This interesting question was analysed in the case of Squibb & Graham. 

The wife wanted to preserve the BFA, which was supposed to be a prenuptial agreement, and for the court to rectify its badly drafted parts.  

The judge noted that both barristers agreed that the financial agreement was “not a model of clarity”.  Further, he said, “The document bears all the hallmarks of having been the subject of an internet search and….completed under the misapprehension that it complied with all the (necessary) legal requirements.”

After separation, the husband decided to challenge the agreement. 

The problems in the agreement included:

1. Omission of the compulsory requirement in the Family Law Act that, to be a “financial agreement”, it had to stipulate that it was made under s90B, 90C or 90D (relating to marriages). 
2. A nonsense paragraph saying that it was governed by the laws of the State of Victoria.  Unfortunately the lawyers had not understood that the Family Law Act is a Commonwealth Act and is not a law of Victoria.
3. And, finally, the husband argued that the agreement was not a just and equitable settlement between the parties and didn’t take into account all their respective contributions to the relationship and to their family.

The judge noted that the agreement referred to their marriage and “their respective rights” to property and spousal maintenance, and it was clear that the agreement was intended to cover their marriage and any future separation.

He then considered the law about rectifying contracts or agreements.They stated that the Court will construe an agreement to give effect to the intention of the parties, even if that intention has been obscurely expressed.Further, there was to be no “limit to the amount of red ink or verbal rearrangement or correction which the Court” allows, as long as it is clear enough that a reasonable person would have understood what the parties intended.

So, the Court decided it was clearly the parties’ intention (if they had understood the law properly) that the agreement was to be a prenuptial agreement and they rectified it to specify that it was made under s90B.

Secondly, it was clear that the statement about the agreement being governed by the laws of the State of Victoria should be replaced with a new clause stating that the agreement was governed by the Family Law Act.

Finally, the argument that the agreement was not a “just and equitable settlement” was rejected because “it is not for the Court to make good a bad bargain”.An identical statement was made in the High Court case of Thorne v Kennedy.

Accordingly, the rectified agreement was found to be legally binding.

Although the wife escaped with a valid agreement, it is dangerous to have binding financial agreements prepared by inexpert lawyers.

How we can help

To avoid needless litigation we are very happy to help with any queries you have in relation to BFA’s.  Please do not hesitate to contact us.

Contractor insolvency has been a frequent occurrence in the Australian construction industry. It shows no sign of slowing down. For each ‘headline grabbing’ insolvency, there have been numerous insolvencies of smaller contractors and subcontractors. Insolvencies, big or small, have major repercussions on construction projects.

It is often difficult to spot the warning signs in time, and to work out which steps to take, to prevent time and cost blow outs on a project. This cheat sheet will help you spot the warning signs and take steps to mitigate the consequences of contractors’ financial difficulties.

Download the Contractor insolvency cheat sheet here

How we can help

For further information, please do not hesitate to contact us.

The federal election is around the corner and campaigning is reaching fever pitch.  There have even been complaints that party volunteers have been entering temporary or mobile polling booths to assist residents to fill out their Senate ballot papers.*

Courts have previously considered the question of whether prisoners have, or ought to have, voting rights (answer:  preventing a group of adult citizens from voting is not consistent with the Constitution per the High Court decision in Roach v Electoral Commissioner (2007) 233 CLR 162)). 

Provision is made for hospital in-patients who generally vote via a mobile polling booth – the presiding officer will take a ballot box, ballet papers and anything else necessary and will be accompanied by a polling official to facilitate voting.

But what is the situation for residents of aged care facilities, particularly those who are physically incapacitated or cognitively impaired?

A voter who is visually impaired or physically incapacitated or illiterate is entitled to appoint someone to enter an unoccupied compartment of the booth with the voter, and mark, fold and deposit their ballot paper for them (section 234 of the Electoral Act 2002 (Cth)).  The Australian Electoral Commission says that a voter can even elect a party worker can to assist a voter in this categorysituation.

There is no express obligation on aged care facilities to arrange for a mobile polling booth for its residents, although that is an option.  Residents can of course cast their ballot via a postal vote.  It is an offence for the proprietor or employee of an aged care facility to influence the vote of a resident (section 325A of the Electoral Act 2002 (Cth)). 

