News & Events

  • Risks for property investors: Can your strata body corporate prevent you listing your apartment on Airbnb?

    As the popularity of the ‘sharing economy’ continues to grow unabated, issues can arise where regulations and commercial practices struggle to keep pace with technological change. While Airbnb hasn’t yet attracted the storm of controversy that Uber has, this may be starting to change as cities around the world, including in Australia, crack down on the home-sharing site.

    In Australia the use of property for Airbnb is subject to regulation at multiple levels. For owners of units in apartment buildings however, there is an additional layer of regulation, the strata company by-laws. Since strata units are in such close proximity to each other, conflicts between unit owners can easily arise. Some unit owners may want to use Airbnb to let their units, because of the high returns, and indeed may have purchased an investment property on the basis of those returns. Other unit owners may object to short stay holiday accommodation in their complex because of fears of noise, disruption, security, loss of amenity and insurance and repair costs.

    This situation has seen an increasing number of by-laws which purport to restrict short term letting. But are such by-laws valid?

    The Position in NSW

    The ability of strata by-laws to restrict short term letting varies between states. In NSW, the largest market for Airbnb in Australia, the position has been summarised by NSW Fair Trading’s ‘Strata Living’ fact sheet as follows:

    “Strata laws prevent an owners corporation restricting an owner from letting their lot, including short-term letting. The only way short-term letting can be restricted is by council planning regulations.”

    This is because of s.139(2) of the Strata Schemes Management Act 2015 (NSW) (SSMA) which states:

    “No by-law is capable of operating to prohibit or restrict the devolution of a lot or a transfer, lease, mortgage or other dealing relating to a lot”

    NSW tribunal decisions such as Estens v Owners Corporation SP 11825 [2017] NSWCATCD 63 have followed the interpretation outlined by NSW Fair Trading and struck down by-laws restricting short term letting. The position is similar in Victoria, where in Owners Corp PS 510391P v Balcombe [2016] VSC 384 the Supreme Court found that owners’ corporations did not have the power to restrict short term letting.

    Recent WA and Privy Council Decisions

    In contrast, the recent WA decision Byrne v The Owners of Ceresa River Apartments Strata Plan 55597[2017] WASCA 104 saw the Court of Appeal uphold a by-law restricting short term letting to no more than 3 months in 12. The Court of Appeal found that the by-law did not present a restriction on disposal of units in the strata scheme, but only a restriction on how the units could be used.

    The Byrne decision has been well-received in a recent UK Privy Council decision, O’Connor (Senior) and others v The Proprietors, Strata Plan No. 51 [2017] UKPC 45, dealing with by-laws in the Turks and Caicos Islands. It may seem odd that a Privy Council decision should be seen as relevant in Australia, given the Privy Council is no longer a part of the Australian legal system, however the relevant provisions in the legislation of the Turks and Caicos Island had been lifted directly from NSW legislation and was identical to s.139(2) of the SSMA.

    The Privy Council found that:

    ‘statutes prohibiting restrictions on dealing in strata lots do not prevent reasonable restrictions on the uses of the property, even though such restrictions may have the inevitable effect of restricting the potential market for the property.”

    The Impact of these Decisions

    Decisions of the Privy Council are no longer binding in Australia. However, the expectation of many is that NSW courts and tribunals will now follow WA and Privy Council decisions and determine that s.139(2) of the SSMA does not prevent by-laws from restricting short term letting.

    In fact, there is already a NSW Supreme Court decision, White v Betalli [2006] NSWSC 537, which sets out that principle. In that case it was held that a restriction on the use of part of a strata complex for boat storage was not a restriction on dealing in granting an easement for boat storage.

    Conclusions

    There is now considerable doubt over whether the SSMA actually does prevent strata company by-laws from prohibiting short term letting in NSW. The uncertainty resulting from recent case law provides an extra headache for strata unit owners wishing to let their apartment on Airbnb, in addition to complying with zoning and planning requirements. It remains to be seen whether there will be legislative changes to clarify whether a body corporate can prevent short-term letting.

    In the meantime, if you are purchasing a unit in a strata complex and you intend to use it for Airbnb, you need to pay close attention to the by-laws that exist in that complex, and be well aware that those can change over time. It is important to be involved in your strata body corporate and to be active in figuring out how to best manage any downsides associated with short term letting

    If you are considering purchasing property in the ACT and require expert advice, contact us.

