by DSA LawHow is the Federal Government assisting financially distressed businesses aside from JobKeeper?
In our previous Insight articles we discussed the changes to insolvency laws[1] and safe harbour laws in Australia,[2] including the various measures introduced by the Coronavirus Economic Response Package Omnibus Act 2020 (Cth),[3] to assist people and businesses by preventing unnecessary insolvencies and assisting businesses with managing debts.
On 9 September 2020, the government announced its plan to extend the temporary relief for financially distressed businesses and individuals impacted by the COVID-19 crisis.
As a result, from 22 September 2020, the regulatory relief has been extended until (at least for now) 31 December 2020 by the Corporations and Bankruptcy Legislation Amendment (Extending Temporary Relief for Financially Distressed Businesses and Individuals) Regulations 2020 (Cth).
Creditor’s Statutory Demand for Payment of Debt
How long is the deadline for responding to a Creditor’s Statutory Demand?
Whilst prior to the COVID-19 response, a company served with a Creditor’s Statutory Demand had 21 days from the date of service of the demand to comply with the demand, compound the debt (agree with the creditor to pay it off over time, or some other forbearance) or issue court proceedings. The COVID-19 response increased the deadline from 21 days to 6 months, and this requirement has been extended until 31 December 2020.
How much does a debt need to be before a Creditor’s Statutory Demand can be served?
The COVID-19 response increased the statutory limit of the debt claimed from $2,000 to $20,000. This has also been extended until 31 December 2020.
This means that a company served with a Creditor’s Statutory Demand in a sum exceeding $20,000 must settle the debt to the creditor’s satisfaction or bring an application to set aside the demand[4] within 6 months of service to avoid a presumption of insolvency.
Safe harbour provisions arising from COVID-19?
The COVID19 Response introduced safe harbour provisions protecting company directors from insolvent trading during this time. This was to give company directors more confidence in trying to trade out of the COVID-19 imposed business slump, without fear that, if they can’t make it out, they would become personally liable for their company’s debts.
Is a director personally liable for debts incurred by a company during COVID-19?
From 26 March 2020 until (with the benefit of the amendments) 31 December 2020, company directors are protected from liability for insolvent trading for debts that the company incurs if:
- the debt is incurred in the ordinary course of the company’s business;
- the debt is incurred during the period of 25 March 2020 to 31 December 2020; and
- the debt is incurred before any appointment of an administrator or liquidator of the company during the period of 25 March 2020 to 31 December 2020.
To substantiate that a debt is incurred in the ordinary course of business, the company will need to demonstrate that the debt was necessary to facilitate the continuation of the business.
What does a director or board do if a company is still struggling in December 2020?
Subject to any further extensions (noting JobKeeper has been extended to the end of March in its updated form, so there is prospect of this), directors and company boards will need to consider the financial position of their company prior to 31 December 2020 to determine whether the company is insolvent and, if a director considers that the company will be insolvent when the temporary safe harbour ends at 31 December 2020, then the director should either:
- put in place a recovery plan under section 588GA to remain in the safe harbour, which requires input from professional advisers that establishes a strategy to get creditors and shareholders a better return than if the company were to be placed into administration; or
- appoint an external administrator on, before, or as soon after 1 January 2020 as possible.
How can DSA Law help?
As you can imagine, our team are already being inundated with requests for assistance as the legislative landscape continues to change.
If you think your company might still be struggling come the end of this year, we highly recommend you reach out to us now so that you can be best prepared to deal with whatever reality your company faces on 31 December 2020.
Therefore, if you have a bankruptcy or insolvency issue,
please Contact
Us or one of the Commercial Lawyers at DSA Law on
(03) 8595 9580 so we can assist you with your concerns.
[1] COVID-19: What are the changes to insolvency laws in Australia
[2] COVID-19: What are the safe harbour laws in Australia?
[3] Coronavirus Economic Response Package Omnibus Act 2020
[4] Corporations Act 2001 (Cth), s459G
by DSA LawCOVID-19 OUTDOOR DINING | Planning Law Changes to help you re-open with outdoor dining option
After three long months of lockdown there is finally some good news for Victoria’s hospitality sector. Yesterday, Victoria’s Minister for Planning, Richard Wynne, announced that pubs, restaurants, cafes, and other food and drink venues will be allowed to use existing outdoor spaces as well as surrounding outdoor space to facilitate the transition to alfresco dining.[1]
The necessary interim exemptions are regulated under amendment VC193 of the Victorian Planning Provisions (“Amendments”) and permits those that would not normally be allowed to trade outside, to do so.[2]
Clause 52.18-6 of the Victorian Planning Provisions provides “any requirement of a permit, including any condition, relating to the layout or location of the preparation, sale or consumption of food or drink on the land does not apply during the exemption period”, same with car parking or vehicle access requirements, if you follow clause 52.18-7.
Following the Amendments, venues will be able to construct temporary structures of up to 3.6m in height without the need to first obtain a permit[3], and temporary liquor licence applications are set to be fast-tracked[4].
The exemption period is defined as the period when a state of emergency declaration under the Public Health and Wellbeing Act 2008 in relation to coronavirus (COVID-19) is in force and for 12 months after.[5]
Certain local laws administered by the relevant council may still need to be met, and we recommend consulting with your council before administering any significant changes.
Don’t hesitate to contact our dedicated planning law team if
you have any queries regarding your preparations to begin trading as soon as
the current restrictions are lifted.
[1] Daniel Andrews, ‘Planning Exemptions Smooth The Way For Outdoor Dining’, The Premier of Victoria (Media Release 21 October 2020) <https://www.premier.vic.gov.au/planning-exemptions-smooth-way-outdoor-dining>
[2] Department of Environment, Land, Water and Planning (Vic), Victoria Planning Provisions (VC193, 21 October 2020), cl 52.18 < https://planning-schemes.delwp.vic.gov.au/schemes/vpps/52_18.pdf>
[4] Daniel Andrews, ‘Planning Exemptions Smooth The Way For Outdoor Dining’, The Premier of Victoria (Media Release 21 October 2020) <https://www.premier.vic.gov.au/planning-exemptions-smooth-way-outdoor-dining>
by DSA LawCommercial & Retail Tenancies – New Regulations are In
In our article published 7 September 2020, we told you about the new legislation that was passing through parliament at, what felt like, a glacial pace, but in legislation terms, was Barry Allen like (you know the guy, red suit, gold lightning bolt…the Flash).
Once again, to understand where we are coming from, if you haven’t read our earlier articles on the first version of the regulations, you might find it useful context (click here for our article on the initial regulations).
