Why Employers Should Seek Professional Legal Advice Before Employee Termination
In a recent Federal Court case, a former senior employee of TechnologyOne has been awarded $5.2 million in damages (plus interest) under the general protections provisions in the Fair Work Act 2009 (Cth) as well as for a breach of contract with respect to incentive payments. The case, Roohizadegan v TechnologyOne Limited (No 2)  FCA 1407, highlights the importance of investigating employee complaints, seeking legal advice before termination and ensuring that caution is taken when terminating employees.
Facts of the Case
Mr Roohizadegan commenced proceedings against TechnologyOne and Mr Di Marco, alleging that he was summarily dismissed on 18 May 2016 due to complaints he had made about workplace bullying. It was noted that TechnologyOne had both an ‘Open Door Policy’ and ‘Workplace Bullying Policy’ that were included in the contract of employment, meaning that Mr Roohizadegan was able to make these complaints as he was exercising a ‘workplace right’. The Respondents contended that the Applicant’s employment was not terminated due to the complaints but rather due to competing allegations made by other employees. However, the company had failed to complete an internal investigation in relation to the allegations made against Mr Roohizadegan, as suggested by their HR department.
The court found that the ‘Open Door Policy’ and ‘Workplace Bullying Policy’ were included in the contract of employment and that the Applicant was exercising his workplace right. The Applicant was successful in proving he was terminated as a consequence of him exercising this workplace right. In other words, the Court decided that an adverse action was taken against him for exercising his workplace right in contravention of s 340 of the Fair Work Act 2009 (Cth).
Comments at trial
The Court made several comments in relation to Mr Di Marco’s actions and decisions. Justice Kerr noted that ‘he twice rejected professional HR advice that it would be unfair to dismiss Mr Roohizadegan on the basis of mere allegations’ and that ‘his choice was to stand with the bullies rather than the bullied’. Justice Kerr stated that ‘to achieve effective deterrence, CEOs in like positions need to know that such temptations as he faced are to be resisted and that there will be a not insubstantial price for failing to do so’ in his consideration of the penalties against TechnologyOne.
Implications of the Case
The case highlights the importance of conducting a proper investigation of internal complaints and the significance of ensuring that, when terminating employees, the correct procedure is followed to ensure employers do not contravene the law. Moreover, it serves as a reminder that employers should always seek and follow professional legal advice in relation to employee disputes and termination.
How can we assist?
If you need assistance in dealing with workplace conflicts or you are dealing with workplace bullying, please contact us on (02) 9963 9800 or via our contact page to speak to our employment law solicitor.
The Fair Work Commission has powers to make anti-bullying orders when a worker has been bullied by an individual or group and there is a risk that the worker will continue to endure workplace bullying by the individual or group.
The Commission does not have the power to order any monetary compensation – the orders are there to get workers back working in a bullying-free environment as quickly as possible, while taking steps to remove future bullying risk.
What is workplace bullying?
Under these powers, workplace bullying occurs when:
- an individual or group of individuals repeatedly behaves unreasonably towards a worker or a group of workers at work; and
- the behaviour creates a risk to health and safety.
The following conduct may constitute bullying:
- aggressive or intimidating behaviour;
- belittling or humiliating comments;
- victimisation, isolation and ostracism;
- spreading rumours or playing practical jokes;
- unreasonable work expectations;
- upwards bullying – such as where a group of employees bully a team leader.
It’s important to note that the unreasonable behaviour must be repeated to fit the definition, but it does not have to be exactly the same specific type of unreasonable behaviour. So, if an employee is subject to belittling comments in one instance, and given unreasonable work expectations in another instance, together that could be repeated unreasonable behaviour which is bullying where it causes a risk to health or safety.
The health and safety risk
Some bullying could be physically violent, or otherwise involve subjecting a worker to a physical safety risk at their workplace. However, bullying will often cause psychological and stress-related risks to health and safety. If you are a worker who is suffering stress due to bullying, it’s not necessary to have a GP’s or psychologist’s diagnosis, but that might help show the health and safety risk that could arise from continued bullying.
What’s not bullying?
“Reasonable management action” will not be held to be bullying. What is reasonable will depend on the facts: management action like performance appraisals, giving warnings or changing a worker’s roster can be reasonable or unreasonable depending on the circumstances, and it will be the Commission’s task to balance people’s views as to what is and what isn’t reasonable.
Who and where?
Under the legislation, bullying by “an individual or group of individuals” towards a worker or group of workers is relevant. So, the bully in question doesn’t have to be employed by the same employer as the bullied worker, the important thing is that the bullying occurred “at work” – that is, at a place at which work activities are done.
Employees of some employers cannot use this process if they are not employed by corporations or certain other entities. For example, if you are employed by a sole trader, you are most likely not covered by the anti-bullying jurisdiction.