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  • Planning Update: Strata schemes and minimum lot sizes in the standard instrument

    In our article, ‘Can strata subdivision avoid minimum lot sizes in NSW?’ we reported on the decision of the Land and Environment Court in DM & Longbow Pty Ltd v Willoughby City Council [2017] NSWLEC 17. In that case the Court held that the minimum lot sizes specified under clause 4.1(4) of the Standard Instrument LEP applied to lots being created under a strata scheme. While no doubt legally correct, this outcome came as a great surprise to many of us and was clearly not what was intended.

    The New Amendment

    The Standard Instrument (Local Environmental Plans) Order 2006 (the Standard Instrument Order) has now been amended to clarify that lots under a strata plan or community title scheme are not required to meet the minimum lot sizes shown on the applicable Lot Size Map of a local environmental plan. This amendment effectively reverses the Court’s decision in the Longbow case.

    Where a Council has adopted clause 4.1(4) of the Standard Instrument in its LEP, following the amendment of the Order on 20 April 2018, the sub-clause should now read:

    4. This clause does not apply in relation to the subdivision of any land:

    1. by the registration of a strata plan or strata plan of subdivision under the Strata Schemes Development Act 2015, or
    2. by any kind of subdivision under the Community Land Development Act 1989.

    A sting in the tail…

    Clause 8 of the Standard Instrument Order provides that the amendments made by an amending order ‘do not apply to or in respect of any development application that was made, but not determined, before the commencement of the amending order’.

    This means that the amended provision won’t apply to any pre-existing DA and that, to take advantage of the changes brought about by the amendment, existing DA’s will need to be withdrawn and replaced with a new DA.

    Unless a further amendment is made to apply a different savings provision, Councils will need to be careful to apply the correct version of clause 4.1(4) having regard to the date on which a DA was made. Any DA lodged prior to 20 April 2018 proposing the creation of lots by registration of a strata plan will still need to comply with the relevant minimum lot size specified in the local environmental plan despite the amendment of the Standard Instrument Order.

    For more information about this decision, or Strata subdivision, please contact Alan Bradbury.

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  • Salary Overpayments And Deductions: HR Breakfast Club April Summary

    SALARY OVERPAYMENTS AND DEDUCTIONS – THE LIMITS OF THE LAW

    This month John Wilson, Managing Legal Director at Bradley Allen Love, spoke about recovering overpayments from employees.

    John Wilson is Canberra’s leading employment lawyer. He is the Managing Legal Director at Bradley Allen Love and has been a NSW Law Society accredited specialist in Industrial Relations and Employment Law for over a decade. In 2017, John became a member of the NSW Specialist Accreditation Employment and Industrial Law Advisory Committee

    How do you recover overpayments?

    Some enterprise agreements will allow employers to make deductions from wages to offset overpayments. In absence of any enterprise agreement, an employer should come to an agreement with the employee (in writing) about any future deductions from their wages.

    What can you do if the employee does not agree to pay back an overpayment?

    This can happen in two ways, (1) the employee can refuse to pay back the money or (2) the employee can withdraw their consent to have deductions made from their wages.

    In these circumstances the employer can seek to recover the overpayments by applying to the courts for an order of restitution. This is not a desirable outcome – it is much easier to come to an agreement with your employee in the first instance.

    Are there some circumstances where you cannot recover overpayments?

    You can only recover an overpayment for up to 6 years. If a person has been overpaid for 10 years you will only be able to seek repayment for the last 6 (equally, an employee can only seek to be reimbursed for underpayments for up to six years).

    Generally employers are not able to recover overpayments that arise out of a contract. If the employer accidentally gave the employee a contract with a larger bonus than intended the employer is most likely contractually bound to provide this bonus – even if it was not what they had had in mind.

    Q & A Corner

    Q: What if an overpayment happened 10 years ago but you only just discovered it today? Do you have 6 years from today to reclaim the overpayment?

    A: No, you can only recover overpayments from the last 6 years regardless of whether the parties did or did not know about it.

    The HR Breakfast Club runs on the third Friday of every month at BAL Lawyers. If you would like to be added to the invite list, please contact us. The next HR Breakfast club will be held on 18 May 2018 – for more details, please click here.

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  • Federal Court decision deals setback to rising Shareholder Activism in Australia

    Shareholder activism has been growing in popularity in Australia. It is a means by which minority shareholders can band together to pressure boards to act in certain ways (usually to the benefit of the minority shareholders with social goals, sometimes not). Advocates contend that shareholder activism is an important way of ensuring that company management remain accountable to their shareholders. Many directors and boards, on the other hand, view the actions of shareholder activists as myopic for focusing on short term earnings for shareholders or misguided for promoting goals that are extraneous to the company’s business, instead of long term growth and value creation.