On 16 September 2020, we announced to you via our Facebook page and LinkedIn that the legislation had passed and the anxious wait for new regulations began.
Well, EXTRA, EXTRA, READ ALL ABOUT IT, on the day that the old Regulations were originally meant to expire, the amending Regulations (can be read here) have breathed new life into the tired 5 month old version that, frankly in our experience, wasn’t really working to resolve the disputes that actually needed imposition and guidance of legislature.
These amendments are an acknowledgement of that and so we set out on the path of trying to help you understand the new landscape.
The new Regulations, with amendments incorporated, can be found here.
What do the new COVID-19 Leasing Regulations change from the first version?
When we say new landscape, we mean it. Those still negotiating their first deal have a whole new bunch of considerations.
Those who thought they had theirs covered until the Scheme ends, might want to reconsider.
Those who negotiated to a fixed date earlier than 31 December 2020, can have another go.
Aside from entirely new provisions, most of which followed what we foreshadowed from the proposed Bill in our 7 September article, there are a number of significant changes to the way the existing system will work moving forward.
Can a tenant ask for more rent relief?
YES! The original Regulations allowed tenants a ‘second bite at the cherry’ upon material changes in their turnover being recorded.
This has been given a facelift, and now if a tenant’s previously agreed rent relief scheme wasn’t based on its decline in turnover at the premises subject of the lease (e.g. you agreed to fixed reduction per month, or included as part of the calculation, income from other sites within your business), or doesn’t go until 31 December 2020, you can apply again, even if your circumstances haven’t changed significantly since you did the deal with your Landlord.[1]
Can a tenant get rent relief now if they weren’t eligible previously?
The definition of an ‘eligible lease has come into the Regulations and been changed in a way that will now extend eligibility to non-employing tenants, starkly left out altogether in the first scheme.[2]
Does a tenant still have to pay its outgoings?
Previously a Landlord could press hard on outgoings and default a tenant for not paying these, but were prevented from doing so regarding rent. Now, if an eligible tenant has made an application pursuant to Regulation 10 that remains unresolved, failure to pay outgoings due any time after 29 March 2020 are exempted from eviction,[3] despite relief from payment of outgoings not being an option under the scheme unless a tenant pays a rent including outgoings.[4]
If parties are happy, do they have to change anything?
If an existing rent relief arrangement was entered into using a length of time referrable to the terms of the legislation, particularly the “relevant period”,[5] and a tenant is happy with it, then no changes need to be made.
If your arrangement specified an end date, and the parties want to extend it to the end of the year, then a simple email or written exchange should suffice to this effect, though us lawyers would recommend you properly record it by way of a lease variation.
How long do new rent relief arrangements go for?
A landlord’s offer of rent relief must now apply to the period starting on the date of the tenant’s request for rent relief and ending on 31 December 2020[6]. The amended Regulations do not make clear if this applies retrospectively to applications not yet resolved but applied for prior to the Amendments, or even those applied for prior to the original Regulations and ratified under same by Regulation 10(6). This could be huge, given many tenants never applied formally as the system was so late in coming into operation. See further below regarding the VSBC guidance to make a fresh application for all tenants.
If a tenant stops getting JobKeeper, can they still get rent relief?
Where rent relief has been agreed and the terms have already been extended (whether by result of the extended Regulations or by agreement), falling out of JobKeeper eligibility will not affect the ongoing arrangements.
If a tenant no longer qualifies for the new JobKeeper arrangements and didn’t apply to extend a rent relief agreement that has already finished, they are no longer eligible.
What are the options if parties can’t agree?
If the parties haven’t been to mediation through the VSBC, that’s the first step.
There are quite lengthy new provisions that give the VSBC the power to make a binding order if mediation fails. We’ll address these in a subsequent article on how to get the other side to agree to reasonable relief, so watch this space.
Does a tenant need to make a fresh application for relief over the additional period?
YES! The VSBC has provided guidance that, in their view, this is the case even if you’ve got an ongoing application, unless you have already provided the information required under the new version of Regulation 10.
The VSBC have provided links to their template letter and updated tenant information guidance.
How does a tenant make a fresh application?
The process for applying to a Landlord has not really changed, just been given more requirements rather than the guides previously provided.
- Any fresh application for rent relief still must state the lease is an eligible lease, not excluded from the regulations.
- It now must also include a statement setting out the tenant’s percentage decline in turnover[7] associated only with the premises to which the rent relief application applies.[8]
- The information required to support a tenant’s request for rent relief, which the VSBC had previously published as a guide, has now been adopted as a requirement.[9] It is crucial this information is included in any fresh application, as without it, the date is not set from which relief begins, and the tenant is not able to rely upon the eviction moratorium in Regulation 9 (see point 2 above).
- The turnover being assessed has been clarified as not including any “coronavirus economic response payment”, which adopts a definition from the Federal legislation as convoluted as you would expect, but presently only includes JobKeeper. It makes no clarification as to State Government grants, for example, leaving same to be a point of contention between disputing parties.
How can DSA Law help?
Our team of
dedicated and experienced Commercial Lawyers, whether in our Melbourne or
Ballarat offices, have been assisting Landlords and Tenants around Victoria
navigate these Regulations.
For advice regarding the changes, your
obligations under the COVID-19 Omnibus Act, or other tenancy law issues
please Contact Us or one of our Lawyers at DSA Law on (03) 8595 9580 or our Ballarat office
on (03) 5331 1244.
[1] Regulation 11, COVID-19 Omnibus (Emergency Measures) (Commercial Leases and Licences) Regulations 2020 passed 29 September 2020 (the Regulations).
[2] Regulation 4A.
[3] Regulation 9, as amended.
[4] Now clarified under Regulation 10(4A).
[5] Regulation 4, Definitions.
[6] Regulations 10(4)(a) and (c).
[7] Calculated in accordance with the decline in turnover test used by the tenant for their JobKeeper reporting, in relation to the tenant’s most recent decline in turnover test period, see sections 8 and 8A of the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020
[8] Regulation 10(2)(a)(iii) & new Regulation 10(2A).
