What effect does a statement of reasons (or wishes) have in defending a challenge to an estate? In the case of Plummer & Anor v Montgomery [2023] NSWSC 175 (Plummer), which involved an unsuccessful family provision claim by two adult stepchildren, the Court placed weight on the deceased’s written reasons for not making any provision.

But what are the risks for will-makers when preparing such a statement?

Plummer case

The deceased left a Will dividing her estate equally between her two biological children and her granddaughter. The deceased’s husband had predeceased her and the deceased had made no provision in her Will for two of her husband’s daughters (the Plaintiffs).

The Plaintiffs therefore made an application for a family provision order pursuant to the Succession Act 2006 (NSW) (the NSW Act). Given that the NSW Act does not have a separate category for step-children claimants (unlike Victoria), they were required to claim under the ‘member of the household’ category.

Ultimately, whilst the court was satisfied that the Plaintiffs were eligible applicants and that there were factors warranting the making of an application, the Court declined to make an order for provision, essentially finding that:

• There was no close personal relationship between the deceased and the Plaintiffs, and they were not brought up as a permanent member of the deceased’s family;
• The deceased did not provide either of the Plaintiffs with any financial support during her lifetime; and
• There was no evidence of a close familial bond and the deceased did not assume a close maternal role. As adults, the Plaintiffs and the deceased rarely saw each other.

The deceased’s intentions

Similar to Victoria, the NSW Act permits any evidence of the testamentary intentions of the deceased person, including evidence of statements made by the deceased, to be considered by the Court.

In Plummer, the deceased also left a document with her Will headed “Testamentary Document to be Incorporated in the Will”.

In this document, the deceased declared her wish that the Plaintiffs were not to benefit from her estate and set out her reasons why. Such wishes reflected the manner in which the Plaintiffs had caused the deceased great anxiety, stress and how they had displayed “intolerable behaviour” particularly at a time when her late husband was unwell. The deceased’s document concluded with her belief that her decision was “just and reasonable” when all matters were considered.

In declining to make an order for provision for each of the Plaintiffs, the Court “also remembered the deceased’s testamentary wishes, as expressed not only by the terms of [her] Will, but also by her written statement.”

Should you prepare a Statement of Wishes?

As evidenced by Plummer, the Court can consider a written statement by the deceased in an application for family provision, and considerable weight may be placed on it. However, the Court also pointed out that care must be taken when considering such statements. In some instances, a statement may unintentionally bolster a plaintiff’s claim for further provision.

Therefore, whilst a statement of reasons can be beneficial, there are also inherent risks associated with preparing and seeking to rely on such document. For instance:

• It is only a snapshot of the relationship or behaviour at a particular point in time. Such statements may be shown to be untrue or inaccurate at the time of death, and could be easily rebutted, which could strengthen a family provision claim. Accordingly, as with the Will itself, a statement of reasons should be regularly reviewed to ensure it remains accurate;
• The statement of reasons should not contradict the Will. Ideally, the statement should be prepared in conjunction with the Will, in consultation with the will-maker’s lawyer and signed contemporaneously with the Will;
• The statement should be prepared in a manner that allows the executor/s to exercise their discretion as to whether it is used to defend a claim or not, given in some instances, it can do more harm than good (however, an executor may be compelled to produce it regardless);
• A statement of reasons should ideally be stored in a safe place with the Will or amongst the will-maker’s personal papers, so that it may be easily found by their executor/s; and
• A statement of wishes will not make a Will ‘watertight’ and should never replace consideration of potential strategies to reduce the impact of a claim, such as by minimising the pool of assets subject to an estate challenge.

How we can help

For expert guidance on Estate Planning and Estate Litigation, please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.

Background

A trustee of a family trust must act strictly in accordance with the terms of the trust deed. It is therefore important that the original trust deed is kept safe. In circumstances where the trust deed cannot be located, significant complications can arise for both the trustee and the trust itself.

In the absence of the trust deed and without sufficient secondary evidence proving the essential terms, the trust could fail due to uncertainty and be unable to operate.

The recent decision of the Supreme Court of Victoria Court of Appeal in Vanta Pty Ltd v Mantovani [2023] VSCA 53 has highlighted the importance of this issue.

The Case & Judgement

The initial case¹ came before the Victorian Supreme Court as a result of a disagreement between siblings – John Mantovani and his brothers Nic Mantovani and Rocky Mantovani as directors of the trustee company, Vanta Pty Ltd – following the death of their mother (Teresa Mantovani).

The trust was created on 27 July 1976 by deed, which had been lost. The only part of the trust deed that could be located was a copy of its schedule, which set out the following:

• the date of making the deed, 27 July 1976;
• the name of the trust, ‘Mantovani Family Trust’;
• the settlor, Rocco Orsida;
• the trustee, Vanta Pty Ltd;
• the settled sum, $50;
• the appointor, Teresa and on her death, whoever is named in her Will; and
• the beneficiaries (being Teresa, her children, her grandchildren).

The Court accepted that the deed was lost, and in that case needed to decide if there was enough certain evidence to rule that the trust was valid. The initial judgment by the Court held that there was not sufficient evidence of the terms of the trust and ruled that it failed for uncertainty. As a result, the assets of the trust were determined to be held as resulting trust in favour of Teresa’s estate, as she had transferred the assets from her sole name to the trust at various points during her lifetime.

