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VOLUME 43 | NUMBER 5 | JUNE 2016

LAW WEEK 2016 EVENT WRAP


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Contents Volume 43 | Number 5 | June 2016

40

26 VOLUME 43 | NUMBER 5 | JUNE 2016

06

Laundering of stains on character

08

The Mental Health Act 2014 and the right to refuse psychiatric treatment

10

Law Week 2016

14

National Commercial Law Seminar

18

Should enterprise agreements be interpreted by the application of the rules that apply to common law contracts of employment or statutory instruments? – issues for consideration

23

When will commencing proceedings in breach of arbitration agreement sound in indemnity costs?

24

Thomas Steane Louch

26

Good Faith in Contractual Performance

31

Dennis Eggington: 20 Years as Aboriginal Legal Service of WA (Inc) CEO

32

Super, personal representatives and conflicts of interest

36

Good Faith in AS 11000: Practical Implications for Contractors

40

Arbitrarily Detained: What the UN opinion means for Julian Assange

42

Lawyer on the Street

43

YLC CPD: Rules of engagement

43

Book Review: Justice in Tribunals

Disclaimer The views and opinions expressed in Brief and the claims made in advertisements published within it, are not to be taken as those of, or as being endorsed by the Law Society of Western Australia (Inc.) or the Brief Editorial Committee. No responsibility whatsoever is accepted by the Society, or the Editorial Committee for any opinion, information or advertisement contained in or conveyed by Brief. Copyright Readers are advised that the materials that appear in Brief Journal are copyright protected. Readers wanting to cite from or reference articles in Brief Journal should reference as follows: (Month and Year) Brief Magazine (Perth: The Law Society of Western Australia) at page __). Readers wanting to reproduce a substantial part of any article in Brief Journal should obtain permission from individual authors. If an author’s name is not provided, or if readers are not able to locate an author’s contact details, readers should contact the Law Society of Western Australia (Inc.). The trade mark BRIEF is the subject of registered trade mark 1253722 and is owned by the Law Society of Western Australia (Inc). Trade mark 1253722 is registered for Western Australia.

Published monthly (except January) Advertising enquiries to Manager Marketing and Communications Moira McKechnie Tel: (08) 9324 8650 Email: mmckechnie@lawsocietywa.asn.au Communications and Media Officer Andrew MacNiven Communications and Design Officer Brett Syme RRP $15.00 incl GST. Printed by Scott Print

LAW WEEK 2016 EVENT WRAP

COVER Law Week 2016 Wrap

REGULARS 02 President's Report 03 Your voice at work 04 Editor's Opinion 44 Young Lawyers Case Notes 46 Family Law Case Notes 48 Law Council Update 49 Pam Sawyer 50 Professional Announcements 51 New Members 51 Classifieds 52 Events Calendar

Editor Jason MacLaurin

President Elizabeth Needham

Deputy Editors Andrew Cameron, Moira Taylor

Senior Vice President Alain Musikanth

Editorial Committee Gregory Boyle, Andrew Cameron, Rebecca Collins, Robert French, Jason MacLaurin, Brigitte Monchouguy, Alain Musikanth, Maureen O'Connell, Tom Porter, Pat Saraceni, Verginia Serdev-Patterson, Moira Taylor, Lorilee Yu

Vice President Hayley Cormann

Proofreaders Sonia Chee, Andrew MacNiven Brief is the official journal of The Law Society of Western Australia Level 4, 160 St Georges Tce Perth WA 6000 Tel: (08) 9324 8600 | Fax: (08) 9324 8699 Email: brief@lawsocietywa.asn.au Web: lawsocietywa.asn.au ISSN 0312 5831 Submission of articles Contributions to Brief are always welcome. For further details, please contact communicationsofficer@lawsocietywa.asn.au

Treasurer Nathan Ebbs Ordinary Members Alison Aldrich, Marie Botsis, Jocelyne Boujos, Tara Connolly, Nathan Ebbs, Adam Ebell, Nicholas Ellery, Catherine Fletcher, Rebecca Lee, Greg McIntyre SC, Marshall McKenna, Denis McLeod Junior Members Saran Bavich, Sophie Ecker, Jodie Moffat Country Member Brooke Sojan Immediate Past President Matthew Keogh Chief Executive Officer David Price

01


President's Report Elizabeth Needham President, The Law Society of Western Australia

LEGAL AID MATTERS CAMPAIGN Members will no doubt be aware that the Society has joined together with the Law Council of Australia and the Law Societies and Bar Associations in other States to raise public awareness of the crisis currently facing our legal aid system. Cuts to legal assistance funding by successive governments have caused important services to shut down. Legal Aid, Community Legal Centres, domestic violence service providers and Aboriginal legal services are all under threat. The cuts have placed greater pressure on remaining services. It is short-sighted of successive governments to fail to address this funding crisis as it only results in increased costs to the taxpayer and in fact the whole community; whether that be by lengthier court proceedings, more people in jail or going to court in the first place when the provision of sound legal advice or social work assistance from, for example a Community Legal Centre, might have avoided the need for legal proceedings at all. The legal profession understands the immense importance of legal assistance organisations, which form a vital safety net in our justice system. Indeed, many legal practitioners are regularly on the ‘frontlines’ when it comes to dealing with access to justice issues, whether they work at a Community Legal Centre or donate their time to pro bono work through a large firm. The Society has held a number of events around the Legal Aid Matters campaign and access to justice issues recently. On Wednesday, 20 April, the Society's Executive hosted a lunchtime meeting with representatives from the Western Australian Bar Association, Legal Aid Commission, the Community Legal Centres Association and the Aboriginal Legal Service at the Society. On Thursday, 28 April, I chaired a lively panel forum to discuss the campaign, involving eminent speakers from the judiciary, the community legal sector, social services and the Western Australian Bar Association. At the Law Week Breakfast on Monday, 16 May, Fred Chaney AO gave a thoughtprovoking keynote address on The Case for Legal Aid. The breakfast was an excellent way to start Law Week and 02 | BRIEF JUNE 2016

to get the Legal Aid Matters campaign rolling. The campaign is continuing to gather momentum, having attracted a great deal of publicity from both the mainstream media and on social media platforms. In fact, the campaign hashtag became one of the leading ‘trending’ topics on Twitter during Law Week. You can share your support for the campaign by using #LegalAidMatters. We need your help to make the Legal Aid Matters campaign a success. Become involved by going to legalaidmatters. org.au and finding out how you can be involved. You can make a difference. At the website you can learn more about the crisis in legal aid, sign a petition and contact your local Member of Parliament directly to let them know that you value a properly funded legal assistance sector. It is crucial that, in this Federal election year, and as we follow this by a State election, we ensure our politicians understand the enormous significance of legal aid to our community and to the justice system. LAW WEEK Law Week began with the aforementioned Law Week Breakfast with Fred Chaney AO, as he presented The Case for Legal Aid. The Attorney General's Community Service Law Awards were also presented. Congratulations to Michael Tucak (individual category) and King & Wood Mallesons (organisation category). Between Monday, 16 May and Friday, 20 May, the Society was delighted to showcase more than 30 events aimed at both the legal profession and the community. Selected highlights included the Law Week Panel Presentation, which took place on Wednesday, 18 May at the Supreme Court. The topic of discussion, ‘Homophobia within the Law’ was a very important one; as attendees learned, the law has and continues to create barriers for the LGBTIQ community. At the Law Week Cocktail Evening on Thursday, 19 May, we were joined by a number of distinguished guests, including Stuart Clark AM, President of the Law Council of Australia. The 2016 Lawyer of the Year Award winners were announced at the event, with the Award for a practitioner with

less than five years’ experience going to Michael Geelhoed. The two leading candidates in the category of more than five years’ experience could not be separated, with Claire Rossi and Glen McLeod sharing the award. The three newest Society Life Members, Steven Penglis, The Hon Justice Carmel McLure QC and Clare Thompson, were also acknowledged at the event. Congratulations to the Lawyer of the Year Award winners and new Life Members. Thank you to everyone who attended a Law Week event. You will find a comprehensive review of Law Week in this edition of Brief. GALA DINNER The Society, in partnership with the Western Australian Bar Association, is honoured to host a Gala Dinner to recognise 10 years of service by the Hon Wayne Martin AC as the Chief Justice of Western Australia. The landmark event will take place on Friday, 9 September, at the BelleVue Ballroom, Perth Convention and Exhibition Centre. Part proceeds from the Gala Dinner will go towards a donation from the Chief Justice's Law Week Youth Appeal Trust to Holyoake. Please visit the Society’s website to register for this very special event. IMPORTANT CHANGES TO PROFESSIONAL INDEMINITY INSURANCE EXEMPTIONS PROCESS From 1 July 2016, the notification of a legal practitioner’s claim for exemption from Law Mutual (WA)’s compulsory Professional Indemnity Insurance arrangements is to be submitted to the Society. All notifications must be made online through the Society’s website, lawsocietywa.asn.au. A new administration levy of $75 (inc GST) is payable for each exemption notification and will apply to non-members of the Society*. Until 30 June 2016, notifications of exemption should be submitted to Law Mutual (WA) at no charge using Forms 2, 3 and 3A, which are available on the Law Mutual website, lawmutualwa.com.au, under Insurance - 2016/17 forms. *Law Society members and legal practitioners notifying of an exemption under Regulation 97(1)(e) Community Legal Centre or 97(1)(h) Pro Bono will have this levy waived.


Your voice at work Members keep the Society on track

2016 SOCIETY SCORECARD REPORT

The Society will retain a focus on improving Continuing Professional Development, committees and working groups, Find-a-Lawyer, LawCare (WA), Advocacy Training, mentoring programmes and Grad-Match.

In April, 404 members and 35 employees evaluated the Society’s performance against a series of key performance indicators (KPIs) in the Strategic Plan.

2016 Score

Overall satisfaction remains high with 83% of members reporting that they are satisfied.

High Value Services – % satisfied The Society's website

71%

The Society remains committed to building a reputation as the essential membership for lawyers. It is pleasing to see that member advocacy remains strong and employee advocacy has improved significantly over the year. We will continue to strive to provide you with a membership organisation that you’re proud to be part of and happy to recommend to others.

Brief journal

87%

E-newsletters

86%

Regular email information alerts

81%

Continuing Professional Development

79%

Committees and Working Groups

69%

Organisational Excellence

2016 Score

Trend Target

Trend Target 

Member satisfaction – % satisfied

83%

Free networking and social events

65%

Member Advocacy

80%

Find-a-Lawyer

76%

Employee Advocacy

71%

Member Privileges

49%

Community Services

76%

LawCare (WA)

45%

Senior Advisors' Panel

61%

Advocacy Training

61%

Mentoring programmes

58%

Grad-Match

33%

In a standout finding this year, the Society has hit its target for understanding members’ needs. 80% of members agree the Society has a good understanding of members’ needs, climbing steadily by 14% points over the past five studies. The Society continues to keep members informed about changes in legislation and key issues affecting the profession, effectively promotes access to justice and is regarded to be the voice of the legal profession in Western Australia. Strong Advocacy – % agree

2016 Score

Trend Target

Has a good understanding of members' needs

80%

Keeps members well informed about changes in legislation and key issues affecting the profession

86%

Is the voice of the legal profession in Western Australia

85%

Effectively promotes access to justice

82%

 Target achieved

 Making progress

If you have ideas about how the Society could improve, or to discuss these results further, please contact the Society’s Chief Executive Officer on (08) 9324 8605 or dprice@lawsocietywa.asn.au.

