Brief May 2019

VOLUME 46 | NUMBER 4 | MAY 2019

Rosalind Croucher AM

Keynote speaker at this month's Law Week Breakfast Also inside Law Week Programme 2019 Contracting with Government Departments and Public Authorities Improving Written Submissions The PPSA and the General Law: How Do They Work Together?

Current Issues at the Legal Profession Complaints Committee

Reaching out for knowledge, expertise and engagement

LAW WEEK 2019 CPD Day for Rural, Regional and Remote Legal Practitioners Friday, 17 May 2019, 8.30am – 5.20pm Swan Room, Level 1, Parmelia Hilton, 14 Mill Street, Perth The Law Society of Western Australia recognises that country lawyers face a number of challenges unique to working away from an urban environment.

The isolating impact of distance can make it more difficult for country lawyers to get together in any one region as a profession, to share collegiality and support, and to learn from each other through tailored Continuing Professional Development initiatives.

After a successful first year, the Law Society is once again hosting a CPD day for RRR lawyers in Perth during Law Week.

Acknowledging the tyranny of distance, this CPD day is offered free for Country members* of the Law Society and heavily discounted for Country nonmembers at $200 for the entire day and provides 6 CPD Points across all four competencies.

The Law Society welcomes regional practitioners to Perth for a combination of professional learning and networking, concluding with a chance to socialise over drinks.

*‘Country Member’ means an Ordinary Member who ordinarily practises outside a radius of 50 kilometres from the Central Office of the Supreme Court of Western Australia, Perth

lawsocietywa.asn.au

Volume 46 | Number 4 | May 2019

11

CONTENTS

07

FOLLOW US lawsocietywa.asn.au LawSocietyWA @LawSocietyWA

30

37

ARTICLES 06

Law Week 2019

07

A Matter of Trust: The Importance of Genuine Decision-Making when Exercising Discretionary Powers

11

Contracting with Government Departments and Public Authorities

24

Current Issues at the Legal Profession Complaints Committee

COPYRIGHT: Readers are advised that the materials that appear in Brief Journal are copyright protected. Copyright is retained by the author.

Readers wanting to cite from or reference articles in Brief Journal should reference as follows: (Month and Year) Brief Magazine (Perth: The Law Society of Western Australia) at page __). Readers wanting to reproduce a substantial part of any article in Brief Journal should obtain permission from individual authors. If an author’s name is not provided, or if readers are not able to locate an author’s contact details, readers should contact the Law Society of Western Australia (Inc.).

The trade mark BRIEF is the subject of registered trade mark 1253722 and is owned by the Law Society of Western Australia (Inc). Trade mark 1253722 is registered for Western Australia.

Published monthly (except January) Advertising enquiries to Manager Marketing and Communications: Madeleine McErlain Tel: (08) 9324 8650 | Email: mmcerlain@lawsocietywa.asn.au

26

Law Week 2019 Programme

Senior Communications and Media Officer: Andrew MacNiven

30

Improving Written Submissions

RRP $16.00 incl GST. Printed by Vanguard Press

37

The PPSA and the General Law: How Do They Work Together?

Communications and Design Officer: Charles McDonald

Editor: Jason MacLaurin Editorial Committee: Gregory Boyle, Thomas Camp, Dr Rebecca Collins, The Hon John McKechnie QC, Dr Pat Saraceni, Robert Sceales, Verginia Serdev-Patterson, Eu-Min Teng Brief is the official journal of the Law Society of Western Australia Level 4, 160 St Georges Tce Perth WA 6000 Phone: (08) 9324 8600 | Fax: (08) 9324 8699 Email: brief@lawsocietywa.asn.au | Web: lawsocietywa.asn.au ISSN 0312 5831

REGULARS 02 President's Report

DISCLAIMER: The views and opinions expressed in Brief and the claims made in advertisements published within it, are not to be taken as those of, or as being endorsed by the Law Society of Western Australia (Inc.) or the Brief Editorial Committee. No responsibility whatsoever is accepted by the Society, or the Editorial Committee for any opinion, information or advertisement contained in or conveyed by Brief.

48 Drover's Dog

04 Editor's Opinion

49 Cartoon

10 Ethics Column: The Lawyer by Implication

50 Law Council Update

28 Family Law Case Notes

52 Classifieds

29 Quirky Cases: The Tale of the Late Night Traveller

52 New Members

51 Professional Announcements

53 Events Calendar

Submission of articles: Contributions to Brief are always welcome.

For details, contact brief@lawsocietywa.asn.au

President: Greg McIntyre SC Senior Vice President: Nicholas van Hattem Junior Vice President & Treasurer: Rebecca Lee Immediate Past President: Hayley Cormann Ordinary Members: Jocelyne Boujos, Nathan Ebbs, Ante Golem, Emma Griffiths, Karina Hafford, Matthew Howard SC, Joanna Knoth, Fiona Low, Denis McLeod, Jodie Moffat, Shayla Strapps, Paula Wilkinson Junior Members: Zoe Bush, Brooke Sojan, Demi Swain Country Member: Kerstin Stringer Chief Executive Officer: David Price

01

PRESIDENT'S REPORT Greg McIntyre SC President, The Law Society of Western Australia

Welcome to the May edition of Brief. This edition has, as one of its major themes, a look ahead to Law Week 2019, which promises to be another exciting opportunity to showcase the important work of the legal profession and to provide members of the community with a deeper insight into the significance of the law and our justice system.

This year more than 40 Law Week events for the legal profession and the community will take place between Monday, 13 May and Friday, 17 May. Law Week will kick off with the annual Law Week Breakfast with a keynote address

by Emeritus Professor Rosalind Croucher AM (who is featured on the front cover of this edition) and the 2019 Attorney General’s Community Service Law Awards. The Law Week Awards Night, to be held at the Grand Ballroom of the Westin, Perth, including the 2019 Lawyer of the Year Awards, will conclude the week on Friday, 17 May. Law Week is the legal profession’s annual focus on law and justice in the community. This year, the Law Society will be launching a new campaign titled ‘Lawyers Make a Difference’. This campaign will celebrate the good work lawyers perform for the substantial benefit of the wider community. This good work often goes unnoticed and unremarked upon. ‘Lawyers Make a Difference’ seeks to shine a spotlight on the positive contributions made by so many legal practitioners in Western Australia.

You can follow the latest developments via the Law Society’s social media channels – Facebook, LinkedIn and Twitter. We also greatly welcome your own contributions – please use #LawyersMakeaDifference to get involved.

An abridged version of the programme is also published in this edition of Brief from page 26. To explore the full programme, please visit the Law Society’s website: lawsocietywa.asn.au/law-week.

02 | BRIEF MAY 2019

New Appointments I take this opportunity to once again congratulate, on behalf of the Law Society, those practitioners recently appointed to judicial and other important roles.

Supreme Court Justice Janine Pritchard has been appointed President of the State Administrative Tribunal (SAT) for a five-year term, beginning on 4 June 2019. Justice Pritchard is the first woman to serve as President of the SAT since its founding 14 years ago, making this a particularly noteworthy and commendable appointment.

Many congratulations also to Jennifer Hill and the Hon Justice John Vaughan, who have been appointed to the Supreme Court and the Court of Appeal respectively. The appointments are effective from 4 June 2019.

I also congratulate Ben Gauntlett on his appointment as Disability Discrimination Commissioner. Each of the appointees listed above are longstanding and highlyvalued members of the Law Society, and I have no doubt that they will each carry out their important roles with the requisite assuredness and skill.

National Reconciliation Week Breakfast As part of its commitment to reconciliation, the Law Society is proud to support Reconciliation WA's National Reconciliation Week Breakfast, taking place on Friday, 31 May at Crown Towers, Burswood.

This year's National Reconciliation Week has the theme 'Grounded in Truth – Walk Together with Courage'. This theme signifies that to promote positive race relations, the relationship between Aboriginal and Torres Strait Islanders and the broader community must be grounded in a foundation of truth, a journey which requires all of us to 'walk together with courage'.

Law Society members and member firms are invited to attend the National Reconciliation Week Breakfast to explore this theme on Friday, 31 May. Tickets

can be purchased online at: eventbrite. com.au/e/national-reconciliation-weekbreakfast-tickets-59148673274

New National Partnership with Virgin Australia The Law Society is delighted to partner with Virgin Australia on a new member privilege offering. Law Society members and companions will enjoy exclusive offers on airfares to over 600 domestic and international destinations.

Law Society members can access significant discounts on Economy, Premium Economy and Business Class tickets to destinations across Australia and worldwide. Added benefits include a Discounted Lounge Scheme with a joining fee of $200 (normally $250) and annual membership fee $325 (normally $420) which provides access to all Virgin Australia Domestic lounges. The joining fee will be waived for Law Society members until 30 June 2019 – please contact lawsocietymembers@virginaustralia.com for details on how to join.

Members also enjoy access to FlyAhead, Economy X and three months Complimentary Pilot Gold Velocity Status Acceleration, which allows travellers to experience the best of Virgin Australia’s premium products and services and be fast-tracked to full Velocity Gold membership. Contact lawsocietymembers@virginaustralia.com for further details on how you can access these benefits.

Please visit the Law Society’s website for full details and for guidance on how to book your flights: lawsocietywa.asn.au/ member-privileges/travel.

Membership Renewals The Law Society's membership renewal period is fast approaching. Please ensure that your details are kept up to date by logging in to your member portal (at members.lawsocietywa.asn.au) and clicking on the ‘My Details’ icon. Further information on how to renew for 2019/20, and the benefits you will continue to enjoy as a valued Law Society member, will be released soon.

DISCOUNTED TRAVEL FOR BUSINESS AND PLEASURE.

TRAVEL IN STYLE WITH VIRGIN AUSTRALIA EXCLUSIVE OFFERS FOR MEMBERS OF THE LAW SOCIETY OF WA Virgin Australia has partnered with the Law Society of Western Australia to offer some amazing deals, including discounts on domestic flights and to over 600 destinations worldwide!

lawsocietywa.asn.au/member-privileges/travel/

03

EDITOR'S OPINION Jason MacLaurin Editor, Brief | Barrister, Francis Burt Chambers

This month’s Brief contains the usual mix of items, both serious and on the lighter side, with a focus on the annual Law Week and the Society’s new campaign #LawyersMakeaDifference.

Law Week events are held not only in the Perth CBD, but also in the suburbs and in Albany, Geraldton, Bunbury, and primary and high schools throughout the State.

This reflects the reach and importance of the legal profession in the community.

The history of the Society is one of devotion to causes like pro bono and legal aid work, as is evident from Dr Catherine May’s Celebrating 90 Years of the Law Society of Western Australia, available on the Society’s website, and the chapters devoted to the Society’s initiatives in these areas.

The Society was involved in access to justice issues from the start, being responsible for the administration of the frankly named Poor Persons Legal Assistance Act 1928. Following from that were years of initiatives and programmes, many of which relied upon volunteer work by members, and culminating in the setting up of Legal Aid WA and the Law Access Pro Bono Referral Scheme, run by the Society.

Western Australian practitioners are famously generous with their time and pro bono work. Though it should be noted that it doesn’t count as having a pro bono scheme if the system behind it is being customarily sloppy in obtaining monies on trust from dubious clients.

Members are encouraged to attend and promote Law Week events. Unfortunately, the Society does not have the megabudget to churn out promotional material possessed by, say, Marvel Studios with its most recent instalment Avengers: End Game (the review of which might well be “is that a promise?”) or Clive Palmer’s United Australia Party.

The esteem in which lawyers are held in the community seems to be improving, according to recent surveys. Though this may be due to the public turning sharply, as to trustworthiness, against bankers, certain cricket players, and anyone who asks (or more commonly demands) to be paid in Bitcoin.

Popular culture also informs upon the regard in which professions are held.

Australian cinema does not boast the sheer volume of courtroom dramas the Americans produce, though has produced two iconic courtroom films.

04 | BRIEF MAY 2019

Bruce Beresford’s Breaker Morant (1980) was adapted from Kenneth G Ross’s play about the 1902 court-martial of Australian Lieutenant Harry “Breaker” Morant and five other officers during the Boer War, over the murder of seven Boer prisoners and a German missionary. The Breaker Morant military trial is considered a miscarriage of justice, it being suggested the British needed to secure convictions to appease Germany over the death of the German missionary – fearing that Germany might enter the war on the Boer side.

Parallels are drawn between Breaker Morant, Kubrick’s Paths of Glory and A Few Good Men with Tom Cruise and Jack Nicholson.

“We all admire your zeal in defending your fellow Australians,” says one of the judges, Lt. Col. H.C. Denny, played by Charles “Bud” Tingwell, to the defence lawyer (Jack Thompson), “but intemperate speech and wild accusations do not further your cause.”

Which is ironic, as this very tactic worked for Tom Cruise in A Few Good Men and for the hero-advocate in just about every other US courtroom movie, including My Cousin Vinny.

Interestingly, four different attorneys claimed to be the inspiration behind Tom Cruise’s character in A Few Good Men1.

A look at them suggests none could have inspired Tom Cruise’s casting, unless it was in DC Comics’ “Bizarro [opposite] world” (trying to push back a little against the all-pervading Marvel universe here).

Some other trivia: foundation cast member of the (really) long running Australian show Home and Away, Ray (“Alf”) Meagher, plays a Sgt. Maj. Drummond in Breaker Morant. This makes sense, as it seems Home and Away has been on air since the Boer War. Kenneth G Ross also wrote scripts for the beloved Australian TV courtroom drama Rafferty's Rules, set in a regional Magistrates Court. Rafferty's Rules is Australian slang for “no rules at all”. The etymology of the phrase is difficult to trace, being of unknown provenance, except it seems as yet another flagrant and rude sledge against the Irish.

The final scene of Breaker Morant is the most memorable, with Edward Woodward/Morant delivering the defiant line before the firing squad: “Shoot straight you b**tards. Don’t make a mess of it.” As a catch-cry, this blows “you can’t handle the truth” out of the water (though

nowadays would probably require some sort of trigger warning).

This was Australian cinema’s most iconic cinematic quote for years, until unseated by the considerably less profound: “That’s not a knife… this is a knife.”

Then came along the epic closing address of solicitor Dennis Denuto from The Castle: “In summing up, it’s the Constitution, it’s Mabo, it’s justice, it’s law, it’s the vibe and, aah no that’s it, it’s the vibe. I rest my case…”

The Castle lifted the public’s affection for lawyers, introduced the public to Section 51(xxxi) of the Constitution and the phrase “on just terms”, and launched a thousand misconceived actions and submissions from self-represented litigants.

The essence of Dennis Denuto was considered in Smith v Lucht [2015] QDC 289, where a solicitor who agreed to act for his daughter-in-law against her ex-husband2 sued the exhusband for defamation for publishing statements to the effect he was “Dennis Denuto”. In finding that it was, in the circumstances, defamatory to call a lawyer “Dennis Denuto”, the Trial Judge described Denuto as “likeable and wellintentioned, but inexperienced in matters of constitutional law and not qualified to appear in litigation of that nature.

His appearance in the Federal Court portrayed him as unprepared, lacking in knowledge and judgment, incompetent and unprofessional.”3 The real lawyer hero of The Castle is of course the retired silk, Lawrence Hammill QC, who comes out of retirement to successfully represent Darryl Kerrigan before the High Court, pro bono, and then befriends the Kerrigans. And the actor who played the hero Hammill QC? None other than Charles “Bud” Tingwell, the villain Lt. Col. H.C. Denny from Breaker Morant.

It seems there is great redemption to be had in pro bono work.

NOTES: 1.

“A Surplus of ‘A Few Good Men’”, By W Glaberson, 15/9/2011, www.nytimes.com.

2.

What could go wrong?

3.

The Plaintiff’s action was however dismissed under the defence of “triviality”.

Brief welcomes your thoughts and feedback. Send letters to the editor to brief@lawsocietywa.asn.au

UNRIVALLED LEGAL TALENT

Western Australia’s

LEGAL MARKET is changing...

ARE YOU READY? Contact Western Australia’s leading legal recruitment firm, and stay one step ahead of the curve.

Market Hot Spots Partner – Commercial • Preeminent national firm with significant growth plans • Minimal $200,000+ transportable client base • Build a reputable WA practice with a leading team

Banking & Finance Associate & Senior Associates • Exclusive briefs with leading top tier firms • Blue chip client bases, complex and diverse range of transactions • Clear pathway to Partnership

KBE Legal Hub will be embracing the digital age with a change in the way we feature our roles...

All levels – Family & Insurance Lawyers • Multiple opportunities with boutique, national and top-tier firms • Career progression and growth available with some of Perth’s fastest growing teams

so connect with us via LinkedIn!

Chris Bates

Siemone Neutgens

Sam Turton

Managing Director

Principal Consultant and Hub Team Manager

Legal Counsel/Consultant

M: 0411 645 984 E: chris.bates@kbe.com.au

M: 0403 383 326 E: siemone.neutgens@kbe.com.au

M: 0413 132 049 E: sam.turton@kbe.com.au

KBE LEGAL HUB P: 08 6467 7889 A: Level 18, 140 St Georges Terrace, Perth W: kbe.com.au

Law Week 2019 Monday, 13 May to Friday, 17 May Law Week is an annual opportunity for the legal profession to engage with the public, build a shared understanding of the law and promote access to justice. In 2019, we focus on lawyers making a difference across Western Australia and using their skills to benefit the broader community.

During Law Week 2019, engaging and informative events focusing on law and justice in the community will take place across Western Australia – in Perth, Mandurah, Albany, Geraldton, Kalgoorlie and at primary schools and high schools throughout the State – from Monday, 13 May to Friday, 17 May. For Law Week 2019, the Law Society launches a new campaign, #LawyersMakeaDifference, to highlight real stories of everyday lawyers. In every facet of society you will find lawyers using their skills to help others; whether keeping the community informed of their rights, helping entrepreneurs set up small businesses, or providing vital legal assistance to those who couldn’t otherwise afford to access justice.

Law Week opens with the Law Society’s Law Week Breakfast at the Parmelia Hilton, Perth on Monday, 13 May. The Law Society is delighted to welcome Emeritus Professor Rosalind Croucher AM, President of the Australian Human Rights Commission, who will present the keynote address to launch Law Week.

The event will also feature the Attorney General’s Community Service Law Awards, recognising an individual legal practitioner and an organisation which have provided outstanding pro bono legal services to the Western Australian community.

The provision of free legal advice to the community has always been an essential aspect of Law Week, and this year is no exception. Free legal advice clinics and information sessions are offered throughout the week at various locations, including in regional areas. These sessions are presented by organisations including

Legal Aid WA, HHG Legal Group, Regional Alliance West, Public Trustee, Seniors Rights and Advocacy Service and various community legal centres.

In keeping with the theme of community engagement and pro bono work, the Law Access Walk for Justice is raising funds for Law Access, which matches disadvantaged members of the community who require legal assistance with pro bono lawyers, who work tirelessly to help people in need. The Walk is on Tuesday, 14 May, National Pro Bono Day, and commences from the Bell Tower on the Perth foreshore. It provides an opportunity for members of the legal profession to give back to the community and raise money for a charitable cause, while participating in a fun activity.

A Law Week film evening is raising awareness about how the legal profession, students and members of the public can assist with Indigenous legal issues. On Wednesday, 15 May, a special screening of Connection to Country will be presented by the Law Society’s Young Lawyers Committee. This beautifully shot documentary, directed by Tyson Mowarin, explores the relationship between Indigenous people and their land and charts the struggles to have their unique cultural heritage recognised, conserved and celebrated.

As the 2019 Law Week comes to a close, the Law Week Awards Night provides an opportunity to acknowledge those who have made a significant contribution to the legal profession, recognising long-serving practitioners and presenting the 2019 Lawyer of the Year Awards.

Thank you to Law Week supporters and sponsors, including the Law Society Public Purposes Trust, Department of Justice, Bankwest, HHG Legal Group, Murdoch University and The College of Law. We look forward to seeing you at a Law Week 2019 event!

For an abridged version of the Law Week 2019 programme, please see page 26.

Please visit lawsocietywa.asn.au/law-week/#law-week-events to see the full Law Week programme and for more information on times and venues for events open to the legal profession and the wider community.

06 | BRIEF MAY 2019

A Matter of Trust: The Importance of Genuine Decision Making When Exercising Discretionary Powers

By Jim O’Donnell Jackson McDonald Lawyers Chair, STEP WA*

I have found that in most cases, with few exceptions,1 a carefully prepared (valid) binding nomination will avoid dispute when it comes to the payment of death benefits from a self-managed superannuation fund (SMSF).

I had almost forgotten the number of seminars that I had attended in the past 20 years when so-called superannuation or estate planning experts peddled views along the following lines:2 Don’t bother using binding nominations for SMSFs. It’s better to just leave it up to the discretion of the surviving trustee. Doing nothing leaves maximum flexibility, as the trustees can give the death benefits to anyone they want, so long as they’re a dependant or the legal personal representative. No questions asked.

Then I came across an interesting death benefit case in the Supreme Court of Victoria in February, which contains a quote from a letter given by a lawyer with remarkable similarity to those short-sighted comments given at those seminars.

In Re Marsella; Marsella v Wareham (No 2),3 Justice Kate McMillan quoted the following passage from a letter sent by the lawyers for one of the trustees of an SMSF, being the daughter (Caroline) from the first marriage of the deceased member (Helen), to the lawyers for the deceased’s second husband (Riccardo): superannuation trustees have an unfettered discretion as to the distribution of superannuation funds (save as required by the [Superannuation Industry (Supervision) Act 1993 (SIS Act)]). In the present case the Trustees were entitled to make a death benefit distribution to any of the eligible beneficiaries. We are familiar with Karger v Paul. You will know that a discretionary trustee is not required to give reasons for any decision and our client does not do so. You have asserted no foundation for an improper exercise of discretion.

You refer to a conflict of interest but we fail to see how that allegedly arises. The Trustee is permitted to exercise her discretion, to any eligible object, which includes herself. Our client owes no duty to the estate or other beneficiaries…

Caroline appointed her husband as a cotrustee, and the co-trustees (defendants) then exercised a discretion to pay all the death benefits ($450,416) to Caroline.

Riccardo (the plaintiff), both as Helen’s spouse and as executor of her estate, sought orders to remove the defendants as trustees of the SMSF, appoint a new trustee, set aside their decision to pay all the death benefits to Caroline, and repay any sum that had been distributed, together with interest. His grounds for seeking those orders were that they had failed to give real and genuine consideration to the interests of the dependants of the SMSF.4 When Helen married Riccardo, she had accumulated substantial assets from her first marriage, and even though Helen and Riccardo were married for 32 years, her estate planning was geared towards leaving most of those assets to her children from her first marriage (Caroline and Charles) as well as her grandchildren. Helen’s Will appointed Riccardo as executor but made only limited provision for him, e.g. a right to occupy one house, and a fixed sum of money allocated for its upkeep. The bulk 07

of the estate was to pass to Caroline and Charles.

Substantial assets passed into the SMSF when it was set up in 2003. Helen and Caroline were the original trustees. Helen was the sole member of the SMSF. At the time of setting it up, Helen signed a death benefit nomination in favour of her grandchildren. That nomination expired before Helen died, and in any event was ineffective as it directed benefits to persons other than dependants, contrary to the SIS Act. After Helen died, Riccardo obtained probate of the Will and brought a family provision claim against the estate.

Riccardo’s relationship with Caroline broke down irretrievably. She exhibited a marked negative attitude and negative feelings towards him.

The SMSF deed provided that where there was no binding nomination, the death benefit must be paid or applied to or for the benefit of a person nominated in writing by the deceased member, provided that the trustee is satisfied that the person was a dependant, one or more dependants of the deceased member, or the legal personal representative of the deceased member. The payment was to be in such proportions between all or any of those persons or categories of persons as the trustee shall determine in its discretion.

The defendants asserted this clause gave them an absolute and unfettered discretion, a general power of appointment, which was tantamount to ownership.

The trustee minutes to distribute the death benefits contained self-serving formulaic words to give the impression that “due consideration” had been made by the trustees of the possible interests of all dependants of the deceased member, the potential eligible beneficiaries of the member, and the member’s estate, before resolving to pay all the death benefits to Caroline.

Orders The Court accepted the plaintiff’s submissions and made orders setting aside the defendants’ exercise of discretion and removing the defendants as trustees. The Court asked the plaintiff to file further submissions as to the identity of a trustee, or director of a corporate trustee, with the intention of the SMSF being a compliant superannuation fund for the purposes of the SIS Act. McMillan J’s judgment should be read in 08 | BRIEF MAY 2019

full, as it provides an excellent summary of applicable principles and how those principles apply to the particular facts in the case. A short article like this, with a capped word count, cannot do it justice.

A few of the key principles drawn from the reasons for decision are summarised below.

Real and Genuine Consideration In accepting office, a trustee becomes bound by certain duties, including the duty to act in the best interests of the beneficiaries. While a trust instrument may afford the trustee absolute and unfettered discretion, such discretion must be exercised in “good faith, upon real and genuine consideration and in accordance with the purposes for which the discretion was conferred”.5 The Court followed the approach quoted by the High Court in Attorney-General v Breckler:6 Where a trustee exercises a discretion, it may be impugned on a number of different bases such as that it was exercised in bad faith, arbitrarily, capriciously,7 wantonly, irresponsibly,8 mischievously or irrelevantly to any sensible expectation of the settlor9, or without giving a real or genuine consideration to the exercise of the discretion.10 The exercise of a discretion by trustees cannot of course be impugned upon the basis that their decision was unfair or unreasonable11 or unwise.12 Where a discretion is expressed to be absolute it may be that bad faith needs to be shown. The soundness of the exercise of a discretion can be examined where reasons have been given, but the test is not fairness or reasonableness13.

