News & Events

  • After the AGM

    After the AGM: How to improve for next year

    Annual General Meetings, or AGMs, are a fundamental part of running a business.  As we come to the close of this AGM season, companies should take this opportunity to take stock of what went well and what didn’t, and to reflect on the value that an effective AGM might be able to add to your business beyond merely ticking boxes.

    Planning your AGM

    Although it’s easy to get caught up in the day-to-day running of your business, especially around the end of the financial year, neglecting AGM planning and scrambling to get organised often leads to things being rushed and opportunities being missed. Rather, AGM planning should be a year-round process to give your business the best opportunity to reflect on its experiences, review its progress, revise its core documents, and keep members engaged.  There are a few key milestones that should appear on your AGM planning timeline to avoid last-minute planning and to ensure you get the most out of your AGM.

    The AGM agenda

    You should begin planning for your next AGM as soon as you finish the previous one. For example, the agenda should always be informed by the experience of the previous year. It is worthwhile to have the Secretary record on the agenda any warnings or notes for the future throughout the meeting. Together with the minutes, this record will ensure that the next agenda can be shaped to ensure efficiency, avoid known issues, address ongoing matters and follow up on anything that was missed or that needs to be revisited.

    Review your constitution

    Another key planning priority should be constitutional review. Amending the constitution at an AGM must be done by special resolution, which has to be proposed in the AGM notice issued several weeks before the meeting itself. However, by the time a company starts digging into its constitution in the lead-up to an AGM—and incidentally discovering defects or room for improvement—it is often too late to do anything about it until the next year’s meeting. As such, we recommend making constitutional review a fixed feature of your strategic planning, several months in advance of your AGM.

    For the most part, nothing will need to change. However, by making this a regular part of your governance activities and giving yourself plenty of time to seek feedback from directors, members and professional advisors, any necessary amendments can be proposed with comfortable notice and in a form that is likely to be successfully passed.

    Questions from members

    Members or their proxies present at the meeting have the right to ask questions on any item of business. However, it may be worthwhile getting out there earlier to seek out their questions or concerns. In the documentation sent to members including the official notice of the meeting, or even earlier, companies should invite members to submit written questions to the board in advance of the AGM. This gives you an opportunity to reflect and to do your research, and to ensure that you aren’t caught by surprise at the meeting. That way, you can keep members engaged and can incorporate any questions or concerns in the formal addresses delivered at the meeting.

    If you have questions about what is required of your company in running an AGM or would like assistance with your planning, please get in touch with our Business team.

    Written by Riley Berry with the assistance of Bryce Robinson.

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  • Residential tenancies act

    Getting the balance right: Further changes to the Residential Tenancies Act

    Protecting the rights of both landlord and tenant is a delicate balancing act. The Residential Tenancies Amendment Bill 2019, introduced into the Legislative Assembly on 26 September 2019, builds on the recent changes to the Residential Tenancies Act 1997 (which commenced on 1 November 2019) and provides the tenant with greater rights and protection against potentially unreasonable practices. Whilst some of these changes may be necessary, it does pose the question whether the balance between the rights of the tenant and the landlord has tipped too far.

    Residential Tenancies Act Changes

    The Bill – introduced in September – amends the Residential Tenancies Act 1997 by:

    • Introducing a right for tenants to terminate a residential tenancy agreement (even during the fixed term of the agreement) by giving 14 days written notice to the Landlord if:
      • the tenant accepts accommodation in a residential aged care facility or social housing dwelling; or
      • the landlord offers the property for sale either within 6 months of the beginning of the tenancy agreement and without the landlord giving notice of an intention to sell to the tenant prior to entering into the agreement or if two inspection requests are made more than eight weeks apart;
    • Creating an opportunity for the minister to make minimum standards for rented residential premises relating to physical accessibility, energy efficiency, safety and security for residential premises (and it appears that regulations will be made in respect of at least minimum energy efficiency ratings);
    • Requiring a landlord to show that any illegal use of premises justifies the termination of the residential tenancy agreement if the landlord seeks to terminate the agreement due to the tenant’s use of premises for an illegal purpose;
    • Limiting the number of inspections a landlord is permitted to undertake when selling a property to no more than two (2) per week; and
    • Clarifying that the standard terms applicable to periodic tenancies are those in force under the Act from time to time.

    How do changes impact landlords and tenants?

    While some changes are necessary to protect those more vulnerable tenants, other changes, like the tenant’s right to terminate due to the landlord’s failure to give notification of the sale of the property, may be considered overly restrictive and onerous by some. This overly restrictive framework is likely to lead to a rise in the number of disputes before the ACT Civil and Administrative Tribunal (ACAT) and therefore higher costs – more so for landlords – and could therefore disincentivise future investment in the residential property market. Should this occur and Canberra’s rental stock shrinks, the very changes brought about for the benefit of the tenant will be (eventually) to the tenant’s detriment.

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  • Temporary Use in NSW

    Essential Guide to Local Government Law: Temporary use and clause 2.8 of the Standard Instrument LEP

    This Essential Guide will assist local councils to apply the temporary use provisions in cl. 2.8 of the Standard Instrument LEP.  Prohibited development can be approved under the Standard Instrument LEP if it will only be temporary. Understandably, however, this is only possible if the development will not adversely impact on the future development of the land or on the residents of surrounding land.

    The stated objective of clause 2.8 is to provide for the temporary use of land if the use does not “compromise future development of the land, or have detrimental economic, social, amenity or environmental effects on the land”.