[9] Regulation 10(2), as amended
[1] For more information regarding initial regulations relating to Commercial & Retail Tenancies, read our article, “COVID-19 Omnibus Regulations 2020 and Leases in Victoria”. [2]Daniel Andrews, ‘Pause on Evictions Extended and Extra Renter Protections’, The Premier of Victoria (Media Release, 20 August 2020) <https://www.premier.vic.gov.au/pause-evictions-extended-and-extra-renter-protections>.[3]COVID-19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020 (Vic). [4] Victoria, Second Reading Speech, Legislative Assembly, 3 September 2020, 2. [5] COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic) s 15. [6] COVID-19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020 (Vic); for a progression of the present Bill, Legislative Assembly, ‘COVID-19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020 (Vic)’, Victorian Legislation (2 September 2020), <https://www.legislation.vic.gov.au/bills/covid-19-commercial-and-residential-tenancies-legislation-amendment-extension-bill-2020>.
by DSA LawCOVID-19: Eviction Relief Extended for Commercial and Residential Tenancies in Victoria
Amendments to the existing regulation of Commercial & Retail tenancies, introduced in the COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic), imposed new regulations to ensure there are avenues of relief for people experiencing financial strain due to COVID-19. The amendments were passed on 1 May 2020 and applied retrospectively from 29 March 2020. They were set to expire on 29 September 2020.[1]
However, on 20 August 2020, the Premier’s office announced that, due to the prolonged impact of COVID-19 in Victoria, certain provisions in the COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic) would be extended, [2] and more relief would be available in certain circumstances, for both the Retail & Commercial leasing sector, as well as the Residential sector.
The relevant announcement foreshadowed that:
- Eligible residential tenants and landlords will be supported with up to $3,000 in rental payments as part of the Rental Relief Grant program, with new recipients able to apply for the full amount, and up to $1,000 extra available for previous recipients.
- Residential and commercial landlords may also be eligible for an increased land tax discount – now up to 50 per cent – doubled from the earlier 25 per cent.
- Eligible small businesses that own their own commercial premises will also now benefit from land tax relief.
What are the proposed changes by the COVID-19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020?
As we know, government press releases can say plenty, but it is the legislative framework, particularly the Regulations, that will really tell us how these extensions are going to work.
According to the State Parliament’s website, the COVID-19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020 (“Bill”),[3] has been given a second reading and debate concluded on 4 September 2020.
The Bill will enact a range of amendments and extensions into the existing Act initially passed. Some of the more notable changes are as follows:
- The ban on evictions and rental increases will now extend. The ban on evictions applies to both retail and non-retail commercial leases and licenses and continues until 26 April 2021 (except in specific circumstances).
- The definition of ‘eligible lease’ has been amended to repeal the conditions whereby the tenant must be an SME entity and qualify for the Jobkeeper scheme, in anticipation of the change of the scheme’s eligibility come 30 September 2020 and the likelihood that many existing eligible leases might then become ineligible, despite needing ongoing rental relief and protection under the regime. Instead the definition of ‘eligible lease’ will be prescribed by the updated Regulations to be more flexible. This flexibility will include opening the regime to non-employing tenants, which had been a significant criticism of the current arrangements. [4]
- All residential tenancy related amendments have been extended to 28 March 2021.
As with the first tranche of legislative provisions passed in April and May of this year, the Regulations are where the logistical mechanisms will be enshrined. These Regulations are empowered by section 15(1) of the Act,[5] to which the new Bill has made considerable changes.[6] This gives us some insight into what might be coming but we hope the Regulation amendments are not as far behind the Act amendments as last time.
What proposed powers will be delegated to the Victorian Small Business Commissioner?
Based on the proposed amendments to section 15(1), it would appear the Minister for Small Business (which means the Victorian Small Business Commissioner’s office as the Minister’s delegate) will be given powers to:
- Make orders forcing rental relief to be granted to their tenants, and implementing systems for review, appeal, variation, and enforcement of such orders;
- Manage the application process for rental relief, including introducing preconditions;
- Require statutory declarations from parties to a rent relief application to support the materials they are submitting;
- Stipulate more prescriptive calculation methods. In this manner, Mr Pallas’ of the State Government has gone on record to say that this will reflect more stringent requirements to base rent relief off turnover changes. Whether that’s in the form of a month by month, or some other assessment overall, is yet to be seen.
Watch this space as we will bring you updates as soon as the Regulation amendments are available.
How Can DSA Law Help?
For advice regarding the changes to your lease, your obligations under the
COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic), or other tenancy law issues, please Contact Us or one of our Commercial Lawyers at DSA Law on (03) 8595 9580.
[1] For more information regarding initial regulations relating to Commercial & Retail Tenancies, read our article, “COVID-19 Omnibus Regulations 2020 and Leases in Victoria”.
[2]Daniel Andrews, ‘Pause on Evictions Extended and Extra Renter Protections’, The Premier of Victoria (Media Release, 20 August 2020) <https://www.premier.vic.gov.au/pause-evictions-extended-and-extra-renter-protections>.
[3]COVID-19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020 (Vic).
[4] Victoria, Second Reading Speech, Legislative Assembly, 3 September 2020, 2.
[5] COVID-19 Omnibus (Emergency Measures) Act 2020 (Vic) s 15.
[6] COVID-19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020 (Vic); for a progression of the present Bill, Legislative Assembly, ‘COVID-19 Commercial and Residential Tenancies Legislation Amendment (Extension) Bill 2020 (Vic)’, Victorian Legislation (2 September 2020), <https://www.legislation.vic.gov.au/bills/covid-19-commercial-and-residential-tenancies-legislation-amendment-extension-bill-2020>.
by DSA LawHow do I make an agreement legally binding?
You make many agreements throughout the day without realising. You promised your partner you’ll be home for dinner, you paid $1.20 for petrol on the way to work and you agreed you’d get that report to your boss by 3pm.
But what, if anything, separates these agreements from legally binding contracts?
Components of a Contract
To be legally binding, an agreement usually must have the following basic elements:
- Capacity
- Offer & Acceptance;
- Consideration;
- an Intention to create a legal relationship; and
- any formalities.
We briefly explore each of these elements below.
Capacity
To enter into a contract, you must have the mental capacity to understand and appreciate its terms and any obligations pursuant to it.
The following categories of people may be restricted in their ability to enter into binding contracts:
- A person suffering from a mental disability who, as a result, is unable to comprehend and appreciate the terms of a contract. If the other contracting party knew (or should have known) about the disability, the contract may be liable to being declared void (meaning unenforceable). A similar rule exists for people who are intoxicated at the time they enter into an agreement.[1]
- Minors (being persons under the age of 18) usually cannot enter into binding legal agreements, though there are exceptions.
- A bankrupt cannot enter into certain types of contracts, such as for credit, and will usually otherwise need to disclose the fact that they are bankrupt.[2]
Offer & Acceptance
A contract is initiated by one party expressing an interest to be bound by terms it suggests.[3] Offers to contract can be made to anyone, ranging from a specific person or group, to ‘the world at large’ such as an advertisement.[4]
Once an offer is made, it is open to be accepted by the recipient until any specified deadline or until it is withdrawn. Depending on the situation, offers can be accepted either verbally or by a party’s actions, such as acting in accordance with the offer or signing a document that confirms the contract in writing.