On appeal², the Court of Appeal relied on the schedule of the trust deed, financial reports and tax returns of the trust and held that they were satisfactory secondary evidence which identifies the essential terms of the trust and met the ‘three certainties’ test. As such the trust did not fail for uncertainty. However, given there was a lack of evidence as to the powers of the trustee and the vesting date, the Court of Appeal allowed the trustee to continue to operate the trust on the basis of an undertaking that the trustee would seek guidance from the Supreme Court of Victoria as to how it could manage the trust (with the further costs that would be incurred).

Key Takeaways

Although as a result of the decision of the Court of Appeal the trust remained valid and on face value is a win for the trustee, the Court of Appeal noted the following:

• the trustee, as a responsible trustee, should have possessed a copy of the trust deed;
• the trustee should have made an application to the court to seek directions as to how to continue to operate as a trust in absence of the trust deed;
• the criticisms of the trustee’s behaviour by John were mainly valid; and
• although the loss of the deed did not in and of itself mean that the trustee breached its duties, the Court of Appeal hinted that the trustee committed other breaches of trust and that John would have remedies against the trustee – ‘such as an order for the taking of accounts or an order for the removal of the trustee’.

As such, the issues that arose (and the legal costs associated) could have been avoided had the trustee ensured the original trust deed was kept in a safe place or at a minimum, retained a complete copy of which it complied with.

How we can help

Notably, issues such as this arise on the death of a key person involved in the trust or dispute as to trust distributions. It is therefore important that as soon as a trustee is aware that the original trust deed is lost, they act proactively to remedy the issue and seek appropriate guidance.

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.

---

1 – Mantovani v Vanta Pty Ltd (No 2) [2021] VSC 771
2 – Vanta Pty Ltd v Mantovani [2023] VSCA 53

If your intended executor or beneficiary is living overseas (or may in the future), there are additional considerations that need to be taken into account in your estate plan.

One of the main considerations is tax (or more to the point – avoiding unnecessary and inadvertent tax). Tax largely depends on who controls or receives the asset.

If your intended executor is not an Australian resident for tax purposes, then your estate will be treated as a non-resident trust, which may adversely impact the intended beneficiaries’ entitlements. If any intended beneficiary is non-resident, this may also impact on the entitlements of the other Australian-resident beneficiaries, depending on what assets they receive.

Tax implications for non-resident trusts/estates and non-resident beneficiaries in Australia can include the following:

Income tax

Taxed as a non-resident. No access to the tax-free threshold available to resident estates or the ability to obtain franking credit refunds.

The implications vary if the assets include the following:

Real Estate

• Additional surcharge rates of land tax will be charged.
• If executor / trustee is non-resident a CGT clearance certificate may not be available and will result in the purchaser withholding 12.5% sale proceeds (relevant to property over $750,000).
• 50% CGT discount not available to foreign residents/trustees.
• If non-resident beneficiary wishes to receive real estate as part of their entitlement or it is directed to them as a specific gift (personally or as trustee of a trust established in a Will), an application to the Foreign Investment Review Board may be required, which is expensive and there is no guarantee of approval.

Shares in public or private companies, units in a managed fund or interests in a business

CGT Event K3 applies as soon as the asset passes to the beneficiary (personally or as trustee of a trust established in a Will) such that any gain or loss is included in the deceased’s final tax return as a disposal at market value, taken to have occurred immediately prior to death. This may result in a liability payable by the Estate (i.e. out of the beneficiaries’ residual entitlements).

Interests in an existing trust (eg. discretionary / family trust)

If control passes to a non-resident:

• the trust will more likely be governed by the tax laws of where the controller is based; and
• it can trigger other tax implications in converting the trust to a non-resident entity.

There may also be additional implications in the jurisdiction where the beneficiary or executor/trustee is a resident for tax purposes.

Beneficiaries of course can change their residence so it is also important for a Will to consider the “what if” and appropriately address how tax might be paid or give options to keep the control within Australia.

How we can help

The implications of non-resident executors and beneficiaries can be complex, but with careful planning, it is possible to navigate these challenges effectively and in line with your overall objectives.

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.

A key decision for executors in administering an estate is whether the assets of the deceased are to be sold or transferred to a beneficiary. This article looks at the issues to be considered in making that decision.

Transfer of assets to a beneficiary is called an ‘appropriation’ in legal terms.

Specific Gifts

Where an asset is specifically gifted by the Will (eg. ‘I give my shares to John’) then it will generally be the case that the asset will be transferred to the beneficiary and not sold. This scenario is not contentious.

Assets Not Specifically Gifted

The more difficult scenario is when the Will is silent as to who receives the particular asset and it is instead part of the residue to be divided between a number of beneficiaries. In considering if assets that are part of residue should be sold or transferred the executors should consider:

1. Does the estate have sufficient funds to meet its debts?
2. Do they have the power to appropriate the asset?
3. What will be the value attributed to the asset?
4. What will be the tax implications?
5. Is the appropriation in the interests of the beneficiaries as a whole, or will it favour one beneficiary over another? And,
6. Should they obtain consent from all interested parties?

Can debts be funded?

It seems an obvious point, but it can be difficult when beneficiaries are desperate to keep an asset but the estate needs cash to meet its liabilities. Any arrangement for a beneficiary to fund liabilities on behalf of an estate, so that an asset can be retained, can have stamp duty or other cost implications that need to be considered.

Is there a power of appropriation?

The starting point for this question is to look at the powers contained in the Will. A properly drafted Will generally contains appropriation powers for the executors and may specify conditions as to how the power is to be utilised.

In default of any powers in the Will, then Section 46 of the Administration and Probate Act 1958 (Vic) should be considered which contains basic appropriation powers. This section requires consent of the intended recipient (except in limited circumstances) and provides that the executor may rely on a value determined by a duly qualified valuer.