    The clause applies despite any other LEP provisions and allows a consent authority to grant consent for a “temporary use”.  A temporary use is one that is carried out for no more than 52 days in any year[1].  The 52 days may be consecutive but do not have to be; for example, a temporary use for the purposes of clause 2.8 could be one that takes place once a week for every week of the year or for a 52 day period once a year.

    The 52 day limit does not apply to the temporary use of a dwelling as a sales office for a new release area or a new housing estate[2].

    A temporary use can only be approved if the consent authority is satisfied that[3]:

    (a) the temporary use will not prejudice the subsequent carrying out of development on the land in accordance with any applicable environmental planning instrument, and

    (b) the temporary use will not adversely impact on any adjoining land or the amenity of the neighbourhood, and

    (c) the temporary use and location of any structures related to the use will not adversely impact on environmental attributes or features of the land, or increase the risk of natural hazards that may affect the land, and

    (d) at the end of the temporary use period the land will, as far as is practicable, be restored to the condition it was in before the use commenced[4].

    Key aspects of Standard Instrument LEP clause 2.8

    Clause 2.8 has been the subject of consideration in several decisions of the Land and Environment Court. The principal decisions are:

    • Marshall Rural Pty Limited v Hawkesbury City Council [2015] NSWLEC 197; and
    • EMRR Pty Limited v Murray Shire Council [2016] NSWLEC 144.

    A number of key principles can be identified in these decisions:

    1. The clause applies despite any other provision of the LEP and allows the approval of a temporary use of land that would otherwise be prohibited.
    2. The temporary use may be approved for a maximum period of 52 days (whether or not consecutive days) in any period of 12 months.[5] The use can still be temporary even if it continues over a number of years or even indefinitely.
    3. The 52 day maximum[6] does not include days spent preparing for or packing up following the actual event.
    4. It is the use of the land that is temporary – the use may be carried out in permanent structures (such as stables, sheds etc).
    5. To be capable of being approved under cl.2.8, the consent authority must be satisfied of each and every matter listed in cl. 2.8(3), i.e:
      1. that the temporary use will not prejudice the future use of the land in accordance with the LEP or any other environmental planning instrument;
      2.  that the temporary use will not adversely impact on any adjoining land or the amenity of the neighbourhood;
      3. that the temporary use and location of any structures related to the use will not adversely impact on environmental attributes or features of the land, or increase the risk of natural hazards that may affect the land; and
      4. at the end of the temporary use period the land will, as far as is practicable, be restored to the condition in which it was before the commencement of the use.
    6. Clause 2.8(3)(b) imposes a different standard to that which applies in the consideration of an application to carry out development that is permissible  under the LEP. Rather than a consideration of whether the likely impacts associated with the development will be acceptable, the clause requires the    consent authority to be satisfied that there will be no adverse impact.
    7. The assessment of impact should take into account the ameliorative effect of any conditions to be imposed on the development consent; however, the effect of those conditions must be to remove any impact, not merely to render the impact acceptable.

    Marshall’s case

    In Marshall’s case, the applicant challenged the validity of development consents granting approval for the temporary use of two barns as a “function centre”.  This use was a prohibited use in the relevant rural zone under the Hawkesbury Local Environment Plan 2012. Relevantly, Moore AJ (as he then was) described the nature of the cl 2.8 tests as follows:

    [113] The nature of the activities that are capable of being permitted by an application invoking cl 2.8 are, I remind myself, activities that are otherwise prohibited in a zone.

    [114]  That any application that is sought to be approved for such a prohibited use seeks a significant indulgence for such a substantial departure from the planning controls applicable to a zone is reflected in two aspects of the clause.

    [115]  The first arises with respect to the temporal limitation mandated by the clause if such an otherwise prohibited use is to be permitted. This aspect of the clause was the subject of Marshall Rural’s first complaint, a complaint dealt with and dismissed in my rejection of Ground 1.

    [116]  The second element engaged by these proceedings is the requirement that the proposal will “not adversely impact” in the fashion specified in cl 2.8(3)(b). This test, cast in absolute terms reflecting the seriousness with which an application of this nature is required to be assessed, puts a very high hurdle in the path of any such application. The placing of such a hurdle requires that the Council must approach the consideration and determination of any such application with a marked degree of precision and caution.

    With respect to the ‘temporal limitation’ referred to above at [115] the applicant had argued that cl 2.8 permitted development consent for a maximum period of 12 months from the date of consent.  The Court, however, held that the ordinary, obvious reading of cl.2.8 does not impose a second limitation in addition to the number of days in any period of 12 months and that it was open to the consent authority to grant a consent pursuant to cl 2.8 for any nominated limiting period or indeed one that was open-ended.

    In relation to the second component, that the proposed development must not adversely impact any adjoining land or the amenity of the neighbourhood, the Court held that the Council had incorrectly proceeded on the basis that it needed to satisfied that the impact of the proposal would be ‘acceptable’ rather than that there would be no adverse impact. His Honour found that the path leading to error began with the acoustic assessment reports which assessed the application by reference to standards which envisaged merely an acceptable impact rather than an absence of adverse impact.

    The Court then said that this error had been transmitted to the Council’s own assessment report which, although it referred to cl.2.8(3)(b) on several occasions, did not display a correct understanding of the ‘absolute’ nature of the threshold test imposed by the provision.  Moore J was critical of the fact that the assessment report did not caution the councillors that the test imposed by cl.2.8(3)(b) is in absolute terms and was therefore different from the test that is conventionally applied to the assessment of an ordinary development application.  In this regard, his Honour explained that the higher threshold reflected the fact that the development for which consent was being sought was otherwise prohibited.