Consideration
At its essence, a contract is a promise to do whatever was agreed in exchange for something of value in return, being the price of the contract. For a contract to become binding, this price must be paid in consideration of that promise.
It is not necessary for consideration to be of equivalent worth to that which was promised, though it must have some value.[5]
Despite this requirement, there are two circumstances where a contract can be binding without consideration:
1.where a formal written contract is properly executed by the parties; or
2. where one party’s actions have caused the other party to assume that there is a valid contract, upon which assuming party relies, that reliance causes the assuming party to suffer some loss or disadvantage (i.e. detriment) and, in light of those actions, a Court decides it would be unfair to find a contract never existed between them.[6]
If an agreement obliges a party to do something for nothing, this can also be formalised by way of a Deed. This requires a particular execution process to be followed and should always be done with the aid of a lawyer.
Intention to create a legal relationship
It may seem obvious but for an agreement to be legally binding the parties must have the intention of entering into a binding relationship at the time of the action being relied upon to evidence the agreement. Paying some form of consideration usually shows a party’s intention to enter into a contract, however, some kinds of contract presume this intention, for example:
- commercial agreements, by their nature, presume an intention to be legally binding; conversely
- agreements made between friends and family do not presume an intention to be bound. This is why inter-family loans and other accommodations should always be reduced to writing somewhere, in case one party changes their mind, loses their faculties or is pressured to ‘forget’.
If you want to overcome these presumptions, then it is up to you to establish evidence they should not apply.
Importantly, if it appears outwardly that a party intends to be legally bound, it does not matter if they harbour secret intentions to not be. [7]
Formalities
Some forms of contract require specific formalities to be complied with to be legally binding. For instance, section 126 of the Instruments Act 1958 (Vic) requires a party selling an interest in land to evidence the sale in writing.[8]
Conclusion
There are many exceptions and rules to these contractual elements.
After considering the above, which of the daily ‘agreements’ do you think involve legally binding contracts? Answer: all three possibly, though as a starting point only the petrol purchase has sufficient elements to evidence a contract without further context.
How Can DSA Law Help?
If you are seeking
advice regarding commercial law issues, and believe you could benefit expert
legal assistance, please Contact
Us or one of our Commercial
Lawyers at DSA Law on
(03) 8595 9580.
[1] See both Gibbons v Wright (1954) 91 CLR 423 and Blomley v Ryan (1954) 99 CLR 362.
[2] See our Bankruptcy Article, “What happens when you declare Bankruptcy?“
[3] Australian Woollen Mills v The Commonwealth (1954) 92 CLR 424.
[4] See this summary of Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256.
[5] Australian Woollen Mills v The Commonwealth (1954) 92 CLR 424.
[6] Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
[7] See this summary of Air Great Lakes Pty Ltd v KS Easter Holdings [1989] 2 NSWLR 309.
[8] Instruments Act 1958 (Vic), s126.
by DSA LawWhat is the Australian Consumer Law and Consumer Guarantees?
We often see the terms, Australian Consumer Law, and Consumer Guarantees, displayed when visiting a retail store. Notices of guarantees are generally provided when consumers purchase goods or services. This could include purchases of:
- hardware (i.e tools);
- electronics (i.e a new TV);
- furniture; or
- daily everyday goods for consumption.
The list of things it applies to is essentially unlimited. Each of those purchases, generally, have guarantees provided under the Australian Consumer Law.[1] That is, goods or services supplied in trade or commerce.
In this article, we explore the frequently asked questions about the Australian Consumer Law and Consumer Guarantees, such as:
- who is a consumer under the Australian Consumer Law?
- what are the common Consumer Guarantees under the Australian Consumer Law?
- what are the remedies available for breaches of the Consumer Guarantees?
Who is a Consumer?
It may be generally thought that a consumer is an everyday person who purchases a good or a service. However, that is not exactly correct. A special meaning of what is a “consumer” is provided under the Australian Consumer Law.
A person is generally considered a “consumer” if:[2]
- the amount paid for a good or service does not exceed $40,000; or
- the good or service acquired is of a kind that is generally acquired for personal, or domestic use or consumption; or
- the goods were a vehicle or trailer acquired for use principally in the transport of goods on public roads.
There ae of exclusions to this, however, these are the generally applicable rules.
What are the Consumer Guarantees?
The Australian Consumer Law provides that, when goods or services are supplied to a consumer, the supplier must guarantee they are of a certain standard. Therefore, when a consumer purchases a good, the following guarantees could apply:[3]
- a guarantee of Acceptable Quality[4]
- a guarantee for Fitness of Disclosed Purpose[5]
- a guarantee of Express Warranties[6]
Each of the guarantees provides protections for a consumer for separate reasons. For example, a Guarantee of Acceptable Quality would generally mean that the goods should, at first instance, be:[7]
- fit for purpose for which goods of that kind are commonly supplied;
- acceptable in appearance and finish;
- free from defects;
- safe; and
- durable.
This would be different to a Guarantee for Fitness of Disclosed Purpose, which would generally require that the Goods supplied were reasonably fit for the purpose that a supplier represented.[8] For example, if a sales person said that a vehicle purchased for $30,000 could reach 500km per/hr when in fact it could only reach 150km per/hr, then this may not be fit for the purpose that was represented to you. This is different to the Guarantee of Acceptable Quality, in that not every car generally is expected to go 500km/hr.
When it comes to buying a car, the Australian Consumer Law may also apply to help protect against the purchase of ‘lemon’ cars.
Furthermore, if a consumer purchases a service, the following guarantees could apply:
Similar to the guarantees applicable to goods, the requirements to meet the eligibility for each guarantee provided for services would be different. For example:
- when seeking to rely on a Guarantee for Due Care and Skill, then you can reasonably ask whether the service was provided with due care and skill expected of someone experienced in providing that service?
- when seeking to rely on a Guarantee as to Fitness for Purpose or Desired Result, you might ask whether the service acquired was fit for the purpose that was made known to the supplier when they were engaged?
What are the remedies available?