The Society is dedicated to delivering high value services. Members report that we are on target with the Brief Journal, enewsletters, regular email information alerts, free networking and social events and community services. Recent improvements to the website have been noticed with member satisfaction up 5% points, edging us closer to our performance target. 03


Editor's Opinion Jason MacLaurin Barrister, Francis Burt Chambers, Editor, Brief Journal

The cover of this month’s edition demonstrates the focus upon the Law Society’s banner event “Law Week”. The importance of Law Week, and the contribution of members of the profession to it, cannot be overstated. It represents a bridge between the legal profession and the broader community. In some ways, it contributes to the happy phenomenon of lawyers In Australia apparently being held in higher esteem than their counterparts in other jurisdictions. Sadly, lawyers still trail behind occupations such as nurses who hold the mantle of being the most trusted and respected. Without derogating from the admirable work nurses perform, it seems that part of the reason nurses are held in such esteem is their ability to cheerfully deal with some of life’s most unpleasant tasks, including cleaning up after another’s mess. While not wishing to engage in a false equivalence, it should be appreciated that lawyers have to (cheerfully or not) deal with similar issues, especially after receiving a client’s initial instructions, or trying to deal with what is left of the client’s case after crossexamination of their principal witness. Another noteworthy aspect of Law Week is that its events are directed to both the profession, as well as the general community. To find such acclaim for a confluence between high-minded technical artistry and popular general society appeal, one has to have recourse to recent obituaries for Prince.1 I must also record Brief’s appreciation for the work and efforts of Julian Sher, the previous editor, whose stewardship of Brief was remarkable. Julian will sadly no longer be a member of the Brief committee- but for the best possible reason- being work commitments with Curtin University Law School. Which does, along with Law Week, give rise to consideration of what seems to be an oft asked question nowadays: are we producing too many lawyers, given Perth now has five law schools? I don’t believe so, even if it has to be accepted that law is becoming a generalist degree and, unfortunately, many law graduates may not receive automatic employment in the traditional 04 | BRIEF JUNE 2016

sense. Posing the question whether there are too many lawyers is prone to a recitation of the (too) many popular lawyer jokes. To the general community one might as well pose the question whether there are too many mosquitos, who, having a respectable share of the market for carrying malaria and the Ross River Virus, somehow got greedy in deciding to carry the Zika virus as well. But let me pose this question- who would you prefer pouring in great numbers into society’s gene pool: people trained and knowledgeable in the workings of the law, and concepts such as the rule of law and natural justice, or someone who can explain, over an unwooded chardonnay and a slice of Ambrosia, why Damian Hurst putting a shark in a tank of formaldehyde and calling it the “The Physical Impossibility of Death in the Mind of Someone Living” is worth $8 million?2 And again, as with nurses, this is not a knock on artists or those with fine arts degrees. I think we can all agree that one David Lynch is worth 100,000 lawyers.3 The fact remains that lawyers, and the values instilled in them, represent an invaluable aspect of society. It should be remembered that when Shakepeare wrote “the first thing is let’s kill all the lawyers”4 this was not a criticism of lawyers, per se, but rather an observation that lawyers are the last bastion against those who would seek to impose tyrannical control over their fellow man. At least I think that’s what Shakespeare meant. It’s hard to know. Joseph Fiennes could not be reached for comment. There is a real shortfall in the ability to match up prospective lawyers with employment. There seems to be a similarity in this regard with the shortfall in men and women being able to be matched up with eligible partners and getting dates, in that, so far as I can tell, the only booming industry at the moment is internet dating sites. So, maybe there is a market for speed lawyer dating sites, setting up lawyers looking for employment with partners from major law firms. In the allocated 10 minutes budding

lawyers can explain why they have an excellent command of the law and good practical commercial acumen, and would be a valuable asset to the law firm in question. In whatever time remains, the partner from the law firms can then explain how they’re being equity-managed, should have followed their dream of being either a merchant banker, professional musician or novelist, that their second ex-spouse was insane but the one that made them laugh the most and didn’t at least take the beach house, and try to get said speed date to read their screenplay for a sure-to-be-hit-Hollywood blockbuster where they initially cast themselves in the starring role but on reflection thought that Ryan Reynolds might fit the spot well. If the importance of lawyers and the law is under any doubt, one only has to look at the month of June itself, in which, amongst other legal milestones, the Magna Carta was signed, and the US Supreme Court handed down its decision in the landmark Miranda case, giving rise to the “Miranda rights” upon the arrest of any accused. On a downside, June is also, from 1692, the month Bridget Bishop was tried (June 2) and executed (June 10) for witchcraft in the first of the Salem Witchcraft Trials. So, as far as us patting us on the backs for being lawyers, “swings and roundabouts” for June I suppose.5 I wish all the profession a good Law Week and thank the Law Society, and all involved for their efforts, in making what is assuredly to be a great success. NOTES 1.

From the Editor’s perspective, to be found dead at the relatively ripe-old age of 56, in the private elevator of their huge mansion, would be regarded as a personal victory.

2.

The Editor’s answer is actually both, that work of art being actually pretty cool, but if one had to choose one area of learning to make a person a better member of society, the law prevails.

3.

Especially given his masterpiece “Blue Velvet” which, for nothing else, after seeing Dennis Hopper’s performance, represents the best rejoinder to a disgruntled partner- as in: “oh yeah, after seeing thatI’m the worst boyfriend ever am I?”.

4.

Remember that from Year 12 English Lit from Henry VI, part 2 Act 4, Scene 2? Yep, me neither.

5.

“Swings and Roundabouts” being of course a customary lawyers’ term for trying to spin for a client a disastrous outcome. It almost never works in placating a client.


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.au 05


Ethics Column

Laundering of stains on character Gino Dal Pont Professor, Faculty of Law, University of Tasmania

A person's continuing 'good character' cannot be assumed.

Post-admission stains on good character may prove more difficult to remove than equivalent pre-admission stains.

Scope exists for an admitting body to adopt a redemptive approach as regards preadmission misbehaviour.

My previous column suggested that good character — which underscores not only admission to practice but continuing stake in practising — is something that, though for the vast majority perhaps not earned upon admission, can potentially be lost with relative ease. Reference was made to judicial remarks that '[c]haracter does not change readily',1 and that while

with. This, of course, is dangerous territory, because it postulates that, for many, a compromise of character is only a difficulty (or, maybe for some, an opportunity) away. Be that as it may, a lawyer shown to be of bad character will most likely forfeit any entitlement to practise law. And such a finding, as mentioned in my preceding column, presents as a weighty impediment to readmission to practice. This is so, it seems, because the person in question has been shown unworthy of the trust already placed in him or her, stemming in part from a belief — some would say assumption — as to his or her good character, by having been admitted to practice. It is legitimate, then, to ponder whether the same response should ensue absent this pre-existing assumed position of trust. The focus here shifts to acts

" ... a lawyer shown to be of bad character will most likely forfeit any entitlement to practise law." '[r]eformations of character and of behaviour can doubtless occur … their occurrence is not the usual but the exceptional thing'.2 The reference to 'character' in these remarks should be prefaced by the term 'bad', a point implied by the term 'reformation' in the second quote. It seems that, in dealing with imperfect human beings, good character can change to bad character. Also, that character, it is said, is tested not in good times but in bad, may explain why some lawyers, when faced with difficulties (personal or professional), behave inconsistently with the 'good character' they previously ostensibly espoused. Yet to the extent that 'character' is truly intrinsic, there may be a legitimate question over whether such lawyers were truly of 'good character' (as opposed to 'good fame') to start

06 | BRIEF JUNE 2016

potentially prejudicial to 'good character' prior to admission to practice. To show oneself unworthy of the 'good character' mantle by reason of post-admission conduct — being prejudicial to the trust thereby invested in legal practitioners — should arguably be treated more seriously than what may prejudice a finding of good character prior to assuming that trust. Of course, this is not to say that character requirements for admission should be removed. But it may be probative of a more stringent 'good character' hurdle for readmission than admission in the first instance. An ostensibly more yielding approach in this context is evident in a recent New South Wales decision. It involved an applicant who, between August 2006 and April 2008, received Austudy benefits while studying law while failing to declare to Centrelink his earnings

from casual employment. He was convicted in 2009 under the Criminal Code (Cth) of five counts of engaging in conduct from which he illegitimately obtained a financial advantage, before being released on a bond of good behaviour. In 2011 the applicant was refused admission by the Northern Territory Supreme Court, Riley CJ finding that the applicant knew, at the time of offending, that he was committing a criminal offence, and viewed his subsequent assertions to the contrary as 'fanciful' and as reflective of 'an effort on his part to minimise his culpability'.3 Yet four years later Schmidt J found that the applicant was of good character to be admitted in New South Wales. While accepting that the applicant had made 'a series of very serious mistakes', for which he had failed to properly take responsibility in 2011, her Honour noted that the statutory test, in focusing on whether a person is currently of good character,4 'recognises … that human beings, flawed as they are, are capable of change'.5 She was willing to accept that the applicant's intervening work experience and apparent insight had wrought a change in his 'intrinsic character'.6 That the law here recognises scope for redemption is in many ways heartening, as it suggests that character can ostensibly change for the better, even within a few years. NOTES 1.

Re B [1981] 2 NSWLR 372 at 381 per Moffitt P.

2.

Ex parte Tziniolis (1966) 67 SR (NSW) 448 at 461 per Walsh JA.

3.

Re Application by Saunders [2011] NTSC 63 at [24].

4.

Under the Legal Profession Uniform Admission Rules 2015, r 10(1)(f); in Western Australia, Legal Profession Act 2008 s8(1)(a).

5.

Saunders v Legal Profession Admission Board [2015] NSWSC 1839 at [98]. On this point see also the more recent decision in Application by Sutton [2016] NTSC 9.

6.

Ibid, [100]. Contrast Prothonotary of the Supreme Court of New South Wales v Montenegro [2015] NSWCA 409 (where the evidence spoke of continuing character deficiencies).


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The Mental Health Act 2014 and the right to refuse psychiatric treatment

Peter Curry Principal Lawyer - Curry & Co Lawyers, Legal Member – Mental Health Tribunal

The WA Mental Health Act 2014 came into effect on 30 November 2015, replacing and superseding the Mental Health Act 1996. The 2014 Act was designed to ensure that the legislation was “up to date with current best practice in mental health, including by reflecting principles of recovery for those living with mental illness”1. The purposes2 of the 2014 Act also include: •

promoting and protecting the rights of persons with severe mental illness;

promoting access to mental health treatment, care and support; and

recognising the role of carers and families in providing care and support to people who have a mental illness.

The 2014 Act also makes significant changes to the legalities of our mental health system, including the creation of the Mental Health Tribunal of WA (replacing the Mental Health Review Board) to hear and determine various matters under the Act. INVOLUNTARY PSYCHIATRIC TREATMENT Both the 2014 Act and the 1996 Act provide(d) for two broad categories of involuntary treatment order. The first is an Inpatient Treatment Order, where a person is required to remain in hospital to receive psychiatric treatment. This is obviously an intrusive form of treatment, and is generally considered only when a person is very unwell. The less restrictive form of involuntary treatment is called a Community Treatment Order (CTO). The patient remains living in the community, but is required to accept recommended psychiatric treatment. In most cases this will involve attending appointments at a

08 | BRIEF JUNE 2016

community mental health service; and taking medication as prescribed (often by way of a long-acting depot injection of anti-psychotic medication). There may also be other types of treatment provided. CRITERIA FOR INVOLUNTARY TREATMENT The criteria for involuntary treatment under the 2014 Act are in many ways similar to the criteria under the 1996 Act. Both require(d) that for a person to be made an involuntary patient, the person must be suffering from a mental illness, there be certain specified risks present, and there must be no less restrictive way in which treatment can adequately be provided. The 2014 Act does however make a very significant change in the way that the issue of capacity/consent is treated. Under the 1996 Act a person who met all of the other criteria could be made an involuntary patient if that person “refused or, due to the nature of the mental illness, is unable to consent to the treatment.”3 The implication of the section was that a person who met the other criteria was not entitled to refuse treatment even if the mental illness had not impaired their capacity to give informed consent. The corresponding section of the 2014 Act is very different. It provides that a person who meets the other criteria is in need of involuntary treatment (either as an inpatient or via a CTO) only if the person “does not demonstrate the capacity … to make a treatment decision about the provision of treatment to himself or herself.”4 The 2014 Act sets out the factors involved in determining capacity, such as whether the person can understand the matters involved in making the treatment decision, understand the effect of the treatment decision, and be able to communicate the

decision in some way.5 Although the relevant criterion refers to a person who “does not demonstrate” capacity, the 2014 Act explicitly provides for a presumption of decision-making capacity unless the person is shown not to have that capacity6. CAPACITY, FREEDOM AND THE RIGHT TO MAKE POOR DECISIONS The effect of these new provisions is that a person who has capacity to make a treatment decision cannot be given psychiatric treatment against their will, either in hospital or under a CTO. This is so even where the other criteria are fulfilled, i.e. where a patient has a serious mental illness7, and where there are risks to the health and safety of the patient or other persons, even where those risks are significant or may involve serious harm8. There is some degree of overlap between these criteria. Consider the example of a person advised by their treating doctor that refusal to take medication will likely lead to relapse of their psychotic illness; and that relapse would likely put the person and/or others at serious risk of injury or death. If that person nonetheless indicates that they will refuse treatment, that may be a consideration that could be taken into account when considering whether the person does genuinely have decisionmaking capacity. BALANCING FREEDOM AND PROTECTION Neither the 1996 Act nor the 2014 Act created a “safety at all costs” regime. Instead, our mental health legislation has always sought to balance the protection of individual freedom and self-determination against the importance of treating people suffering from mental illness, and protecting that person


(and members of the community) from associated risks.

prescribed period of 56 days under the 1996 Act, lawyers would generally regard this as an extraordinarily long time to be detained without review. One possible solution would be to legislate for a “rapid response” level of review to occur, say within 48 - 72 hours of detention. Such review could focus on the need for involuntary treatment, but also ways to ameliorate the serious negative impacts of detention on a person’s employment, housing, reputation etc.