    The Court considered that the conditions formulated to address the impact of the proposed development also reflected the same incorrect presumption. Those conditions had sought to require compliance with the remedial acoustic measures recommended by the acoustic experts.  However, the Court pointed out that this would merely render the acoustic impact of the proposed development “acceptable” rather than resulting in the removal of any adverse impacts.

    The EMRR decision

    This was a Class 1 appeal in relation to the modification of an existing consent for a function centre to extend the period of its operation from one year to three years.  The applicant and the Council had participated in a s.34 conciliation conference, as a result of which they had resolved their differences. The owner of a neighbouring property, however, was given leave to intervene in the proceedings to argue that the Court lacked the legal power to approve the development.

    The objector argued that the proposed development was prohibited by the Murray Local Environmental Plan 2011.  In doing so, he raised 2 contentions. The first was that there was a conflict between cl.2.8 (temporary uses) and another provision which prohibited development on river front areas.  The second was that, despite compliance with the restriction on the number of days on which the development would be carried out, the use of the land, on a continuous and regular basis, for the purpose of functions over a three year period could not really be described as a ‘temporary use’.

    The Court rejected both arguments.

    In relation to the first argument, the Court held that the prohibition of certain development on river front areas was no different to a prohibition in the Land Use Table.  Both were subject to cl.2.8.  The Court held that a temporary use may occur on land where such a use may otherwise be prohibited provided it meets the requirements of cl.2.8(3). Sheahan J noted that this conclusion was ‘consistent with Moore AJ’s excellent analysis in Marshall’.

    In rejecting the second argument, the Court appears to have accepted the applicant’s argument that the prescription of a number of occasions in an identified time period means, in effect, a use which complies with the numerical controls is, by definition, to be regarded as a temporary use.  In coming to that conclusion the Court found that the requirement that the land only be used for the specified number of days did not mean that structures to facilitate that use could not be erected and remain on the land throughout the temporary use period.  The Court also found that the day limit did not include days on which ancillary activities were carried out, such as the construction and deconstruction of a marquee, inspections, bookings, deliveries and setting up. The days on which those ancillary activities were carried out, were held by the Court not to count in the calculation of the number of days on which the temporary use is carried out.

    For more information on temporary uses or the Standard Instrument LEP, contact us.

    Further Essential Guides to Local Government Law can be found here.

    The content contained in this guide is, of course, general commentary only. It is not legal advice. Readers should contact us and receive our specific advice on the particular situation that concerns them.

     

    [1] Clause 2.8(2); unless another number is adopted in the relevant local environmental plan.

    [2] Clause 2.8(4)

    [3] Clause 2.8(3)

    [4] Unless the temporary use is the use of a dwelling as a sales office for a new release area or a new housing estate see clause 2.8(5)

    [5] Provided the 52 day period is the period specified in cl. 2.8(2) and not anther period.

    [6] Ibid.

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  • Non-Disclosure Agreements with John Wilson and Judith Bessant

    In our latest podcast episode, we discuss non-disclosure agreements, or clauses, which are now very common when employment ends in contentious circumstances for a variety of reasons but are they fair, and reasonable? Do they prevent us from having discussions about workplace issues that might, in fact, be in everyone’s interest, and under what circumstances should you sign one?

    What is a non-disclosure agreement?

    Whether a matter such as sexual harassment or workplace bullying goes to trial or not, there is always a process whereby parties attempt to settle the dispute between themselves.  A deed of release is the instrument in which the proceedings are settled, which contains a non-disclosure or a confidentiality clause, which simply says that the parties are required to keep the terms of the settlement confidential.  There may be exceptions enabling a party to disclose the details to family members, their accountant or legal representative but otherwise, the effect of the clause is that neither party is allowed to tell anybody the terms of the settlement.

    Over the past 30 years, little has changed in relation to the presence of such clauses in settlements.  They contain confidentiality clauses essentially because one or both parties want to keep the circumstances that led to the controversy confidential.  Either or both parties may also wish to keep terms of settlement, including what money might be paid, and other arrangements confidential.

    Can non-disclosure agreements hinder justice for victims?

    Judith Bessant argues that non-disclosure clauses, because they prevent people within and outside the organisation from knowing what happened, can act as an anti-learning mechanism.  They can prevent any corrective action being taken on the part of managers within an organisation. Secondary victimisation and intimidation can result for people who have been subject to sexual harassment, or other kinds of harmful workplace behaviour, if required to sign off on such clauses.

    Non-disclosure clauses can enable bad behaviour, Bessant argues.  Significant power imbalances often exist between the employee and the employer, and if employees refuse to sign a non-disclosure agreement, they likely forego a satisfactory agreement. Within the organisation, executive and managers need to know what happened and be accountable. These clauses can protect managers by allowing them to deny liability because they didn’t know.

    It is in the public interest, and that of the victim, that things like this are “aired”. In many circumstances such clauses encourage a form of contrived ignorance and diminish any prospect for remedial action.

    Episode 12 is an enlightening look around the practical realities of non-disclosure agreements and what HR managers can do to prevent the need for them in the first place.

    For further information about dealing with workplace issues, please get in touch with our Employment Law & Investigations Group today.

    Listen to the full podcast episode now.

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  • After the AGM

    Unfair Contract Terms: What’s there to ‘Wine’ about?

    The Australian Consumer and Competition Commission (ACCC) has recently released a report following their inquiry into wine grape sector contracts – and it’s not looking ‘grape’ (read: “great”).  The inquiry has found that there is a substantial bargaining power imbalance that exists between the grape growers and winemakers, which has led to harmful market practices.