Remedies are also available when there are failures (major failures or non-major failures) relating to goods or services supplied to consumers. In the context of goods supplied, this could include:
- refund, replacement, or repair of the good/s; [11]
- recovery of reasonable costs of having the failure rectified;[12]
- rejecting the good/s;[13]
- compensation for reduction in value of the good/s.[14]
Furthermore, in the context of services, the remedies available could include:
- terminating the contract for supply of services;[15] or
- recovering compensation for any reduction in the value of the services payable by a consumer.[16]
However, this does not limit the right for consumers to recover damages for losses incurred by a consumer that are reasonably foreseeable.[17]
Whilst the array of remedies available to a consumer is broad, seeking legal advice on how the guarantees under the Australian Consumer Law may apply in your situation is important in ensuring that you are fully aware of the recoveries available and that your legal rights are protected.
How Can DSA Law Help?
If you are seeking advice regarding commercial law
issues, and how the Australian Consumer Law may apply to your business, and
believe you could benefit expert legal assistance, please Contact Us or one of
our Commercial Lawyers at DSA Law on (03) 8595 9580.
[1] Competition and Consumer Act 2010 (Cth) sch 2 (‘Australian Consumer Law’).
[2] Australian Consumer Law, s 3. There are exclusions to what can be considered a “consumer” however this article provides a broad overview on what the meaning of “consumer” is.
[3] In our article, we address the common guarantees that are generally applied within the consumer context.
[13] ibid.
[14] ibid.
by DSA LawWhat is a Caveat and what you should know?
In Victoria, a caveat is used to record on the land’s title a person’s interest in that land that would not otherwise be reflected on the title, or are awaiting subsequent lodgement of documents to formally record that interest.
This article addresses the following questions, in an overview:
- what is the purpose of a caveat?
- when should a caveat be lodged?
- how should a caveat be lodged?
- what are the damages that can be awarded because of wrongly lodged caveat?
What is the purpose of a Caveat?
In Victoria, section 89 of the Transfer of Land Act 1958 authorises the Registrar or Titles (“Registrar”) to register caveats against the title of the land on the application of a person. It is important to note that the role of the Registrar is not to assess the legitimacy of the application or the underlying interest in the land asserted.
The predominant or primary purpose of lodging a caveat is: [1]
- to warn the relevant Registrar of Titles of a claim; and
- to ensure that the caveator is given notice to oppose any dealing with the title of that land before that dealing can be registered.
There are many ways that a caveatable interest in land can arise. The most common interests, include:
- a purchaser’s interest acquired pursuant to a contract of sale with the vendor;
- equitable interest through a trust;[2]
- an interest as an unregistered mortgagee;[3]
- an interest pursuant to a charge (often created via their credit application forms);[4]
- a family law interest in matrimonial assets; and
- the interest of a trustee in bankruptcy where land has vested in the trustee.[5]
When should I lodge a Caveat?
Your caveat should be lodged as soon as your interest in the land arises, or as soon as practicable thereafter. This is to ensure that others are put on notice as to your interest, thereby avoiding the possibility of someone else obtaining a competing interest (such as a lender securing a loan against the property), which would result in a priority dispute with that person who subsequently acquires an interest in the land.
If you are found to have unreasonably delayed the registration of your caveat, you might find that a later created interest in the land takes priority over yours.[6]
How do I lodge a Caveat?
Caveats are now lodged predominantly through an electronic subscription service called PEXA. Given the implications of recording a caveat incorrectly, which can include significant financial damages and court costs, you should consult a solicitor that can advise you whether or not to lodge a caveat on your behalf. They can then do so through their PEXA subscription.
It is important for the caveat to accurately reflect your interest in the land, including identifying appropriate prohibitions on further dealings with the land. If your caveat is contested, it may only be amended in exceptional circumstances[7].
How can a Caveat be removed?
The most common way that caveats are removed is withdrawal by consent. This usually occurs when the land subject to your caveat is being sold, or the interest you were claiming becomes registered more formally (e.g. a mortgage). If your caveat secures an amount of money you are owed, the land owner should invite to withdraw your caveat when they have found a purchaser and are seeking to settle, in return for a share of the proceeds of sale that your interest entitles you to.
There are also procedures for dealing with ‘contentious’ or ‘hostile’ caveats, where the underlying interest in the land protected by the caveat is disputed.
There are two main methods for dealing with a hostile caveat:
- the first method is to request that the Registrar issue a lapsing notice; [8] or
- the second method is to issue proceedings in the Supreme Court for the removal of the caveat. [9]
The two methods, lapsing notices, and issuing of proceedings, are examined more closely below:
1. How does lapsing notices affect Caveats?
A lapsing notice received from the Registrar will inform you that your caveat will be removed from the title of the land on a given day (being not less than thirty (30) days from the date of the notice) unless, before that day, you institute proceedings to maintain your caveat and notify the Registrar of Titles that such proceedings are on foot.
Accordingly, it is imperative to bring a lapsing notice to your solicitor as soon as possible if you wish to ‘defend’ your caveat.
2. How does the issuance of proceedings affect Caveats?
Alternatively, the owner of the land or another interested party can initiate proceedings to have your caveat removed from the title of the land. This will involve an examination by the Court of the underlying interest that you have in the land that is protected by your caveat and consideration of the balance of convenience[10].
The onus will be on you, as the caveat holder, to justify your underlying interest in the land[11].
Where the land is to be sold imminently, it is common (and practical) for the parties to agree for the caveat to be withdrawn so that the sale can proceed, with monies that are subject to the competing interests being retained (either paid into Court or quarantined in a solicitor’s trust account) from the sale pending the Court’s determination of your interest in the land.
What are the damages that can be awarded when lodging a Caveat?
The Court can order payment of compensation to a person who suffers loss and damage because of a caveat having been lodged ‘without reasonable cause’[12].
To be awarded compensation, a plaintiff must first demonstrate that there was no interest in the land as asserted in the caveat, and that the person lodging the caveat did not have an honest and reasonable reason to claim that it had that interest.
Damages suffered can include:
- loss of value of land caused by a caveat’s impact on a land owner’s opportunity to sell the property according to a contract.[13]
- Interest and costs payed by a vendor due to a delayed settlement of a property sale.[14]
How Can DSA Law Help?
If you are seeking advice regarding a caveat and believe you could benefit expert legal assistance, please Contact Us or one of our Property Lawyers at DSA Law on (03) 8595 9580.
[1] J. & H. Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546 per Windeyer J.
[2] Schmidt v 28 Myola Street Pty Ltd [2006] VSC 343
[3] Avco Financial Services v White [1977] VR 561
[4] ibid.
[5] E.g. reference is made to such lodgement in section 126(3) of the Bankruptcy Act 1966 (Cth).