The 2014 Act is a further step towards freedom, in that it turns the legislative settings further towards the liberty of the person being treated, especially on the issue of decision-making capacity. This will presumably (all other things being equal) come at a cost of a greater number of injuries and deaths, both to patients and members of the community. This can be a harsh reality to confront, but as is often stated, freedom is never free; rather it always comes at a cost. It is also worth noting that the 2014 Act brings psychiatric treatment further into line with the modern “informed consent” approach to the administration of medical treatment generally. People who have decision-making capacity are generally free to refuse medical treatment, even where that refusal will likely or even certainly result in their death or serious injury. Such decisions not only harm the patient involved, but can also impose a huge cost on their family, social networks, and not infrequently on members of the public. FURTHER REFORM Mental Health legislation will continue to evolve in response to community expectations, the reduction of stigma, and of course ongoing improvements in the range and effectiveness of psychiatric treatment, driven by advances in genetics, neuroscience and other areas of research. Even at present there are important areas that may require further reform: •

Involuntary inpatients may be required to wait for the prescribed period of 35 days to have an “initial” review of their involuntary treatment9. Although this is shorter than the

There is still no comprehensive legislative regime10 protecting the rights of elderly people who lose decision-making capacity. Such people comprise a far greater number than people being treated/protected under the 2014 Act. The lack of a comprehensive legislative framework for such treatment disadvantages not only patients, but also the professionals who must provide treatment, care and protection without the comprehensive powers and protections that the 2014 Act affords. With our ageing population and the increased consciousness of issues in elder law (and the prevention of elder abuse) this is an issue that many believe requires urgent legislative attention.

at the forefront of legislative reform in this complex, dynamic area of medicine and the law. NOTES 1.

Second Reading Speech - Legislative Assembly Mental Health Bill - 23 October 2013.

2.

All of these purposes are detailed in the first page of the Second Reading Speech (above).

3.

1996 Act Section 26(1)(c).

4.

MHA 2014 Section 25(1)(c) for Inpatient Treatment Order; Section 25(2)(c) for Community Treatment Order

5.

MHA 2014 Section 18.

6.

MHA 2014 Section 13(1).

7.

MHA 2014 Section 25(1)(a) for Inpatient Treatment Order; MHA 2014 Section 25(2)(a) for CTO. The definition of mental illness is wide but it contains a number of specific exclusions: for example a person does not have a mental illness merely because that person holds or fails to hold a particular religious, cultural, political or philosophical belief or opinion: MHA Section 6(2)(b).

8.

MHA 2014 Section 25(1)(b) for Inpatient Treatment Order; MHA Section 25(2)(b) for CTO.

9.

MHA 2014 requires that initial period reviews be conducted as soon as practicable after an involuntary order is made, and in any event within 35 days [Section 386(2)]. For patients aged less than 18 the prescribed maximum period is 10 days [Section 386(1)(b)]. In practice many reviews are conducted significantly earlier than this.

10.

Note that the Guardianship and Administration Act 1990 (WA) does currently provide some significant legislative powers/protections in this area.

CONCLUSION The 2014 Act provides a clear step towards personal autonomy and selfdetermination for people suffering from serious mental illness, while at the same time maintaining access to assertive mental health treatment, and protection against the risks associated with the acute phase of mental illness. While there will be ongoing discussion about whether the 2014 Act has those settings right, and about the large range of other matters that the Act addresses, there is no doubt that WA continues to be

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LAW WEEK 2016 A FOCUS ON LAW AND JUSTICE IN THE COMMUNITY

Law Week 2016 ran from Monday, 16 May to Friday, 20 May. The Society supported more than 30 events across Western Australia for the legal profession and the community. A range of organisations took part, providing free legal information sessions, seminars and social events. The programme began with the Law Week Breakfast, where Fred Chaney AO gave an absorbing keynote address on The Case for Legal Aid. The Breakfast was also the setting for the presentation of the Attorney General's Community Service Law Awards, which recognise practitioners and organisations that have provided outstanding pro bono legal services to the WA community. Michael Tucak won the award in the individual category and King & Wood Mallesons was the inaugural winner in the organisation category. On Monday, the Commissioner for Victims of Crime outlined how community organisations can help support victims of crime, including victims of family violence. In Fremantle, Attorney General's Community Service Law Award winner Michael Tucak organised 30 minute one-on-one free legal advice sessions for musicians. Meanwhile, 36 Year

10 | BRIEF JUNE 2016

10 students from 18 different schools attended the Society’s Youth Civics Leadership Day. Each of the students had demonstrated leadership potential and civic awareness within their school and community. The students heard from a range of speakers on topics including the rule of law, civics and leadership skills. Each student was presented with a certificate of participation by the Hon Wayne Martin AC, Chief Justice of Western Australia. On Tuesday morning, Law Access organised the inaugural Walk for Justice along the Perth foreshore to celebrate the vital pro bono work of the profession and to raise funds for the Law Access Pro Bono Referral Service. The event had a superb turnout, with members of the judiciary, legal profession and other supporters helping to raise over $26,000 for this very worthy cause.

Museum was the venue for a fascinating discussion of the life of Alfred Hawes Stone. Dr Pamela Statham-Drew provided an insight into one of the first people to practice law in the Swan River Colony, who later became a keen amateur photographer. The Fremantle Community Legal Centre and the City of Fremantle were proud to host Law in Kings Square. Eight solicitors from private practices in Fremantle and Perth, together with five lawyers from the Fremantle Community Legal Centre and eight volunteer law students from the University of Western Australia, Murdoch University and Curtin University, provided free legal advice to 50 clients on over 20 areas of law.

On Wednesday, the Society’s Young Lawyers Committee hosted a Law Week Panel Discussion on the subject of Homophobia within the Law. The panel which included leading members of the legal profession, discussed the obstacles the law continues to present for the LGBTIQ community.

Law Mutual (WA) and the Society presented two free seminars on Mental Health Matters, one of which involved a review of the Society’s 2011 report into psychological distress and depression in the legal profession. The other was an examination of technology and its effects on the practice of law, including the added stress levels that that come with being constantly connected to the work environment through smartphones and access to email.

The Society’s Old Court House Law

Law Week also saw the latest meeting


Law Week 2016

2.

1.

4.

3.

5.

7.

6.

1.

Nicholas Creed, King & Wood Mallesons; The Hon Michael Mischin MLC, AttorneyGeneral and Minister for Commerce; Elizabeth Needham, President, Law Society of Western Australia; and Michael Tucak, Creative Legal at the Law Week Breakfast

2.

Jeremy Rich, Allens; Michelle Rogers, Curtin University; Matthew Keogh, Immediate Past President, Law Society; Magistrate Hogan, President, Gender Reassignment Board; and Asanka Gunasekera, Western Australian Bar Association at Homophobia within the Law Young Lawyers Panel Discussion

3.

Student volunteers at the Fremantle Community Legal Centre's Law in Kings Square

4.

The Hon Wayne Martin AC, Chief Justice of Western Australia opens the inaugural Walk for Justice with Maria Saraceni, Director, Law Access; and Elizabeth Needham, President, the Law Society

5.

Participants in the inaugural Walk for Justice

6.

Dr Pamela Stratham-Drew presents the Alfred Hawes Stone Talk - Early Lawyer and Photographer

7.

Moira McKechnie, Manager Marketing and Communications, the Law Society; Joanna Blackley, Policy Lawyer, the Law Society, Fred Chaney AO; and テ(ne Whelan, General Manager - Programmes, the Law Society at the Law Week Breakfast

11


Key Highlights 1.

2.

3.

5.

4.

1.

Libby Fulham, Legal Practice Board; Graeme Geldart, Legal Practice Board; and David Price, Chief Executive Officer, the Law Society at the Law Week Breakfast

8.

David Davidson, Office of the DPP - State; Stewart Forbes, S Forbes; and Tim Kavenagh, Hunt and Humphry at the Law Week Cocktail Evening

2.

Fred Chaney AO presents The Case for Legal Aid at the Law Week Breakfast

9.

3.

Attendees at the Law Week Breakfast listen to the keynote speech from Fred Chaney AO

James Nicholls, Allen & Overy; Krista McMeeken, Jackson McDonald; and Richard Sandover, Jackson McDonald at the Law Week Cocktail Evening

4.

Lawyers from King & Wood Malleson were awarded the inaugural organisation category winner for the Attorney General's Community Service Law Award

10.

5.

Attendees at the Law Week Breakfast

Sara Kane, Employment Law Centre of WA; Helen Creed, Community Legal Centres Associations (WA); Maria Fifield, Avon Legal; and the Hon Jennifer Smith, A/President, WA Industrial Relations Commission at the Law Week Cocktail Evening

6.

Elizabeth Needham, President, the Law Society with Lawyer of the Year Award winners, Michael Geelhoed, Employment Law Centre of WA; Glen McLeod, Glen McLeod Legal; and Claire Rossi, Legal Aid WA

7.

Christine Thambyappah, Magister Legal; and Sukhwant Singh, Magister Legal at the Law Week Cocktail Evening

12 | BRIEF JUNE 2016


Law Week 2016

6.

7.

9.

of the very well-subscribed Sole Practitioner and Small Firm Forum. At the complimentary event, attendees heard from marketing expert Joanne Casey as she addressed the topic Bang for Buck: Marketing and Business Development on a Shoestring Budget. On Thursday, the Society hosted Refugee Matters: a seminar for lawyers and the public, which provided a breakdown of the roles of the various courts and tribunals assessing refugee claims and offered first-hand advice for preparing refugee visas from those working in the frontline. On Thursday evening, the Law Week Cocktail event and Lawyer of the Year Awards were held at Bankwest Place.

8.

10.

Attendees enjoyed a selection of delicious canapés and music provided by members of the Perth Symphony Orchestra. Congratulations to the 2016 Law Society Lawyer of the Year Award winners: •

Practitioner with more than five years’ experience: Claire Rossi and Glen McLeod

Practitioner with less than five years’ experience: Michael Geelhoed

The event also provided the opportunity to present certificates to Steven Penglis, the Hon Justice Carmel McLure and Clare Thompson, who were all awarded Life Membership at the Society's AGM last year.

A number of Law Week events also took place outside Perth, including Amazing Race – Law Edition (The Last Verdict), which was organised by the Geraldton Resource Centre. 10 teams took part, with four participants in each team. In Albany, the Aboriginal Legal Service of WA held a Law Week Dinner for the legal profession and staff at Lavender Cottage. Thank you to everyone who attended a Law Week event. Your support has been invaluable in making Law Week 2016 a resounding success. The Society acknowledges the funding assistance from the Public Purposes Trust for Law Week.