What’s the process?
A worker can make an application for an anti-bullying order to the Fair Work Commission. The Commission must start to deal with the application within two weeks.
The Commission sends a copy of the application to the employer, and anyone named as a bully in the application, and they have seven days to respond. The Commission may then deal with the application by having a conference or mediation between the parties, and then potentially a more formal hearing. After that, the Commission can make an order to stop bullying. Of course, the parties might agree on a solution or a way forward before the Commission gets to the point of issuing orders.
What sort of order?
The order will depend on the facts presented to the Commission, and the orders sought by the affected worker or workers.
The point of making orders is to prevent the bullied worker being put at a future health and safety risk arising from future bullying.
If the person who had been causing the bullying is no longer in the workplace, then it might mean that the Commission does not need to make an order to prevent bullying.
However, orders might be made such as changing people’s shifts, changing the person a worker reports to, or changing the work location of the bullied worker or the person accused of bullying.
What if an employee is sacked or resigns?
If an employee is terminated, he or she is no longer able to bring a bullying application. However, there are other applications that can be made in those circumstances, such as unfair or wrongful termination or an application under the general protection provisions.
How can we assist?
If you are an employee, we can answer your questions about the anti-bullying process, such as whether you can apply for an anti-bullying order and whether there are other applications you can make. We can prepare and make an application for you and assist you in the conciliation and hearing stage of your application.
If you are an employer, we can advise on the type of behaviour that may constitute bullying and help you to implement policies and systems to mitigate the risk of bullying in your workplace.
If you need more information, assistance, or advice on how to proceed please call us on (02) 9963 9800 or via our contact form here.
When parties separate, it can be important to make sure that assets are protected before a family law property settlement is formalised. One way that matrimonial assets can be protected is through the lodgment of a caveat.
What is a caveat?
A caveat is a note that is recorded on the title of a property that protects any interest that the maker of the caveat may have on the property. This notice can be used as a way to delay a property transaction. If your ex-partner is the registered owner, a caveat can prevent them from adversely dealing with the property such as by selling, transferring, mortgaging or encumbering it until the court has determined whether there is an interest in the property. A person who lodges a caveat is known as the ‘caveator’.
When should a caveat be lodged?
A caveat may be lodged if a party has a caveatable interest in the property. This may occur if both parties to a relationship have an interest in the property but there is only one party’s name on the title of the property. This may have occurred, for example, if both parties contributed to paying the mortgage or have contributed to the property through other financial or non-financial means throughout the relationship. If the person making these contributions does not have their name registered on the title of the property, then it is likely that they will not gain any benefit from that property, if it were to be sold by the proprietor.
How is a caveat lodged?
A caveat is lodged by way of a caveat form, which can be completed for electronic lodgment by a solicitor or conveyancer or in hard copy, with NSW Land Registry Services. Basic requirements of the caveat include the name and address of the person lodging the caveat, the name and address of the person who owns the property and the interest claimed by the person lodging the caveat. It is important to complete the caveat correctly the first time it is lodged as you cannot lodge another caveat on the same grounds unless you get leave from the court.
What happens after a caveat has been lodged?
Once a caveat is lodged, NSW Land Registry Services will then examine the documentation and if property protocol is followed, they will record the caveat against the title of the property. They will then serve notice to both the caveator and the registered proprietor of the property. Subsequently, the registered proprietor will be entitled to serve a lapsing notice on the caveator, requiring them to commence court proceedings immediately in order to establish their interest to that property. Failing to attend to this within fourteen (14) days will result in the caveat lapsing.
How do you remove a caveat?
In order to remove a caveat legal steps must be followed. A caveat can be removed by bringing an application to the Registrar of Titles, this application must have a supporting certificate signed by a legal practitioner and must be done in writing. This application must also include a statement confirming that the caveator does not own the property and has no claim to it. If proceedings are not commenced by the caveator then the caveat will lapse after three months as a result of the application lodged with the Registrar. If the caveat has lapsed the owner of the property can then lodge a form to remove the caveat.
Get Legal Advice
When drafting a caveat, it is important all proper protocols are followed to ensure that the caveat is permitted by the relevant authority.
Our experienced family law team at Etheringtons Solicitors are ready and willing to assist you with your matter and take the stress out of your divorce or other family law matters. If you need any assistance please don’t hesitate to get in contact via this form or call us on 02 9963 9800.
If you are entering into an employment contract, do you know what should be included? If you are an employer and using an old contract, should it be reviewed first? It is clear contracts should be individually structured to meet the needs of those involved and in reality, both employer and employee should seek legal assistance first before offering or accepting an employment contract.
This article is intended to provide a starting point only and attempts to clarify some of the important information all parties should know.
What terms should always be in an Employment Contract?