    Shareholder activism is made possible by the permissive regulatory framework which governs the rights of shareholders, including the Corporations Act which:

    • allows shareholders with only 5% of issued share capital have the right to call a General Meeting; and
    • gives shareholders the right to seek relief against ‘oppressive conduct’ against them.

    The Federal Court in RBC Investor Services Australia Nominees Pty Ltd v Brickworks Ltd [2017] FCA 756 dealt an apparent blow to shareholder activism, instead preferencing board autonomy. The Court’s decision demonstrates that where directors have a basis to believe they are acting with the best interests of the Company in mind, the Court will be reluctant to intervene.

    Brickworks Ltd (Brickworks) and Washington H. Soul Pattinson & Company Ltd (Soul Pattinson) are two companies that operate under a cross-shareholding structure implemented in the 1960s, meaning that each company owned approximately 40% in the other (such arrangements cannot be implemented today due to a prohibition in the Corporations Act). Perpetual Investment Management Ltd (Perpetual) is a minority shareholder of both Brickworks and Soul Pattinson.

    Perpetual had engaged in shareholder activism against Brickworks and Soul Pattinson for many years, putting multiple proposals to the Board to have the cross-shareholding dismantled. In this case, Perpetual claimed it had been ‘oppressed’ (as a minority shareholder) due to the maintenance of the cross shareholding structure, which Perpetual argued entrenched the incumbent boards, thereby depressing the share price in each company.

    Justice Jagot dismissed Perpetual’s claim for oppressive conduct stating there was no evidence that the dismantling would yield material longer term financial benefits to the shareholders of either company. In respect of Perpetual’s many failed attempts to dismantle the cross-shareholding structure, her Honour reaffirmed the principle that it is the responsibility of the directors (not the Court) to determine what is in the best interests of the company as a whole. Her Honour found that the Board had considered the range of potential effects of the each of Perpetual’s proposals (both positive and negative) and acknowledged the Board’s decisions to preserve the structure were duly informed and considered.

    This outcome is in line with the Court’s traditional reluctance to intervene in or to punish directors for the result of ‘commercial business decisions’, lest it is unequivocally clear that irrationality, illegality, unfairness or oppression has occurred as a result.

    Despite the loss by Perpetual in this case and the Court’s tendency to favour board autonomy, the rise in shareholder activism is a warning against corporate complicity and complacency. Boards should ensure that they at all times act in the best interests of the company, communicate proactively and clearly with shareholders, think strategically about all external communication and be ready to engage in dialogue if and when activists come knocking; even if only to save the costs of expensive litigation..

    For advice on the changes to the Privacy Act or to update your privacy policies please contact us.

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  • Essential Guide to Local Government Law: Expert Witness Survival Guide

    Key Instruments

    • Uniform Civil Procedure Rules 2005 (the UCPR) – Part 31 Division 2 – Expert Evidence
    • Expert Witness Code of Conduct – Schedule 7 of UCPR
    • Land and Environment Court Policy – Conference of Expert Witnesses
    • Land and Environment Court Policy – Joint Expert Reports
    • Land and Environment Court Practice Notes – sections dealing with expert evidence

    Why are expert witnesses special?

    Expert witnesses are special because they are allowed to give evidence about their opinion and not only about matters of fact.

    The usual rule is that evidence given in Court must relate to matters of fact: what a witness did, saw or heard; and not matters of opinion: what the witness thought about what they did, saw or heard.

    It is the judge’s role to listen to the evidence of what people did, saw or heard (i.e. ‘facts’) and draw inferences from those facts to form an opinion about what actually happened.

    Expert opinion is an exception to the usual rule that allows a person who has specialised knowledge based on the person’s training, study or experience to give opinion evidence in Court proceedings that is based on that person’s expert knowledge.

    Admissibility of expert opinion evidence

    The Evidence Act provides that, if a person has specialised knowledge based on the person’s training, study or experience, they are allowed to give opinion evidence that is wholly or substantially based on that knowledge. However, there are some rules about when and how this will be allowed. These are:

    1. Relevance or helpfulness test

    This is fundamental – evidence in any court proceedings is only admissible if it is relevant. Unless the expert evidence is relevant and will help the Court make its decision, the evidence will not be allowed.

    2. Specialised knowledge test

    This has two elements:

    • The first is that the expert opinion must lie within a field of knowledge that the law recognises as one on which expert evidence can be called; so expert evidence will not be allowed on a topic if an ordinary person is just as capable of forming a view about it without expert assistance. For example, an ordinary person would be able to form an opinion on the colour of a building.
    • The second is that the subject must form a part of a body of knowledge which is sufficiently organised or recognised to be accepted as a reliable body of knowledge – such as engineering or town planning.

