Brief October 2019 by The Law Society of Western Australia

VOLUME 46 | NUMBER 9 | OCTOBER 2019

Climate Change: Political and Legal Accountability Also inside... How to Prevent Burnout in the Legal Profession Getting Unbundling Right – The Retainer We've Come a Long, Long Way Together – 10 years of the Fair Work Act 2009 The Repeal of s 51(3) of the Competition and Consumer Act 2010 (Cth) Contractors, Owners and Banks: Relationships Built on Trust and Security?

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Volume 46 | Number 8 | October 2019

CONTENTS

ARTICLES 05

Letter to the Editor

How to Prevent Burnout in the Legal Profession

Practical Advocacy Weekend

Getting Unbundling Right – The Retainer

The Old Court House Law Museum – A Collection on the Move! We’ve Come a Long, Long Way Together – 10 Years of the Fair Work Act 2009

The Repeal of s 51(3) of the Competition and Consumer Act 2010 (Cth)

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. 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)

2019 Sir Ronald Wilson Lecture: Climate Change – Political and Legal Accountability

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

Contractors, Owners and Banks: Relationships Built on Trust and Security?

RRP $16.00 incl GST. Printed by Vanguard Press

Book Review: A Stolen Life – The Bruce Trevorrow Case

Editorial Committee: Gregory Boyle, Thomas Camp, Jack Carroll, Dr Rebecca Collins, The Hon John McKechnie QC, Dr Pat Saraceni, Robert Sceales, Eu-Min Teng

Senior Communications and Media Officer: Andrew MacNiven Communications and Design Officer: Charles McDonald

Editor: Jason MacLaurin

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 Submission of articles: Contributions to Brief are always welcome. For details, contact brief@lawsocietywa.asn.au

REGULARS

President: Greg McIntyre SC

02 President's Report

42 Quirky Cases

04 Editor's Opinion

44 Drover's Dog

Junior Vice President & Treasurer: Rebecca Lee

14 A Matter of Trust – Can an Administrator Make a Binding Death Benefit Nomination

45 Cartoon

Ordinary Members: Jocelyne Boujos, Nathan Ebbs, Ante Golem, Emma Griffiths, Matthew Howard SC, Gary Mack, Denis McLeod, Jodie Moffat, Shayla Strapps, Paula Wilkinson, Joel Yeldon

36 Federal Court Judgments 38 High Court Judgments 40 Family Law Case Notes

46 Law Council Update 47 Professional Announcements

Senior Vice President: Nicholas van Hattem Immediate Past President: Hayley Cormann

Junior Members: Jack Carroll, Brooke Sojan, Demi Swain Chief Executive Officer: David Price

48 New Members 48 Classifieds 49 Events Calendar 01

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

Climate Change – Political and Legal Accountability

practical advice on health and wellbeing issues.

The featured cover article for this edition of Brief provides an overview of the key issues discussed at the Law Society’s 2019 Sir Ronald Wilson Lecture in August, which I was pleased to chair.

CorpVote, an independent voting services organisation. Ballots will close at 3.00pm WST on Wednesday, 13 November.

Law Society and Law Council Welcome Reforms to Fines Enforcement Regime

The Law Society's Council sets the strategic direction of the Law Society and provides advocacy on the important issues affecting the legal profession and the wider community. I encourage all members to engage with the voting process, to ensure the Law Society’s 2020 Council is representative of the Society’s membership the wider legal profession.

Bronwyn Bell, Manager Policy – Natural Resources, The Chamber of Minerals and Energy of Western Australia, and Tim Macknay, Principal Solicitor, Environmental Defender’s Office of Western Australia, brought different perspectives to the interactive panel discussion, which explored topics including the Commonwealth Government’s current initiatives and future options on climate change. You can find the article on page 24 of this edition.

Health and Wellbeing Every year, both R U OK? Day (12 September) and WA Mental Health Week (6-12 October) remind us of the importance of health and wellbeing and the need to reach out and provide assistance to, and seek support from, our colleagues, family and friends. While these landmark dates are important in raising awareness, health and wellbeing is undeniably of crucial importance throughout the whole year. The law can be a combative, adversarial and exacting profession. Having an empathetic person to confide in can be of significant benefit, whether a friend, trusted colleague or health professional. That’s why the Law Society maintains its LawCare WA health and wellbeing service for members, which includes an assistance programme and free counselling sessions. Further information is included in the full page advertisement published directly across from this Report. It is incumbent upon employers to take practical measures to make health and wellbeing a priority in the workplace, including by providing access to flexible working arrangements, fostering respect for work-life balance and promoting a positive, supportive workplace culture. Published in this edition of Brief is an article on “How to Prevent Burnout in the Legal Profession”, which contains 02 | BRIEF OCTOBER 2019

In September, the Law Society of Western Australia and the Law Council of Australia welcomed the announcement by the Attorney General the Hon John Quigley MLA of proposed changes to the enforcement and recovery of fines in WA. The Fines, Penalties and Infringement Notices Enforcement Amendment Bill 2019 (WA) has been introduced into State Parliament and proposes to make imprisonment for non-payment of fines “restricted so as it can only be ordered by a Magistrate, and even then only as a sanction of last resort”. Imprisonment for fine default has impacted adversely on the most vulnerable in our community, including Aboriginal and Torres Strait Islander peoples, and has a huge cost socially and to the taxpayer. The replacement of imprisonment by debt recovery and community service options is therefore most welcome and will be far less costly to the community.

Aboriginal Youth Voice Gets the Go Ahead In September, the Law Society was delighted to announce that through its Lore / Law project, Aboriginal youth voice will play a key role in reducing Aboriginal and Torres Strait Islander youth engagement with the justice system. Lore / Law will begin in early 2020, starting in the Kalgoorlie, Boulder and Coolgardie region, and promises to deliver a ground breaking co-designed initiative, which sees an Aboriginal and Torres Strait Islander Youth Leadership Team taking the lead in engaging with communities on issues of significance to local youth.

Law Council of Australia President Arthur Moses SC said, “Imprisonment for fine default is an inherently disproportionate and ineffective punishment which only serves to criminalise people living in poverty. This Bill will bring Western Australia further in line with the recommendations of the Australian Law Reform Commission in the Pathways to Justice Report and of the Law Council in the Final Report of the Justice Project, which called for the practice to be abolished in all jurisdictions.”

The project acknowledges that Aboriginal and Torres Strait Islander youth often walk in two worlds and will see engagement with relevant local stakeholders, followed by the development of community-led and culturally appropriate solutions.

Law Society Council Elections

The Law Society is accepting expressions of interest from organisations or individuals who would like to make a financial contribution and become part of this bold initiative that sees Aboriginal youth voice drive the discussions and outcomes for Aboriginal youth in Western Australia. To discuss further, please contact Áine Whelan, General Manager Programmes at the Law Society: awhelan@lawsocietywa.asn.au.

Nomination forms for the Law Society Council elections were sent to all eligible members via email on Tuesday, 1 October. Nominations for election to Council close on Wednesday, 16 October. On Wednesday, 30 October, electronic ballot papers will be transmitted via email to all members eligible to vote. The election process will be managed by

$430,000 in funding has been secured, including through Lotterywest and the Criminal Property Confiscation Grants Program. The Law Society still has a further $200,000 to raise to complete the Kalgoorlie, Boulder and Coolgardie project in full over two years.

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.

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

Recent times have seen some controversial events – with the law and lawyers in the mix. Our feature item concerns one such issue: climate change. We have presentations from the Chamber of Minerals and Energy of WA and the Environmental Defender’s Office of WA at the Sir Ronald Wilson Lecture. These provide, from considered and various perspectives, insight into the practical and legal framework affecting what ought to be done, and how it might be achieved. Brief’s cover graphically illustrates the anxieties surrounding climate change – though could also be mistaken for a photo of the Editor’s backyard after he asked his kids to “keep an eye on the garden” while he was away for a while, or conceivably a mash-up of two, and possibly up to four, Midnight Oil album covers (letters to the Editor identifying the same are welcomed).1 The last few weeks anointed two prominent mantras of our time, which might well emblazon tattoo sleeves: “you have stolen my future!” and “impeach!”. The Editor’s eldest son combined both concepts by suggesting his father be impeached from that position, and that his future had been stolen, by the Editor’s modest proposal that a 1974 Ford Pinto was a perfectly suitable “starter car”. This was unfair, as a careful analysis of the litigation and technology involved shows that with a 1974 Ford Pinto you can have the experience of Elon Musk’s 2019 Tesla S Series exploding into flames for one 60th of the price. Reports of the S Series’ Beijing immolation2 describe “white smoke” coming from the Tesla 45 seconds before the explosion. Coincidentally, witnesses also described a train of white smoke emanating from Elon Musk’s studio appearance on Joe Rogan’s podcast, 45 seconds before Musk’s implosion. To use the reputed Chinese curse, we are living in the most interesting of “interesting times”. To antipodean ears however, this ancient curse sounds a lot better than recent incantations along the lines of: "If there is a war…you are the frontier. You are the first sacrifice for that… not good for you". In this age of fake news, it seems that even the attribution of this famous phrase is of

04 | BRIEF OCTOBER 2019

dubious provenance, it being suggested that it was not actually an established Chinese saying, but was used in 1936, as a matter of hearsay, by Sir Austen Chamberlain (yes, of those Chamberlains) in an address to the Birmingham Unionist Association.3 It seems the phrase may have been drawn from Chinese tales, such as one documented in 1627, about those going to, in effect, a civil war: “They prayed to heaven, earth and their ancestors not to run into the Jurchens.4 Truly, better be a dog in days of peace. Than a human in times of war!” The Chamberlain family obviously ran with this concept and delivered, contrary to promises that everyone would be a dog in peace, the most “exciting” of times. As to impeachment, we have just in the past few weeks seen threats to impeach President Trump and SCOTUS Justice Brett Kavanagh. The UK clearly didn’t want to be left behind in impeachment-palooza, hence the speculation as to whether PM Boris Johnson can be impeached after the UK Supreme Court’s controversial decision (11 to 0)5 to declare Johnson’s advice to the Queen to promulgate parliament unlawful and of no effect. The UK Supreme Court’s decision has itself caused controversy, including amongst lawyers, but also the general public. It seems this is the angriest that many in the UK have been at 11 of their kind since the English cricket team botched the fourth test and lost the Ashes at Old Trafford. Still, impeachment has not been used in the UK for some time, and indeed since Queen Caroline’s case (whose alleged affairs vexed not only a nation, but also many students in evidence law), Lord Melville in 1805, and the attempt to impeach Lord Palmerston in 1848. Lord Palmerston’s impeachment, moved for by Mr Erskine involved an allegation that Palmerston had entered into a secret treaty with, wait for it: Russia. Hansard from 1848 records accusations being flung around between Mr Erskine and Lord Palmerston about claiming each was “a firebrand, disturbing the peace of Europe, by hatred of Russia; and at another time as a Russian agent”6 (sound familiar?). The delicious bit of the Hansard transcript here is that it was noted: “Lord Palmerston

made a gesture of denegation.” Letters to the Editor about one’s favourite “gestures of denegation” in a legal context, are also welcomed. In any event, accusations of Russian (or near Russian) activities in impeachments clearly have a historical precedent. “Plus les choses changent plus elles restent les mêmes” as the French would say, and very possibly are saying with time-honoured Gallic contempt, towards the UK in their efforts to exit the EU, the negotiations for which must surely involve “gestures of denegation” from all sides. We have some interesting months to come – as the ancient Chinese (or someone) would say. We are grateful to have many items of diverse interest in this edition, like Paul D Evans providing a follow-up to a November 2017 Brief article about ‘Getting Unbundling Right – The Retainer’, Justice Michael O’Bryan of the Federal Court of Australia on the repeal of s 51(3) of the CCA, Daniel Morris on contractors, owners and banks, Greg Sikich on the Old Court House Law Museum, Amber Roncoroni on 10 years of the Fair Work Act, a review by Robert Guthrie of Dr Antonio Buti’s book on the Bruce Trevorrow case and Danielle Bechelet in the ‘Matter of Trust’ column on a recent SAT decision, as well as our much appreciated regular judgments notes and regular features. We also note Stuart Taylor’s article on how to prevent burnout in the legal profession, which is timely given this edition’s proximity to WA Mental Health Week and explores issues that are always of importance to the Law Society, as referenced in this month’s President’s Report. Endnotes 1

5 6

Brief does not wish to preempt or disclose the likely winner of this contest, but speculates, and does so discreetly, that the Midnight Oil devotee might (again to preserve anonymity) bear the initials M.L.u.n.d.b.e.r.g. See “Tesla promises to investigate exploding car in China as Elon Musk unveils robotaxi plan”, 23/4/19, abc.net.au. See “May you Live in Interesting Times”, from quoteinvestigator.com and “A Chinese Curse?” by Nicholas Kristof, 24/9/08 at kristof.blogs.nytimes.com. Tribes from ancient Manchuria who shaved all the hair off the front of their heads with longer, sometimes ponytailed hair at the back. Otherwise known nowadays as middle-aged hippie arts graduates, or those people lying down in the road or swinging from bridges preventing people getting to work in their Tesla Series S’s. GWS could only hope for such a close contest. HC Deb 06 March 1848 vol 97 cc232-5.

LETTER TO THE EDITOR Steven Penglis SC Barrister, Fourth Floor Chambers | Life Member, The Law Society of Western Australia

Dear Sir

Judicial Bullying I wrote to you earlier this year on the topic of establishing a Judicial Commission in Western Australia. I did so specifically by reference to judicial delay. As you know, at that time it was my intention to subsequently write an article dealing with judicial bullying. I was therefore delighted to read the article authored by the Hon. John McKechnie QC in the September edition of Brief. What I would like to briefly develop and emphasise are the potential repercussions of judicial bullying on a legal practitioner, particularly one who has not yet developed the necessary resilience to recognise the difference – and there certainly is a difference – between, on the one hand, grumpiness and/or testiness and, on the other, bullying. In short, the potential repercussions of bullying may be life changing. I commenced my career as a legal practitioner in Sydney in the mid-80s. In what must have been my second year of practice I appeared in an interlocutory matter before a senior (in both senses of the word) Judge in the Equity Division of the Supreme Court. To cut a long story short, the Judge ended up roaring at me, adjourning the matter and telling me in clear terms that if he ever saw me again it had better be as a solicitor instructing counsel. Apart from my obvious humiliation, I was immediately overwhelmed by self-doubt and questioned whether I in fact had what was needed to be a litigation lawyer. I (properly) told my supervising partner what had happened. He got on the phone to a senior barrister (now Judge of the Supreme Court) with whom I had worked and liked. We were duly informed that the Judge’s reputation as a bully was well known and that he was the subject of numerous complaints to the Chief Justice, particularly from junior barristers. The wise counsel of

the barrister and my supervising partner was to not take the matter to heart and, although perhaps avoid appearing before the same Judge for some time, continue with my advocacy. I did so. Fast-forward some 30 years, and I found myself often assisting young/younger solicitors who, rightly or wrongly, felt they had been bullied by a judicial officer. On many of those occasions I suspected that (to borrow from the McKechnie article) the lawyer had appeared before “a judicial officer who is simply grumpy or perhaps stressed”. However, there have been occasions where, given what I was told and/or having regard to the judicial officer involved, it appeared that the conduct had over-stepped the mark and was properly described as bullying. I can think of at least three very competent and now senior solicitors who I have counselled in relation to such bullying. Like me all those years ago, the solicitors I counselled were having second thoughts about life as an advocate. Thankfully they have all continued as advocates, and successfully so. So, the potential effect on a legal practitioner of bullying by a judicial officer is not only “a potential threat to health”, but a potential threat to a person’s pursuit of their chosen occupation.

inflicted upon) a less-senior practitioner. Practitioners, particularly less-senior practitioners, should be encouraged to inform their employer or colleagues if they feel they have been bullied in Court (including by opposing Counsel). Senior legal practitioners need to readily assist any legal practitioner – no matter how senior or junior – who is subjected to (or even witnesses) judicial bullying, even if it be no more than providing sage counsel and reassurance. As in my case, the importance of such counsel and reassurance should not be underestimated.

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

As for what to do, I respectfully agree that “it is hard for the bullied or harassed to take on their tormentor. The Chief Judicial Officer is an obvious first step but there are others. Any Senior Counsel is likely to make time to assist”. However, there can be little doubt that a far more effective avenue would be the existence of a Judicial Commission: apart from anything else, human nature suggests that it is likely that a victim of bullying would be more comfortable making a complaint to an independent Commission than to the Chief Judicial Officer of the relevant jurisdiction (and thus would more likely do so). Instances of judicial bullying are rare. However, when it occurs, its consequences can be profound, particularly if witnessed by (let alone if

How to Prevent Burnout in the Legal Profession This article was first published in Lawyers Weekly1

Legal work has always been synonymous with high levels of stress, where large workloads, long hours, client demands, tight deadlines and a lack of work/life balance all combine to create a high-pressure environment that’s conducive to burnout, writes Stuart Taylor. A recent study by Executive Health Solutions has found legal professionals are battling plummeting physical and mental health, raising concerns for the industry’s wellbeing. The report, released this week, found lawyers have fallen from first place to seventh place in overall health, and from 12th place to 16th place in mental health. It revealed that approximately 50 percent of the legal industry worked more than 60 hours per week in the last financial year, and that lawyers also ranked the worst in many physical health markers, including cholesterol levels. Whilst these findings may well be confronting, they are nevertheless unsurprising. Unfortunately, it is all too common to miss the signs of burnout until they’re already there, but the long-term consequences of “overdoing it” can be damaging to our work life — resulting in a lack of focus and engagement, poor time management, and heightened worry and anxiety. What’s more, when unaddressed, workplace stress has a tendency to impact our personal lives, too. Lawyers are prime candidates for emotional “spillover”, where the stress they experience at work can overflow and impact their personal life, at first affecting their ability to relax at home. Over time, spillover can give way to “crossover”, where higher exhaustion levels begin to impact on workplace performance, eventually leading to burnout. This was confirmed in our own study released in 2018 which revealed that fatigue was the highest factor related to burnout or, inversely, to resilience. The power of resilience in business is that it acts as a buffer in particularly stressful or high-intensity occupations, preparing and enabling you to maintain balance in your life, protect your wellbeing and sustain high performance at work. The good news for lawyers is that resilience is not innate, but rather a learnt competence that can be purposefully

06 | BRIEF OCTOBER 2019

built and skillfully maintained. In our 2018 study, we found professional services had only average resilience but were very responsive to interventions aimed at building resilience. This means that legal professionals who invest in building their own personal resilience are more likely to be able to master stress and prevent the onset of burnout. Firstly, it’s imperative for lawyers to establish boundaries between their work and home life. This not only positively benefits their personal life and mental health, but also provides the much-needed performance boost that comes from rest and overall life enjoyment. To achieve this, try exercising the following: 1. Funnel negative stress into something productive. Too often, we reserve our worst behaviour for those we care about the most. Going for a run or cooking dinner for the family can be healthy ways to channel the negative energy boiling under the surface and avoid any unpleasant outbursts. 2. Catch, check, then change. One of the most effective things we can learn is how to reframe our thinking to avoid “thinking traps” that lead to unhelpful responses and emotional spillover. Learn your personal emotional cues to identify negative behaviours and shift your attitude into a more constructive and beneficial response. 3. Express gratitude. Take time every evening to appreciate and celebrate the positive things that happened in the day. The simple act of recalling and magnifying the positives will mean your focus is no longer on deadlines and work stress, allowing you to channel your energy towards hobbies or personal relationships. To build on this, lawyers who invest in developing their own personal resilience are more likely to be able to master stress and prevent the onset of mental health problems. While it can be easy to let your personal wellbeing fall by the wayside in

times of stress, it’s important to establish some non-negotiables to keep yourself on the right track. 1. Engage with family and friends. Take the time to maintain healthy and emotionally stimulating relationships outside of work and explore ways to connect with people in meaningful ways. For example, go for a nice walk after work or eat a meal with friends or family as often as possible. 2. Get into a structured sleep habit. Aim for seven to eight hours a night and wake up at the same time every morning (even on the weekend). A good sleep routine can be a welcome boost to those who continually function at a fast pace and highperformance level. 3. Divide your day into segments. Allocate time for certain work tasks, time to move your body and time for mental breaks. 4. Find a way to be active every day. You can stretch, stand up or take a walk around the block. This is also a great tool to help you refocus. Just 30 minutes a day can work wonders for your brain and increase your resilience long-term. 5. When in doubt, breathe out. Controlled breathing can help you improve your cognitive performance, effectively manage stress and help you become more resilient by improving concentration, increasing creativity and improving productivity to help you power through. The demands faced by legal professionals are unlikely to change, but it’s both in spite of and because of this that lawyers must safeguard their mental wellbeing. By implementing resilience practices in their own lives, lawyers can pave the way for productivity and sustainability in the workplace, which in turn produces greater business outcomes. Stuart Taylor is the founder and CEO of Springfox, a provider of evidence-based resilience programs for professionals and organisations. Endnotes 1

11 July 2019, <https://www.lawyersweekly.com.au/ biglaw/26055-how-to-prevent-burnout-in-the-legalprofession>.

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Participants and coaches at the Practical Advocacy Weekend (above) Coaches at the Practical Advocacy Weekend (right)

Practical Advocacy Weekend 2019 By Chris Burch, Deputy Chair, and Aleksandra Miller, Committee Member, the Law Society's Young Lawyers Committee

On the weekend of 16 August 2019, we and 33 other keen new advocates took part in the Law Society’s Practical Advocacy course. Held at the Children’s Court, the weekend began early Saturday morning. But we didn’t need the coffee to wake up — we had Ms Julia Moody, professional voice coach, to get us up jumping, shouting and shaking everything out. Energised, we strode past a bemused security officer and into an injunction application. Standing up for the first time in a courtroom (for many of us) was nervous and exciting. We didn’t have anything to worry about, though. The coaches — a host of Judges and senior barristers — were generous in their advice and feedback. The hardest part was watching the videos of ourselves. No one, it turns out, is a harsher critic of your performance than you are. But we kept going — into a closing address, an examinationin-chief, and a cross-examination, split up only by a trip to 08 | BRIEF OCTOBER 2019

that other Court for lunch. Surprisingly quickly, day one was done. Reflecting on it, Sasha Dawson of Corrs Chambers Westgarth, said "it was like being thrown in the deep end, but in the best way". And with that, it was off to dinner and a thoroughly enjoyable (emphasis on thorough) speech by barrister Jason MacLaurin. Like the Saturday, Sunday morning started with some more vocal warm ups and some yummy breakfast catering. We then put the feedback from the previous day into practice by doing another cross-examination and repeating our closing address — this time with inspiration from the closing addresses delivered the previous night by Paul Yovich SC and Amanda Forrester SC. We were able to iron out some mistakes made on the first day and set goals for ourselves to further improve our advocacy skills. The course was enjoyable, rewarding and an invaluable learning experience. Thanks to the course we will now no doubt give more polished performances in real courtrooms as we continue to develop our skills as advocates.