Naturally there are some preliminary matters. For example, the identity of the parties needs to be set out as well as the duration of the contract (if fixed).
The contract then needs to specify the terms.
Before the terms are considered, the application of any statutory provisions or award or collective agreement must be considered. Generally speaking, employers and employees cannot contract out of awards or collective agreements.
The following are critical to mention and the particular entitlements need to be specified, including:
- The remuneration;
- The frequency of remuneration reviews;
- The period of the contract (if fixed term);
- The basis of remuneration adjustment and performance management/appraisal;
- Termination conditions;
- Any professional indemnity;
- Any applicable Awards;
- Specific employment conditions including
- hours of work;
- annual leave;
- annual leave loading;
- public holidays;
- long service leave;
- reimbursement of expenses;
- sick leave or carer’s leave;
- parental leave; and
- other leave.
Depending on the nature of the employment and industry it may be important also to include:
- Intellectual property;
- Restrictive covenants;
- Professional development and training;
- The location of employment; and
- Post-termination restraints
A statement of duties should be attached to the contract. For this attachment to become part of the terms of the contract, it should be expressly incorporated into the contract by a statement which makes it part of the contract in the body of the contract itself or as an annexure.
Some workplace policies will be incorporated into the contract because of the nature of their content, some will not, and it is often hard to know what matters a court will find are incorporated. If an employer definitely wants to incorporate a policy into the contract, they can expressly do so by reference in the contract.
Employees and contractors
There is often ambiguity in a worker’s status, as to whether they are a true employee or an independent contractor. Employment law differs from other law, such as tax law, on these questions.
There are also significant legal consequences of incorrectly assuming an employee is a contractor, or vice versa. The true nature of the working relationship should be considered at the time of drafting an employment contract or a contract for services.
The employer is responsible to ensure that appropriate superannuation contributions are paid into the employee’s nominated superannuation fund. Generally a contractor will be responsible for their own superannuation contributions. When offering employment, you should clearly state if that offer includes superannuation.
Some entitlements and obligations that exist in the employment relationship are implied. This means that they are not written down or stated, but they still exist.
The implied terms include:
- An employee must exercise reasonable skill and care in their performance of duties;
- A general duty exists for an employee to obey all lawful and reasonable directions by their employer;
- There must be fidelity and confidentiality within the employer/employee relationship; and
- If there is no provision for termination within the contract then “reasonable notice” for termination must occur unless in circumstances of “serious misconduct”.
When negotiating an employment contract it is essential for both employers and employees that the contractual arrangements should be specific to the individual and the terms say what you want them to mean. Parties entering into these arrangements are wise to seek legal assistance beforehand to ensure they are right.
If you want to know more or if you run a business and would like your draft employment contracts reviewed please call us on (02) 9963 9800 or via our contact form.
As our methods of communication change and develop so do our defamation law needs. These changing needs have been recognised recently in a bill (Defamation Amendment Bill 2020) that has passed in the New South Wales upper house. It amends the Defamation Act 2005 (NSW). These reforms are aimed at reducing the number of costly minor claims and the size of defamation payouts. Here are some of the major changes you need to know.
Serious Harm Element
Previously, there was no threshold that had to be met with respect to the seriousness of a claim in Australian defamation law. Claims were not filtered until they reached trial, which meant they had already incurred significant costs both financially and with respect to time. In the proposed amendment, section 10A, the onus would be placed on the plaintiff to prove that the publication ‘has caused, or is likely to cause, serious harm to the reputation of the person’. The aim of section 10A is to encourage the resolution of disputes earlier by creating a threshold that must be met.
Single Publication Rule
There has been an amendment to the Limitation Act 1969 (NSW) to include a single publication rule. Previously, a defamation action had to be commenced within one year of the publication as per the limitation period but the multiple publication rule provided that each publication of the article was subject to its own limitation period. The newly introduced single publication rule means that the limitation period commences when the initial publication occurs and subsequent republications of the same content or a republication of substantially the same content is not subject to its own limitation period.
An amendment has been put forward whereby it is mandated that the person about whom the defamatory comments are made is to issue a concerns notice to the other party to enable them to provide an offer in order to resolve the issue before the court proceedings can be commenced. The amendment provides clarity as to the form of this notice, its timing and content as well as guidance as to the response to the concerns notice.
Public Interest Defence
A new defence has been put in place to ensure that Australian defamation law does not inhibit freedom of expression by introducing a public interest defence. Courts have previously rejected a common law expression of the defence which is in place in the United Kingdom, Canada and New Zealand. The new section, section 29A, states that a defendant will not be held liable if the article concerns an issue of interest to the public and that they reasonably believed that the matter was in the public interest. It is then up to the judge to determine whether the defence has been established. This amendment is of use to media organisations who print information from confidential sources or whistle-blowers.