It should be noted that if the executor is also a beneficiary of the estate, then an appropriation power will generally not operate to permit the executor to transfer assets to themselves without consent of interested beneficiaries, given they are subject to further obligations regarding conflict of interest and a prohibition against self-dealing.

What is the value to be attributed?

Again, the terms of the Will should be considered to determine if it provides a mechanism to value appropriated assets. In lieu of any guidance in the Will, then:

• the item may have a reasonably fixed, uncontentious value, for example the price of listed shares;
• the value may be determined by consent of all interested beneficiaries; or
• the value may be determined by a valuation from one or more duly qualified valuers.

Often, for assets with uncertain value, a formal valuation is the starting point but the executor may wish to put the valuation to the interested beneficiaries for approval or objection prior to the appropriation occurring.

What will be the tax implications?

An appropriation can be beneficial for an estate in saving capital gains tax (CGT) or other sale costs that may be incurred if the asset was sold by the estate. There must be careful consideration of the terms of the Will and the timing of the event to assess who will bear any CGT in relation to the sale or appropriation of an asset.

Further, care needs to be taken in transfers to foreign residents and other tax advantaged entities, as it may be the case that this will trigger CGT, notwithstanding that the estate has not realised the asset.

A beneficiary who receives the transfer of an asset should also consider that:

• they may inherit the deceased’s CGT cost base, meaning that there could be a historical tax bill payable by them if they sell the asset and a simple valuation of the asset will not generally take this into account;
• where multiple beneficiaries each receive an appropriation of similar assets (eg. a share portfolio transferred between multiple beneficiaries), then the tax outcome for each of them may differ depending on their own tax bracket and income; and
• stamp duty may be payable for real estate, to the extent that it is beyond the value of the beneficiary’s share of the estate.

Is the appropriation in the best interests of the beneficiaries?

The executor’s obligation is to act impartially for the benefit of all beneficiaries. Generally, this issue will be satisfied by ensuring that a proper value is attributed to the relevant asset. However, there might be issues if multiple beneficiaries are interested in receiving an asset or there are other reasons why a sale will result in a better outcome for the estate.

Should beneficiary consent be obtained?

Subject to the terms of the Will, this is not always required. However, even if there are powers of appropriation that do not require consent, there is always some risk if an executor proceeds to fix a value and transfer an asset against the wishes of other interested beneficiaries. So, care should be taken if considering an appropriation without consent.

If the transfer is to the executor as a beneficiary, then it is even more imperative that consent is obtained.

Key Takeaways

There is generally some flexibility in administering an estate as to whether assets are sold or transferred, but care needs to be taken in assessing the options.

How We Can Help

For expert advice or guidance regarding Estate Planning, contact us.

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.

Victoria’s child employment watchdog, Wage Inspectorate Victoria, is prosecuting Muffin Break’s Southland store in Melbourne for 360 alleged breaches of child employment laws.

Victoria’s child employment watchdog has alleged that Muffin Break in Southland:

• employed three children under the age of 15 without a permit on 111 occasions;
• failed to ensure the children were supervised by someone with a Working with Children’s Clearance (WWC clearance);
• did not give a break to children of at least 30 minutes after every three hours of work;
• employed children for longer than three hours per day during a school term; and
• employed children for longer than six hours per day during school holidays.

Each of these breaches holds a maximum penalty of 100 penalty units (currently $18,429). The matter has been listed for a mention in the Melbourne Magistrates’ Court on 15 June 2023.

This case is the eighth child employment prosecution by Wage Inspectorate Victoria in the last 18 months. Many of these prosecutions have related to restaurants and cafes, although there have also be investigations to other workplaces such as chemists, tutoring companies and fashion companies. A prosecution is a regulator’s most serious compliance tool and decisions to take legal action are made in line with its Compliance and Enforcement Policy.

Victoria’s child employment laws require employers of children under 15 to obtain a permit from the Wage Inspectorate before any work takes place. This enables the Wage Inspectorate to check that matters like safety, hours of work, rest breaks and supervision are properly considered before employment starts. Workers under 15 must be supervised by someone who has WWC Clearance, and relevant organisations must comply with the Victorian Child Safe Standards (CSS).

This article summarises the key obligations that apply to organisations who employ children under the age of 15, and lessons from the current prosecution.

Child Employment

In Victoria, employers of children under 15 must comply with the Child Employment Act 2005 (Vic) (Child Employment Act). The Act aims to protect a child’s:

• health and safety;
• moral and material welfare;
• development;
• attendance at school; and
• capacity to benefit from instruction.

In order to employ a child under 15, employers must apply for a permit with Wage Inspectorate Victoria. The application must outline details of the child’s prospective employment including their duties, intended hours of work and whether the employment will occur during the school term and during school hours.

If a permit is approved, the employer must ensure a child:

• only performs light work;
• is employed for a maximum of three hours per day and 12 hours per week during the school term;
• is employed for a maximum of six hours per day and 30 hours per week at any time outside the school term;
• is given a rest break of at least 30 minutes after every three hours of work; and
• has at least 12 hours between shifts.

A breach of any of these conditions has a maximum penalty of 100 penalty units (currently $18,429) for a body corporate or 60 penalty units (currently $11,095.20) in any other case.

From 1 July 2023, a child employment licensing system will replace the existing permit system allowing employers to employ multiple children under one licence.