When considering whether a trustee has acted in good faith, upon real and genuine consideration and in accordance with the purpose for which the power was conferred, a court may look at the enquiries the trustee made, the information they had, and their reasons for, and manner of, exercising their discretion. This includes consideration of any gaps or errors in the information.14 The trustee must inform her or himself of the matters relevant to the decision. If consideration is not properly informed, it is not genuine.

power in the SMSF deed was a special power.16 It was not a general power of appointment. It required the trustee to distribute the proceeds of the SMSF to one or more individuals who fell within the identified class of objects.

The Court acknowledged that the donee of a fiduciary power ought to be even more vigilant that she has discharged her duties when exercising the power in her own favour,17 and found the approach taken by Caroline was quite the opposite:18 “Based on the correspondence from her lawyers, she appears to have approached the exercise of discretion under misapprehensions as to the terms of the SMSF deed, the duties she owed to the plaintiff, and the relevance of the plaintiff’s role as legal personal representative of the estate”.

The assertion in her lawyers’ letter that the defendants failed to see how a conflict allegedly arose indicated an ignorance or deliberate mischaracterisation of the true circumstances at hand.19 The Court found that the trustee minutes containing the resolutions to distribute the death benefits were formulaic and not genuine.20 The Court found that the defendants ignored the plaintiff’s substantial relationship with the deceased, and his relatively limited financial means, which demonstrated a failure by the trustees to take into account a relevant consideration. Further, the fact that no distribution was made to Caroline’s brother, Charles, was inconsistent with the defendants’ own submissions to benefit her children and grandchildren.21 The Court also noted even though Caroline obtained legal and accounting advice, she did not obtain ‘specialist advice’ as suggested by the accountant and did not seek to resolve uncertainty surrounding the SMSF deed, in the context of a significant financial decision. For example, her lawyers’ letter suggested there was ongoing uncertainty surrounding the required number of trustees.22

The duty of trustees to properly inform themselves is more intense in superannuation trusts than in trusts of the Karger v Paul type.15

The ill-informed arbitrariness with which Caroline approached her duties also amounted to bad faith. These facts, together with dismissive tenor of her lawyers’ correspondence, all pointed towards the conclusion that her conduct was beyond ‘mere carelessness’ or ‘honest blundering’.23

The Court determined that the relevant

On balance, the Court could draw an

inference that Caroline acted arbitrarily in distributing the death benefits, with ignorance of, or insolence toward, her duties. She acted in the context of uncertainty, misapprehensions as to the identity of a beneficiary, her duties as trustee, and her position of conflict. As such, she was not in a position to give real and genuine consideration to the interests of the dependants.24 The Court also dealt with and explained various other principles and points including: •

improper purpose;25

•

why a trustee isn’t bound to disclose their reasons for a decision; 26

•

bad faith; and

•

why the appointment of Caroline’s husband as a co-trustee and his involvement in the decision did not prevent the outcome being ‘grotesquely unreasonable’ or the view that the discretion was never properly exercised upon real and genuine consideration.27

The Court found that in the context of an improper exercise of discretion and significant personal acrimony between Caroline and the plaintiff, the defendants had to be removed as trustees of the SMSF.28

Implications With Re Marsella, we finally have a decision in the context of SMSFs that sets the record straight. Unless proper care is taken, there may be grounds to challenge the exercise of a trustee’s discretionary power even where the discretion conferred by the trust instrument is expressed to be ‘absolute and unfettered’, as it does not give a trustee carte blanche to do anything they want. This case is relevant for SMSFs as well as discretionary trusts.29 Care must be taken when drafting trustee resolutions to evidence your exercise of the discretionary power. When making trust distribution decisions, it is important to ascertain who falls within the class of eligible beneficiaries. While it is not necessary to include reasons for your decision, do not mindlessly adopt standard, formulaic wording, particularly where it does not reflect the factual reality of how you came to your decision.

The involvement of a trust lawyer is strongly recommended.

Where friction exists between you and any of the beneficiaries that could give rise to a conflict for you, as a trustee, when exercising a discretion,

you should consider the possibility of either absenting yourself from the decision30 or resigning from the office and having a new trustee appointed in your place, particularly if the decision is a substantial one that could materially affect the position of the trust and/or the beneficiaries. The use of a trustee company may provide an advantage over individual trustees when decisions need to be made in circumstances of conflict, as it is often easier to appoint a new director than it is to appoint new trustees.

It is important to obtain expert advice to navigate the complexities of trusts and SMSFs. If Helen took effective estate planning advice, and made adequate provision for Riccardo, perhaps the dispute would have never arisen.

Further, the SMSF trustees’ discretion to distribute death benefits would have never been enlivened if Helen left a valid binding nomination. Similarly, obtaining expert advice after the death of a family member can help avoid dispute. In Re Marsella, the Court may well have dismissed the application had Caroline appointed her brother Charles as a cotrustee instead of her husband and the trustees decided to divide the death benefits between Caroline and Charles equally.

Re Marsella also serves as a warning to lawyers that they are expected to understand what principles apply when advising trustees about their duties and the process that must be followed when exercising a discretionary power.

Despite the clarity provided by this case, some lawyers may seek to dismiss its relevance by arguing that it should be confined to its own particular facts, or by asserting that it should not be followed in Western Australia. For other practitioners who are more embracing of the decision, there is still likely to be some lingering uncertainty and divergence of opinion as to how the relevant principles should be applied in practice in a particular case, especially when looking beyond an SMSF to other types of trust, such as a family discretionary trust, or even an SMSF with a different set of governing rules. The task of advising is not made any easier by the fact that there is a seemingly endless number of trust deeds out there, each with differently worded discretionary powers. When in doubt, advice should be sought from an expert trust lawyer. Subject to cost constraints, one might also expect to see more applications for judicial advice as a result of this case.31

*STEP (The Society of Trust and Estate Practitioners) is a worldwide professional association for lawyers, accountants and other advisers who help families plan their assets across generations. STEP promotes high professional standards by educating professionals, connecting advisers and families globally, informing public policy and acting in the public interest.

Endnotes 1

2 3 4

5 6

7 8

9 10 11 12 13 14 15 16 17 18 19 20 21 22

23 24 25 26

27 28 29

30

31

In Wooster v Morris [2013] VSC 594 the second wife of the member became the sole director of the SMSF trustee company after the member died. She paid the death benefits to herself after disregarding a valid binding nomination in favour of the member’s daughters from his first marriage. The wife relied on legal advice that the nomination wasn’t valid, however that advice was incorrect.

Katz v Grossman [2005] NSWSC 934 was often cited in support of these views.

[2019] VSC 65 (15 February 2019).

The application was made under s 48 of the Trustee Act 1958 (Vic), which empowers the Court to appoint new trustees. Similar provisions can be found in the trustee legislation of other States, including s 77 of the Trustees Act 1962 (WA).

[2019] VSC 65 at 24-35.

(1999) 197 CLR 87 at 99-100. The passage quoted adopted a summary of court of equity decisions in trustee discretion cases, attributed to Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd (1998) 79 FCR 469 at 480 (Heerey J quoting the trial judge Northrop J).

In re Pauling’s Settlement Trusts [1964] Ch 303 at 333.

Lutheran Church of Australia South Australia District Incorporated v Farmers’ Co‑operative Executors and Trustees Ltd (1970) 121 CLR 628 at 639.

In re Manisty’s Settlement [1974] Ch 17.

Karger v Paul [1984] VR 161, which includes a survey of the authorities.

Dundee General Hospitals Board of Management v Walker [1952] 1 All ER 896.

Gisborne v Gisborne (1877) 2 App Cas 300 at 307.

In re Londonderry’s Settlement [1965] Ch 918 at 928‑929; Karger v Paul [1984] VR 161 at 165‑166.

[2019] VSC 65 at 36, citing Karger v Paul [1984] VR 161 at 164 and 175.

[2019] VSC 65 at 38-39, citing Finch v Telstra Super Pty Ltd (2010) 242 CLR 254 at 280-1.

[2019] VSC 65 at 47.

Geraint Thomas (2012) Thomas on Powers, 2ed, Oxford University Press at [12.32].

[2019] VSC 65 at 48.

[2019] VSC 65 at 49.

[2019] VSC 65 at 55.

[2019] VSC 65 at 52.

[2019] VSC 65 at 22, 53 and 55. While specialist advice will not be necessary in every instance, the Court found that it would have been justified in this case, in light of the size of the SMSF, the complexities surrounding the SMSF deed and compliance with the SIS Act. [2019] VSC 65 at 57.

[2019] VSC 65 at 56.

[2019] VSC 65 at 40.

[2019] VSC 65 at 40 citing Curwen v Vanbreck Pty Ltd (2009) 26 VR 335, 349-351; and Karger v Paul [1984] VR 161, 165.

[2019] VSC 65 at 51 and 58.

[2019] VSC 65 at 72-73.

Query how the obligation to give genuine consideration applies, and what counts as a relevant or irrelevant consideration, in relation to a family trust where there is a large class of beneficiaries? See Thomas on Powers (cited above) at [10.119]-[10.122], [10.133]-[10.138].

For example, as an individual trustee where the terms of the trust deed makes allowance for that, or if you are one of several directors of a trustee company with rules to exclude conflicted directors from decisions.

Subsection 92(1) of the Trustees Act 1962 (WA) states: “Any trustee may apply to the Court for directions concerning any property subject to a trust, or respecting the management or administration of that property, or respecting the exercise of any power or discretion vested in the trustee.”

09

The lawyer by implication Gino Dal Pont Professor, Faculty of Law, University of Tasmania Ethics Column

• Contract law forms for the foundation for the lawyer-client relationship.

• In line with contract law generally, that relationship can be constituted by implication, independent of the lawyer’s intention.

• Being clear as to client identity is accordingly critical not just in managing risk but in fulfilling ethical responsibilities.

A basic understanding of the law of contract is clearly part of the core legal knowledge expected of a lawyer.

There are, after all, few crevices of the civil law that have not been in some way invaded by contractual notions. There is, moreover, a reason closer to home for lawyers to maintain contractual knowledge: the lawyer-client relationship is inherently contractual, described by the specific term “retainer”. The latter is, from the lawyer’s perspective, the source of obligation, authority and entitlement.

To this end, lawyers cannot ordinarily seek fees from persons who have not retained them, or exercise a lien as security for fees. Nor, aside from contract, do they possess authority to represent a person in a legal capacity. And retainer by a client attracts not only contractual obligations, but weighty tortious and fiduciary duties, amongst others. It stands to reason that lawyers, as well as (putative) clients, should be clear as to when a lawyer-client (contractual) relationship has come into being.

In many, indeed most, instances there will be little or no scope for misunderstanding in this regard. And this can remain so even if not every aspect of the retainer is reduced to writing. At the same time, documenting the retainer in writing is strongly advisable, not only for proof as to its existence, but its scope. Instances may nonetheless arise where the law recognises a retainer between a lawyer and a person with whom the lawyer may not have intended to contract for this purpose.

In these instances, despite the absence of a written retainer, a court may give effect to that person’s reasonable expectations of being represented in the matter, via what is termed an “implied retainer”.

A well-known and instructive case illustration is Pegrum v Fatharly.1 There W wished to borrow money from the appellants and, to contain costs, proposed that the respondent solicitor, who was on retainer for W’s group of companies, prepare all the documents, to which the appellants agreed. The loan deed provided for W to pay the appellants’ costs pertaining to the

10 | BRIEF MAY 2019

instructions for and preparation of the deed. The respondent gave the appellants no warning that, to his knowledge by virtue of the existing retainer, W and his companies were a bad risk and the securities given by them were inadequate to secure the loan.

When W could not repay the loan and the securities proved inadequate, the appellants succeeded in establishing that the respondent had acted as solicitor for them under an implied retainer. That no other solicitor was engaged in the transaction, regarding which each party contemporaneously attended upon the respondent, created in the appellants a reasonable expectation that the respondent acted for all parties.

That the appellants were not liable for the respondent’s fee was no impediment to the retainer. By failing to disclose relevant knowledge, the respondent had breached his duty of care to the appellants triggered by the implied retainer, and was thus liable for the appellants’ loss.

The spectre of an implied retainer, while concerning where the parties’ interests do not align (as for lender and borrower in Pegrum), can raise its head in instances of ostensibly compatible interests, such as partners, joint venturers and spouses. On each occasion it behoves the lawyer, and each such person, to be clear who is the client and, just as importantly, who is not. A failure to be explicit in this regard can open the door to an expansive interpretation of the retainer, and potential liability not only in tort, but in the fiduciary sphere (by reason of conflicting client interests). A scenario may even arise, as it did in a relatively recent Singaporean case, where an implied retainer was utilised as the foundation for the presumption of undue influence.2 That the foregoing can be viewed from the perspective of risk management does not preclude an ethical dimension. In giving effect to the reasonable expectations of a party in the circumstances, the law is, after all, making an ethical judgment as to where the trajectory of responsibility should lie. And the disciplinary case law, to this end, reveals multiple instances of lawyers disciplined out of assuming conflicting responsibilities in retainers.3 Contract law, accordingly, cannot be overlooked closest to home.

GINO DAL PONT is Professor, Faculty of Law, University of Tasmania.

Endnotes 1.

2.

3.

(1996) 14 WAR 92.

BOK v BOL [2017] SGHC 316.

A recent illustration is found in Law Society of New South Wales v Ferry [2018] NSWCATOD 74.

Contracting with Government Departments and Public Authorities

By Zoran Vukojević Client Engagement Director, Australian Taxation Office

This article is intended as a high level guide for private sector businesses who intend on entering into contractual arrangements with Western Australian state government entities, especially where they are doing so for the first time. The article is about government procurement, that is, the purchase of goods and services by government, and its various departments, agencies and statutory authorities – in this paper referred to as ‘government authorities’.1 Government authorities also provide services and sell goods, but such arrangement are not the focus of this article.

Much emphasis in this article is placed on the rules and policies around the entry into government contracts, as opposed to contractual performance, management of contracts and termination. This is so because the most marked differences between government contracting and other types of contracts stem from such rules and policies, and have the potential to cause most confusion and misunderstanding by those outside the public sector who are dealing with a government authority for the first time.

This article brings together in one place information that is scattered around various sources – policies, legislation, websites and other documents. As such, it is hoped that government lawyers might find the article useful as a source of reference.

Sections 1 and 2 of this article look at the differences and peculiarities of government contracts, including government policies, the appropriate types of contractual arrangements based on value of the contract, and the involvement of different government agencies in the contracting process.

Section 3 focuses on tenders. Sections 4 and 5 are about specific solutions adopted by government in expediting procurement (common user arrangements and panels) and payment (through card payments). Sections 6 offers a brief outline of state agreements, a topic that is more relevant for those who have more experience with government contracting.

Sections 7 and 8 deal very briefly

with contracting in other jurisdictions, namely the Commonwealth and local government. The final section 9, offers a list of tips for government contracting.

1 Why enter into contracts with government?

Contracting with government authorities offers many opportunities and advantages. It can provide a contractor with a reliable source of business and cash flow. It can lead to business development opportunities, and as a selling point to a wide range government authorities, especially for those providers who are able to place their goods and services on common user arrangements.

Successful contractors may also use their experience and references from government contracting to develop their business and to secure contracts overseas or in the private sector.2

ways similar to contracting with anyone else. The rules around the formation, performance and termination of the agreement are governed by the familiar general contract law rules, and as modified by the relevant statutory regimes such as the Sale of Goods Act 1895 (WA) and the trade practices law.

The main difference lies in the fact that contracting with the government means contracting with the Crown. This means that the government party may be subject to Crown privileges and immunities.4 Further, the government party’s freedom to contract and to negotiate the terms of the contract is affected by numerous legal and policy rules. Another significant difference is that government parties are subject to numerous disclosure and approval requirements. A prospective contractor should acquaint itself with those rules to ensure that its experience with government contracting runs smoothly and that it can take steps to minimise risks, including the risk of contractual disputes.

Another difference is about the application of general contractual principles in three particular circumstances: intention to create legal relations, liquidated damages and tenders.5 In those circumstances, ordinary contractual principles apply slightly differently to government authorities.

2 How are government contracts different?

First, in ordinary commercial contracts, there is a strong presumption that there is an intention to create legal relations where the elements of a contract are present.

In other cases, where the government authority is delivering a government policy or implementing an agreement, the presumption is weaker and there may not be a contract. While this is worth remembering, it is not within the scope of this article – the focus of this article is on commercial service and procurement agreements.

Entering into contractual agreements with government authorities is in many

Second, the usual test for determining the validity of a liquidated damages

There is great demand from the government for goods and services. The total expenditure for Western Australian government authorities in 2017-2018 was $15 billion. Of this, more than $5 billion was spent on professional services, $3 billion on building and construction, $2 billion on health and medicine, and $1 billion on travel and transportation. 3

11

clause, that of determining whether there is a genuine pre-estimate of a loss, may be waived in certain circumstances in government contracting. This appears to be the case where it is not possible to make a genuine pre-estimate.6 Third, in the tendering process, given that no contract arises until the winning bid is selected, the bidding parties do not ordinarily have any rights until that time.

However, there is an expectation that the government authority will follow the process and the rules it set for the tender.

Those expectations can be enforced in certain cases.7 At the Commonwealth level, there is now specific legislation covering this.8 The rules and processes concerning tenders are set out in section 3 of this article.

2.1 Broad policy considerations in government contracting Government must ensure that its procurement of products and services achieves the best value for money outcome.9 As a consequence, the Government has instituted a number of policies that it requires all government authorities to follow when entering into contractual arrangements. The most important policies are: value for money, buy local, open and effective competition, and probity and accountability.10 The State Supply Commission administers these policies.11 In this way the Commission discharges its duties under the State Supply Commission Act 1991 (SSA). Under SSA s19(1), "the Commission is responsible for arranging and co-ordinating the supply of all goods and services necessary for the operation of each public authority …"

The value for money policy requires government authorities to align their procurement with government objectives, and to support whole of government initiatives. 12 The policy does not always mean that the cheapest offer will be accepted. Instead, a public authority is required to consider the relevant cost and non-cost factors.

Potential suppliers can make their offers more attractive by articulating clearly some of the factors that would apply under the value for money policy. For example, by explaining the whole of lifecycle or whole of contract life costs, managerial and technical capabilities, compliance history, financial viability, and the ability to perform the contract without risk of default.13 The buy local policy requires government authorities to "maximise the use of

12 | BRIEF MAY 2019

competitive local businesses in goods, services, housing and works purchased or contracted on behalf of government."

14 The policy sets a target of 80% of purchases from local suppliers.

Government also provides price preferences to regional businesses. For evaluation purposes, the price of an offer from a regional provider can be reduced by 10%.15

•

•

Direct engagement of a contractor, without going through a tender or quotation process is possible in these circumstances: •

There is only a source of supply.

•

A government authority requested a similar contract through a competitive process in the last 12 months, and the market has not changed since the contract was awarded.

•

promote the diversification and growth of the Western Australian economy by targeting supply opportunities for local industry;

The goods or services are so integrated with an existing contractual arrangement that an alternative is not suitable.

•

provide suppliers of goods or services with increased access to, and raised awareness of, local industry capability;

There are opportunities to obtain goods or services from a registered Aboriginal business or a registered Australian Disability Enterprise. 20

•

Emergency circumstances. 21

Tied in to the local content requirement is the Western Australian Participation Strategy, mandated in the Western Australian Jobs Act 2017 (WAJA).16 The objectives of the strategy are to: 17 •

advertising.19

encourage local industry to adopt, where appropriate, world’s best practice in workplace innovation and the use of new technologies and materials;

•

promote increased apprenticeship, training and job opportunities in Western Australia;

•

promote increased opportunities for local industry to develop import replacement capacity by giving local industry, in particular small or medium enterprises, a full, fair and reasonable opportunity to compete against foreign suppliers of goods or services.

A prospective supplier to a government authority is required to prepare a written participation plan outlining its commitments to local content in connection with the Western Australian Participation Strategy. 18 These plans are weighted at 10%-20% of the qualitative evaluation by a government agency in a procurement process, but this may be increased for strategic projects (valued $25 million or more).

The open and effective competition policy sets up minimum requirements for engaging in procurement contracts.

The requirements depend on the amount of monetary outlay. For contracts below $50,000 in value (GST inclusive) the most appropriate method can be chosen by the particular authority. This can include direct sourcing, or requests for verbal or written quotations. For contracts $50,000 and above, quotations and offers must be in writing. Contracts that are $250,000 or more in value, must be preceded by a tender process through public

The $50,000 and the $250,000 thresholds will not apply in such circumstances.

In addition, the open and effective competition policy allows government authorities in certain limited circumstances to: •

approve the naming of a proprietary product;

•

approve a contract period greater than five years;

•

approve an advertising period less than ten days; and

•

choose not to publish contract award details on Tenders WA where doing so would represent an operational risk. 22

In a usual procurement process the Department of Finance and the State Tender Review Committee would be involved. However, three government agencies have obtained exemptions from this, as long as they comply with the State Supply Commission and government procurement policies. 23 The probity and accountability policy requires government authorities "to demonstrate to suppliers and the community that it conducts its procurement activities with high standards of probity and accountability."24 Government authorities demonstrate probity by conducting procurement activities ethically, honestly and fairly.

The policy requires the separation of procurement functions and responsibilities to ensure officers are not responsible for an entire procurement activity.25 Probity advisers and probity auditors oversee a government authority’s

procurement activities. Probity advisors are a resource for the procurement officers, and can be involved from the beginning of the contracting process.

Probity auditors review the process after it is complete, or at certain key stages during the process.26 Under the accountability principle, government authorities are required "to publicly account for its decisions and take responsibility for the achievement of procurement outcomes." 27 From the point of view of a supplier, this means that details of the contract can be made public as a matter of course, to be open to public scrutiny.

2.2 Knowing the appropriate type of contractual arrangement The open and effective competition policy states that the type of contractual engagement will depend primarily on the value of a contract. The two main thresholds are $50,000 and $250,000 in value, GST inclusive. For contracts below the $50,000 in value the government authority is able to choose the method of contracting arrangement. In most cases, this would be direct sourcing. In cases where the complexity and risk is greater, the government authority may choose to seek quotations.

The contracting process is done within the government authority. Only certain officers within a government authority have the delegation and authority to enter into contracts or to authorise expenditure.

Different spending and approval limits may be delegated to different officers of the government authority, but in general, the director general or the chief executive officer of a government authority would be expected to have the highest spending and approval limits. In some cases, statutory officers might also have the highest spending and approval limits, for the purposes of administering their particular legislation.

From a government authority’s point of view, the internal process for direct purchasing for up to $50,000 is: 28 •

To use an existing agency contract, if one exists.

•

If there is no agency contract, to consider whether a registered Australian Disability Enterprise or a registered Aboriginal business can supply the goods or services.

•

If there is no applicable Australian Disability Enterprise or registered Aboriginal business, to consider whether the goods or services can be supplied under a common user

agreement.

•

Finally, to identify an appropriate supplier and enter into a contract.

The internal process from a government authority’s point of view for verbal quotations up to $50,000 is initially the same as the process for direct purchasing. That is, the authority must consider whether there is an existing contract, or an Australian Disability Enterprise or registered Aboriginal business, or a common user arrangement.

However, if those arrangements do not apply, the government authority is expected to go through a verbal quotation process. 29 •

The government authority must request quotes from 2-5 suppliers.

This can be done by telephone, by email, or in person.

•

The government authority describes its requirements to the prospective suppliers and provides sufficient time for them to respond. The usual selection criteria are suitability of purpose and price. If there are any additional selection criteria, they need to be clearly advised to the potential suppliers.

•

•

requests. Limited requests are those where the government authority identifies that the goods or services can be supplied only by specific suppliers, and it wishes to contact those suppliers directly to provide a quote.

Once all the quotes are received, the government authority evaluates them, and provides a justification statement on the Finance Verbal Quotation form. The Finance Verbal Quotation form also records the details of all the quotes received. If there are additional selection criteria, the government authority needs to complete an evaluation report.

The government authority advises the potential suppliers of its decision, and awards the contract to the successful supplier.

For contracts between $50,000 and $250,000 in value, quotations and offers must be in writing.30 The internal process from a government authority’s point of view is initially the same as the process for direct purchasing or for verbal quotations. That is, the authority must consider whether there is an existing contract, or an Australian Disability Enterprise or registered Aboriginal business, or a common user arrangement.

However, if those arrangements do not apply, the government authority is expected to go through a written quotation process. 31

•

Requests for a written quote are sent out or advertised, typically with a response time of 3-10 days.

•

An evaluation panel of at least two qualified people evaluates the written quotations against the specifications, and against the State Supply Commission and government policies.

•

All potential suppliers are advised in writing of the outcome, and the contract is awarded to the successful supplier.

•

The details of contracts worth $50,000 or above are published on Tenders WA.

Contracts that are $250,000 or more in value need to go through a publicly advertised tender process, which is dealt with in more detail in section 3 of this article.33 Department of Finance must be involved in all purchases or contract variations valued at $250,000 and above, for authorities under the jurisdiction of the SSA operating under a partial exemption.34 These thresholds also apply to contract variations. Contract variations of $250,000 or more must be referred to Government Procurement, and those exceeding $5 million must be submitted to the State Tender Review Committee.35 Aside from affecting the contractual arrangements, the thresholds also determine what level of involvement other government departments have in the contracting process. Where the value is $250,000 or above, the Department of Finance is required to be involved in the procurement activity.36

•

The government authority uses the Finance Written Quote suite of documents32 to develop a specification.

There are special rules that affect Western Australian state government procurement as a result of free trade agreements that the Commonwealth Government signed with the USA, Singapore, South Korea, Chile and Japan.37 Broadly, under the free trade agreements, the procurement process must not disadvantage foreign suppliers. The free trade agreements apply to products and services equal to or greater than $657,000, and to construction contracts equal to or greater than $9,247,000 in value. The value includes GST and the value of any options.38

•

There are two types of quotation requests – open market, or limited

In addition to these whole of government thresholds, each particular government 13

authority may impose internal policies and processes (including other thresholds) to govern the approvals for contracting with external parties. It is worthwhile considering the existence and operation of such internal thresholds when contracting with a particular government authority.

Finally, different forms of standing offers are used by government authorities.