Contextual Truth Defence
The contextual truth defence allowed for defendants to plead contextual imputations and was designed to operate in instances where there are multiple defamatory meanings where some are ‘substantially true’ while others are not. These were dealt with in section 26 which has been reformed to clarify the defence and enable the defendant to ‘plead back’ any of the imputations that are substantially true.
There has been inconsistency with the interpretation and application of the previous section 35 of the Defamation Act 2005 (NSW). This section provides a maximum amount for the amount of damages that may be awarded for non-economic loss and this cap is more of a scale or range rather than a limit. However, the amendment provides that awards of aggravated damages must be made separately to an award for non-economic loss.
If you would like further information regarding defamation or believe that you have been defamed or accused of posting defamatory content on your social media page, please do not hesitate to contact one of our experienced defamation solicitors on 9963 9800 or via our contact form here.
Social media has become a valuable tool for families going through the process of separation or divorce as it allows for easy and instant communication. Whether it’s organising parental arrangements between the separating parties or allowing parents and kids to stay connected and exchange pictures and messages, social media is undoubtedly a means of better communication and a faster way of connecting than ever before. However, it is important to remember that social media must be used responsibly, particularly when parties are involved in family law proceedings, as social media posts may end up being used in evidence during family law proceedings to the detriment of the author. In this blog, we will review the current position on social media, how it may be applied as evidence in family law, and the repercussions that may flow from negative or derogatory posts.
What Does The Law Say?
The Family Law Act states that it is a punishable offence to publish or broadcast any account of family law proceedings which identifies any parties, children or witnesses involved in the proceedings. This is an important provision as it aims to protect the privacy of families going through the often stressful process of family law proceedings. This extends to all forms of publishing, including posting on social media or the internet generally. The court also has the power to order you to refrain from posting or removing existing posts.
Moreover, challenges on a party’s credibility are fairly common in family law cases, for example, in the case of the suitability of a parent to retain custody of a child, and the use of social media posts or photos are an easy tool to demonstrate this. One judge described the usage of social media for the purpose of damaging another party’s case as “an unfortunate and increasing feature of modern litigation”.
What Material Can Be Used?
Photos from Facebook or Instagram posts and profiles, private messages or pictures can be used as evidence and are gradually being relied upon in family law proceedings. Some examples of different forms of social media include:
- Text messages or direct messages on apps such as WhatsApp, Facebook Messenger, emails or Instagram messenger;
- Photographs of parents not acting in a safe and responsible manner;
- Facebook, Twitter or Instagram posts relating to the location of a child which was not agreed upon by the parties;
- Derogatory or hurtful social media posts; and
- Social media posts at expensive venues when one party claims to be financially struggling.
A Recent Example
In a recent decision, the father sought the child to be returned to New Zealand from Australia. The mother objected to the relocation and asserted that the relocation to Australia was through an alleged agreement between the parents. The father presented evidence of the mother’s Facebook posts that were contrary to her previous assertion, as well as comments which ascertained the purported Australian travel to be classified as a ‘holiday’. In this case, the Court ultimately ordered that the child should be returned to New Zealand.
Get Legal Advice
Our experienced family law team at Etheringtons Solicitors are ready and willing to assist you with your matter and take the stress out of the divorce or other family law process. If you need any assistance please don’t hesitate to get in contact with one of our lawyers via email at firstname.lastname@example.org or call us on 02 9963 9800 for a no-obligation discussion.
With technology becoming more accessible, intelligent and widely used, it is becoming increasingly important to ensure that your personal information and data is protected from scams. There has been a growth in the number of people online as a result of COVID-19 pandemic and this has caused a proliferation of scammers targeting personal information. This increase has led to a total financial loss estimated at $91m in 2020 so far.
Top Tips to Avoid Scams
The Australian Competition and Consumer Commission has put together its top five tips to help protect your personal information.
- Do not feel pressured to give your personal information away to someone who has contacted you.
- When receiving unexpected emails or messages, do not click on any links, even if it seems to have been sent by a legitimate source.
- Make sure to use strong passwords for all your accounts and your internet network.
- Install antivirus software on your computer and other devices and ensure that it is kept up to date.
- Limit the personal information that is shared about yourself online, even on social media.
There has been an increase of 44% in phishing scams this year alone. Phishing scams are the most common form of scam and it is where a scammer will pose as a legitimate institution such as government departments, banks, telephone companies and other businesses in order to collect personal details which they can use to access bank accounts, superannuation and apply for loans under the stolen identity.
Common features of phishing emails or messages to look out for are:
- An offer that is too good to be true
- A sense of urgency to respond to the message
- Unusual hyperlinks within the message
- Unexpected attachments
- Unfamiliar sender
Get Legal Advice
If you think you have been scammed and need any assistance please don’t hesitate to get in contact with one of our lawyers via our contact form or call us on 02 9963 9800 for a no-obligation discussion.