Getting Unbundling Right – The Retainer By Paul D Evans1

Introduction In the November 2017 edition of Brief2 we looked at the essential things to think about when contemplating a limited or “unbundled” retainer agreement, under which a lawyer will perform specific, limited tasks rather than taking responsibility for an entire transaction or proceeding. That article followed the publication by the Law Society of Guidelines for Law Practices to consider in relation to such engagements. If you are contemplating accepting an unbundled retainer and have followed the recommendations in the earlier article: •

•

you will have a clear concept of the nature of the relationship the client is asking you to enter into; and you will have identified any risks or unusual hazards to which the relationship may expose you;

following which you will reduce the retainer to writing, so that those concepts are recorded and the hazards eliminated (or at least minimized). Because of the nature of an unbundled retainer, a standard form agreement is unlikely to be satisfactory. While careful attention is always required to the scope of the tasks to be undertaken even in a general retainer, the need for bespoke drafting is even more acute where specific role delineation is necessary. Before looking at some specimen provisions, you will need to consider in detail whether it is necessary to incorporate specific provisions such issues as: •

•

interacting with any other Law Practice(s) which may be acting for the client; communications, and in particular whether the Law Practice is required to limit communications exclusively to the client, or whether communications with: o any other Law Practice(s) (or internal legal advisors) acting for the client;

any lawyers acting for a counterparty to a transaction or opponent in litigation, are permitted or required;

statutory authorities;

•

whether any special provision must be made to protect the client’s legal professional privilege;

•

whether any conflicts of interest are likely involving the Law Practice, or the client;

•

whether it is possible to limit the Law Practice’s liability by advance waivers;

•

the impact of proportionate liability and the Civil Liability Act 2004 in particular if there are multiple Law Practices involved (and whether the Civil Liability Act should be excluded);

•

whether the Law Practice will be responsible for accepting service of process and other documents including court documents and the obligations that flow from that;

•

In the case of court appearances, whether a representative of the Law Practice will act as an advocate, or an instructing solicitor in the course of the appearance;

•

the costs implications of the actions to be undertaken within the retainer, including how the client will satisfy any liability under an adverse costs order in litigation;

•

whether any proposed clauses could potentially make the proposed retainer agreement into an unfair contract and thus void or voidable in whole or part under the Australian Competition and Consumer Act 2010; and

•

the resolution of complaints in relation to the performance of works under the retainer.

The client may need to be specifically directed to the opportunity and need to take independent advice in relation to the provisions of the limited retainer agreement, in particular to the extent

that the retainer limits liability or contains provisions for the payment of costs beyond the scale. A critical part of the retainer agreement will be an acknowledgement that the client is aware of the limitations of the retainer and the possible impact on any advice given. Those impacts will be specific to the particular limitations reflected in the retainer. It is important to ensure that any further explanation of the scope and terms of the limited retainer are recorded in writing in a contemporaneous file note and immediately afterwards confirmed by letter or email (or both) to the client. One of the ongoing issues in the performance of the retainer will be the possibility of needing further information. The retainer agreement should, if possible, allow the Law Practice the ability to seek further information from the client from time to time to the extent that it is reasonably necessary for the Law Practice to render the services required. Any request to a party for further information should of course be communicated to the client in writing.

Retainer Agreement The limited scope retainer is based on the core elements of the Law Society’s Standard Offer to Enter into a Costs Agreement, available to Members from the Society’s website. The following are fitted into cl 3, although modification to other provisions may be required. If you practice as a barrister, the scope for a limited retainer is likely to be less (retainers for barristers have innate limitations by virtue of the nature of the barrister’s practice), but any particular limitations should be considered in the light of WA Bar Association Form 1 or 2 Retainer Agreements.

Legal Services The first and most important part of the retainer is the description of the scope of the instruction. It is useful to put that in context: 09

You (Client) have requested that [ ] (Law Practice) provide legal advice to you in relation to [ ] (Transaction) Client and Law Practice may agree that Law Practice may be instructed to represent you in the entire Transaction, or only in certain parts of the Transaction. “Limited representation” occurs if you retain Law Practice only for certain parts of the Transaction. Client has requested and Law Practice has agreed that Law Practice will provide only limited representation on the terms set out below. When Law Practice agrees to provide limited representation in relation to a Transaction, Law Practice must act in your best interest and give you competent help. However: • Law Practice does not have to give more help than Law Practice and Client have agreed. • Law Practice does not have to help with any other part of your Transaction. Law Practice’s representation begins with the signing of this Agreement and ends at the completion of the services requested and identified below or _____________, whichever happens first If the assistance required is in relation to proceedings, substitute “Proceedings” or “Case” for “Transaction”.

The Services Specifying the Services to be performed in detail is essential to the concept of “unbundling”. Getting this right takes time and care: The Law Practice will provide the following services under this retainer agreement, but no other services: [Insert a brief but thorough description of the nature of the Proceedings or Transaction in which the Client is engaged and for which the retainer is required.] If the type of matters can be standardised to some extent (and in any event as guidance): Client confirms that they seek only the following services from Law Practice [check appropriate box, or use as guidance for describing the retainer in detail]:

10 | BRIEF OCTOBER 2019

KEY ITEM

ELABORATION

This is a one-time consultation in relation to …..

Describe the subject matter of the consultation in detail.

Evaluation of Client self-diagnosis of the [Proceeding/Transaction] and advising Client about legal rights and responsibilities.

In relation to …

Advice about the availability of alternative means of resolving the following dispute [including mediation and arbitration, including helping you prepare for mediation.].

Description of dispute …

Evaluate settlement options in relation to the following dispute:

Identify the nature of the matters to be settled and the settlement objective identified by the Client …

Planning for negotiations in relation to the following dispute:

Identify the nature of the negotiations …

Providing guidance and procedural information Identify the court documents … for filing or serving of the following court documents. Review pleadings and other documents prepared by Client for the purpose of ….

Specify the purpose for which the review is undertaken …

Review pleadings and other documents prepared by opposing party/counsel for the purpose of …..

Specify the purpose for which the review is undertaken …

Suggest documents for Client to prepare for the purpose of ….

Specify the purpose …

Draft pleadings, and other documents, comprising …., for the purpose of …..:

Specify the documents and the purpose for which they are prepared …

Factual investigation: eg contacting witnesses, Identify the relevant witnesses and searches and the purpose for which they public record searches, in-depth interview of are undertaken … Client. Assistance with computer support programs.

List the programs to be used …:

Legal research and analysis in relation to …..

List the issues to be researched and analysed …

Prepare discovery documents, comprising: Requests for discovery; Compilation of discovery documents provided by Client; Review of discovery documents provided by Client for: Legal Professional Privilege Confidentiality (for the purpose of advising upon an appropriate confidentiality regime); Relevance (this will require the Client to advise upon the issues in the proceedings); Preparation of discovery list; Inspection of documents produced on discovery for relevance.

List the discovery documents to be prepared or particular discovery processes to be undertaken … There are many steps in the discovery process and the steps to be undertaken should be specified with precision. Undertaking discovery related tasks without a full understanding of the issues is fraught with risk and requires particular warnings to the Client in relation to the ability of the Law Practice to provide effective representation.

Planning for court appearances. Standby telephone assistance during negotiations or settlement conferences.

There are particular risks in providing a “telephone advice” service where the Law Practice has not been fully briefed which again requires a specific risk statement …

Referring Client to expert witnesses, other counsel, or other service providers.

Identify the purpose for which counsel or experts are required …

Providing advice to Client about an appeal from ..

Specify the decision to be appealed …

Procedural assistance with an appeal and assisting with substantive legal argument in an appeal. Provide preventive planning and/or schedule legal check-ups. Representing Client in court but only for specific matters:

Identify the specific matters and the specific role to be played …

Other:

Given the whole point of an unbundled retainer any additional service should be described specifically and not generally …

In drafting the retainer it may be desirable to include a specific allocation of responsibilities for identified tasks, for example: TASK OR ISSUE

with the party directly); appearing at any court hearings; and preparing and filing whatever documents are appropriate within the timeframes

LAW PRACTICE TO DO

Client understands and agrees that:

•

they are agreeing that the scope of this representation is limited to the matters described above; Law Practice is not my lawyer for any other purpose and does not have to provide any further or other legal services;

•

Law Practice is not promising any particular outcome; and

•

because of the limited services to be provided, Law Practice has its investigations of any necessary facts to those set out in specifically in this agreement; [and

•

if Law Practice goes to court with me, Law Practice does not have to help me afterwards, unless we both agree in writing.]

specified by statute, order or rule, and sending copies to the opposing party or their lawyer.

Notwithstanding anything to the contrary in this agreement, this representation is terminated when the services listed in above have been completed, and Client will not expect any further services to be performed by the Law Practice, including document-drafting, giving legal advice, or court appearances, unless ….[or] On completion of these services, you will be responsible for representing yourself unless …

On completion of these services, Law Practice anticipates that the status of the matter will be as follows: … Law Practice will inform Client of any outstanding deadlines at that time.

•

to perform, or have another person or entity perform, the following additional tasks:……. [as appropriate]

To help Law Practice represent Client effectively, and to reduce the costs of the representation, Client agrees: •

•

at Law Practice's request, to provide and to help Law Practice obtain all information (in whatever form it may appear) that Client or someone to whom Client may make an appropriate request possesses; to inform Law Practice about any new developments or information in relation to the Transaction [e.g., court notices, letters from the opposing party, new factual developments as appropriate], or other similar developments; to respond to Law Practice's communications (letters, telephone calls, or other forms of electronic forms of communication) as soon as reasonably possible;

•

to make themselves available for any meetings, interviews, or other events that Law Practice requires, including at Law Practice's office if requested;

•

to carefully consider Law Practice's advice before making any major decisions;

and for litigation, to put the matter beyond doubt: This means that Client will be responsible for: communicating with any opposing Law Practice (or if the other party is unrepresented, then

•

Effective representation in an unbundled retainer is critically dependent upon instructions provided by the Client, and this must be made clear:

signs a new retainer and costs agreement with Law Practice; or retains another lawyer to represent you.

Communications with counterparties or opposing counsel and the Court pose particular issues and provision needs to be made to manage those communications issues:

Obligations of Client

Eg Client:

•

to otherwise, as request by Law Practice, help Law Practice provide the services identified above and to effectively represent Client; and

and in either event:

and that the retainer in fulfilled when that is done, eg;

•

DATE DUE



Make it really clear that this statement is exhaustive not inclusive:

•

to immediately tell Law Practice if and when Client changes address, changes jobs, changes a phone number or changes any other electronic means of communication, or any situation will otherwise make it difficult for Law Practice to communicate with Client;



Preparation of pleadings Advice on discovery categories based on pleadings

CLIENT TO DO

•

Unless the opposing party or their lawyer knows that Law Practice represents Client, Client is considered to be unrepresented, and will be expected to communicate with the opposing party or lawyer as though you do not have Law Practice representing you in relation to [Transaction/ Proceeding].

OR •

Law Practice will inform the opposing party or their lawyer of the limited scope representation, and Law Practice will inform them as to: o

when they must communicate with Law Practice;

when they must communicate directly with Client;

including to whom and where they opposing party or their lawyer should send correspondence, court documents and other notices, and whether you have authorized Law Practice to accept service on your behalf. If it is possible within the rules of the relevant Court or Tribunal expressly identifying the limited role the Law Practice will play will assist in ensuring there is no ambiguity about that role, and facilitate a withdrawal application if that is required: •

If the Services involve assisting you with legal proceedings in a Court or Tribunal, we will 11

Law Practice's fees and costs is less than the amount of the deposit, the difference will be refunded to Client.

Client's Informed Consent Finally, get “informed” consent, which requires: • Full disclosure of the advantages and disadvantages of the proposed Agreement; • Ensuring that the Client has the opportunity to take independent legal advice about the Agreement; notify the Court or Tribunal that Law Practice has agreed to provide Client with limited scope representation, specifying: the matters, hearings or issues on which Law Practice will represent Client. When the Services have been completed Law Practice will withdraw from the legal proceedings with Client’s consent, and Law Practice will: o

•

deliver all documents and property to which Client is entitled relating to those legal proceedings and provide Client’s contact information, including address, telephone number, and email address to the Court or Tribunal and all other parties.

Client agrees not to unreasonably withhold consent to Law Practice’s withdrawal or make that withdrawal subject to any conditions.

At least in Superior Courts Law Practice will incur significant responsibilities by going “on the record”, and will also be treated as having plenary authority to bind the Client. Very particular care would need to be taken to design a limited retainer consistent with those responsibilities which will require particular attention to risk allocation and information reliance (where information is provided by others to enable the Law Practice to perform its retainer).

Legal Costs One of the reasons for unbundling is to constrain costs, and there is possibly more scope for creative charging arrangements (within the realm permitted by the Legal Profession Conduct Rules 2010) but it is critical that there is absolute clarity about the basis upon which fees will be charged. The Standard Costs Agreements deals with hourly charges and disbursements 12 | BRIEF OCTOBER 2019

but any special provisions need to be recorded:

And getting that acknowledgement recorded:

The estimates of costs set out below in relation to the matters in which Law Practice has agreed to represent Client are based on the information available at the time of preparing this agreement. These estimates are not quotes unless otherwise specifically provided.

Client has carefully read this Agreement and considered the additional information and advice that Law Practice has provided to Client. Client acknowledges and agrees:

Estimates of costs otherwise payable, costs recoverable, and costs risks to which the Client is exposed must still be explained in the usual way. There may be difficulties in that, but it does not absolve the Law Practice of the requirement.

•

that Client understands the possible risks and benefits of the limited-service representation described in this Agreement;

•

that Law Practice has advised Client that Client should take independent legal and financial advice on the risks and benefits of entering into this Agreement and Client has either:

Payment in Advance

taken such advice and enters into this Agreement after considering that advice; or

voluntarily decided not to take independent advice.

It may be prudent to seek payment in advance as security for the costs payable. Amount which Client agrees to pay in advance on account of legal costs and disbursements: $....[Deposit] to be received by Law Practice on or before [date], and to be held by the Law Practice to be applied against Law Practice's fees and costs incurred by Client. This amount will be deposited by Law Practice in Law Practice's trust account. Client authorizes Law Practice to withdraw funds from the trust account to pay Law Practice's fees and costs as they are incurred by Client. Client must ensure at all times that the Deposit is sufficient to satisfy all outstanding fees and disbursements accrued by the Law Practice, Client shall deposit additional funds sufficient to ensure that all accounts for fees and disbursements are paid and the Deposit is maintained at the agreed amount at all times and in any event within thirty days of billing. If, at the termination or completion of Services under this Agreement, the total amount incurred by Client for

Understanding those possible risks and benefits, Client voluntarily, knowingly and intentionally enters into this Agreement with Law Practice.

Conclusion Unbundled services are a fact of modern legal practice. They have risks and advantages for Client and Law Practice. You cannot shy away from them, though it is always up to the practitioner as to whether to accept a retainer of this type. Proper preparation and documentation are essential prerequisites to maximising the benefits and limiting the risks of delivering legal services this way. Endnotes 1

Partner, Quinn Emanuel Urquhart & Sullivan, Adjunct Professor Murdoch University Law School and Member, Law Society Ethics Committee. Brief, November 2017, p.24.

Note: The checklists and related information provided by the author in the above article are intended as examples only; readers should obtain their own advice as to the applicability of this information to their own circumstances.