Generally speaking, a standing offer is an ongoing, repetitive requirement for products and services, but the exact volume of products or services is not known.39 One type of standing offer is a common use agreement, which is an offer established by the Department of Finance for use by the whole government sector.40 Another type of standing offer arrangement is a panel arrangement.

Where an agency has an ongoing requirement for a large volume of products or services, it is able to organise a panel of suppliers to ensure the continuity and availability of supply, in circumstances where it is unlikely that one supplier can supply all the required products and services.41 Where a panel arrangement is not suitable, a single supplier standing offer can be used. This may occur when the government authority has an ongoing need for a good or service, but the quantity required cannot be determined or there is only one supplier for the good or service.42

2.3 Legal power and character of state government authorities The Crown43 has the power to enter into contracts. In Western Australia, the Crown’s power vests in the head of the executive, the Governor,44 then through the Governor to the ministers45 of the Crown and the various departments of the executive branch of government.46 Ordinarily, any expenditure must be authorised by parliament, but the executive is entitled to uphold its contractual obligations without the benefit of a current legislative appropriation.47 When considering the extent of the concept of the ‘Crown’, the listing of agencies, bodies and offices in the Public Sector Management Act 1994 (PSMA) is instructive. While the PSMA applies to the whole of the public sector, it also provides specific rules about the public service. The public sector48 is very broad, comprising all agencies, ministerial offices and non‑SES organisations.49 Agencies are essentially the public service,50 while ministerial offices comprise staff appointed to assist ministers or "another

14 | BRIEF MAY 2019

political office holder." 51 Most of these bodies enter into procurement arrangements in their own right, but some may have arrangements, such as service level agreements and memoranda of understanding, that allow other government authorities to provide procurement services on their behalf. In Western Australia, the rules governing the tendering and contracting process for the whole of the public sector are set out in policies and guidelines, rather than in statute, as is the position at the Commonwealth level and in other states.

A government department, entering into a contract, therefore, is nothing other than the Crown entering into a contract. When it comes to other types of government authorities, such as statutory corporations and other bodies, it is important to enquire whether they can also be classified as the Crown, for the reason that there are privileges and immunities, and principles such as the presumption of Crown immunity from legislation.52

2.4 Some specific government policies and rules The State Supply Commission has published the following policies, which government authorities need to abide by:53 •

Value for money54

•

Probity and accountability55

•

Buy local56

•

Open and effective competition57

•

Common use arrangements58

•

Procurement planning and contract management59

•

Sustainable procurement60

•

Disposal of goods

2.4.1 Australian Disability Enterprises and Aboriginal businesses Where goods and services are available from registered Australian Disability Enterprises61 or registered Aboriginal businesses, government authorities are able to exempt themselves from the Open and Effective Competition policy. This means that a government authority can obtain the goods and services from the registered Australian Disability Enterprise or a registered Aboriginal business without going through the competitive requirements of seeking quotes or going to tender.62 These organisations can be engaged directly even where a common user arrangement exists.63 One of McGowan government’s election

commitments was to set mandatory targets for contracting with registered Aboriginal businesses, resulting in the introduction of the Aboriginal Procurement policy, applicable from 1 July 2018, which requires a mandatory target of 3% for Aboriginal procurement by government departments.64 The contracts taken into account when calculating this target are those with a value of $50,000 or more, collaborative arrangement such as joint ventures, and panel arrangements.

2.4.2 Sustainable procurement The State Supply Commission’s Sustainable Procurement policy requires government authorities to consider sustainable procurement: •

"when preparing procurement plans;

•

in Request design, including selection criteria;

•

in Request specifications that reflect environmental standards, codes or legislation;

•

when determining methods of verification of a preferred bidder’s claims made regarding sustainability;

•

in evaluation reports; and

•

as a measure of a supplier’s contract performance against agreed commitments." 65

Sustainable procurement is defined in the Australian and New Zealand Government Framework for Sustainable Procurement (14 September 2007), developed by the Australian Procurement and Construction Council: "Sustainable procurement means that when buying goods and services organisations practicing sustainable procurement will consider: •

strategies to avoid unnecessary consumption and manage demand;

•

minimising environmental impacts of the goods and services over the whole of life of the goods and services;

•

suppliers’ socially responsible practices including compliance with legislative obligations to employees; and

•

value for money over the whole-oflife of the goods and services, rather than just initial cost."

This framework applies in Western Australia because the Western Australian government, along with other state and territory governments is a signatory to the framework. 66 The aim of sustainable procurement is to

minimise environmental impact, to benefit society and the natural environment, and to reduce overall operational costs.67 Prospective suppliers who can demonstrate some or all of these aims through their quotations and tender documents can assist government authorities abide by the sustainable procurement policy, and can also put themselves into an advantageous position when requesting government contracts.

2.4.3 Managing risk Risk management occurs at all stages of the contracting process.

Government authorities need to comply with Treasurer’s Instruction 825 Risk Management and Security in this regard.

When negotiating with government authorities, it is worth bearing in mind the options for managing risk that are identified in the Treasurer’s Instruction 825:68 "(i)

lessen risk by introducing controls to reduce the likely occurrence of undesired events, such as standardised questionnaires/ checklists to assist officers responsible for major projects to indicate compliance with risk management practices;

(ii) avoid risk by deciding not to engage in activities likely to generate risk; (iii) reduce the likely impact of undesired events by having in place

contingency plans and recovery procedures; (iv) transfer risk to another party by way of contract conditions or insurance; and (v) accept a certain level of risk in instances where other options are impractical or uneconomic."

Government authorities are required to put in place procedures, policies and practices to manage risk, and to maintain an appropriate level of security over money and public property, including information held and intellectual property developed by the agency. Options available to authorities to manage risk are to transfer risk to another party by way of contract conditions or by insurance.69 Standard tender request conditions provide for the contractor to have public liability insurance, public and product liability insurance, workers’ compensation insurance, motor vehicle third party, and technology (cyber) liability insurance.

2.4.4 Foreign exchange risk Foreign exchange risk has been singled out by the Treasury for special treatment because of potential high risk exposure for government authorities who purchase from overseas, or who purchase domestic goods and services with a large imported component.

Both the Treasurer70 and the Department of Finance require an assessment of foreign exchange risk. Where the risk

is assessed as significant or high, the government authority needs to ask for greater pricing detail in contract requests, and needs to contact the Western Australian Treasury Corporation to assist with procurement planning.71 The assessment of foreign exchange risk is carried out against two criteria – the cost of the contract and the overseas content or exposure to foreign currency.

Generally speaking, where the cost of the contract is less than $150,000, the foreign exchange risk will be low. The foreign exchange risk will be significant or high where the cost of the contract is more than $500,000 or $600,000, depending on the amount of overseas content or exposure to foreign currency.

The standard procurement templates from the Department of Finance request pricing in Australian dollars. This is consciously used as a method of transferring foreign exchange risk to the supplier.72

2.4.5 Commodity risk Another risk that has been singled out for special treatment is commodity risk. This is defined as "the risk of a transaction’s value changing due to movements in underlying commodity prices."73 Where a government authority determines that there are significant or high levels of commodity risk, it needs to contact the Western Australian Treasury Corporation to assist with procurement planning.

This applies to contracts involving 15

commodities such as electricity, diesel, oil, and steel.

2.5 Knowing the contracting party Western Australian Government departments are not separate legal entities.74 Legally, they are all part of the Crown in the right of the State of Western Australia. Ordinarily, the State of Western Australia would be a named as a party to a contract.75 Other government authorities may or may not be separate legal entities, but this can be determined by checking the relevant legislation. So, the Perth Theatre Trust Act 1979 establishes the Perth Theatre Trust as a separate legal entity – a body corporate with perpetual succession. While the Main Roads Act 1930 establishes the Commissioner of Main Roads as the relevant legal entity – again a body corporate with perpetual succession.

Even when dealing with one government department, it is important to establish which legislation applies to determine who will be the contractual party. For example, within the Department of Biodiversity, Conservation and Attractions, there are three separate authorities, each with their own legislation: Botanic Gardens and Parks Authority, Rottnest Island Authority, and the Zoological Parks Authority.76 Although entities with an Australian Business Number (ABN) can enter into commercial transactions including contracts, the purpose of an ABN is to enable the functioning of the Goods and Services Tax system, and an entity can have an ABN even if it is not a legal entity.77 Only a legal entity can enter into contracts, so when dealing with government authorities, the contracting party should be the State of Western Australia, or a named entity under a particular law, whether it be the name of the entity or the statutory office.

When considering the authority to enter into contracts, the distinction between delegations and authorisations becomes important. Delegation is a power usually expressly conferred by legislation.78 A person to whom a statutory power is delegated exercises that power in their own right, using their own discretion.79 Therefore a delegate can negotiate and execute contracts in his or her own name.

Authorisations are made by a person exercising statutory powers. They enable that person to authorise another to exercise the power for and on their behalf.

This is done under an implied power to authorise, known as the Carltona principle.80 A person acting under an authorisation is doing so, not in their own

16 | BRIEF MAY 2019

the standard business as usual procurement and may be made up of multiple procurements that impact one another.

right, but for the person who made the authorisation.

Delegations and authorisations are updated regularly, and it is important to check their application and currency, especially after elections. In practice, this is done by the government authority.

The State Supply Commission is the government authority "responsible for arranging and co-ordinating the supply of all goods and services necessary for the operation of each public authority."81 The commission does this by administering procurement policies.82 The commission also has purchasing and contracting authority under the SSA which it delegates to government authorities.83 The decision making and the responsibility for purchasing resides with the accountable authority. Under the Financial Management Act 2006, an accountable authority is an officer in each government authority, who is responsible for purchasing, amongst other things, and is the chief executive officer of the government authority, or someone else appointed by the minister.84 This is usually the government authority’s director general, or their delegate.

2.6 Involvement by the Department of Finance Apart from the relevant government authority, other interested parties would be involved in government contracting.

It is a requirement that the Department of Finance is involved in contracts with a total estimated value of $250,000 and above (including GST). The scale of involvement by the Department of Finance depends on the value and risk of the contract in question.85 Different areas of the Department of Finance are involved for different contracting arrangements. For example, the Funding and Contracting Services unit is involved when a not-for-profit organisations are required to provide a community service, and the Building Management and Works unit is involved for purchases relating to building, infrastructure or accommodation.86 For major government projects, the Strategic Project Support Services (SPSS) team from the Department of Finance assists in strategic and complex procurement activities. SPSS needs to be involved in a project if at least four of these seven criteria are met.87

3. One off or unusual requirement – The project is an unusual business need for the agency or requires an alternative procurement process (such as Expression of Interest, Request for Proposal or lower value Public Private Partnership (not covered by the Office of Strategic Projects)).

4. Significance/public interest – The project is highly visible to taxpayers, or is of high significance to the State, or politically sensitive for Government.

5. Transformational (vs transactional) – The project will transform the agency’s business.

6. Timeframe – The project is extremely urgent or impacts other government initiatives, requiring immediate resourcing. Alternatively, if long-term assistance on a project is required more than six months.

7. Value – The project should have a minimum estimated contract value (ECV) of $1 million, with an expectation that most SPSS projects would have an ECV greater than $5 million. The total spend of an agency, agency size and internal expertise will also be considered in the context of this value."88

2.7 Involvement by RiskCover and others Insurance obligation of government authorities can potentially affect their contracting arrangements. As noted earlier,89 Treasurer’s Instruction 825 Risk Management and Security requires government authorities to manage risk, which can be done by using insurance.

The default insurer for Western Australian government authorities is RiskCover.

Contractual liability insurance applies automatically, but can be voided in the following situations:90 •

Government authority waives or limits its right of recovery, for example, by agreeing that the supplier’s liability under a contract is capped;

•

Government authority agrees to indemnify another party;

•

Standard form Department of Finance contractual clauses, relating to indemnity, liability and insurance, are varied or deleted; and

•

Joint ventures or partnerships are set up where the State of Western

"1. Risk – The risk profile of the project is identified as high or extremely high.

2. Complexity – The project proposed is highly complex relative to

Australia is one of the partners or joint venturers.

For that reason, government authorities are unlikely to accept such terms in their contractual arrangements, though it is possible for a government authority to accept such terms if it obtains RiskCover’s approval and agreement to reinstate the contractual liability insurance cover.

The State Tender Review Committee is another party that is involved in high value contracting. When a government authority enters into agreements valued at $5 million or more, including from a Common Use Arrangement, it must prepare a procurement plan,91 and submit the procurement plan, evaluation report and contract management plan to the State Tender Review Committee.92

2.8 Request template The Department of Finance facilitates government contracting by offering support and template documents that can be used by government authorities.

One of the most important template documents is the standard request template.93 This is in essence a template for a contract, with standard form conditions, to be carefully reviewed and adapted to each procurement process.94 The request is in two parts: Part A is the request and part B contains the respondent’s offer and disclosures.

Part A contains the background to the contract, the formal requirement on how to submit an offer, how long the submission period lasts, with details of the contact persons, and a reference to the standard terms in the Request Conditions and General Conditions of Contract, another Department of Finance document. Part A may also refer to a briefing that a government authority may provide to interested parties about

the particular contract. There is also an explanation of how the selection process is carried out, and of the relevant State Supply Commission policies.

The government authority completes Schedule 1 to Part A, providing information which will form part of the contract, such as the term of the contract, commencement date, extensions, price variation, insurance obligations, contract management obligations, police clearance, warranties, intellectual property, reporting under the Western Australian Industry Participation Strategy, and obligations under Disability Access and Inclusion Plans. Schedule 2 to Part A outlines the scope of the procurement contract and specifications for the work or products required by the government authority.

Government authorities are obliged to develop specifications that comply with the relevant legislative requirements.

For example, a Disability Access and Inclusion Plan must be provided for in customer contracts.95 The prospective supplier completes Part B, where the contact details of the supplier are disclosed. The supplier may also be required to provide details of pre-qualification requirements such as compliance with Australian standards.

The prospective supplier should disclose if it will use the government’s standard for conditions, or whether it wants to vary them or substitute other terms and conditions. Disclosures about trust relationships, related parties, subcontractors, criminal convictions and conflicts of interest are also required.

Information on payment methods, competitive neutrality (for academic and government organisations), and professional standards schemes may also be required. The prospective supplier provides its responses to qualitative requirements or selection criteria in Part

B, as well as details of its insurance policies and the pricing methodology for the product or service in question.

Questionnaires on local content and regional content and pricing are included in Part B, to explain the prospective supplier’s compliance with the Buy Local policy and the Regional Business Preference and Regional Content Preference. Finally, a prospective supplier needs to include a participation plan required under the WAJA.96

2.9 Recording of contracts valued at more than $50,000 Government authorities are required to set up a register of contracts valued $50,000 and above (GST inclusive), though this threshold can be revalued up to $100,000.97 The minimum information in the register needs to contain the following:98 "(i) the contract title, or a description of the subject matter of the contract, for example, the goods, services or works to be provided or project to be undertaken; (ii) the estimated dollar value of the contract at commencement; (iii) final contract dollar value and the total value of approved variations; (iv) foreign exchange exposure (if applicable); (v) the counterparty name and contact details; (vi) the commencement date and duration of the contract (if applicable); (vii) the name and position of the contract manager; and (viii) the scheduling and manner of contractor performance reviews where the agency is the recipient of goods or services (if applicable)."

Gifts in Wills help us fund Research

Support

Prevention

Australia will become the first country to effectively eliminate cervical cancer if vaccination and screening rates are maintained1. Our daughters and granddaughters will likely live in a world that is free of cervical cancer thanks to Professor Ian Frazer AC, former VicePresident and President of Cancer Council Australia and our investment in cancer research.

Gifts in wills make a real difference. When writing a Will for a client please ask them to consider including a charitable gift.

To find out more contact us on 08 9212 4333 or visit cancerwa.asn.au.

Cancer Council Western Australia (Inc). Level 1, 420 Bagot Road, Subiaco, WA 6008.

ABN: 15 190 821 561 Lancet Public Health 2 October 2018

1

17

authorities are required to use the website to advertise requests for tender, where an open approach to market is required by policy.106

2.10 Gateway reviews and other reviews Premier’s Circular 2016/05 Improving the Outcomes of Major Projects Through Gateway Reviews requires government authorities (except government trading authorities) to apply gateway review to their major contracts. Government authorities can obtain exemptions from the Gateway Unit of the Department of Finance.

The contracts required to be reviewed are: •

infrastructure projects valued at $100 million (inclusive of GST) and above;

•

ICT projects valued at $10 million (inclusive of GST) and above; and

•

other projects identified by the Department of Treasury.

The six gates mentioned in the Premier’s Circular 2016/05 for review are: •

Strategic Assessment

•

Business Case

•

Readiness for Market

•

Tender Decision

•

Readiness for Service

•

Benefits Evaluation

In addition to gateway reviews, government authorities review existing contractual arrangements when deciding if they should be renewed or extended.

Such reviews looks at the strengths and weaknesses of the contract, and whether deliverables have been achieved.

Department of Finance offers guidance and templates for contract reviews.99

3 Tenders Government authorities are required to undertake a tender process where the total estimated value of the contract is $250,000 or more. The Department of Finance guidelines require public advertising for open tender.100

18 | BRIEF MAY 2019

The reason for this is the overriding objective to spend public funds in an accountable manner, that is free from favour or bias. The tender process is seen as supporting this objective because it is a consistent process that is accountable, free from favour, objective and accountable.101 The open tender process has three stages: procurement planning (refer to section 3.1 below), contract formation (refer to section 3.4 below), and contract management (refer to section 3.5 below).102

3.1 How the tender process starts In deciding to commence a tender process, the government authority needs to put together a business case. The business case needs to identify the need that will be met by advancing a project, it needs to explain why the existing options or arrangement cannot satisfy the need, and in putting together a case for proceeding to tender, it needs to delineate the scope of the project and who will be benefitted by the project.103 The expected resourcing for each stage of the tender and contract management project is also a part of the business case.

For larger tender projects, the Government’s best practice is to post notices of early tender advice on the Tenders WA website (www.tenders. wa.gov.au).104 The information on the website will have a brief explanation of the contract need, contact details and the expected advertising date.

The contract in the request for tender can be a contract with a single supplier, a panel contract, or a placement on the Common User Arrangement.105

3.2 Requests for tender Tenders are advertised on the Tenders WA website (www.tenders.wa.gov. au) and in newspapers. Government

The advertisements will contain tender documentation, including the request.

The tender documentation will contain selection pre-requisites and selection criteria, such as qualification or resources required and prior experience, the relevant government policies, specifications of the tender, the contractual terms, contact details and information on returning the tender submission by the due date. For the features of the standard Department of Finance request template, refer to section 2.8 of this article.

The minimum time for advertising requests for tender is 25 calendar days, but this can be as short as ten working days where the Early Tender Advice facility on the Tenders WA system was used, or where the public authority procures commercial property or services, or if there are urgent circumstances.

The 10 day period is the minimum under the State Supply Commission policy.107 For tenders covered by free trade agreements, the minimum time for advertising is 25 days.108 If the request for tender, or the tender documentation are not published electronically, or if the tenders are not accepted in an electronic form, the minimum time is required to be extended.109 The Government can provide guarantees and indemnities as long as they are incidental to the performance of another function, such as the purchase of goods and services. Otherwise, a guarantee and indemnity which imposes a contingent liability on the State must be referred to the under-Treasurer with detailed information to be included in the register of contracts.110 Before a request for tender is formally advertised, a government authority can issue the draft request for tender for comment. This would be done to allow consultation on the request for tender, to determine whether the tender documentation is deficient, onerous or biased.111 Potential suppliers should obtain professional advice before participating in consultation on a draft request, because there is the danger that a conflict of interest could arise which could preclude the supplier from submitting tenders.

During the advertising period, the government authority may do a briefing for potential suppliers. Potential suppliers are encouraged to attend the briefings

to obtain information about the tender. A potential postponement in the process may result, however, if the government authority provides information or answers at the briefing, that requires the scope of works or tender specifications to be clarified, or if the information is not included in the request for tender, or indeed, if any potential supplier is given an advantage over others. In such situations, the government authority must issue an addendum to the request for tender.112 In some cases the failure to follow process could be such that it results in a judicial review, and the cancellation and a re-issue of the tender process.113 Contractors are required to have various types of insurance. Contracts value at more than $1 million (in Perth) or more than $500,000 (in the country) need to have a WA industry participation strategy, participation and reporting under the WAJA. Contractors delivering services are required to have a disability access and inclusion plan.

3.3 Tender documents The tender documents will contain selection requirements, disclosures and contractual terms. From the perspective of a legal advisor, the disclosures and the contractual documentation will require the most scrutiny. The Request Conditions and General Conditions of Contract set out the conditions that are common across all requests for tender.114 The disclosures allow the tenderer to vary the standard terms of the tender. They require the tenderer to disclose criminal convictions of any specified personnel essential to the contract, as well as any conflicts of interest. Contracts for products need to disclose the imported content questionnaire under the Buy Local policy.

Tenderers should also bear in mind that the offer should be made in the name of the company or legal entity who will carry out the tender terms. This is because interests cannot be transferred or assigned without written approval from the government authority.115 High risk contracts may contain financial guarantee and performance guarantee clauses. Financial guarantees allow the Government party to obtain guaranteed funds on breach of contract.116 After a potential supplier has put in a tender offer, the offer must be open during the validity period. The validity period is a period of time specified in the request for tender.117 Revisions and changes to the tender offer

can be submitted before the closing date Such revised offers should be clearly marked as being replacements for the previous offer.118

3.4 Evaluation and award of tenders After the closing date for tenders, the government authority will evaluate the offers following this process: •

Evaluation panel will be put together.

The members of the panel are expected to have knowledge of the products and services subject of the tender. "When evaluating bids on the basis of a qualitative assessment and the estimated contract value is $250,000 and above, then an evaluation panel of at least three voting members must be convened."119

•

Offers not satisfying the preliminary requirements are eliminated.

•

Each offer is assessed against the selection requirements.

•

The evaluation panel will make a shortlist through a consensus of all the panel members.

•

The panel might require additional information from the tenderers.

This could include due diligence or financial audit. It might even involve direct contact with the tenderers.

•

The panel makes a recommendation nominating the preferred supplier.

•

For contracts valued $5 million or more, the recommendation goes to the State Tender Review Committee for endorsement.

•

The last internal step is for an approving officer in the government authority to approve the recommendation.

is published on the Tenders WA website www.tenders.wa.gov.au. However, other information may be published, depending on the tender request. Further details of the contract may be disclosed following requests under the Freedom of Information Act 1992, or because of Parliamentary or court orders.123 Any complaints should be raised with the State Supply Commission, who may undertake an independent review.

Complaints should be raised before the contract is awarded, because the State Supply Commission cannot overturn a decision to award a contract.124

3.5 Contract management Government requirements are to manage the contract actively, to ensure that it is performed in a timely manner and within the scope of the original contract.

Contract management plans deal with performance, contract variations, extensions, relationship management and transitional arrangements.125 A formal contract management plan is required for contracts with an estimated total value of $5 million or more (GST inclusive) or for lower value contracts that are deemed medium or high risk.

Exceptions from the requirement for a contract management plan for contracts over the $5 million threshold are if: •

The buyers’ guide for a common user arrangement does not require a contract management plan.

•

The relevant government authority decides that the contract management plan is of no benefit because of the nature of a particular procurement.

•

The purchase is a one-off that is not the subject of a period contract arrangement.126

The government authority will then award the contract to the successful tenderer, and provide feedback, upon request, to the unsuccessful ones.120

Contract management plans for purchases over $5 million must be referred to the State Tender Review Committee for endorsement.127

The Department of Finance has published a standard evaluation handbook template121 and a standard evaluation report template122 on its website at www. finance.wa.gov.au. These documents contain more information on the evaluation process.

Varying contracts with government parties requires additional levels of approval, than would usually be the case. The level of approval depends on the amount of the increase in the purchase price above the original contract value. It does not matter whether the variation is through one single variation or a number of variation.

The government authority is obliged to publish certain information about the successful tender. The minimum requirement is that within 60 calendar days of awarding the contract, the name of the successful tenderer, the total contract value, period of the contract, and a description of products or services

Variations increasing the contract price up to $50,000 can be negotiated and approved within the government authority that awarded the contract. Variations of $50,000 or more must be published on Tenders WA. Variations of $250,000

19

or more must be submitted to the Department of Finance for comment.

Variations of $5 million or more submit a contract variation memo to the State Tender Review Committee through the Department of Finance for comment.128

for payments under $5,000. This eases administration and auditing of such payments. The Department of Finance advises government authorities to consider whether suppliers accept government purchasing cards for payments.137

4 Common User Arrangements and Panels

Prospective suppliers of goods and services can set up a merchant facility that allows payment by government purchasing cards, which are corporate credit cards. The facility is set up through State government card providers.138

Common User Arrangements (CUA) are arrangements with suppliers that any government authority can use.

The Department of Finance has a delegation to develop and manage whole of government CUA.129 A CUA is a standing offer by the supplier who is listed in a CUA to the Government. When a government authority makes an order under a CUA, it accepts the standing offer and a binding contract commences at the time of the order.130 Each CUA has a contract manager situated in the Department of Finance.

Each CUA has a buyers’ guide which guides the government authority in making purchases under the CUA.131 CUA have the greatest coverage in the Perth metropolitan area. Consequently, most CUA are mandatory in the Perth metropolitan area. Unless there is an exemption in place, government authorities must make purchases from suppliers on CUA. Even if a CUA is not mandatory, government authorities are required to consider the CUA first before requesting quotes from other suppliers.132 One exemption from using CUA is that Government can contract directly with a registered Aboriginal business or registered Australian Disability Enterprise even if a mandatory CUA is in place.133 Otherwise, government authorities must seek approval from the Department of Finance for exemptions from using CUA or the buying rules of CUA.134 Government authorities are required to follow disclosure rules when entering into contracts through a CUA. The disclosure rules depend on the contract price.