Special thanks to

Cocktail Evening Host Sponsor

Lawyer of the Year Award Sponsor

Lawyer of the Year Award and Community Events Sponsor

13


National Commercial Law Seminar Australia – a vital commercial hub in the Asia Pacific region: the importance of and challenges for Australian commercial courts and arbitral institutions 25 February 2015 Chief Justice Allsop Federal Court of Australia

The topic bespeaks Australia's participation in the regional and world economy. It is a clichĂŠ to talk of globalisation of world trade that has occurred in the last two decades. What perhaps is not fully appreciated in Australia is the likely scale and volume of economic activity and trade in the Asia Pacific Region in the next quarter of a century. It will produce huge demands for regional dispute resolution. One of this nation's abiding strengths is the basal and structural quality of its legal system. That is not to say that there are not challenges of great importance: the greatest of which is making the vindication and defence of rights of ordinary people (including ordinary commercial people) affordable and equitable. The strength and quality of the Australian legal system is founded on the exceptional quality of Australian legal education. One of the reasons why young Australian lawyers are so sought after in the legal centres of the English-speaking world is that there is no better national cohort of legally-educated students. The second great strength is an independent profession: solicitor and counsel. There are challenges here, as independence is corroded by systems that see the practice of the law as a business or commercial enterprise. That said, the independent profession, especially the independent bar, is critical to the structural quality and integrity of the Australian legal system. The third great strength is the independent integrated national court structure of federal and state courts. Federation brings with it challenges for efficiency and simplicity; but the legal governance of a continental nation requires flexibility, a degree of autonomy, within overall coherent consistency. That is achieved by the interlocking 14 | BRIEF JUNE 2016

relationships of the court systems. With this structure, what is Australia's mandate and its opportunity? We cannot present one concentrated legal centre as Singapore, Hong Kong and London can. We can, however, present at least three things: (a) practitioners of the highest quality, (b) courts of the highest quality, and (c) available arbitral structures of the highest quality. The presentation of these three attributes should not be based on competitive parochialism. It is Australians and Australia that foreigners recognise as having relevant qualities (or not, as the case may be) not whether Brisbane is better than Sydney, or Sydney is better than Perth, or Melbourne is best. Such self-focused parochialism is of no consequence to the foreign disputant or commercial party. It is the reliable quality of all those three things (profession, courts, arbitral structures) in Australia that is fundamental. If one jurisdiction does things badly; Australians have done these things badly. In order that civil society may grow, within and across our region, a regional justice system must develop. By this I mean the development of a trusted and reliable body of courts, and of trusted and reliable arbitral activity and institutions. Central to this process is the acceptance of the autonomous character of the arbitral legal order and the development of commercial courts of the highest quality in all countries of the region. Australia's challenge and opportunity is to play an integral part in this. The acceptance of an arbitral legal order requires the legal and cultural acceptance by the judiciary and the national laws of a country of the legitimacy of fairly-run

arbitration. To achieve such, the arbitral legal order must be worthy of the trust placed in it by courts and national laws. The coherence of the arbitral order in the region is facilitated by the broad and comprehensive adoption of a uniform basis for the organisational framework of arbitration in the region: the UNCITRAL Model Law which has been brought into domestic laws in Japan, South Korea, Australia, New Zealand, Singapore, Malaysia, Thailand, Vietnam, The Philippines, India, Sri Lanka and (substantially) Hong Kong. Not only does this lead to a familiarity and coherence in legislative structure, it also encourages and facilitates a conscious and salutary discussion, and generally adoption, of regional jurisprudence. For instance, recently, in TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd1, the Full Court of the Federal Court of Australia in discussing the question of public policy in Art V of the New York Convention and Arts 34 and 36 of the Model Law, and the provisions of the Australian International Arbitration Act 1974 (Cth) that involved the same concept, drew heavily on regional (Hong Kong, Singapore and New Zealand) case law. The development of consistency and interwoven jurisprudence within the region will assist in the development of a coherent regional law area. The quality, and legal culture, of the court of the seat of any arbitration is critical. The court of the seat has a crucial role in the supervision of the procedural conduct of the reference and thus of its fairness. It is the fairness of the arbitral procedure, the reputation for fairness of an arbitral centre, and of a legal order of a city or a state or a region, that is at the heart of the arbitral process, and its acceptance. The supervising court has a primary role in the assessing of that fairness of the procedure.


Courts and arbitral structures should not view themselves as necessarily competitive in an antagonistic sense. The arbitral process depends upon the court system for enforcement. It also depends upon the court system for oxygen and moral order. The oxygen is provided by courts understanding the light touch of noninterference that is generally required. That light touch will be founded upon a deep familiarity of the court with the international legal framework of the arbitral order, upon a recognition of the significant skill and expertise of many practising in arbitration and upon the deference given to the contractual autonomy of the parties who have chosen arbitral resolution. The moral order is provided by the courts being clear and unswerving in their enforcement of the premise of all arbitration – its fairness. This is not achieved by micro-managing in a pernickety way complaints about procedure; rather, it is achieved by the skilled and experienced application of fundamental rules of fairness by a mature and skilled legal culture. Article 18 of the Model Law expresses the fundamental norms of equality and fairness (so necessary for legitimacy and acceptance):

The parties are to be treated with equality and each party shall be given a full opportunity of presenting his case. It is the short expression of the uncompromising demand of the fairness of the arbitration process. This is not some pernickety body of rules, but the demand for equality and fairness that lie at the root of any legal order. The supervising court of the seat and in its skilled, knowledgeable and fair attendance to this basic requirement is critical to the attractiveness (or not) of the chosen seat. The flashiest arbitration rooms, the most appealing arbitral procedures are of little value if the supervising court is not a commercial court of the highest quality, with a sympathetic, but rigorous, understanding of the arbitral process, and with a legal culture of skill and despatch. What do I mean by "legal culture" in this context? I mean the values and expectations of those who participate in commercial dispute resolution in the jurisdiction: the legal profession, judges, arbitrators and commercial parties. It is constituted and nourished, not so much by legal rules, but by practice, custom, convention and attitude; indeed, by a shared assumption as to how dispute resolution works, as to how cases should

run, about what the reach of procedural power is, and ultimately, about what is fair. If I may be permitted to illustrate this with some personal reflections. I began to practise as a barrister in the Commercial List in the Supreme Court of New South Wales in 1981. No doubt Victorian practitioners of the time have a recollection about the commercial list of Marks J, and, later, Hayne J. The younger of you may associate many (not all, I hope) of the following remarks with Goldberg J and Finkelstein J (speaking only of the Federal Court). My practice as a junior barrister for a time was confined to handling matters in the Friday list, where directions and motions were heard. No case could be won there, but a case could be lost there. Under the, at times daunting, but always testing, supervision of the brilliant Justice Andrew Rogers, one learnt that only points worth running would be tolerated; complete preparation was compulsory; despatch and clear thinking were essential; co-operation with one's opponents was expected and essential; a lack of frankness or obfuscation with the court, or any form of incompetence or unpreparedness risked the danger of ritual humiliation in front of one's peers (the only aspect not to be copied; Andrew Rogers would

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forgive me for saying this: he was dragging people from another century, sometimes kicking and screaming, into the twentieth). Practice there instilled in succeeding generations of lawyers how to run commercial litigation quickly, fairly and cost-effectively. I can still hear the oft-expressed phrase uttered when some delaying tactic was being half-disguisedly run: "not in my court you won't." This approach changed utterly and completely the legal culture of commercial dispute resolution in Sydney, as no doubt did Marks J and Hayne J here. Cases were run with efficiency; bad points were abandoned or leave was not given to run them. For a time, loud complaints were made about a lack of fairness by parties (and their advisers) unable to run their litigation at their then customarily comfortable pace. The Court of Appeal showed no mercy in its support of the new broom. The legal culture changed. The purpose of this reflection is to illustrate what I mean by legal culture and how it can develop and evolve. It is also to reject, categorically, that judicial process is necessarily long, overly complex and institutionally inefficient. As some of the best commercial courts demonstrate, this is simply not so. It is a question of culture, technique and always recalling that commerce does not wait; it demands expedition. We should recognise that in this country our commercial courts have developed, often pioneered, reforms and techniques well in advance of many other countries. And, may I say, often in advance of arbitral procedures. If a supervising court has that kind of legal culture, it must inevitably affect how the proper conduct of arbitrations is viewed in that jurisdiction, with an inevitable effect on how fairness is viewed in respect of procedural despatch. In such a climate of efficient despatch, fairness and equality take on their binary, not unitary character. If a party requests an unreasonable time or an apparently unnecessary or oppressive step to be taken, but the arbitrator agrees to the request in fear

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of being accused of denying the party a full opportunity to present its case, neither fairness nor equality is being exhibited to the other party. If, however, the arbitrator is tolerably confident that his or her judgment as to what is robustly fair will be supported by the prevailing culture and practice in the supervising commercial court, that will give him or her a measure of confidence; it will empower him or her to exercise the authority vested in him or her. Efficient, skilled and experienced commercial courts thus have a crucial part to play in fostering and encouraging efficient, well-run arbitrations. They do so by fostering the legal culture of commercial acumen, fairness, efficiency and despatch in the support of arbitrations in the jurisdiction. They also do so by constantly maintaining and developing their own efficiencies in the despatch of their business. It is of the utmost importance for the health of arbitration in any jurisdiction that the commercial courts of the jurisdiction are viewed both as skilful and efficient and knowledgeable of commercial matters, and knowledgeable of, and sympathetic to, arbitration as the choice of the commercial community if that choice be made. It is to be recognised that many international parties would prefer the swift, efficient and knowledgeable handling of first-rate commercial courts. The problem with court adjudication can be, however, international enforcement. That difficulty will be overcome by Australia and other nations recognising the significance of the Hague Convention on Choice of Court Agreements 2005. The qualities of skill, fairness, equality and despatch are essential characteristics of a just legal order. The existence and concurrent development of commercial courts and arbitral structures of great quality creates a symbiotic legal order for the just resolution of commercial disputes. The development of skill and consistency in and among the major legal centres of the region including Australia is critical to the creation of a self-conscious and coherent law area and justice

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system in this region, based on values of fairness and equality and marked by skill and despatch. Australia's opportunity and challenge is to be at the forefront of that judicial skill and expertise in its commercial courts and to develop arbitral institutions of equal skill and expertise. The current important changes to the Federal Court's organisation under the National Court Framework will, I anticipate, answer this opportunity and meet this challenge by the creation, in effect, of a national commercial court, an international maritime court, a national intellectual property court and a national tax court. The steps the bar must take in the future are ones that should reflect the following realities: (a) the importance of the arbitral legal order, (b) the importance of international practice, and (c) the importance of working with the courts to build, and constantly maintain, a legal culture in commercial dispute resolution of skill, fairness, equality and despatch. The tasks of Australian commercial courts and the commercial profession are not simple. They are not dictated by the simplicity of a unitary legal system located at a fulcrum of world trade. But we have certain great strengths and advantages: a proximity to South Asia, Africa and India; a proximity to North Asia and the West Coast of Continental America; a legal culture of long standing and deep skill; and a profession and judiciary of the highest quality. How the courts and the profession co-operate to develop these inter-related resources and skills will be a great challenge for the future. The beginning, and the critical foundation, is the development of professional and judicial skill in the despatch of commercial cases. NOTES 1.

[2014] FCAFC 83.

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CURRENT MARKET SNAPSHOT Our team has long established relationships with national/international and boutique law firms and our aim is always to provide WA’s lawyers with an unrivalled level of knowledge and exceptional level of service. We are currently working on numerous exclusive briefs to source high calibre lawyers with 2 years’ PAE through to Equity/Salaried Partners, with the most recent opportunities listed below.

M&A Activity We are advising several medium sized law firms in assisting them with M&A activity, with both merger and acquisition options available. The firms are seeking high profile senior lawyers (with or without teams) with some form of transportable client/referral network who are interested in joining as Salaried/Equity Partners. The firms have excellent brands, several own their premises, and can provide highly experienced Partners/Directors with long established systems and processes.

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Commercial Lawyer with 4+ years’ PAE. Diverse role working across Property, Commercial, Corporate, and also front end Insolvency matters. This would suit a lawyer seeking extensive client contact. Exceptional mid-level Litigation Lawyer to join a highly regarded boutique law firm and advise clients across a variety of industry sectors. Client facing role involving Court work. Family Lawyer with 3-6 years’ PAE to join one of WA’s strongest boutique family law teams and advise HNW clients. IP Lawyer to join a national mid-tier firm to take on a leadership position in building the IP practice. Mid to senior level Commercial Lawyer to join a leading boutique firm and complete a range of high quality commercial work. This role will be BD focused in bringing new clients to the firm.

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1 year PAE and 3-5 years’ PAE Corporate Lawyers to commence ASAP. Client facing roles working with some of WA’s most approachable Partners. Exposure to public/private M&A and equity capital markets experience is desirable. Family Lawyer with 1-3 years’ PAE to work with a Senior Partner in a newly established team. Insolvency/Commercial Litigation Lawyer for top-tier firm. Some focus on mining/resources law in addition to Insolvency, and would suit a lawyer with 1-3 years’ PAE to work alongside a market leading Partner. Junior Workplace Relations Lawyer to join a busy ER/IR practice within a quality national firm. Plaintiff side PI lawyer to join a well known medium sized firm. 1-4 years’ PAE with some workers’ comp experience being desirable. Wills/Estate Planning Lawyer to join a recently launched firm in the south-west of WA. Lawyers with under 3 years’ PAE seeking a sea change are encouraged to apply.