The Old Court House Law Museum: A Collection on the Move! By Greg Sikich, Curator, The Law Society of Western Australia, Old Court House Law Museum

The Old Court House Law Museum (Museum) collection holds over 2,000 unique items that intertwine the legal, political and social histories of Western Australia. The collection is comprised of a variety of objects including furniture, legal regalia such as wigs, wig tins, robes and jabots, countless legal documents and letters, maps, portraits, illustrations, paintings, books, judge's notebooks and personal effects including diaries and photographs. Collectively, the objects provide a valuable insight into the histories and stories of Western Australia through the lens of the law from colonisation in 1829 to the present day. As the number of items in the collection has increased since the establishment of the Museum in 1974, the collection has outgrown its current location. The reorganisation of the Supreme Court has provided the opportunity for the Law Society of Western Australia to house the Museum collection in Court 8, within

the 1903 Supreme Court building, as long term storage for the collection. The Law Society has a duty of care to this important community collection and is grateful to the Department of Justice and Supreme Court for their support and generosity. The transformation of Court 8 into a collection storage facility commenced in June and is being guided by the National Museum Standards to ensure best practice. Problem solving is currently underway to maintain an appropriate and stable environment for the Court 8 fit out as well as the sourcing of archival-quality furniture and materials. The relocation is a complex project where risk and safety of the collection and people is a priority. Museum Curator, Greg Sikich, is working with a team of volunteers

that have museum experience to implement improvements to cataloguing, conservation and storage. Further research and interpretation into making object stories more accessible continues to be an ongoing benefit to the relocation plan. Implementing improvements and updates to how the Museum is preserving its significant collection for future generations is at the core of relocation plan. With an eye to the future, the Curator is further developing the collection to reflect its unique purpose and build on the significant stories of a diverse and changing community. Guided by Dr Joanna Sassoonâ&#x20AC;&#x2122;s Statement of Significance of the Old Court House Law Museum and Collection Policy, the Museum is actively collecting. If you have an item that inspires discussion around the history of State law and the legal profession, the Museum would love to hear from you. Email museum@lawsocietywa.asn.au. 13

A Matter of Trust By Danielle Bechelet Avon Legal

Can an administrator make a binding death benefit nomination – a discussion of the recent State Administrative Tribunal decision in SM [2019] WASAT 22 SM’s mother was appointed administrator of her estate on 30 November 2016. On 30 July 2018, SM’s estate received damages of approximately $5.7million and Australian Executor Trustees (AET) was appointed as trustee of such monies. AET was granted a limited administration order on 5 November 2018 for the purpose of depositing monies into superannuation for SM’s benefit. During the course of the proceedings, the following additional function was sought by AET: “AET as limited administrator has authority, in respect of any superannuation fund of which the represented person is a member, to make and renew any document which has the effect of directing or binding the superannuation trustee as to the payment of superannuation death benefits following the represented person’s death.”1 A hearing to consider the additional function was listed before a three member panel. The key considerations were whether: 1. the Tribunal can confer on an Administrator a power to make or confirm a binding death benefit

14 | BRIEF OCTOBER 2019

nomination (BDBN); 2. an Administrator with plenary powers can make a BDBN; 3. a represented person subject to an administration order can make a BDBN; 4. making or renewing a BDBN is a testamentary disposition; and 5. it is in the best interests of the represented person that the Tribunal grant the additional function.2

What is a testamentary disposition? A disposition includes a gift, devise, bequest or an appointment of property contained in a will.3 A will includes a codicil and any testamentary instrument or disposition.4 Subject to section 111A of the Guardianship and Administration Act 1990 (WA), a plenary administrator may not make a will or other testamentary disposition on behalf of a represented person.”5 Section 111A6 provides that a plenary guardian or administrator may make an application to the Supreme Court in accordance with section 40 of the Wills Act 1970 (WA) for a will to be made for a person who lacks testamentary capacity. Under section 40, the Supreme

Court may on the application of any person make an order authorising the making, alteration or revocation of a will on behalf of a person who lacks testamentary capacity. Therefore, if the making of a BDBN is considered to be a testamentary disposition, then arguably an administrator may be prohibited from making a BDBN. Whether a BDBN is considered to be a testamentary disposition will depend on whether the represented person has a legal entitlement to the object of the nomination and if the nomination is binding when it is made.7 In this instance, the proposed BDBN was found to be a testamentary disposition because SM had proprietary rights and powers over the property in the superannuation during her lifetime and any BDBN did not take effect until her death.8 The Tribunal found it was not able to grant the order sought because it was not a permissible function of an administrator.

Can a represented person make a BDBN? Where there is an administration order, the represented person is incapable of making any disposition of their estate, except to the extent that the

administrator authorises them to do so in writing with the consent of the Tribunal.9 The Tribunal referred to a previous decision where it was found that “any disposition” did not include making a will because the will itself does not effect a disposition, it is the death of the will maker that creates the disposition of the will maker’s property.10 Therefore a represented person can make a testamentary disposition, as long as the above requirements are met and the person has the requisite testamentary capacity. A capacity assessment of the represented person in accordance with Banks v Goodfellow11 may be of assistance to an administrator who finds themselves in a position where it may be desirable for a represented person to make a BDBN.

Can the Tribunal confer such a power? The Tribunal found it did not have the power to grant the additional function as an administrator’s role is to protect the estate of the represented person during their lifetime and the purpose of a BDBN is solely to deal with a superannuation benefit on death.12 The appointment of an administrator ceases upon death and an administrator has no duty to protect the estate of the represented person after their death.13 However, arguably the position may be different if the administrator is the Public Trustee, as upon the death of any person their real and personal estate is deemed to vest in the Public Trustee until a grant is made.14 The Tribunal found that, even if it had the power to grant the additional function, it

was not in SM’s best interests because if no BDBN was made, any monies left in the superannuation fund would ordinarily be paid to the Legal Personal Representative and pass under the terms of the will (if there was one) or the rules of intestacy.15 Further, as SM lacked capacity to make a will, it was open for the administrator to make an application under section 40 of the Wills Act 1970.16

What about an attorney acting under an Enduring Power of Attorney? In a recent Queensland decision, Re Narumon Pty Ltd,17 it was held that renewing a BDBN was not a testamentary act and in accordance with Queensland legislation was considered to be a “financial matter” for which the attorney under an enduring power of attorney had the requisite power.18 The position in Western Australia differs from that in Queensland, as there is no similar definition of a “financial matter” as set out in the Powers of Attorney Act 1998 (Qld). Therefore, the author submits that in Western Australia, the decision in SM19 may also apply to an attorney, as their authority applies only during the lifetime of the donor. Although there is no express provision in the legislation that prohibits an attorney making a testamentary disposition, it is inherent that their power does not extend to protecting the estate on the passing of the donor. Subject to any conflict issues, an attorney could also make an application for a statutory will should the need arise.20

Conclusion Whether an administrator can make a BDBN will depend on the facts of the case, particularly as to whether the proposed BDBN is a testamentary disposition, and this in turn will depend on the type of policy and whether the represented person has proprietary rights and powers over the property during their lifetime. If the represented person has testamentary capacity, a BDBN could be made with the approval of the administrator and consent of the Tribunal. Practitioners should bear in mind that any person, including a plenary administrator or an attorney, can make a section 40 application to deal with testamentary dispositions if the represented person lacks the requisite testamentary capacity. Endnotes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

SM [2019] WASAT 22 para 8 (emphasis added). SM [2019] WASAT 22 para 36 (emphasis added). Section 4 of the Wills Act 1970. Ibid. Section 71(2a) of the Guardianship and Administration Act 1990. Guardianship and Administration Act 1990. SM [2019] WASAT 22 para 97. SM [2019] WASAT 22 paras 100 – 104. Section 77(1) of the Guardianship and Administration Act 1990. The Full Board of the Guardianship and Administration Board [2003] WASCA 268. (1870) LR 5 QB 549. SM [2019] WASAT 22 paras 89 and 90. SM [2019] WASAT 22 para 91. Section 9 of the Public Trustee Act 1941. Section 14 of the Administration Act 1903. SM [2019] WASAT 22 paras 106. [2018] QSC 185. Re Narumon Pty Ltd [2018] QSC 185 at para 69 and Schedule 2 Part 1 of the Powers of Attorney Act 1998. [2019] WASAT 22. Section 40 of the Wills Act 1970.

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We've Come a Long, Long Way Together – 10 Years of the Fair Work Act 2009 By Amber Roncoroni HLS Legal

This year marks the 10 year anniversary of the commencement of key parts of the Fair Work Act 2009 (Cth) (the Fair Work Act) including the unfair dismissal and general protections provisions. In this article we reflect on the Fair Work Act and what the key cases have taught us about the Fair Work Act. The impact that the Fair Work Act has had on employment law in the last 10 years cannot be understated.

However, there remain important parts of the Fair Work Act which are untested and unclear.

The Fair Work Act has governed employment law in Australia during a period of significant change to the Australian economy, politics and technology.

Understanding these can assist with navigating the Fair Work Act moving forwards.

In these respects: •

The mining and construction sectors have expanded and contracted.

•

The Labor Party, which introduced the Fair Work Act, was replaced by the Coalition at the Federal level in 2013.

•

Use of social media has become prolific and its impact on work has grown. For instance, according to the 2018 Yellow Social Media Report, 93% of 18-29 year olds and 90% of 50 to 64 years olds in Australia maintain a Facebook profile.1 The CFMEU and the MUA merged to create the CFMMEU super union.

With this in mind, it is an appropriate time to ask: What do we know about the Fair Work Act? Since key parts of the Fair Work Act commenced on 1 July 2009, there have been approximately 80,000 decisions, including Fair Work Australia/Fair Work Commission decisions, that refer to the Fair Work Act. 19 of these decisions were issued by the High Court of Australia. Some of these decisions provide guidance on the meaning of the Fair Work Act in respect of key day to day issues. 16 | BRIEF OCTOBER 2019

What we can say is fairly settled •

In respect of unfair dismissal, an employer will generally have a valid reason to dismiss an employee who has sent sexually explicit material or comments over social media to colleagues: In Luke Colwell v Sydney International Container Terminals Pty Limited [2018] FWC 174 an employee was terminated for sharing a pornographic video on a Facebook Messenger chat group which included a number of his colleagues.

Commission to support employers in dismissing employees engaging in this form of conduct. •

Enterprise agreements are unique from legislation, regulations and contracts, meaning that a special approach is to be used when interpreting their terms: In Toyota Motor Corporation Australia Limited v Marmara [2014] FCAFC 84, the Full Court discussed what enterprise agreements are and principles should be used to interpret them. The Full Court considered this issue for the purposes of considering the significance of a “no extra claims” clause in an enterprise agreement. The issue was whether a clause purporting to prevent the parties from varying the enterprise agreement was effective when the Fair Work Act permitted the parties to vary the enterprise agreement. The Full Court found that enterprise agreements: o

are not delegated legislation to be interpreted like a regulation as they are not “made” by the Fair Work Commission, rather they are made by employees, employers and sometimes unions; or

are not contracts as they are made between an employer and a majority of employees not one employer and one employee.

When finding that the employer had a valid reason to dismiss the employee, Commissioner McKenna acknowledged the growing number of cases regarding dismissal, social media use and out of hours' conduct. Commissioner McKenna held that the connection between the employee’s conduct and his employment was satisfied as the employee was Facebook friends with his colleagues because of the employee’s relationship with the employer. The decision reflects the general willingness of the Fair Work

The Full Court found that enterprise agreements are a “statutory artefact” of legislative character because the Fair Work Act empowers an employer and

in lieu of notice is to be calculated on the hours the employee would have worked had the employment continued until the end of the minimum period of notice.

the majority of employees to make enterprise agreements. The Full Court indicated that the principles applicable to the interpretation of enterprise agreements are unique to enterprise agreements.

The Federal Circuit Court held that there is nothing in the language of s 117 of the Fair Work Act that requires an employee to be paid for non-working time, in particular where the employee works a roster which compresses working time into set periods.

Having set out these findings, the Full Court held that the “no extra claims” clause did seek to prevent the parties from varying the enterprise agreement and the clause was contrary to the Fair Work Act and unenforceable. •

The Federal Circuit Court’s decision makes it clear that rostered working hours impact the calculation of payment in lieu of notice for s 117(2)(b) of the Fair Work Act.

Rest and relaxation periods in an employee’s roster remain non-paid time for the purposes of an employee’s payment in lieu of notice pursuant to s117(2)(b) of the Fair Work Act: In Short v CBI Constructors Pty Ltd [2017] FCCA 2442, it was argued that fly-in-fly-out employees working on a roster which included non-working time should be paid as if they were at work when being paid in lieu of notice, that is, ignoring non-paid, non-working time in their roster.

•

Relevantly, s 117(2)(b) of the Fair Work Act provides that payment

Payment of accrued but untaken annual leave on termination of employment may be higher than the employee’s base rate of pay if a modern award or enterprise agreement provides for payment of annual leave during employment which is higher than the base rate of pay. In Centennial Northern Mining Services Pty Ltd v Construction,

Forestry, Mining and Energy Union [2015] FCAFC 100, the Full Court considered the difference in the language requiring payment of annual leave taken during employment in s 90(1) of the Fair Work Act and accrued and untaken annual leave on termination in s 90(2) of the Fair Work Act. The Full Court confirmed that s 90(2) of the Fair Work Act is expressed differently to s 90(1) of the Fair Work Act to ensure that where a modern award or enterprise agreement provides for annual leave to be paid at a rate which is higher than an employee’s base rate of pay during employment that this is also the rate to be paid at termination for accrued but untaken annual leave. The Full Court indicated that the intention of s 90(2) of the Fair Work Act is to ensure that payments which would be payable when an employee takes annual leave during their employment, like annual leave loading, would also be paid to the

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In Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32, the High Court confirmed that an employer will contravene the Fair Work Act where the “substantial and operative factor” if the employer’s decision to take the adverse action against an employee is a prohibited reason.

As section 570(1) of the Fair Work Act makes it more difficult for a party to obtain costs against the other party, employee claims which couple breach of contract and general protections claims have become commonplace. •

The Full Court described the character of casual employment as the absence of a firm advance commitment to continuing and indefinite work according to an agreed pattern of work. The Full Court’s decision indicated that employers need to be mindful that:

Section 570 of the Fair Work Act, which limits the circumstances where costs can be awarded against a losing party in proceedings involving the Fair Work Act, can apply to claims outside the Fair Work Act. This can occur where a non-Act related claim is commenced at the same time as an Act related claim and the non-Act related claim is within the court’s accrued jurisdiction:

Accordingly, s 570(1) of the Fair Work Act applied to the employee’s claims in respect of 18 | BRIEF OCTOBER 2019

The meaning of “causal employees” for the purposes of s 86 of the Fair Work Act is the customary meaning in general law:

The Full Court held that determining whether an employee is a casual employee requires consideration of the character of and indicia traditionally used to define casual employment, subject to any adjustment required by the Fair Work Act.

The High Court’s decision establishes that credible and strong evidence that an employer’s reasons for taking adverse action against an employee were not prohibited reasons is essential for an employer to successfully defend a general protections claim.

In Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20, the Full Court held that the employee’s claims under the Fair Work Act and common law breach of contract claims were matters within the same proceeding.

The Federal Circuit Court ordered that the Human Resources Manager pay a penalty of $9,920 in respect of deductions that were made to employee’s wages and for a failure to keep accurate records. In EZY Accounting 123 Pty Ltd v Fair Work Ombudsman [2018] FCAFC 134, the Full Court held that an accounting firm that was aware of and facilitated its client’s systematic underpayment of its employees was an accessory to the employer’s contravention.

In WorkPac Pty Ltd v Skene [2018] FCAFC 131, the Full Court held that the meaning of "casual employees" in s 86 of the Fair Work Act is its customary meaning in general law.

That is, the assessment is not an assessment of what an objective outsider would believe the employer’s reasons to be or an assessment of whether there was an unconscious bias towards a prohibited reason.

•

In FWO v Oz Staff Career Services Pty Ltd & Ors [2016] FCCA 105 and FWO v Oz Staff Career Services Pty Ltd & Ors (No.2) [2016] FCCA 2594, the Federal Circuit Court held that a Human Resources Manager was liable as an accessory for contraventions of s 323 of the Fair Work Act and regulation 3.44 of the Fair Work Regulations 2009 (Cth).

Section 570(1) of the Fair Work Act provides that costs should only be awarded where a party instituted proceedings vexatiously or without reasonable cause or engaged in an unreasonable act or omission which caused the other party to incur costs.

An employer will contravene the Fair Work Act if they take adverse action against an employee and the “substantial and operative” reason for this action was a prohibited reason:

The High Court confirmed that the question of whether an employer’s decision to take adverse action against an employer was for a prohibited reason involves the assessment of the employer’s (specifically, the decision maker’s) reasons for taking the adverse action from a factual perspective.

liable under s 550 of the Fair Work Act:

the Fair Work Act and his breach of contract claims.

employee when paid their untaken leave.

• merely designating an employee as a casual employee may not make the employee a casual employee for the purposes of the Fair Work Act; and • the essence of casual employment is the absence of a firm advance commitment to continuing and indefinite work according to an agreed pattern of work. •

Directors, human resource professionals and accountants may be accessories to contraventions of the Fair Work Act pursuant to s 550 of the Fair Work Act. The knowledge requirements for s 550, which includes being “knowingly concerned” in a contravention, can result in these parties been found

The Full Court found that it did not matter that the accounting firm did not intend to assist its client to contravene the applicable modern award.

Areas where clarity is still required •

Whether an employer can lawfully terminate an employee for comments of a political or religious nature which are made outside of work but which are contrary to the employer’s mission or culture: In Linfox Australia Pty Ltd v Fair Work Commission [2013] FCAFC 157, the Full Court found no error in the Fair Work Commission Full Bench’s finding that free speech may justify a finding of unfairness in an employer’s decision to terminate an employee. The Commissioner at first instance held that the comments made by the employee were “[W] ithin his right to free speech… even though many, including myself, would find much of the Facebook discourse which is in evidence to be distasteful”. The decision of the Full Court suggests that an employer may unfairly dismiss an employee where the reason for the dismissal was the employee’s use of social media to comment on religious or political matters.

On the other hand, in Banerji v Bowles (acting Secretary, Dept of Immigration and Citizenship) [2013] FCCA 1052, when considering the employee’s, Ms Banerji, application for an injunction on the basis of threatened and actual adverse action because of political tweets, the Federal Circuit Court held that “even if there be a constitutional right [to free speech] of the kind for which the Applicant contends, it does not provide a licence [allegedly] to breach a contract of employment.” The issue was recently considered by the High Court in Comcare v Banerji [2019] HCA 23. The High Court held that the political tweets were not protected by a general right to free speech pursuant to the Constitution. The High Court stated that the question was whether the law used to sanction Ms Banerji (which was related to the public service) impermissibly limited political communication. Although the matter was unique in terms of the public sector aspect and focus on the Constitution, it has been considered a decision against “free speech” in the employment context.

broader approach and held that an employee makes a complaint when they raise a matter or conduct which could reflect badly on them or could prejudice them in their employment.

protections claim in the Federal Circuit Court on 31 July 2019 (MLG2486/2019). •

When a shift worker will be entitled to the additional weeks’ annual leave pursuant to s 87(3) of the Fair Work Act: In O'Neill v Roy Hill Holdings Pty Ltd [2015] FWC 2461, the Fair Work Commission held that the threshold that an employee must satisfy in order to “regularly” work on Sundays and public holidays for the purposes of s 87(3)(a)(iii) of the Fair Work Act is at least 34 Sundays and 6 public holidays per year of employment. The Fair Work Commission extracted the 34 Sundays and 6 public holidays threshold from cases which predated the Fair Work Act. While it is arguable that Parliament intended the 34 Sundays and 6 public holidays threshold to apply for consistency and certainty, the meaning of s 87(3) is yet to be confirmed.

•

In respect of religious comment, the area may receive the attention it needs as a result of rugby union player Israel Folau. Mr Folau was dismissed by Rugby Australia for posting content on social media stating that “hell awaits” “homosexuals” and others. Rugby Australia’s position is that the content did not meet its inclusive standards whereas Mr Folau described the content as an expression of his devout Christian beliefs. Mr Folau filed a general

What is a “complaint” for the purposes of the general protections provisions of the Fair Work Act: One approach takes a narrow view on what is a “complaint”. The narrow approach requires that the employee have a contractual right to make complaint.

The impact of this broader approach was seen more recently in Fatouros v Broadreach Services Pty Ltd [2018] FCCA 769 where an email sent by an employee about another employee’s performance was considered a complaint.

What does the future hold? The Coalition government is unlikely to introduce significant changes to the Fair Work Act in the next three years. Only a handful of its election promises concerned industrial relations. One of its most significant proposals to date has been to limit the impact of the Skene decision by stopping “double dipping” by casual employees. Regardless, it is undeniable that the Fair Work Act has and will continue to shape the employment law landscape moving forward. HLS Legal provides comprehensive and current advice to employers in respect of the Fair Work Act, including, in respect of managing termination of employment, enterprise agreement disputes, annual leave and deductions from pay. Endnotes 1

The other and broader approach captures most circumstances where an employee expresses concern about matters that could affect their employment.

Yellow, 2018 Yellow Social Media Report (2018), https://www.yellow.com.au/wp-content/ uploads/2018/06/Yellow-Social-Media-Report-2018Consumer.pdf.