Where the contract price is $50,000 or more (including GST), the details of the contract must be published on Tenders WA.135 For contracts of $5 million or more, the government authority must submit a procurement plan, evaluation report and contract management plan to the State Tender Review Committee. Rules for varying the contract are the same as those outlined in section 3.5 Contract management.136

5 Card payments Government authorities are encouraged to use government purchasing cards 20 | BRIEF MAY 2019

6 Specific legislated contracts – state agreements State agreements are used commonly in Western Australia, perhaps more so than in the other states. There are some 65 state agreements in operation at present, mostly in the resources industry and for infrastructure such as railways and ports.139 State agreements are typically used for very large projects. While not strictly within the scope of this article, state agreements have some interesting features which are set out in this section of the article.

State agreements are agreements between the State of Western Australia and private sector companies that are incorporated into legislation as agreement acts. They have facilitative and regulatory functions. The facilitative functions are what set state agreement acts apart from other legislation. That is, state agreement acts facilitate the project by streamlining government approvals, provide certainty about land tenure and can even override inconsistent State legislation in order to expedite a project. It is the Crown as the executive branch of government that is a party to the agreement, while the legislature validates the agreement.140 Historically, there were issues about whether state agreements could fetter the future exercise of executive discretions. In Australia, the issue was resolved in a commercially sensible manner so that state agreements are binding.141 State agreements cannot be changed unilaterally by the state; they require the consent of both parties to the agreement to be changed. Theoretically, the parliament retains the power to repeal the ratifying acts, or to legislate in such a way as to change an aspect of the agreements. However, the Western Australian parliament has not acted in such a way.142

7 Commonwealth government Procurement and contracting at the

Commonwealth government level is not within the scope of this paper. However, some observations on the differences with State government contracting are set out in this section.

In contrast to the position in the Western Australian jurisdiction, the procurement for Commonwealth government departments and agencies is governed by legislation. Section 44 of the Financial Management and Accountability Act 1997 (Cth) allows a Chief Executive to enter into contracts "on behalf of the Commonwealth, in relation to the affairs of an Agency." The Governor-General (or rather the Finance Minister) issues regulations and guidelines relating to procurement at the Commonwealth level.143 There is now judicial authority that the Commonwealth government does not have a general unlimited power to enter into contracts, but it requires statutory authority before it can be exercised.144 In latest developments for Commonwealth government contracting, from 1 July 2019, it will be a requirement for tenderers and their first tier subcontractors to apply for a statement of tax record from the Commissioner of taxation certifying compliance with their tax liabilities. This applies to contracts over $4 million in value.145 From April 2019, prospective suppliers will be able to obtain an injunction or compensation for a contravention of the Commonwealth Procurement Rules146 under the Government Procurement (Judicial Review) Act 2018 (Cth). The complaint is made at first instance to the relevant authority for investigation, and only then to the Federal Court. The authority must suspend the procurement while the complaint is being investigated, unless the secretary of that authority has issued a ‘public interest certificate’ for that procurement.147

8 Local government A brief mention should be made about local government tendering and contracting. The governing legislation is the Local Government Act 1995 s3.57(1): "A local government is required to invite tenders before it enters into a contract of a prescribed kind under which another person is to supply goods or services."

The relevant regulations are in Part 4 of the Local Government (Functions and General) Regulations 1996, which require open tenders for contracts with an expected value of over $150,000. Other contracting methods are through the WA Local Government Association’s Preferred

Supplier Program, through panel arrangements and by obtaining quotes under a purchasing policy. Government policies outlined in section 2.1 also apply to local governments.

The power to enter into contracts is vested in the local government, each of which is a body corporate, with the legal capacity of a natural person.148 This power can then be delegated to officers employed by the council.

9 Preparing your clients for government contracting Understand the legal peculiarities in government contracts, such as Crown privileges and immunities and the application of liquidated damages clauses.

Know the financial thresholds and the type of contract arrangement applicable (refer to the table).

Threshold (value including GST)

Be aware of the goals of the government authority, its reasons for contracting, and its powers.

Be aware of the authorisations and spending limits of the government authority.

Enquire about the specifics of the relevant procurement process, whether it is a tender or otherwise, the timeframes, the approval points and other pertinent features.

Address all the selection criteria in a tender or other procurement process.

Demonstrate how your client’s offer fits in with the criteria, such as minimising the environmental impact, to satisfy the sustainable procurement goals of government.

Provide disclosures about trust relationships, related parties,

Requirements for WA State Government Contracts

subcontractors, criminal convictions and conflicts of interest.

Attend information sessions and comply with the other procedural requirements.

Be aware of the procurement policies and be ready to explain how your client can satisfy them.

Ensure your client prepares a participation plan under the Western Australian Jobs Act 2017, where the relevant thresholds apply.

Be ready for potential challenges to the process, and for the publication of the details of the contract.

Obtain and keep current appropriate insurance: public liability insurance, public and product liability insurance, workers’ compensation insurance, motor vehicle third party, and technology (cyber) liability insurance.

The prospective supplier should disclose if it will use the government’s standard for conditions, or whether it wants to vary them or substitute other terms and conditions.

≥ $100,000,000

Gateway reviews for major infrastructure projects.

≥ $25,000,000

For strategic projects, participation plans can be allocated a higher weighting in qualitative evaluations.

≥ $10,000,000

Gateway reviews for ICT projects.

≥ $9,247,000

Special rules from free trade agreements apply (construction contracts).

If the prospective supplier insists on varying the government’s standard form conditions, be aware of the consequences. For example, will using the supplier’s standard conditions void the government authority’s contractual liability insurance? This can happen if:

≥ $5,000,000

Contract management plan is required.

•

The government authority waives or limits its right of recovery, for example, by agreeing that the supplier’s liability under a contract is capped;

•

The government authority agrees to indemnify another party;

•

The standard form Department of Finance contractual clauses, relating to indemnity, liability and insurance, are varied or deleted; and

•

Joint ventures or partnerships are set up where the State of Western Australia is one of the partners or joint venturers.

Contracts and variations must be submitted to the State Tender Review Committee. ≥ $3,000,000

Industry participation strategy and plan required (contracts under the Public Works Act 1902).

≥ $1,000,000

Strategic Project Support Services team from the Department of Finance may be involved in major government projects.

Industry participation strategy and plan required (nonregional contracts).

≥ $657,000

Special rules from free trade agreements apply (except construction contracts).

≥ $500,000

Increased scrutiny of foreign exchange risk.

Industry participation strategy and plan required (regional contracts).

≥ $250,000

Department of Finance is required to be involved.

Tender process with public advertising is required.

≥ $50,000

Quotations and offers must be in writing (except for ADE and registered Aboriginal businesses).

Details of contracts are published on a register of contracts (Tenders WA).

Mandatory targets under the Aboriginal procurement policy.

< $50,000

The method of contracting is chosen by the government authority

< $5,000

Government purchasing cards are encouraged for contract payments.

For contracts with foreign exchange risk, understand that the assessment of foreign exchange risk is carried out against two criteria – the cost of the contract and the overseas content or exposure to foreign currency. The standard procurement templates from the Department of Finance require pricing to be in Australian dollars.

Endnotes 1

"Authority" is used in the phrase "public authority" in the State Supply Commission Act 1991, and defined in section 3 as "(a) a department of the Public Service of the State established or deemed to have been established

21

under the Public Sector Management Act 1994; and (b) an agency, authority or instrumentality of the Crown in right of the State."

2

Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 1.2.

3

Department of Finance, Who Buys What and How 20172018 report, https://app.powerbi.com/w?r=eyJrIjoiNDM4OGQ2NmItYzhiNy00NzVhLTkxMTEtMWJmMzNlY2NlMDlhIiwidCI6ImI3MzRiMTAyLWEyNjctNDI5YS1iNDVlLTQ2M GM4YWQ2M2FlMiJ9. (accessed 1 March 2019).

4

Nicholas Seddon, Government Contracts: Federal, State and Local, 4th edition, Federation Press, Annandale, NSW, 2009, at page 144.

5

Nicholas Seddon, Government Contracts: Federal, State and Local, 4th edition, Federation Press, Annandale NSW, 2009, pages 9-13.

6

"The case law on this is somewhat sparse but nevertheless strong." according to Nicholas Seddon, Government Contracts: Federal, State and Local, 4th edition, Federation Press, Annandale NSW, 2009, page 13. He lists the following cases in support of this contention: Clydebank Engineering and Shipbuilding Co Ltd v Don Jose Ramos Yzquierdo Y Castaneda [1905] AC 6; Wollondilly Shire Council v Picton Power Lines Pty Ltd (1994) 33 NSWLR 551; and Tasmania v Leighton Contractors Pty Ltd (2005) 15 Tas R 243; [2005] TASSC 133.

7

Nicholas Seddon, Government Contracts: Federal, State and Local, 4th edition, Federation Press, Annandale NSW, 2009, page 11. Depending on the breach and the loss sustained by the bidders, the bidders could potentially seek redress through estoppel, actions for restitution, breach of confidentiality, negligence, or misleading conduct. In some cases, administrative law remedies may be available for failure to afford procedural fairness or to follow legislation.

8

Government Procurement (Judicial Review) Act 2018 (Cth): refer to section 7 of this article for more detail.

9

Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 1.1.

10

Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 2.

11

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 4.

12

State Supply Commission, Supply Policy: Value for Money, 28 December 2017: https://www.finance.wa.gov. au/cms/State_Supply_Commission/Procurement_Policy/ Value_for_Money.aspx.

13

Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 6.3.

14

15

16

State Supply Commission, Buy Local Policy, July 2002: https://www.finance.wa.gov.au/cms/uploadedFiles/ State_Supply_Commission/Policies/Buy_Local_Policy_ July_2002.pdf.

Department of Finance, Request Conditions and General Conditions of Contract, October 2018: http://www. finance.wa.gov.au/cms/uploadedFiles/Government_Procurement/Guidelines_and_templates/gs_request_conditions_and_general_conditions_of_contract.pdf.

Part 2 of the Western Australian Jobs Act 2017. The strategy is required for contracts exceeding $1 million, and for contracts under the Public Works Act 1902 exceeding $3 million: Western Australian Jobs Regulations 2018 reg 4.

It is required regional procurement valued at $500,000 or more. The policy is administered by the Department of Jobs, Tourism, Science and Innovation. The strategy has been operational since 1 October 2018.

17

Section 7 of the Western Australian Jobs Act 2017.

18

Section 11 of the Western Australian Jobs Act 2017.

There is no requirement to submit a participation plan if the Delivering Community Services in Partnerships Policy applies: Western Australian Jobs Regulations 2018 reg 5.

19

State Supply Commission, Open and Effective Competition Policy, 1 July 2018: https://www.finance.wa.gov.au/ cms/uploadedFiles/State_Supply_Commission/Policies/ Open_and_Effective_Competition_policy.pdf. For more detail, refer to section 2.2 Knowing the appropriate type of contractual arrangement.

20

An Australian Disability Enterprise is a commercial business that employs people with a disability.

21

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, pages 71-72.

22

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 71.

23

The three government agencies are the Public Transport Authority, Main Roads Western Australia, and the Insurance Commission of Western Australia. Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 4.

24

State Supply Commission, Probity and Accountability Policy, 27 June 2014: https://www.finance.wa.gov.au/

22 | BRIEF MAY 2019

Act 1994 s3 is similar to the definition of Public Service, that is "departments and SES organisations". However, the definition of "Public Service" also adds "persons employed under [Part 3 of the Public Sector Management Act 1994] , whether in departments or in the Senior Executive Service in SES organisations, or otherwise." Departments are government departments established by the governor under s35 of the Public Sector Management Act 1994.

SES organisations are bodies "established or continued for a public purpose under a written law" and specified in column 2 of Schedule 2 of the Public Sector Management Act 1994.

cms/uploadedFiles/State_Supply_Commission/Policies/ Probity_and_Accountability_policy.pdf.

25

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 61.

26

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 62.

27

State Supply Commission, Probity and Accountability Policy, 27 June 2014: https://www.finance.wa.gov.au/ cms/uploadedFiles/State_Supply_Commission/Policies/ Probity_and_Accountability_policy.pdf.

28

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 7. The description of steps is slightly different than the one given in this article.

29

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 9. The description of steps is slightly different than the one given in this article.

30

Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 3.1.

31

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 12. The description of steps is slightly different than the one given in this article.

32

Available from www.finance.gov.au.

33

State Supply Commission, Open and Effective Competition Policy, 1 July 2018: https://www.finance.wa.gov.au/ cms/uploadedFiles/State_Supply_Commission/Policies/ Open_and_Effective_Competition_policy.pdf. For more detail, refer to section 2.2 Knowing the appropriate type of contractual arrangement.

34

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 4.

35

Department of Finance, Mini Guide to Procurement in the WA Public Sector Goods & Services, sixth ed., July 2016, page 9.

36

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 63.

37

Australia – United States Free Trade Agreement (1 January 2005); Australia – Chile Free Trade Agreement (6 March 2009); Korea – Australia Free Trade Agreement (12 December 2014); Japan – Australia Free Trade Agreement (15 January 2015); Singapore – Australia Free Trade Agreement (1 December 2017).

38

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 55.

39

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 57.

40

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 57.

51

Appointed under the Public Sector Management Act 1994 s68.

52

In Australia the presumption of immunity from legislation has been contentious in its scope, and does not play a great role in commercial arrangements. The High Court in Bropho v Western Australia [1990] HCA 24; (1990) 171 CLR 1; rejected the broad historical concept of Crown immunity, under which an act of parliament does not bind the Crown unless there is an express provision or by necessary implication. Cf. Anthony Gray, Immunity of the Crown from Statute and Suit (2010) Canberra Law Review, pages 1-35.

53

Department of Finance, State Supply Commission website: https://www.finance.wa.gov.au/cms/State_Supply_ Commission/Procurement_Policy/Procurement_Policy. aspx.

54

Refer to section 2.1 Broad policy considerations in government contracting of this article.

55

Refer to section 2.1 Broad policy considerations in government contracting of this article.

56

Refer to section 2.1 Broad policy considerations in government contracting of this article.

57

Refer to sections 2.1 Broad policy considerations in government contracting and 2.2 Knowing the appropriate type of contractual arrangement of this article.

58

Refer to section 4 Common User Arrangements and Panels of this article.

59

Refer to section 2.4.3 Managing risk of this article.

60

Refer to section 2.4.2 Sustainable procurement of this article.

61

A list of approved Australian Disability Enterprises is available from buyability.org.au/directory.

62

Department of Finance, Mini Guide to Procurement in the WA Public Sector Goods & Services, sixth ed., July 2016, page 3.

63

Department of Finance, Mini Guide to Procurement in the WA Public Sector Goods & Services, sixth ed., July 2016, page 3.

64

The targets for the first year (2018-2019) are 1%, second year (2019-2020) are 2% and from then on, 3%. Department of Finance, https://www.finance.wa.gov.au/cms/ Government_Procurement/Policies/Aboriginal_Procurement_Policy.aspx. References to directories of Aboriginal business can also be found on this website.

65

State Supply Commission, Sustainable Procurement: Supply Policy; 27 June 2014.

41

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 58.

66

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 82.

42

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 59.

67

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 82.

43

Defined in the Interpretation Act 1984 s5 as "the Sovereign of the United Kingdom, Australia and Her other Realms and Territories, and Head of the Commonwealth and includes the predecessors and the heirs and successors of the Sovereign." Governor is defined as "the Governor of the State and includes the officer for the time being administering the Government of the State."

68

Treasurer’s Instruction 825 Risk Management and Security. Financial Administration Bookcase http://www. treasury.wa.gov.au/FAB/.

69

There is also guidance on insurance: Treasurer’s Instruction 812 Insurance. Financial Administration Bookcase http://www.treasury.wa.gov.au/FAB/.

44

Nicholas Seddon, Government Contracts: Federal, State and Local, 4th edition, Federation Press, Annandale NSW, 2009, page 122.

70

45

Defined in the Interpretation Act 1984 s12 for references in written law, as "(a) in the case of a reference in an Act, as a reference to the Minister of the Crown to whom the administration of the Act, or the provision of the Act, in which or in respect of which the term is used, is for the time being committed by the Governor".

Treasurer’s Instruction 826 Managing foreign exchange risk. Financial Administration Bookcase http://www.treasury.wa.gov.au/FAB/. Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 67.

71

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 64.

72

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 64.

73

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 67.

74

Government departments are established by the Governor under the Public Sector Management Act 1994 s35.

75

Nicholas Seddon, Government Contracts: Federal, State and Local, 4th edition, Federation Press, Annandale, NSW, 2009, note 53 at page 143. Seddon also notes (at page 137) that once the State is named as a party to a contract or a writ, it is acceptable to use the name of the relevant department for administrative and practical purposes. Following a discussion of using department names

46

The Governor can establish and designate departments, amalgamate, divide and abolish departments, and alter the designations of existing departments: Public Sector Management Act 1994 s35(1). This particular power is exercised following the recommendation of the Public Sector Commissioner.

47

New South Wales v Bardolph (1934) 52 CLR 455; Pape v Commissioner of Taxation [2009] HCA 23, per French CJ at 62.

48

Defined in the Public Sector Management Act 1994 s3.

49

Defined in the Public Sector Management Act 1994 s3.

50

The definition of "agency" in Public Sector Management

and minister’s names as parties to the contract, the lesson in Seddon is that the State should be named as the party to the contract or a writ.

102 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, pages 14-29.

130 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 52.

76

The relevant legislation is the: Botanic Gardens and Parks Authority Act 1998, Rottnest Island Authority Act 1987 and the Zoological Parks Authority Act 2001.

103 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 16.

131 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 52.

77

A New Tax System (Australian Business Number) Act 1999 s8(1)(a): "You are entitled to have an ABN if you are carrying on an enterprise in Australia." "Enterprise" is defined broadly, and includes non-commercial activities. "You" is defined in s41 as applying to entities generally. "Entity" is defined in A New Tax System (Goods and Services Tax) Act 1999 s184-1(1) which lists the following to be entities: an individual, body corporate, corporation sole, body politic, partnership, any other unincorporated association or body of persons, trust and superannuation fund.

104 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 16.

132 Department of Finance, Mini Guide to Procurement in the WA Public Sector Goods & Services, sixth ed., July 2016, page 2.

105 Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 6.7.

133 Department of Finance, Mini Guide to Procurement in the WA Public Sector Goods & Services, sixth ed., July 2016, page 2.

78

For example, under the Public Sector Management Act 1994 s108A, the Minister may delegate to any person any power or duty of the Minister under another provision of the Public Sector Management Act 1994.

79

This can be tempered by the extent of the power that is delegated. So, in Interpretation Act 1984 s59(1)(b): Where a written law confers power upon a person to delegate the exercise of any power or the performance of any duty conferred or imposed upon him under a written law: such a delegation may be made subject to such conditions, qualifications, limitations or exceptions as the person so delegating may specify.

80

Carltona Ltd v Commissioners of Works [1943] 2 All ER 560 (CA).

81

State Supply Commission Act 1991 s19(1).

82

State Supply Commission Act 1991 s17. Refer to section 2.1 of this article for details of the policies.

83

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 4.

84

Financial Management Act 2006 ss54-56.

85

Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 1.3.

86

Department of Finance, Mini Guide to Procurement in the WA Public Sector Goods & Services, sixth ed., July 2016, page 3.

87

Department of Finance, Mini Guide to Procurement in the WA Public Sector Goods & Services, sixth ed., July 2016, page 7.

106 Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 4.1.

107 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 55. Also: the Suppl Commission policy Open and Effective Competition.

108 Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 4.7.

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 23.

109 The extension is for 5 days for each of Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 56.

110 Premier’s Circular 2011/02. Guarantees, indemnities and sureties in respect of moneys received from the Commonwealth cannot be made without prior approval of the Treasurer.

111 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 23.

112 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, pages 23 and 39. These documents can be accessed at the website www.finance. wa.gov.au > Government Procurement > Templates and Guides > Goods and Services Templates, Guides and Conditions of Contract.

113 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 41.

114 http://www.finance.wa.gov.au/cms/uploadedFiles/Government_Procurement/Guidelines_and_templates/gs_request_conditions_and_general_conditions_of_contract. pdf? (October 2018 version).

88

Department of Finance, Mini Guide to Procurement in the WA Public Sector Goods & Services, sixth ed., July 2016, page 7.

89

Section 2.4.3 Managing risk of this article.

90

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 18.

91

The relevant Buyers’ Guide may contain an exemption from doing this.

117 Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 4.4.5.

92

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 19.

118 Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 4.8.2.

93

The standard request template can be accessed at www. finance.wa.gov.au under Government Procurement > Templates and Guidelines > Goods and Services Templates, Guides and Conditions of Contract. Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 20.

119 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 19.

94

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 20.

121 http://www.finance.wa.gov.au/cms/uploadedFiles/Government_Procurement/Guidelines_and_templates/Evaluation_Handbook_template-wqts.doc

95

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 20.

122 http://www.finance.wa.gov.au/cms/uploadedFiles/Government_Procurement/Guidelines_and_templates/Evaluation_Report_template-wqts.doc

96

A participation plan is required for contracts exceeding $1 million, and for contracts under the Public Works Act 1902 exceeding $3 million: Western Australian Jobs Regulations 2018 reg 4. It is required regional procurement valued at $500,000 or more.

123 Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 5.5.

Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 56.

97

Treasurer’s Instruction 820 Register of Contracts, http:// www.treasury.wa.gov.au/FAB/.

124 Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 7.3.

98

Treasurer’s Instruction 820 Register of Contracts, paragraph 5, http://www.treasury.wa.gov.au/FAB/.

99

This can be accessed from the Finance website at www. finance.wa.gov.au under Government Procurement > Templates and Guidelines > Goods and Services Templates, Guides and Conditions of Contract. Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 28.

125 http://www.finance.wa.gov.au/cms/uploadedFiles/Government_Procurement/Guidelines_and_templates/gs_contract_management_plan.doc

115 Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 4.6.

116 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 49.

120 Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, sections 6.1 and 6.5.

126 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 44.

127 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 27.

100 State Supply Commission, Open and Effective Competition Policy, 1 July 2018: https://www.finance.wa.gov.au/ cms/uploadedFiles/State_Supply_Commission/Policies/ Open_and_Effective_Competition_policy.pdf.

128 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 27.

101 Department of Finance, Guide to Tendering with Western Australian Public Authorities, December 2017, section 3.2.

129 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 4.

134 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 52.

135 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 26.

136 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 52.

137 Department of Finance, Procurement Practice Guide: A Guide to Products and Services Contracting, for Public Authorities, August 2018, page 28.

138 Currently, these are ANZ and NAB. Payment terms are 48 hours: https://www.finance.wa.gov.au/cms/uploadedFiles/Government_Procurement/Guidelines_and_ templates/p_card_guide_for_suppliers_2.pdf?n=3822.

139 From a list of state agreements at: https://www.jtsi. wa.gov.au/what-we-do/manage-state-agreements/list-ofstate-agreements.

140 Richard Hillman, The Future Role for State Agreements in Western Australia (2006) 25 ARELJ 293, at 316.

141 Per Mason J Ansett Transport Industries (Operations) Pty Ltd v Commonwealth [1977] HCA 71 "It will be perceived from what I have written that in my opinion the doctrine that an agreement of the kind in question may constitute an anticipatory fetter on the exercise of a statutory discretion is closely connected with the question whether the agreement is authorized by statute, or is prohibited by, or incompatible with it. If the agreement is authorized, then it is valid, and any breach of the undertaking it contains will be enforceable by damages but only when the effect of statutory approval is to convert the discretion into a duty will it be enforceable specifically."

142 Colin Barnett, "State Agreements", AMPLA Yearbook 1996, 314-323, at 317: "It is testimony to the importance if State Agreements that no Parliament has even attempted such unilateral repeal action."

143 Financial Management and Accountability Act 1997 (Cth) s64 and Financial Management and Accountability Regulations 1997 (Cth) reg 7.

144 "What is rejected in these reasons is the unqualified proposition that, subject to parliamentary appropriation, the executive power of the Commonwealth extends generally to enable it to enter into contracts and undertake expenditure of public moneys relating to any subject matter falling within a head of Commonwealth legislative power."

Williams v Commonwealth of Australia [2012] HCA 23, French CJ at paragraph 4. The former Chief Justice of the High Court, recently commented on the effect of recent High Court decisions on the Commonwealth’s capacity to enter contracts: "In the joint judgment of five [in Williams v Commonwealth of Australia [2014] HCA 23], the effect of Pape [v Federal Commissioner of Taxation (2009) 238 CLR 1] was summarised as follows: • sections 81 and 83 of the Constitution do not confer a substantive spending power; • the power to spend appropriated moneys must be found elsewhere in the Constitution or in statutes made under it; • the determination of the Executive Government that there was a need for an immediate fiscal stimulus to the economy enlivened legislative power under s51(xxxix) to enact the impugned law as a law incidental to that exercise of the executive power." Robert French, "Executive Power in Australia - Nurtured and Bound in Anxiety" [2018] University of Western Australia Law Review, vol 43 (2) 16.

145 https://www.ato.gov.au/Business/Bus/Statement-of-taxrecord/.

146 Commonwealth Procurement Rules, 1 January 2019 made under the Public Governance, Performance and Accountability Act 2013 (Cth).

147 Government Procurement (Judicial Review) Act 2018 (Cth) s20.

148 Local Government Act 1995 s2.5.

23

Current Issues at the Legal Profession Complaints Committee

The Committee has recently seen a number of instances where legal practitioners and law practices are contravening the provisions in the Legal Profession Act 2008 (LPA) concerning trust money and trust accounts in receiving payment for legal services pursuant to a fixed fee arrangement.

Receipt of “trust money” The scenario typically arises where a law practice or legal practitioner provides a fixed fee which is intended to cover an initial meeting with the client and possibly the preparation of a document, say for example a simple will. The client is asked to pay the fixed fee prior to the meeting. After the meeting, the client will then decide if they wish to proceed with the document. If they do not, then the sum paid is accepted as payment for the practitioner’s time meeting with the client. If they do, the client instructs the law practice/legal practitioner to prepare the will but no further fee is payable as the initial sum paid is intended to cover the meeting and preparation of the document.