[6] E.g. LTDC Pty Ltd v Cashflow Finance Australia Pty Ltd [2019] NSWSC 150. Counter-reference the decision of the WA Supreme Court in Bunnings Group Pty Ltd v Hanson Construction Materials Pty Ltd & Anor [2017] WASC 132.
[7] Midwarren Estates Pty Ltd v Retek & Stivic [1975] VR 757.
[8] Transfer of Land Act 1958 (Vic) s 89A.
[9] Transfer of Land Act 1958 (Vic) s 90(3).
[10] Yamine v Mazloum [2017] VSC 601 at paragraph 15.
[11] TL Rentals v Youth On Call [2018] VSC 105 at paragraph 29.
[12] Transfer of Land Act 1958 (Vic) s 118.
[13] RDN Developments Pty Ltd v Shtrambrandt & Ors [2011] VSC 130.
[14] KB Corporate Pty Ltd v Sayfe and anor [2017] VSC 623.
by DSA LawForeign Purchaser Duty Surcharge & Discretionary Trusts
As of midnight 1 March 2020, the Victorian State Revenue Office drew a line in the sand, imposing a mandatory 8% duty surcharge on the purchase of residential land by foreign discretionary trusts.
This mandate has the potential to impact most discretionary trusts, given the commonly broad classes of beneficiaries prevalent in discretionary trusts.
Although this article focuses on Foreign Purchaser Duty Surcharge Rules in Victoria, it is worth noting that such Rules differ slightly in New South Wales and Queensland. In New South Wales, a foreign person is required to pay an 8% surcharge on any residential land they acquire. In Queensland, a foreign person is required to pay a 7% surcharge on any residential land that they acquire. Additionally, in both states, a foreign person must pay a land tax surcharge of 2%.
What Constitutes a Foreign Trust?
The Duties Act 2000 (Vic) (“Act”) defines a foreign trust to mean any trust in which a foreign corporation or natural person holds a substantial interest in the trust estate.[1]
Special
rules under the Act apply for determining the substantial interest threshold
for discretionary trusts, because under a discretionary trust there can be
times when no person has a beneficial interest. The Act provides that if, under the terms of a trust, a trustee has
the power or discretion to distribute the capital of the trust to
a person or a member of a class of persons, any
such person is taken to have a beneficial interest in the
maximum percentage of the capital of the trust.[2]
What Does This Mean For Your Discretionary Trust?
Most, if not all, discretionary trusts have a broad class of beneficiaries (e.g. any spouse, child, grandchild or grandparent of the primary beneficiary or the spouse of such child, grandchild or grandparent).
A single person from amongst this wide-ranging class of beneficiaries who satisfies the Act’s definition of a foreign person, regardless of whether they have received any distributions from the trust or are likely to in the future, will cause the entire discretionary trust to be deemed foreign.
This means that in the case of most discretionary trusts, any future purchase of residential land (or indeed purchased from 1 March 2020) will incur an additional duty surcharge, which, depending on the value of land, could be upwards of several hundred thousand dollars in additional stamp duty.
What Does This Mean For Your Unit Trust?
The Foreign Purchaser Duty Surcharge also applies to Unit Trusts. If a unit holder is a foreign natural person and has a substantial interest in the trust, the trust will be deemed foreign trust. Any purchase of residential property by such a Unit Trust will therefore attract additional duties.
How Can You Avoid Additional Surcharge Duty?
Most trust deeds provide a mechanism for the provisions of the deed to be amended. The terms of your trust deed may be varied by a simple deed of amendment to exclude foreign beneficiaries from being eligible to receive allocations of income and advancements of capital from the trust. Such an amendment to the trust would limit the class of beneficiaries and the trust would no longer trigger the foreign beneficiary surcharge duty provisions of the Act.
If you would like to have your Trust Deed reviewed to establish whether the updated provisions of the Act apply to you, or wish to discuss the above further, please feel free to contact Mr Zaid Mohseni or Mr Mitchell Hickey of our office.
[1] Duties Act 2000 (Vic), s 3.
[2] Duties Act 2000 (Vic), s 3B.
by DSA LawWhen is a contract frustrated?
COVID-19 has had a major effect on everyday life, complicating even simple transactions like paying for groceries in a store. With so many restrictions, it is natural to ask the question – what happens if I cannot do something, I have previously agreed to do because of COVID-19? In short, a contract or agreement is thought to be frustrated if, through no fault of either party, it can no longer be performed due to “circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract”.[1]
Put in another way, if, through no fault of either party, an event has caused a contract to be unable to be performed without changing the essence of what was agreed, a contract will be considered “frustrated”. For example, if you book to stay in a certain house and the week before you are due to stay there, there is a major storm that floods the house, then the contract would likely be frustrated.
Once frustrated, the contract is terminated and any obligations due to be performed following the event are discharged and do not need to be complied with.[2] Therefore, this article will outline:
- what events may frustrate a contract; and
- what events may not frustrate a contract.
First, what events may frustrate a contract?
Illegality
Any change in law that makes performance illegal will likely frustrate that contract.[3] This is particularly relevant given the number of new laws passed due to COVID-19, which may not have been contemplated at the time the contract was first entered into.
Unavailability
Where the contract involves something specific, like the above example in relation to the rental property, and that specified item (or service) becomes unavailable due to factors outside the parties’ control, then that contract will likely be considered frustrated.[4] If the contract was either not specific enough or is able to be substituted for something similar, then it is unlikely to be considered frustrated.
For example, if you book a room in a hotel, even if part of the hotel in which you thought you were staying becomes unserviceable due to some unforeseen event, there are likely other rooms available that make it possible for the hotel to fulfil their obligations unless the particular room was specified and the hotel’s terms and conditions don’t provide them discretion to move you after booking. [5]
Second, what events may not frustrate a contract?
Delay
Unless an unforeseen event caused significant delay or meant that the contract was not able to be completed by a specified deadline, then delay will not likely frustrate an contract. While timing is important in all contracts, it is more prominent in some and therefore more prone to frustration.
For example, a dinner booking made on 27 March 2020 for 6 April 2020 with a ‘non-refundable’ deposit, would have been frustrated by the government banning ‘dining in’ shortly after the booking was made. The deposit should be refundable as the ‘contract’ has been frustrated through no fault of the diner. Contrast that with the purchase of a restaurant gift card, which obliges the restaurant to honour credit for an amount paid to it but COVID-19 bans won’t frustrate that so long as the gift card doesn’t expire before the restaurant re-opens.
Hardship
Unforeseen financial hardship by one of the parties will not cause frustration. This includes circumstances where the contract is no longer profitable for one party.