Child Safe Standards

Organisations that employ children under 15 and are required to have a child employment permit must also comply with the CSS¹. The CSS sets out mandatory standards which organisations must meet to protect children from harm and abuse. The CSS require that:

1. Organisations establish a culturally safe environment in which the diverse and unique identities and experiences of Aboriginal children and young people are respected and valued.
2. Child safety and wellbeing is embedded in organisational leadership, governance and culture.
3. Children and young people are empowered about their rights, participate in decisions affecting them and are taken seriously.
4. Families and communities are informed and involved in promoting child safety and wellbeing.
5. Equity is upheld and diverse needs respected in policy and practice.
6. People working with children and young people are suitable and supported to reflect child safety and wellbeing values in practice.
7. Processes for complaints and concerns are child-focused.
8. Staff and volunteers are equipped with the knowledge, skills and awareness to keep children and young people safe through ongoing education and training.
9. Physical and online environments promote safety and wellbeing while minimising the opportunity for children and young people to be harmed.
10. Implementation of the Child Safe Standards is regularly reviewed and improved.
11. Policies and procedures document how the organisation is safe for children and young people.

On 1 January 2023, the Victorian Wage Inspectorate became a sector regulator, with responsibilities for promoting child safety outcomes, and monitoring and enforcing compliance with the CSS for organisations that employ children under 15.²

In regulating compliance with the CSS, the Victorian Wage Inspectorate has the power to enter and search premises and request documents. Compliance powers range from official warnings and notices to comply, to applications for an injunction or an enforcement order, as seen with Muffin Break. The Magistrate’s Court can also order organisations to pay penalties for their failure to comply.

The maximum penalty for a breach is 120 penalty units (currently $22,190.40) for a body corporate or 60 penalty units (currently $11,095.20) in any other case.

Working with Children’s Check Clearances

There are also a number of requirements for an employer or staff supervising children during their employment. Under the Child Employment Act, the supervision of a child is considered to be ‘child-related work’. Therefore, any person who supervises a child must apply for a WWC Clearance and receive a WWC clearance unless an exemption applies.

People who are exempt from having a WWC Clearance include:

• a person who is closely related to the child (i.e. family members);
• registered teachers;
• police officers;
• a member of the Australian Federal Police; and
• a person who is not an Australian citizen and not ordinarily resident in Australia if they do not ordinarily engage in the supervision of children in Victoria.

The supervisor must directly and adequately supervise the child at all times in employment.³ Employers must also have a written record of any person who supervises a child and the number of their WWC Clearance, which must be kept for at least 12 months after the permit expires.⁴

Practically, this means that employers must ensure that supervisors hold appropriate WWC Clearance, provide appropriate supervision on all shifts when children under 15 are rostered on, and are aware of their obligations, as supervision of children under 15 involves a higher degree of responsibility.

Key Lessons for Employers

The Muffin Break prosecution highlights the complex issues that must be considered to safely and lawfully employ children under 15, and provides an important insight into the way that the Wage Inspectorate is approaching its new compliance powers.

How can we help

Moores supports organisations to safely and lawfully engage younger workers and meet the CSS. Please contact our Child Safety team on (03) 9843 0418 if you would like to discuss any aspects of this article further.

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.

---

1 – https://ccyp.vic.gov.au/child-safe-standards/who-do-the-standards-apply-to-page/
2 – Other entities with responsibility for regulating compliance with the CSS include the Commission for Children and Young People (CCYP), the Department of Families Fairness and Housing and Social Services Regulator, Department of Health, Department of Education and Training, and Victorian Registration and Qualifications Authority.
3 – Child Employment Act 2005 (Vic) s 19(1)(b)
4 – Child Employment Act 2005 (Vic) s 19(2)-(3)

Recently, the Australian Law Reform Commission (ALRC) sought responses to its Religious Educational Institutions and Anti-Discrimination Laws: Consultation Paper (Consultation Paper).

Whilst submissions closed in February this year, the ALRC has stated that its report “will now be delivered to the Attorney General by 31 December 2023” and that “the extension responds to a request made by the ALRC in late February for further time to consider more than 420 submissions received […], and more than 40,000 survey responses”.

The Consultation Paper proposes to:

• make discrimination against students on the grounds of sexual orientation, gender identity, marital or relationship status, or pregnancy in schools and other religious educational institutions unlawful, by removing exceptions currently available under federal law;
• protect teachers and other school staff from discrimination on the grounds of sex, sexual orientation, gender identity, marital or relationship status, or pregnancy, by removing similar exceptions;
• allow religious schools to maintain their religious character by permitting them to give preference to prospective staff on religious grounds where the teaching, observance, or practice of religion is a part of their role (and it is not discriminatory on other grounds); and
• require all staff to respect the educational institution’s religious ethos.

Ultimately, the ALRC proposes to clarify the scope of existing exceptions under anti-discrimination laws and the circumstances in which they may apply to religious schools, while introducing additional safeguards to ensure that discrimination is not permitted in specific circumstances. At the heart of the Consultation Paper and its proposals is the balancing of a religious school’s right to operate in accordance with its faith, and the need to protect individuals from discrimination on the basis of their personal attributes.

You can read more about the Consultation Paper, and its proposals, in our article published in February.

The commentary from faith and education leaders suggests that these proposals – for many – go to the very heart of what it means to be a religious school.

However, discussions on how religious schools navigate these matters is not new. School leaders have, for many years, been required to balance:

• a school’s duty of care;
• discrimination laws;
• regulations which impose obligations such as child safe standards, which include matters of sexuality;
• expectations and requirements from religious bodies or figures involved in the school community or who govern it, or from lay groups who have a religious mandate in the school; and
• parent expectations, particularly in the age of the “consumer parent”.