    Unfair contract terms examples found by the ACCC include lengthy payment terms (sometimes grape growers would be waiting between nine to 12 months for payment from winemakers), unilateral rights for the winemakers to vary agreements, and other sub-optimal terms that winemakers relied on to the detriment of the growers.  This stems (no pun intended) from the winemakers having significantly greater bargaining powers due to having the benefit of information asymmetries, ability for winemakers to access a relatively homogenous product from various sources, and the fact that grapes are perishable and have a historical oversupply.

    The ACCC will follow the progress of the industry to see whether winemakers adopt their recommendations to ensure fairer contracts for grape growers, however it may make a recommendation to the Federal Government to implement a code of conduct for the wine industry.  Note that unfair contract terms are not illegal (although this idea was floated by the Labor party in early 2019), and therefore ACCC cannot impose penalties to prevent businesses from including these terms in the first place.

    While this particular inquiry targets the warm-climate wine region, this is a reminder for all business that it’s a good idea to revise your contracts and ensure they they’re still appropriate.  Take a look at whether there is a term in there that may be perceived to be too “one-sided”, to avoid disputes arising in relation to that contract.  This is particularly the case if the goods or services you’re supplying or purchasing are continually changing.

    What are unfair contract terms?

    The laws governing Unfair Contract Terms are contained in the Australian Consumer Law s 23 Australian Consumer Law (ACL).

    Unfair contract terms in consumer law apply in relation to standard form contracts for consumers as well as small businesses.   A standard form contract is a contract that has been prepared by one party and the other party has limited or no opportunity to negotiate the terms of that contract.  A small business contract is one where at least one party to that contract employs fewer than 20 people (not including casual employees) and the upfront price payable is less than $300,000, or if the contract has a duration of more than 12 months, $1 million.

    A term is considered unfair under section 24 of the ACL if the term:

    1. Would cause a significant imbalance in the rights and obligations of the parties under the contract, for example all the risks fall to one party, one party has unilateral rights to vary or terminate the contract or determine if a breach has occurred, or if one party has unilateral rights to determine quality;
    2. Is not reasonably necessary to protect the interests of the party who is advantaged by the term, the ACL presumes that a term in a standard form contract will not be reasonably necessary to protect legitimate interests and the onus falls on the party who wrote the contract to prove otherwise;
    3. Would cause detriment (financial or otherwise) to a party if it were relied on, for example lose a sale, not receiving payments for months, or have to re-do work due to a term being unilaterally changed.

    Key Takeaways

    If a term is considered unfair, the courts can declare the term void, although the remainder of the contract will be continue to be binding and enforceable, unless the contract is incapable of operating without the unfair term.  So in essence, including unfair contract terms within your standard form contracts, while not illegal and will not incur any penalties, could have the effect of completely de-railing your contract.

    The moral of the story: if your standard form contract terms aren’t fair for the party you’re contracting with, they’re probably not ‘vine’ (read: “fine”) and it’s probably time to review and revise your contracts.

    If you have any concerns about how these recent updates might affect your contracts or you’re concerned about unfair contract terms in your agreements, please contact our business team to see how we can help.

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  • Chorley not! – High Court will no longer award costs to self-represented solicitors under the Chorley exception

    As the saying goes, “a man who represents himself has a fool for a client.”[1] This sentiment has been confirmed in the recent High Court ruling in Bell Lawyers Pty Ltd v Janet Pentelow & Anor [2019] HCA 29 (‘Bell’), which provides that self-represented solicitors will no longer be able to be awarded costs under the Chorley exception.

    What is the Chorley exception?

    It is well-settled law that a self-represented litigant may not obtain any recompense for the value of his or her time spent in litigation.[2] Until Bell, an exception to this rule applied if that self-represented litigant happens to be a solicitor. This exception is known as the Chorley exception and, up until recently, it was assumed that Australian common law had inherited this anomaly from our English forebears. The underlying rationale for the exception, as set out in the old English authority of London Scottish Benefit Society v Chorley,[3] was that it promoted time and cost efficiency through encouraging solicitors to represent themselves in their own personal matters rather than engaging an independent solicitor to act on their behalf. It was posited that this would minimise the impact of an adverse cost order for the other side.

    Background to Bell

    Janet Pentelow, a barrister, was engaged by Bell Lawyers to appear in a matter before the Supreme Court of New South Wales.  At the conclusion of the matter, a dispute arose between the two parties as to the payment of Ms Pentelow’s fees, leading to recovery proceedings.  Initially, Ms Pentelow was unsuccessful in the Local New South Wales Court, however, later succeeded on appeal to the New South Wales Supreme Court. Additionally, the New South Wales Supreme Court ordered that Bell Lawyers pay Ms Pentelow’s professional costs for the Local and Supreme Court proceedings. On further appeal to the District Court of Appeal of New South Wales, the majority there held that Ms Pentelow was entitled to costs per the Chorley principle, regardless of the fact that she was a barrister and not a solicitor.  By grant of special leave, Bell Lawyers appealed to the High Court.[4]

    The Findings

    The High Court ultimately found that the Chorley exception does not form part of Australian common law and, therefore, neither solicitors nor barristers may rely on this rule in order to reclaim costs in litigious proceedings. The High Court stated that the Chorley exception ‘was an affront to the fundamental value of equality of all persons before the law’.[5] This criticism stemmed from an underpinning belief that all parties to litigious proceedings, regardless of their profession, should seek independent legal advice. Furthermore, the High Court found that self-represented solicitors may not provide themselves with impartial and independent advice that the court expects of its officers. This, in turn, may affect a solicitor’s objectivity due to their own self-interest. Indeed, this self-interest may cause a solicitor to pass on higher legal costs, in the event of an advantageous cost order.[6] This finding contradicts one of the fundamental justifications for the existence of the Chorley principle, as the High Court found that it is not self-evidently true that the costs to the other party will be minimised when a barrister or solicitor represents themselves.[7]

    The lesson

    In the aftermath of Bell, solicitors or barristers who elect to represent themselves in their own personal cases will no longer be able to recover professional fees through cost orders. The resounding rejection of the historic Chorley exception marks an historic departure from the English jurisprudence and highlights the High Court’s unwillingness to discriminate on the basis of profession in relation to cost orders.