For example, a Major Domestic Building Contract fixes the price a builder must deliver the build for, give or take limited variation capabilities.[6] If the builder can’t meet their costings and is facing financial ruin, the obligations aren’t frustrated, and the builder is merely in breach. This also applies if the owner cannot afford to pay the builder’s invoices due to losing their job due to COVID-19 and the bank pulling the funding.
Force Majeure
Some written contracts contain clauses listing various events that will allow one or more parties to cease complying with its terms, often allowing them to suspend or even terminate the contract should one of those events occur through no fault of that party.
Typically, the types of events listed directly overlap, or are similar to, events that would cause the frustration of the contract. As these usually unforeseeable events were in the minds of the parties at the time the contract was entered into, force majeure clauses generally make the principle of frustration redundant by providing an express contractual right for the parties to terminate the contract where it can no longer be complied with.
How can DSA Law help?
When experiencing difficulties regarding when a contract may potentially be frustrated, or if you are currently unable to meet your obligations under a contract and would like to speak to someone, please Contact Us or one of our Commercial Lawyers at DSA Law on (03) 8595 9580.
[1] Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 at [729].
[2] Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337.
[3]Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1942] UKHL 4.
[4] Taylor v Caldwell [1863] EWHC QB J1.
[5] For more information regarding frustration and retail leases, read our article, “How does the Coronavirus (COVID-19) affect Retail Leases?”
[6] For more information regarding variation of articles, read our article, “Can a builder make changes to a domestic building contract?”
by DSA LawCan an employer force you to get a flu shot?
When implementing measures and policies to protect the health and wellbeing of employees as they return to the workplace, employers may consider requiring their employees to have a flu shot. But can an employer lawfully force an employee to get a flu shot?
As we head into the flu season, with the COVID-19 pandemic still a reality, there is an increased push for Australians to get vaccinated against influenza.[1] In certain circumstances, it will almost certainly be lawful for an employer to require an employee to get a flu shot. This includes the following situations.
1.Where the employee is required by law to have a flu shot.
There are currently restrictions on persons entering residential aged care facilities.[2] In Victoria, the Deputy Chief Health Officer has made a Direction which requires any person attending a residential aged care facility to have an up to date vaccination against influenza.[3]
Therefore, if you are an employee either of:
- a residential aged care facility; or
- with duties requiring you to attend such facilities,
then, your employer can lawfully require you to have the necessary vaccination.
2. Where it is a condition of employment.
If it is a term of your contract of employment that you have an up to date vaccination against influenza, the employer can require you to be vaccinated.
It may be more common in certain industries and professions to make vaccination a condition of employment, such as in: [4]
- health services sector;
- residential aged care; and
- child care.
If an employer wishes to make vaccination against influenza a condition of employment (for which noncompliance amounts to dismissible conduct), the term in the contract should clearly justify/explain the purpose behind the requirement.
3. Is requiring an employee to get a flu shot, a lawful and reasonable direction?
Where it is not a condition of employment, or required by law, it is less clear whether the employer can make you get the flu shot.
Is the direction, lawful?
Employers can give lawful and reasonable directions to their employees, and employees are under a duty to obey such directions.[5] A failure to obey such a direction may amount to misconduct, which can be grounds for termination.
It is clearly lawful for an employer to make a policy requiring employees get vaccinated against influenza. Whether such a policy is reasonable:
- requires further investigation on a case-by-case basis; and
- will largely depend on the particular job in question.
Is the direction, reasonable?
It may be reasonable for an employer to require its employees to get a flu shot if an employer deems it necessary to: [6]
- comply with its obligations in relation to providing a safe working environment; and
- to protect the health and wellbeing of employees.
This is especially the case in the current COVID-19 pandemic, as employees who contract both influenza and COVID-19 are at an increased risk of:
- serious illness; or
- fatality.
For the same reason, it may also be reasonable for employers to direct employees to get a flu shot, if the employer owes a duty of care to protect the health and wellbeing of others (such as patients and clients).
However, if an employee is at a low risk of contracting influenza and/or COVID-19, and is unlikely to come into contact with other persons to whom the employer owes a duty of care, it may not be reasonable to give a direction to get a flu shot.
An obvious example would be if an employee is:
- working from home; and
- not come into contact with any other employees or customers of the employer.
4. Can I refuse the direction because of personal beliefs or religion?
If vaccinations are not required by law, then employers must be mindful of the implications a flu shot policy may have in relation to discrimination.
If an employer makes a policy requiring employees to get a flu shot, for which noncompliance leads to dismissal, the policy could amount to unlawful discrimination. This will be the case if the employees who are disadvantaged by the policy, are those who cannot be vaccinated because of their religious beliefs. This is referred to as indirect discrimination.[7]
Though, not all forms of discrimination are unlawful.
Again, consider the above example. If an employer can demonstrate that the policy is reasonable (e.g. to protect the health and wellbeing of employees and patients), then the indirect discrimination will not be unlawful.
Furthermore, holding a particular belief or opinion (which does not amount to a religious belief), such as anti-vaccination, is not a protected attribute and any policy which disadvantages persons with such a belief or opinion will not amount to unlawful discrimination.
5. Advice to Employers and Employees
Therefore, if you are an employer and considering implementing a policy for influenza vaccination, we suggest you first seek legal advice from one of our qualified practitioners to get advice on how best to implement such a policy.
If you are an employee who is refusing to get vaccinated, and your employment has been impacted by your refusal, we likewise suggest you contact us to discuss your options.
How can DSA Law help?
If
you have any questions or issues in relation to employment, please Contact
Us or one of our Employment
Lawyers at DSA Law on
(03) 8595 9580 and let us assist you.
[1] Greg Hunt, Record 16.5 million flu vaccines to protect Australian (19 April 2020) Department of Health <https://www.health.gov.au/ministers/the-hon-greg-hunt-mp/media/record-165-million-flu-vaccines-to-protect-australians>.
[2] Department of Health, FAQs – Restriction on entry into and visitors to aged care facilities (1 April 2020) Department of Health <https://www.health.gov.au/sites/default/files/documents/2020/04/coronavirus-covid-19-restrictions-on-entry-into-and-visitors-to-aged-care-facilities_1.pdf>.
[3] Annaliese van Diemen, Care Facilities Directions (No 4) (31 May 2020) Department of Health and Human Services <https://www.dhhs.vic.gov.au/sites/default/files/documents/202005/direction-care-facilities-no-3-signed-2020-05-11.pdf>
[4] Department of Health, Immunisation for work (1 May 2019) Department of Health <https://www.health.gov.au/health-topics/immunisation/immunisation-throughout-life/immunisation-for-work>.