If an older person has lost capacity, provision exists to remove them from the electoral roll using a prescribed form. 

Everyone has a right to participate in representative democracy.  To that end:

• assist your physically incapacitated, visually impaired or illiterate family members or friends to vote;
• make sure your family members or friends complete a postal vote; or
• apply to remove a family member who is incapable of understanding the nature and significance of enrolment and voting, to minimise the risk of undue political influence being exerted on them and to help them avoid a penalty for failing to vote.

* https://www.abc.net.au/news/2019-05-08/federal-election-2019-aged-care-home-voting-complaint-liberal/11091310

How we can help

If you have any questions regarding this article please do not hesitate to contact us.

Following extensive consultation across Australia, the Federal Government has announced the Royal Commission into Violence, Abuse, Neglect and Exploitation of People with Disability. The Hon Ronald Sackville AO QC has been appointed as the Chair of the Royal Commission, along with the appointment of five other Royal Commissioners.

Broadly speaking, the Royal Commission has been authorised to inquire into what should be done to:

• prevent, and better protect, people with disability from experiencing violence, abuse, neglect and exploitation;
• achieve best practice in reporting and investigating of, and responding to violence, abuse, neglect and exploitation; and
• promote a more inclusive society that supports the independence of people with disability and their right to live free from violence, abuse, neglect and exploitation.

The broad mandate will permit investigation of financial, emotional, psychological abuse as well as sexual and physical acts of violence. Implicit within framing of the inquiry through a human rights lens, the Royal Commission will also consider discrimination against people with disability, and their equality before the law, particularly as victims of violence and abuse, and their experiences with the criminal justice system.

A standalone website will be established which will allow the public to engage with the Royal Commission, and provide information about how submission can be made and when and where hearings will be held. Interested parties can subscribe to updates in relation to the Royal Commission here.

Our team will provide updates as soon as they become available. For more information, please do not hesitate to contact us.

Employers should seriously consider appointing an independent investigator when they receive allegations of sexual harassment following the recent case of Kerkofs v Abdallah (Human Rights) [2019] VCAT 259. In that case, the Victorian Civil and Administrative Tribunal (VCAT) found an employer vicariously liable for sexual harassment by one employee towards another. VCAT ordered that the accused perpetrator and the employer, Parker Manufactured Products (Company), were jointly liable for the sexual harassment as the Company failed to carry out a ‘proper and independent investigation’ into the complaint.  

Background

The complainant was a 20-year-old employee who made a complaint of sexual harassment following several incidents with a male colleague. The complaints included that he:

• touched her inappropriately at work by massaging her shoulders and neck uninvited;
• called her names at work such as sexy, baby and honey;
• showed her a fake Facebook page which he used to communicate with young girls;
• made inappropriate comments about her body such as commenting on her bottom when she bent over; and
• drove her home when she was unwell after work and touched her inappropriately in the car. He then helped her into her home, got into bed with her and tried to take off her bra and touch her breasts, saying he was “horny”’.

When the employee made the complaint to her employer, they failed to hire an independent investigator. Rather, a director of the company undertook a three day ‘cross-examination’ of the complaint and did his own ‘googling on the internet about sexual assault’. The directors then dismissed the claim and alleged that the complainant had made up the claim for money or to get time off work.

The complainant then left the company.

Judgment

Vice President Judge Harbison found that the allegations of sexual harassment and assault were substantiated. The accused employee was a favoured employee in a position of authority over the complainant who was young and starting employment in a new country. The conduct constituted unwelcome conduct of a sexual nature within the meaning of section 92 of the Equal Opportunity Act 2010 (Vic) (the Act).

Pursuant to section 109 of the Act, an employer will be found vicariously liable if an employee is found to have contravened section 92. However, there is an exception under section 110 if the employer took reasonable precautions to prevent the employee from contravening the Act. In this case, the judgment found that the company took no such reasonable precautions and as such, was vicariously liable.