    3. Qualifications test

    The witness must be an expert in their field and must have acquired specialised knowledge on the topic based on their training, study or experience. Academic qualifications and experience usually go together – simply holding an academic qualification with no real experience would not be accepted by most of us as qualifying a person as an expert. However, sometimes people are recognised as experts even though they do not have the relevant academic qualifications if they have significant practical experience. For an example of this in a local government context, see our recent newsletter: https://ballawyers.com.au/2018/04/22/expert-witness/

    4. Basis test

    Again there are two aspects to this test:

    • First, the expert opinion must have its basis in the expert’s specialised knowledge – evidence by an expert that strays beyond the area of his or her expertise is, self-evidently, no longer expert opinion.
    • Secondly, the facts on which the expert opinion is based must be disclosed in the expert’s report – an opinion based on incorrect assumptions will not assist the Court, so it is important to know what facts were found or assumed in arriving at the expert’s opinion.

    Expert witness codes, policies and practice notes applicable in the Land and Environment Court

    The key instruments listed at the top of this Guide contain detailed requirements about the preparation and giving of expert evidence in the Land and Environment Court of NSW (the Court). The most important thing to be aware of is that the overarching duty of an expert witness is to the Court, not to any particular party.

    The Court may require ‘competing’ experts to discuss their views to try and narrow or resolve the expert issues in dispute. This is called joint conferencing. The Expert Witness Code of Conduct sets out requirements in relation to the joint conferencing of experts. The Code currently requires the experts:

    • to confer;
    • to endeavour to reach agreement on any matters in issue;
    • to prepare a joint report specifying any matters not agreed and the reasons for any disagreement.

    The Code requires each expert witness to exercise his or her independent judgment in relation to every conference in which they participate and in relation to the preparation of each expert witness report. It provides that the expert must not act on any instruction or request to withhold or avoid agreement.

    The Court’s Practice Notes provide that legal representatives are not to be involved in the preparation of expert reports and are not to attend joint conferences of experts without leave of the Court. The legal representatives should however ensure that experts are familiar with the relevant parts of the key instruments listed above.

    Where a dispute arises between the experts in the preparation of their joint report it is possible to seek directions from the Court to resolve the dispute – Landco (NSW) P/L v Camden Council [2017] NSWLEC 86.

    The Court’s Joint Expert Reports Policy provides that an expert report should:

    • generally engage with the matters the experts are required to address and any disagreement between them;
    • not be a mere ‘copy and paste’ from an individual expert report or council report;
    • only set out facts and assumptions that are relevant to the opinions expressed in the joint report;
    • where relevant, contain photos, maps and diagrams to explain the experts’ evidence, or the difference in the evidence of the experts;
    • avoid jargon;
    • prefer short sentences or ‘dot points’ to long sentences; and
    • not use excessive amounts of material directly taken from legislative sources or other reports.

    Some practical tips on giving expert evidence – ten golden rules[1]

    1. Be prepared – thorough preparation is the key to being a credible and confident expert witness:

    • Read the material you are briefed with thoroughly.
    • Think about whether there is other material that you will need access to and, if so, make arrangements to get it.
    • Read the Code of Conduct and the associated Court practice notes and policy.
    • Always inspect the site.
    • Carefully read the questions you are being asked to answer:
      — Are they within your particular area of expertise?
      –Are there other obvious questions you have not been asked?
    • Make sure you have capacity to prepare the report in the time required and that you will be available to attend the hearing, if necessary.

    2. Take care in writing your expert report:

    • A good report has two readers in mind:
      –the judge (who decides the issues and needs to understand the experts’ opinions and how they have been arrived at); and
      –the other side – both their expert and lawyers.
    • Evaluate the strength of your evidence:
      –see what can be agreed with your counterpart during joint conferencing;
      –anticipate and deal with the weak points in the argument upfront in your expert report – not doing so may result in damage to your credibility later in cross-examination.
    • Develop clear reasoning:
      –the reasons for any conclusions you reach and opinions you form must be clear;
      –link the facts and any assumptions to your opinion and ensure there is a logical flow between them.

    3. Be punctual and ready – Make yourself feel comfortable about the exercise and don’t arrive at Court feeling rushed. Talk to your party’s lawyers beforehand about how your evidence will be taken and make sure you are ready for what is coming. Even little things like being asked whether you will give your evidence on oath or affirmation can throw you if you are not expecting to be asked – especially if you are already feeling a little nervous. Have any papers you need ready to take with you into the witness box. Make sure documents are stapled, or logically organised in a folder, and paginated so you can find and refer to them easily.