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Should enterprise agreements1 be interpreted by the application of the rules that apply to common law contracts of employment or statutory instruments? – issues for consideration This article is an abridged version of a paper prepared for the Law Society's Law Summer School 2016. The full version is available at wairc.wa.gov.au. The Hon Jennifer Smith Acting President, Western Australian Industrial Relations Commission

APPROACHES TO INTERPRETATION OF CONTRACTS AND STATUTORY INSTRUMENTS Little has been written about how approaches to the construction of disputed words in a contract diverge from the interpretation of contested language in statutory text. In one of the few papers written on this issue, the Hon Justice Michael Kirby speculated in 2002 that:2 The explanation for this dearth of analysis may lie in the fact that the scholars who are interested in issues of contractual interpretation are likely to be experts in private law. Those who are interested in developments in statutory construction are likely to be devotees of jurisprudence or public law (Cf J. Hellmer, 'Interpretation of Contracts under the Influence of Statutory Laws' in Essays in Honour of John Henry Merryman (Duncker Hunbolt, 1990), 173). The twain, it seems, rarely meet. Justice Kirby, in his paper, set out some of the common and different features of interpreting contractual and statutory text as follows: (a) Common features (i) The modern approach to interpretation insists that the context be considered in the first instance, especially in the case of general words, and not merely when ambiguity arises.3 (ii) Neither the interpretation of contracts or statutes is concerned with discovering the subjective intentions of the writers of the words in question.4 (iii) The correct starting point is examination of all relevant parts of the written text.5 18 | BRIEF JUNE 2016

(iv) A non-literal meaning is to be preferred to a wholly unreasonable construction that has only a literal interpretation to commend it.6 (v) The proper approach to the task of interpretation is to attempt to read the words as they would be understood in everyday life. This approach facilitates the use of plain or ordinary English expression.7 (vi) A search for the 'purpose' of the text enables regard to be had to extrinsic materials (also referred to as surrounding circumstances when construing a contract), or the 'matrix of fact' by Lord Wilberforce in Prenn v Simmonds8 where ambiguity cannot otherwise be resolved.9 (b) Differences (i) A written contract is typically a mutual agreement between a small number of identified parties. A statute, or a law made under a statute, is not consensual, except in the broadest political sense, is addressed to the entire community affected by the law and generally enjoys a longer anticipated duration and more coercive consequences than a breach of contract.10 (ii) The fact that, normally, a statute will have a broader and more enduring operation means that words in a statute are usually interpreted by their contemporary meaning as the provisions 'always speak' (which can over time change. Thus, words in a statute are not generally regarded as static and should not be confined to

The Hon Jennifer Smith, Acting President, Western Australian Industrial Relations Commission presenting at Law Summer School 2016.

the meaning of the words when the statutory provision was first enacted).11 (iii) Normally the interpretation of a contract will be controlled by the terms of the contract and the rules of the common law. The interpretation of a statute and a statutory instrument is governed by rules of statutory interpretation including interpretation Acts of Parliament.12 (iv) Contracts are ordinarily drafted with less formality than statutes and statutory instruments and different extrinsic materials are available to assist interpretation. In the case of a written contract, regard can be had to earlier drafts in some circumstances.13 (v) Regard may be had in some circumstances to subsequent conduct of the parties when interpreting a contract.14 Enterprise agreements are collective


agreements about the terms and conditions of employees and are made to apply to an enterprise or multiple enterprises, that is, they can apply to more than one business and/or to more than one employer and the employees of those enterprises. Once registered under s41 of the Industrial Relations Act 1979 (WA) or approved by the Fair Work Commission pursuant to the requirements of s185 – s192 of the Fair Work Act 2009 (Cth), an enterprise agreement usually overrides and, in effect, replaces any award terms and conditions that would otherwise apply to the employees covered by the enterprise agreement. Importantly, in contrast to a contractual instrument an enterprise agreement binds persons who are not parties to the enterprise agreement. Enterprise agreements have for at least the past 20 years dominated the regulation of working conditions of employees employed in large government and private organisations at a State and Federal level. These instruments have significant elements of contractual documents being consensual and having usually been drafted by employers and unions or their representatives who have no training in legal drafting. Enterprise agreements cannot, like contracts, be amended by the doctrine of rectification. Industrial agreements, in particular, cannot be amended once registered, except in limited circumstances.15 Yet, perhaps the only real elements of an enterprise agreement shared by statutory instruments are the coercive consequences that flow from a breach of an enterprise agreement and the extent to which enterprise agreements bind persons and organisations that are not in the contractual sense parties to the agreement. When regard is had to the points of difference between the approach of interpretation of contracts and statutory instruments, it is apparent that enterprise agreements by their nature have in more recent times been considered as having more of the common features of a contract than a legislative instrument. Yet enterprise agreements do retain some features of legislative instruments. Once registered by the Western Australian Industrial Relations Commission or approved by the Fair Work Commission, enterprise agreements have statutory force. However, enterprise agreements like contracts are usually made by agreement between unions and employers whereby they agree that the rights and obligations agreed to will be enforceable by operation of statute.16 Also, enterprise agreements unlike most statutory

instruments are intended to have effect for a defined period of time. It is also the case that enterprise agreements, like most contracts, are drafted with little formality when compared to statutory instruments. In this paper, I will examine some of the rules of interpretation of contract and whether those rules have been accepted as applying to the construction of enterprise agreements. MUST AMBIGUITY IN THE TEXT OF AN ENTERPRISE AGREEMENT ARISE BEFORE REGARD CAN BE HAD TO EXTRINSIC EVIDENCE AND SHOULD THE RULES OF INTERPRETATION OF STATUTORY INSTRUMENTS BE APPLIED TO THE INTERPRETATION OF ENTERPRISE AGREEMENTS? In a recent article written by Phillip Boncardo in 2011 he argued that, although the common law of contract has exercised a significant influence on the interpretation of enterprise agreements, several important differences in interpretative approach exist.17 These, he says, arise from the public nature of agreements and the fact that they fall to be construed in line with the Acts of Parliaments as compared to the private and primarily commercial character of contracts. In his paper he also put forward the view that enterprise agreements should be interpreted by the application of the rules of statutory interpretation and the interpretation Acts of Parliament. The view that the Acts Interpretation Act 1901 (Cth) applies to the interpretation of an enterprise agreement approved by the Fair Work Commission was recently unanimously rejected by a Full Bench of the Fair Work Commission in 2014 in The Australasian Meat Industry Employees Union v Golden Cockerel Pty Ltd.18 In Golden Cockerel the Full Bench 'settled' two important issues for the interpretation of enterprise agreements approved by the Fair Work Commission. The first, is that it found that regard can be had to evidence of surrounding circumstances before the existence of ambiguity in an enterprise agreement is identified, to determine whether an ambiguity arises. The second is that enterprise agreements are to be construed differently from awards made by the Fair Work Commission as the Acts Interpretation Act does not apply to enterprise agreements. CAN ENTERPRISE AGREEMENTS HAVE EFFECT IN THE LAW OF CONTRACT AS WELL AS HAVING STATUTORY FORCE?

Whilst it is clear that enterprise agreements that are approved by the Fair Work Commission or industrial agreements that are registered by the Western Australian Industrial Relations Commission operate with statutory force, it does not necessarily follow that such an agreement cannot also have force as a contract. This issue is different to the issues raised in considering whether the terms of an enterprise agreement can be said to have been incorporated into an employee's contract of employment.19 In Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission20 the High Court found that to an extent that agreement certified by the Australian Industrial Relations Commission pursuant to s170MC of the Industrial Relations Act 1988 (Cth) exceeded what was permitted by the Constitution or by the legislation that the agreement effect as an award, it could not operate with that effect, but the underlying agreement remained and its validity depended on the general law. The court concluded:21 The parties to an industrial situation are free to agree between themselves as to the terms on which they will conduct their affairs. Their agreement has effect according to the general law. If their agreement is certified, it also has effect as an award. To the extent that an agreement provides in a manner that exceeds what is permitted either by the Constitution or by the legislation which gives the agreement effect as an award, it cannot operate with that effect. But the underlying agreement remains and the validity of that agreement depends on the general law, not the legislative provisions which give it effect as an award. The law on this point has to some extent not been pursued by unions, employers or employees. When regard is had to these observations in Construction, Forestry, Mining and Energy Union v The Australian Industrial Relations Commission, it appears there may be difficulties in pursuing an argument that an enterprise agreement may also be characterised as a common law contract made between an employer and a union so long as the agreement meets the usual requirements for validity of a common law contract. The most comprehensive consideration of the law on this issue is to be found in the decision of Ryan v Textile Clothing & Footwear Union of Australia22 a decision made 20 years ago. In that matter, the Court of Appeal of Victoria considered whether an unregistered collective agreement was enforceable 19


by a union on behalf of employees, in the law of contract. It was argued on behalf of the union that the employer and either the individual employees by their agents (the union or its representatives), or the union as a principal, had made a contract that provided for the terms and conditions of redundancy for the employees. Justice Hayne, with whom Tadgell JA agreed, observed that three elements must be met for an agreement to be enforceable as a contract. These are:23 (a) the parties to the agreement must be identified; (b) the parties must be found to have formed the intention to enter into a legally binding agreement; and (c) consideration for the agreement must be identified. Justice Hayne also observed, that whilst it was clear unions in Australia as corporate bodies have capacity to make contracts,24 answering the question whether the parties intended to be legally bound by the arrangement that they made could not be answered without identifying the parties and identifying the arrangement.25 Identifying parties to an enterprise agreement is difficult where it is contended that individual employees are parties. Justice Hayne made this point very clear. He said:26 It is convenient then to consider the question of parties. The learned trial judge found that 'each union officer who signed the document did so as agent for the union employees he represented who had approved the agreement at a meeting and did not do so as principal on behalf of the union'. I do not agree. Any conclusion that the union (or its officers) was acting as agent rather than as principal confronts a number of difficulties which I consider are insuperable obstacles in the way of accepting the proposition. The arrangement was one that would operate in the future; it was not an arrangement dealing with an existing problem. Although there had been some redundancies which had provoked the negotiations, the arrangement that was reached was one that would govern redundancies in the future and the parties negotiated the arrangement without confining their attention to any identified employees or classes of employee who were about to be made redundant. Further, it is clear that one of the so-called 'offsets' which Homfray wanted (about payment of wages by electronic funds transfer) extended not only 20 | BRIEF JUNE 2016

to present employees but to future employees. … If the union was acting as agent, for which employees at Homfray did it act as agent? The learned trial judge concluded that the union was acting on behalf of those members who voted in favour of the proposal put to the general meeting of union members on 16 September 1991. … A conclusion that the union was acting only for those employees who voted in favour of the proposal leads to strange and difficult results. The agreements which the unions and the employer executed were cast in general terms. There was nothing in them to suggest that only some employees were to benefit. No record was made at the meeting of who voted in favour of the proposal and thus there was no record of who, on this analysis of the matter, was to benefit from the arrangement. (Indeed, no record was made at the meeting of who attended it. All that the evidence shows is that some employees were absent from work on the day the meeting was held and it was suggested in argument that even that may not represent a sufficient basis for concluding that they did not attend the meeting, it being submitted that they might have come to the meeting but not attended work that day.) Of course the fact that there may be difficulties in proving who did or did not vote in favour, and thus, on this analysis, difficulties in proving who is or who is not a party to the agreement, is not determinative of the legal issue which is raised but I mention these difficulties to demonstrate the improbability that when they signed an agreement cast in terms apparently applicable to all employees at Homfray, the union and the employer are to be taken to have made an arrangement benefiting some but by no means all of the then employees of Homfray. Justice Hayne found that if individual employees could be said to be parties, then consideration would not be an issue. However, if the union itself was the sole party to the agreement, then it was difficult to find consideration. He found that there must be a sufficiently certain promise by the union and not by some third party,27 (presumably he was referring to the employees as a third party). When the facts were considered, settlement of a dispute was not sufficient to constitute consideration in the absence of any undertaking given by the union that the members would not take industrial action.