In Walsh v Greater Metropolitan Cemeteries Trust (No. 2) [2014] FCA 456 Bromberg J favoured the

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The Repeal of s 51(3) of the Competition and Consumer Act 2010 (Cth) LESANZ Breakfast Meeting, 10 April 2019

By Justice Michael O’Bryan Federal Court of Australia

In 1987, I delivered a paper at the Law Council’s Trade Practices Workshop in Melbourne titled “Interaction between intellectual property and sub-section 51(3) of the Trade Practices Act”. At the conclusion of that paper, I somewhat precociously proposed the repeal of sub-section 51(3) and the expansion of the exception in sub-section 51(1) to intellectual property statutes.1 Almost 30 years later, I returned to that topic as a member of the Competition Policy Review, chaired by Prof Ian Harper. In its Final Report published in March 2015, the Harper Committee recommended the repeal of s 51(3) of the Competition and Consumer Act 2010 (Cth) (CCA). That recommendation was not taken up in the legislative reforms enacted through the Competition and Consumer Amendment (Competition Policy Review) Act 2017 (Cth). However, the recommendation has now been enacted by the inconspicuously titled Treasury Laws Amendment (2018 Measures No. 5) Act 2019 (Cth) and will take effect on 12 September 2019. The implementation of the Harper Committee recommendation is, though, only partial. In conjunction with the repeal of s 51(3), the Harper Committee 20 | BRIEF OCTOBER 2019

also recommended the widening of the vertical supply exception to the cartel prohibitions so that the exception would apply to restrictions contained in intellectual property licences. The Harper Committee considered that intellectual property licensing restrictions should be assessed under the standard competition test and should not be prohibited per se. That recommendation has not been implemented. My address briefly comments upon: (a) the rationale for the repeal of s 51(3); (b) the desirability of a broader vertical supply exception to the cartel prohibitions; and (c) following the repeal of s 51(3), the application of the cartel prohibitions to intellectual property licence restrictions.

Repeal of Section 51(3) The rationale for repealing s 51(3) is discussed in the Final Report of the Harper Committee. In short, the Harper Committee considered that the differences between intellectual property rights, and other forms of property and assets, did not justify the statutory exception in s 51(3). In terms of its economic characteristics (and speaking at a level of generality), intellectual property has similarities and dissimilarities with other forms of real and personal property. Generally speaking, intellectual property is established through a statutory right to exclude use. Again, the same is true of most other forms of property rights. The development or acquisition of intellectual property sometimes involves very large investment; but the same is true of many assets used in commerce and industry. It can be accepted, though, that certain types of intellectual property have economic characteristics that differ from physical property. In particular, information and ideas are typically a “public good” in the economist’s sense of that expression. A public good (as distinct from a private good) has two related economic characteristics: “non-

For a long time it has been recognised that there is no fundamental incompatibility between competition law and intellectual property rights. The object of competition law is to prohibit conduct undertaken unilaterally by a corporation with substantial market power, or arrangements entered into between commercial entities, which have the purpose or likely effect of substantially lessening competition. The question that underpins competition law is whether, in the absence of the impugned conduct or arrangement, competition in the relevant market would be materially better, worse or unchanged. In general terms, the commercial exploitation of most assets, including intellectual property rights, increases supply and thereby promotes competition. There is nothing inherently anti-competitive about intellectual property licences, just as there is nothing inherently anti-competitive about leases, licences or other contracts for the use of many assets, including airports, ports, railways and production facilities of various kinds. That proposition generally holds true notwithstanding that a given lease, licence or contract is restricted in its scope.

rivalrous consumption” and “exclusion difficulties”. Non-rivalrous consumption means that consumption of the good, here ideas or information, by one person does not leave any less for others and therefore the marginal cost of supplying an additional individual is very low or zero. Exclusion difficulties refers to the fact that it is difficult to exclude individuals from enjoying the good, again ideas or information, once it is produced. Consequently, there is a free rider problem that may result in the supply

or use of the good being unprofitable. Intellectual property rights address those characteristics and enable ideas and information to be exploited profitably, within the parameters of the statutory rights. Those statutory rights facilitate the exploitation of the ideas or information through licensing arrangements. It is also implicit that the rights licensed may be limited in various dimensions: temporally, geographically and the product field of use.

Cartel prohibitions and vertical supply arrangements Australia’s Competition Act contains statutory per se prohibitions of various forms of conduct described as cartel conduct. An arrangement between two commercial entities will constitute cartel conduct if two conditions are satisfied. First, the entities must be competitors in relation to the supply or acquisition of particular goods or services. I will call them the competitive goods or services.

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Second, the arrangement must contain one of the following types of provision: (a) a price fixing provision – which is a provision that has the purpose or likely effect of fixing, controlling or maintaining the price of the competitive goods or services; (b) a supply restriction – being a provision that has the purpose of preventing, restricting or limiting the production, capacity to produce, supply or acquisition of the competitive goods or services; (c) a geographic or customer restriction – a provision that has the purpose of allocating between the commercial entities the geographic areas in which they will supply or acquire the competitive goods or services or the classes of persons to whom they will supply or from whom they will acquire the competitive goods or services; and (d) a bid rigging provision – being a provision that has the purpose of ensuring that, in the case of 22 | BRIEF OCTOBER 2019

a request for bids in relation to the supply or acquisition of the competitive goods or services, one or more will bid while others will not. Provisions within intellectual property licences have the potential to constitute cartel conduct within the statutory definitions in Australia’s Competition Act. This can occur where the licensor exploits its intellectual property rights to produce and supply a product in a particular market, and also chooses to licence another commercial entity to do the same, but imposes a cartel type restriction on the licensee. The Harper Committee expressed the view that such licensing restrictions should not be prohibited per se under the cartel prohibitions, and should only be prohibited if they have the purpose or likely effect of substantially lessening competition. That treatment of intellectual property licences is consistent with competition laws throughout the world. It reflects an economic view that intellectual property licences, even granted on a restricted

basis, are generally supply enhancing and therefore pro-competitive. On that view, it is inappropriate to apply per se rules and such licences should be assessed under a competition test. Presently, there is an exception to the cartel prohibitions in the case of vertical trading arrangements that fall within the definition of exclusive dealing in s 47 of the CCA. That exception is s 45AR. However, that exception is not generally applicable to intellectual property licenses because s 47 is not framed with intellectual property licences in mind. It is confined to standard forms of exclusive dealing whereby a supplier of goods or services agrees to supply those goods or services to another person exclusively (exclusive distribution), or on the condition that the other person will not acquire competing goods from another supplier (exclusive acquisition) or will not resupply the goods to particular persons or in particular places (restricted distribution). Thus, the restriction relates to the goods or services that are the subject of the primary supply. In the case of intellectual

property licences, the primary supply is a licence of the intellectual property rights and typically the restriction relates to goods or services that are produced through the exploitation of those rights. Generally, s 47 has no application to those circumstances. For that reason, the exception to the cartel prohibitions, found in s 45AR, is unlikely to apply to intellectual property licences. It was for that reason that the Harper Committee recommended the enactment of a broader vertical supply exception that would cover intellectual property licences and other vertical conduct that is not within s 47. That recommendation has not yet been adopted. Thus, following the repeal of s 51(3), intellectual property owners who both exploit the intellectual property themselves, and license others to do so, must be conscious of the potential application of the cartel laws to such licences.

Potential cartel conduct Let me say a few words about the potential application of the cartel prohibitions to intellectual property licences following the repeal of subsection 51(3). It is unchartered waters, and the application of the laws is not without difficulty. It is only possible to identify the issues that may arise. As already mentioned, one of the two elements of the definition of cartel conduct is that the arrangement is made between two persons who are in competition with each other in respect of the supply of particular goods or services. Therefore, the first question to consider is whether the parties to the proposed licensing arrangement are or are likely to be, or but for the licence would be or be likely to be, in competition with each other in relation to the supply of particular goods or

services in trade or commerce. In this context, trade or commerce means trade or commerce within Australia or between Australia and places outside Australia. In many cases, there will be no prospect of that condition being satisfied. That will be so if the owner of the intellectual property does not itself exploit the rights to supply goods or services in Australian trade or commerce. In general, therefore, the cartel prohibitions are only likely to be of concern when an owner of intellectual property itself exploits the rights to supply goods or services in Australian trade or commerce, and also licenses another person to exploit the rights to supply competing goods and services in Australian trade or commerce. Difficult questions will arise where the owner of intellectual property exploits the rights to supply goods or services in Australian trade or commerce but, at the time the licence is entered into, the licensee is not a competitor in respect of the supply of those goods or services and is not likely to be a competitor. It is yet to be determined how the cartel prohibitions will apply to licence arrangements between persons who are not competitors at the time the licence is entered into, but have the potential to be competitors by reason of the licence. If the first question is answered in the affirmative, it will then be necessary to consider whether a condition of the licence falls into one of the 4 categories of cartel conduct. A provision that restricts the price of goods or services to be produced pursuant to the licence is at obvious risk of constituting price fixing. Similarly, a territorial restriction that restricts the geographic area in which the licensee can supply goods or services will need close consideration.

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Other common forms of licensing restriction are field of use restrictions and quality restrictions. Whether they have the potential to infringe the cartel prohibitions will depend on whether the purpose of such restrictions is to prevent, restrict or limit production or supply. Each case will, of course, turn on its own facts. A key question will be whether a licence that enables the licensee to exploit intellectual property rights within a certain field of use, but not in other fields of use, has the purpose of enhancing production and supply or the purpose of restricting or limiting production or supply. That may depend on whether the licensee would otherwise have the right to produce or supply at all.

Conclusion Let me conclude by reiterating two points. First, consistently with the views expressed in the Harper Report, the repeal of 51(3) is a desirable amendment to the Competition Act. Second, and again consistently with the views expressed in the Harper Report, further attention ought to be given to the scope of the exception from the cartel prohibitions for vertical supply arrangements. The current exception, focussed on conduct that falls within s 47 of the Act, is not adequate. Section 47 does not define all forms of vertical dealings, and generally does not apply to restrictions contained in intellectual property licences. The recommendations made in the Harper Report in that respect remain apposite. Endnotes 1

Intellectual property statutes are expressly excluded from s 51(1)(a).

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Sir Ronald Wilson Lecture 2019 A Law Society Community Event

On 7 August, the Law Society was delighted to present the 2019 Sir Ronald Wilson Lecture – Panel Discussion: ‘Climate Change – Political and Legal Accountability’ at Brookfield Place, Perth. Attendees enjoyed the lively and thought-provoking discussion. Thank you to our panel including Bronwyn Bell, Manager Policy – Natural Resources, The Chamber of Minerals and Energy of Western Australia; and Tim Macknay, Principal Solicitor, Environmental Defender’s Office of Western Australia. Brief is pleased to publish the following article, which provides an overview of the key issues discussed.

Climate Change – Political and Legal Accountability Presented by The Chamber of Minerals and Energy of WA By Bronwyn Bell, Manager Policy – Natural Resources

Climate Change The Intergovernmental Panel on Climate Change (IPCC) is considered the peak organisation for climate science including understanding and predicting consequences of climate change. It is the United Nations body for assessing the science related to climate change. The IPCC regularly prepares Assessment Reports as well as periodic Special Reports to ensure knowledge associated with climate change is regularly reviewed and updated. All reports are made publicly available through the IPCC’s website at: https://www.ipcc.ch/reports.

The status of international covenants, protocols and treaties in protecting human rights in Australia The Australian Government ratified the Paris Agreement in November 2016. Under the Paris Agreement1, Australia’s Nationally Determined Contribution (NDC) (in short form) is to reduce emissions by 26 to 28 per cent below 2005 levels by 20302.

Political and legal accountability –

24 | BRIEF OCTOBER 2019

the Commonwealth Government’s contemporary initiatives to address climate change The Chamber of Minerals and Energy of WA (CME) supports a whole of economy, broad-based, nationally consistent approach to emissions reduction and views the Commonwealth Government as having primary responsibility for emissions reduction including fulfilling Australia’s commitments now and in to the future under the Paris Agreement. This is consistent with Section 51(xxix) of the Constitution of Australia covering the “external affairs” power Commonwealth of Australia Constitution Act 1900 (Imp)3.

greenhouse gas emissions to 26–28 per cent below 2005 levels by 2030 through the “Direct Action” climate change program. •

Emissions reduction: accrediting emissions reduction and abatement projects to earn “Australian carbon credit units” (ACCUs) which can be purchased by the Clean Energy Regulator, on behalf of the Commonwealth at auction through the Emissions Reduction Fund (ERF) helping to reduce Australia’s overall emissions. Further information about the ERF is available from the Clean Energy Regulator’s website: http:// www.cleanenergyregulator.gov. au/ERF/Pages/default.aspx. This website also contains a register of all Emission Reduction Fund projects including details of the abatement method and amount of carbon credits generated by each project. In total, more than 66 million Australian Carbon Credit Units (ACCUs4), have been generated since 31 December 2012; and

•

The Safeguard Mechanism: legislation under which large emitting facilities are held accountable to baseline emissions

Broadly speaking, the Commonwealth Government has a sectoral approach to managing greenhouse gas emissions that uses a combination of public funding to incentivise sequestration through the Emissions Reduction Fund (now Climate Solutions Fund) and sector-based regulation to limit emissions (eg. the baselines in the Safeguard Mechanism). Although it has undergone several iterations, the core aspects of the Australian Government’s policy framework, have largely been in place since August 2015, when the Australian Government announced it would reduce

levels which the facilities must not exceed except by surrendering prescribed carbon units. This requirement has been in place since 1 July 2016 and annual data including requirements to surrender ACCUs is publicly reported5. The Clean Energy Regulator, a noncorporate Commonwealth entity, administers both the Emissions Reduction Fund and the Safeguard Mechanism.

Political and legal accountability – what CME WA would like to see from the Commonwealth Government over the next three years in a political and legal sense, if anything, to address climate change Noting the Australian Government has primary responsibility for the greenhouse gas emissions policy framework, there are still several areas to be further progressed or are subject to regular review. CME highlights these below including: •

Facilitating international credits and trading through the ongoing negotiations regarding Article 6 of the Paris Agreement;

•

Development of a mechanism to manage the trilemma for the electricity network – affordability, reliability and emissions reduction;

•

Development of Australia’s next and future Nationally Determined Contributions including the requirement in 2020 for the 2030 NDC noting that each subsequent NDC is to reflect increasing ambition; and

•

Update of the Climate Change Authority’s Advice to the Australian Government on meeting the Paris Agreement and the subsequent Government response (Advice due by end 2019).

Additionally, fostering bipartisan support for Australia’s response to climate change including implementation of the Paris agreement is critical. This must also include State/Commonwealth alignment and enhanced cooperation, including with respect to climate adaptation. Bipartisanship should promote policy stability and investment certainty including promoting innovation and research to support a measured transition to a lower emissions economy.

Lawmaking process in parliament and the courts, with reference to the influence of political parties and pressure groups CME WA is the peak resources sector representative body in Western Australia and is funded by our member companies

which collectively are responsible for over 90 per cent of the State’s mineral and energy production and workforce employment. CME’s policy advocacy focuses on the sector’s contribution, capability and competitiveness, advocating on behalf of its members in policy development of relevance to the sector. CME WA makes submissions to numerous public consultation processes coordinated by both the Commonwealth and State government. These are typically made publicly available by the relevant Government agency as well as through CME WA’s public website6. Additionally, CME advocates for its members through representation on formal bodies (such as the WA Environmental Protection Authority’s Stakeholder Reference Group), by commissioning research reports, collecting survey data, coordinating familiarisation tours, providing Government briefings and organising events such as the Women in Resources Awards.

Endnotes 1 2

3 4 5

https://unfccc.int/sites/default/files/english_paris_ agreement.pdf. For the complete, see: https://www4.unfccc.int/ sites/submissions/INDC/Published%20Documents/ Australia/1/Australias%20Intended%20Nationally%20 Determined%20Contribution%20to%20a%20new%20 Climate%20Change%20Agreement%20-%20 August%202015.pdf. https://www.legislation.gov.au/Details/C2013Q00005. One ACCU is equal to sequestering one tonne of carbon dioxide equivalents. Refer to the Clean Energy Regulator’s website for Safeguard Facility data. The most recent year is 201718: http://www.cleanenergyregulator.gov.au/NGER/ National%20greenhouse%20and%20energy%20 reporting%20data/safeguard-facility-reportedemissions/safeguard-facility-emissions-2017-18. http://www.cmewa.com/

Sir Ronald Wilson Lecture 2019 A Law Society Community Event

Climate Change – Political and Legal Accountability Presented by the Environmental Defender’s Office of WA The Science of Climate Change The Intergovernmental Panel on Climate Change Special Report: Global Warming of 1.50C provides an authoritative overview of the current science of climate change and the Environmental Defender’s Office of Western Australia (EDOWA) notes that the situation is dire. As of 2017, average global air and sea temperatures have increased by 10C from preindustrial levels, and will likely reach 1.50C between 2030 and 2050, due to human activities.1 Keeping global temperatures below this level is vital to protecting lives and livelihoods, as worsening extreme weather and accelerated sea-level rise will increase the risk of starvation, mass migration and resulting conflict.2 An increase of less than 20C will severely worsen these risks and has been predicted to take the “trajectory of the climate system out of human control.”3 Australia is already seeing worse extreme weather events such as the 2018 drought, the 2009 Black Saturday bush fires, prolonged heatwaves and increased storm damage.4 It has been predicted that by 2050, Brisbane summer days will measure over 400C every 1-2 days, on average.5

Political and Legal Accountability Current Initiatives Australia is a signatory to three major international law instruments on climate change: the 1992 United Nations Framework Convention on Climate Change (UNFCCC),6 the 1997 Kyoto Protocol extending the UNFCCC, and the 2015 Paris Agreement signed under the UNFCCC. The Australian Government has legislative power under the Australian Constitution to implement international treaties, and a nationally consistent climate change policy would be the preferred arrangement. However, State governments possess broad legislative powers for “peace, order and good government”, including the power to take action with respect to greenhouse gas emissions, and in the absence of effective action at the national level, they have an obligation to do so. 26 | BRIEF OCTOBER 2019

The Australian Parliament formerly enacted national carbon pricing legislation, which was effective in reducing emissions during the period it was in operation7 although it remained politically contentious and was abolished in 2014.8 Currently, federal policy consists of the Climate Solutions Fund (formerly the Emissions Reduction Fund), which provides for government funding of voluntary emissions reduction projects by industry and the community, and the Safeguard Mechanism, which requires industrial facilities that meet certain criteria to keep emissions below specified baselines.9 Australia’s current national emissions reduction target under the Paris Agreement is to reduce emissions by 26-28% below 2005 levels by 2030.10 In 2015 the Climate Change Authority recommended a target of 30% reduction below 2000 levels by 2025, and a reduction of 40-60% below 2005 levels by 2030.11 Both of these targets were rejected in favour of the current, less ambitious target, yet were based on a 66% chance of avoiding 20C warming – a bare minimum for avoiding dangerous disruption to the climate system.12 Despite this, Australia’s emissions trajectory is, by a wide margin, inadequate to reach its current target,13 let alone the targets consistent with accepted climate science. Possible Future Initiatives As such, Australia’s political leaders must set significantly more ambitious emissions reduction targets, acknowledge that we are currently not on track to avoid dangerous global warming, and implement policies that effectively reduce emissions. A carbon price similar to the one enacted in 2011 would be an economically and environmentally effective way to start reducing emissions.14 The urgency of increasing global temperatures also necessitates further possible measures such as a net zero emissions target, an ambitious renewable energy target, measures to encourage the use of electric vehicles, and stronger measures to offset emissions like carbon farming and revegetation, possibly employed by industries that cannot reduce emissions.

Lawmaking Processes and the influence of the Resources Industry Businesses, particularly the resources industry, have a disproportionately large influence on policy-making in Australia, and especially in WA. This influence is clear through examples including partial exemption clauses for emissionsintensive trade-exposed industries in Australia’s Renewable Energy Target scheme,15 among others. In the context of climate change, while there are notable exceptions (for example the recent commitment by BHP to reduce its emissions in partnership with customers and stakeholders), the influence of the resources industry has predominantly been used to prevent or delay effective emissions reduction policies in Australia. In WA, the Environmental Protection Authority’s proposed policy requiring new projects producing more than 100,000 tonnes of carbon a year to offset their emissions was attacked in the media by the fossil fuels industry,16 prompting the policy’s withdrawal pending further consultation. More recently, the coal mining company Adani has sought to obtain the names of individual CSIRO scientists reviewing their coalmine groundwater checks to ensure they were not “anti-coal activists.”17 Additionally, fossil fuels companies donated over $1,000,000 to the ALP and Coalition parties over 2017 and 2018,18 and environment and energy ministers from both major parties maintain close relationships with the resources industry.