It is the latter situation where instructions are given for the preparation of a document which is problematic. The legal practitioner/law practice has received ‘trust money’ to the extent that the fixed fee relates to preparation of the will as this is work yet to be completed and is required to deal with that money in accordance with the provisions in Part 9 of the LPA. Section 205(1) of the LPA defines “trust money” as “money entrusted to the law practice in the course of or in connection with the provision of legal services by the practice”. It includes “money received by the practice on account of legal costs in advance of providing the services”. The LPA also provides that a 24 | BRIEF MAY 2019

law practice that receives trust money must maintain a general trust account in this jurisdiction (s214(1)). That account must be established and maintained in accordance with the regulations (s214(2)) and as soon as practicable after receiving trust money the law practice must deposit it into a general trust account (s215(2)). Contravention of these sections can attract a financial penalty.

One possible option to avoid the above noted issues, where the law practice/ legal practitioner does not wish to utilize a trust account, is to accept a fixed fee for the meeting on the day the meeting takes place and then set a further fixed fee to cover the document preparation with payment being accepted on completion of the document.

Withdrawing money from trust The Committee has also seen a number of occasions where law practices are withdrawing or have withdrawn money from trust in contravention of the relevant provisions. In one instance, the law practice/legal practitioner requested and received funds in trust from the client pursuant to a fixed fee agreement.

Shortly after the funds were received and despite not yet having completed any work, the firm issued a lump sum invoice in the amount of the fixed fee providing a limited description of work and then transferred trust funds to pay the invoice.

The transfer was made without first providing the client with notice of the withdrawal and before the seven days for the client to object to the invoice had elapsed.

The first issue with the above scenario is that until the work is completed there are no legal costs owing to the practice.

S225 of the LPA which concerns dealing with trust money for legal costs, provides that a law practice “may withdraw money

for payment to the practice’s account for legal costs owing to the practice” if the relevant procedures or requirements under the LPA are complied with. The second issue is that the procedures set out in regulation 65 of the Legal Profession Regulations 2009 have not been complied with.

Substituting higher invoices Recently, there have been some instances seen by the Committee of law practices seeking to substitute a higher bill in situations where the client has queried costs, requested an itemised bill or raised the possibility of having the law practice’s accounts assessed.

Care needs to be taken when proposing to substitute a higher bill in these instances to ensure that it is not used as a means to deter or discourage a client from exercising their statutory rights. A client has a statutory right to request an itemised bill after receiving a lump sum bill (s292) and to apply to a taxing officer for an assessment of the whole or any part of a bill for legal costs (s295(2)) even if the legal costs have been wholly or partly paid (s295(4)).

Further, care also needs to be taken to ensure that it is appropriate in the particular circumstances to substitute a higher bill. In the Committee’s view, although an itemised bill may work out higher than the amount in the original lump sum bill, lawyers should not charge more in the itemised bill than they charged in the lump sum bill. A lawyer may substitute a higher bill if it goes to assessment, provided that the original lump sum bill is delivered subject to an appropriately worded reservation of rights clause (the clause must be fair and reasonable) and it is also disclosed in the lawyer’s costs disclosure information/ costs agreement.

The Law Society’s Wellbeing and Resilience Programme Did you know? Your membership with the Law Society provides complimentary access to these support programmes through LawCare WA. To find out more about all resources offered through LawCare WA, visit www.lawsocietywa.asn.au/lawcare-wa

Member Assistance Programme

Employee Relations Advice Line

The member assistance programme offers support with personal and work-related issues that may impact your job performance, health, mental and emotional wellbeing.

LawCare WA offers a free confidential telephone advice service to members on personal matters relating to a range of human resources and employee relations issues.*

Service provided by Converge International

Service provided by CCIWA

Phone: 1300 687 327

Phone: (08) 9365 7660

Practitioner Advice

Health and Wellbeing

Members of the profession connect with experienced practitioners for advice on ethical issues or complaints through the Senior Advisors Panel and Western Australian Bar Association Referral Service.

Working in the legal profession can be rewarding and challenging. It is important to find balance in your life as you juggle career, family, friends and hobbies.

Referral service provided by WABA

Phone: (08) 9220 0477

LawCare WA is available to members of

• • •

Attend complimentary Pilates classes provided by HBF twice a year Participate in sporting tournaments hosted by the Law Society’s Young Lawyers Committee Take advantage of exclusive offers through the Law Society’s member privileges programme

For more information about LawCare WA please visit

lawsocietywa.asn.au/lawcare

*This service is only for a Law Society member who is an individual employee (not an employer). If after speaking to CCIWA more substantial employee relations advice is required, members may use the Law Society’s Find a Lawyer service to find legal practitioners specialising in employee relations law. Disclaimer: The Law Society facilitates all the above services and does not warrant or guarantee the work undertaken by any third party organisation, firm or individual listed or provided and is not liable in relation to any aspect of services they may provide to you.

25

Law Week PROGRAMME Monday, 13 May 2019 to Friday, 17 May 2019 #LawyersMakeaDifference Every year, Law Week brings the community and legal profession together to build a shared understanding of the law. Law Week 2019 features our most exciting programme yet, with events that will entertain, inform and inspire.

Use #LawyersMakeaDifference on social media to share your own examples of ways lawyers are making a difference in your community. We look forward to seeing you at Law Week 2019!

MONDAY, 13 MAY 2019 Law Week Breakfast with Keynote Address by Emeritus Professor Rosalind Croucher AM Time 7.15am – 9.15am Venue Argyle Ballroom, Parmelia Hilton, 14 Mill Street, Perth Description Join us as we celebrate the official opening of Law Week 2019, and recognise the contributions made by members of the legal profession to the WA community with a breakfast and keynote address.

Register Cost Organiser Award Sponsor For

The Law Society is delighted to once again host the Attorney General’s Community Service Law Awards at the event. www.lawsocietywa.asn.au/event/law-week-breakfast-2019/ Law Society members - $60.00, Non-members - $85.00 Tables of ten are also available The Law Society of Western Australia Department of Justice Legal profession

Mediation and adjudication – synergistic partners or rivals?

Time 5.15pm for a 5.30pm start Venue Jackson McDonald, Level 17, 225 St Georges Terrace, Perth Description Presentation by The Hon Wayne Martin AC QC on Mediation and adjudication – synergistic partners or rivals?

Register https://www.resolution.institute/events/event/wa-law-weekmediation-and-adjudication-synergistic-partners-or-rivals Cost Free Organiser Jointly presented by Resolution Institute & Jackson McDonald For Legal profession, mediators, conciliators, conflict resolvers

26 | BRIEF MAY 2019

TUESDAY, 14 MAY 2019 THE LAW ACCESS WALK FOR JUSTICE 2019 Time 7.30am – 9.00am Venue Commencing in front of the Bell Tower on the CBD foreshore at Barrack Square, Elizabeth Quay Description Law Access Walk for Justice followed by a free "recovery" breakfast Register www.mycause.com.au/events/lawaccesswalkforjustice Cost Free but registration essential. Walkers are also invited to raise funds for Law Access.

Organiser Law Access For Legal profession Intellectual Property 101 - What you need to know about protecting your Intellectual Property Time 12.30pm – 1.30pm Venue Law Society of Western Australia, Level 5, 160 St Georges Terrace, Perth Description The Law Society’s Intellectual Property and Technology Committee presents a panel discussion Q&A event providing an introduction to intellectual property, highlighting why it is important and how business owners can take steps to protect it.

Register advocacy@lawsocietywa.asn.au Cost Free Organiser Hosted by the Law Society’s Intellectual Property and Techonology Committee For For small business owners, start-up founders and employees, students and other curious community members Pragma's 3rd Annual Law Week Quiz Night Time 6.30pm – 9.30pm Venue Subiaco Football Club, 246 Vincent Street, Leederville Description As part of Law Week, Pragma is hosting a Quiz Night to raise funds for one of Western Australia’s community legal centres, The Subiaco Justice Centre Inc. The centre provides legal advice and representation to disadvantaged persons and seeks to improve access to justice in new and innovative ways.

Register Cost Organiser For

With the support of the Law Society and the Piddington Society, the Quiz Night will be held on Tuesday 14 May 2019. The topics will be centred around some of the more interesting and entertaining aspects of the law, including popular culture and everyday life. Guests will be tested on their knowledge of classic legal films, quirky laws and remarkable decisions from around the world. We are hoping it will be a fun night without any formalities, a chance to socialise within the profession, and an opportunity to raise funds for a good cause. www.eventbrite.com/e/pragmas-3rd-annual-law-weekquiz-night-tickets-58352195989 Table of 10: $300.00 Pragma Lawyers Legal profession

Wednesday, 15 May 2019 Behind the curtains at the Corruption and Crime Commission Time 12.00pm – 1.00pm Venue Corruption and Crime Commission, Level 5, 45 Francis Street, Northbridge Description One way the CCC investigates corruption is by conducting examinations. They are usually in private and shrouded in secrecy. For Law Week, the CCC will be conducting a mock examination. See first-hand what any CCC examination might involve - hard hitting questions, surveillance footage, telephone intercept, red-faced witnesses and the ultimate uncovering of the truth!

Register by email to LawWeekEvent@ccc.wa.gov.au or at www.behindthecurtainsattheccc.eventbrite.com.au Cost Free Organiser Corruption and Crime Commission For Community and Legal profession The Life and Music of Dom Resendo Salvado Time 5.00pm – 7.00pm Venue Old Court House Law Museum, Stirling Gardens Perth Description The New Norcia mission was founded in March 1846. By late April, the community had exhausted their provisions and was at risk of starvation.

The colourful Spanish missionary Dom Rosendo Salvado and an Aboriginal companion walked 130 kilometres from the Victoria Plains to Perth to speak to Bishop Brady about their desperate situation. It was decided that a piano recital would be held at the Old Court House to raise money and on the evening of 1 May 1846, Salvado gave a three hour piano recital to a packed audience.

Register Cost Organiser For

Join us at the Old Court House Law Museum for an evening of music, drinks and canapés as Father Robert Nixon, who currently resides at New Norcia, gives his own recital of Salvado’s music and chats about his remarkable life and achievements.

The Museum will also be hosting a new temporary exhibition showcasing many rare and interesting objects related to Salvado and his life; these are on loan from New Norcia. www.eventbrite.com/e/the-life-and-music-of-dom-rosendosalvado $25.00 The Law Society’s Old Court House Law Museum Recomended for over 18 years, community, musicians, historians, academics

Special Law Week Screening: Connection to Country Presented by the Young Lawyers Committee Time 5.30pm – 7.30pm Venue QV1 Conference Centre, Level 2, 250 St Georges Terrace, Perth Description The Law Society's Young Lawyers Committee is raising awareness about how the legal profession, students and members of the public can assist with Indigenous legal issues.

The event will centre on a screening of Connection to Country, a beautifully shot documentary directed by Tyson Mowarin.

It explores the relationship between Indigenous people and their land and charts the struggles to have their unique cultural heritage recognised, conserved and celebrated.

Register Cost Organiser Sponsor For

This special event in Law Week is open to all members and nonmembers, law students, local community groups, lawyers and those with an interest in Indigenous issues. www.lawsocietywa.asn.au/event/law-week-2019-ylc/ Free The Law Society of Western Australia's Young Lawyers Committee The College of Law Legal profession and law students

Online Dispute Resolution - The Way of the Future Time 6.30pm – 8.30pm Venue The Blockchain Centre, Level 2, 66 Kings Park Road, West Perth Description As part of Law Week 2019, we want to promote access to justice and feel there is no better way to do this than inviting members of the legal profession and the community to an interactive demonstration of the Remedium online dispute resolution platform (www.remediumlaw.com). The demonstration will be of the Family & Separation process we have developed, which helps separating couples deal with property settlements and parenting in a cost and time efficient manner.

Register https://www.eventbrite.com.au/e/online-disputeresolution-the-future-of-dispute-resolution-is-hereregistration-60510295924 Cost Free Organiser Remedium For Legal profession, ADR practitioners, the community

Friday, 17 May 2019 CPD Day for Rural, Regional and Remote Legal Practitioners – Free for Country Members Time 8.30am – 5.20pm Venue Swan Room, Level 1, Parmelia Hilton, 14 Mill Street, Perth Description After a successful first year, the Law Society is once again hosting a CPD day for RRR lawyers in Perth during Law Week.

Acknowledging the tyranny of distance, this CPD day is offered free for Country members* of the Law Society and heavily discounted for Country non-members at $200 for the entire day and provides 6 CPD Points across all four competencies.

Register

Cost Organiser For

The Law Society welcomes regional practitioners to Perth for a combination of professional learning and networking, concluding with a chance to socialise over drinks.

To register your attendance at the event, please fill out the registration form at www.lawsocietywa.asn.au/event/cpdday-country-practitioners and email to cpd@lawsocietywa.asn.au Country Members: $0 | Country Non-Members: $200 The Law Society of Western Australia Country legal practitioners

LAW WEEK AWARDS NIGHT 2019 Time 5.30pm – 8.00pm Venue The Westin Perth, 480 Hay Street, Perth Description As Law Week comes to a close, join the legal profession for an evening of recognition to celebrate law and justice in the community and our much anticipated Law Week Awards.

The prestigious awards are an opportunity to acknowledge those that have made a significant contribution in their legal careers to improving the course of justice and will announce the welldeserved recipients of the 2019 Lawyer of the Year Awards.

The evening also recognises long-serving practitioners who have held a practising certificate for more than 50 and 60 years.

Register Cost Organiser Sponsors For

We look forward to seeing you there for an evening of recognition, refreshments, canapés and conversation in the modern surrounds of The Westin. www.lawsocietywa.asn.au/event/law-week-awardsnight-2019 Law Society members – $35.00 | Non-members – $55.00 The Law Society of Western Australia Principal Sponsor, Bankwest; HHG Legal Group; Murdoch University Legal profession

For more information and other events during Law Week please visit www.lawsocietywa.asn.au/law-week/ or call (08) 9324 8692 or email membership@lawsocietywa.asn.au

With thanks to Law Week supporters and sponsors:

Awards Night Principal Sponsor

Sponsor of Senior Lawyer of the Year Award

Sponsor of Junior Lawyer of the Year Award

Sponsor of the Young Lawyers Committee Event

27

FAMILY LAW CASE NOTES Robert Glade-Wright Former barrister and accredited family law specialist

Property – Wife’s SMS held admissible against her case that $145,000 advance from father-in-law was husband’s debt In Phe & Leng [2019] FamCAFC 17 (8 February 2019) the Full Court (Alstergren CJ, Strickland & Watts JJ) dismissed the wife’s appeal against a property order where Le Poer Trench J found that the husband’s father was owed $145,000. The wife alleged that that sum was the husband’s debt alone, having been deposited into an account the husband controlled. It was found that it was the parties’ debt as the wife in a text message to the husband’s sister said that she would “return” the money to the husband’s parents if her child “M can come back to Sydney”.

On appeal, the wife argued that her text message was inadmissible being a settlement negotiation within the meaning of s 131 of the Evidence Act 1995 (Cth). The Full Court disagreed, saying (from [28]): “His Honour put to the wife that the message represented an acknowledgment by her that the loan (in Taiwanese dollars) existed … [T]he wife said the message was …an attempt to … get the husband and his family to return the parties’ eldest child to Australia. ( … ) [30] … [T]he wife contended … that his Honour should not have allowed the message to have been adduced … because it was a communication made in connection with an attempt to negotiate the settlement of a dispute ( … ) [36] The broader view … is that [the exception in] s 131(2)(g) … applies where the existence or the contents of otherwise privileged communication contradicts or qualifies existing evidence or an inference from that evidence and the court is otherwise likely to be misled unless the communication is adduced. ( … ) [49] … [W]e conclude it was likely that the primary judge would have been misled into accepting the wife’s evidence had the message been excluded.

[50] Thus s 131(1) of the Evidence Act does not apply to exclude the message because s 131(2)(g) was enlivened and the wife was not entitled to claim privilege.”

Children – Interim coercive order for mother to return and stay in a place where she had not been living was in error In Mareet & Colbrooke [2019] FamCAFC 15 (7 February 2019) the mother left the father after a four month relationship. She was

28 | BRIEF MAY 2019

pregnant with the parties’ child when moving from the Northern Territory (where the father worked) to Queensland via “Town F” in NSW where her family lived. She alleged stalking and harassment by the father. The child was born in Queensland. The mother signed a lease and moved her possessions there, also enrolling her four year old child from a former relationship in kindergarten. A judge of the FCC on the father’s application ordered the mother to return with the child to the “H Region” in NSW to spend time with the father at a contact centre. The mother appealed.

Ainslie-Wallace J (with whom Ryan and Aldridge JJ agreed) allowed the mother’s appeal, saying (from [14]): “While it is undisputed that the Family Law Act … provides the power to enjoin a party to relocate (or not relocate), such an injunction should rarely be made … [S]uch an injunction can be avoided if the court gives adequate consideration to alternate forms of access …

[15] Her Honour regarded the issue … as a ‘relocation case’ … Clearly however, the child’s residence was never in the H Region in [NSW]. … Her Honour’s characterisation … led her to make significant errors of law.

[16] In particular, her Honour gave no consideration to making orders that the father travel to the D Region in Queensland to see the child. Nor did she turn her mind to the interests of the mother’s older child who had been enrolled at pre-school [there] ... Instead, her Honour took the view that the mother should be compelled to return.

[17] This order … one directly affect[ing] the mother’s right of freedom of movement, in the circumstances of this case was wrong at law. Secondly, her Honour’s … order which bound the mother to the H Region of [NSW] from which she could not leave is patently erroneous.

[18] … [H]er Honour’s order … [also] took no account of the financial and other burden on the mother consequent on the move … ”

Financial agreements – Section 90B agreement was no bar to a spousal maintenance application by wife as it did not comply with s 90E In Barre & Barre & Anor [2018] FCCA 97 (19 January 2018) the wife applied (inter alia) for interim periodic spousal maintenance in proceedings filed by her under s 90K(1)

(d) of the Family Law Act (material change in circumstances relating to a child) for the setting aside of a financial agreement made by the parties in 2005 under s 90B before their marriage. Subsequent to their agreement the parties had two children, aged 11 and 5 at the time of the hearing. The husband opposed the application.

Judge Kemp said (from [37]): “ … [T]he Court does not accept that the … agreement excludes either party’s right to make an application for spousal maintenance.

[38] The husband says that, while the actual words ‘spousal maintenance’ are not referred to as excluded, inferentially they were, as they were not specifically included within the terms of the … agreement as being an excluded item ( …)

[39] The husband, further, says that such an outcome, being no ability to apply for spousal maintenance, would be consistent with the fact that the … agreement was entered into … where both parties were in employment, apparently able to adequately support themselves … and intended to continue to do so in the future. The Court does not accept that submission. While the … agreement contemplated the parties having children, it was silent as to the impact of having children on each of their earning capacities. ( … ) [44] … [I]n Boyd [2012] FMCAfam 439 Brown FM … considered … s 90E and stated: ‘Essentially, the legislature requires that any … financial agreement specify which portions of any lump sum or property order conferred thereunder are for either spousal or child maintenance, so that the social security implications of such an order or agreement is apparent.’

[45] The wife referred to that decision and submitted that as the … agreement did not comply with s 90E … that was ‘the end of the matter’ and the wife’s spousal maintenance rights were, clearly, preserved.”

Judge Kemp agreed.

Robert Glade-Wright is the founder, principal author and editor of The Family Law Book, a one-volume, loose-leaf and online subscription service. thefamilylawbook.com.au. He is assisted by accredited family law specialist Craig Nicol.

The Tale of the Late Night Traveller

By John McKechnie QC

Perhaps many of us have experienced frustration at being in transit through airports. There are few places to sleep and the wait seems interminable. It is often late at night.

But at least you are unlikely to be ejected from the airport before your plane is scheduled to depart and there is usually a place to get a beer or a meal.

Picture then the plight of Mr Shair Mahomet.

However, Mr Mahomet didn't think this was quite fair. Besides, he was comfortable where he was.

So he told the Station Master where to go (or something like that).

In 1901, he needed to go from Nulla Nulla, a small town siding of Moorine Rock, to Yellowdine out of Southern Cross.

Well, the Station Master, who was now probably very tired as well as angry, had had enough.

Mr Mahomet decided to go by train. Only five years before, the Eastern Goldfields line had been extended to Kalgoorlie and the line went right through Nulla Nulla so this was an obvious choice.

Besides, it was a long journey by horse, mule or camel.

However, the journey proved to be not so convenient, as it turned out.

Yellowdine was a small siding and so it was necessary for Mr Mahomet to change trains in Southern Cross.

The train pulled into Southern Cross, late in the evening; 10.45pm. The train to Yellowdine was not due to depart until 3.40am.

What to do?

Well, fortunately there was a waiting room by the platform so Mr Mahomet ensconced himself within to pass the time until he could travel on.

Mr Mahomet was probably the only passenger at such a late hour and the Station Master may have been longing for home and bed. But he couldn't leave without locking up and he couldn't do that while Mr Mahomet was sitting peacefully in the waiting room.

He caused Mr Mahomet to be arrested and lodged in the police lock-up. So I suppose Mr Mahomet did get some shelter that night â&#x20AC;&#x201C; though not much sleep.

The next day, the Magistrate was not impressed by the actions of the Station Master. He ordered that Mr Mahomet be freed immediately.

Mr Mahomet did as all good people should and consulted a solicitor, Mr N K Ewing, who sued the Commissioner of the Railways for malicious arrest and false imprisonment.

Justice Parker thought Mr Mahomet might have had a rough deal, but he didn't have a legal leg to stand on.

The full court disagreed. Mr Mahomet had a through ticket from Nulla Nulla to Yellowdine and therefore had to wait at Southern Cross for a change of trains.

The Commissioner had no right to revoke his licence to be in the waiting room without cause.

And so the full court ordered that Mr Mahomet's legal action could proceed after all.

History does not record what the ultimate outcome was, but I think the Commissioner would have been wise to settle â&#x20AC;&#x201C; donâ&#x20AC;&#x2122;t you?

Who knows?

What we do know is that the Station Master ordered Mr Mahomet to leave the waiting room.

Whether Mr Mahomet waited on the dark and lonely streets or somewhere else, was of no concern to the Station Master. After all, Southern Cross was still a boom town with 10 hotels and inns.

(Adapted from Shair Mahomet v The Commissioner of Railways (1902) 5 WALR 107)

29

Improving Written Submissions

By Judge Alan Troy District Court of Western Australia

This article is adapted from a paper presented at a Law Society CPD seminar.

To discover more of our seminars, visit lawsocietywa.asn.au/cpd-seminars.

The purpose of this article is to make some suggestions on improving the quality of written submissions. Writing well is not easy. I have drawn heavily on the work of Bryan Garner, Professor of Law at Southern Methodist University in the USA, both in his own right and in collaboration with the late Justice Antonin Scalia. I have also applied the advice, along broadly similar lines, in J. Yellowlees Douglas' book, The Reader’s Brain – How Neuroscience Can Make You a Better Writer (Cambridge University Press 2015).

In the contemporary legal landscape written advocacy is, with the exception of jury trials, at least as important as oral advocacy. Fundamentally it is an exercise in trying to persuade another human being, the judge in your case, to agree with you. In trying to persuade the other person to agree with your argument do you make it easy for them to agree with you or difficult? Do you force them to wade through superfluous detail or not? Do you reassure them that your argument is in conformity with established appellate authority or suggest that you are inviting them to 30 | BRIEF MAY 2019

break new legal ground? Do you attempt to satisfy them that the outcome you desire is objectively the fairest and most equitable one? The answers to these questions are, of course, self-evident and should be the guiding force behind your written submissions.

Your reader is not reading your submissions for pleasure. Nor are they trying to assimilate every word as if there is a test at the end. They are trying to extract information as efficiently as possible.

As a general proposition, throughout your career you should strive to strengthen your command of written English. I cannot do better than quote a section from the text: Making Your Case – The Art of Persuading Judges by Scalia and Garner.

At page 61 the authors write: You would have no confidence in a carpenter whose tools were dull and rusty. Lawyers possess only one tool to convey their thoughts: language.

They must acquire and hone the finest, most effective version of that tool available. They must love words

and use them exactly. Cultivate precise grammatically accurate English; develop an appealing prose style; acquire a broad vocabulary.

Naturally, these are not tasks you can undertake a month before your brief is due. They are lifelong projects and you may as well begin them at once.

It is important to hold the trust of your audience. You risk forfeiting that trust by conveying false information, even inadvertently, mischaracterising authority to suit your case and ignoring rather than confronting obvious competing arguments. Your argument becomes more appealing if you fairly present the facts of the case and honestly characterise the issues.

In drafting written submissions your task is to take the material that is before you, in perhaps several lever arch files, and figure out from the mass of possibilities precisely what your points are, and then state them coherently and with adequate reasoning and support. But to do so as economically as possible.

Your objective The overarching objective of written submissions is to make the Court’s job easier. That objective is achieved by:

before returning to begin editing it. This will take up the balance of the total amount of time spent working on an outline.

These phases are distinct and should not be blurred. Taking breaks between the phases assists in that regard.

•

brevity;

•

simple, straightforward English;

•

clear identification of the issues;

Structure of submissions

•

a reliable statement of the facts; and

•

informative section headings.

As is the case with all good writing, written submissions should contain an introduction, a main body and a conclusion, as opposed to a piece of work that is, in essence, entirely the middle.

The written submissions must form a coherent whole. Design the entire writing, from the statement of issue to the conclusion, to bring out your theory of the case and your principal themes. What three or four points are most important for the judge to take away? Ensure that both the structure of the submissions and its content are designed to make these points stand out.

Making a start It is tempting to get writing immediately to try put at least some of the task behind you. It is a good idea, however, not to start to write the first draft until you have spent time absorbing and reflecting on the nature of the case that you are writing about. Jot down ideas that occur to you before your overall approach to the case becomes too fixed.