In these circumstances, his Honour was unable to identify any detriment suffered, undertaken or forbearance by the union.28 His Honour was also not satisfied that the union and the employer intended to enter into a legally binding agreement. In particular, he found that: (a) a legitimate expectation of the parties that the employer would in the future provide redundancy benefits and the employees would permit payment of wages by electronic transfer among other matters was not sufficient and if the parties wished to ensure the agreements were enforceable at law, they could have registered them under appropriate industrial legislation.29; and (b) the settlement of the dispute and the provision of the offsets was consistent with the making of an arrangement that was to have industrial rather than legal consequences of an agreement the parties intended to be binding at law.30 In my research, I have been unable to identify a decision where a court or tribunal has on consideration of the facts of a particular matter found an enterprise agreement enforceable in the law of contract. The reasoning of Hayne JA in Ryan has been applied by the Full Court of the Industrial Relations Court of South Australia in Commissioner for Public Employment v Public Service Association of South Australia31 and Goldberg J of the Federal Court in United Firefighters' Union of Australia v Metropolitan Fire and Emergency Services Board32. In both matters, when the relevant facts going to the making of the agreements were considered, the same difficulties that arose in Ryan in identifying the parties and identifying consideration given on behalf of a union resulted in the claims failing. Subsequent to Ryan, observations made by Whitlam and Gyles JJ in ACTEW Corporation Ltd v Pangallo33 led to speculation that enterprise agreements registered, approved or certified under Federal or State legislation cannot have effect as a contract. In Pangallo the Full Court of the Federal Court was called upon to determine whether the Supreme Court of the Australian Capital Territory had jurisdiction to make declarations of right in relation to a certified agreement within the meaning of the Workplace Relations Act 1996 (Cth). The Full Court concluded that the Supreme Court did not have jurisdiction. In this matter Whitlam and Gyles JJ said:34 Counsel for the respondent is


correct in submitting that there are substantial differences between the current regime for certified agreements and that which applied pursuant to the 1988 Act. There is less discretion reposed in the Commission so far as certification is concerned; the emphasis is upon single businesses rather than industry or other groupings; there is the opportunity for those affected to vote; and agreements are not necessarily made in settlement of an industrial dispute. At the same time, there has been a significant change in the scope of awards, particularly as a result of s89A of the Act, so that awards are likely to be less comprehensive and less prescriptive than previously. These developments, and the introduction of Australian workplace agreements (Pt VID), reflect a movement to more consensual industrial arrangements. It is likely that matters which may formerly have been dealt with by an award may now be dealt with either in a certified agreement or an Australian workplace agreement. That trend does not assist the respondent's argument in endeavouring to distinguish the decision in Byrne. A certified agreement now may be rather more like an award was at the time of that decision than it might be now. However, the trend towards consensual arrangements has not resulted in any fundamental change to the nature and effect of a certified agreement. The submission for the appellant that a certified agreement is solely a creature of statute having force by virtue of the statute remains correct. In a sense, the term 'agreement' is a misnomer because it will bind individuals whether or not they authorise it or are in favour of it. There is no scope for private law concepts of contract or equity in such circumstances. (See, in a different setting, McHugh J in I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd (2002) 210 CLR 109 at 135-136 [84]). We do not see that the circumstance that a certified agreement can now be made without settling an industrial dispute has any significance in this context. Once the process has been gone through, and the agreement is certified, it has force in precisely the same way as a certified agreement which settles an industrial dispute. The application of administrative law remedies does not arise in considering the question of law at issue in this appeal. However, where Whitlam and Gyles JJ

said that there is no scope or equity to bind individuals in circumstances of contract, whether or not the individuals authorise or are in favour of a registered agreement, their Honours may simply have been alluding to the point that following compliance with the requirements of registration or approval under relevant law enterprise agreements will bind individual employers and employees by statutory force. As Goldberg J in United Firefighters' Union of Australia v Metropolitan Fire and Emergency Services Board said when hearing an application for an interlocutory injunction that he doubted whether Whitlam and Gyles JJ in Pangallo were addressing the issue whether a certified agreement may also be characterised as an enforceable common law agreement.35 Goldberg J also had regard to the opinion expressed by Merkel J in Electrolux Home Products Pty Ltd v Australian Workers Union36 that where a matter in a certified agreement is not strictly about requisite matters, it may have effect according to the general law.37 More recently, in Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia re Manfield Colair and CEPU Electrical Division Northern Territory Enterprise Agreement Gove Alumina Refinery and Mine Site – 2010/201238 Lawler VP, without considering any authorities, in an application to approve an enterprise agreement under the Fair Work Act, rejected an argument that the employer was entitled to rescind the agreement on grounds of unilateral mistake. In the matter Lawler VP found:39 An enterprise agreement is not a common law contract. It is a species of agreement that is a creature of statute. An enterprise agreement comes into operation under the FW Act upon its approval by FWA, not upon its making by the parties in accordance with the process specified in the FW Act. There are important differences between enterprise agreements made under the FW Act and common law contracts. Perhaps the most important is that an enterprise agreement can come into existence notwithstanding that some employees covered by the agreement did not vote to approve it or otherwise agree to it. That feature alone is inconsistent with such an agreement being a common law contract. The scope for multiple employee bargaining agents for a single enterprise agreement, together with the fact than an

enterprise agreement may by "made" with the meaning of the FW Act notwithstanding that a particular bargaining agent does not agree with it underscore the difficulty of importing common law contractual notions around the creation and termination of contracts as applicable to enterprise agreements. Whilst this decision went on appeal this point was not directly considered by the Full Bench of Fair Work Australia.40 In any event, the observations of Lawler VP were made in the context of considering whether to approve an enterprise agreement and it appears that his honour was not called upon to consider whether the enterprise agreement in question was a document that had effect in common law. The reason why this issue has some importance is that if it is doubtful that a provision in an enterprise agreement can as a matter of fact have effect at common law as a contractual provision, a related question has to be asked whether the principles in law of contract that provide for the implication of terms be applied to enterprise agreements, or as a matter of public policy should enterprise agreements be confined to express terms. SHOULD IT BE OPEN AT LAW TO IMPLY TERMS IN ENTERPRISE AGREEMENTS? The implication of terms in fact are based on the presumed intentions of the parties to the contract, in respect of a matter that they have not mentioned but presumably they would have agreed should be part of the contract.41 In Codelfa the High Court set out the well-established conditions for implying a term in fact into a contract that appears complete on its face. These are:42 (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract. In Director General, Department of Education v United Voice WA Buss J (who was in the minority on this point) found a term could be implied into an industrial agreement.43 In that matter, the union filed an originating claim in the Industrial Magistrates Court alleging that the Director General had contravened cl 10 of a registered industrial agreement which was entered into by the Director 21


General and the union. The union claimed a penalty pursuant to s83(4) (a)(ii) of the Industrial Relations Act. Clause 10 of the agreement required the Director General through the Department of Education to provide inductions to employees at each district office. The district offices were abolished and replaced with regional offices and the Director General delegated the responsibility to conduct inductions to schools. The Industrial Magistrate dismissed the union's claim and found that cl 10 was incapable of enforcement. Justice Pullin, with whom Le Miere J agreed, did not refer to, or consider, whether a term could be implied into the industrial agreement. It is apparent from his reasons that such analysis was unnecessary. His Honour found that there was a statutory obligation on the Director General to comply with the agreement and it was no answer to a complaint about contravention to say the 'government' had adopted a policy which made it impossible to comply. Justice Pullin also found that the Director General's functions authorised her to make arrangements so that suitably qualified staff could conduct the inductions.44 Justice Buss approached the matter differently. Without any consideration of whether the industrial agreement was a contractual agreement or the nature of the civil enforcement proceedings which empowered the Industrial Magistrate to enforce the terms of the agreement by the imposition of a fine, Buss J applied the conditions for the implication of a term in Codelfa and found that it was an implied term that:45 (a) the Department, through its employees, will arrange for inductions of new education assistants to be held twice each term at the buildings previously occupied by each district office, unless there are no new education assistants requiring induction; and (b) the inductions will be conducted by suitably qualified employees of the Department. No consideration was given by Buss J whether the requirement in s83 of the Industrial Relations Act, which requires a person to comply with a provision in an industrial agreement, could extend to an implied provision in an agreement. Also no consideration was given to the requirement in s83 that a claim for enforcement of a provision in an industrial agreement can be brought by a person who is not a party to the agreement, such as an employee or an industrial inspector. 22 | BRIEF JUNE 2016

Section 41(4) and s83 of the Industrial Relations Act bind and extend the terms of an industrial agreement to persons who would not necessarily be regarded at law as parties to the agreement. Section 41 provides that an industrial agreement extends to and binds existing and future employees covered by the agreement and employers who are parties or who are members of an association of employers that is a party to the agreement. A party or a person bound by an industrial agreement has an obligation imported by statute to comply with the terms of the agreement and that pursuant to s114 of the Industrial Relations Act, a person cannot be freed from this obligation. Given that if a breach of the agreement is proven, civil penalties can be imposed on the person who is in breach, it could be argued that as a matter of public policy, parties and other persons bound by the terms of an industrial agreement should only be subject to compliance with express provisions of a registered agreement. When regard is had to these provisions it may be arguable that the conditions for implication of a term in Codelfa are not capable of being applied, or should not be applied, as the obligation to comply arises not out of a contractual obligation but by statute.

9.

(100 - 105). In matters before the Western Australian State courts and tribunals whether ambiguity must first arise in the text or to be evaluated having regard to surrounding circumstances has recently been the subject of considerable controversy arising out of a consideration of the 'true rule' stated in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337, 352, very brief observations made about the true rule in Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; (2011) 282 ALR 604; (2011) 86 ALJR 1 and whether what was said in Jireh is inconsistent with observations in Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640; (2014) 306 ALR 25; (2014) 88 ALJR 447; see the discussion by The Hon Justice Kenneth Martin 'Surrounding Circumstances Evidence: Construing Contracts and Submissions about Proper Construction: The Return of the Jedi (sic) JUDII', WA Bar Association 2015 Construing Contracts.

10.

(106).

11.

(106 - 107).

12.

(107 - 108).

13.

(108 - 109).

14.

(109). Regard cannot be had to subsequent conduct to interpret an agreement that is wholly in writing: Hughes v St Barbara Ltd [2011] WASCA 234 [106] (Pullin JA); The Administration of the Territory of Papua and New Guinea v Daera Guba (1973) 130 CLR 353, 446 (Gibbs J); Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 [25] - [26] (Heydon JA); Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 [35] (Gummow, Hayne and Kiefel JJ). However, subsequent conduct may be examined for the purpose of identifying the entire terms of the contract: County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 [21] - [27] (Spigelman CJ).

15.

Section 43(1) of the Industrial Relations Act 1979 (WA) provides that an industrial agreement may be varied by a subsequent agreement.

16.

The Fair Work Commission can also approve an enterprise agreement made between employers and employees: s172 of the Fair Work Act 2009 (Cth).

17.

'Enterprise Agreements and Contracts: Convergent and Divergent Approaches to Interpretation' (2011) 18 James Cook University Law Review 56.

18.

[2014] FWCFB 7447.

19.

See the discussion in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 which established the principle that the provisions of an award are not implied, or imported, into contracts of employment.

20.

[2001] HCA 16; (2001) 203 CLR 645; (2001) 103 IR 473.

21.

[34].

22.

(1996) 130 FLR 313.

23.

(343 - 349).

24.

(344).

25.

(345).

26.

(346 - 347).

27.

(349).

28.

(350 - 351).

29.

(351 - 352).

30.

(351).

31.

[2001] SAIRC 12; (2001) 122 IR 161.

32.

[2003] FCA 480; (2003) 123 IR 86; (2003) 198 ALR 466.

33.

[2002] FCAFC 325; (2002) 127 FCR 1.

NOTES

34.

[33].

1.

In this paper, except where the context otherwise provides, I use the term enterprise agreement to mean agreements approved by the Fair Work Commission as an enterprise agreement and an industrial agreement registered by the Western Australian Industrial Relations Commission.

35.

[484].

36.

[2001] FCA 1600.

37.

[50].

38.

[2011] FWAA 9129.

39.

[39].

2.

'Towards a Grand Theory of Interpretation: The Case of Statutes and Contracts' (2003) 24 Statute Law Review 95, 98. See also recent discussion about Justice Kirby's paper by J Dharmananda and L Firios 'Interpreting statutes and contracts: A distinction without a difference?' (2015) 89 ALJ 580.

40.

CJ Manfield Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2012] FWAFB 3534.

41.

3.

(98); K & S Lake City Freighters Pty Ltd v Gordon and Gotch Ltd (1985) 157 CLR 309, 315 (Mason J citing Attorney-General v Prince Ernest Augustus of Hanover [1957] AC 436, 461).

Breen v Williams (1995) 186 CLR 71, 102 (Gaudron and McHugh JJ).

42.

4.

(98).

5.

(99).

6.

(99); CIC Insurance Ltd v Bankstown Football Club Limited (1997) 187 CLR 384, 408; Newcastle City Council v GIO Ltd (1997) 191 CLR 85, 112 - 13; Project Blue Sky Ltd v Australian Broadcasting Corporation (1998) 194 CLR 355 [69], [78].

[1982] HCA 24; (1982) 149 CLR 337, 347 their Honours referred to the majority judgment in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266; (1977) 52 ALJR 20 adopted by Mason J with the concurrence of the other members of the court in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596.

43.

[101] - [108].

44.

[32] - [33].

45.

[102] - [103].

CONCLUSION Consideration of some of these points and arguments will have to wait for another day. Perhaps, in time, specialist principles of interpretation will emerge that recognise the quasi contractual nature of enterprise agreements that takes account of the statutory context that extends the application of terms of enterprise agreements beyond the unions and employers who negotiate and sign the agreements and has regard to the civil penalty regime that operates by statutory force and not by agreement.