More information on types of scams and how to protect yourself can be found here.
Scamwatch can also help if you wish to get help or to report a scam.
There are five important things to do before leaving your relationship. In Australia, de facto relationships are recognised by law, therefore when de facto or married couples split, there are legal considerations which must be dealt with before ‘walking out the door’.
1. Gather Important Documents and Protect your Information
Before leaving the family or matrimonial home gather documents like your Will, passport and birth certificate. If there are children involved and you are a primary carer, consider the birth certificates and passports for your children too.
It is important to note that a separation will not change your Will. If you fail to amend your Will, your former partner could benefit as a result of this. Your ex-partner may also have a level of control over your finances or medical decisions unless this is amended.
For an effective property settlement which is fair and reflective of your financial position, you should also gather any relevant financial documents including bank account statements, tax returns, pay slips and superannuation statements. This information can be subpoenaed if necessary, or requested directly from the institution, however, full and frank disclosure of your financial position is required, and having the information readily accessible will save you time and money.
Protect your privacy and security by changing your banking, email, social media, your Apple ID and passwords for your phone. It is also important to change any PINs for your ATM cards. If your partner or spouse is emotional or vengeful, having access to your sensitive information could be an issue for you.
2. Plan for the Children
The parties should reach an amicable agreement about how the children will be looked after and the time each parent will spend with them. A mediation with Relationships Australia is a valuable resource that may help you make plans for the children that are in their best interests. If you are unable to agree on arrangements for the children, a certificate, called a Section 60i, will be provided to you, and you will need to provide this before you can file an Application with the Court in relation to parenting matters. An exception to this rule is where family violence has occurred or there are matters of urgency.
If the parties have reached an agreement, it should be written down and provided to a lawyer so that a Parenting Plan or Consent Orders can be drafted.
3. Access to Funds
Consider whether it is appropriate to limit your partner’s access to joint funds by obtaining a joint authority or closing your account and splitting the balance if the parties so agree. The bank could freeze the account and this may be disruptive for both parties. We recommend keeping a separate bank account and considering freezing a joint credit card if necessary.
4. Sort out the Bills
If you are leaving the family home or business, you should contact creditors and let them know in writing that you are not responsible for future liabilities.
If you are the primary income earner and your partner cannot afford these costs, you may be required to pay them anyway. We recommend that you do this to avoid the other party applying to the Court on an urgent basis for spouse maintenance. Attending Court is costly and should be avoided unless necessary.
5. Consider Third Party Involvement
Before leaving a relationship, consider discussing your issues with a third party who is valued by both partners. Involving a third party, such as through a mediation, can help to avoid emotions clouding your better judgement and assist you to reach resolutions that are in your best interests.
There are many legal considerations that arise following a relationship breakdown. If you are considering leaving your relationship and need more information, or if someone you know needs help, please contact Etheringtons Solicitors to speak to one of our experienced solicitors on (02) 9963 9800 or contact us here.
Lawyers are often stereotyped as being interested in prolonging an expensive court action, however more often the opposite is true, due to the availability of alternate dispute resolution avenues such as mediation.
Lawyers know that court cases are expensive and that clients are fearful that legal costs could escalate to an intolerable level. Lawyers interested in preserving long standing relationships with their clients will often recommend alternative dispute resolution options. Mediation is one of those options.
There are various types of mediation
- Pre-litigation informed settlement, or a round table conference
- Informed settlement conference after the court proceedings have commenced without a mediator
- Courted ordered mediation with a mediator
What exactly is mediation?
Mediation allows parties to remain in control of their own disputes and outcome while facilitating parties to tell their side of the story to the other party and the mediator. It is conducted on a ‘without prejudice basis’ which means that whatever is said during the mediation is confidential and cannot be used in court against you. It rules out the uncertainty and risk of court litigation and allows the parties to make certain compromises to achieve a commercial outcome.
Mediation is one form of alternative dispute resolution. Others include Early Neutral Evaluation, Expert Determination and Arbitration.
In essence, mediation is an informal conflict resolution process brought before an independent, neutral third party. Mediation gives the parties the opportunity to discuss their issues, clear up misunderstandings, and find areas of agreement in a way that would never be possible in a court case.
Mediation is often voluntary. Typically the mediator has no authority to make a binding decision unless both parties agree to give the mediator that power. This is dealt with in advance of the mediation commencing. Mediators are accredited under the National Mediator Accreditation System.
When parties should consider mediation
In practical terms mediation is likely to be quicker and more cost-effective than the more formal processes of arbitration or litigation (in court). Mediation should be considered as early as possible after a dispute has arisen. It is particularly appropriate where a dispute involves complex issues and/or multiple parties.