Climate Change and Human Rights As a community legal centre, EDOWA upholds human rights and supports Australia’s participation in international human rights conventions. Australia is a signatory to the major human rights treaties, including the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights among others. Under the auspices of these treaties, Australia has established the Australian Human Rights Commission (AHRC)19 and further legislation for which the AHRC is responsible for enforcing.

Climate change is fast becoming recognised as a significant threat to human rights on many fronts. The AHRC has noted that the impacts of climate change threaten the rights to life, adequate food, water, health and of indigenous peoples ensured by Australia’s treaty obligations.20 The United Nations Environment Programme has confirmed this, recognising that climate change impacts include both sudden events that will threaten human lives and safety, and more gradual environmental degradation that will undermine access to water, food, and other resources.21 Climate change also has a clear impact on the rights of indigenous peoples, evidenced by the recent complaint to the United Nations Human Rights Commission (UNHRC) lodged by a group of Torres Strait Islanders against the Australian government. The complaint alleges that the government’s failure to take action on climate change has resulted in rising sea levels and erosion of their traditional lands.22 This will be the first climate change litigation brought against the government based on a human rights complaint. Both the UNHRC and the AHRC have limited ability to keep the Australian government accountable to human rights

infringements brought about by climate change. However, the action of the Torres Strait Islanders is a positive step towards holding both governments and private entities responsible for failures to act to alleviate, or acting to worsen, climate change.

About EDOWA EDOWA is a not-for-profit and nongovernment organisation that specialises in public interest environmental law. EDOWA provides free or low cost legal advice and representation on environmental law matters in the public interest, promotes environmental law reform, and undertakes community legal education. EDOWA is funded by donations, grants and project-based client funding agreements. Principal Solicitor Tim Macknay can be contacted at EDOWA@edowa.org.au. Endnotes 1 2 3 4 5

6 7

Intergovernmental Panel on Climate Change, Special Report: Global Warming of 1.50C (Report, 2018), p. 51. Climate Council of Australia, The Good, The Bad and the Ugly: Limiting Temperature Rise to 1.50C (Report, 2018), p. 11. Ibid. Ibid, p. 10. Sarah Chapman et al, ‘The impact of climate change and urban growth on urban climate and heat stress in a subtropical city’ (2019) 39(6) International Journal of Climatology 3013. Adopted 1992, UN INFORMAL 84 (entered into force March 1994). Clean Energy Act 2011 (Cth).

8 9 10 11 12 13 14

15 16

19 20

21 22

Clean Energy Legislation (Carbon Tax Repeal) Act 2014 (Cth). Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth). Department of the Environment and Energy, Australia’s 2030 Emissions Reduction Target (Report, 2015), p. 1. Climate Change Authority, Final Report on Australia’s Future Emissions Reduction Target (Report, 2 July 2015), p.1. Climate Council of Australia, Climate Cuts, Cover-Ups and Censorship (Report, 7 April 2019), p.12. United Nations Environment Programme, Emissions Gap Report 2018 (Report, 27 November 2018), p. 8. Organisation for Economic Co-operation and Development (OECD), Effective Carbon Rates 2018: Pricing Carbon Emissions Through Taxes and Emissions Trading (Report, 18 September 2018), p.7. Renewable Energy (Electricity) Amendment (Exemptions and Other Measures) Regulations 2017 (Cth). Cole Latimer, Hamish Hastie and Emma Young, ‘WA’s big polluters targeted by tough new emissions guidelines’, Sydney Morning Herald (7 March 2019) < https://www.smh.com.au/business/the-economy/ wa-s-big-polluters-targeted-by-tough-new-emissionsguidelines-20190307-p512gh.html>. Josh Robertson, ‘Adani demands names of CSIRO scientists reviewing groundwater plans’, ABC News (16 July 2019) <https://www.abc.net.au/news/2019-07-16/ adani-requests-names-of-csiro-scientists/11308616>. Henry Below, Ariel Bogle and Jackson Gothe-Snape, ‘Australia’s largest donors revealed: Discover the millions funding politicians’, ABC News (1 Feb 2019) <https:// www.abc.net.au/news/2019-02-01/donations-australiafederal- politics-foreign/10768226>. Australian Human Rights Commission Act 1986 (Cth). Australian Human Rights Commission, ‘Climate Change and Human Rights’, Australian Human Rights Commission (1 December 2007) <https://www. humanrights.gov.au/our-work/rights-and-freedoms/ projects/climate-change-and-human-rights>. United Nations Environment Programme, Climate Change and Human Rights (Report, December 2015), p. viii. Katharine Murphy, ‘Torres Strait Islanders take climate change complaint to the United Nations’, The Guardian (13 May 2019) <https://www.theguardian.com/ australia-news/2019/may/13/torres-strait-islanderstake-climate-change-complaint-to-the-united-nations>.

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Contractors, Owners and Banks: Relationships Built on Trust and Security? By Daniel Morris Special Counsel, HHG Legal Group

When head contractors become insolvent, subcontractors may not be paid. When a construction contractor becomes insolvent, its subcontractors are at risk of not being paid for their work. This is because, absent special statutory protections (proposals for which are the concern of this paper), the legal status of a subcontractor, vis a vis the party that has engaged it to carry out the subcontracted works, is that of unsecured creditor. This means that, when proving its debts in insolvency, the subcontractor will rank, in order of priority, behind the insolvent 28 | BRIEF OCTOBER 2019

contractorâ&#x20AC;&#x2122;s employees, whose payment rights are protected under section 556 of the Corporations Act 2001; and behind the insolvent contractorâ&#x20AC;&#x2122;s secured creditors: in particular, its lenders. The principal of an insolvent contractor might complain of being in the same predicament. However, principals typically have recourse to commercially valuable statutory1, contractual2 and equitable3 set-off rights that subcontractors do not have. Recent case law has even cast doubt on the right of those subcontracted to insolvent parties to invoke security of payment legislation.4 Generally, two paths have been

proposed towards better protection of subcontractor payments in the event of upstream insolvency. These involve: (a) the declaration, by statute or contract, of two varieties of trust over monies paid, or to be paid, by principals to contractors, on account of construction work carried out by subcontractors; and (b) the grant to subcontractors, either by statutory deeming provisions or by contract, of security interests under the Personal Property Securities Act 2009 (PPSA) which are then proposed to be given a degree of priority over competing

security interests. These proposed solutions to the problem of subcontractor payment in insolvency will be critically evaluated in the light of applicable principles of equity, trusts, securities and insolvency law. The objective will be to try and improve upon existing proposals for construction law reform, so as to better protect payment rights at every point in the contracting chain.

Two proposed solutions: statutory, declared trusts and project bank accounts Most recently, the WA Government5 and Queensland’s legislature6 have adopted project bank accounts (PBA) to quarantine payments for certain government works,7 to the benefit of the contractors and subcontractors that carry out those works. That protection is intended to pervade the entire contracting chain. Objections to the PBA model centre on: (a) its perceived complexity and the degree of red-tape involved in administering it;8 and (b) resulting restrictions on the flow of cash across a project portfolio. This would arguably tend to inflate construction costs overall and ironically, expose contractors to the very risk of insolvency that PBAs were designed at least to ameliorate if not to cure.9 To simplify the administrative complexity of PBAs, the parliamentary reports of Murray10 and Fiocco11 propose instead that: (a) each tier of contractor (except the most subordinate) be required to establish two trust accounts for subcontractor payments across all projects, rather than two12 or three13 separate accounts being opened for each individual construction project; (b) upon a contractor’s insolvency, the amount standing to the credit of those accounts be deemed by statute to be held on trust for the insolvent contractor and all its subcontractors as beneficiaries in common; and (c) where several tiers of subcontractor sit below the head contractor, such trusts be structured in cascading layers, such that each but the most subordinate subcontractor will be both the beneficiary of trust money held by its principal and the trustee, for itself and its own subcontractors,

of the trust money it holds or is entitled to be paid. The main advantage of this model over PBAs is posited to be that the funds in the contractor’s trust account may be applied in payment of the contractor and subcontractors across the contractor’s portfolio of projects in a way that would not be allowed by the quarantining of funds in PBAs.

How effective are trust protections for construction contractors? There are lingering doubts as to the precise legal propositions governing: (a) how a trust relationship will affect the distribution of a limited pool of assets in the event of a head contractor’s insolvency; and (b) how to preponderate that distribution in favour of those whose protection is sought through the use of trusts: that is, each level of contractor and subcontractor that supplies labour and materials in the course of a construction project. The cause for doubt is not immediately manifest in a construction context because the issues arising in common trust situations tend not to be construction-specific14.

Without effective trust protections, securities and insolvency law may impair the rights of construction contractors Critical analysis of the case law reveals a particular complicating factor in the application of trust law to modern scenarios involving the management of contractor and subcontractor payments. That factor is the intervention of securities law. Since 2012, the PPSA has become the primary locus of complexity. The PPSA governs the securitisation of debts and some interests in property other than land. The utilisation of those securities and interests for the intended benefit of contractors and subcontractors is one objective of PBAs. Even a regime for contractor payment protection that makes no provision for PPSA will be nonetheless affected by PPSA. In essence, the reason for this is that the institutions that finance the delivery of construction works typically secure their entitlement to loan repayments by means of effective registrations on the Personal Property Securities Register (PPSR). This observation has profound implications for contractors and

subcontractors throughout the contracting chain, particularly when a construction contractor becomes insolvent. Those implications are the result of a complex interplay between the provisions of the PPSA, trust law principles and certain statutory rights arising out of the Corporations Act 2001 (Corporations Act). Those statutes, together with the law of trusts, create rights with respect to the cash generated by and earned in the course of construction works that are competing and stratified. These various heterogeneous rights vest or inure in different ways and in differing degrees, in and to the various parties that compete for a stake in the limited pool of assets available for distribution upon a contractor’s insolvency. The relationships between the various interested parties in a typical construction insolvency give rise to proprietary equitable interests and lesser “equities” in the assets that comprise, or arise out of the obligation to pay, the money that a contractor and its subcontractors will have earned by their labour, prior to the insolvency. Determining who gets what in a case of construction insolvency requires those rights and interests to be organised according to some rational order of priorities.

In search of subcontractors’ place in the insolvency queue - Part 1: the Forge cases To uncover this order of priorities, two lines of authority must be reconciled: a task for which no Australian case has yet provided the appropriate vehicle. First, consider the authorities beginning with the first-instance decision of Tottle J in Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liquidation) (receivers and managers appointed)15 and (so far), ending with the judgment delivered on appeal from that decision16. These decisions (collectively, Forge), consider the interplay between certain statutory rights enlivened by a head contractor’s insolvency under both the Corporations Act 2001 and PPSA. The story of Forge begins with administrators’ appointment to the Forge Group in the course of its execution of works under two contracts (Relevant Contracts) with Hamersley. Upon the administrators’ appointment, the Relevant Contracts automatically terminated under ipso facto clauses.17 This triggered claims against the limited funds available for distribution, which, under the Relevant Contracts, were 29

either held by Forge or payable to Forge by Hammersley. There were, no doubt, subcontractors that also wanted to be paid for their work. However, they evidently did not join the contest for the limited funds available for distribution upon Forge’s insolvency. That is the very situation that commentators like Murray18 (and more recently in Western Australia, Fiocco19) have been commissioned by Australian governments20 to find a way to solve. The search for that solution will involve examination of how, in the recent past, the Courts have apportioned the benefit of insolvent companies’ assets, as between parties that do not include subcontractors but do include the banks and principals of insolvent contractors. Understanding how lenders and principals seek to maximise their share of insolvent contactors’ assets is a useful starting point in the search for better ways to make such approaches applicable to subcontractors. It is with this objective that a critical analysis of Forge will proceed. Those competing for a portion of Forge’s assets in insolvency were: (a) ANZ Bank, having lent money to finance the construction project under the Relevant Contracts; and (b) Hamersley, the principal, which appeared as the plaintiff at first instance and as appellant in the appeal. Hammersley relevantly asserted a concurrent statutory21 and contractual22 right to set off its own delay claims against Forge’s progress payment claim which had been made and certified but not paid. ANZ’s interests ANZ had: •

•

an All Present and After-Acquired Personal Property Security Interest (All PAAP) that attached to the assets of Forge under the PPSA; and the benefit of Forge’s fiduciary duty to creditors (including ANZ) under the insolvency provisions of the Corporations Act.

ANZ’s All PAAP was the only security interest registered against Forge’s insolvent estate. Both Tottle J and the Court of Appeal characterised that All PAAP as a proprietary interest. According to Tottle J, this caused the collateral to which ANZ’s security interest attached to become vested in ANZ. Tottle J held that this brought ANZ’s collateral outside the pool of assets available to the liquidators 30 | BRIEF OCTOBER 2019

for distribution amongst the general corpus of creditors. That collateral was the account receivable, brought into existence by the principal’s certification, prior to Forge’s insolvency, of Forge’s unpaid progress claim. That account receivable was the principal asset that Forge pursued in competition with ANZ, both at first instance and on appeal. Trust law principles influence the reasoning in Forge Although leading to opposite conclusions, the decisions at firstinstance and on appeal appear to have been predicated on trust law principles even though no trust relationship was said to have arisen in either party’s submissions. The basis for trust law’s intervention was the idea of a perfected security interest resulting in the separation of the legal and beneficial interests with respect to the account receivable (as collateral). Tottle J at first instance held that in a proprietary sense, the beneficial interest in the account receivable had vested upon attachment of ANZ’s security interest in that account under PPSA s,19. The liquidator that legally held the account was therefore obliged to transfer it to ANZ: practically speaking, to pay the amount of Forge’s certified progress claim to ANZ.

Appeal, that at the time of the relevant progress claim that brought the relevant account into existence, the benefit of the account remained with Forge.24 For the purposes of the Corporations Act, s.553C, then, Hamersley’s liquidated damages claim against Forge and Forge’s progress claim against Hammersley were mutually, beneficially held. That mutuality enlivened the operation of s.553C of the Corporations Act which required the progress payment claim and the liquidated damages claim to be set off against each other, such that only the balance would become payable to the party with the bigger claim. The Court also found that even though ANZ ultimately had the benefit of the account receivable, the set-off provisions of the Relevant Contracts were preserved by PPSA, s.80(1): “80 Rights on transfer of account or chattel paper—rights of transferee and account debtor Rights of transferee subject to contractual terms and defences (1)

(a) the terms of the contract between the account debtor and the transferor, and any equity, defence, remedy or claim arising in relation to the contract (including a defence by way of a right of setoff)...”.

This vesting in ANZ of the beneficial interest in the account was held at first instance to have destroyed the mutuality between: (a) Hamersley’s legally and beneficially held23 right to recover liquidated damages from Forge; and (b Forge’s progress payment claim, which had brought the account receivable into existence, and given Forge (and so, its liquidators) a legal but not beneficial interest in that account receivable. The corollary, said Tottle J, was that ANZ’s proprietary interest in the account, as collateral for PPSA purposes, stood unimpaired by Hammersley’s set-off rights which, arising out of the Corporations Act, s.553C, would have required a mutuality of rights that no longer existed. So, ANZ’s right to be paid was not to be set off against anything.

For the purposes of this s.80: (a) the “transferor” (of the relevant beneficial interest) is the insolvent contractor; and (b) the “transferee” is ANZ, such that, in the words of section 80(1)(a): The rights of ANZ, as the transferee of the benefit of the account receivable, transferred from the insolvent contractor, were subject to a defence in relation to the Relevant Contracts, by way of a right of set-off. 25 Forge summary •

Registration of a PPS interest does not destroy the mutuality of claims between principal and contractor that would otherwise be required to be set off against each other, either by the Corporations Act, s.553C or by a contractual set-off provision.

•

Even if the Corporations Act, s.553C is not enlivened at the point of a contractor’s insolvency, contractual set-off rights are undisturbed.

The corollary of ANZ’s acquisition of the beneficial interest according to the Court of Appeal Contrary to Tottle J., the Court of Appeal held that it was not until ANZ sought to enforce its All PAAP that it acquired a beneficial, proprietary interest in the account. It followed, said the Court of

The rights of a transferee of an account or chattel paper (including a secured party or a receiver) are subject to:

These propositions may be applied in seeking to protect subcontractors’ payment rights. First, though, there is benefit in considering another line of authority as to the interplay between trust and insolvency law, culminating in Jones (liquidator) v Matrix Partners Pty Ltd, in the matter of Killarnee Civil and Concrete Contractors Pty Ltd (in liquidation).26

In search of subcontractors’ place in the insolvency queue - Part 2: equities of indemnification and subrogation Introduction: implications of separating legal and beneficial interests The relevant line of Australian authorities commences with the seminal case of Octavo Investments Pty Ltd v Knight.27 In that case and those that followed it, the question for the Courts’ determination was: how does a trust creditor get access to assets held under trust by an insolvent trustee, when the insolvent party, being the trustee, only had the legal title to, but not the benefit of, those assets? The difficulty arising from this separation

of legal and beneficial interests, of the essence of a trust relationship, is that in the event of insolvency, the creditor’s recourse is not against the party with legal title but rather, against those with the beneficial interest. At law, the beneficiaries do not owe the debt and therefore, upon the actual debtor’s (that is, the trustee’s) insolvency, those who benefit are not those who are liable. Resulting injustice to creditors This separation of benefit and liability, borne of the separation of legal and beneficial interests, creates an injustice to creditors. What is unjust is that, were it not for the funding that creditors, at their own expense and risk, provide to a trustee, the beneficiaries might not have the assets that they enjoy upon the trustee’s insolvency. Equity’s solution: indemnification and subrogation To overcome this injustice, certain equities arise, which nominally benefit the trustee but upon the trustee’s insolvency, are subrogated to its creditors. The first of these is the trustee’s equity of indemnification: in fact, an amalgam of the component

equities of recoupment and exoneration. These equities give the benefit of at least a portion of the trust assets back to the insolvent trustee, in ways explored below. The second relevant equity is the right of subrogation that accrues to a trustee’s creditors upon that trustee’s insolvency. The solution, part 1: indemnification The trustee’s equity of indemnification seeks to ensure that beneficiaries bear risks and carry liabilities in proportion to the benefits they derive from the trustee’s exertions. Equity shifts those risks and liabilities (at least to the extent of the beneficiary’s interest), from the trustee to the beneficiary, by giving the trustee a right of indemnification. This is a right: (a) to recoup from the assets held under trust, an expense that the trustee has actually paid, out of its own pocket, in the course of administering the trust; and (c) further, to be exonerated from a liability which the trustee has assumed in the course of administering the trust, by the application of trust funds, instead of the trustee’s own personal funds, in

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the discharge of that assumed (but unpaid) liability. A schism emerges These basic principles of equity were never doubted. Nonetheless, the authorities that sought to apply these principles in increasingly more complex situations began to diverge in answering these two questions: (a) How do certain provisions of the Corporations Act that govern the entitlements of unsecured, priority creditors interact with the trustee’s equitable right of indemnification? (b) What is the extent of a creditor’s subrogation to the trustee’s right of indemnification? The first matter of controversy does not bear upon the present analysis. The second controversy was authoritatively resolved by a specially convened Federal Court of three Judges who heard and determined the matter before them at first instance, rather than on appeal. That was the case of Jones (liquidator) v Matrix Partners Pty Ltd, in the matter of Killarnee Civil and Concrete Contractors Pty Ltd (in liquidation).28 The controversy it resolved concerned equity’s solution to another kind of injustice, being beneficiaries’ profiting at the expense of trust creditors when the trustee liable to repay those creditors becomes insolvent. Equity seeks to cure this injustice by subrogating an insolvent trustee’s right of indemnification, to its creditor’s. The solution, part 2: subrogation The question for the Federal Court in Jones was whether, upon a trustee’s insolvency, that trustee’s right of indemnification is subrogated: (a) only to the creditors of the insolvent trustee qua trustee; or (b) to the trustee’s general corpus of creditors, irrespective of whether the trustee incurred a liability to any such creditor in its own right on in right of its beneficiaries. The Federal Court held: (a) The trustee’s right to recoup, from the trust fund, monies expended in the course of administering that fund as trustee is subrogated to the general corpus of creditors. (b) The trustee’s right to exonerate itself from exposure to liabilities, incurred in the administration of the trust but not yet discharged, is subrogated to trust creditors only. The administrators and liquidators of insolvent contractors will have a fiduciary 32 | BRIEF OCTOBER 2019

duty to exercise these subrogated rights in the interests of creditors.