    4. Prepare thoroughly – make sure you have thoroughly read your individual and any joint report. There is nothing more embarrassing than finding that the other side’s lawyer has read something to you from your own report that contradicts your argument.

    5. Make sure you understand each question before answering it – guessing what the question was can get you into trouble. There is nothing wrong with asking a lawyer to repeat a question.

    6. Answer the question that was asked as directly, concisely, honestly and courteously as you can. Don’t try to work out where the questioning is going or answer the question that you think should have been asked – but wasn’t. Take your time – If you need to refer to your papers to be able to answer a question, say so. Don’t fall into the trap of trying to appear knowledgeable by answering too quickly. If you need a moment to consider your answer – take it.

    7. Direct your answers to the judge/commissioner – they will be the one who will decide the case, not the lawyers asking you questions. Also, don’t look to your own party’s lawyer for approval when answering questions from the other side. And stay interested in what’s being said especially during ‘hot tubbing’ when questions are being directed to another expert – looking bored or distracted will not reflect well on you.

    8. Make necessary and appropriate concessions – your objectivity is essential to the credibility and reliability of your expert evidence. This will not be lost by forcefully defending your opinion but it may be compromised if you are unwilling to give genuine consideration to other points of view.

    9. Don’t lose sight of your primary obligation to assist the Court – it is very easy to fall into the trap of being an advocate for the party who engaged you. Your role is to provide an impartial opinion to assist the Court make an informed and fair decision. Don’t undermine your credibility by starting to argue for your client’s position.

    10. Finally, don’t engage in personal exchanges with the other side’s lawyer – you will nearly always come off second best!

     

    Read more Essential Guides to Local Government Lawhttps://ballawyers.com.au/local-government-guides/

    If you would like to be notified when new Essential Guides are published, sign up to our mailing list at https://ballawyers.com.au/.

    [1] We acknowledge the helpful assistance derived from the following articles in the preparation of these tips:

    ‘The Art of Giving Expert Evidence’ by Gerry Lagerberg published in The Lawyer 10 April 2000

    ‘Medical Expert Witnesses: Tips and Traps When Giving Evidence’ by Harry McCay and Dr Walid Jammal, Avant Mutual, 20 July 2017

     

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  • Council Expert Witness Survives Challenge

    The acceptance of expert evidence provided by a Council employee by a Commissioner of the Land and Environment Court was unsuccessfully challenged in a recent appeal.

    The appeal arose from an application to modify a development consent for the construction of a dwelling house. The consent, which was granted in 2001, incorporated a design for a driveway to access the dwelling and the modification application involved a significant reconfiguration of the driveway. The driveway was steep and engineering evidence was called by both sides.

    The council’s evidence was given by its development engineer. He held formal academic qualifications in engineering surveying but not in engineering. He did however have extensive experience, spanning almost 40 years in local government, in domestic driveway design.

    His evidence was challenged by the applicant on two grounds. One was that he did not have appropriate qualifications to give expert engineering evidence to the Court as he had no formal engineering qualifications. The other was that, as an officer of the council, he had a conflict of interests and could not be regarded as an appropriate person to give expert evidence to the Court.

    Both grounds of challenge were rejected by the Court in a decision handed down on 10 April 2018.[1]

    On the first ground, Moore J held that the qualification for a person to give expert evidence does not necessarily require that they have a university-based qualification. Instead, they should be able to demonstrate from their specialised training, knowledge or experience that they have obtained the necessary degree of specialised knowledge or skill to be regarded able to speak authoritatively about the subject matter in question. In this case the council witness clearly had significant relevant experience and an appropriate and relevant qualification to give expert evidence on the technical aspects of the proposed driveway design. His Honour commented (at [72]) that:

    Indeed, to hold that the absence of a university-based qualification would disentitle Mr Clare from being accepted as an expert for the purposes of assessing Mr Doyle’s application would be intellectual arrogance of the highest order. It would also be bad at law!

    The Court also rejected the second ground of challenge, saying that neither the expert witness nor the council as his employer had any pecuniary interest or other direct or indirect interest in the outcome of the proceedings.

    Moore J said that a conflict of interests could arise where an expert witness might be perceived as having a direct or indirect pecuniary interest arising out of their employer’s role in particular proceedings and therefore did not meet the independence obligations imposed on expert witnesses. Excluding a potential witness in such a case may not be unreasonable, depending on the particular circumstances. However, his Honour observed that such a situation does not arise in the case of a council employee when the council’s position in the proceedings is consistent with the position adopted by the council employee. The Court noted that a contrary position arises where the position adopted by the council is inconsistent with the approach recommended by the council officer and observed that, to avoid such a conflict, it was customary for councils to engage external experts when that situation occurred.