In addition, mediation can be implemented prior to, or in conjunction with, other forms of dispute resolution such as arbitration or court proceedings.
In circumstances where privacy and confidentiality are important, mediation enables parties to preserve these rights without public disclosure. This often leads to more satisfactory outcomes for both parties.
Advantages of mediation
There are many advantages. In summary these can be described as:
You get to decide
The responsibility and authority for coming to an agreement remain with the people who have the conflict. The dispute is viewed as a problem to be solved. The mediator does not make the decisions, and you do not need to “take your chances” in the courtroom.
In doing this however, you need to understand your legal rights so that you can make decisions that are in your own best interests. It is very important to seek legal advice from a competent litigation lawyer so that you do not agree to an offer that is much less than you are entitled to.
The focus is on needs and interests
Mediation examines the underlying causes of the problem and looks at what solutions best suit your unique needs and satisfy your interests.
For a continuing relationship
Colleagues, business partners, and family members have to continue to deal with each other co-operatively. Going to court can divide people and increase hostility. Mediation looks to the future. It helps end the problem, not the relationship.
Mediation deals with feelings
Each person is encouraged to tell their own story in their own way. Discussing both legal and personal issues can help you develop a new understanding of yourself and the other person. You are encouraged to see things from the other person’s perspective.
Participants in mediation report higher satisfaction rates than people who go to court. Because of their active involvement, they have a higher commitment to upholding the settlement than people who have a judge decide for them. Mediation ends in agreement about 80% of the time and has high rates of compliance.
Apart from court ordered mediation in a large court, for complex litigation in which parties would follow a set structure such as submitting position paper and a mediation bundle to the mediator ahead of the mediation, informal settlement conferences are less intimidating process than going to court. Since there are no strict rules of procedure, this flexibility allows the people involved to find the best path to agreement. Although it is normal for any dispute resolution to be taxing emotionally, mediation is a process that is much less confronting and is conducted in a much more comfortable environment than litigation
Faster than going to court
Years may pass before a case comes to trial, while a mediated agreement may be obtained in a couple of hours or in sessions over a few weeks.
The court process is expensive and costs can exceed the benefits. It may be more important to apply that money to solving the problem, repairing damages, or paying someone back. Mediation services are available at low cost for some types of cases. If you can’t agree, other legal options are still possible. Even a partial settlement can lessen later litigation fees.
Unlike most court cases, which are matters of public record, most mediations are confidential.
Where mediation is not the solution
With mediation, a resolution is not guaranteed. There is the potential that parties may invest time and money in trying to resolve a dispute out of court and still end up having to go to court. Ultimately, it is a call that should be made in consultation with an experienced lawyer.
Mediation should not be a solution in circumstances where it is not appropriate. For example, where a court remedy is necessary such as an injunction or seeking specific urgent court orders.
It must also be remembered that the mediator has no power to impose a binding decision on the parties. Therefore, even after the mediation the matter may be unresolved and you may still need to go to court.
Fundamentally, mediation rarely produces a satisfactory resolution unless all parties to a dispute are committed to a resolution.
Navigating the court system can be a financially and emotionally costly and time-consuming process. Mediation is an alternative. It is suitable for people who are willing to communicate with the other party and attempt to better understand and settle their dispute with the help of a trained third party.
To find out more call us on (02) 9963 9800 or contact us here.
Parties to a commercial building dispute may utilise Security of Payment (SOP) legislation in their jurisdiction, involving adjudication, to resolve payment claims and recover money owing under a construction contract. The relevant legislation for NSW is the Building and Construction Industry Security of Payment Act 1999.
Disputes are resolved quickly by an adjudicator and any amount determined as owing must be paid within the statutory timeframe. The determination is enforceable but without prejudice to the common law rights of either party. Due to the limited time in which an adjudicator must determine a payment dispute, it is not surprising that a determination may come before the Court for judicial review.
The grounds for review have been visited by various Courts with the following cases providing insight as to what might (and might not) justify having an adjudication determination quashed.
No review avenues for non-jurisdictional error
The High Court in Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd  HCA 4 confirmed that parties to an adjudication determination under the Building and Construction Security of Payment Act 1999 (NSW) may not seek judicial review for non-jurisdictional error of law.
The Court reiterated the nature of the (NSW) Act which, amongst other things, was intended to ‘reform payment behaviour in the construction industry’ by ensuring prompt recovery of payment for work carried out under a construction contract. The legislation is ‘coherent, expeditious and self-contained’ and ‘not concerned with finally and conclusively determining the entitlements of parties to a construction contract’.
Accordingly, an adjudicator is sanctioned to make a determination and a Court is not empowered to quash that decision for non-jurisdictional error, even if based on an incorrect interpretation of the subject contract.