    Written by Kate Meller with the assistance of Claudia Weatherall.

    [1] Abraham Lincoln.

    [2] Cachia v Hanes (1994) 179 CLR 403 at 410 – 411; Guss v Veenhuizen {No 2} (1976) 136 CLR 47 at 51.

    [3] (1884) 13 QBD 872.

    [4] Bell Lawyers Pty Ltd v Janet Pentelow & Anor [2019] HCA 29, at paragraphs 4 – 12.

    [5] Bell Lawyers Pty Ltd v Janet Pentelow & Anor [2019] HCA 29, paragraph 2.

    [6] Bell Lawyers Pty Ltd v Janet Pentelow & Anor [2019] HCA 29, paragraphs 18 – 19.

    [7] Bell Lawyers Pty Ltd v Janet Pentelow & Anor [2019] HCA 29, paragraph 18.

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  • IP no longer spared from competition law: Is your business at risk?

    The laws that regulate the conduct of Australian business reflect a community expectation of fair play. Indeed, the Competition and Consumer Act 2010 (Cth) (CCA) seeks to prohibit conduct which lessens competition in the relevant market. Such prohibited conduct might include price fixing, bid rigging or restrictions on outputs, but also extends to practices where competing businesses agree—expressly or implicitly—to act in a way that can be seen as ‘anti-competitive’.

    However, until now, there has been an exemption for certain dealings relating to intellectual property (IP). Section 51(3) of the CCA previously granted immunity to certain assignments or licences of IP rights that would otherwise constitute anti-competitive behaviour.

    Having reviewed IP and competition policy, the Australian Parliament has now abolished the exception. Businesses were given six months to bring their agreements into line. That grace period has now ended, and the exemption was officially removed from the statute books as of 13 September 2019.

    Scope of the changes

    The exemption initially provided protection for conditional licences or assignments of certain IP rights, including patents, trade marks, copyright, registered designs or eligible circuit layouts. Eligible provisions or dealings would be spared from prohibitions on cartel conduct, exclusive dealing and other concerted practices, although not from laws forbidding resale price maintenance or misuse of market power.

    With these protections now gone, all new and pre-existing licences, assignments, contracts, arrangements or understandings must be made compliant with the CCA by businesses.

    Risks, impact and moving forward

    Because the scope of the exemption was itself narrow, its removal is not expected to cause any great disruption. All businesses that licence or assign their IP may be affected by the changes, although technology-based industries will be more exposed.

    The consequences of non-compliance include penalties as great as $10 million (or greater, in some circumstances).[1]  The Australian Competition and Consumer Commission (ACCC) is an active regulator and there is a very real risk that it will pursue significant instances of breach.

    Common IP arrangements that will often carry a risk of breach include:

    • Conditional licences that restrict the use of IP to certain geographical areas, uses, customers or market sectors;
    • Obligations requiring a licensee to transfer or licence any changes or improvements to the subject of the IP back to the initial licensor;
    • Paying a competitor to delay their entry into the market; or
    • Restrictions or requirements regarding output quantity, quality or price.

    Businesses may avoid liability by applying to the ACCC for authorisation where it can show that proposed arrangements will result in a public benefit that outweighs any likely public detriment.

    The Business Team at BAL Lawyers have extensive experience in regularly preparing and reviewing IP assignment and licensing agreements, as well as providing advice on the application of competition law. Please get in touch with us if you are concerned about whether you might be affected by these changes or if you are interested in knowing more.

    Written by Lauren Babic with the assistance of Bryce Robinson.

    [1] Competition and Consumer Act 2010 (Cth), Part IV, Subdivision B.

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  • Contract Fundamentals: October Business Breakfast Club Summary

    On Friday 11 October 2019, Mark Love presented  a “taster” for a series that we are running for our Business Breakfast Club commencing in early 2020 regarding contracts.  Friday’s talk covered contract fundamentals – often the biggest mistakes and the reason people walk into our office is because they’ve made a mess of things, which could have all been avoided if they had the benefit of really understanding contract “first principles”.

    We discussed the dos and don’ts of contracting by way of a case study, which was based on an actual dispute one of our clients had faced.  The key takeaways from October’s Business Breakfast Club were:

    1. When making an agreement with another party, you should consider questions like what could go wrong, how you can stop it from going wrong, and if an outsider had to look at this agreement (i.e. a judge who may have the final say on matters in the event of a dispute), what will they make of the agreement?
    2. We cannot say that you didn’t get what you bargained for if we do not understand the bargain itself or how it came about.
    3. Put your agreement in writing. Even if you don’t formally document the specific terms of the agreement, at least document your understanding of the agreement by way of email (or even a text message).  This serves a dual purpose – you’ve written down what you think the agreement is and it also gives the other party the opportunity to either agree or refute the terms and offer their understanding of the agreement.  But of course, we will always recommend that you save yourself some trouble later down the track and put your agreement down in a formal document.
    4. Don’t start actioning your part of the agreement until you and the contracting party have agreed to what it is exactly that you are to do. This for a number of reasons, but primarily because:
      • a counter-offer is not acceptance;
      • past consideration is not good consideration for future representations (i.e. I buy a horse from you and after the transaction is finished you tell me the horse is good-natured, but later I find out the horse is quite vicious, the money that I paid when purchasing the horse could not support consideration for the subsequent promise[1]);
      • while silence does not equal acquiescence, conduct might; and
      • what is central to traditional contract principles is the notion of consensus ad idem (or ”meeting of the minds” for those who aren’t familiar with Latin), which basically means that both parties must be aware of the terms of the offer and agree to them.