Applying case law to hypothetical scenario to test efficacy of trust protections These judicial expositions may help test the efficacy of proposals for the protection of payment rights in the construction industry. There are, in essence (with minor variations that do not impact on the present inquiry), two such competing proposals: (a) the declaration, under statute, of trusts over the assets of an insolvent construction contractor at the point of its insolvency, to the common benefit of that contractor and its subcontractors; and (b) the use of PBAs in conjunction with the compulsory grant of a PPS interest by the head contractor to its subcontractors and concomitant subordination of all competing PPS interests held by third parties.29 The use of trusts generally, be they statutory, deemed trusts or PBAs, to protect subcontract payment rights may be of more limited utility than they superficially appear, as the following hypothetical case study demonstrates. Hypothetical case study Put the following case: (a) Principal, P engages contractor, C to construct a jetty. (b) The construction contract provides for set-off of P’s liquidated damages claims against the contractor’s progress claims. (c) To finance the project, C borrows from a bank, B. (d) To secure its entitlement to be repaid its loan monies, B registers an All PAAP attaching to all C’s assets from time to time. (e) Whether by statute or government policy, C is constituted a trustee for itself and all its subcontractors in common, with respect to all progress payments and the final payment due to C under the construction contract. (f) C completes the most expensive, subsea portion of the works, including the erection of pylons, before it becomes insolvent. (g) C’s works are delayed and P asserts a liquidated damages entitlement, exceeding the value of C’s most recent, certified but unpaid, progress

claim, made prior to C’s insolvency. (h) P invokes its right of set-off, which prior to C’s insolvency, had accrued but not been exercised. (i) Following Forge, PPSA, s.80 preserves that set-off right even though B’s security interest in the account receivable constituted by the certified progress payment claim is a proprietary interest. (j) However, by separating the legal interest in that fund (C’s alone, as trustee) from the beneficial interest (belonging to C and its subcontractors in common, as beneficiaries), the PBA/statutory trust would destroy mutuality between C’s and P’s obligations to each other. This would arguably render both statutory and contractual set-offs unenforceable. (k) Does that mean that the net balance is then available for distribution, in accordance with the terms of the trust instrument? Yes, but subject to the operation of the PPSA. In this scenario, the only registered PPS interest is B’s. (l) B’s PPS interest, being a registered All PAAP, attaches relevantly to the account receivable and is constituted a form of property following Forge. Thus, B becomes a secured creditor of the contractor as trustee of the trust fund constituted by the statutory/PBA trust. As such, and given B’s perfection of its All PAAP by registration, B immediately becomes entitled to enforce that security interest by virtue of PPSA, ss. 19 and 20. (m) This further diminishes the trust fund, to the detriment of all contractor-creditors in common. (n) Turn now to the equity of indemnification. This vests in the trustee (the insolvent head contractor) and is subrogated to the benefit of that contractor’s trust creditors (the subcontractors, other suppliers, B, etc.). Notably, the subcontractors are not only the creditors of the head contractor as trustee: they are also beneficiaries of the trust that the head contractor administers. However, since this is the very trust that has been diminished by both P’s set-off and B’s All PAAP, the trust may be expected to avail the subcontractors little. The subcontractors present in no better position as creditors

of the trust than they do as its beneficiaries. This is because, whilst they may be creditors, they are still unsecured creditors. As such, they might at best expect a slight elevation in their rank as against the general corpus of creditors (as opposed to creditors of the trust), by virtue of their right of subrogation. Remember, though, in virtually all such cases, the entire fund available for distribution in the head contractor’s insolvency will consist in the trust fund. It remains the case, then, that the subcontractors, having no perfected security interest in the fund of the trust, may be found in much the same position as they would be without any trust protections: that is, as creditors ranking in priority behind B and all other secured creditors of the insolvent head contractor.

Subcontractor’s PPS interest becomes nugatory if not perfected by registration WA’s and Queensland’s PPS protections will not improve a subcontractor’s position if their PPS interests are not registered on the PPSR. Registration is essential because of PPSA, s.267. Where, before the head contractor’s insolvency, a subcontractor has not perfected, by registration on the PPS Register, its security interest in an unpaid, but certified, progress claim, PPSA, s.267 vests that unperfected security interest in the insolvent head contractor. As a result, that security interest becomes unenforceable by the subcontractor. From the subcontractor’s perspective, it is as if the security interest had never existed.

Using PPSA, s.268 to rescue a subcontractor’s unperfected security interest In attempting to solve this vesting problem, consider subsection 268(1) (b), read with subsection 268(2), of the PPSA. For the purposes of PPSA, s.268: (a) the insolvent head contractor is the obligor;

Using PPSA, s.73 to improve the rescued security interest of subcontractors

(b) the subcontractor, entitled under contract to be paid for works done prior to the head contractor’s insolvency, is the senior creditor; and (c) the bank is the junior creditor. A modified PBA or statutory trust regime might seek to give subcontractors the benefit of PPSA, s.268 by deeming a head contractor’s lender to have agreed to the following terms of lending: (a) to satisfy subparagraph 268(2)(c) (i) – the head contractor’s debt to the bank is subordinated to the head contractor’s debt to the subcontractor;

(c) to satisfy subparagraph 268(2)(c)(iii) – where the bank receives any such payment from a head contractor without knowing of that contractor’s indebtedness to a subcontractor, it is to hold that payment on trust for the entitled subcontractor, up to the amount of the entitlement; and

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The security interest that might thereby be granted to subcontractors without vesting under PPSA, s.267, could be further improved by legislation of the same effect as s.59 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld). In enacting that provision, the Queensland legislature has exercised the power conferred upon it by PPSA, s.73: (a) to declare the PBA established elsewhere in that Act, to be a statutory security interest for PPSA purposes; and

(b) to satisfy subparagraph 268(2)(c) (ii) – whenever the bank discovers a payment to it by the head contractor was in preference to, or instead of, a payment owed to a subcontractor, the bank will pay it over to that subcontractor, up to the amount that is owed by the head contractor;

(d) to satisfy subparagraph 268(2)(c)

(iv) – where, by these terms, the bank holds any part of the head contractor’s payment on trust for any subcontractor, it grants to that subcontractor, a security interest over the fund of that trust, securing payment of the head contractor’s debt to the subcontractor.

(b) to give that declared security interest priority over all other security interests in relation to all money held in trust under that PBA. It is posited that the trust thereby made the subject of a statutory security interest in favour of subcontractors need not be in the nature of a cumbersome PBA. The trust assets, typically consisting of the subcontractors’ most recently claimed and certified, but yet unpaid, progress payment claims, together with retentions, would, it is argued, be as well protected by a statutory trust deemed to arise upon the head contractor’s insolvency. However, this would only be so, where subcontractors take action to enforce their payment rights relatively quickly

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after any default in payment, as the security interest would lose its practical utility once the protected “account payable”: (a) has been paid by the principal to the head contractor; and (b) is then disbursed to third parties who take for value and without notice of the subcontractor’s interest in the funds thereby paid. This highlights the importance: (a) of educating construction contractors about their payment rights and how to enforce them, including by seeking rapid pay dispute adjudication under security of payment legislation; and (b) of creating a culture where subcontractors do not perceive themselves under such economic duress that they are unable to 34 | BRIEF OCTOBER 2019

exercise the security of payment rights they know they have.30

Conclusion In considering the utility of trusts imposed for the protection of construction contractors’ payment rights, the starting proposition is that, such is the contractual relationship between subcontractor and upstream contractor, that the subcontractor will typically be both: (a) the upstream contractor’s creditor on account of its contractual entitlement to progress payments; and (b) the beneficiary of the cash and accounts payable that the upstream contractor will, under either of the proposed trust regimes, be required to hold on trust.

In its capacity as both creditor and trust beneficiary, a subcontractor’s payment rights will be affected, upon an upstream contractor’s insolvency, by equitable doctrines of indemnification and subrogation. Where the trustee contractor becomes insolvent, its indemnification out of the fund of the trust may be expected to be to the detriment of the subcontractors, as beneficiaries of that trust. This is so, notwithstanding that the subcontractors will count amongst the creditors to whom the trustee’s equity of indemnification will be subrogated. That is because, without legislative assistance, a typical subcontractor might not be expected to have secured its right to payment by registering a security interest on the PPSR against the insolvent contractor’s assets (in particular, its cash and accounts). Assuming competing creditors of the

insolvent contractor, such as lenders and suppliers of goods, have perfected their securities, their claims against the assets of the insolvent contractor will have priority over the competing claims of unsecured subcontractors. Ironically, the assets against which such priority claims may be enforced will include the trust assets out of which the contractor, as trustee, will have been indemnified in equity. To elevate subcontractors’ rank as creditors of insolvent, upstream contractors, legislative intervention is proposed. First, dispense with the need to perfect security interests by registration by means of legislation that satisfies the requirements of PPSA, s.268. Such legislation might provide for the implication into construction and loan contracts, or otherwise deem to exist, an agreement in the terms set out in PPSA, s.268, between the

upstream contractor’s lender (as junior creditor), subcontractor (as senior creditor) and contractor (as obligor). It is submitted that this would rescue the subcontractor’s security interest, which by operation of PPSA, ss.19 and 20, will have attached to the cash and accounts of the upstream contractor to secure its payment obligations to the subcontractor. It would rescue that security interest by substituting for that vested in the contractor upon its insolvency, under PPSA, s.267. Then, to give the subcontractor’s security interest, thereby rescued, priority over competing security interests, PPSA, s.73 may be invoked, as it is under Queensland’s Building Industry Fairness (Security of Payment) Act 2017, s.59.

Endnotes

Whilst on this analysis, upon an upstream contractor’s insolvency, legislated or government-mandated trusts, be they deemed by statute or PBAs, will avail subcontractors little against the competing claims of secured creditors, they still have value. Their value, it is argued, lies in their effect of destroying the mutuality that exists, according to the Court of Appeal in Forge,31 between the claims that principals and contractors often make against each other when contractors become insolvent. By destroying that mutuality, the proposed forms of trust may be expected to deprive principals of statutory, contractual and/or equitable rights of set-off (the latter two being preserved by PPSA, s.80), otherwise exercisable to the detriment of subcontractors, for whom the funds available to satisfy payment claims would be diminished by that setoff exercise.

Either form of trust will arguably achieve this by effectively shifting the beneficial interest in the contractor’s payment claims against the principal, from that contractor alone, to that contractor as trust beneficiary in common with all its subcontractors (and each of their subcontractors in turn, through cascading trusts). If both statutory, deemed trusts and PBAs would achieve this, the former kind is to be preferred as ameliorating restrictions on cash flow and involving less red tape. For such deemed trusts to have their intended effect, cultural change is needed within the construction industry as is improved contractor education, so as to improve response times to payment default and thereby reduce the likelihood that, by the time such trust are declared, there is no money left to protect.

Pursuant to s.553C, Corporations Act 2001.

That right has been foreclosed in Victoria: Façade Treatment Engineering Pty Ltd (in liq) v Brookfield Multiplex Constructions Pty Ltd [2016] VSCA 247; rendered uncertain and difficult in WA: Hamersley Iron Pty Ltd v James [2015] WASC 10, vindicated in NSW at present: Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (In liquidation) [2019] NSWCA 11. However, amendments to the Building and Construction Industry Security of Payment Act 1999 (NSW) are proposed, which would prohibit parties in liquidation from taking the benefit of the Act.

James v Commonwealth Bank of Australia (1992) 37 FCR 445 at 458-9; Hanak v Green [1958] 2 QB 9at 25-6, 29; Galambos & Son Pty Ltd v MacIntyre (1974) 5 ACTR 10.

As regards the “east coast” regime, see Façade Treatment Engineering Ltd v Brookfield Multiplex Constructions Pty Ltd; and the “west coast” regime, see Hammersley Iron Pty Ltd v James [2015] WASC 10.

Building Management and Works Division of the WA Department of Finance.

Building Industry Fairness (Security of Payment) Act 2017, Chapter 2.

In WA, worth over $1.5 million; in Queensland, worth between $1 million and $10 million. Software packages such as projectpay.com seek to ameliorate this issue. There is no data available to test the efficacy of such an online solution.

See, for example, J Murray AM, Review of Security of Payment Laws: Building Trust and Harmony, December 2017, Commonwealth Department of Jobs and Small Business, at 300.

J Murray AM, ibid.

J Fiocco, October 2018, op. cit.

As in Western Australia.

As in Queensland.

For example, in Jones (liquidator) v Matrix Partners Pty Ltd, in the matter of Killarnee Civil and Concrete Contractors Pty Ltd (in liquidation) [2018] FCAFC 40.

[2017] WASC 152.

Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liquidation) (receivers and managers appointed) [2018] WASCA 163.

A party’s ipso facto right to terminate a contract upon the other party’s insolvency will now be stayed by virtue of Corporations Act, ss. 415D, 434J, 451E, incorporated into that Act pursuant to Schedule 1, Part 2 of the Treasury Laws Amendment (2017 Enterprise Incentives No 2) Act 2017.

Op. cit.

Murray, by the Commonwealth Government; Fiocco, by the Government of Western Australia.

Under section 553C of the Corporations Act 2001.

Under the Relevant Contracts.

Having arisen out of the Relevant Contracts.

This is arguably a result of the erroneous application of outdated concepts of fixed and floating charges and their crystallisation, which have been superseded by PPSA provisions, in which case, Tottle J’s approach may be preferable, for reasons that lie beyond the scope of this paper.

In principle, also equitable set-off. The authorities on equitable set-off in construction are not settled, but tend to support a principal/owner’s right in equity, to set off defect and delay claims against the contractor’s final (but not progress) claim. See: James v Commonwealth Bank of Australia (1992) 37 FCR 445 at 458-9; Hanak v Green [1958] 2 QB 9at 25-6, 29; Galambos & Son Pty Ltd v MacIntyre (1974) 5 ACTR 10. As to set-off defences to progress payment claims, compare: LU Simon Builders Pty Ltd v HD Fowles [1992] 2 VR 189; Algons Engineering Pty Ltd v Abigroup (1998) 14 BCL 215; Novawest Contracting Pty Ltd v Taras Nominees Pty Ltd [1998] VSC 205; Main Roads Construction v Samary Enterprises Pty Ltd [2005] VSC 388.

[2018] FCAFC 40.

(1979) 144 CLR 360.

[2018] FCAFC 40.

These are preconditions to being awarded government tenders worth over $1.5 million by WA’s Department of Building Management and Works.

These are beyond the scope of this paper.

Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liquidation) (receivers and managers appointed) [2018] WASCA 163.

FEDERAL COURT JUDGMENTS Dan Star QC Barrister, Owen Dixon Chambers West, Melbourne

Administrative law Procedural fairness – McKenzie friend For a third time, the Federal Court has made orders setting aside orders of the Federal Circuit Court in litigation in bankruptcy proceedings involving Brett John Hayes. In Hayes v Pioneer Credit Acquisition Services Pty Ltd [2019] FCA 1260 (13 August 2019) Rangiah J set aside a sequestration order against the estate of Mr Hayes on the ground of a denial of procedural fairness. At the commencement of the hearing in the Federal Circuit Court, the primary judge refused to allow Mr Hayes to be represented by Mr Welch, who was not a lawyer. His Honour also directed Mr Welch to leave the area where he was sitting behind the bar table near Mr Hayes and move to the public gallery. The primary judge subsequently called security staff into the courtroom and threatened to remove Mr Hayes. However the hearing continued, with Mr Hayes making submissions on his own behalf. In the appeal, the Federal Court considered the concept of a McKenzie friend from McKenzie v McKenzie [1971] P 33: at [25][30]. Rangiah J stated at [30]: “In Australia, the prevailing view is that in criminal cases, the court has a discretion as to whether to allow a litigant a McKenzie friend: for example, Smith v R (1985) 159 CLR 532 at 534; R v EJ Smith [1982] 2 NSWLR 608; R v Dodd (No 2) [1985] 2 Qd R 282 at 283–284; Crown v Burke [1993] 1 Qd R 166 at 167, 173, 178–179. The position is different in civil cases. I understand the Queensland Court of Appeal to have held in Coffey v State of Queensland [2010] QCA 29 at [37]-[38] that

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in a civil case, an unrepresented litigant may have a person attend as a McKenzie friend, subject to the power of the court to disallow such assistance where that becomes necessary”. The Court held at [31] and [40] that Mr Hayes was denied procedural fairness by being denied that assistance of Mr Hayes as a McKenzie friend. However, it was not shown that it was unreasonable for the primary judge to call in security staff, or that it was otherwise an error in doing so (at [39]). The matter was remitted again to the Federal Circuit Court for a new trial.

Consumer and credit law ASIC case – alleged contraventions of s128 of National Consumer Credit Protection Act 2009 (Cth) In Australian Securities and Investments Commission v Westpac Banking Corporation (Liability Trial) [2019] FCA 1244 (13 August 2019) Perram J dismissed ASIC’s case that Westpac breached the National Consumer Credit Protection Act 2009 (Cth) (the Act) in the manner in which it extended hundreds of thousands of Westpac-branded home loans across the period 12 December 2011 to March 2015. The Court considered the provisions in Division 3 of Part 3-2 of Chapter 3 of the Act. Relevantly, the Act requires a credit provider to ask itself only whether “the consumer will be unable to comply with the consumer’s financial obligations under the contract” or, alternatively, whether the consumer “could only comply with substantial hardship”: s131(2)(a) (the s131(2)(a) Questions) (at [3]).

The alleged breaches fell into two categories. The first was an allegation that in approving its home loans Westpac failed to have regard to any of the living expenses declared by consumers on their loan application forms. The Court rejected this case on the facts (at [2], [21]-[35] and [86]). In any event, the Court held that the Act does not operate as ASIC alleged (at [56]-[85] and [87]-[92]). Perram J summarised his conclusion at [3]: “Whilst I accept that the Act requires a credit provider to ask the consumer about their financial situation (s130(1)(b)) and, in turn, to ask itself—and to answer — the s131(2)(a) Questions, I do not accept that this has the further consequence that the credit provider must use the consumer’s declared living expenses in doing so”. The second category of alleged contraventions of the Act were where Westpac calculated proposed repayments with principal amortised over the life of loans in the case of loans having an initial interest only period before payment of principal was required (at [7]-[8]). ASIC’s case on these allegations were also rejected (at [93]-[103]). There is a section in the Court’s judgment about the Household Expenditure Measure (HEM) benchmark, which measures household expenditure across the Australian community (at [26]-[47]). ASIC did not allege that Westpac was entirely prohibited by the Act from using the HEM benchmark, rather its case was that Westpac had not used the consumer’s declared living expenses and had, rather, relied solely on the HEM benchmark (at [10]). While following the judgment there was media comment about this aspect of the case, Perram J stated that the HEM benchmark was of “marginal relevance” to the case

(at [36]). Further, “the capacity of the HEM benchmark to serve as a proxy for substantial hardship is not an issue which is actually live in the litigation” (at [38]).

Consumer law and damages Damages assessment under s236 of the Australian Consumer Law In Flogineering Pty Ltd v Blu Logistics SA Pty Ltd (No 3) [2019] FCA 1258 (9 August 2019) Greenwood J determined an interlocutory dispute concerning the production of documents and particulars following the Court’s judgment on the separate question in which it was held that the respondents had engaged in conduct in contravention of ss18 and 29 of the Australian Consumer Law (ACL). The interlocutory dispute related to the applicant’s claim for damages pursuant to s236 of the ACL. The Court considered the formulation of the text on causation in s236 of the ACL of “a person suffers loss because of [contravening] conduct” as compared with the earlier test of s82(1) of the Competition and Consumer Act 2010 (Cth) of “a person who suffers loss or damage by conduct of another . . .” (at [23]-[28]). Greenwood J held that, notwithstanding the difference in text, the principles in the cases on s82 “properly characterise the approach to s236, having regard to the text, context and purpose of the Competition and Consumer Act 2010 (Cth) and Schedule 2 to that Act” (at [27]).