An adjudication determination may only be set aside on grounds of jurisdictional error – an error going to the authority or power of the adjudicator, such as non-compliance with procedural requirements under SOP legislation.
Minimum standards required when assessing an adjudication determination
Nuance Group (Australia) Pty Limited (Nuance) v Shape Australia Pty Limited (Shape)  VSC 362 provides guidance as to when a Court might quash an adjudication determination.
Shape served a payment claim on Nuance for over $3.5 million for demolition and associated works at Melbourne International Airport. Nuance responded with a payment schedule stating the amount payable as nil. Shape applied for adjudication for the sum of $2,243,105.55. An amount of $1,400,007.12 was determined payable, which after an adjudication review instigated by Nuance, was reduced to $1,216,715.72.
Nuance challenged the validity of both the original and reviewed determination in the Supreme Court of Victoria.
Nuance submitted that the adjudicator had not determined the amount of the progress claim as required by SOP legislation, which as a minimum necessitated a finding of whether the work identified in the relevant claim had in fact been performed and the value of that work. Rather, the adjudicator had deducted what he considered were excluded amounts from Shape’s claim to arrive at the revised figure and, in doing so, failed to comply with ‘basic and essential requirements’ of the Act.
Nuance was successful, and the adjudication determination was quashed.
Whilst acknowledging the tight time frames under which adjudicators are required to operate, Justice Digby nonetheless conceded that the adjudicator had:
‘…failed to undertake the required task of addressing the payment claim and payment schedule and, consider those parameters of the dispute between the claimant and the respondent as to what claimed work … had been carried out under the Contract and what the value of that work … was.’
The adjudicator had merely worked back from the original claim in a manner that did not constitute a ‘fair and reasonable consideration’ of the determination providing ‘no sufficiently comprehensible reasons and basis for the amount determined’.
An adjudicator’s reasons must be considered in context
Southern Cross Electrical Engineering (Southern Cross) v Steve Magill Earthmoving (Magill)  NSWSC 1027 considered another appeal of an adjudication decision.
Essentially, Southern Cross disputed Magill’s payment claim, which comprised additional amounts for excavation work based on trenching some areas of the subject site that were wider than stipulated in the contract. Southern Cross submitted that the adjudicator had erred by requiring it to prove that there had been no variation to the contract and that the earthmoving works had been over-claimed.
Relying on Justice Vickery’s lengthy series of matters to consider in Plenty Road Pty Ltd v Construction Engineering (Aust) Pty Ltd  VSC 631, Southern Cross claimed that the adjudicator was required to ‘examine all the material for himself, and to come to a conclusion, based on that material as to what amount (if any) is payable.’
Justice McDougall acknowledged the processes set out by Justice Vickery were applicable to a determination however rejected any requirement for them to be ‘applied serially and mechanically in every case.’ Rather, the adjudicator’s reasons must be considered in context which included ‘the content of the dispute as established by the payment claim and the payment schedule, and the parties’ elaboration of that dispute.’
Further, the reasoning must be assessed considering the interim nature of an adjudicator’s determination under SOP legislation, the voluminous material to be dealt with, the strict timeframe and the fact that adjudicators are not usually lawyers.
Cross Engineering’s appeal was dismissed, Justice McDougall concluding that:
‘Factually, the adjudicator’s approach may have been (and probably was) incorrect. It is no doubt something that could have been improved upon if the adjudicator had “world enough and time”. But looking at his approach … I am far from persuaded that it was unreasonable to the extent that it must be taken to invalidate his determination’.
An adjudication determination is not subject to judicial review for non-jurisdictional error.
An adjudicator must apply certain minimum standards when assessing an adjudication application, however his or her reasoning will be considered in the context of the purpose and intent of the legislation, that being for the timely resolution of payment disputes under a construction contract. A decision that emanates from an error of law not associated with a jurisdictional error, will generally not entitle the Court to intervene.
Security of Payments legislation across Australia has been the subject of review and proposed reform. The recent release of the Murray Report recommends the national harmonisation of SOP laws and the implementation of review rights for parties (by a review adjudicator) for determinations concerning amounts of $100,000 or more.
If implemented, construction industry participants should have greater clarity regarding the circumstances under which an aggrieved party can challenge an adjudication determination.
If you or someone you know wants more information or needs help or advice, please contact us on (02) 9963 9800 or via the contact form here.
It is vital for a director to continually monitor and assess the solvency of their company. Failure to do so may lead to insolvency and potential bankruptcy. This article will offer guidance to directors who are uncertain of their duties in managing the solvency of their company.
What is insolvency?
A company is deemed to be insolvent if it cannot pay its debts as and when they are due.