7.

(99).

8.

[1971] 1 WLR 1381; [1971] 3 All ER 237, 239.


When will commencing proceedings in breach of an arbitration agreement sound in indemnity costs? Is there a general rule? Kristian Cywicki Associate, Corrs Chambers Westgarth lawyers, Perth, Australia1

Excitedly informing people of the importance of understanding the court’s general discretion to award indemnity costs often runs the risk of your listeners slipping into a coma of boredom. But pay attention because the recent decision of the WA Supreme Court in Australian Maritime Systems Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2016] WASC 52 (S) may save you time and cost. Australian Maritime Systems Ltd (AMS) commenced an action in the WA Supreme Court against McConnell Dowell Constructors (Aust) Pty Ltd (McConnell Dowell) in breach of a valid arbitration agreement. McConnel Dowell successfully applied for a stay of that action, incurring legal costs in doing so. McConnell Dowell applied for an order that it recover its legal costs on an indemnity basis, contending that there was a general rule that a court should exercise its discretion to award costs on an indemnity basis where those costs arise from a successful stay application based upon the proceedings being in breach of an arbitration agreement. Justice Mitchell held that no such general rule exists, and as a consequence rejected McConnell Dowell’s application for indemnity costs, ultimately awarding costs on the usual party-party basis.

beyond breach of the arbitration or jurisdiction agreement,4 both Martin CJ (in Pipeline Services) and Colman J (in A v B) emphasised that the general approach should not be regarded as a mandatory or inflexible rule, but rather depends on the particular circumstances of the case and, in particular, whether the successful party’s conduct justifies it being deprived of an order for indemnity basis costs.5 So, what are the circumstances in which an indemnity costs order may be justified? As a general rule, the categories in which the discretion to award indemnity costs may be exercised are not closed.6 Nevertheless, indemnity costs will be commonly awarded where: •

His Honour identified two competing lines of authority arising from conflicting single judge decisions in various Australian jurisdictions. One line of authority advocates that the party who reasonably incurs legal costs in successfully making an application to stay an action commenced in breach of an arbitration agreement should, generally, be allowed to recover its costs on an indemnity basis (the general approach).2

In this author’s view, this is true even of the general approach. While availability of indemnity costs under the general approach does not require any special circumstances

a party unreasonably refuses to accept an offer of settlement of the proceedings. The unreasonableness of the rejection of the offer depends on the circumstances of the particular case.9

a provision in the parties’ contract provides for indemnity costs to be paid in circumstances where one party has breached the dispute resolution procedure or arbitration agreement.10

a party or its legal advisers engage in some improper, or at least unreasonable, conduct.11 For example, the creation of false issues by tactical denials or failures to admit in pleadings may lead to indemnity costs orders.12

Another opposing line of authority regarded the ‘general approach’ as unsound and not supported in principle.3 Justice Mitchell preferred the second line of authority and considered that the courts should not apply the ‘general approach’ to awarding costs to a party who successfully stays proceedings commenced in breach of an arbitration agreement. His Honour effectively found that the court would be justified in exercising its discretion to award indemnity costs only where there was “some special or unusual feature to the case” and, in this case, there was no such feature.

a party persists with what should, on proper consideration, be seen to be a hopeless case. In Pipeline Services for example, Martin CJ had found that Pipeline Services had apparently engaged in a “strategy of running every conceivable argument in opposition to the application for a stay, irrespective of its strength or prospects of success”. In such cases, the action may be presumed to have commenced or continued for an ulterior motive.7 Alternatively, a finding that a party has persisted with a hopeless case may follow if a party wilfully disregards known facts or clearly established law.8

a party engages in aggressive, discourteous and non-cooperative behaviour that leads to incurring delay, inconvenience and needless costs. For example, a party who fails to cooperate in a manner that leads the other party to unnecessarily call a number of witnesses to testify, may be the subject of an award of indemnity costs for fees and

disbursements incurred with respect to those witnesses (after the preparation of their statements).13 What can front end lawyers learn from this decision? Certainty about recovering all of your legal costs may be secured by incorporating a clause in arbitration agreements or other dispute resolution procedures that provide for parties to indemnify each other for legal costs incurred in connection with proceedings commenced in breach of that agreement or procedure. What can dispute lawyers learn from this decision? Be careful when making applications for indemnity costs. The line of authority that Mitchell J followed suggests that the commencement of proceedings in the face of a valid arbitration agreement is not some special category of case that will justify an indemnity costs award. Until the Court of Appeal rules on the issue, it would be prudent not to rely on the ‘general rule’ approved in Pipeline Services. Instead, parties should only make an application for indemnity costs where they are confident that a ‘special’ or ‘unusual’ circumstance exists that justifies the court exercising its discretion to make the costs order sought. NOTES 1.

The author acknowledges the assistance of Michael Barnes, Lawyer, and Pilar Adams, Law Graduate, (both of Corrs Chambers Westgarth, Perth, Australia) in preparing this article.

2.

Pipeline Services WA Pty Ltd v Atco Gas Australia Pty Ltd [2014] WASC 10 (S) per Martin CJ (Pipeline Services) applying A v B [2007] EWHC 54 per Colman J (A v B).

3.

See for example John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [No 2] [2015] NSWSC 564 per Hammerschlag J and Sino Dragon Trading Ltd v Noble Resources International Pte Ltd [No 2] [2015] FCA 1046 per Edelman J.

4.

See A v B at [10].

5.

A v B at [15]; Pipeline Services at [15].

6.

Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 187 per French J, referred to by Ipp J in Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190, 191 (Unioil).

7.

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397, 401 per Woodard J.

8.

Ibid.

9.

Ford Motor Company of Australia Ltd v Lo Presti (2009) 41 WAR 1, 11 [31].

10.

A v B [2007] EWHC 54, approved by Martin CJ in Pipeline Services at [18].

11.

Justice Sheppard canvasses a number of cases in Colgate Palmolive v Cussons (1993) 46 FCR 225, 233.

12.

Unioil at 193, per Ipp J.

13.

Unioil at 194, per Ipp J.

23


Thomas Steane Louch Continuing the series of displays marking the four year centenary of WWI, the Old Court House Law Museum's newest display is titled A Voice from the Front: Thomas Steane Louch. The display runs until 31 August 2016.

The Albany Contingent. Demonstrative Farewell. Albany, 16 August 1914 Albany's contribution to the Western Australian contingent of the Australian Imperial Expeditionary Force left by train for Perth tonight and their departure was the occasion of an enthusiastic public demonstration at the railway station. The volunteers, who number 30, were marched from the drill hall, headed by the Albany band. The whole town turned out and an immense crowd followed the men through the streets.1 Amongst those 30 young men was a 20 year old law clerk named Tom Louch.2 Tom, the son of an archdeacon, was raised in Albany and worked for Haynes and Robinson.3 Later, in his memoirs, Tom wrote "All we wanted was to get to the war before it was over. The Governor, Sir Harry Baron, a distinguished General, had stated publicly that it could not possibly last for more than four months".4 The men were amazed when on arriving at Blackboy Hill training camp they found, instead of the bustling campground they had expected, an empty tract of bushland. Just as they were about to leave again, the tents arrived in horse drawn wagons and they set about raising camp.5 Many of the complaints from the men concerned food. Tom wrote: The food was monotonous – stew for every meal, plus half a dozen loaves of bread and 2 tins of jam per tent per day. The bread and jam were collected each morning from the Q.M.'s store in a blanket, and stowed away unhygienically (sic) in a blanket until eaten. There were no mess tents, tables or chairs; one ate sitting on the ground.6

24 | BRIEF JUNE 2016

Tom Louch joined the 11th Battalion. He was given the rank of Corporal due to his previous service in the militia and put in charge of a section of 12 men.7 The men spent 2½ months training before departing for further training in Egypt. On the 28th February, 2015 the 11th Battalion sailed to the Island of Lemnos, they were to remain there for 8 weeks, living on board their ship8 We were at Lemnos for eight weeks, living on board the old Suffolk. We used to land nearly every day and career madly all over the hills-such a funny, old-world place. One seemed suddenly to jump back two thousand years, …9 Towards the end of April, the Battalion was told that they would soon be landing on the Peninsula. On 25 April 1915 the men landed at Gallipoli. Their orders were to push on at all costs. Louch's section was to land just after the first wave went in.10 Tom wrote about that landing later, in a letter to his sister: The bullets were flying all round, and we were so helpless - not able to do a thing … What actually happened was that everyone jumped into the water as soon as the boats touched. I went in up to my waist, and some almost had to swim. We were carrying all our earthly possessions - great coat, clothes, 200 rounds of ammunition, three days' rations, water proof sheet, one water bottle and sand bags... Well we lay on the beach for a few minutes, absolutely

Photo: Captain Thomas Steane Louch MC,1918 State Library of Western Australia BA 780/13.

exposed, waiting for orders. None came, so we went for our lives up a cliff, …11 The next 2 days were spent in a very small trench with very little water. Tom was lucky. He and his friend Dick Clarke were the first to get to the trench. Five others were shot attempting to reach it.12 In June an idealistic Tom wrote to his sister "War is horrible, but it also brings out a man's finest points, and the experience is invaluable. I wouldn't have missed it for the world".13 By July Tom had come down with dysentery and jaundice. He wrote to his mother "I'm getting weary and I'm homesick as I have never been before".14 On 5 August Tom was receiving orders


to attack Leane's Trench when he was badly wounded in the right arm by shrapnel. He could be considered lucky. The battle for Leane's Trench had heavy casualties. That wound probably saved his life. By this time suffering from jaundice and malnutrition, he was evacuated to Egypt where the wound in his arm became septic. He was pronounced unfit for active service and sent back to Australia.15 However, he was determined to return and in 1916 he was sent to France where he was awarded a Military Cross.16 Tom was discharged from WWI as a Captain. He returned to Australia where he finished his articles17 and commenced work with the firm of Robinson Cox Jackson and Wheatley.18 At the outbreak of the WWII, Tom Louch was appointed Lieutenant Colonel, commanding officer of the 2/11th Infantry Battalion. He commanded the 2/11th until he was forced to retire sick in April 1941.19 On return from the war Tom continued working as a barrister, first with Parker and Parker and then back with Robinson Cox again in 1946.20 In 1947 he was made a King's Counsel.21

Three years later he was offered an appointment as a Puisne Judge in the Supreme Court of Western Australia, but declined the appointment.22

3409A, State Library of Western Australia, 1915. 10.

Wes Olsen, Gallipoli, the Western Australian Story, University of Western Australia Press, Crawley, 2006.

11.

Thomas Steane Louch, Albany Soldier's Experience, Geraldton Guardian, 7 September 1915, Trove [online database], accessed 6 Feb. 2016.

12.

Wes Olsen, The Western Australian, Band of Soldiers cut down at Gallipoli, op.cit.

13.

Thomas Steane Louch, Albany Soldier's experience, Geraldton Guardian, op.cit.

14.

Louch Family Papers, Acc. 3409A/34, State Library of Western Australia, 30th July 1915.

15.

Wes Olsen, Gallipoli, the Western Australian Story, op. cit.

16.

James Hurst, op. cit.

17.

The Barristers Board of Western Australia, Extract from the Register of the Barristers Board, ACC 3409A/26 State Library of Western Australia, 1960.

18.

Open: Tuesday – Friday, 10am – 4pm

West Australian, 10 July 1947, Trove [online database], accessed 6 Feb. 2016.

19.

Wes Olson, Battalion into Battle: The History of the 2/11th Australian Infantry Battalion 1939–1945, 2011.

NOTES

20.

Thomas Steane Louch , Biographical notes of T.S. Louch, ACC 3409A/2, State Library of Western Australia.

Tom Louch had a long and distinguished legal career. He spent his holidays travelling the world, often returning to those places he had visited during the war years. He died in 1979.23 Old Court House Law Museum Stirling Gardens, Corner Barrack Street and St Georges Terrace

1.

The Albany Contingent, The West Australian, 17 August 1914, Trove [online database], accessed 6 Feb. 2016.

21.

2.

Australian War Memorial, WX2 Thomas Steane Louch MC, https://www.awm.gov.au/units/people_4824.asp, 2016, accessed 15 Jan. 2016.

Certificate awarded to T.S. Louch on appointment as a Kings counsel, Acc. 3409A/24, State Library of Western Australia.

22.

Abbott, Letter from the Attorney General to Tom Louch, ACC 3409A/33, State Library of Western Australia, 1950.

3.

The Albany Advertiser, 13 November 1912, Trove [online database], accessed 6 Feb. 2016.