Native title and adminsitrative law Tension between gender restriction orders and the natural justice hearing rule In Stuart v State of South Australia (Oodnadatta Common Overlap Proceeding) [2019] FCA 1282 (15 August 2019) the Court heard an application for orders to take account of cultural and customary concerns of claimant groups regarding the evidence in proceedings for the determination of two overlapping

claims of native title. One of the claimant groups (the Walka Wani People) sought a range of orders the effect of which would preclude any Aboriginal man who has not been initiated into the relevant Men’s Law which is to be the subject of evidence from hearing that evidence or being informed of it. The other claimant group (the Arabana People) and the State objected to aspects of the orders, namely the limitation with respect to the Aboriginal men who may hear or be informed of the evidence. In the case of the Arabana People, that was because the restriction would preclude any member of the Arabana People from hearing, or being informed of, the male gender restricted evidence and such a restriction would thereby inhibit their ability to give instructions concerning that evidence, to contest that evidence to the extent thought appropriate, and to give evidence themselves concerning those matters (at [17]). The Court considered its powers authorising the exclusion of persons from a hearing (s17 of the Federal Court of Australia Act 1976 (Cth)) and in native title matters to take account of the cultural and customary concerns of Aboriginal peoples and Torres Straight Islanders (s82 of the Native Title Act 1993 (Cth)) (at [25][39]). The Court also considered the entitlement of a party to litigation to hear, or at least be informed about, the evidence presented for the purpose of defeating the party’s claim as an incident of the natural justice hearing rule (at [45]-[48]). Justice White held at [66]: “In summary, I am satisfied that orders in the form proposed by the Walka Wani Applicants would prejudice unduly the Arabana People in the proceedings as they would involve an abrogation of the natural justice hearing rule with respect to matters which appear to be at the heart of the contest between the two claimant groups. As already indicated, that rule is fundamental to the provision of procedural fairness. Taking account of the cultural and customary concerns of the Walka Wani by precluding any member of the Arabana People from hearing, or

being informed about, the restricted gender evidence would, in my judgment, prejudice the Arabana People unduly”.

Practice and procedure Application by litigation representative for approval of settlment In James v WorkPower Inc [2019] FCA 1239 (8 August 2019) the Court made an order approving the settlement by a litigation representative of the applicant’s claims of discrimination contrary to the Disability Discrimination Act 1992 (Cth) and a contravention under the Fair Work (Transitional Provisions and Consequential Amendments) Act 2009 (Cth). After referring to rules 9.70 and 9.71 of the Federal Court Rules which deal with settlement of a proceeding involving a litigation representative and approval by the Court, Mortimer J said at [11]: “. . . in determining whether or not to approve a settlement, for the purpose of rendering it binding on an applicant under a legal incapacity, the Court must be satisfied the settlement is in the applicant’s best interests, or beneficial to the applicant’s interests. That is not a requirement of the Rules themselves but stems from the nature of the jurisdiction exercised by the Court where a party is under a disability and unable to conduct or conclude a proceeding himself or herself”. The Court also noted that a relevant factor in considering the risks attending the full litigation of a proceeding include the emotional and psychological strain of litigation on the person under a disability (at [14]).

Dan Star QC is a Senior Counsel at the Victorian Bar, ph (03) 9225 8757 or email danstar@vicbar. com.au. The full version of these judgments can be found at www. austlii.edu.au. Numbers in square brackets refer to a paragraph number in the judgment.

HIGH COURT JUDGMENTS Andrew Yuile Barrister, Owen Dixon Chambers West, Melbourne

Statutory construction Mutual recognition principle – exceptions Victorian Building Authority v Andriotis [2019] HCA 22 (7 August 2019) concerned whether the appellant had a discretion to refuse to register the respondent and whether Victorian character requirements fell within an exception to the mutual recognition principle. The respondent registered as a waterproofer in New South Wales. In his NSW application he falsely stated his work experience. He later sought registration in Victoria under the Mutual Recognition Act 1992 (Cth) (MRA). That Act allows for a person registered in one state, after notifying a second state registration authority, to be registered in the second state for the equivalent occupation. Section 19 of the MRA allows for a person to lodge a notice seeking registration. Section 20(1) provides that a person who lodges a notice is entitled to be registered as if registration in the first state was a sufficient ground of entitlement to registration. Section 20(2) provides that the local authority “may” grant registration in the second state on that ground. Section 17(2) provides for a limited exception to the mutual recognition principle: a law in the second state will apply if it applies to all persons seeking to carry on the occupation, but only if it is not based “on the attainment or possession of some qualification or experience relating to fitness to carry on the occupation”. The respondent in this case was refused registration on the basis that he did not meet a “good character” requirement applicable in Victoria under s170(1)(c) of the Building Act 1993 (Vic). The Administrative Appeals Tribunal upheld the refusal. On appeal to the Full Federal Court, the appellant argued that s20(3) of the MRA confers a discretion to register; and that the good character requirement came within the exception in s17(2). The Full Federal Court rejected both arguments. The High Court unanimously dismissed

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the appeal. The Court held that s20(2) of the MRA is empowering and does not admit of a broader discretion. And the limit on the exception s17(2) was to be interpreted broadly, so that not only qualifications of an educational or technical kind were caught. The limit on s17(2) encompassed the subject matter of s170(1)(c) of the Building Act, meaning the exception could not apply. Nettle and Gordon JJ jointly; Kiefel CJ, Bell and Keane JJ jointly concurring; Gageler J and Edelman J each separately concurring. Appeal from Full Federal Court dismissed.

Constitutional law Implied freedom of political communication – Australian Public Service Code of Conduct In Comcare v Banerji [2019] HCA 23 (7 August 2019) the High Court held that an exception to the provision of compensation based on reasonable administrative action taken in respect of the respondent’s employment did not impermissibly burden the implied freedom of political communication. The respondent was employed by the then Department of Immigration and Citizenship (the department). Under a Twitter handle “@LaLegale”, the respondent broadcast more than 9000 tweets, many of which were highly critical of the department, other employees, department policies, and government and opposition policies. A complaint was received about the respondent’s actions and an investigation was conducted. A delegate of the Secretary of the department proposed to find that the respondent had breached the Australian Public Service (APS) Code of Conduct and also proposed to terminate the respondent’s employment. The Code, which is set out in s13 of the Public Service Act 1999 (Cth), relevantly provides that an APS employee must at all times behave in a way that upholds the APS values, and the integrity and good reputation of the APS. The APS values, which are set out in s10 of the

Public Service Act, include that the APS is apolitical and delivers services fairly, efficiently, impartially and courteously to the public. After her termination, the respondent lodged a claim for compensation under s14 of the Safety, Rehabilitation and Compensation Act 1988 (Cth). That Act provided that no compensation was payable for an “injury” suffered as a result of reasonable administrative action taken in a reasonable manner in respect of an employee’s employment. A delegate of the appellant rejected the respondent’s claim on the basis that it came within that exception. The Administrative Appeals Tribunal found that the use of the APS Code impermissibly burdened the respondent’s freedom of political communication and set the appellant’s decision aside. The respondent also argued that her anonymous tweets did not fall within the scope of the Public Service Act provisions (the construction argument). On appeal to the Federal Court, the matter was removed into the High Court. The High Court unanimously rejected the respondent’s construction argument. The Court further held that ss10(1), 13(11) and 15(1) of the Public Service Act had a permissible or legitimate purpose; that is, consistent with the constitutionally prescribed system of representative and responsible government. The purpose was the maintenance of an apolitical public service. The Court also held that the provisions of the Public Service Act were reasonably appropriate and adapted or proportionate to their purpose. Accordingly, they did not impose an unjustified burden on the implied freedom. Kiefel CJ, Bell, Keane and Nettle JJ jointly; Gageler J, Gordon J and Edelman J each separately concurring. Appeal from the Administrative Appeals Tribunal (removed from the Federal Court) upheld.

Electoral law Counting of votes – power to publish information about indicative counts

Palmer v Australian Electoral Commission [2019] HCA 24 (Orders 7 May 2019, reasons 14 August 2019) concerned the power of the Australian Electoral Commission (AEC) to publish an indicative two-candidate preferred count (Indicative TCP Count) of votes in an election. The Australian Electoral Act 1918 (Cth) requires the scrutiny of votes in an election for each Division to include an Indicative TCP Count. The Count is a count of preference votes (other than first preferences) “that, in the opinion of the Australian Electoral Officer, will best provide an indication of the candidate most likely to be elected for the Division”. The plaintiffs were candidates at the May 2019 election. They challenged the AEC’s practice of publishing the identity of candidates selected for the Indicative TCP Count and the progressive results of the Count after polls had closed for the relevant Division, but while polls in other places were still open. The plaintiffs argued that the Electoral Act did not authorise the publication of that information before all polls were closed; and that publishing the information before the close of all polls would distort the voting system in a manner that would compromise the representative nature of a future Parliament, contrary to the Constitution. The High Court rejected the factual basis for the challenge. It was not shown that publication of the information suggested the giving of an imprimatur to any particular candidate or outcome. The selection of candidates was not shown to be inaccurate or misleading. There was no factual foundation for the contention that the publication of the information after the polls had closed in some, but not all, places had any effect on the constitutional requirements for elections. Section 7(3) of the Electoral Act, which gives the AEC power to do “all things necessary or convenient to be done for or in connection with the performance of its functions” empowered the AEC to publish the Indicative TCP Count and related information in the way the AEC did. Kiefel CJ, Bell, Keane, Nettle, Gordon and Edelman JJ jointly; Gageler J separately concurring. Application for constitutional writ dismissed.

Costs Judicial discretion to order costs – impecuniosity of unsuccessful party In Northern Territory v Sangare [2019] HCA 25 (14 August 2019) the High

Court held that it was erroneous to decline to order costs only because the unsuccessful party to the litigation might not be able to pay the debt. The respondent brought defamation proceedings in the Northern Territory Local Court arising from a briefing note that the appellant prepared for the Northern Territory Minister for Infrastructure. The briefing note was part of a process for seeking a visa to work in Australia. The respondent alleged that the briefing note contained fabricated material. The matter was transferred to the Supreme Court, which dismissed the proceeding. An appeal was also unsuccessful. The appellant sought its costs of the trial and the appeal. The Court of Appeal acknowledged that the appellant, having been successful, would normally have its costs on the basis of the rule that costs normally follow the event. The Court of Appeal declined to make that order, however, because making such an award would be futile because the respondent was impecunious. The High Court unanimously allowed the appeal. The Court noted that the power to award costs is a wide discretion, but must be exercised judicially. The guiding principle is that a successful party is generally entitled to an order for costs by way of indemnity against the expense of litigation that “should not, in justice, have been visited upon that party”. In this case, there was no conduct of the appellant that would have disentitled it to costs, or that would have weighed against the usual exercise of the discretion. It was also not relevant that the appellant was a public body. Impecuniosity of a wrongdoing is not a reason for declining to pay damages, and in the same way, impecuniosity of an unsuccessful party is not a reason to decline to order the payment of a successful party’s costs. The Courts have consistently rejected futility due to impecuniosity as a reason not to order costs. Kiefel CJ, Bell, Gageler, Keane and Nettle JJ jointly. Appeal from the Supreme Court (NT) allowed.

Legal professional privilege Advice privilege – whether legal professional privilege only an immunity or also an actionable legal right

(LPP) can be deployed as an actionable legal right, as opposed to an immunity only. The plaintiff pleaded that it had received legal advice from Appleby (Bermuda) Limited (Appleby), a law practice in Bermuda. That advice was part of a cache of documents stolen from Appleby’s electronic file management system and provided to the International Consortium of Investigative Journalists. The Court also assumed that the documents had been further disseminated. The advice came into the possession of the defendants. Upon learning of that, the plaintiff requested the return of the advice, asserting that the documents were subject to LPP. The defendants refused and the plaintiff brought proceedings in the High Court’s original jurisdiction, seeking an injunction to restrain the use of the documents and seeking their return. The only basis on which the proceeding was brought was LPP, the plaintiff arguing that LPP is not limited to operation as an immunity. The plaintiff did not rely on breach of confidence and the Court noted some difficulties that might have been encountered in relying on such a breach given that the documents are in the public domain. The defendants demurred, arguing there was no cause of action disclosed entitling the plaintiff to the relief sought. The High Court unanimously upheld the demurrer and dismissed the proceedings. The Court held that LPP is “only an immunity from the exercise of powers which would otherwise compel the disclosure of confidential communications”. It is not a legal right founding a cause of action. There was no justification in policy for the creation of such a right. On the present state of the law, once privileged communications are disclosed, a party must turn to the equitable doctrine of breach of confidence to protect the material. Kiefel CJ, Bell, Gageler, Keane, Nettle, Gordon and Edelman JJ jointly. Proceeding in the original jurisdiction of the Court dismissed.

Andrew Yuile is a Victorian barrister, ph (03) 9225 7222, email ayuile@ vicbar.com.au. The full version of these judgments can be found at www.austlii.edu.au.

Glencore International AG v Commissioner of Taxation [2019] HCA 26 (14 August 2019) concerned whether legal professional privilege

FAMILY LAW CASE NOTES Robert Glade-Wright Former Barrister and Accredited Family Law Specialist

Property – No error in Court’s treatment of non-commutable military pension as a financial resource (income stream)

[2016] FamCAFC 271 … At trial, neither party sought a … splitting order in respect of the wife’s MSBS pension.

In Carron & Laniga [2019] FamCAFC 115 (8 July 2019) the Full Court (Aldridge, Kent & Austin JJ) considered a property case where the wife had been made redundant from the Australian Defence Force and had interests in the Military Superannuation Benefits Scheme. The first was in the growth phase and the second was in the payment phase as a non-commutable pension of $520 per fortnight.

[37] The Act only provides that a superannuation interest must be valued before it is amenable to a splitting order (s 90XT(2)) ( … )

At trial, neither party sought a splitting order. The wife’s expert provided a notional capital valuation of the pension interest of $230,148, but otherwise confirmed that this amount could not be “cashed out” in any way. Judge Egan treated the wife’s growth phase interest as property, but found that the pension interest was a financial resource. The husband appealed, arguing that both interests were “property”. The Full Court said (from [29]): “The wife opposed her MSBS pension being attributed any notional capitalised value because it could not be commuted and the husband did not seek any … splitting order in relation to it, as the trial judge correctly recognised. ( … ) [36] In property settlement proceedings, there is no need to ascertain the capitalised value of a superannuation interest, much less one in the payment phase being paid in the form of a non-commutable pension, unless a … splitting order is sought in relation to the interest (Welch & Abney 40 | BRIEF OCTOBER 2019

[39] Relevantly, the wife’s entitlement to the MSBS pension crystallised in 2000 following her redundancy from employment in the armed services, shortly after the parties’ marriage in 1998. She is entitled to receive the pension for life, during which time it cannot be commuted or alienated. While it will continue to be a modest income stream for her, it will not be enough alone to sustain her and she will always need to supplement it with other income from paid work. Such features of the pension made it readily identifiable as a financial resource rather than an asset. …”

Children – Judge erred by restraining overseas travel without considering relevant matters set out by Full Court in Line & Line In DeLuca & Farnham and Anor [2019] FamCAFC 100 (13 June 2019) Le Poer Trench J had ordered that neither party remove the children from Australia without the written consent of the other or an order and that the children’s names be placed on the watch list. The mother appealed so as to facilitate visits to family in Europe by the children. The Full Court (Strickland, Kent &

Watts JJ) said (from [34]): “ … The primary judge had an obligation to give adequate reasons which allowed the parties to understand why his Honour assessed the risk of flight as being too great … (Bennett … [1990] FamCA 148 … ) [35] In Line & Line [1996] FamCA 145 … the Full Court set out … relevant matters … : 4.49 The … degree of risk that the departing parent … will … choose not to return. In assessing that, … considerations are the existence (or otherwise) of continuing ties … the existence and strength of possible motives not to return (…) 4.50 … [W]hether the country … is … a signatory to the [Hague Child Abduction Convention] … [although] there may be little to prevent him or her … travelling on to a non-convention country. 4.51 [T]he financial circumstances of both parties, … hardship … the departing parent would suffer by the imposition of security at a particular level as compared with the hardship which the non-departing parent would suffer if the security were fixed at a lower level. … [36] The primary judge did not discuss why he assessed the risk of flight of the parties … as too great, and why he put the travel restriction in place until 2027. Most of the considerations referred to in Line were not explored. ( … ) The Full Court re-exercised discretion, making an order for overseas travel.

Child Support – Paternity declaration under s 106A CSAA made four years after refusal of mother’s application for child support assessment In Calafiore & Netia [2019] FamCAFC 132 (2 August 2019) the parties’ child was born after separation. The mother’s application for child support assessment in May 2013 was refused, the father (who was not named on the birth certificate) disputing paternity. Four years later the mother applied for a paternity declaration under s 106A of the Child Support (Assessment) Act. The respondent submitted to a paternity test which confirmed that he was the father. A judge of the FCC declared paternity but declined to order that child support be backdated to the child’s birth, saying that it was “the CSA’s decision as to when the father pays child support from” ([9]). On appeal, Kent J (with whom Tree and Hogan JJ agreed) said (from [23]): “Following the making of an assessment application, if the registrar refuses the application on the grounds that the registrar ‘was not satisfied under section 29 that a person who was to be assessed ... is a parent of the child’, the applicant may apply to the Court under s 106A of the CSAA seeking a declaration that the ‘person should be assessed in respect of the cost of the child because the person is a parent’. [24] Then, as occurred here, if the Court grants that declaration, s 106A(6)(a) provides: ‘(a) If the reason referred to in paragraph (1)(b) was the only reason for the Registrar refusing the application – the Registrar is taken to have accepted the application for administrative assessment of child support.’ (Emphasis added)

[25] It follows, then, that the declaration granted by the trial judge … operated retrospectively, pursuant to s 106A, to render the father liable for child support from the commencement of the ‘child support period’ being the day the mother made her application on 2 May 2013. ( … ) [40] Her Honour’s conclusion … that it [was] a matter for the CSA to determine the date upon which the assessment would commence was an error of law.” The appeal was allowed and the case remitted for re-hearing.

Property – Wife was refused leave to rely on her shadow expert as an adversarial expert In Forsburg & Stubbs [2019] FCCA 1884 (12 June 2019) a single expert (“Valuer A”) appointed by the parties valued Town C property at $265,000. A gross value of $425,000 was reduced by $160,000 of “deductions” to account for the property being land with “modest improvements” such as “an older style caravan”, “a non-approved sceptic system”, “an older-style … patio” and “some concrete tanks” ([18]). The deductions included “costs [of] upgrading vehicular access”, “professional studies re bushfire flora and fauna” and “risk associated with obtaining consent for the site to be utilised as a single home site” ([19]). Disputing that valuation, the wife applied for leave to rely on a valuation by shadow expert (“Valuer D”) of $430,000 without deductions. In dismissing that application, Judge Betts said (from [20]): “[T]he wife … did not instruct her [lawyer] to write to Valuer A to put questions … Rather, she engaged Valuer D to conduct a shadow valuation for litigation purposes. [21] [Her] instructions … to Valuer D … contained …

factual assertions that were not agreed and are in dispute. [They] were prepared solely by the wife’s solicitors, unlike the single expert’s instructions. The instructions to the shadow expert … were partisan and entirely one-sided. ( … ) [26] In good faith, the husband permitted the shadow expert access to the property for the valuation … on the … basis that Valuer D was being engaged by the wife as a shadow expert only. ( … ) [46] The wife could have engaged Valuer D to undertake the shadow report as they did do and questions could then have been put to Valuer A based on what Valuer D had said. But that is not what the wife wants to do. She wants … to engage an expert in a partisan way as a shadow expert and then call them as an adversarial expert. But a shadow expert and an adversarial expert are two very different experts. Real questions of natural justice and procedural fairness arise when adversarial evidence is contemplated. ( … ) [55] In short, I do not consider it appropriate that the single expert be provided with a copy of the Valuer D report. … [I]f the wife wishes to challenge the Valuer A by using information provided to her by Valuer D then [she] should pose specific questions to Valuer A. [56] In the event the wife wished to call Valuer D as an adversarial expert, I consider that the instructions they have already provided are so tainted as to render such a report of lesser, if not of no, weight.” 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.