Quantum of damages

Judge Harbison accepted that the complainant had suffered significant anxiety and distress and that the harassment had caused a long-term condition of hyper-vigilance and lack of concentration. Consequently, the complainant was awarded $130,000 for general damages (noting that a WorkCover claim was also accepted).

Judge Harbison was critical of the company’s failure to undertake an independent investigation. It held that the ‘cross-examination’ for three days by a director was inappropriate as it was gruelling, asked questions about her personal life (such as her relationships and health) and drew unsubstantiated conclusions. Judge Harbison expressed concern that the director chose to rely on his own unreliable ‘googling’ as opposed to seeking expert advice. The company also breached confidentiality by placing the employee’s claims on the company intranet to be viewed by any staff member.

As a result, Judge Harbison ordered the employer to pay an additional $20,000 in aggravated damages.

Lessons for employers

The judgment reflects a growing intolerance for sexual harassment in the workplace, and an expectation that complaints of sexual harassment will be promptly and independently investigated. Previously, courts generally awarded between $12,000 and $20,000 for sexual harassment claims. However, more recent judgments have included higher damages.

This presents an important lesson for employers that failure to prevent and respond to sexual harassment claims will be scrutinised. Having a policy on harassment is not enough. In this case, the employer’s policy on harassment was given little weight as it was not put into practice and a culture of accepting inappropriate behaviour including at the leadership level persisted.

The case also has interesting implications for schools and universities in relation to child abuse claims or abuse alleged by students. Changes in child safety legislation are reversing the onus so that institutions must demonstrate that they took steps to prevent abuse. Otherwise, institutions risk being held liable for abuse perpetrated by their employees, volunteers or agents.

Next steps

As stated by Judge Harbison, courts are focusing on the need “to eliminate sexual harassment to the greatest extent possible in the workplace”.

It is important that employers and schools are prepared for this and we recommend taking the next steps below.

1. Start at the top – this recent case demonstrates the importance of strong leadership on sexual harassment at an executive and board level. It is important your board receives training on its obligations.
2. Put your policy in practice – as outlined above, a policy is not enough. Policies need to be reflected in the culture of the organisation and must include a fair investigation process and confidentiality requirements.
3. Seek advice and support – employers who attempt to manage a complaint entirely internally can find themselves in trouble if the investigation is not independent or they rely on inaccurate legal information. 

How we can help

Moores has extensive experience in supporting employers and service providers to conduct investigations and effectively respond to complaints. If you would like assistance, please do not hesitate to contact us.

Recent amendments to the Fair Work Act 2009 (Act) have enhanced the Fair Work Commission’s (Commission) discretion to approve enterprise agreement applications despite minor procedural or technical errors. Yet despite this new discretion, a recent Full Bench has rejected an application on the basis of a technical error relating to the notice of employee representational rights, thereby casting doubt on whether the Commission will actually use it.

In December 2018, the Commission was provided with the discretion to approve an application for an enterprise agreement under section 185 of the Act despite a minor procedural or technical error, where the error has caused no disadvantage to the employees.

The Commission used the following examples to illustrate what might be considered by the Commission to be a minor procedural or technical error for the purpose of section 188(2) of the Act:

• where employees were provided with six days’ notice of an upcoming vote for an enterprise agreement rather than seven days’ notice in accordance with the Act; and
• where an employer alters the wording of the notice of employee representational rights from “speak to your employer” in the final paragraph to “speak to your manager Brad or Damien”.

However in Spotless Facility Services Pty Ltd [2019] FWC 1331, the Commission rejected an application for approval of an enterprise agreement because of a failure by the organisation to include in its notice of representational rights all employees who were to be captured by the coverage of the enterprise agreement. Although the Commission acknowledged that Spotless Facility Services Pty Ltd had not intentionally avoided its obligations under the Act, the difference between the coverage as defined in the notice of employee representational rights and the coverage of the enterprise agreement could not be classified as a minor procedural or technical error.

This case acts as a reminder that although the Act provides the Commission with the power to approve enterprise agreement applications with minor technical errors, it will not do so hastily. It remains important that orgainsation are aware of and comply with their obligations under the Act.

How we can help

If you require support or assistance with negotiating a new enterprise agreement or making an application with the Fair Work Commission to have your enterprise agreement approved, please do not hesitate to contact us .