    While we are running a series on contracts, each Business Breakfast Club will be a self-contained talk on a different element within the subject of contracts – we encourage you to attend all the sessions, but you are more than welcome to come to just the particular ones you are interested in.

    Our next Business Breakfast Club will be on Friday 8 November 2019.  We will be discussing current issues regarding licensing and leasing in hospitality.

    [1] Roscorla v Thomas [1842] EWHC J74.

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  • Recognition of Indigenous Peoples' rights and culture

    Originally presented by Mark Love, Legal Director and Accredited Business Law Specialist, BAL Lawyers, to the SIETAR Australasia International Conference on 2 October 2019.

    A positive contribution to law and governance

    In assessing the evidence in the Wik Case it becomes apparent that the historical and political climate was critical to determining “parliamentary intention”; did “pastoral leases” deliver something that was intended to give rise to all incidents of a “lease” or was such a grant something different? If it was different, was the grant to be of a kind and character that would, by necessity, be inconsistent with the enjoyment of the rights, obligations and privileges that were formed through the systems of governance that attached to the land though Aboriginal Law?

    Owing to the original tenures that characterised “pastoral leases”, the legal system was looking at the system of rights granted from the late 1840’s. The answer to that question drew heavily from the excellent works of Professor Henry Reynolds.

    What was apparent from Prof Reynolds work was that the Australian Administration, under direction by the British Home Office was out of step with the British Home Office’s policies for the implementation of the Parliament’s policy. At the time the British Parliament was the source of the power for the pastoral leasehold grant.

    The correspondence flowing between the Governor of the day for NSW (and there were several through the relevant period) and the Home Office showed that the Home Office in London was acting off reports which included the likes of G A Robinson, Chief Protector of Aborigines, to shield and protect the Indigenous population from the excesses of settlement, but importantly to see that such settlement proceed according to the requirements of the Law. Now, whilst that second part sounds uncontroversial, it proved determinative in my view in the outcome of the Wik Case.

    The laws of Settlement and Conquest had been laid out in Blackstone’s Commentaries Volume 1, pp.104-5, so these were not novel to the Select Committee of the House of Commons on Aborigines in 1837 (when they were considering John Batman’s attempt to acquire land from the Port Phillip Aborigines).  And the legality was all dependent on a question of fact (possibly being one of two tests), was the land cultivated or was it inhabited?

    From 1837, the British Parliament saw the rise of Robert Peel’s conservatives, yet the Whigs , who represented new money and urban dwellers remained in control for much of the period to the 1850’s, becoming increasingly the  force of reform.   In a way, what was being played was a reflection of the larger drama unfolding across Europe. England had taken the lead in throwing off the feudal influence with the emergence of the Bourgeoisie, the increasingly urbanised and concerns for the increasingly large and soon to be emergent political force of the working class and Australia was following suit.

    The context here is important and it is also important in understanding how it was that colonising nations ended up overlooking the responsibilities to the First Nations for so long and why the recognition of the debt was left to later generations. And this consequence is important to us right now.

    The role, power and influence of Parliament as the paramount influence of society was something which evolved. The ascendancy of Cromwell’s Parliamentary Army didn’t simply deliver the pervasive influence of Parliament as we know it today. The 1840s in Europe gave rise to the Spring of Nations – when Europe and the UK were turning away from feudal control, towards Parliamentary control. It was no accident that this was occurring through the dawn of industrialisation.

    With the dawn of industrialisation, came urbanisation and the adverse symptoms of an amassed society living in close proximity; this was all new.

    The means of production depended on significant supply of labour. It is a fact of history that the more unscrupulous Industrialists and agricultural producers simply took labour, through slave traders. And possibly because of that, and possibly because of the normalisation of the urbanised classes, a power shift gained force whilst Industrialisation took hold.  Represented by the Whigs the new urban wealthy began to assert political influence, and in so doing started to gain ascendancy over the “old” landowning gentry class (the country squires) and defenders of privilege.

    The British Parliament through the 1840’s was influenced by humanitarian ideas though this is not to suggest there was were strong countervailing forces, as not all Industrialists were liberal. However, the slave trade invited a reaction that gave rise to the recognition of Human Rights. And ultimately, because the value of labour and the value of a healthy work force was recognised, steps were taken and policies asserted towards these notions.

    Yet with the absence of the kinds of levers of control and sources of information that we now take for granted, the growth of the industrial machinery and the competition between Nations would soon leave policies giving priorities of Humanism to take a back seat. The focus of government was drawn into addressing the issues that arose through mass population and the raging competition for “success” over rival Nations. Mankind’s benefit at large would rise through the forces of supply and demand.

    For the indigenous populations, whose lands were being taken, whose resources were being funnelled towards the wealth of the new Nations that sprang to serve these exploding, industrial populations, this was the worst conceivable time for the so called “civilised” world to foster their accommodation within this new world.  Governments remained focused on notions of “the economy”, at a time during the peak of laisse faire and caveat emptor, which drove the industrialists forward. The industrial world’s needs and focus lay in labour, resources, land and exploitable produce. Those things such as understanding:

    • different systems of governance;
    • difference systems of resource allocation;
    • different systems of belief; and
    • different systems of crime and punishment,

    simply didn’t have obvious answers to the questions that the overlords of the 1850 to 1950’s were asking.

