputy role. One his main reasons for scrapping this role was to financially enable the Society to hire a policy coordinator and communications officer.

In Stephen’s view, the addition of dedicated policy and communications staff members has benefitted the legal

Stephen Hodder

profession by strengthening the Society’s advocacy on behalf of the profession, but he came to realise what the executive and council did all those year ago, that the chief executive’s job was just too vast on its own, and in recent years he was able to he reinstate the “deputy” position, now known as Chief Operations Officer, which Dale Weetman currently holds.

Stephen believes the quality and quantity of Society’s output has increased since he started at the Society.

“I think that the extent to which the Society informs, interacts and represents the profession has changed markedly since I started,” Stephen said. “The quality of our various publications is extremely high, particularly given the size of the organisation and the limited resources.”

“I often receive comments about the quality of Law Society submissions in the national sphere, those comments are often to the extent that the Society “pulls above its weight”.

Stephen strongly believes that it is not necessarily an advantage for the Chief Executive to be a lawyer. In fact, he sees benefits to a non-lawyer being in the role.

“So much of the job is being able being able to visualise and identify issues, and then work out in which order dots need to be joined. The job is administrative, which is why you don’t need a lawyer. That’s not to say a lawyer shouldn’t be the chief executive, just that it doesn’t have to be a lawyer, as long as you have the appropriate staff that you recognise, trust and empower, and the right reporting relationships with executive and council. And you also need the ability to recognise when you do need a lawyer, and in this organisation it’s not hard to find one! “

Stephen has identified three key challenges for the Society and legal profession going forward – the size and operation of the Society’s Council, the inevitable establishment of a national profession, and diversity and inclusion within the legal profession.

Stephen has participated in three attempts over the years to reduce the size of and change the structure of the Society’s Council.

“My view is that it is simply way too large, he said. “While on the one hand, it can be said that the size of the Council provides for broad representation of the Membership, my opinion is that it could be halved in size without any such detriment. My suggestion for the future is that the size and structure of the Council again be revisited.”

The establishment of a national profession, which would see practitioners across Australia be subject to the same rules (known as the uniform law), has been adopted by NSW, Victoria and most recently WA.

“The Society, having reviewed the Uniform Law again during the last 18 months has decided it does not support participation at this time due to a number of specific objections. But it will come at some stage. It is a matter of when, not if, in my view,” he said.

“Rather than each presently nonparticipating jurisdiction dealing with things separately, my suggestion is that there be some sort of summit held involving those jurisdictions. If the law societies in those jurisdictions band together, they might be able to influence and bring about changes to the structure of the Uniform Law which would then make it palatable.”

With regards to diversity, Stephen has witnessed significant in-roads made towards gender equality in the profession, having overseen a formidable amount of work developing initiatives, resources, and projects to address gender equality and associated issues, including successfully lobbying for a mandatory annual CPD to address bullying, discrimination and harassment in the profession.

“The membership needs to address diversity in its true sense – rather than focusing almost solely on gender. Gender balance and related issues are of course important, but I think that the size and mix of the profession will see the gender gap close. We need a greater focus on ensuring the profession is truly representative of society by promoting diversity that goes beyond gender. Bullying, discrimination and harassment also remain challenges and must continue to be addressed.”

Stephen had always said that 10 years is a long enough time to be in the role of Chief Executive. “If you have not achieved achieve want you wanted to achieve in 10 years, you are probably not going to achieve it,” he said.

Stephen has achieved most of what he set out to achieve, and strongly believes it is time for someone else to take the reins.

He would have retired earlier if not for COVID-19 and then the major cyber incident that temporarily crippled the Society’s IT infrastructure.

“I wanted to help guide the Society through the pandemic, which was a really turbulent time for everyone,” he said.

One of his significant achievements during this time was delivering a $1.8 million relief package to members of the profession, to help lawyers impacted by covid.

But perhaps more than his achievements, Stephen will cherish the friendships he has made.

“I consider it to have been an honour and a privilege to have been in this role,” he said. “The membership has some fantastic people in it and I have made some lifelong friends. Similarly, the Society has some truly amazing and fantastic staff. Some of the staff will also be lifelong friends.”

So what’s next for the new retiree?