The Full Bench of the Fair Work Commission (Commission) has confirmed that the protection from bullying in the Fair Work Act 2009 (Act) is broad enough to cover volunteers. The decision in Bibawi v Stepping Stone Clubhouse Inc t/a Stepping Stone & Others[1] highlights that organisations with volunteers, including volunteer board members, may be subject to the FWC’s stop-bullying jurisdiction.

Background

Stepping Stone Clubhouse Inc (Stepping Stone), an organisation which provides services for people living with mental illness, runs programs whereby members can volunteer in work units to develop self-esteem, and social and vocational skills. Mr Bibawi volunteered as a member in the Clerical, Administration and Technology Unit and assisted with general clerical duties.

Mr Bibawi lodged an application for stop-bullying orders against Stepping Stone and named individuals, and claimed that he was subjected to bullying while he was a volunteer member with Stepping Stone.

To be eligible to seek a stop-bullying order, a person must be a ‘worker’ as defined in the Act. Stepping Stone argued that Mr Bibawi was not a worker

At the first instance, the Commission found that the relationship between Mr Bibawi and Stepping Stone was not “work” of a paid or unpaid type that would be done by a volunteer, but rather it was done as part of a program, funded by the Government to improve the well-being and mental health of its participants such as Mr Bibawi.

However on appeal, the Full Bench held that the definition of “worker”, which has the same as in the Work Health and Safety Act 2011 (WHS Act), is very broad, requiring the following two elements to be met:

1. the person must carry out work ‘in any capacity’; and
2. the work must be carried out for a person conducting a business or undertaking.

The Full Bench found that Mr Bibawi performed work for Stepping Stone, and despite such work being performed as part of a program funded by the Government, there is nothing in section 7 of the WHS Act which would exclude Mr Bibawi from the definition of worker.  It was immaterial that Mr Bibawi’s work was also intended to improve his health and wellbeing, because “there may be a wide range of motivations and objectives attaching to the performance of such work”.

Not-for-profit organisations that engage volunteers to assist with their activities should be mindful that people who volunteer in programs and perform work may be a ‘worker’ eligible to make a stop-bullying application.

The case also illustrates the importance of educating all workers, including volunteers, about their rights and responsibilities in relation to bullying, and ensuring that your policies and procedures apply to all people who perform work on behalf of your organisation.

How we can help

If you require assistance to manage and respond to a stop bullying application, or want to be sure your current policies and procedures are consistent with your legal obligations, please do not hesitate to contact us.

Much is happening in Family Law – in fact, you might easily say it is more exciting than the coming election! The Australian Law Reform Commission has just put out its recommendations for major changes in the family law system, following its long awaited review after 43 years of operation of the Family Court of Australia.

But a great deal is going on in addition to what the ALRC proposes such as:

1. The strange left-field proposal by government to merge the Family Court and the Federal Circuit Court has been rejected by the Senate.
2. The family law courts have just issued an update of their “Family Violence Plan”. This is a very detailed and helpful blueprint for how the courts are to make sure that cases involving allegations of family violence are handled promptly, sensitively and with focus on risk protection.
3. About a dozen new family law judges (both courts) have been appointed since November which is a marvellous way of reducing the delays in the court system and ensuring real help is provided to people when they unfortunately get into the court system.

And the Australian Law Reform Commission has made 60 recommendations for change. The big ones include:

1. Creation of state “super courts” to handle both family law and also state based family violence matters (intervention orders) and state based child welfare matters (the children’s court jurisdiction relating to children at risk). Unfortunately, this proposal needs the States and the Commonwealth to cooperate and even if the Commonwealth wanted to push ahead with this there is no way this will happen this calendar year and it could take much longer again.
2. The tortuous provisions of the Family Law Act under which the court must consider (usually then rejecting the idea) equal shared time for children in every parenting case are to be repealed, leaving a focus as it should always have been, on what is in the best interests of the child.
3. There is an important recommendation to simplify property settlements. At present property issues are totally in the discretion of the court which must take into account in excess of 20 considerations with no guidance as to which ones have more weight than others. The ALRC has picked up a recommendation made by Moores (and echoed by some others) that a court should presume that contributions made by the parties during the marriage or relationship (financial, parenting, homemaking, etc.) should be treated as equal. 
   