Many religious schools successfully navigate these complex – and sometimes competing – issues by implementing policies and procedures that achieve a robust balance of interests, including in relation to enrolment and employment. The publication of the Consultation Paper provides an opportunity for religious schools to reflect on how they can maintain and celebrate their distinctive religious identity, values and ethos consistent with their legal obligations.

How Moores can help

For assistance with understanding your school’s anti-discrimination obligations, or reviewing your policies and procedures, please contact Practice Leaders Skye Rose, Cecelia Irvine-So or Rebecca Lambert-Smith on (03) 9843 2100.

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.

The case of Bird v DP (a pseudonym) VSCA 66 (3 April 2023) marks a significant development in historical abuse cases in religious institutions, and confirms that the principle of vicarious liability is not limited to employment relationships.

In that case, the Victorian Supreme Court of Appeal upheld the decision that the Catholic Diocese of Ballarat was vicariously liable for sexual abuse committed by a parish priest.

This decision is significant because of the overall quantum awarded, the award of aggravated damages, the costs decision, and the failure of the Plaintiff’s case in negligence.

However, this article will focus on its ramifications for the law of vicarious liability and organisations that engage volunteers and religious leaders.

Background

The Plaintiff (DP) alleged that he was sexually abused by Father Coffey (Coffey), a priest within the Diocese of Ballarat (the Diocese), on two occasions in 1971. DP attended St Patrick’s Primary School (School) and St Patrick’s Catholic Church (St Patrick’s), which were located in the Diocese. Coffey was an assistant priest at St Patrick’s and a teacher at the School. Coffey attended DP’s family home to provide matrimonial advice to DP’s parents, and the abuse occurred at DP’s home when DP was 5 years old.

DP commenced proceedings against the Diocese through the Bishop, Paul Bird, who was the nominated defendant for the purpose of the proceeding pursuant to s 7 of the Legal Identity of Defendants (Organisational Child Abuse) Act 2018 (Vic).

DP alleged that the Diocese of Ballarat was vicariously liable for Coffey’s assaults, and that the Diocese was directly liable in negligence as a result of the failure by the Bishop of the Diocese to exercise reasonable care in his authority, supervision and control of Coffey’s conduct.

In its defence the Diocese admitted that in 1971 it appointed priests to parishes within the Diocese, including St Patrick’s, through the Bishop. The Diocese also admitted that Coffey’s duties as a priest at St Patrick’s and in the Diocese included the provision of pastoral support and spiritual guidance to members of the congregation that worshipped at the St Patrick’s. However, the Diocese denied that it was vicariously liable for Coffey’s actions as a Catholic priest.

Justice Forrest ultimately accepted that DP was abused on two occasions. In deciding whether the Diocese was vicariously liable for Coffey’s conduct, Forrest J considered the following questions:

• Nature of the Relationship: Did the relationship between Coffey and the Diocese or Bishop give rise to vicarious liability on the part of the Diocese for Coffey’s conduct? and
• Liability: If so, is the Diocese or the Bishop liable for Coffey’s unlawful conduct (noting that the assaults were unlawful and far outside Coffey’s clerical role)?

Justice Forrest was satisfied that both questions could be answered in the affirmative, and found that the Diocese was vicariously liable for Coffey’s conduct. His Honour’s consideration of those questions is set out below.

Nature of the relationship

DP asserted that the Diocese was vicariously liable irrespective of whether Coffey was an employee of the Diocese.¹

The Diocese asserted that it could not be vicariously liable for Coffey’s conduct unless Coffey was an employee of the Diocese at the time of the alleged abuse. The Diocese relied on the High Court authority of Sweeney v Boylan Nominees Pty Ltd (Sweeney) to support their argument that vicarious liability is limited to employment relationships.

Considering relevant authorities from Australia, Canada and the UK,² Justice Forrest concluded that ‘the Court in Prince Alfred College did not endorse a confined theory of vicarious liability (restricted solely to an employer/employee relationship) as contended by the Diocese’, and that vicarious liability ought not be limited to ‘preconceived notions of agency or employment’.

His Honour also explored the applicability of Sweeney in the context of this proceeding, and noted that that Sweeney ‘stands for the proposition that a principal cannot be liable for the acts or omissions of an independent contractor — no more, no less’.

Justice Forrest found that Coffey was not an employee of the Diocese, but was otherwise satisfied that the relationship between Coffey and the Diocese could give rise to vicarious liability.

Liability

Justice Forrest then considered whether the Diocese should be liable for Coffey’s conduct, given that the abuse was committed outside the lawful scope of Coffey’s engagement by the Diocese.

Citing Prince Alfred College, His Honour held that:

“The appropriate inquiry is whether [Coffey’s] role as [a priest] placed him in a position of power and intimacy vis-à-vis [DP] such that [Coffey’s] apparent performance of his role as [a priest] gave the occasion for the wrongful acts and that because he misused or took advantage of his position, the wrongful acts could be regarded as having been committed in the course of his employment.”

Justice Forrest found that Coffey was conducting a ‘pastoral visit’ when he committed the alleged abuse and that the Diocese was vicariously liable for Coffey’s criminal conduct by reason of:

• the close nature of the relationship between the Bishop, the Diocese and the Catholic community where St Patrick’s was located;
• the Diocese’s general control over Coffey’s role and duties within St Patrick’s parish;
• Coffey’s pastoral role in the local Catholic community; and
• the relationship between DP, his family, Coffey and the Diocese, which was one of intimacy and trust in the authority of Christ’s representative, personified by Coffey.