    [1] Doyle v Hornsby Shire Council [2018] NSWLEC 45.

    For more information about this case, or on council expert witnesses, please contact Alan Bradbury.

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  • Re-wrapping Red Tape: Treasury Laws Amendment

    As we start down the slippery slope towards the end of the 2017-18 financial year, conveyancers, solicitors, buyers and developers alike need to come to terms with the likely impact of the Treasury Laws Amendment (2018 Measures No.1) Act 2018 (Treasury Act) on real property transactions.

    With the Treasury Act commencing on 1 April 2018, buyers (yes, buyers!) rather than the developer (or the supplier) must now withhold and pay directly to the Australian Taxation Office the GST payable on a taxable supply that is made by way of sale or long term lease of:

    1. new residential premises; or
    2. potential residential land that is included in a property subdivision plan and which does not contain any building that is in use for a commercial purpose.

    However, the withholding regime will not apply to new residential premises which have been created through substantial renovations.

    The amount to be withheld by buyers will be equal to:

    1. 1/11th of the purchase price identified in the contract for sale;
    2. where there is no purchase price, 1/11th of the GST exclusive market value; or
    3. where the margin scheme applies, 7% of the purchase price (or GST exclusive market value where there is no purchase price).

    The amount must be withheld and paid to the Australian Taxation Office on the day on which consideration is first provided. In most circumstances, this will be on the day of settlement.

    The Treasury Act applies to all contracts under which any consideration (other than the deposit) is first provided on or after 1 July 2018, though there is an exemption for those contracts entered into before 1 July 2018 and under which the consideration is first provided before 1 July 2020.

    So what are the practical implications of the Treasury Act? Well, for a developer, they will still need to account for the GST amount in its BAS and will be entitled to a credit for the GST amount once paid by the buyer to the ATO. They will also need to give buyers notice specifying whether the buyer is required to withhold payment from the supply, and if relevant, the amount to be withheld and paid to the ATO.

    It would be prudent for developers to consider a review of their existing developments and future sales to ensure both administrative processes and contract terms facilitate the requirements of the withholding regime.

    Whilst the intention of the Treasury Act is to discourage GST avoidance, we expect the changes will be somewhat detrimental to developers and likely to lead to increased transaction costs.

    For property developers who require further advice on these reforms, please contact a member of our Real Estate Development team.

    Written by Benjamin Grady, Associate, and Julian Pozza, Lawyer.

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  • Competition Consumer Act: Business Breakfast Club April Summary

    UPDATE: On 6 November 2017, changes to the Competition and Consumer Act 2010 (Cth) took effect.

    This month at Business Breakfast Club, we discussed changes to the Competition and Consumer Act 2010 (the Act) which change the notification regime and extend the type of prohibited conduct. The changes make it easier for small businesses to obtain legal protection from potential breaches of the competition laws which usually prohibit businesses from collectively bargaining with a customer or supplier. In particular, we focused on the illegal practices of ‘concerted practice’, ‘cartel conduct’ and ‘collective bargaining’. BAL Legal Director, Mark Love shared some of his insights on the topic. Mark touched on:

    Why do you need legal protection?

    Competitors who engage in collective bargaining may be in breach of the Act. The most effective way for businesses to collectively bargain without risk of breaching the Act is to lodge a ‘notification’ with the Australian Competition and Consumer Commission (ACCC) which identifies the proposed bargaining group and the type of conduct they intend to engage in. The notification process has been available since 2007, but has historically been viewed by the business community as not providing a substantive practical benefit. This is because the notifications were interpreted narrowly by the ACCC so it was still possible to breach the Act. Now, notification can be given for a class of persons both in relation to the beneficiaries of the bargaining group and the targets (customers or suppliers). However, with the broadening of the notification regime comes a third basis for infringement: concerted practice.

    Collective bargaining

    Collective bargaining is an arrangement whereby two or more competitors come together to negotiate terms, conditions and prices with a supplier or a customer. Essentially, collective bargaining tends to benefit smaller businesses who do not have the volume (of sales or purchases) alone to give them bargaining power. Permission to collectively bargain can be obtained through the notification or authorisation procedures of the Act provided there is some ‘public interest’ in allowing the conduct.

    Cartel conduct

    Cartel conduct encompasses agreements between competitors to fix prices, divide markets, rig bids, or restrict outputs thus restricting competition. To prove “cartel conduct” the ACCC is not required to prove that there has been a lessening of competition as a result of the conduct, rather the ACCC must demonstrate that:

    1. the persons concerned are in ‘competition’ (whether for customers or suppliers);
    2. there is a relevant ‘purpose’ to the arrangement or understanding; and
    3. there is a relevant contract, agreement or understanding to that effect.