Once you have mulled over the issues in your mind you are not necessarily in a position to embark upon drafting the submissions in final form. But you are ready to begin to sketch an outline.

Garner suggests the following approach.

Firstly, use your imagination to churn out copious thoughts and ideas as quickly as possible. This should account for 15-20% of the total time expended in drafting an outline.

Secondly, arrange those ideas in complete sentences and in a sensible order. A good outline can be as simple as three propositions arranged in the most logical and powerful order. This should account for less than 10% of the time expended.

Try to place your strongest argument first. Couple it with the counter argument and your rebuttal of the likely counter argument. Change the order of your points to ensure that the final argument flows as logically as possible.

Thirdly, write out a draft, joining sentence to sentence, paragraph to paragraph. This is the longest of the four phases and should account for 40-45% of the time expended.

Captioned section headings Use captioned section headings. I try for full sentences, ideally no lengthier than a single line. Garner is comfortable with a lengthier heading but to a maximum 35 words.

Introduction The introduction identifies the points at issue in a way that is readily comprehensible after a single reading.

It essentially amounts to an executive summary, identifying the precise points at issue, and places the essential concepts before the reader.

This is achieved by identifying how many distinct arguments you wish to make, and then turning each one into a statement of issues.

Beginning with a statement of the main issue(s) is preferable to merely stating the facts without putting them into the context of the disputed issues. A statement of the main issues should, however, contain enough facts to make it informative, as opposed to merely abstract.

Consider this example from an amicus brief filed by the American Bar Association in the Supreme Court of the United States.

In constructing a statement of issues a useful method is to put the statement in terms of a syllogism. Legal reasoning is an exercise in logic and the most rigorous form of logic is the syllogism.

A positive argument expressed syllogistically consists of a major premise, for example, all humans are mortal. Followed by a minor premise – Socrates is human. Leading to the conclusion – Socrates is mortal.

This example, however, merges the introduction/statement of issues with the summary of argument. I think it is more useful to keep them distinct.

In a legal context the major premise is the controlling rule. That is the rule that applies to a given scenario, either by statute or by virtue of binding authorities

Table of contents For lengthier submissions a table of contents is likely to be desirable.

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ................................................................................................................................................................. iii PRELIMINARY STATEMENT AND SUMMARY OF ARGUMENT. ........................................................................................................................................................................................... 3 ARGUMENT

. .................................................................................................................................................................................................

7

EVEN WHEN IT WAS DECIDED, MEZEI RESTED ON WEAK AND HISTORICALLY UNFOUNDED REASONING ............................................................................................ 8 A. Before Mezei, Noncitizens Seeking Admission Were Entitled

to Some Due Process ................................................................................................................................................. 8 B. Mezei Wrongly Equated the Power to Exclude with the Power

To Detain Indefinitely ................................................................................................................................................... 13 THIS COURT’S SUBSEQUENT DECISIONS HAVE ERODED MEZEI AND CONFIRMED ITS PLACE AS AN ANOMALY IN THIS COURT’S DUE PROCESS JURISPRUDENCE...................................................... 17 A. This Court’s Substantive Due Process Jurisprudence

Has Eroded the Foundations on which Mezei Purported

to Rest ........................................................................................................................................................................................... 18 B. This Court’s Subsequent Procedural Due Process Jurisprudence

Has Similarly Undermined Mezei. ............................................................................................................... 23

Finally, set the draft aside for some time 31

at common law. Often the major premise is self-evident and acknowledged by both sides.

For example in a criminal case, where there has been a substantial delay between the alleged offence and the point in time when the accused is advised of the existence of a formal investigation, the jury must be warned in considerable detail of the actual forensic difficulties faced by such an accused.

This requirement is the major premise.

In this example, the minor premise might consist of the relevant sections of the summing up, where it is contended that the jury were not adequately directed of the disadvantages actually suffered by the accused. If the minor premise is made out, that would lead to an inevitable conclusion, in this example that the trial judge erred in law. It has been said that legal reasoning revolves mainly around the establishment of the minor premise. That, therefore, is a key objective when drafting written submissions.

In cases controlled by a governing statute, you might begin with the 32 | BRIEF MAY 2019

words of the text to establish the major premise, e.g. s 247 of the Workers’ Compensation and Injury Management Act 1981 (WA) providing as it does for an appeal only on a question of law. The minor premise might then state that the applicant has contended the arbitrator erred in finding Mr X to be a reliable witness. On the authorities that does not amount to a question of law. Conclusion: leave to appeal should be refused.

One of the examples referred to in ‘Making Your Case’ comes from a case considered by the Supreme Court of Louisiana in 1997: Rousseve v Jones.

Rousseve paid five years of child support to his former wife Jones for their daughter ‘A’. Biological testing then established that A was not his daughter after all.

Rousseve sought reimbursement of the five years of child support that he had paid.

His argument constructed as a syllogism ran as follows: Major premise: under state law a husband who is not the father of his wife’s child is not obliged to pay support for that child.

Minor premise: blood tests have conclusively established that Rousseve is not A’s father.

Conclusion: Rousseve was not obliged to support A and is entitled to reimbursement.

Jones’ counter argument was expressed as follows: Major premise: under state law a husband is presumed to be the father of his wife’s child unless he denies paternity within one year of the child’s birth.

Minor premise: Rousseve did not deny paternity within one year of A’s birth.

Conclusion: Rousseve was presumed to be the father of A for the relevant period of five years and not entitled therefore to reimbursement.

Jones’ argument prevailed. In essence because the major premise she identified operated as a qualifier to Rousseve’s major premise, rendering Rousseve’s minor premise immaterial. If her syllogism was converted into a statement of issues

and placed at the commencement of her written submissions on her behalf it could read as follows: Under state law, a husband is presumed to be the father of his wife’s child and must support the child unless he denies paternity within one year of the child’s birth.

Rousseve did not deny paternity until five years after A’s birth. Was he obliged to support A until he proved that he was not her father?

This is an example of what is called the deep-issue method, where the question posed subtly suggests the desired answer. The deep issue is presented as a syllogism with the major premise first, then the factual premise, preferably in chronological order, followed by a short, punchy question expressed interrogatively. It is not necessary, nor desirable, to attempt to condense the statement of issues into a single sentence. As a rule of thumb aim for about 75 words for each issue. Do not begin the statement of issues with ‘whether’ or any other interrogative word.

Determining the contents of a legal syllogism is a matter of finding a rule that is invoked by the facts of the case. The aim is to convince the judge that your syllogism is closer to the case’s ‘center of gravity’. You have to convincingly answer the question, ‘What is this legal problem mostly about?' As the philosopher F.C.S. Schiller stated in Formal Logic: A Scientific and Social problem (MacMillan 2nd ed 1931): ‘To put an argument in syllogistic form is to strip it bare for logical inspection. We can then see where its weak points must lie, if it has any.’

You should endeavour to find the premise that pulls the court towards your conclusion and then make that premise explicit in your statement of the issue. Try not to overreach in this regard. The statement of the issue to be decided must be honest and fair. Don’t include irrelevancies and don’t colour the issue with loaded adjectives and argumentative propositions.

Try to find an explicit statement of your major premise in a governing or persuasive case. The more recent the better. It is often quite easy to find a governing case with a passage that says precisely what you want your major premise to be. When direct quotation is not possible, set out the major premise in your own words, supported by citation of the relevant case. That case must clearly hold to that precise effect. If the case you refer to is only close but not

completely on point, say so. Then explain why the difference is inconsequential and should not affect the outcome.

Overall summary of your argument This is a short version of the substance of the arguments that will be set out under each topic. Generally it should occupy one or two pages. This would be the last part of the written submissions that you draft.

legal premise factual premise conclusion

possible objection

another possible

answer to objection

objection

Chronological statement of the relevant facts

answer

A chronological statement of the relevant facts is distinctly preferable to a narrative which is a witness by witness account. To break up the narrative don’t begin sentence after sentence with dates, rather use phrases such as, ‘the next morning’ or ‘later that day’.

You are not trying to compile details, you are attempting to select them knowledgeably. If a particular fact is not necessary to understand the issues or if it does not add human interest, omit it.

further point in support

Whether the summary of argument section precedes the statement of the relevant facts or vice versa is a matter of individual preference and will vary from case to case.

The main body of the submissions As you draft your argument, write out the statement of issues and have it before you. Each aspect of the argument should be consistent with the statement of issues and should be no more extensive than is necessary to support it.

If three fundamental arguments arise, then there will be three parts in the main body or middle of your written submissions. You proceed from the strongest to the least strong. Organise each of the three parts to do four things.

Firstly, set out the legal rule which is embedded in the issue statement (the major premise). Secondly, show how the factual points fit into this rule. Thirdly, deal with any obvious counterarguments.

Fourthly, drive the point home with an additional reason or set of reasons.

In some cases if you fail to explicitly recognise the force of your opponent’s point you undermine your credibility.

So, as you draft your submissions you should habitually consider whether your reader might reach a different conclusion to the one that you are urging. A wellconstructed argument might run like this:

clincher

Conclusion to submissions The conclusion should set out the relief that you seek, but should also be a true conclusion in the sense of one or two paragraphs convincingly encapsulating your winning syllogism in a fresh and vivid way. The analogy is a distance runner’s devastating sprint at the end of the race.

At the very least it should recapitulate your main points concisely. It flags the important findings from your submissions and singles out the central details you want your readers to recall.

Style Use the same word to describe each key concept throughout your submissions.

Use consistent wording for the same concept. Never use a word that the judge might have to look up!

Avoid Latin expressions unless no shorthand English equivalent exists, for example res ipsa loquiter. Don’t resort to legalese. Examples: Legalese

Alternative

Such action

This action

Nexus

Link; connection

Instant case

This case

Pursuant

under; by; in accordance with

In regard to

About; concerning

If your submissions repeatedly refer to one particular company and mentions 33

no other company it is not necessary to specify parenthetically ‘the Company’.

Use the parties’ names as opposed to ‘the plaintiff’ or ‘the respondent’.

Trying to cultivate a sense that you were talking directly to the reader, one intelligent being to another. Studies on readability indicate that the use of contractions such as ‘don’t’ rather than ‘do not’ can assist in this process.

Use italics instead of underlining. And minimise the use of italics for emphasis.

You might try putting the ‘punch word’ at the end of a sentence to give it emphasis rather than using italics.

Use single-spacing rather than doublespacing and a single-space after a full stop.

Have a good usage guide to hand for example Fowler’s A Dictionary of Modern English Usage.

Sentence length and structure Look for variety in the length of sentences, for example from three words to 35, but aim for an average length of about 20 words. It is not impermissible to begin sentences with And or But. Omit needless words. In Legal Writing in Plain English, Garner sets out at p 24 a sentence from a code of Federal regulations: It is not necessary that an investment adviser’s compensation be paid directly by the person receiving investment advisory services, but only that the investment adviser receive compensation from some source for his or her services.

That sentence at 35 words is not unusually long. Garner’s suggested rewrite, nonetheless, reduces the length by two thirds without losing any meaning: ‘Although the investment adviser must be paid, the source of the payment does not matter.’

In looking to eliminate bloated phrases and replace them with normal expressions the word ‘of’ can be a clue.

Instead of

use

a sufficient number of

enough

During the course of

during

Focus on each ‘of’ to see whether it is to blame for a wordy construction by searching for ‘[space] of [space].’

Try to put the subject (the actor) and the verb at or near the beginning of 34 | BRIEF MAY 2019

a sentence and don’t separate vital words. State related ideas in a similar grammatical form. For example, a list should contain only nouns or only verbs, not both. Rather than stating, ‘She was a law professor, environmental activist and wrote mystery novels’ you would change the final element to ‘writer of mystery novels.’

Vary the structure of your sentences so that they do not always start with ‘the’ or ‘this’ or always follow a subject-verb, subject-verb structure.

Use the active not the passive tense.

It promotes brevity. It better reflects a chronological sequence. It makes the reader’s task easier and makes the prose more vigorous and lively. The exception is where the actor cannot be identified or is relatively unimportant. Spotting the passive is made easier if you apply the rule that a ‘be’ verb such as ‘is’, ‘are’, ‘was’ or ‘were’ followed by a past tense verb is a passive-voice construction, for example ‘is dismissed’ or ‘be sanctioned’.

Use strong, precise action verbs as opposed to ‘be’ verbs. So, ‘Jones is in agreement with Smith’ becomes ‘Jones agreed with Smith.’ ‘The professional fees in this project are entirely dependent upon the planning techniques that the client is in favour of implementing’ becomes ‘the professional fees depend entirely upon the planning techniques that the client wishes to implement.’

Abstract nouns can also detract from the sentence’s strength. Avoid using words that end in – ion unless you need to refer to, for example, mediation or negotiation as a procedure. To achieve this change phrases such as ‘make accommodation for’ to ‘accommodate’. Or write ‘examine’ as opposed to ‘conduct an examination of.’

Turning sentences from passive to active requires choosing the right subject. ‘There was first a review of the transformation of the market for mouthwash' should read, 'First, the department reviewed the transformation of the market for mouthwash.'

The replacement eliminates 'there was'.

'Review' doesn't end in 'ion' but it is a nominalisation because it can be turned into a verb. The verb is non active. So, the key is to find an appropriate actor, a person or group of people capable of making something happen. This sentence can in fact be improved further – 'First, the department reviewed how companies had drastically changed the market for mouthwash.'

Actors are individuals (she), groups

(researchers) capable of action or effecting a change. They perform actions that have results and are the strongest candidates for subjects. Avoid isolated pronouns such as ‘this’, ‘that’, ‘these’, ‘it’ and ‘those’ as subjects unless paired with a noun, e.g. ‘this tactic seems like a mistake’ rather than ‘this seems a mistake.’ Avoid starting sentences with ‘there is’ or ‘there are’. So, instead of ‘there are three ways we can think of this’ use ‘we can think of this dilemma in three ways’.

Place the subject close to the beginning of the sentence, no more than five or six words in. Keep the verb as close as possible to the subject. Then provide the details. Keep the subject consistent from sentence to sentence.

If you are using a list, place the item with the least number of words and syntactic complexity first and the most complex last. Keep a list of items within a sentence to a maximum of five.

Bullet points are the best way to highlight important items in a list. If your bullet items consist of full sentences, capitalise the first word and use a full stop at the end of each point. If the list is of phrases or clauses, use a semi-colon at the end of each point, an ‘and’ or an ‘or’ after the last semi-colon and a full stop after the last point.

Keep a list of bullet points to a maximum of seven.

End sentences emphatically so that the final word or phrase in a sentence has a special kick. With virtually any sentence you have a conscious choice about what you want to stress.

Avoid negatives and redundant pairs Use positive not negative statements and in particular avoid double negatives. Any negative in a sentence implies ‘what is’ by telling the reader ‘what isn’t’.

Instead of

Use

did not

failed to

not the same

different

does not have

lacks

Remove redundant pairs such as ‘first and foremost’. If you spot one, remove ‘and’ as well as the offending first or second word. Similarly, in redundant modifiers one term implies the other rather than repeats it. It is therefore unnecessary, for example, ‘split apart’, ‘final outcome’ or ‘evidently clear’.

Citations and Footnotes Although minds differ, I agree with Garner’s view that you should only mention the case in the body of your submissions with the citation in a footnote. If you do use footnotes, ensure that you do not relegate anything of importance to a footnote.

Your reasoning in support of the premise you advance is almost always more clearly and forcefully expressed in your own words than stringing together a number of quotations from various cases. Quotations from cases are effective only if used sparingly. Difficult as it is, you should be especially loath to use a lengthy indented quotation.

The better course is to either weave quotations deftly into the fabric of your writing or paraphrase the particular quotation. If you do use a series of quotations it is essential to use connectives to take your reader from one quotation to the next.

Do not cite multiple authorities for a particular proposition. If the point you

are making is relevant to your reasoning but is relatively uncontroversial, the most recent citation suffices. If the point is central and is controversial, it is desirable to concisely describe the facts of the particular case you are relying upon and its holding.

Avoid saying ‘the court stated as follows’, followed by a lengthy slab of quotation. Instead state an assertive proposition and then let the quotation support what you have said.

Structure of paragraphs Think of the paragraph, as opposed to the sentence, as the basic unit of thought.

Try to vary the length of your paragraphs but generally keep them relatively short, perhaps aiming for an average of no more than 150 words, ideally 100, in three to eight sentences. No less than three. Move to a new paragraph when you are moving to a new sub-point and wish to signal a change of topic.

Garner suggests opening each paragraph with a sentence that announces what the paragraph is about, with the other sentences playing supporting roles. You generally don’t introduce a citation in the topic sentence.

A reader should be able to get most of the story from skimming the topic sentences.

Yellowlees prefers beginning each paragraph with a set of comprehensive overview sentences as opposed to a single topic sentence. What might be described as the paragraph head. The paragraph head promises. The body delivers. This approach involves keeping the head about a third and the body two thirds. Don’t introduce a topic in the body that you haven’t referred to in the head.

This approach obviously results in longer paragraphs.

Front-loading important information in this way is a blue print that aids predictability and hence grasp and recall.

Your thesis is a one-sentence summary of what your submissions cover. Make it 35

your clearest sentence. Put it at the end of the head paragraphs. This could well be the most important sentence of the submissions.

•

•

When sequencing ideas: ‘first’, ‘second’ and ‘third’ or most importantly’.

•

Frequency: ‘afterward’, ‘eventually’, ‘meanwhile’.

Place the most important information at the end of a sentence or paragraph.

Transitions/pointing words In addition to announcing the subject, the first sentence of the paragraph should contain a transitional word or phrase that assists the reader to make his/her way from one paragraph to the next. The reader should be able to see whether, for example, the new paragraph amplifies what has just been set out in a preceding paragraph or contrasts with it. This can be achieved by ‘pointing words’ such as ‘this’, ‘that’ ‘these’, ‘those’ or ‘the’. Pointing words refer directly to something already mentioned. So if a particular address has been referred to, the phrase ‘that property’ provides a clear connection.

A smooth transition can be achieved by words or phrases which echo a previously mentioned idea. Or it can be achieved by explicit connectives, that is words whose chief purpose is to supply transitions such as ‘but’, ‘latterly’, ‘also’, ‘further’, ‘therefore’ and ‘yet’. Use transitions every two or three sentences at the beginning of the sentence before the subject or the verb.

Transitions fall into the following categories (with examples):

Conclusion or when summing up: ‘to summarise’, ‘in conclusion’ or ‘consequently’.

If you note the absence of bridging words in a piece of work, it suggests some discontinuities in the text so that you are not writing with an unbroken train of thought.

In addition to transitions you also achieve continuity by introducing material that you have already put before the reader at the start of a sentence before moving onto new ground. You don’t have to use exactly the same words but the sequence is familiar – unfamiliar – familiar. Use more sparingly than transitions.

In addition to captioned headings, the use of signposts in the body of the paragraph assists the reader. You could say, for example, ‘the arbitrator’s reasoning was flawed’ followed by long paragraph, introduced by ‘in the first place...’. It would be preferable to say that ‘the arbitrator’s reasoning was flawed for three reasons’, set out a bulleted list and then embark upon a full explanation.

Editing checklist: •

cut or reword unnecessary legalisms;

•

convert ‘be’ verbs into stronger verbs;

•

convert the passive voice into active unless good reason not to;

•

change ‘ion’ words into verbs when you can;

•

do a search for ‘of’ to see if it is propping up a wordy construction;

•

check the misused words and faulty punctuation;

•

see if you can cut each sentence by 25%; and

•

read aloud stressing the final word or phrase in each sentence to see it reads naturally.

Further editing checklist: •

Does the central point emerge clearly and quickly?

•

Is there a strong counterargument that you have not adequately addressed?

•

Is there an obvious bridge at the outset of each paragraph?

•

Is there an informative lead in before each block quotation?

•

Can you inject more drama into your points so as to phrase them more memorably?

•

Are there sections that can be converted into bullet points?

Continuity: (adds a point to that which has gone before) - ‘also’, ‘in addition’ or ‘moreover’.

Introduce a conclusion sentence which tells the reader what to take away from the paragraph they have just read.

Repetition aids in the opening argument.

•

Example: ‘for instance’, ‘for example’ or ‘likewise’.

Final editing

•

Have you properly utilised footnotes for citations?

•

Contrast or exception: ‘however’, ‘on the other hand’ or ‘nonetheless’.

•

Have you used real names for parties?

•

Comparing: similarly’, ‘likewise’, ‘in the same way’.

•

Restating: ‘in other words’, ‘in short’, ‘put differently’.

•

Cause: ‘because’, ‘since’ or ‘when’.

•

Result: ‘so’, ‘as a result’, or ‘accordingly’.

•

Conceding or qualifying: admittedly’, ‘granted’ or ‘while it might be argued that’.

•

Amplification or when pressing a point: ‘even so’, ‘as a matter of fact’, or ‘of course’.

•

Explaining a sentence: ‘that is’, ‘meanwhile’ or ‘previously’.

I always find it preferable to edit from a hard paper copy as opposed to viewing the document on a computer screen.

Once you are satisfied from a number of read-throughs that all typographical errors have been eradicated and all citations are accurate, the penultimate read through is devoted solely to compression. Difficult as it sometimes can be to sacrifice much loved passages, often the product of a great deal of work, you must be ruthless in eliminating superfluous words or sections. Every word that is not a help is a hindrance because it distracts. Justice Scalia considered that a judge who realises that the submissions are wordy will skim it; one who finds it terse and concise will read every word. In a similar way the final read-through is an exploration of whether any aspects can be expressed more vividly or crisply.

•

36 | BRIEF MAY 2019

The PPSA and the General Law: How Do They Work Together?

By Linda Widdup* This article is adapted from a paper presented at a Law Society CPD seminar.

To discover more of our seminars, visit lawsocietywa.asn.au/cpd-seminars.

The Personal Property Securities Act 2009 (CTH) (PPSA) has been in force in Australia for seven years. It remains a “complicated, provocative and yet fascinating scramble of legislation”1 which makes a substantial contribution to commercial law. It represents a significant rework of the general law relating to personal property securities, and overrules many historical common law and equitable rules that applied haphazardly on the basis of the form of a transaction despite the fact that many of those transactions essentially performed the same function. The PPSA’s innovation rests largely with its substance over form approach by applying uniform rules to all forms of transactions that create an interest in personal property “that, in substance, secures payment or performance of an obligation”. Each transaction that does this is defined to be a security interest.2 A charge, a chattel mortgage, a retention of title arrangement, a finance lease and a pledge, among others, each were subject to its own discrete legal rules under prior law, but is now characterised as a security interest under

the PPSA. The varying legal treatment for personal property transactions that did not significantly differ in substance has largely been supplanted by the PPSA. The PPSA is not, however, a law unto its own. Section 254(1) states: This Act is not intended to exclude or limit the operation of any of the following laws (a concurrent law), to the extent that the law is capable of operating concurrently with this Act: (a) a law of the Commonwealth (other than this Act); (b) a law of a State or Territory; (c) the general law.

“General law” is defined in s 10 to mean the principles and rules of the common law and equity.

How, therefore, do the general law and the PPSA work together?

The answer to this question is often elusive. This article will

discuss this issue in the context of recent Australian case law.

Section 18(1) Section 18(1) is a simple, but vital provision. It states: A security agreement is effective according to its terms.

Section 10 defines security agreement to mean: (a) an agreement or act by which a security interest is created, arises or is provided for; or (b) writing evidencing such an agreement or act.

In most cases, a security agreement will be a document that evidences a consensual arrangement whereby one party grants a security interest in personal property to secure an obligation owing to another party. This could take the form of the transactions described in the introductory paragraph of this article, or, as has developed since the PPSA has come into force, a general security deed or a specific security deed. These are all contracts. But, as section 3 of the 37

PPSA succinctly points out: “This Act is a law about security interests in personal property.” It is not a law about contract.

Section 18, therefore, is a supplementary provision indicating that the body of the general law of contract applies to support the PPSA. And while this preserves freedom of contract within the scope of the PPSA, section 254 should be a reminder that the rules of contract law remain subject to the statutory rules in the PPSA.

The Floating Charge Nevertheless, arguments have been made that s 18(1) is not subject to the rules otherwise mandated by the PPSA. If this was the case, then parties would be free to contract around the substantive rules in the Act. One such argument has played out in the context of the floating charge, the inception of which dates from the late nineteenth century when the courts of equity in England responded to the need for companies to raise capital and sanctioned the ability of a company to secure a loan with a charge on its entire “undertaking”.3 The undertaking of a company included all of its present and future assets, including “circulating” assets such as stock-in-trade and book debts which, at that time, formed the greater part of most entrepreneurial companies’ assets.4 Companies needed 38 | BRIEF MAY 2019

to control these circulating assets and deal with them in the ordinary course of business in order to generate cash flow and sustain the business as a going concern.

The recognition by the courts of the all-assets charge created a conceptual problem at law. The equitable charge, as initially developed by the courts of equity, fastened on to specific assets and gave the holder an immediate proprietary interest in the assets subject to the charge. In order for a company to dispose of circulating assets free from the charge and collect the proceeds of sale, the company would have to obtain the consent of the holder. The need to obtain such consent for these types of assets would, however, paralyse the company’s business. Thus, to obviate the need for consent, the courts recognised a floating charge which did not have the ordinary incidents of a fixed charge.5 The floating charge did not become fixed or fasten to specific assets until it crystallised which usually occurred upon the company’s insolvency when it could no longer operate as a going concern.

The PPSA, however, tries to abolish the floating charge to the extent that it relates to personal property subject to the legislation. It attempts to create more certainty by side-stepping the wayward legal precedents generated by the floating charge. The PPSA provides that

a security interest in a circulating asset (such as “inventory” and “accounts” in PPSA parlance) takes immediate effect as a fixed security interest which is akin to a fixed charge. Sections 12 and 19 of the PPSA makes this explicit. Section 12 specifically includes a floating charge within the definition of security interest.