Forrest J concluded:

“I am also satisfied that Coffey’s role as a priest under the direction of the Diocese placed him in a position of power and intimacy vis-à-vis DP that enabled him to take advantage of DP when alone — just as he did with other boys. This position significantly increased the risk of harm to DP. He misused and took advantage of his position as a confidante and pastor to DP’s family; this enabled him to commit the unlawful assaults upon DP.”

Consequently, the Diocese was held to be vicariously liable for Coffey’s abuse of DP, and ordered to pay $230,000 in general damages, and $20,000 in aggravated damages. Justice Forrest did not make a separate finding of negligence against the Diocese.

The Appeal

The Diocese ultimately appealed the decision to the Court of Appeal on the following grounds:

• Vicarious Liability: In circumstances where Coffey was not an employee of the Diocese, the trial judge erred in finding that the Applicant was vicariously liable for Coffey’s conduct; and
• Opportunity and occasion for wrong conduct: If the relationship between the Diocese and Coffey gave rise to a relationship of vicarious liability, the trial judge erred in concluding that the relationship was such as to find that the Diocese was so liable.

Vicarious Liability

The Court of Appeal held that ‘Coffey was the servant of the Diocese, notwithstanding that he was not, in a strict legal sense, an employee’, and that the trial judge was correct to conclude that the relationship between Coffey and the Diocese was one which, in an appropriate case, would render the Diocese vicariously liable for any tort committed by Coffey in his role as an assistant priest within the Diocese.

The Court of Appeal upheld Justice Forrest’s decision that the Diocese could be vicariously liable for Coffey’s conduct on the basis that:

• Coffey had no other vocation, nor the right to undertake any other vocation;
• Coffey could not delegate his role or duties;
• Coffey’s livelihood was provided for by the Diocese;
• Coffey wore the uniform of a Roman Catholic priest, and it was common to wear the clerical collar when providing pastoral care;
• Coffey did the work of the Diocese in the Parish to which he was appointed; and
• The Diocese did its work by and through him.

Opportunity and occasion for wrongful conduct

The Diocese argued that it did not provide Coffey with the opportunity and occasion for the wrongful conduct for the following reasons:

• priests exercised a lot of discretion and the Diocese was not ‘all powerful’ in the management of clergy and the activities of an assistant parish priest;
• the friendship between DP’s family and Coffey was social and not connected with his role as an assistant priest; and
• there was insufficient evidence to show that the Diocese designated special functions to Coffey as an assistant priest.

The Court of Appeal did not accept these arguments, and found that the Bishop ultimately retained overriding authority over all priests in the Diocese. Additionally, by appointing and maintaining Coffey as an assistant priest, the Diocese gave him a degree of power and authority to enable him to achieve such intimacy with DP’s family. It was also found that pastoral work required priests to develop personal acquaintances and friendships with parishioners. It was through this work that Coffey gained ‘authority, power, trust, control and the ability to achieve intimacy’ with parishioners, including with DP’s family and DP.

Significance of the decision

The case confirms that vicarious liability is not limited to employment relationships and sends a strong message that religious organisation may be vicariously liable for abuse committed by religious leaders (such as priests), even if those leaders are not employees. The case also highlights how liability can attach to pastoral care provided by individuals connected with religious organisations, and how claims can be effectively pursued against unincorporated organisations under the Legal Identity of Defendants (Organisational Child Abuse) Act 2018 (Vic).

It is important that organisations that engage or appoint volunteers and religious leaders consider whether they hold insurance that extends to criminal abuses by volunteers and other non-employees. As it stands, there is no absolute, unequivocal defence against liability for the consequences of criminal abuse simply because the perpetrator is not an employee.

How Moores can help

Moores is supporting religious organisations to understand the impact of this decision, and the safeguards that can be adopted to minimise the risk of harm and liability.

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.

---

1 – following authorities from the UK and Canada, as well as the decision of the High Court in Prince Alfred College Inc v ADC,10
2 – Hollis v Vabu Pty Ltd (Bicycle Couriers case) (2001) 207 CLR 21; 181 ALR 263; [2001] HCA 44; Plaintiff A and B v Bird (2020) 300 IR 235; [2020] NSWSC 1379; Roman Catholic Trusts Corp for Diocese of Sale v WCB (2020) 62 VR 234; [2020] VSCA 328; Bazley v Curry [1999] 2 SCR 534; Lister v Hesley Hall Ltd [2002] 1 AC 215; BN v Anglican Church [2020] MBQB 2; Maga v Archbishop of Birmingham [2010] 1 WLR 1441; Various Claimants v Catholic Child Welfare Society [2013] 2 AC.

Children’s privacy has been in the news for the last few years, with the introduction of information sharing schemes for child safety, the technological upskilling that came with online schooling, and an emphasis on online safety by the eSafety Commissioner. In big privacy news, the U.S. Federal Trade Commission has ordered Epic Games, the maker of video game Fortnite, to pay $245 million (USD) to consumers in part for letting children make purchases without parental involvement.

The proposed amendments to the Privacy Act released by the Attorney-General continue this trend. Below we deep dive into the proposed changes to children’s privacy, and consider how these changes align with other regulatory changes and requirements to protect children.

Who is considered a child under the Privacy Act?

There are multiple different definitions of a “child” or “young person” in different regulatory regimes. Currently, in privacy, there is no rule about who is considered a child. In the absence of a rule, organisations need to apply the “Gillick competence” test to determine a child or young person’s capacity to consent to information handling. This is based on the person’s capacity to understand the consequences of their consent.