Mickey Mouse Goes to Court: A Mouse Tale By John McKechnie QC

In 1937, a manufacturer of radio sets wanted to market them under the names Mickey Mouse and Minnie Mouse. Walt Disney naturally opposed this course and won on all levels.

thankfully long gone, thought it prudent to add "Minnie Mouse, his feminine counterpart".

Poor old Mickey however in winning, had to endure some judicial contempt.

So Mickey, whose features appeared on everything from canned soups to cotton undershorts, from bridge scorers to boys' braces, triumphed.

Although the Chief Justice, Sir John Latham thought Mickey and Minnie were two fantastic and amusing characters (a fan), Sir Owen Dixon described the grotesque forms and absurd antics of both (not a fan). Sir George Rich had a bit each way saying Disney had "obtained great reputation or notoriety for the form and name of Mickey Mouse". Sir George, perhaps mindful of a tendency for judicial ignorance, now

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I wonder what he would have thought of the New Zealand would-be politician who changed his name to 'Mickey Mouse' and campaigned on the slogan, 'Put a mouse in the house'. (Adapted from Radio Corporation Pty Ltd v Disney (1937) 57 CLR 448)

BOOK REVIEW

A Stolen Life – The Bruce Trevorrow Case By Antonio Buti Fremantle Press, 2019 Review by Robert Guthrie, Criminal Injuries Assessor, Office of Criminal Injuries Compensation

Dr Tony Buti has a strong connection with the stolen generations. As a lawyer at ALS he worked with the late activist Rob Riley, gathering and collating statements from members of the Stolen and Removed Generations. He published papers in 1998 and 2008 examining the impediments for claimants seeking damages after forced removal from their Indigenous families. The latter article chronicled the landmark decision of the South Australian Supreme Court in Trevorrow v The State of South Australia. In his latest book (this is his fourth) A Stolen Life, Buti continues his examination of the Trevorrow case, this time with an in-depth examination of the life of Bruce Trevorrow, his fight for recognition and compensation and the processes he lived through to gain a final judgment. Buti’s treatment of this important case is masterful for a number of reasons. First, the sheer grunt of his research is aweinspiring. He gained access to the full transcript of the trial – over 3,000 pages of transcript over more than 30 days of hearing. He interviewed more than a dozen of the key players, including lead counsel of the plaintiff, the heroic instructing solicitors and the trial judge. He examined the law in minute detail. He has researched a range of cases and materials, reports and articles. His commentary on the trial is a masterclass in the description of trial advocacy and evidence, explaining with ease the key elements of those mysterious adversarial processes. There are many sporting analogies along the way. In another life Buti could well have rivalled Richie Benaud or Dennis Cometti. The respective counsel are players in this test

match we call litigation, delivering (or sending?) short pitched deliveries to the top order witnesses, looking for an edge to have them caught out. Not afraid of mixing his metaphors, Buti indulges in a few check-side punts for goal when the trial judge manages to pin counsel to a point. The unique feature of Buti’s commentary is, unlike other ‘court-case’ books, it is not simply a run-down of the key issues and a few samples of devastating crossexamination that won the day. Buti’s selection of transcript shows a deep understanding of the issues and the evidence, and his incisive sotto-voce style of commentary leaves the reader with the impression that they are inside the head of the key players. His grasp of strategy is clear and well communicated. Certainly, towards the end of this book one feels as though you have been sharing flat whites with Julian Burnside QC and team at a Gouger Street café in Adelaide or pondering the merits of the submissions with Judge Thomas Gray in his chambers. State authorities failed to return baby Bruce Trevorrow to his family after he was hospitalised with a short illness. He did not see his biological family for 10 years after he was placed in a non-Indigenous household. He lost his attachment to his family and Indigenous culture. He was never able to properly connect with his brother and sister. His father died shortly after he was taken away. He led a sad and troubled life characterised by dysfunctional relationships, alcohol abuse, violence and grief and yet for all of this, he managed remarkably to hold down work. The loss of attachment to family

and culture is given detailed analysis in this book, as it was a significant feature of the evidence and for this alone, the book is well worth the read. Buti introduces the reader to the work of Dr John Bowlby whose seminal report in the 1950s changed the way we view the relationship of parent and child. Bowlby’s work on attachment has been influential in many fields and provides the template for understanding the dislocation suffered by Trevorrow throughout his life. The understanding of attachment theory was an important element in the ultimate discussion of damages for Trevorrow as the plaintiff. Buti’s skilful excision of the key elements in the evidence allows the reader to readily grasp the key concepts of attachment theory while all the time appreciating the tricky rules of evidence which seem to have a habit of getting in the way. There has been much written about the importance of the Trevorrow case. This book gives a detailed insight into the life of the plaintiff, written with compassion and empathy but not shirking the hard reflections. Buti is a fine writer. It is a hard story to read, but so well written it is hard to put down, and enriching with every page.

Dr ver's Dog Send your submissions to the Dog via brief@lawsocietywa.asn.au

The shield of privilege available to a client and attaching to communications between the client and its lawyer is sufficiently well known as not to be the subject of speculation as to its limits. As the High Court recently said in Glencore International AG v Commissioner of Taxation [2019] HCA 26, at para 21 and following, the privilege is: Legal professional privilege has been described as a right which is fundamental to persons and to our legal system. It has also been described as "a practical guarantee of fundamental, constitutional or human rights". Such descriptions point up the importance of the privilege. They serve to show that it is not merely an aspect of curial procedure or a mere rule of evidence but a substantive right founded upon a matter of public interest. The same distinction has been drawn in New Zealand and the United Kingdom. “What cannot be discerned from these cases is that the "right" spoken of in connection with the privilege is an actionable right. If one asks what this "right" gives to a person, the answer could be stated as "a right to resist the compulsory disclosure of information" or "the right to decline to disclose or to allow to be disclosed the confidential communication or document in question", as the Privy Council and the House of Lords respectively have held. So understood it is a freedom from the exercise of legal power or control, which is to say an immunity, and that is what Daniels Corporation held its true character to be. “In Daniels Corporation Gleeson CJ, Gaudron, Gummow and Hayne JJ, having observed that it is now settled that legal professional privilege is a rule of substantive law and not merely a rule of evidence, made the statement referred to earlier in these reasons that: "It is an important common law right or, perhaps more accurately, an important common law immunity." McHugh J likewise described it as "a person's immunity from compulsion to produce documents that evidence confidential communications about legal matters "between lawyers and clients. Your Dog sometimes wonders if the extent of the privilege is grasped by businessmen and their accounting advisers, in particular, as to limits on a claim for privilege imposed by criminal law. Perhaps replacing the term “tax avoidance”, and its close, but ugly relative, “tax evasion”, with the more glamorous “tax minimisation” is thought to make the activity acceptable, without having to define a dividing line between the two. The dividing line is said to be that avoidance is legal, whereas evasion is illegal. Does the

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innocuous term “minimisation” achieve respectability? Does advice as to “tax minimisation” enjoy privilege as of right, or is there more to it than that? As described in Grant v Downs [1976] HCA 63 the rationale of the rule is to encourage the client to retain a lawyer and to make a full and frank disclosure of circumstances to the lawyer, so to obtain legal advice. Reportedly, it seems that some of the so-called “privileged” communications in Glencore related to Power Point presentations created by its accountants depicting the multiple steps to be undertaken in the restructure of Australian investments. It will be interesting, in due course, to read the transcripts of evidence as to the design and implementation of the tax minimisation which the schemes were expected to achieve, and to mull over the question whether privilege was truly ever available to the client in respect of those documents. For instance, some reports suggest that Appleby (Bermuda) Ltd described by email an instruction from the client to backdate a scheme document as follows: “Hi boys! Glencore are up to their old tricks!” It will make for interesting cross-examination! Your Dog sometimes has a sense that some people do not grasp the concept of a conspiracy to defraud – an agreement having the intention of dishonestly obtaining a gain from, or causing a loss to the Commonwealth, often by suppressing or disguising commercial or financial affairs so as to limit or exclude a liability to taxation that would otherwise have arisen. Kirby J (as he then was) in a paper entitled “Of “Sham” and other lessons for Australian Revenue Law” examined what he saw as a general reluctance of Australian courts to embrace a more robust approach to designating documented transactions as “shams”. Perhaps the point will come to be considered more closely in the context of tax avoidance? Members would be aware of the memorandum issued by the Law Council of Australia on 15 August 2019 which comments on the implications of the decision. It raises the question whether an application based on the confidential nature of the information would have succeeded. The LCA comments on a perceived gap in the law because of the nature and impact of hacking and breach of cyber security. It expresses the view that there are serious concerns regarding privileged documents mistakenly disclosed to government authorities. Consequently, legal practitioners ought to review their potential exposure to negligence claims if such confidential information is inadequately protected from hackers. Your Dog

Law Council Update

Family violence awareness training urged for parliamentarians The Law Council has condemned as dangerous suggestions by Senator Malcolm Roberts of One Nation that the family courts are contributing to family violence and called for family violence awareness training for all members of parliament. “It is inappropriate to be blaming victims, the courts or judges for any person lashing out and hurting another person,” Law Council President, Arthur Moses SC, said. “Politicians must be careful not to use words that may incite those currently engaged in the system or dissatisfied with a court outcome to engage in violence.” Mr Moses labelled as “irresponsible and plain stupid” comments by made One Nation Senator Malcolm Roberts blaming the family law system for violence by men. “These comments could incite violence against partners, children or judges of those courts, or provide excuses for some men to blame anyone else but themselves for hurting a partner or child. The comments of Senator Roberts will undermine, not assist, concerns being raised by some members of the community for law reform as to how custody matters can be dealt with in a less adversarial manner.” “The Joint Select Committee Inquiry provides a critical opportunity for Parliament to examine holistic options to reform the system, including recent recommendations by the Australian Law Reform Commission. The Law Council has offered its support to the Inquiry but it needs to be free from bias and predetermined outcomes.” “But let me be clear – the Inquiry will have no hope of achieving any meaningful reform and will quickly lose support if it is overshadowed by these disgraceful comments or misguided by myths. Reform has to be based on facts not slogans.” “This Inquiry must be about finding long-term solutions to a crippled family law system. This will assist vulnerable children, mothers, fathers, families

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and victims of family violence. Not apportioning blame or seeking to excuse the inexcusable. “Cases of family violence are serious matters to be heard and determined by the courts and prosecuted by the police, not Parliament. If parties are unhappy with outcomes, these can decisions reviewed. “I acknowledge Home Affairs Minister Peter Dutton and Attorney-General Porter have said earlier comments reported by Senator Hanson about the raising of domestic violence issues in family cases were wrong. The reported comments by the Senator were plainly wrong.” “However, Prime Minister Morrison, Attorney-General Porter and Committee Chair Andrews now need to condemn these latest remarks by Senator Roberts in the strongest possible terms and ensure the Inquiry is conducted in a manner that is safe and respectful. Otherwise, the situation will quickly deteriorate and this Inquiry will harm not help children, mothers and fathers” Mr Moses said. “The Law Council strongly recommends all parliamentarians including those who participate in this Inquiry be provided with family violence awareness training at the outset to help them undertake their important roles in the Inquiry but also considering any recommendations from the Inquiry. “This training is important to assist them to better understand these issues, engage appropriately with stakeholders, and reach meaningful policy solutions.” “There is also an urgent need for additional funding for legal assistance and family violence services to help those most vulnerable people in our community in their time of need.”

Public interest advocate role would help protect public interest journalism, promote due process A federal Public Interest Advocate or Monitor role would provide greater scrutiny of search warrants and help protect public interest journalism, the Law Council has told a hearing on the impact of law enforcement and intelligence powers on press freedom.

Appearing before the Parliamentary Joint Committee on Intelligence and Security, Law Council President, Arthur Moses SC, said three improvements were needed to the process of determining warrants relating to journalists or media. “First, the issuing officer of a warrant must be a judge of a superior court of record. “Second, the judge should apply a statutory public interest test, similar to the test that already exists in section 180T of the Telecommunications (Interception and Access) Act 1979 (Cth) for journalist information warrants,” Mr Moses said. “Third, adopting a Public Interest Advocate or Monitor model would provide greater transparency and accountability to search warrants relating to journalists, including an annual reporting requirement that discloses: • • •

the number of warrant applications made; the applicant organisation; and the number of warrant approvals and refusals.”

Public Interest Monitors already exist in Queensland, Victoria and Canada. The Law Council believes these jurisdictions provide useful best practice models to consider. Canadian legislation requires a search warrant must be issued by a judge of a superior court and also allows the media to contest the disclosure of documents obtained during a search. “The reforms we propose would not undermine the integral work of our law enforcement and intelligence agencies to keep our communities safe but seek to balance legitimate aims of safety and security with the rights to freedom of expression and freedom of the press. Proportionality is key,” Mr Moses said. “In protecting the rights and freedoms of Australians, our parliament is aided by the media which plays a key role in defending the public interest and scrutinising the exercise of power. “Our legal framework must respect the role a free, independent media plays in safeguarding human rights and freedoms, especially in national security legislation.”

Professional Announcements Career moves and changes in the profession

OPEN DAY | 2019

Kott Gunning Lawyers – Retirement of Laurie James AM

DISTRICT COURT

Laurie James AM began his career-long association with Kott Gunning as an articled Laurie James AM clerk in 1963 and was made Partner in 1967. He has been a valued member of the Law Society since 1965 and notably served for many years as Convenor of its Alternative Dispute Resolution Committee. Throughout his career Laurie has been recognised as an outstanding practitioner and for many years, pre-eminent in the field of building and construction law, which was his main area of expertise. Laurie’s contribution to every facet of the business of Kott Gunning over the decades has been truly phenomenal. As well as leading Kott Gunning’s building and construction team for many years, Laurie has been lead partner in commercial litigation and local government, an invaluable advisor to the insurance team, and a much sought-after arbitrator. He has served as managing partner and as senior partner during the period prior to his retirement.

Thomas Prior

Nicholas Mountain

Mony De Kerloy Barristers and Solicitors Mony De Kerloy Barristers and Solicitors is pleased to announce the appointment of Thomas Prior and Nicholas Mountain as Associates of the firm. Thomas and Nicholas have proved themselves to be excellent solicitors since commencing as Law Graduates. Thomas practices primarily in commercial litigation focusing on construction and insurance disputes and debt recovery. Nicholas works primarily in Family and Criminal law as well as providing corporate advice and commercial drafting.

OF WESTERN AUSTRALIA

SUNDAY, 17 NOVEMBER 10AM – 4PM Talk to judicial officers & staff Visit courtrooms and custody centre Learn about jury duty and participate in a mock jury empanelment Café open

Slee Anderson & Pidgeon Lawyers – Celebrating 100 Years Being a vital part of the Bunbury Geographe region since 1919, the team at Slee Anderson and Pidgeon take pride in providing first class quality legal services to their diverse local client base. Founded by World War I veteran Frank Slee in 1919 and later joined in partnership by Ian Anderson in 1931 and William Pidgeon in 1955, the firm has earned its long-standing reputation for strength, integrity and innovation. They’ve seen the Great Depression in the 1930s, the post-World War II boom, endured the 1987 stock market crash, stood strong in the global financial crisis of 2007 and seen the resources booms come and go. 100 years on, the team at Slee Anderson and Pidgeon continue to deliver quality legal service, personalised easy to understand advice, strategies, security and peace of mind in all commercial, litigious and family law matters.

Francis Burt Chambers Jonathon SlackSmith is now a barrister at Francis Burt Chambers. His practice covers Jonathon Slack-Smith disputes in relation to the financial, resources and construction industries, and he has particular experience with insolvency and corporations matters. For more details, please see www.francisburt.com.au/ jonathon-slacksmith.

www.districtcourt.wa.gov.au

Francis Burt Chambers Lauree Coci is now practising as a barrister at Francis Burt Chambers. Lauree is available to appear and advise in all Lauree Coci commercial litigation matters. She has particular expertise in contractual, property, consumer law and corporations law disputes. Lauree’s practice also includes advising corporates and individuals in connection with corruption and financial crime, and emerging business and human rights risks. Lauree has significant experience in the conduct of high value, complex, commercial litigation disputes in superior courts in Western Australia and Victoria. She also has experience in representing clients in royal commissions. Prior to joining the Bar, Lauree was a Senior Associate in the litigation team of Clayton Utz in Perth. She was also a solicitor at the State Solicitor’s Office.

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Missing Will HELEN DELURY late of 12 Roscorla Avenue, Yokine, Western Australia died on 10/05/2019. Would any person knowing the existence or location of a Will and Testament made by HELEN DELURY please contact Alison Wallace of salient.law on 0411 639 961 or email alison@salientlaw.com.au

PERTH’S BUSINESS VALUATION EXPERTS  Family Law Disputes  Partnership Dissolutions and Admissions

 Licensing Applications  Bank Opinions  Purchaser and Vendor Opinions Contact:

Graham O’Hehir MBA

BRIEF CARLO PELLICCIONE late of 166 Phoenix Road, Hamilton Hill, Western Australia died on 17 January 2010. Would any person holding the last Will and Testament of CARLO PELLICCIONE or knowing the whereabouts of such last Will and Testament, please contact the Public Trustee at 553 Hay Street, PERTH, WA 6000 on (08) 9222 6702 within one (1) month of the date of publication of this advertisement, quoting reference DE33161979 EM35. PTO_02331

Managing Director 0438 882 626 or graham@buyabusiness.com.au

For advertising opportunities in Brief please contact: Madeleine McErlain Manager, Marketing and Communications T: (08) 9324 8650 E: advertising@lawsocietywa.asn.au lawsocietywa.asn.au

www.buyabusiness.com.au

New Members New members joining the Law Society (September 2019)

Associate Membership Mr David Baldwin University of Notre Dame Australia Ms Cody Brandis Edith Cowan University - Business & Law Mr Stuart Caporn Edith Cowan University - Business & Law

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Mr Marco Chadinha Curtin University - School of Business Law & Tax Ms Erin Duce Murdoch University - School of Law Ms Surina Maharaj MacLean Legal Mrs Emily May Murdoch University - School of Law

Mrs Leanne Russell Edith Cowan University - Business & Law

Events Calendar

With thanks to our CPD partner

Stay up-to-date with the latest Law Society member events

OCTOBER 2019 CPD Seminars Wednesday, 2 October Criminal Law Masterclass Thursday, 3 October Contract Law Masterclass – Advanced Friday, 4 October Contract Law for Young Lawyers Tuesday, 8 October The Many Hats of In-House Counsel and Government Lawyers Wednesday, 9 October Legal and Ethical Aspects of Artificial Intelligence and Robotics – Webinar Thursday, 10 October Sharing Knowledge: The Small Business Roadshow by ASIC

Thursday, 10 October Appearing in SAT: Civil & Commercial Jurisdictions Friday, 11 October Ethics on Friday: You Are Not Your Client’s Mouthpiece Monday, 14 October Family Law Masterclass Tuesday, 15 October Succession Law Masterclass Wednesday, 16 October The Legal Services Award – key changes & consequences of a contravention Thursday, 17 October Environment, Town Planning and Local Government Masterclass

Thursday, 17 October e-Trials – An Introduction Friday, 18 October Legislative Drafting – what are the recent developments at Commonwealth and State levels? Thursday, 31 October The New Practice Direction on Witness Outlines: a Brave New World or Back to the Future? Membership & Education Events Thursday, 3 October Careers Uncut Wednesday, 23 October Mock Trial Grand Final Thursday, 24 October Society Sundowner

NOVEMBER 2019 CPD Seminars Thursday, 7 November A View from the Bench Friday, 8 November Ethics on Friday: Journalists and Legal Ethics

Wednesday, 13 November Cyber Risk – Still Risky Business – Webinar Friday, 15 November Responding to Challenging Behaviours – Full Day Workshop

Wednesday, 20 November Building a Prosperous Firm Membership Events Friday, 1 November YLC Mixed Netball Competition

DECEMBER 2019 Membership Events Thursday, 5 December End of Year Celebration

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