    The Court considered ‘cartel conduct’ in ACCC v Australian Egg Corporation Limited [2017] FCAFC 152. In that case, the ACCC alleged that Australian Egg Corporation Limited (AECL) and two egg producing companies, Ironside Management Services Pty Ltd (T/A Twelve Oak Poultry) and Farm Pride Foods Limited attempted to induce egg producers who were members of AECL ‘to enter into an arrangement to cull hens or otherwise dispose of eggs, for the purpose of reducing the amount of eggs available for supply to consumers and businesses in Australia’.

    Virtually every aspect of the ACCC’s case against AECL was found by the presiding judge to be true and based on largely uncontested facts, specifically the conduct of the parties at an industry summit brought together urgently to address the very issue of the oversupply of eggs and the damage that was apt to do to egg producers and the Australian Egg industry. However, despite the findings of fact the Court found AECL was not in breach of the Act because the conduct was something ‘less than a binding contract or arrangement’.

    Concerted practice

    As a result of the AECL decision, the Act now includes a third basis of infringement which is a hybrid of the cartel and collective bargaining provisions. Concerted practice is a form of coordination between competing businesses by which, without them having entered a contract, arrangement or understanding, practical cooperation between them is substituted for the risks of competition. There must be the purpose or likely effect of substantially lessening competition which has been held to be ‘whether the effect of the arrangement was substantial in the sense of being meaningful or relevant to the competitive process’.

    Q&A Corner

    Q. What are the risks associated with lodging a notification to the ACCC?

    A. Lodging a notification to the ACCC requires businesses to disclose information regarding the proposed conduct in a sufficiently precise manner. The ACCC can then consult with interested parties and assess the notification. As part of the notification, it is important that you:

    • outline the areas of competition likely to be affected by the proposed conduct;
    • describe the likely public benefits from the proposed conduct; and
    • specify the likely public detriments (including any adverse effect on competition).

    Some businesses may be reluctant to disclose this information as it may prompt the ACCC to carefully scrutinise the conduct of the businesses engaged in exclusive dealing. Further, once notification is lodged with the ACCC, it is published on the ACCC’s public register. Businesses must determine whether the risks associated with notifying the ACCC of the proposed conduct (the publication of business information) outweighs the risks of not obtaining the ACCC’s “blessing” for the conduct. Remember, breaches of the cartel, collective bargaining (and now) concerted practice provisions can result in criminal prosecution.

    The Business Breakfast Club is held on the second Friday of each month, the next one is on 11 May. If you would like to attend, please contact us to be added to the invite list.

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  • Essential Guide to Local Government Law: Investigating Staff Misconduct Complaints

    Investigations of staff misconduct complaints, including workplace bullying can be difficult. It is important to carry out your investigations in a reasonable manner: below is a guide on how to best investigate staff misconduct complaints, including workplace bullying.

    Key instruments

    1. Local Government (State) Award 2017 (‘Award’).
    2. Local Government Industry Guidelines on Workplace Investigations under section 36 of the Award (‘Guidelines’)
    3. Model Code of Conduct for Local Councils in NSW (‘the Code’)
    4. Procedures for the Administration of the Model Code of Conduct (‘the Procedures’)

    Key questions to ask when a complaint has been made

    How serious is the complaint?

    • If the complaint is minor, dated, or there are mitigating factors, then it may be best dealt with at a management level. There is discretion under both the Award (clause 36) and the Procedures (at 5.2) to handle a complaint this way.
    • What will be achieved by escalating (or not escalating) the complaint? At law, the only legitimate purpose to invoke civil disciplinary proceedings is to protect the Council (and public confidence in it). Invoking proceedings to simply ‘punish’ an employee is unnecessary and impermissible.

    What process do I need to follow?

    • Establish if the complaint is most accurately characterised as a performance issue, a conduct issue, both, or neither, and adopt the corresponding process. You may need to get more particulars to answer these questions (i.e. who, what, how, where, when etc). If you think the complaint, if substantiated, might amount to a breach of the Code, identify with precision what particular section(s) of the Code are involved.

    Remember that there may be multiple processes to follow, and ensure your process complies with all applicable processes. Key potentially applicable processes include:

    • the disciplinary process set out at cl 36 of the Award (and the Guidelines);
    • the Procedures for Administration of the Model Code of Conduct; and/or
    • the Public Interest Disclosure process.