Section 19 states that a security interest will attach when the grantor has rights in the collateral and clarifies in s 19(4) that a reference to a floating charge does not mean that the security interest does not attach upon the grantor acquiring rights in the collateral. Therefore, when a company grants a security interest in circulating assets, the security interest attaches as a fixed security as soon as the company acquires those assets. It no longer floats and it no longer needs crystallisation to become fixed.

A PPSA security interest in circulating assets operates like a fixed charge with an express or implied licence for the debtor to deal with these assets in the ordinary course of business.6 The PPSA contains rules enabling a grantor to grant security over circulating assets and still utilise the collateral in the ordinary course of business. These rules render the floating charge unnecessary and establish that circulating assets are capable of being subject to a fixed security.

First, s 32 states that a security interest will continue in the collateral if the

secured party did not expressly or impliedly authorise the disposal. Since the secured party generally authorises the disposal of circulating assets, s 32 ensures that the grantor can dispose of the collateral free from the security interest just as it could with a floating charge. Furthermore, s 32 provides that the security interest that had been attached to the circulating asset will automatically attach to the proceeds generated from the disposal of that asset.

Sections 31 and 32 reconcile the fixed security with the freedom required to deal with circulating assets in the ordinary course of business.7 This is supported by Sifris J in the Victorian Supreme Court decision in Lewis & Anor v LG Electronics Australia Pty Ltd who said that s 32 is “equivalent to the concept of the floating charge whereby the chargor could, until crystallisation, sell inventory in the ordinary course of business free of the charge”.8 Tottle J in the Western Australian Supreme Court decision of Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liquidation) (receivers and managers appointed)9 agreed. He stated: Sections 31 and 32 of the PPSA make it unnecessary to use the mechanism of the floating charge in order to permit a grantor to give a creditor security over its collateral and to utilise the collateral in the ordinary course of its business. The effect of the s 32(1) provisions is to authorise a grantor to deal with collateral in the ordinary course of business and convert it into proceeds and for the security interest to attach to the proceeds

without employing a floating charge.

Secondly, s 69 of the PPSA enables trade creditors to be paid from circulating assets subject to a fixed security interest.

Section 69 provides that a trade creditor who receives payment of a debt owing by a grantor will take priority over a security interest in the funds paid.

Therefore, even if a secured party has a fixed security interest in book debts and other accounts (property formerly subject to a floating charge), the trade creditor who receives payment from those funds will have priority to the funds.

Thirdly, s 46 of the PPSA also enables a grantor to carry on its ordinary course of business without a floating charge.

Section 46 provides that a buyer or lessee of personal property takes the personal property free of a security interest given by the seller or the lessor if the personal property was sold or leased in the ordinary course of the seller’s or lessor’s business. Despite the fact that a secured party has a PPSA security interest attached to the grantor’s inventory, the grantor can deal with the inventory. Section 46 operates to ensure that a buyer or lessee takes free of a security interest.

While it seems abundantly clear from the language of the PPSA that the distinction between the fixed and floating charge has been obliterated for purposes of the Act, courts have been reticent to make any such bald assertions. For example, Gilmour J in the Federal Court decision of Langdon, in the matter of Forge Group Limited (Receivers and Managers Appointed) (in Liq)10 stated that despite the PPSA not distinguishing between a fixed and floating security interest, this was “not to say that the effect of the PPSA is to abolish the distinction… for

all purposes. I do not need to determine that question.” Tottle J also observed in Hamersley v Forge that for “the purposes of this case it is unnecessary to reach the conclusion that the PPSA abolishes the general law distinction between fixed and floating charges over personal property.”11 Hamersley v Forge12 involved a priority dispute between ANZ’s security interest in all of the present and after acquired property of Forge Group Power Pty Ltd (Forge) and the right of Hamersley Iron Pty Ltd (Hamersley) to set-off amounts it owed to Forge from amounts owing to it

by Forge. At issue were various payments owing by Hamersley to Forge (Payments).

The fixed nature of ANZ’s security interest was key. To generalise and simplify this issue to illustrate the point in this article, under pre-PPSA law ANZ’s security interest in the Payments would likely have been characterised as a floating charge, in which case, mutuality for purposes of the insolvency set-off provision in s 553C of the Corporations Act 2001 (Cth) (Corps Act) would exist between the claims of Hamersley and Forge. In this scenario, Hamersley’s set-off rights would have priority over ANZ’s security interest because it was not a fixed security.

However, under the PPSA, ANZ’s security interest is a proprietary interest akin to a fixed charge which prior law recognised as destroying mutuality and, therefore, on that analysis, ANZ should have priority.

Tottle J came to this conclusion, but was overturned on appeal.

One of Hamersley’s arguments was that ANZ’s security agreement was structured as a floating charge and, therefore, it should take effect in accordance with its terms as provided by s 18(1) such that ANZ had no greater rights under the PPSA than it would have enjoyed under the general law applicable

Shearn HR Legal - Human Resource + Recruitment is proud to announce its 21st Anniversary in 2019, having first opened the doors on 16 February 1998 and still going strong! It has been a pleasure working with the legal fraternity, locally and afar, over all these wonderful years and it is our aim to continue doing so, for many years to come. Please call or email for a confidential discussion about your most important asset, you or your firm, for your legal career needs and requirements.

Julianna Shearn B.Juris.,LL.B. Director 0401 001 888 julianna@shearnhrlegal.com.au

Suite 4, 5 Colin Street, West Perth WA 6005 T (08) 9322 3300 F (08) 9322 3355 www.shearnhrlegal.com.au

39

to a floating charge.13 Although Tottle J rejected this argument, the Court of Appeal focused on the terms of ANZ’s security agreement which contained the incidences of a floating charge whereby Forge, not ANZ, had control over and the benefit of the Payments and “the absence of control means that the charge operates as a floating charge over Forge’s claims”.14 As such, for the purposes of insolvency set-off, mutuality of interest existed giving Hamersley’s set-off rights priority over ANZ’s security interest. The Court’s analysis was not impressed with the fixed nature of ANZ’s security interest and insolvency set-off precedent holding that a fixed interest destroys mutuality. The Court stated: Therefore, the critical question when assessing mutuality is not the classification of a charge over receivables as fixed or floating, but whether the chargor has the right to use payments received for its own benefit.15 40 | BRIEF MAY 2019

The Court justified this approach because s 18(1) stated that the security agreement was effective according to its terms. The Court stated: Nothing in the PPSA denies the operation of the provisions of the GSA which entitle Forge to use payments received from Hamersley under the Contracts for its own benefit. To the contrary, as noted at [130] above, s 18(1) of the PPSA provides that a security agreement such as the GSA is effective according to its terms.16 Although the Court downplayed the significance of ANZ’s fixed security interest by focusing on the fact that ANZ’s security agreement gave Forge control over the Payments, the decision suggests it is open to the parties under s 18(1) to overrule the specific provisions of the PPSA and it is open to the courts to apply the law on floating charges despite the PPSA. Indeed, s 18(1) does not specify that it is subject

to the PPSA. Contrast the equivalent sections in other PPSA jurisdictions.

The Canadian PPSAs state Subject to this Act and any other Act, a security agreement is effective according to its terms. New Zealand’s PPSA states Except as otherwise provided by this Act or any other Act or rule of law or equity, a security agreement is effective according to its terms. It is doubtful that the drafters of the Australian PPSA by omitting such language intended that parties could override fundamental provisions of the PPSA such as s 12 and s 19 which underpin the entire scheme of the legislation.

Section 257 of the PPSA does, however, restrict the extent to which a security agreement is effective according to its terms by stating that s 18(1) is subject to: (a) a law of the Commonwealth (other than this Act); (b) a law of a State or a Territory; (c) the general law.

Professors Duggan and Brown state that

provisions specifically establish that a security interest embodied in a security agreement is fixed and proprietary even if the terms of the contract indicate it is a floating charge and the grantor has the benefit of circulating assets.

Australian commentators support this view. They state in the context of s 18(1) that the PPSA is largely concerned with any security interest which may arise by operation of the agreement. It is not concerned with the agreement’s primary obligations. General contract law applies for enforcement remedies in personam, but the PPSA applies for enforcement remedies in rem.19

a literal reading of s 257(2) could mean that the parties may contract out of the PPSA altogether, “but any such carte blanche would defeat the purpose of the reforms”.17 They state further: To avoid this outcome, the bracketed words in subs 257(2) should be read as applying only to the extent that the PPSA specifically preserves the parties’ freedom of contract.

Canadian commentators address the extent to which the PPSA applies to restrict the law of contract. It is the proprietary effect of the security agreement – the security interest itself – to which the PPSA applies to restrain freedom of contract.18 Section 18 is needed to establish that the remaining contractual aspects of the security agreement are left to contract law. It does not operate to enable parties to contractually change the nature of the security interest because ss 12 and 19 of the PPSA speak to the proprietary effect of the security agreement which is mandated by the PPSA. These

The courts’ penchant for breathing life back into the floating charge can be attributed in large part to the circulating security interest regime under the Corps Act. The term “circulating security interest” is defined in the Corps Act to accommodate the changes to the law enacted under the PPSA to the extent that such changes affect the insolvency rules in the Corps Act. Section 51C of the Corps Act defines the term to mean a security interest that is governed by the PPSA that has attached to a “circulating” asset within the meaning of the PPSA. Circulating asset is defined in s 340 of the PPSA to include, inter alia, accounts and inventory, unless the secured party has control over such assets. Control essentially denotes that they are not circulating. The fact of the secured party’s control means the assets are not in circulation.20 Section 51C also defines circulating security interest to mean a floating charge. As a result, the Court of Appeal in Hamersley v Forge found that a floating charge under the Corps Act is “treated in the same way as a security interest attached to the circulating asset under the PPSA.”21 However, the fact that s 51C includes a floating charge within the definition of circulating security interest does not mean that parties to a security agreement over a circulating asset can opt out of the priority rules in the PPSA in favour of the floating charge. Nor does it mean the floating charge continues to exist with respect to personal property subject to the PPSA. Floating charge is included in the definition because some personal property is carved out of the scope of the PPSA22 in which case the priority rules of the PPSA do not apply and a floating charge remains possible with respect to such personal property.

The Payments, what the Court refers to as “Forge’s claims”, are property clearly subject to the PPSA and, therefore, not capable of being subject to a floating charge.

Nevertheless, the Court stated that insofar as ANZ’s security agreement “invokes the operation of the general law… the charge operates as a floating charge over Forge’s claims.”23 As discussed above, there is no ability for ANZ’s security agreement to invoke the floating charge with respect to Forge’s claims. The PPSA’s substance over form approach means that a floating charge is treated the same as any other security interest. The parties to a security agreement can no longer agree to have a floating charge so that all the legal incidents of the floating charge apply to their transaction. They can agree that a security interest attaches to collateral at a later time,24 but not that it is subject to the pre-PPSA law of a floating charge.

The circulating asset regime contributes to the deception that the floating charge is alive and well. Despite the legislators’ intent to remove the distinction between the fixed and floating charge for purposes of the PPSA, the legislators did not wish to alter the priority payment regime with respect to a winding up under the Corps Act.25 Prior to the enactment of the PPSA, these payments were made in priority to the claims of secured creditors over assets subject to the secured creditor’s floating charge. With the demise of the floating charge under the PPSA, came the development of the concept of circulating assets which intends to capture the type of assets previously subject to the floating charge so as not to disrupt the priority payment regime. However, it is a mistake to assume that the concept of circulating assets means the law on floating charges remains applicable to circulating assets subject to the PPSA. A security interest in a circulating asset is a fixed security interest in that asset despite being a circulating asset and even if the security agreement characterises it as a floating charge.

Now that the PPSA has been enacted, determining priority creditor entitlements for the most part requires an analysis of the nature of the asset. If it is the type of asset described in s 340(5) of the PPSA, then priority creditors will have priority. This differs from prior law where the analysis focused on the nature of the security interest (that is, whether the charge was fixed or floating).

However, under the PPSA, an asset that is not described by s 340(5) can still be circulating if: …the secured party has given the grantor express or implied authority for any transfer of the personal property to be made, in the ordinary course of the grantor’s business, free 41

of the security interest.26 If the asset does not fall within s 340(5), then the analysis as to whether it is circulating will depend on the agreement between the parties as to whether the grantor is free to dispose of the asset in the ordinary course of business.

The decision in Langdon, in the matter of Forge Group Limited (Receivers and Managers Appointed) (in Liq)27 dealt with whether ANZ’s security interest was circulating for the purposes of s 433 of the Corps Act. At issue in this case were moneys received by the receivers from the ATO as a tax refund. If the refund was characterised as a circulating asset, then it would be distributed to priority creditors. If the refund was not a circulating asset, then ANZ would have priority under its security agreement.

The Court found that the tax refund was not “property” in the hands of the receivers upon their appointment and was not caught by s 433. However, the Court went on to consider whether the tax refund was a circulating asset in that ANZ gave Forge express or 42 | BRIEF MAY 2019

implied authority for the transfer of the tax refunds in the ordinary course of business. The Court found that since the receiver’s application to the ATO resulted in the refund, it did not arise in the ordinary course of business for purposes of s 340(1)(b) and was not a circulating asset.

In its treatment of s 433 of the Corps Act, the Court acknowledged that the use of terms such as “fixed” and “floating” charges does not avoid the operation of the PPSA. Nevertheless, in determining the date for fixing assets caught by s 433, the Court proceeded with an analysis founded on whether ANZ’s security interest was a floating charge or a fixed charge rather than on whether the refund was a circulating asset as per the definition in s 340 of the PPSA. In response to the Department of Employment’s argument that the Refund was a circulating asset, the Court stated: Were it otherwise a floating charge would, in effect, float indefinitely even after the appointment of the

Receivers. This would be to ignore the agreement between the secured party and the grantor that assets, subject to a floating charge, could be dealt with only in the ordinary course of business.

The secured party would be denied recourse to assets which upon the appointment of the Receiver were subject to a fixed charge… However upon the appointment of the receivers, there is no longer a floating charge. The Refund is captured by the fixed charge.

The decisions in Langdon and of the Court of Appeal in Hamersley v Forge illustrate the conceptual difficulties in the transition from applying the historically entrenched law on floating charges to that of the new law introduced by the PPSA.

Intangible property and possession The PPSA has also introduced new

terms for personal property. The PPSA defines these categories of personal property: goods, chattel paper, currency, document of title, investment instrument, negotiable instrument, intermediated security and intangible. These categories are defined so that any personal property subject to the Act will fall into just one of the categories. Intangible is defined to mean personal property that is not financial property28, goods or an intermediated security. This category operates as a catch-all so that personal property that does not fall within any of the other categories of personal property will be an intangible. The categories are defined so that intangibles are truly “intangible” – incapable of being physically possessed. Accounts, ADI accounts and intellectual property are sub-categories of intangible and also defined in the Act. The different categories of personal property are identified so that rules in the PPSA will apply specifically to that personal property when it is inappropriate or unworkable for those same rules to apply to other categories of personal property.

Possession is another key concept in the PPSA. Security interests in personal property need to be perfected in order to be enforceable against, and have priority over, third parties with competing claims to the same property.29 While registering a financing statement on the Personal Property Securities Register (PPSR) is the most common method of perfecting a security interest, taking possession of the personal property subject to a security interest is another. Taking possession of intangibles, as defined by the PPSA, is not possible so this method of perfection is not available for security interests in intangibles.

In Knauf Plasterboard Pty Ltd v Plasterboard West Pty Ltd (In Liquidation) (Receivers and Managers Appointed),30

the Federal Court considered the meaning of possession under the PPSA. Section 21 of the PPSA states that a security interest is perfected if a registration is effective with respect to the collateral. In that case, the secured party’s registration was not effective.

Section 21 also states that a security interest can also be perfected if “the secured party has possession of the collateral (other than possession as a result of seizure or repossession).”

The secured party argued that it had perfected by possession when it appointed receivers who took control over the assets of the grantor.

The Federal Court was called upon to consider whether the common law meaning of “possession” which included constructive possession should be imported into the PPSA. The secured party argued that the receivers had possession because they had the power to deal exclusively with the assets of the grantor. Markovic J held that possession under the PPSA had the common law meaning, modified to the extent provided for in s 24 of the PPSA which limited possession to “actual or apparent” possession such that constructive possession is not sufficient under the PPSA. The secured party also argued that intangible property could be perfected by possession. Court then considered the possession of intangible property.

The Court rejected the submission that “all intangible assets”31 could be perfected by possession. The Court correctly pointed out that a conceptual limitation exists to perfect intangible property by possession because intangible property cannot be physically possessed. However, the actual definition of intangibles in the PPSA, which includes only property that cannot be physically possessed,

was overlooked. The Court stated that “certain classes of intangibles”, those that have a physical embodiment including chattel paper, investment instruments and negotiable instruments, are capable of being perfected by possession. While it is correct that security interests in chattel paper, investment instruments and negotiable instruments can be perfected by possession, the Court was imprecise because these types of personal property are not “intangibles” for the purposes of the PPSA despite being classified as intangibles at common law.

While this misnomer does not affect the result in the case, it could matter in other situations because the rules under the PPSA that apply to intangibles specifically are not intended to apply to chattel paper, investment instruments or negotiable instruments.

Accounts Although intangibles can also be compared to “choses in action”, this general law term is not used in the PPSA and is not equivalent. Nevertheless, despite the enactment of the PPSA, courts continue to refer to choses in action, and the rules of common law and equity developed in relation to assignments of choses in action, despite the fact that the PPSA has changed the law considerably as it relates to the assignment of choses in action.

The concept of “account” is central under the PPSA. An account falls within the definition of intangible, but is a specifically defined sub-category which means a monetary obligation that arises from disposing of property or from granting a right or providing services in the ordinary course of a business. Under pre-PPSA law, these would roughly equate to book debts and would also

The Dogs’ Refuge Home (WA) operates under a pro-life policy and relies on community support for funding.

E S TA B L I S H E D 1 9 3 5

Dog lovers can leave a lasting legacy By suggesting a bequest to the Dogs’ Refuge Home of WA, you can help your client leave a lasting legacy to support the caring and rehoming of lost and abandoned dogs in Perth.

We are one of WA’s oldest animal charities and operate a pro-life policy. Your clients can also be assured that we can make arrangements for their pet dogs to be cared for and re-homed.

For information, visit www.dogshome.org.au or request our Bequest brochure on 9381 8166. You can also contact Chris Osborn, who is a Lawyer for any advice on 9481 2040; 0400 206 105 or chris.osborn@whlaw.com.au Our recommended wording is: “I leave...to the Dogs’ Refuge Home (WA) Inc of 30 Lemnos St, Shenton Park, WA for its general purposes and the receipt of its President, Treasurer or Secretary shall be a sufficient discharge to my Trustees”.

43

be choses in action. The definition of account, however, specifically excludes from its definition other types of personal property that may have been considered some form of a chose in action under prior law. These include an ADI account (that is, a bank account), chattel paper (including the monetary obligation evidenced in the chattel paper), an intermediated security (the rights of a person in securities held by an intermediary), an investment instrument (shares, bonds etc) and a negotiable instrument (bills of exchange, letter of credit).

The PPSA applies to security interests in accounts, transfers of accounts by way of security and even outright sales that do not involve securing an obligation.32 Under the PPSA, these are all considered “security interests in accounts” and the rules apply uniformly to them except in certain specific situations. The PPSA does not distinguish between legal and equitable assignments for purposes of priority over security interests in accounts.

44 | BRIEF MAY 2019

In Hamersley v Forge, the Court of Appeal commented that the parties approached the issue of the proper construction of the PPSA and the Corporations Act on the basis that the statutory instruments were to be construed “in the context” of the general law background. While it is beyond the purpose of this article to explore in detail whether this approach is appropriate given the extensive changes the PPSA has made to the law, the point for this article is that the Court proceeded to illustrate the general law on assignments of choses in action without directly addressing the parts that are overruled or affected by the PPSA.33 The Court deals with accounts under the PPSA forty or so pages later in its decision,34 but still fails to address how the rules in the PPSA relate to the general law of assignments of choses in action.

The Court states that “Forge’s claims against Hamersley are legal choses in action” without stating that these are now characterised as “security interest in accounts.” The distinction between legal and equitable assignments of choses in

action is discussed without any reference to the fact that these transactions are both subject to the PPSA and the PPSA makes no such distinction. It states that “[s]uccessive equitable assignments of an interest in personal property are governed by the particular rule in Dearle v Hall35 (emphasis added). In fact, they are now governed by the PPSA which overrules the rule in Dearle v Hall with priority rules founded primarily on the time of registration not the first to notify the account debtor.36 The Court’s decision gives the impression that the general law of assignments of choses in action has not been materially adjusted by the PPSA.

Constructive trust v tracing into proceeds The case of In the matter of O’Keeffe Heneghan Pty Ltd (in liquidation); Aus Life Pty Ltd (in liquidation); Rocky Neill Construction Pty Ltd (in liquidation) trading as KNF Group (a firm) (No 2)37 (O’Keeffe) provides a situation whereby

the application of general law could produce a different result from the application of the rules under the PPSA. The Court imposed a constructive trust which gave priority to one secured party.

Although not raised fully in the case, the application of the rules under the PPSA may have given priority to the competing secured party. If the application of the priority rules under the PPSA provides an answer to a priority dispute, it is questionable whether the imposition of a constructive trust appropriate.38 In O’Keeffe, the three companies in liquidation operated as a partnership (Partnership). In 2013, each of the companies and the Partnership granted security to CBA over all present and after-acquired property. While CBA perfected its security interest in the assets of each of the companies by registering on the PPSR, it did not register with respect to the Partnership.

In 2016, the Partnership granted to IFG Network Australia Pty Ltd (IFG) a security interest in all of the Partnership’s present and after-acquired property including specifically its receivables to secure debts owing to IFG. IFG perfected this security interest by registering on the PPSR.

In 2017, the Partnership transferred from its account with CBA $240,000 dollars to an account, also held with CBA, of Rocky Neill Construction Pty Ltd (RNC) one of the partnership companies. These funds were then transferred to an offshore bank account through OzForex Ltd (OzForex).

This transfer failed and OzForex repaid the funds to the liquidators of RNC. IFG appointed receivers over the assets of the Partnership and claimed the OzForex funds as property belonging to the Partnership and subject to IFG’s security interest.

The Court accepted that the payments by the Partnership to RNC were made in breach of fiduciary duty owed by the companies to the Partnership. IFG requested that the Court impose a constructive trust as a remedy for the breach which would return the funds to the Partnership. CBA contested the imposition of the constructive trust alleging that IFG was relying on the constructive trust to improve its security position over CBA’s security position.

In the alternative, IFG claimed its security interest in the transferred moneys could be traced into the funds in RNC’s account as proceeds. The Court, however, did

not find it necessary to determine this claim because it already ordered the return of the moneys to the Partnership by imposing a constructive trust.

The liquidators raised the issue that CBA had priority over IFG despite the fact that it failed to register on the PPSR. CBA had essentially perfected its security interest in the Partnership’s accounts by control39 which gave it priority over any other security interest in the account regardless of the fact that it was not registered on the PPSR.40 The imposition of the constructive trust in effect landed the moneys back into the Partnership account over which CBA had control.

CBA thus had priority over the funds. The Court reasoned that CBA would have had priority over IFG in the funds in the Partnership account if they had not been transferred to RNC and then to OzForex so the imposition of the constructive trust did not affect CBA’s priority position as CBA initially alleged.

The Court’s analysis seems sound enough. However, a question must be asked whether the imposition of a remedial constructive trust is capable of operating concurrently with the PPSA in accordance with s 254. How would the

YOUR HOME STYLE to ARTIQUE ARTISTRY & CRAFTSMANSHIP AWARDED CUSTOM HOME DESIGNER & BUILDER Building with confidence since 1988

Build a High Quality Custom Home – Completed at less cost than your average Project Builder

• Free design by Designer/Builder • Designed for your site & lifestyle • Demolition & approvals included • Direct contact with Builder • Complete pricing – no hidden extras

Contact Malcolm Goode ‘Today’ for a personal obligation free appointment to discuss your new home ideas, direct with the Designer/Builder/Director himself providing the confidence of over 30 years’ experience in producing Great Homes.

T: 0418 959 741

www.artiquehomes.com.au

enquiries@artiquehomes.com.au

• Completion costs less than project builders – All inclusive costs • Awarded Quality & Trust since 1988 • Custom building – why settle for less?

• Experience the difference with Artique

Artique EST. 1988

HOMES

CUSTOM HOME DESIGNER & BUILDER

Experience – C onfidence – Trust

Artique Building Pty Ltd – BC #9669 Registered Builder/Supervisor: Malcolm Goode – BP #7816

45

priority dispute be resolved under the PPSA if the Court had not imposed the constructive trust to plant the moneys back into the Partnership’s bank account with CBA? The Court accepted that the transfer of the funds by the Partnership to RNC’s account and then to OzForex gave rise to proceeds and that both CBA’s security interest and IFG’s security interest attached to the moneys as proceeds. However, as discussed above, the Court found it was unnecessary to continue this point due to the imposition of the constructive trusts.

If we set aside the constructive trust and apply the PPSA, does the result change?

Assuming for the moment that the funds in the hands of RNC or OzForex or the liquidators are, indeed, proceeds for the purposes of the PPSA as the Court accepted, then s 32(5) provides that the time of perfection of the original collateral (that is, the CBA bank account) is the time of perfection in relation to the proceeds of the collateral. If this is the rule, then CBA’s security interest will have priority over IFG’s as it was perfected by control 46 | BRIEF MAY 2019

in 2013 while IFG’s was perfected by registration in 2016.

However, the transfer of the funds out of CBA’s bank account means that CBA no longer had control over those proceeds.

An argument can be made that CBA’s security interest in the proceeds was no longer perfected because the funds were no longer in the account. Section 33(1) states that a security interest is proceeds is perfected only if a registration describes the proceeds or a registration covers the original collateral. CBA does not have a registration. Therefore, it is questionable that CBA’s security interest in the proceeds is perfected, in which case, IFG has priority because it has a registration perfecting the original collateral and the proceeds.