    It can be contended that these builders of our world were in their own minds Nietzsche’s Ubermensch, grasping labour and resources with zeal and building the world according to their own visions; yet they were more infant supermen, than those Nietzsche had described, as they lacked the gratitude and appreciation for the world that they were consuming, as they took the world and moulded it, using money and industrial might to acquire power and influence.

    There were the exceptions; whilst this was the birth of industrialisation, science and studies of society and social systems was a toddler beginning to walk. Those like Darwin, Banks and GA Robinson became determined to record, and then attempted to understand. Part of what was recorded was how the intrusion of the colonising supermen often accidentally, but far too often deliberately, set out to destroy.

    As aforementioned, this large drama of the world’s political and social development was being played out in its own way in Australia. There was, in the 1840’s UK, a Home Office driven by a Humanitarian outlook, then determined, at least to paying lip service to the policies expressed, to see that appropriate steps might be taken to ‘shelter’ the Australian indigenous population from the excesses of “settlement”. However, what interrupted these initiatives was mass migration.

    Driven by the “Gold Rush” and by the Industrial Revolution’s desire for wealth, wool, wheat and meat, the convenience of Terra Nullius was all too tempting. The Governments of Victoria, New South Wales and Queensland had no capacity to cope with the flood of people and the Humanitarian influencers in the UK were swept aside by the now tremendously wealthy merchant and industrial classes, who eyed potential of the vast country they had claimed for themselves.  By the time the Local Assemblies had caught-up with that had happened, we were heading to the “War to End All War’s (aka WWI) and then some short respite before WWII and the Cold War.

    So what does all this have to do with indigenous culture’s contribution to Law and Governance? In a previous article I published shortly after the Wik Case, I observed that winning the Wik Case might prove adverse to the Parliament’s attitude to the newly rediscovered rights, loosely called “Native Title”. I argued that, on seeing the extent to which the legal rights of Aboriginal People had been swept away, Parliament could only have responded by recognising and addressing the terrible loss inflicted.

    In some respects, this expectation of a reaction that would address past, wrongful dispossession was founded on the same reasoned and responsible reaction to a society enslaving people from generations past.

    But with recognition that Native Title could survive in the gaps left by grants to Pastoralist of rights to manage and control of the land, with that “victory” came the conservative response; John Howard holding up of “that map” showing the extent of land that was subject to potential claim – appealing directly to the rural land dependent voting populations of Queensland, WA, Northern NSW and SA. This contrived fight for control of rangeland Australia could not have been more perfect for Howard’s electoral prospects, and it is not stretching matters to say that this issue allowed his government maintain support whilst it implemented policies unpopular within that constituency, reforms such as the Gun Buy Back.

    But such a “negative contribution” is not really the message I have: the positive legacy here is threefold, in my opinion, namely:

    1. That land systems of interaction over common resources do not have to have a single purpose. It has been demonstrated that resource use and consumption have many stakeholders and parallel interests that can amount to actual rights can exist. Arrangements can exist to allow the costs incurred through the consumption of resource to be identified and allocated; and
    2. That systems of ownership and governance can take diverse forms. This includes the rights existing inter se between holders of rights within, say, “native title”, but also the means by which commercial users of land and resources can exploit such resources whilst being required to respect that system.

    These will inform the third point.

    It was the Mining Industry who embraced the common use and costs allocation most easily. The Mining Industry had greater experience than the Graziers in addressing such complex issues. In securing access to resource rich lands of Africa, South America and Asia they had already worked within systems that accommodated layers of stakeholders. Australia was sadly a slow adopter of these systems. But the Australia Mining industry recognised early if they were to be too cynical, defying the newly declared recognition of actual rights, that such an approach  would cause them not just considerable political issues domestically, but bodies such as the ANC would could move against them and deny access to resources overseas. Treatment of the First Nations Population became an indication of an aspect of the quality a company had, which could result in the actual denial of rights to mine resources. The triple bottom-line of People Planet and Profit was becoming “real”.

    The Mining industry was not alone in taking these steps; even before the term “Indigenous Land Use Agreements (ILUA)” was coined, the Cape York Pastoralist had proposed a Pastoralist Code of Conduct  to be settled with the Wik Peoples (the document from which the phrase Indigenous Land Use Agreement was drawn). Many of the very same people had promoted and signed off on the Cape York Heads of Agreement, which drew an alliance between the Cape York Pastoralist, the Traditional Owners of the Cape (through the Cape York Land Council) and the environmental movement in the form of the Australian Conservation Foundation.

    Of course, and once again, it was economic force of the need to access the resources, in the strive for wealth that was the great evener here. However the political and social landscape was shifting, with Ethical Investment rating becoming an actual influencer of institutional investment.

    Engagement with the “asset” that was “native title”, according to our systems of law, required some recognisable entity or entities and a prescription of the way the owners might manage their entitlements. Further, there was need for a vessel to hold and distribute the spoils of those who were (indeed are) lucky enough to receive reward through agreements (ILUAs) that allow for the exploitation of resources.

    The 1998 Amendment spawned the Native Title Representative Body (NTRB), which would become the bodies, by default that would hold and deploy whatever might result from such rights. The 1999 Love-Rashid Report[1] commissioned by ATSIC to review the performance and resourcing of NTRBs, made the critical observation that these bodies were intended not only to represent the Native Title Holders, but to be representative of them. That gave rise to the question of what these bodies should look like.