    Key considerations once a decision has been made to Investigate:

      1. It is important to follow all applicable procedures. Make sure you know who has what role.
      2. Remember that the employee has a right to be represented in any Investigation.
      3. Most Investigations regarding staff can be dealt with ‘in-house’�, but consider whether Council needs assistance of an external body to carry out the Investigation. This is particularly advisable in cases concerning serious or complex allegations, sensitive subject matter, where an actual or perceived conflict of interest exists, or where Council doesn’t have the resources to conduct the investigation expeditiously.
      4. Any sanctions or disciplinary responses for proven misconduct must be only those necessary to ‘protect’ the Council (and public confidence in it). Disproportionate sanctions are impermissibly punitive.

    Key things to remember in all investigations:

    Procedural Fairness

    Procedural fairness is owed to the respondent, not the complainant.

    In essence, the rules of procedural fairness require:

      1. the person who may be subject to an adverse finding is ‘heard’ in a manner appropriate to the circumstances;
      2. the decision maker is able to bring an impartial mind to the question before him or her (and is seen to be able to do so); and
      3. decisions are made on the basis of logically probative evidence.

    In particular, the employee concerned has a right:

      1. to receive clear notice of all allegations and how, precisely, they might offend the Code;
      2. to receive all relevant information before responding to the allegations;
      3. to be given a fair amount of time to consider the allegations and supporting materials before being required to respond; and
      4. for their response to be received and genuinely considered before an adverse decision is made.

    Suspension

    In certain circumstances it may be appropriate to suspend an employee while an investigation is being carried out. However, suspension as a disciplinary tool should be used sparingly and only when it is necessary for the integrity of the investigation and protection of the Council.

    Work Health and Safety

    It is important to carry out your investigations in a reasonable manner so as to reduce the risk of mental health injuries to those involved.

    Need more help?

    Our Employment and Workplace Lawyers provide effective solutions to help manage your workplace and employees, while minimising your exposure to risks and issues. Where claims are made by employees, we are experienced advocates in all workplace jurisdictions, including the Fair Work Commission and the Federal Courts.

    For further advice on investigations into staff misconduct complaints, please contact Gabrielle Sullivan, Director of Employment and Workplace Relations, or Alan Bradbury, Director of Planning, Environment and Local Government.

    Read more Essential Guides to Local Government Law.

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  • 4 BAL Directors ranked in the 2018 edition of Best Lawyers - Australia

    Four BAL Directors have been recognised for their legal excellence in the 2018 edition of the Australian Financial Review’s Best Lawyers Australia list. Produced by a peer review company and published by the Australian Financial Review, the list is compiled following an extensive evaluation process. The list includes more than 3,300 lawyers from 330 law firms nationwide, up from more than 3000 last year.

    The directors have been successful in the following practice areas:

    • Alan Bradbury – Government Practice, Planning and Environment Law;
    • John Bradley – Leasing Law, Real Property Law;
    • Mark Love – Commercial Law, Insolvency and Reorganisation Law, and Corporate Law; and
    • John Wilson – Labour and Employment Law, Occupational Health and Safety Law.

    This is the ninth consecutive year the Alan Bradbury has been acknowledged for his expertise. Managing Legal Director John Wilson makes his sixth appearance in the list, while Mark Love and John Bradley were again recognised for their respective practices.

    John Wilson congratulated his fellow Legal Directors on their achievements.

    “A listing in Best Lawyers is a considerable honour, reflecting as it does the praise of fellow practitioners in each speciality,” he said. “For three of my colleagues and I to be included speaks highly to the calibre of our team at Bradley Allen Love.”

    Best Lawyers is the oldest and most respected peer-review publication in the legal profession. A listing in Best Lawyers is widely regarded by both clients and legal professionals as a significant honour, conferred on a lawyer by his or her peers. For more than three decades, Best Lawyers lists have earned the respect of the profession, the media, and the public, as the most reliable, unbiased source of legal referrals anywhere.

    The full list is available here.

    BAL directors - best lawyers 2018

    Above: Mark Love, John Wilson, John Bradley and Alan Bradbury, – listed in The Best Lawyers in Australia 2018

    ABOUT BEST LAWYERS

    Best Lawyers is the oldest and most respected attorney ranking service in the world. Since it was first published in 1983, Best Lawyers has become universally regarded as the definitive guide to legal excellence. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation. 83,000 industry leading attorneys are eligible to vote from around the world, and Best Lawyers received almost 10 million evaluations on the legal abilities of other lawyers based on their specific practice areas. Lawyers are not required or allowed to pay a fee to be listed; therefore inclusion in Best Lawyers is considered a singular honour.

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