   This can be adjusted for contributions from other sources like inheritances, and for the parties having different future needs (such as responsibility for young children or a difference in earning capacity). This will remove bickering in family law settlements about the detail of what has gone on during a relationship, at least in relation to property settlement.
4. They recommend that the date to value assets and superannuation is the date of separation (not the current date of trial) “unless the interests of justice require otherwise”. This suggests that if somebody gets an inheritance after separation it may be disregarded in a settlement – which the law does not permit at present.
5. They recommended there be a presumption that the value of superannuation accumulated during a relationship should be split equally between the parties. Again, this means pre-relationship super and post-relationship super may be disregarded.  This will certainly simplify arguments about superannuation.
6. They recommend greatly simplifying the currently complex operation of superannuation splitting, which will make it much easier for the separating couple.
7. They recommend the introduction of a new ground for claiming money; a statutory tort of family violence. One party can include this in their family law claim and get damages from the other party for violence during the relationship.  Those damages will then not be taken into account in the family law property settlement which will go ahead in the normal way. This is a major change and while it may increase litigation, in bad violence cases it gives real hope for the injured party to get real compensation.
8. They also recommended (as Moores also suggested in submissions to the ALRC) that parties must take “genuine steps” to resolve their financial matters before going to court. This will lead to increased mediation of financial matters in family dispute resolution centres and will force people to seriously negotiate.  If not they may be ordered to pay wasted costs of the other party being dragged to court.
9. The ALRC would expand the use of arbitration (which you could loosely call rent-a-judge, done privately) to cover all financial matters, and some parenting matters where family violence is not involved. This is a highly desirable option for those who cannot settle without a third party making a decision and it is quicker and cheaper than going through the Court system in the large majority of cases.
10. They recommend removing the general rule that each party pay their own legal costs. The detail of this has to be fleshed out. We hope this means that those who unnecessarily or unreasonably escalate legal matters will be ordered to pay costs more often and that misbehaviour in the legal system will reduce accordingly.

There are many other interesting proposals. As mentioned the state super court proposal will not happen soon. We hope that most of the other proposals are legislated for this year. They promise to simplify family law and to reduce litigation which is a good thing.

If you require assistance or advice about any of these matters, please do not hesitate to contact us.

Retrospective changes to child support legislation

On 1 July 2018, amendments were made to the Child Support (Assessment) Act 1989 (“The Act”) by virtue of the the enactment of the Family Assistance and Child Support Legislation Amendment (Protecting Children) Act 2018.

The amendments directly impact the enforceability of binding and limited child support agreements by way of introducing a suspension period and then terminating event where a parent of a child ceases to be an eligible carer in accordance with the Act.

Masters & Cheyne [2016] FamCAFC

The amendments are the result of a parliamentary committee report which addressed the decision of the Full Court of the Family Court in Masters & Cheyne [2016] FamCAF where the Father was obligated to continue to pay child support to the Mother despite the child residing with him on a full time basis.

In summary, the Mother and Father signed a binding child support agreement on 31 July 2008 with respect to their three children.  The agreement provided the Father was to pay the Mother $220 per week per child until they reached the age of 18 years.  At the time of signing the agreement, the children lived with the Mother and spent time with the Father.

Fast forward to 2012, the Mother relocated to NSW and the youngest child resided with the Father. The two eldest children were now adults. The Father made an Application to the Family Court to have the agreement set aside on the basis that:

1. exceptional circumstances had arisen since the signing of the agreement resulting in the younger child residing with the Father; and
2. the Father would suffer financial hardship if he was obliged to continue to pay $220 per week to the Mother despite the child residing in his care full time.

Ultimately, the matter proceeded to Appeal. Unfortunately for the Father, the Full Court of the Family Court dismissed the Father’s application and noted that although exceptional circumstances had arisen with a change to care arrangements, the Father, who earned approximately $192,000 gross per annum and had net assets valued at an excess of $1.1 million would not suffer hardship if the agreement was not set aside.