Section 33(2) also relates to CBA’s security interest in proceeds. It states that if a security interest in original collateral is perfected (that is, CBA’s security interest in the bank account perfected by control), but a security interest in proceeds is not perfected (CBA’s security interest in the funds

transferred out of the bank account), then the security interest is temporarily perfected for a five business day period after the transfer. If the security interest in the proceeds is not perfected within those five business days, then it becomes unperfected. CBA did not perfect its security interest in the transferred funds. Therefore, under this rule, it became unperfected and IFG’s perfected security interest would have priority.

The above analysis applies if the transferred funds were actually proceeds for purposes of the PPSA. But as raised by the liquidators, the transferred funds were not proceeds. The Court declined to deal with this issue because it was unnecessary due to its finding of the constructive trust. However, as alleged above, if the application of the priority rules under the PPSA provides an answer to a priority dispute, the imposition of the constructive trust is inappropriate. The definition of proceeds requires that the grantor of the security interest has an interest in the

proceeds. In this case, the Partnership as the grantor of the security interest transferred the funds gratuitously to RNC who transferred them to OzForex. This transfer did not generate proceeds that became the property of the Partnership.

The definition of proceeds requires a dealing with the original collateral that gives rise to a replacement asset for the grantor. For example, if the grantor sells an asset subject to a security interest, the sale gives rise to an account owing from the purchaser of the asset. This account is property of the grantor to which the security interest in the original asset will attach. In this case, the funds were transferred to RNC and no asset arose from this dealing. Therefore, the funds once transferred cannot be proceeds for the purposes of the PPSA. Section 34 deals with this point. If collateral is transferred, and at the time of the transfer a secured party held a perfected security interest in the collateral, the security interest remains perfected for a temporary period. Both CBA and IFG had a perfected security interest in the bank account, CBA by control and IFG by registration. This section provides that CBA’s security interest will be temporarily perfected for a period of 24 months after the transfer while IFG’s security interest will remain perfected until the end time of the registration. Therefore, it seems that both security interests were perfected by the time the funds were paid to the liquidator. As CBA perfected its security interest in the bank account by control in 2013 and IFG perfected its security interest in the bank account in 2016, CBA has priority.

If it is appropriate to impose a constructive trust rather than apply the rules of the PPSA (arguable), then CBA has priority over the funds as found by the Court. If, however, the rules of the PPSA should be applied and, as found by the Court, the funds are proceeds, then the rules seem to apply to give IFG priority over the funds. An argument could succeed, however, that the funds are not proceeds for the purposes of the PPSA. If that was the case, then the rules in the PPSA would apply to give CBA priority.

Conclusion The above discussion demonstrates that the manner in which the PPSA sits amongst the backdrop of the general law is complicated. The extent to which the PPSA has overridden historical common law and equitable rules relating to personal property securities is not

abundantly clear. The PPSA is not a complete code and the general law continues to operate to the extent that it is capable of operating concurrently with the PPSA, and much of the general law is necessary to support the objectives of the PPSA. The courts can expect to deal with many more issues relating to how the PPSA meshes with the general law.

15.

16.

17.

18.

19.

20.

Endnotes *

Lawyer and Consultant, admitted as a Barrister & Solicitor of the Supreme Court of Western Australia, the High Court of New Zealand and the Law Society of Saskatchewan, Canada.

1.

Linda Widdup, Personal Property Securities Act – Concepts in Practice (LexisNexis 2016 4th ed) 3.

2.

PPSA, s 12(1).

3.

Re Spectrum Plus Ltd (In Liquidation) [2005] UKHL 41; [2005] 2 AC 680. The development of this charge on a corporation’s entire undertaking began with Holroyd v Marshall (1862) 10 HL Cas 191 where the Court recognised the efficacy of assigning future property in equity.

4.

Re Spectrum Plus Ltd (In Liquidation) [2005] UKHL 41; [2005] 2 AC 680 at [95].

5.

Re Panama, New Zealand and Australian Royal Mail Co (1870) 5 Ch App 318 is regarded as the first case to recognise the floating charge.

6.

This issue played out in Canadian and New Zealand courts when their PPSAs were being considered. See The Royal Bank of Canada v Sparrow Electric Corp [1997] 1 SCR 411 (SCC); Bank of Montreal v Innovation Credit Union [2010] 3 SCR 3 (SCC); Royal Bank of Canada v Radius Credit Union Ltd [2010] 3 SCR 38 (SCC); Commissioner of Inland Revenue v Stiassny [2012] NZCA 93 and Waller v New Zealand Bloodstock Ltd [2006] 3 NZLR 629 (CA).

7.

Duggan and Brown, Australian Personal Property Securities Law (2nd ed, 2016) [4.48].

8.

[2014] VSC 644 [39].

9.

[2017] WASC 152 as [342].

10. [2017] FCA 170 at [32].

11. [2017] WASC 152 at [337].

12. [2017] WASC 152; [2018] WASCA 163.

13. Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liquidation) (receivers and managers appointed) [2017] WASC 152 at [271].

14. [2018] WASCA 163 at [131].

21.

22.

23.

24.

25.

26.

27.

28.

29.

30.

31.

32.

33.

34.

35.

36.

37.

38.

39.

40.

[2018] WASCA 163 at [87].

[2018] WASCA 163 at [135].

Duggan and Brown, Australian Personal Property Securities Law (2015, 2nd ed) 104.

Cuming, Walsh and Wood, Personal Property Security Law (2012, 2nd ed Toronto) 288.

Harris and Mirzai, Annotated Personal Property Securities Act 2009 (Cth) (2014, 2nd ed) 107.

Perfecting a security interest by taking control of assets that are otherwise “circulating assets” fulfils the policy of the Act. See Knauf Plasterboard Pty Ltd v Plasterboard West Pty Ltd (In Liquidation) (Receivers and Managers Appointed) [2017] FCA 866 at [172] where the Court states that the methods for perfecting a security interest under the PPSA are “all directed to the objective of a secured party giving public notice of its security interest.” A secured party who doesn’t give public notice by registering must perfect by possession or control which takes the assets from the possession or control of the grantor and, therefore, will not deceive the public into believing these assets are not subject to a security interest.

[2018] WASCA 163 at [64].

See the definition of “personal property” in PPSA s 10 which excludes land and any personal property declared not to be personal property for the purposes of the PPSA. [2018] WASCA 163 at [131].

PPSA, s 19(3).

Corps Act, ss 433, 555-561. Also see PPSA, s 140.

PPSA, s 340(1)(b).

[2017] FCA 170.

Defined to include the categories of chattel paper, currency, a document of title, an investment instrument and a negotiable instrument.

PPSA, s 20.

[2017] FCA 866.

[2017] FCA 866 at [133].

PPSA, s 12(3).

[2018] WASCA 163 at [38] – [47].

[2018] WASCA 163 starting at [182].

(1828) 38 ER 475.

PPSA, part 2.6.

[2018] NSWSC 1958.

In the Canadian PPSA context see Jacob S Ziegel, “The Unwelcome Intrusion of the Remedial Constructive Trust in Personal Property Security Law: Ellingsen (Trustee of) v. Hallmark Ford Sales Ltd” (2001) 34 Canadian Business Law Journal 460.

PPSA, s 25.

PPSA, ss 57 and 75.

47

Dr ver's Dog Send your submissions to the Dog via brief@lawsocietywa.asn.au

The Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry made a number of observations and recommendations regarding mortgage broking and the charging and payment of trail commissions by lenders. Commissioner Hayne reported: Trail commissions are valuable to brokers and brokerage businesses. Because they are valuable, brokers and brokerage businesses resist any change to trail commissions. But it is necessary to look not only at how trail commissions are valuable to those that receive them, but why they are valuable to both the party receiving the payments and the party making them.

The chief value of trail commissions to the recipient, to put it bluntly, is that they are money for nothing.

Why should a broker, whose work is complete when the loan is arranged, continue to benefit from the loan for years to come? It cannot be that they are deferred payment of fees earned earlier when the amount paid as trail depends upon the length of the life of the loan. And it cannot be that they are a fee for providing continuing services given there is no obligation for the broker to do so and no evidence of it being done.

Commissioner Hayne identified three matters underlying its recommendation to do away with trail commissions: • The system of remunerating mortgage brokers is conflicted remuneration, reasonably expected to influence the broker’s recommendations about choice of lender, amount to be borrowed, and terms on which the amount is borrowed.

• A borrower who engages a mortgage broker looks to the broker for advice. The advice the borrower wants is what the broker thinks will be best for the borrower. If there is scope for negotiation with the lender, the borrower wants the broker to strike the deal that is best for the borrower.

In all these activities, the borrower rightly wants and expects the broker’s undivided loyalty. The broker must act in the best interests of the borrower.

• It did not accept that changing to a system where the borrower, not the lender, pays the broker would reduce the number of borrowers using brokers, so that abolishing trail commissions would adversely affect the profitability, and thus the viability, of brokerage.

It came as little surprise to your Dog that the mortgage broking industry howled its outrage at the thought that a fee paid for providing no service over the life of a loan could be placed under threat in such a way, and ultimately be removed! Shock! Horror!! The industry did what always happens where self-interest comes into play: it took its case to those pillars of rectitude – government members looking for votes in a forthcoming election! Your Dog cast his mind back to the TV footage of the meeting between the Minister and Commissioner Hayne when the Report was tabled.

Interestingly, the Commissioner declined to be photographed shaking the Minister’s hand: perhaps he anticipated how the Report would be neutered to serve the best interests of members seeking re-election and of mortgage brokers looking at new Ferraris.

Figures provided by the industry show there are about 17,000 brokers, each earning an average annual revenue from trail commissions of $130,000. Manna from Heaven!

48 | BRIEF MAY 2019

It is surprising that the current Government has agreed with the industry not to accept or act upon the recommendation of Commissioner Hayne. There is a perverse logic in thinking that the votes of 17,000 brokers are of more value than the votes of the millions of borrowers who pay the trail commissions, which are factored into the pricing of the loan.

While it is the subject of a Royal Commission into the Management of Police Informants, before Commissioner Margaret McMurdo, it is incredible to read of the activities of Lawyer X, (Police Informer 3838), subsequently named as Ms Nicola Gobbo, who represented clients while at the same time cooperating with the Victorian Police to provide information regarding those clients. What is even more incredible is that she was first registered as a police informer in 1995, and again in 2005 to 2009. It has gone on for yonks!

The High Court decision in AB v CD; EF v CD [2018] HCA 58 described the situation as follows:

Here the situation is very different, if not unique, and it is greatly to be hoped that it will never be repeated. EF’s actions in purporting to act as counsel for the Convicted Persons while covertly informing against them were fundamental and appalling breaches of EF’s obligations as counsel to her clients and of EF’s duties to the court.

Likewise, Victoria Police were guilty of reprehensible conduct in knowingly encouraging EF to do as she did and were involved in sanctioning atrocious breaches of the sworn duty of every police officer to discharge all duties imposed on them faithfully and according to law without favour or affection, malice or ill-will. As a result, the prosecution of each Convicted Person was corrupted in a manner which debased fundamental premises of the criminal justice system. It follows, as Ginnane J and the Court of Appeal held, that the public interest favouring disclosure is compelling: the maintenance of the integrity of the criminal justice system demands that the information be disclosed and that the propriety of each Convicted Person’s conviction be re-examined in light of the information. The public interest in preserving EF’s anonymity must be subordinated to the integrity of the criminal justice system.

When your Dog first read the decision, he wondered if there was an April fool’s trick on the go. Sadly, he concluded it was not so.

One wonders how police, legal advisers to the police and all the other involved in administration of justice in Victoria over so many years considered it to be right? It simply beggars belief!

One wonders how many involved will be prosecuted and be the subject of disciplinary proceedings, whether in Victoria or otherwise?

Your Dog wonders how long it will take for the Commonwealth Attorney-General to confirm to the Law Council President, Arthur Moses SC, that the administration of justice has not been similarly compromised in the Commonwealth jurisdiction? One would hope that the response would be instantaneous. At the time of writing the answer is not known.

49

Law Council Update

Resourcing, consultation key to improving family law

child spending equal time or substantial and significant time with each parent.

The Law Council of Australia will carefully consider recommendations by the Australian Law Reform Commission’s (ALRC) Family Law for the Future – An Inquiry into the Family Law System report but warned immediate solutions are required to ease pressures on the Family Court and Federal Circuit Court for the good of Australian families.

This change is likely to attract strong community feedback and should be the subject of respectful discussion. “There is merit in considering the ALRC’s recommendations to redraft the Family Law Act 1975 (Cth) for clarity, including to streamline and redefine what a court will take into account under section 60CC when considering what is in a child’s best interests in determining parenting arrangements,” Mr Moses said.

“The Law Council will closely review the ALRC’s recommendations with the diligence and respect the report deserves. However, there is no excuse for failing to act now to address the immediate pressures facing the family courts,” President Arthur Moses SC said.

“In order for any reform to succeed, there must be proper consultation with the public, the courts, state and territory governments and the legal profession. Any transfer of family law jurisdiction to state and territory courts as suggested by the ALRC will be a five-to-10year project.

“Assuming agreement can be reached with all state and territory governments, each will have to find funding and resources and will need to pass legislation for any new arrangement.

“It is unlikely state and territory governments who already carry the burden of having to fund Commonwealth criminal cases will take on more work in the absence of any proper funding.”

Mr Moses said while the points raised in the ALRC are important, Australia’s family law system is in immediate crisis due to a lack of resourcing, poor planning and outdated court rules.

He said the Federal Government has a duty to ensure the courts are properly resourced and that the Family Court and Federal Circuit Court move to advance the streamlining of rules and forms as a matter of urgency.

“These issues can and must be attended to now. This is something which the legal profession has been demanding for some time,” Mr Moses said.

“Renaming a court to solve problems was a mirage – Australian families need real solutions and prompt action. Similarly, shifting responsibility to another jurisdiction can never be the answer to a problem when a lack of resources is at its core.”

Mr Moses said several of the ALRC report’s recommendations require close attention, including the proposed abolition of section 65DAA of the Family Law Act 1975 (Cth), which currently requires the courts to consider in certain circumstances the possibility of a

50 | BRIEF MAY 2019

“Lengthy statutory processes that must currently be followed to make an interim parenting order are already the subject of criticism, including from the judiciary,” Mr Moses said.

“The ALRC report also makes recommendations regarding property division which must be worked through forensically as these unfortunately did not receive the benefit of extensive coverage or consultation during the ALRC’s review.

“Suggested rebuttable presumptions regarding equality of contributions during a relationship for property settlement cases and an even split of superannuation accumulated during a relationship must be carefully scrutinised.

“There are also likely to be mixed views on the suggested creation of a statutory tort of family violence. Family violence is a matter of enormous community concern and we need to ensure that our laws properly support those affected by it.”

Mr Moses said he was very troubled the report was only released after the government failed to get its flawed merger bills through the Parliament.

"This conduct appears to be a breach of faith with the Australian Parliament, the community and the legal profession,” he said.

“There must always be a high level of trust between the profession and the AttorneyGeneral.

“The government, the Parliament, the courts and the legal sector must work together to improve outcomes for families and children following the breakdown of relationships. This cannot occur when vital pieces of information, consultation and research are withheld.”

Additional Federal Court appointments welcome to manage increased caseload, extended jurisdiction The Law Council of Australia has welcomed the appointment of Mr Stewart Anderson QC and Ms Wendy Abraham QC as judges of the Federal Court of Australia.

President of the Law Council, Arthur Moses SC, said the appointments were timely and will provide the Federal Court with valuable expertise and resources.

“These appointments come at an important time following the Government’s announcement of its proposal to expand the Federal Court’s jurisdiction to include corporate crime. They will also assist the court to manage an anticipated increase in cases following enforcement action by the Australian Securities and Investments Commission,” Mr Moses said.

“Mr Anderson and Ms Abraham are respected counsel and will be valuable additions to the Bench. The Law Council thanks Commonwealth Attorney-General Christian Porter for these quality appointments and for listening to the concerns of the profession in equipping the court with much-needed resources to support its important and expanding work.

“Mr Anderson is a commercial law specialist and has practiced at the Bar for more than thirty years with particular expertise in corporations law, banking and finance, superannuation, property, contracts, equity and trusts.”

Mr Anderson will commence in the Court’s Melbourne registry on 6 May 2019.

“Ms Abraham is a highly regarded advocate with extensive experience in the criminal law jurisdiction. Her impressive national practice has focused primarily on criminal appellate casework in the High Court of Australia and intermediate appellate courts,” Mr Moses said.

“Ms Abraham was retained by the Commonwealth Director of Public Prosecutions as full-time national appellate counsel from 2005 to 2009. She appeared in numerous High Court cases of significant importance, including appearing for the Commonwealth Director of Public Prosecutions in R v Tang (2008) 237 CLR 1, being the first conviction of a slavery offence in Australia.

“Ms Abraham’s knowledge and expertise will contribute to the significant regulatory and criminal jurisdictions of the Federal Court.”

Ms Abraham will commence in the Sydney registry on 7 May 2019. “The Law Council congratulates Mr Anderson and Ms Abraham on their appointments and wishes them both well,” Mr Moses said.

“Their respective skillsets and experience will be an asset to the Federal Court and the legal profession looks forward to the contributions they will make to the Court and to the community.”

Professional Announcements Career moves and changes in the profession

Pragma Lawyers

Leach Legal

Pragma Lawyers are pleased to announce the appointments of Alistair Sullivan as a Lawyer and Eu-Min Teng as a Senior Associate.

Leach Legal is delighted to announce the appointment of Breanna Deakes as an Associate of the firm, as at 5 March 2019.

Alistair was admitted as a Lawyer to the Supreme Court of Western Australia in 2015 following completion of a Bachelor of Laws, Alistair Sullivan Bachelor of Commerce (UNDA) and Masters of Laws (UQ) where he was admitted to the Dean’s Roll of Honour.

Eu-Min was admitted to practice in Western Australia in 2008. He graduated from the University of Western Australia with a Eu-Min Teng Bachelor of Laws with Honours and Bachelor of Commerce (majoring in accounting and corporate finance), holds a Master of Laws from the University of Sydney, and is currently completing a Master of Construction Law at the University of Melbourne.

Breanna Deakes

Originally from Melbourne, Breanna graduated from Deakin University with a Bachelor of Laws in 2012. Breanna relocated to Perth where she was admitted in to the Supreme Court of Western Australia. Breanna practised exclusively in Family Law since her admission but ceased practising to commence her own mediation and Family Dispute Resolution practice.

Breanna is a Nationally Accredited Mediator and Family Dispute Resolution Practitioner registered with the Australian Government Attorney-General's Department.

It is hereby notified for general information in accordance with Rule 36 of the Legal Profession Rules 2009 that the following practitioners were elected members of the Legal Practice Board for a two year term commencing Thursday 4 April 2019: • John Gaetano Mario FIOCCO • Natalie Belinda DIMMOCK • Rebecca Tenille HEATH • Gary Norma MACK • Sabina Marie SCHLINK • Karen Ann SHEPHERD

KAREN MERRIN — TRIBUTE Statement by Attorney General the Hon John Quigley MLA to the Parliament of Western Australia | Wednesday, 3 April 2019 On behalf of the Western Australian Government, I would like to acknowledge and pay tribute to Karen Merrin, a tireless champion of the community services sector, who has recently passed away. Karen was the inaugural manager of the Northern Suburbs Community Legal Centre in Mirrabooka when it first opened in 1996.

IRDI Legal IRDI Legal is pleased to announce the appointment of Emma Maclean as a Lawyer in their expanding Litigation team.

Elected Members and Members of the Legal Practice Board of Western Australia

Emma Maclean

Emma previously of Hall & Wilcox brings over five years of experience in personal injury law to strengthen team capabilities.

Over 20 years, under Karen’s leadership, the centre expanded to Edith Cowan University in Joondalup and in Wanneroo, eventually employing 20 people. Karen’s positive impact on the Western Australian community was widespread. She assisted with the establishment of community legal centres in the goldfields and the wheatbelt, and was chairperson of the Community Legal Centres Association for many years. Karen helped improve the lives of countless people over many years, particularly those who were new arrivals in our country. Karen’s legacy will be a lasting one.

On behalf of Parliament, my sincere and heartfelt condolences to Karen’s family and her many friends. Vale, Karen Merrin.

51

Classifieds 6 STRATA UNITS OFFERED AS ONE LOT CBD OFFICES WITH SENSATIONAL VIEWS • Half CBD Floor 541m2 • 6 Strata Offices • Sensational River Views • Vacant Possession • Quality Fit-out Included • Landmark Building

Owner Occupy, Invest or Profit from Onselling Strata Lots 76 to 79, 86 and 87, Level 7/12 St Georges Tce, Perth

FOR SALE $2.25m plus GST Contact: Terry Matthews 0403 573 532 or trmatthews@iinet.net.au

Missing Will Any person holding or knowing the whereabouts of the last Will and Testament of the late JASON PAUL HOWE/CHEETHAM (DOB 8 December 1978, DOD 8 April 2019) formerly of 50/68 Fisher Street, Belmont, Western Australia, please contact Emma Neal on (08) 9386 5200 or email legal@butlers.com.au within one month of the date of publication of this advertisement.

New Members Ordinary Membership Ms Dee McCulloch CGL Legal

Associate Membership Mrs Ebonny Bell Murdoch University - School of Law Miss Sophie Belton Murdoch University - School of Law Mrs Alisha Bond Allens Ms Stephanie Bouwman Curtin University Mr Kristin Bowtell The University of Western Australia - Law Faculty Miss Mary-Rose Bright Herbert Smith Freehills Ms Claudia Carr Herbert Smith Freehills Chan Edward Murdoch University - School of Law Mr Alexander Cook Herbert Smith Freehills Miss Gabrielle Davey Miss Jasmine France Allens

52 | BRIEF MAY 2019

FOR LEASE

PARTITIONED OFFICES 5th Floor Equus 580 Hay Street Perth • Up to 5 offices • Shared reception & Boardroom • From $1,400 p/m per office including Outgoings and GST Taylah: equusofficelease@gmail.com

LOW-COST SERVICED OFFICES FOR LAWYERS IN THE COURT PRECINCT If you are a court lawyer looking for the convenience of an affordable office in the proximity of the Federal, Supreme or District Courts, then we have exactly what you are looking for.

We have a number of offices which are furnished or unfurnished, depending upon your requirements.

Board-room and kitchen facilities are provided free of charge.

Our reception and secretarial staff are highly professional and efficient, ensuring that you will have the necessary support to operate a successful practice.

Our existing tenants are all lawyers who operate legal practices in diverse areas of law, so you will have the opportunity to work in a collegiate environment. You will have the advantage of working alongside successful lawyers who are experts in their areas of legal practice.

You will also have the benefit of operating an independent legal practice, whilst at the same time enjoying the camaraderie of working in the proximity of like-minded professionals.

Our facilities are available immediately and we are flexible as to your requirements of occupancy (monthly or yearly).

Seize the opportunity and contact Lee now!

Lee Goods Nightstyle Pty Ltd 16 Irwin Street, Perth WA 6000 08 9221 8337 or lee@nightstyle.com.au

New members joining the Law Society (April 2019) Mr John Gray University of Notre Dame Australia

Ms Thea Lendich Herbert Smith Freehills

Ms Rahila Haidari Murdoch University - School of Law

Miss Jessie Lonergan Murdoch University - School of Law

Miss Rachael Heggie Murdoch University - School of Law

Mr Thomas Lysaght Clifford Chance (Sydney)

Miss Zahra Hilaly Murdoch University - School of Law

Miss Ciara Nalty University of Notre Dame Australia

Ms Maddison Hogan University of Notre Dame Australia

Miss Madeleine Plester Herbert Smith Freehills

Miss Grace Holmes Herbert Smith Freehills

Miss Sana Pulappadi Murdoch University - School of Law

Mr Andrew Huxtable Allens

Miss Ansel Rens Herbert Smith Freehills

Mr Vincent William Ipsaro-Passione The University of Western Australia - Law Faculty

Miss Bethany Rose University of Southern Queensland

Ms Alma Jovanovic Allens

Miss Somoe Sheikh Murdoch University - School of Law

Mr Joshua Kain Herbert Smith Freehills

Ms Kathleen Summers Edith Cowan University

Miss Danielle Kickett Allens

Mr Adam Tucher Herbert Smith Freehills

Mr Stephen Kikiros Herbert Smith Freehills

Ms Courtney Van Der Meer Murdoch University - School of Law

Mr Rafael Lawrence Herbert Smith Freehills

Miss Amy Wang Allens

Mr Kenyon Lee Curtin University

Events Calendar

With thanks to our CPD partner

Stay up-to-date with the latest Law Society member events

MAY 2019 Membership Events

CPD Seminars

Thursday, 2 and 9 May Pilates Classes

Monday, 6 May Western Australia Police Force - Body Worn Camera Program

Monday, 13 May Law Week Breakfast and the 2019 Attorney Generalâ&#x20AC;&#x2122;s Community Service Law Awards Tuesday, 14 May Law Access Walk for Justice Wednesday, 15 May Special Law Week Screening: Connection to Country Presented by the Young Lawyers Committee Friday, 17 May Law Week Awards Night 2019

Friday, 17 May CPD Day for Rural, Regional and Remote Legal Practitioners Thursday, 30 May Quality Practice Standard Accreditation Workshop 1

D E T A D P U E B TO

Wednesday, 22 May Young Lawyers Committee Interprofession Networking Event

JUNE 2019 CPD Seminars

Thursday, 6 June Quality Practice Standard Accreditation Workshop 2 Friday, 21 June & Saturday, 22 June Essentials of Advocacy & Negotiation

For all CPD-related enquiries please contact cpd@lawsocietywa.asn.au or (08) 9324 8640.

For all membership-related enquiries please contact membership@lawsocietywa.asn.au or (08) 9324 8692.

For all upcoming events and further information please visit lawsocietywa.asn.au

53