There are two alternative proposals to amend the Privacy Act to provide greater clarity:

1. define a child as a person under 18 years of age; or
2. embed the 15-year-old assumption of capacity in the Privacy Act.

Consent to the handling of personal information

Currently, there is no definition of consent in the Privacy Act. There is a proposed amendment to codify the principle that consent must be given with capacity to be valid.

Whether an individual has capacity to consent depends on their age and other factors or vulnerability and diversity, such as understanding of English and disabilities. These kinds of considerations are a common trend in legislative amendments, for example, the increasing focus on wide scale vulnerabilities in child safeguarding legislation.

Another proposed amendment is for collection notices and privacy policies be clear and understandable, in particular for any information addressed specifically to a child. This empowers the individual to give informed consent and have more control in the handling of their personal information.

Children’s Online Privacy Code

The ability to implement specific Codes which enforce additional requirements to address identified risks is already in the Privacy Act. This proposal is for a Children’s Online Privacy Code which would:

• apply to online services that are ‘likely to be accessed by children’ such as apps, games, connected toys (Internet of Things) and online new services;
• provide guidance on the format, timing and readability of collection notices and privacy policies for children;
• align as much as possible with the scope of the UK Age Appropriate Design Code; and
• address how the best interests of child users should be supported in the design of an online service.

How we can help

Privacy and online safety are increasing elements of child safety and safeguarding measures, particular as the Child Safe Standards require organisations to take steps to protect children in online environments. We can help you implement these proposed changes – as recognised best practice ideals – to ensure children in your care are safe online, and are also empowered to understand their privacy rights.

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.

To continue our series on the Privacy Act Review, we have summarised the proposed reforms most likely to affect Not-for-profit (NFP) organisations and charities.

Other articles in this series include:

• Privacy Act Review: Coming Soon
• Privacy Act Review: Small charities and NFPs likely to be captured
• Privacy Act Review: We have a Privacy Bill, but some promised reforms will have to wait
• Privacy Act Review: Schools, are you ready?

Small business exemption

Currently, the “small business” exemption means organisations with a turnover of less than $3 million annually do not need to comply with the Privacy Act. A limitation on this exception is health service providers. Despite their size, health service providers must comply with the Privacy Act. This may include many NFP organisations and charities.

For NFPs and charities that are not health service providers, the removal of the small business exemption would greatly increase privacy obligations by making them subject to the Privacy Act, including the Australian Privacy Principles and the Notifiable Data Breach Scheme (NDB Scheme). Recognising this, the proposal includes a process of consultation and gradual implementation for “small businesses”.

Right to erasure

This prospective right is far-reaching and would greatly increase the burden on organisations to proactively delete all records relating to an individual, on request by that individual. Currently, there is no such right, although individuals do sometimes ask for it, particularly after a publicised data breach at the organisation or elsewhere.

There is a proposal to introduce this right to erasure where:

• an individual may seek to exercise the right to erasure for any of their personal information; and
• an organisation which has collected the information from a third party or disclosed the information to a third party must inform the individual about the third party and notify the third party of the erasure request unless it is impossible or involves disproportionate effort.

In addition to the general exceptions similar to those already existing for access and correction requests, certain limited information should be quarantined rather than erased on request so the information remains available for the purposes of law enforcement. This is particularly important in relation to child safety records, which must, in many instances, be retained permanently or for an extended period of time.

The policy objective behind the right to erasure is to give individuals more control over their personal information. However, practical implementation of this right may be difficult for organisations which do not have strong technological capabilities, or funds to invest in upgrading their technology systems to allow for erasure requests.

A right to erasure was introduced in the European Union in the General Data Protection Regulation (GDPR) in 2017.

Changing the data beach reporting period from 30 days to 3 days

The proposed new data breach reporting obligation would require organisations covered by the NDB Scheme to notifying the Office of the Australian Information Commissioner (OAIC) within 72 hours of becoming aware of a data breach, so that, when a data breach occurs, quick action can be taken to minimise harm to affected individuals.

The current requirement is 30 days. This is a significant change, and will require NFP organisations to upskill in how they respond to data breaches.

This amendment is similar to the GDPR’s 72-hour requirement for breach reporting to national Data Protection Authorities (Article 33).

How we can help

Big or small, we can help NFPs review how they handle personal information, assist with preparing privacy policies, or conduct privacy audits. We understand your data can be incredibly important to your charity, whether you are collecting donations or providing services to your clients. Please contact our privacy lawyers for any assistance.

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.

There has been quite a lot of movement in the world of workplace regulation over the last year or so. While we are a forgiving bunch at Moores, the law is a little less so. So, in case you’ve let a few go through to the keeper, we’ve summarised some of the key changes below.

Sexual harassment

We’ve seen a lot of change in how the law views sexual harassment following the release of the Respect@Work Report (see more here). Since 10 September 2021, sexual harassment has been recognised as a form of serious misconduct in the Fair Work Regulations 2009 (Cth). The change is relevant to an employer’s obligation to provide notice of termination, but is more broadly an important signal in the workplace about the seriousness with which sexual harassment in the workplace can be treated.

The Fair Work Act 2009 (Cth) (FW Act) now contains a definition of sexual harassment, adopted from the Sex Discrimination Act 1984 (Cth), which provides that a person sexually harasses another person if they:

• make an unwelcome sexual advance;
• make an unwelcome request for sexual favours; or
• engage in other unwelcome conduct of a sexual nature.

For a person to have sexually harassed someone else, it has to be reasonable for the person to expect that in the situation, there’s a possibility that their behaviour would offend, humiliate or intimidate the other person.