Suspension and Termination of Assessment

The amendments to the Act have attempted to address the decision upheld in Masters & Cheyne to provide a fairer outcome.

The amendments stipulate:

1. As of 1 July 2018, if a parent who is entitled to receive child support payments ceases to be an eligible carer of that child (less than 35% care of the child per year) the binding child support agreement will be suspended for a period 28 days or 26 weeks in certain circumstances.
2. If the 28 day suspension period ends without the former carer again having becoming an eligible carer, the binding child support agreement is terminated.
3. Termination has effect on the day the former carer ceases to be an eligible carer.

How we can help

The changes made to the child support legalisation are retrospective. It is likely many people may have a child support agreement in place that does not contemplate the amendments and already be suspended or in some cases, terminated.

It is imperative that practitioners are aware of the legislative changes and carefully draft agreements that provide for a change in care arrangements and a role reversal between parents.

We would welcome a discussion with you or your clients about the risk of a prior agreement being terminated and how to ensure a future child support agreement is binding.

If you have any queries, please do not hesitate to contact us.

A “New” land tax

The Vacant Residential Land Tax (“VRLT”) commenced operation in Victoria in relation to occupation of residential land from January 2018. It operates to apply additional land tax on residential properties that were considered “vacant” in certain councils close to the Melbourne CBD.  Unlike traditional land tax however, which is calculated on the unimproved value of the property, VRLT is calculated on the capital improved value – which is usually significantly higher.

The stated policy behind the VRLT was to disincentivise property banking in the face of a housing shortage. However, it appears that in application, the new law has the potential to go beyond that stated policy, largely due to the definition of “vacancy” and as to how it relates to trusts and other private entities.

The definition of vacancy is wide and can catch private use by family members (even where rent is being paid). While there are exceptions for some private use, their application is very limited where property is held in a trust of company structure.

An example

Kim is a director of a publicly listed company and works in Melbourne. Her partner Tom lives in Albury with their 3 children where he works as an accountant. Tom owns their principal residence in Albury.

Kim regularly spends 2-3 nights a week in Melbourne rather than commuting each way. An apartment in East Melbourne was acquired for her to use for that purpose, at a cost of $1.8M. Kim and Tom did not want Kim owning the property given the risk associated with her role, so the property was acquired via their family trust.

Under this example:

• the property would likely be considered vacant for the purposes of the VLRT
• the annual VRLT on the property would be 1% of $1.8M ($18,000) in addition to the standard land tax which may include the trust surcharge as well.

In effect, the outcome is up to 3 different land taxes applying to this property.

How did this result occur?

Generally, a property is considered “vacant” for the purposes of the VRLT unless the owner or the owner’s “permitted occupier” occupies the property for more than 6 months in the relevant year or another specific exception applies. Those exceptions include:

• holiday house use by the owner (for at least 4 weeks a year)
• work use by the owner (for at least 140 days a year)

The issue for Kim and Tom is that even if her use qualified under the time periods applicable to these exceptions, because she is not the owner of the property (the trustee of her family trust is), on the face of the legislation the exceptions do not apply.  Explanatory commentary on the SRO website supports this interpretation, stating that those exceptions do not generally apply to trusts or companies.

Who will this affect?

People acquiring residential property in the relevant council areas, who are not using it as their principal residence but do not want to personally own the land as part of an asset protection strategy. 

Ironically, the very people wanting to use the work exemption are more likely to be the ones wanting to use a trust for asset ownership, if their role brings with it asset protection concerns. 

What are the lessons?

For Kim, she may be able to have considered structuring a loan from a related trust to enable her to acquire the property personally. As the owner, she would then have the potential to qualify under either the work exemption or the holiday home exemption.  However, she loses the asset protection benefits of trust ownership.

Other lessons are:

• Don’t assume your property won’t be caught by the VRLT, just because you are using it part of the time.
• Consider all implications of trust ownership of real property including general land tax, land tax trust surcharges, VLRT, foreign ownership rules and the potential for duty and tax to transfer out of a trust. 

How we can help

Getting thorough advice before nominating a trust to acquire property will minimise the chances of an unwelcome surprise assessment.

For more information or expert advice, do not hesitate to contact us.