“The short answer is I don’t know!’”

“I have not had a long holiday for 26 years so intend taking the summer off the think about what I want to do. I intend to do almost nothing for three months, other than relax, enjoy summer and Christmas and do some travelling both locally and overseas,” Stephen said.

“I also intended to do a little bit of volunteer work in the coming months.

After a three-month break, I will think about it. I do not have any intention to work full time ever again, however I know that I will need something to keep me intellectually stimulated. What that might be, I don’t know. I just want to relax at this point and decide for myself what I want to do, rather than doing what my diary and email tells me I must do.”

ACCESS TO JUSTICE FOR SURVIVORS OF FAMILY AND DOMESTIC VIOLENCE MEANS GETTING THE FIRST RESPONSE RIGHT, EVERY TIME

DR SARAH MOULDS, SENIOR LECTURER IN LAW, UNISA

It’s easy for lawyers to think about ‘access to justice’ as something that starts when a person needs a lawyer. But for many people who have experienced domestic or family violence, the path to justice starts – and sadly sometimes ends – way before instructions are given or legal advice taken. ‘Access to justice’ for survivors means being seen and heard when they report abuse or violence at a police station, GP surgery or school front desk, or when police or other authorities are called to attend an incident at their homes. ‘Access to justice’ means empowerment and control right from the beginning – and this demands a rethink of how we train first responders and others in the system that are likely to interact with survivors.

This is one of the key findings from a recent collaborative research project called Powerful Interventions. The project was undertaken by Uniting Communities and UniSA, funded by the Law Foundation of South Australia’s Brian Withers Grant and supported by an expert Advisory Group of legal practitioners and other service providers. It focuses on the legal framework governing access to, use and enforcement of orders made under the Intervention Orders (Prevention of Abuse) Act 2009 (SA) in South Australia.

Past efforts to improve the effectiveness of legal interventions to address family and domestic violence have focused on data produced and published by the courts and the South Australian

Police. However, this information does not always uncover the legal, social, cultural and other barriers to the effectiveness of this legal framework in South Australia.

The Powerful Interventions project aimed to centre the voice of those with lived experience of the Intervention Orders regime. It considered 63 anonymous survey responses from people with lived experience of domestic and family violence, as well as service providers including lawyers, social workers and court officials. Researchers also conducted nineteen individual interviews and four focus groups, including two with Aboriginal organisations.

When taken together, the data reveals a system under acute pressure that is failing to meet the needs of those it is designed to protect. Research participants explained that there are many hard-working police officers, public servants, court officials and specialist lawyers, social workers and other support services dedicated to ensuring the Intervention Order system provides meaningful protection for those experiencing, or at risk of, family and domestic violence. However, participants also said that these positive initiatives and genuine individual efforts are not enough to address the structural problems and cultural deficits evident within both the legal framework governing Intervention Orders and the practical implementation of these legal tools.

Those with lived experience accessing or engaging with the Intervention Orders system told the researchers that they want changes to the system so that they can access these legal tools in a way that gives them back control over their own lives. They want to be put at the centre of the system. They want to be believed, respected and empowered when they report violence and abuse – that first encounter can determine the nature of their experience with the rest of the legal system. As one service provider said:

Being told that your abuse is ‘not serious enough’ or there is no abuse identified is one of the most damaging things that can happen. It can impact the relationship of trust going forward. It is therefore critical first responders are adequately trained in trauma-informed care and practice, and have training in best practice responses to domestic violence, so that the survivor can also be referred to suitable support services.

If that first response (by police, for example) is dismissive or re-traumatising, it can leave survivors vulnerable to ongoing violence and harm, and distrustful of the legal system. As one survivor said:

I didn’t feel like I was taken seriously or believed. [I was] made to feel like I was being judged as hysterical, ridiculous and time wasting. This made me feel unsafe to approach police again which was fairly scary, because they were the place I was supposed to be able to count on to help, and I wasn’t sure where else I could go.

A mishandled first response can reinforce narcissistic or controlling behaviour by perpetrators, who use these experiences as evidence of their own power. One interviewee said:

The system that is being built to protect women from this type of abuse can be turned into a weapon in the hands of those men that are seeking to perpetuate control against their partner or their family.