Additionally, since November 2021, employees who believe they have been sexually harassed have been able to apply to the Fair Work Commission for a Stop Sexual Harassment Order. These orders are similar to the Stop Bullying Orders you may be familiar with. However, reports of sexual harassment should be dealt with appropriately by your organisation so employees do not feel they must seek relief from the Fair Work Commission.

More recently, since 7 March 2023, employers have a positive duty to prevent sexual harassment, sex discrimination and victimisation in the workplace. This duty applies in addition to the duties under occupational health and safety law and extends to conduct by third parties, customers and clients. It requires employers to shift from taking a complaints-based approach to respond to sexual harassment after it has occurred, to taking a proactive approach to prevent sexual harassment before it occurs.

Supporting working families

There has been a raft of changes to support families and those impacted by domestic violence. Of note:

Family and domestic violence leave

• The National Employment Standards (NES) were amended on 1 February 2023 to provide for 10 days of paid family and domestic violence leave (previously 5 days unpaid leave). Paid leave is available to full time employees in full, and to part time or casual employees where they are rostered to work.
• It will not be pro-rated for part time or casual employees, will be renewed every work anniversary, and will not accumulate if unused. Grounds for taking this leave include staff making arrangements for their own safety or the safety of a close relative, court appearances, accessing police or counselling services and other appointments.
• Paid family and domestic violence leave must not be recorded on an employee’s payslip.

Flexible work arrangements

• See our article for more information about changes to enhance flexible work arrangement rights.
• Disputes about requests for flexible working arrangements and extensions to parental leave can also be referred to the Fair Work Commission.

Compassionate leave

• Compassionate leave has been extended to be available to employees where they, or a current spouse or de facto partner, have experienced miscarriage, stillbirth or death of a child.
• Other employees may also be entitled to take compassionate leave if the child was an immediate family member or household member of the employee.

Discrimination at work

Employers have been unable to discriminate against a person on the basis of certain protected attributes under the FW Act such as age, sex, marital status and disability for some time now. On 7 December 2022, a person’s gender identity, intersex status and breastfeeding were added to the list of protected attributes. These characteristics were already protected under anti-discrimination law and employers are now prohibited from taking adverse action against employees on the basis of these characteristics.

Employment contracts

Since 7 December 2022, employees have a new workplace right to choose whether or not to disclose their pay and terms of their employment that might relate to their pay outcomes. This means that pay secrecy clauses in contracts entered into or varied after 7 December 2022 will be prohibited or will have no effect. Penalties can apply from 7 June 2023.

There are also changes on the horizon for fixed term contracts. From 6 December 2023, employers will be prohibited from entering into fixed term contracts:

• where the term exceeds 2 years;
• which contain the right to extend or renew the contract more than once; or
• where the employee has previously been engaged on two consecutive contracts for the same or substantially similar work.

Some limited exceptions apply (e.g. where an employee earns more than the high-income threshold, which is currently $162,000). This means that an employer’s ability to enter into fixed term contracts will be significantly reduced. Employers should consider how this change will interact with the option for casual staff to request permanent employment status under the casual conversion provisions in the NES. Additionally, employers will need to provide employees engaged under new fixed term contracts a Fixed Term Contract Information Statement. See more on these changes here.

Changes to industrial awards

We’ve also seen a number of changes to industrial awards. For example, the Fair Work Commission has recently confirmed that pay increases for ‘direct care’ workers in the aged care sector will come into effect from 30 June 2023 (see more on those changes here). Changes to the Educational Services (Teachers) Award 2020 were also introduced last year (see more on those changes here).

Enterprise bargaining

The Secure Jobs Better Pay legislation introduced changes to enterprise bargaining requirements and has put a sunset date on ‘zombie agreements’, which will come to an end on 7 December 2023 unless extended by the Fair Work Commission. The Fair Work Commission has published a list of the zombie agreements that will be impacted by the change. Please contact us if you require assistance with your expired enterprise agreement.

Changes are also coming to single and multi-employer enterprise agreements. Employers looking to bargain this year and onwards may be impacted by the changes. See more on these changes here.

Recruitment advertising

From 7 January 2023, job ads must not include pay rates which breach the FW Act, industrial awards or enterprise agreements (e.g. rates lower than the minimum in the award, agreement or legislation). The Fair Work Ombudsman has the power to issue compliance notices and commence legal proceedings for any breach.

So, what do employers need to do?

Well, it depends on how their workplace is impacted by the changes. Some employers will take one or more of the following steps:

• Conduct a policy review, taking a closer look at your bullying and harassment policies, disciplinary policies, parental leave and flexible working policies, and consider how these policies actually apply in practice;
• Communicate any changes in your policies and practices to staff;
• Perform a risk assessment to identify areas of risk and review the mechanisms your organisation has in place to prevent and respond to reports of sexual harassment;
• Review current workplace supports for working families and seek advice (eg. process to consider and respond to flexible work arrangements, workplace facilities for those who require additional supports such as breastfeeding or expressing facilities);
• Review organisational policies and frameworks for gender diverse employees to work safely and inclusively; and
• Audit your fixed term contracts and your process for keeping track of casual and fixed term employment arrangements.

How we can help

Our Workplace Relations Team is passionate about helping employers facilitate positive change to make their workplace a safe and enjoyable space for everyone. We can guide you through identifying and implementing the changes necessary to meet your obligations and stay ahead of the pack, including working on your policies and contracts.

Contact us

Please contact us for more detailed and tailored help.

Subscribe to our email updates and receive our articles directly in your inbox.