When determining a company’s solvency, the Court will assess the commercial realty of the company’s financial status. This legal process involves various cash-flow and balance sheet tests, which measure the financial position of the company. If the tests show the company is at risk of insolvency, the director must prevent their company from incurring further debt.
What is Insolvent trading?
Under s588G Corporations Act 2001, directors must not trade if their company is insolvent or if by incurring debt the company will become insolvent. It is a director’s duty to prevent insolvent trading.
Consequences for breaching this duty include civil penalties, compensation proceedings and criminal charges. Civil penalties for insolvent trading include the disqualification from directing a company or a fiscal penalty of up to $200,000. In addition to this, ASIC may prosecute and commence compensation orders against directors wherein payments are potentially unlimited. Not only is the director personally liable and at risk of bankruptcy, criminal proceedings may be issued by ASIC for insolvent trading which may lead to fines of up to $220,000 or imprisonment for up to 5 years.
What are a director’s duties?
To prevent insolvent trading, a company director must comply with the following duties:
- Directors must stay informed of their company’s financial position by continually assessing the company’s solvency. By monitoring bank lending facilities, cash flow and current assets, a director may predict and prepare for eventualities of poor liquidity ratios, overdue taxes or trade creditors. This assessment and preparation of potential financial difficulties is a duty which is essential to the solvency of a director’s company.
- Directors should obtain professional advice on the solvency of their company. Legal and financial guidance will inform directors of the risk of insolvent trading and provide options available to address financial difficulties. Options, based on advice, may include the injection of funds from an asset sale or the implementation of a restructuring plan.
- Directors should act in a timely manner should they, on reasonable grounds, suspect that the company is incurring debts they will not be able to pay. In this event, appropriate action should be taken immediately on advice received from legal professionals as some solutions may take time. For example, restructures and turnarounds are very complex and may take several months to prepare and implement.
For more information regarding a director’s duty to monitor and assess the financial position of their company, please visit the ASIC website.
Seek Legal Advice
It is essential that directors are aware of the duties involved in preventing civil and criminal penalties for insolvent trading.
If you require guidance or advice regarding insolvency or if you are a creditor of an insolvent company please contact us on (02) 9963 9800 or via our contact form here.
Every year scams cost Australians millions of dollars as well as considerable non-financial harm, therefore it is crucial that you remain alert so that you are not the target of the next scam. In 2019 alone, there were over 353,000 reports of scams, and Australians lost over $634 million. In this blog, recent trends in scam activity and methods to protect yourself from being scammed are outlined.
Business email scams accounted for the highest financial losses in 2019, costing businesses $132 million according to the ACCC’s Targeting Scams report. A common technique scammers use is to intercept legitimate invoices and change the payment details so that the recipient will not realise that they have been scammed. Scammers may also impersonate staff to request the transfer of funds for purchasing gifts for other colleagues or for other business related expenses.
Small and micro businesses reported more scams than medium and large-sized businesses. The average loss was $11,000, however, some businesses lost up to $200,000. Scams have become increasingly complex and difficult to identify with the aid of technology. Therefore, it is essential for businesses and staff to remain alert and to familiarise themselves with common scams they may encounter.
Consumer scams succeed because they mimic genuine deals and catch consumers off-guard. By taking advantage of new technology, new products or services and major events to create believable stories, it is simpler for scammers to target their audience and capture their money or personal details. Scamwatch has received over 2,000 reports about COVID-19 scams and reported losses of more than $700,000.
Scammers set up fake websites, ads on trusted platforms and false social media accounts in the guise of selling real products. They often ask for upfront payments or an initial deposit, plus additional costs such as administration or transportation. Consumers must also be alerted to common scams such as online shopping scams. These scams do not have a verified payment system, offer free products in exchange for personal details and lure you with unexpected winnings or an investment scheme.
How to Protect Yourself from Being Scammed
Scams target people of all backgrounds, ages and income levels. With increased socio-economic vulnerability during COVID-19, scammers have the opportunity to target a wider audience. For example, with many people feeling lonely during isolation, Scamwatch has seen a recent spike in the activity of puppy scams resulting in Australians losing around $300,000.
The best way to combat online fraud is to stay one step ahead of scammers by learning how to protect yourself. Here are some tips from Scamwatch to help you remain alert:
- Be alert to the fact that scams exist.
- Know with who you are dealing.
- Do not open suspicious tests, pop-up windows or click on links or attachments in emails.
- Keep your personal details secure.
- Choose your passwords carefully.
- Requests for personal details or money should be red flags.
- In particular, be alert to law enforcement scams.
Unfortunately, scams are becoming more sophisticated and are often very difficult to trace, so in most cases, the money can never be retrieved. For further assistance on any matter relating to scams or competition and consumer law, please contact one of our experienced solicitors on 02 9963 9800 or via our contact form here.