Survivors also want to be kept in the loop about any changes or variations that might be made to Intervention Orders by the courts or the police, and they want a say in the design and delivery of appropriate penalties and behavioural change programs. They want the chance to collect and present evidence of the harm they have experienced – including nonphysical harm – in a supported, trauma informed environment. This means engaging professionals to help the survivor confront the perpetrator with the broader health, financial and social impacts of their behaviour. As one service provider said:

With this support team, the survivor could be encouraged to develop a strong recorded, accumulative evidence case. And these other professionals could be empowered to confront the defendant about the harm that he is causing to his partner, and in many cases also to his children.

Survivors also said they want greater focus on perpetrator accountability by exposing the true impact of the violence on the lives of others, not just the aspects of the behaviour leading to criminal offences or breaches of the law.

Access to justice for survivors of domestic and family violence also means access to practical support to help recover and rebuild– and this includes financial support, housing options, employment opportunities and mental health care. As one participant said:

I’d really like to see some kind of focal point, resources for [domestic violence] survivors. To support people to rebuild their lives. Getting the universities and tertiary institutions to help with retraining and teaching, employment. Somewhere where people can break back in. Including social life, as well as financial security and employment.

Aboriginal communities want the right to determine their own strategies to response to domestic and family violence, and access to culturally-safe prevention strategies that focus on meeting the health, housing and employment needs of families – as well as locally-informed risk assessment strategies to protect against violence and abuse.

These changes – rather than amendments to legal tests or increases in maximum penalties for breaches of orders – are top priorities for those with lived experience of the system.

These priorities are unpacked in further detail in the Key Findings and Recommendations contained in the Report, which aims to equip lawmakers and policy makers with the best available information as they seek to give effect to a shared commitment to reduce the prevalence of family and domestic violence in our community. So far, the findings have been welcomed by the South Australian Government, with some recommendations already implemented, including the removal of filing fees for the lodgement of private Intervention Order applications. Other recommendations, including those suggesting legislative changes and mandatory trauma-informed training for all first responders, remain under active consideration.

The researchers would like to thank all individuals who participated in the qualitative interviews and surveys conducted as part of this research. Their generosity, resilience and determination to improve the Intervention Order system for others is truly inspiring. As one research participant said:

No legislation is good enough until people with lived experience have been consulted […] All these people with lived experience are not being heard. They are the ones that have the knowledge. Every time you don’t go to the coal face you miss the point.

You can read a full copy of the Report here B

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LawCare

The LawCare Counselling Service is for members of the profession or members of their immediate family whose lives may be adversely affected by personal or professional problems.

If you have a problem, speak to the LawCare counsellor Dr Jill before it overwhelms you. Dr Jill is a medical practitioner highly qualified to treat social and psychological problems, including alcoholism and drug abuse.

The Law Society is pleased to be able to cover the gap payments for two consultations with Dr Jill per patient per financial year.

All information divulged to the LawCare counsellor is totally confidential.

To contact Dr Jill 08 8110 5279

7 days a week LawCare is a member service made possible by the generous support of Arthur J. Gallagher

The Litigation Assistance Fund (LAF) is a non-profit charitable trust for which the Law Society acts as trustee. Since 1992 it has provided funding assistance to approximately 1,500 civil claimants.

LAF receives applications for funding assistance from solicitors on behalf of civil claimants seeking compensation/ damages who are unable to meet the fees and/or disbursements of prosecuting their claim. The applications are subjected to a means test and a merits test. Two different forms of funding exist –Disbursements Only Funding (DOF) and Full Funding.

LAF funds itself by receiving a relatively small portion of the monetary proceeds (usually damages) achieved by the claimants whom it assists. Claimants who received DOF funding repay the amount received, plus an uplift of 100% on that amount. Claimants who received Full Funding repay the amount received, plus 15% of their damages. This ensures LAF’s ability to continue to provide assistance to claimants.

LAF recommends considering whether applying to LAF is the best course in the circumstances of the claim. There may be better methods of obtaining funding/ representation. For example, all Funding Agreements with LAF give LAF certain rights including that funding can be withdrawn and/or varied.

For further information, please visit the Law Society’s website or contact Annie MacRae on 8229 0263.

Andrew Hill