[5] Darling Island Stevedoring & Lighterage Co (1938) 60 CLR 601.
[6] Occupational Health and Safety Act 2004 (Vic) s 21.
[7] Equal Opportunity Act 2010 (Vic) s 9.
by theladDSA Law welcomes new Special Counsel
DSA Law continues to invest in talent, paying attention to client needs by bringing in a new Special Counsel.
“Thanks to our committed, and responsive team, we have continued to work closely with our clients to understand their priorities, and align our firm’s design and operation so that we can meet demand, in spite of COVID-19,” said Kimble Stynes.
Mr Stynes welcomed Zaid Mohseni and said, “he will bring additional senior specialist skills, to boost capacity, and support our clients”.
Zaid is a former Partner, and Head of the Commercial Department, of Wilmoth Field Warne lawyers, and has substantial experience in corporate and commercial law.
He advises private, corporate and government clients on a wide range of transactions, including corporate restructuring, fundraising, M&A, media, intellectual property, and technology.
Specialising in complex commercial transactions, Zaid has over 25 years of commercial legal experience in Australia and overseas, with previous roles as the CEO of Broadcast Middle East FZ-LLC, Group COO of Moby Group, and most recently, the CEO of Alef Technology.
If you require legal advice about your rights as an employer or employee regarding casual employment, please Contact Us or one of the Employment Lawyers at DSA Law on (03) 8595 9580 so we can assist you.
by DSA LawWorkPac v Rossato: Are you a casual employee?
The Full Bench of the Federal Court, in the recent case of WorkPac Pty Ltd v Rossato [2020] FCAFC 84, confirmed its earlier decision in WorkPac Pty Ltd v Skene [2016] FCCA 3035, holding that, if a casual employee’s hours of work are regular and systematic, the employee is entitled to payment of permanent employee entitlements.
However, this decision goes much further than the Skene decision, finding that, if an employee has been paid casual loading (usually an additional 25% above the ordinary hourly rate of pay), the employer is not automatically entitled to claw that casual loading back, should the employee be deemed a permanent employee.
This decision has wide ranging implications for employers and employees alike, as it allows casual employees to ‘double dip’ in some circumstances i.e. to receive payment of casual loading, plus payment of permanent employee entitlements, such as annual leave and personal leave.
Background to WorkPac Pty Ltd v Rossato
This case centered on Mr Rossato’s employment with WorkPac. Mr Rossato was an employee of WorkPac from July 2014 through to April 2018.
Mr Rossato’s contract of employment with WorkPac described Mr Rossato as a casual employee. Accordingly, Mr Rossato was paid casual loading at the ordinary rate of 25%, in lieu of receiving permanent employee entitlements, such as annual leave and personal leave.
Following the conclusion of his employment, Mr Rossato sent correspondence to WorkPac in which he claimed to have been a permanent employee and therefore entitled to permanent employee entitlements. In response, WorkPac claimed Mr Rossato was a casual employee and that, if he were truly a permanent employee, WorkPac would be entitled to:
- set off the 25% casual loading against any permanent employee entitlements; or
- seek restitution for the 25% leave loading that was mistakenly paid to Mr Rossato.
The Easy Part: Was Mr Rossato a casual or permanent employee?
In reaching its decision, the Federal Court did not hesitate in declaring Mr Rossato was a permanent employee, rather than a casual. This conclusion was largely based on the Court’s determination that Mr Rossato’s hours of work were too regular and systematic for him to have been anything but a permanent employee, noting Mr Rossato worked:
- Every shift he was rostered on to work;
- 7 days on, 7 days off; and
- Pursuant to a shift roster that was sometimes set 7 months in advance.
In reaching this conclusion, the Court followed its previous decision in Skene, focusing on whether there was, amongst other things, a ‘firm advance commitment’ with respect to Mr Rossato’s engagement.
The Hard Part: Can Mr Rossato ‘double dip’?
The Court’s primary focus was on the question of ‘double dipping’. That is, if Mr Rossato was not a casual employee, is it just and fair for him to retain the casual loading that he was paid due to his incorrect categorization as a casual employee, as well as receive payment of permanent employee entitlements?
As expected, WorkPac argued strongly against ‘double dipping’, submitting that casual loading was paid under the mistaken assumption that Mr Rossato was a casual. As such, WorkPac was entitled to be repaid (a remedy known as restitution), or to set off, the casual loading against those permanent employee entitlements Mr Rossato was entitled to as a permanent employee.
Unfortunately for WorkPac, the Court was not convinced.
Severable Portions
Regarding, the supposed mistake of WorkPac in paying Mr Rossato casual loading, the Court found that casual loading was not a severable portion of payment for which restitution could be sought.
Casual Loading Offset
Regarding WorkPac’s desire to offset the casual loading amounts against permanent employee entitlements, the Court found this was not permissible as Mr Rossato’s written contract of employment did not allow or provide for a right to such a set off.
Accordingly, Mr Rossato was allowed to keep the casual loading he was paid and also awarded those permanent employee entitlements he ought to have been paid.
What employers should know?
This decision, along with the Federal Court’s previous Skene decision, shows that employers must pay very close attention to the substance of their employee’s working arrangements, rather than how they are simply described in a contract of employment.
An employee whose hours of work are:
- regular; and
- systematic,
is not a casual employee because their contract of employment describes that. Importantly, this means employers need to closely monitor the shifts and work patterns of their casual workforce to ensure their hours of work are sufficiently irregular. Otherwise, the employer risks having their casual employee claim additional entitlements.
What can employers do?
If casual employers are working regular and systematic hours, employers should:
- consider offering those employees part-time or full-time contracts;
- consider any casual conversion requests that may be made; or
- insofar as contracts of employment are concerned, review these to ensure that casual loading can be set off against annual leave entitlements, in the event a legal claim is made.
What employees should know?
If you are a casual employee and you believe your work patterns are regular and systematic, the law may consider you to be a permanent employee and therefore entitled to payment of permanent employee entitlements.
Whether or not your work patterns are regular and systematic is a question of fact, determinable on a case by case basis.
Factors that may indicate your work pattern is regular and systematic is:
- consistency in shifts (i.e. you work Wednesday, Thursday and Friday every week and have done so for some time); and
- how far in advance your shifts are set or rostered.
There are, of course, various other factors to be considered, so we recommend you seek legal advice prior to claiming permanent employee entitlements.
How can DSA Law help?
If you require legal advice about your rights as an employer or employee regarding casual employment, please Contact Us or one of the Employment Lawyers at DSA Law on (03) 8595 9580 so we can assist you.