    This was, in my view, the second legacy of the recognition of Native Title and the cultural contribution which our First Nations have given to the corporate structure. The richness of this opportunity gave life to an important book, written from the viewpoint of the Anthropologist in the Wik Case, Dr David Martin and a Barrister, Christos Mantziaris. The book, “Native Title Corporations: a legal and anthropological analysis: represents an important exploration into how diverse interest can coalesce into a single functioning decision making entity. It is not just a book for Indigenous Corporations.

    In the Industrial Age, “market price” was allowed to determine the success or failure of a given enterprise. Such a market assumes all costs are brought to account, and consequently acts on imperfect information. More and more, as our knowledge of cost and consequence improves, we bring to account (perhaps often only politically) the external costs which the market overlooks.  Faced with the imminent closure of their local service station, failing for the reason that the profits are insufficient to support the owner’s family, a small tourist town buys the service station, as a defensive strategy to the town’s failure. Without that amenity, the town as a destination fails and along with it, the café’s and shops, and the benefit to the surrounding primary producers and residents.

    That pattern is being repeated across the commercial world, as the “interests of the company” are being replaced by “the interests of the members[2]”.

    Is this a direct result of Indigenous Culture? Probably not, but it is a shift in mindset and we have seen and been given examples of models of governance that address the shared ownership, use and exploitation of resources.

    Finally, the third and most important positive influence: recognition of the intrinsic rights of the First Nation’s People and the wrongful dispossession of their lands is a barometer by which we can measure health of society. Whilst the reaction to the slave trade might not have been driven solely by the recognition of Human Rights, it was driven by a recognition that our long term needs are best served by a healthy and engaged population. A core aspect of such health and engagement is to recognise and address past wrongs and to embrace those who are or have been dispossessed by the conduct of our society that gives us the fruits we enjoy.

    Whilst Australian Society may point to long periods where its priorities were drawn away from addressing issues of First Nations dispossession, we now stand in a society that has had 70 odd years of relative “Peace”, with a generation or more of only occasionally interrupted economic growth.  The reasons for not addressing the past have never been excuses, merely reasons.

    What is our barometer saying of us now?

    [1] Senatore Brennan Rashid, Review of Native Title Representative Bodies, March 1999.

    [2] The “Co-operative” is becoming an increasingly popular choice, noting the adoption of the CNL by all States and Territories bar Qld.

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  • Captain of a sinking ship: Warning to directors who make personal sacrifices for the company’s sake

    It seems only logical: your company is in severe financial trouble, so you and your co-directors agree to reduce or even forego your wages payable by the company, to assist its financial position for the time being. But be warned that this logic comes at a cost – it is unlikely that you will be repaid those foregone wages. This is because your employment contract may be deemed to be varied by reason of the doctrine of ‘practical benefits’, which is explored in the case of Hill v Forteng Pty Ltd [2019] FCAFC 105, below.

    The Facts

    Mr Hill was an employee, director and shareholder of the company, Forteng Pty Ltd (“Forteng”), which was experiencing ongoing financial difficulties. As a result, between the period of January 2013 and December 2013, Mr Hill along with the other directors of Forteng agreed that they would receive reduced or no remuneration as employees, in order to improve the financial position of the company.

    A few years later, Mr Hill resigned as a director of Forteng and well after that, Mr Hill brought proceedings against Forteng, seeking to be repaid the amount of his salary withheld between January and December 2013 and unpaid superannuation totalling $154,876.63. Mr Hill argued that Forteng’s failure to repay him amounted to a breach of his employment contract and oppressive conduct, such that he was entitled to relief under section 233 of the Corporations Act 2001 (Cth).

    The Decision

    The judge at first instance found in favour of Forteng, which was upheld on appeal by the Full Bench of the Federal Court. Ultimately it was held that there was sufficient consideration in the form of a ‘practical benefit’ in order to vary the contract, such that Mr Hill was not entitled to relief or repayment by Forteng.

    The Court held that Mr Hill received consideration for his remuneration foregone by way of ‘practical benefits’. This is because his reduced or foregone salary was invested back into the company, thereby:

    • Improving Forteng’s financial position and preventing the company from being wound up;
    • Allowing Mr Hill to maintain his employment with Forteng (as Forteng would have been unable to pay employees, creditors and full director salaries had the directors not agreed to take reduced salaries);
    • Improving Mr Hill’s business investment (by allowing Forteng to retain employees and pay creditors); and
    • Increasing Mr Hill’s chances of being paid dividends in the future.

    As such, Mr Hill’s decision to reduce or forego remuneration was to ‘ensure the survival, future growth and enhanced value of Forteng,’[1] for which Mr Hill stood to benefit from indirectly.

    The Lessons

    1. Remember that a binding contract or contractual variation can only occur if there is consideration from each of the parties to the contract.
    2. Courts will look to the benefit gained or the detriment avoided when determining the ‘practical benefit’ as consideration.
    3. Courts appear reluctant to invalidate contracts on the basis of insufficient consideration if one party to the contract has made a promise to the other which is of “some substance”.[2]
    4. Whilst a ‘practical benefit’ is more likely to be found where the contract is executory, it is not to say that ‘practical benefits’ will not be found to exist in contracts of a different kind.
      (An executory contract is one where the parties to the contract still have continuing or future obligations to perform such as contracts for goods and services)

    If you are seeking advice on any contractual matters, or advice on corporate governance issues, talk to our Business Team today.

    Join our upcoming Business Breakfast Club on contracts to learn more about how to form legally binding agreements.

    [1] Hill v Forteng Pty Ltd [2019] FCAFC 105 [39].

    [2] Ibid [38].

    Written by Riley Berry with the assistance of Maxine Viertmann.

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