23.

4.

Thomas Steane Louch, In the Ranks, Acc. 4637/1, State Library of Western Australia.

Louch Family Papers, State Library of Western Australia, http://slwa.wa.gov.au/pdf/mn/mn1001_1500/mn1127. pdf, accessed 5 Feb. 2016.

5.

James Hurst, Game to the Last, The 11th Australian Infantry Battalion at Gallipoli, Newport, Big Sky Publishing, 2011.

6.

Thomas Steane Louch, In the Ranks, op. cit.

7.

Wes Olsen, Band of Soldiers Cut Down at Gallipoli, The West Australian, 14 April 2010.

8.

Thomas Steane Louch, In the Ranks, op. cit.

9.

Thomas Steane Louch, Letter to his sister Mary, ACC

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25


Good Faith in Contractual Performance A background paper for the Judicial Colloquium Hong Kong, September 2015

The Hon Justice Susan Kiefel AC High Court of Australia

It has been observed1 that because some legal systems regard good faith as vitally important to the modern law of contract this raises the question as to how other legal systems cope without it. The answer may be that they do not, at least not altogether. Aspects of good faith may be seen in the doctrines and remedies already provided by the common law and by equity. However, most common law systems refuse to accept an overarching principle of good faith in performance of contractual rights and duties as governing the exercise by parties to a contract of their rights under it or the carrying out of their obligations in accordance with it. In this respect they differ from legal systems in Europe and in the United States. It is well known that good faith has its roots in Roman law and has been part of European legal culture for a long time. English law allowed recourse to notions of good faith and commercial expectations which were part of the early law merchant2. This may in part explain Lord Mansfield's statement in Carter v Boehm3, in 1766, that "[t]he governing principle is applicable to all contracts and dealings. Good faith forbids either party by concealing what he privately knows, to draw the other into a bargain, from his ignorance of that fact, and his believing the contrary." The context for Lord Mansfield's statement was a contract of insurance, which even today would remain subject to the requirement of utmost good faith both at common law and by statute. It has been said that Lord Mansfield "believed in the importance of certainty in mercantile transactions … but fairness, not certainty, was his lodestar for the general run of contract cases."4 This was not the view which prevailed in 19th and early 20th century English law, which regarded the commercial need for certainty in contract law as a reason for rejecting requirements of good faith in performance. Other reasons may include notions of individual freedom in relation to the exercise of contractual rights 26 | BRIEF JUNE 2016

and the pursuit of self-interest. These views were maintained by English law, as evidenced by statements such as "[t] here is no general doctrine of good faith in the English law of contract. The plaintiffs are free to act as they wish, provided they do not act in breach of a term of the contract"5, and "[a] person who has a right under a contract … is entitled to exercise it and can effectively exercise it for a good reason or a bad reason or no reason at all."6 However, the tide may be turning. A BASIS FOR GOOD FAITH In First Energy (UK) Ltd v Hungarian International Bank Ltd7, Lord Justice Steyn said: A theme that runs through our law of contract is that the reasonable expectations of honest men must be protected. It is not a rule or a principle of law. It is the objective which has been and still is the principal moulding force of our law of contract. … [I]f the prima facie solution to a problem runs counter to the reasonable expectations of honest men, this criterion sometimes requires a rigorous re-examination of the problem to ascertain whether the law does indeed compel demonstrable unfairness. It is the notion of good faith as fulfilling what the parties to a contract may be taken reasonably to expect which informs much of the current thinking about a good faith standard8. In HIH Casualty and General Insurance Ltd v Chase Manhattan Bank9 Lord Bingham said that "[p]arties entering into a commercial contract … will assume the honesty and good faith of the other; absent such an assumption they would not deal." And in Yam Seng Pte Ltd v International Trade Corporation Ltd10 an expectation of honesty was described as a general norm in commercial dealings. More recently, in Bhasin v Hrynew11 Cromwell J, delivering the judgment of the Supreme Court of Canada, said that good faith doctrine should be

accepted because the common law is itself uncertain, the current approach to good faith performance lacks coherence and is out of step with the reasonable expectations of commercial parties to a contract. ARGUMENTS TO THE CONTRARY The "traditional hostility" of English law to the doctrine of good faith is said to be explained, in part, by its preferred method, which is to proceed incrementally by fashioning particular solutions to particular problems rather than enforcing broad, overarching principles12. This is not the approach taken in other common law systems, such as the United States and Canada, which have shown a willingness to apply broader principles in contract law. Since it is accepted that general legal principle or rules may evolve from a series of decisions in a particular area of the law over time, the question may be whether that point of evolution has now been reached in other common law jurisdictions. Of course it should not be assumed that each common law system has developed in exactly the same way and to the same point in the evolution of the topic. As will shortly be discussed, English law has not developed the same doctrines as have other common law countries. And it has been suggested that Anglo-Australian law has developed in a way different from Canadian law. An example which is given is the law relating to the implication of terms, which has developed with a greater emphasis on specifics rather than identification of a genus expressed in wide terms13. The fears most commonly expressed about the adoption of a doctrine of good faith is that it is inconsistent with the principle of freedom of contract and will create uncertainty in the law and for commercial dealings because its content is vague and subjective14, and it would permit ad hoc judicial moralism15. This is compared with the process by which intentions are imputed to the


parties, which courts say is undertaken objectively. Commentators on the famous good faith provision of the German Civil Code (the BGB), s242, also express concerns about its use, but there is no suggestion that its application has led to uncertainty there16 or in other legal systems which employ it. It is perhaps more likely to be regarded as flexible, rather than uncertain, if it is viewed as a standard rather than as a rule. A premise often stated for the adoption of a requirement of good faith in contractual performance is that it is necessary to fill the gaps in the law. This directs attention to the field covered by the doctrines which have thus far been developed by the courts. This may raise the question whether an overarching principle of good faith is really necessary. WHERE GOOD FAITH HAS BEEN ADOPTED A notable contrast to the movement in the 19th and early 20th centuries by the English common law away from the doctrine of good faith is the United States. Its courts maintained the connection to Lord Mansfield's approach. In 1918, in Wigand v Bachmann-Bechtel Brewing Co17 it was said that "[e]very contract implies good faith and fair dealing between the parties to it." In the late 1960s, when the Uniform Commercial Code ("the UCC") was adopted and § 205 of the Restatement of the Law Second, Contracts was being drafted, there was a large body of case law which invoked the concept of good faith and used its terminology18. Section 1-203 of the UCC contains the general provision for good faith in commercial contracts. Section 205 of the Restatement provides more generally that "[e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement." One of the reasons given in Bhasin v Hrynew19 for the adoption of a good faith doctrine is that Anglo-Canadian law is out of step not only with the civil law of Quebec, but also with most jurisdictions of Canada's trading partner, the United States. In that case, an agreement between C and B, who was one of C’s retail dealers, was subject to an automatic renewal of the three year term unless one of the parties gave six months' notice to the contrary. H wanted to capture B’s lucrative market and had encouraged C to force a merger of B and H's agencies. C appointed H to review C's retail dealers for compliance with securities laws, a task which required H to have access to B’s confidential business records,

Photo: Hong Kong Legislative Council.

to which B objected. C misled B by saying that H was under an obligation to treat the information confidentially. C did not answer B’s enquiries about whether it was proposing a merger. When B continued to refuse H access to its business records, C gave notice of non-renewal. B lost the value of his business and most of his sales agents were solicited by H’s agency. It was held that there was a general duty of honesty in contractual performance and C had not acted honestly in exercising the nonrenewal clause20. Damages were awarded on the basis of what B's position would have been had C fulfilled its obligation of honesty21. None of the Australian, New Zealand, Hong Kong or UK courts have embraced a good faith standard at final appeal court level. It is of interest to note that despite the civilian aspects of the law of Scotland, its courts have not adopted it either. In Royal Botanic Gardens and Domain Trust v South Sydney City Council22, the High Court of Australia noted that there had been no definitive statement on the existence of a good faith obligation in Australian contract law, but did not consider that case to be an appropriate vehicle for a discussion of the principle. More recently, in a case involving a contract of employment23, it was argued that there should be implied a duty of mutual trust and confidence, but this duty was treated as distinct from a duty of good faith more generally and it was not argued that the latter duty arose. Neither the Supreme Court of New Zealand nor the Court of Final Appeal of Hong Kong have considered good

faith as a general rule applying to the performance of contracts. The Supreme Court of the United Kingdom has not pronounced upon the matter, although in Walford v Miles24, the House of Lords denied the existence of a duty of good faith in connection with negotiations. The question of an acceptance of a general rule or standard of good faith has however received the attention of judges of lower courts. In Yam Seng, Leggatt J surveyed the arguments for and against adoption and concluded25 that there was nothing novel or foreign to English law in recognising an implied duty of good faith. In Hyundai Engineering and Construction Co Ltd v Vigour Ltd26, Reyes J of the Court of First Instance of Hong Kong considered that the parties to a contract were under an obligation of good faith to attempt to resolve a dispute through the agreed contractual process. In Australia, Priestley JA of the Court of Appeal of the Supreme Court of New South Wales in Renard Constructions (ME) Pty Ltd v Minister for Public Works27, considered that the law should imply an obligation of reasonableness, in the sense of a duty of good faith and fair dealing. His Honour may have spoken too soon in saying28, in 1992, that "[a]lthough this implication has not yet been accepted to the same extent in Australia … there are many indications that the time may be fast approaching when the idea … will gain explicit recognition in the same way as it has in Europe and in the United States." His Honour's approach has been applied in other decisions29 but there is not unanimity about it30. In New Zealand, 27


Thomas J, in his dissenting judgment in Bobux Marketing Ltd v Raynor Marketing Ltd31, considered that good faith, in the sense of loyalty to a promise, to be the latent premise of much of the law of contract and to be closely associated with notions of fairness, honesty and reasonableness already recognised by the law. ASPECTS OF GOOD FAITH PRESENT IN SOME LEGAL SYSTEMS Although the 19th century has been regarded as a time when English law turned its face against the good faith principle, it has been pointed out32 that the notion of fraud at this time was very wide and that courts of law and of equity would provide remedies based upon that wide notion in relation to contractual performance. Nevertheless, as Bingham LJ said in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd33, "English law has, characteristically, committed itself to no such overriding principle [of good faith] but has developed piecemeal solutions in response to demonstrated problems of unfairness." English law has developed doctrines such as frustration and economic duress, which relieve against the strictness of contracts, defences to actions for

28 | BRIEF JUNE 2016

specific performance and injunctions and it provides relief against forfeiture and penalties. A review of some of these doctrines shows how aspects of good faith can be found in legal systems even outside its adoption as an overriding principle. In Canada, Australia and New Zealand, the doctrine of unconscionable bargains comes close to an overarching principle, albeit not one expressed to be based on good faith principles. It goes further than the doctrine of undue influence in its requirement that advantage not be taken of a person in an inferior bargaining position because they suffer from a special disadvantage. It is used to relieve a person from a bargain which has been procured in a way which is oppressive and unreasonable, because the person was suffering from some serious disability or disadvantage of which the other party knew or ought to have known. Thus, in Australia, a guarantee taken by a bank from a customer's parents who had limited English and an imperfect understanding of the nature of the guarantee and the risk to which they would be exposed, was set aside on the basis of this doctrine34. Like good faith, unconscionability of bargain has been said by some to be

vague or uncertain. Nevertheless, it has continued to be applied. Sir Anthony Mason35, a former Chief Justice of the High Court of Australia, observes that whilst it is true that unconscionability does not lend itself to precise definition and involves value judgments, guidance wil come from decisions dealing with particular situations. He suggests that "equity" and "good conscience" may develop into synonyms for "good faith" and "fair dealing". In Australia, a representation or a mistaken assumption created with respect to present or future conduct will found an estoppel36. The basis for an estoppel is the prevention of an unjust departure from an assumption which has been created by the representor's conduct. These doctrines, or extended doctrines, may be thought to reflect notions of fair dealing, which is a standard of good faith. However not all share this view. It has been suggested37 that although notions of good conscience may play a part in some of these developments, "it requires a leap of faith to translate these wellestablished doctrines and remedies into a new term as to the quality of contractual performance, implied by law."


The courts also regulate, to an extent, the exercise of certain contractual powers. For example, they will not allow a power given to one party to be used in an arbitrary or capricious manner. In an article on the topic of good faith, Sir Anthony Mason gives examples of Australian and Canadian cases which limit the power given by clauses in contracts for the sale of land which entitle a vendor to rescind the contract if the vendor is unable or unwilling to comply with, or remove, objections or requisitions made by a purchaser38.

to each contract. In Canada, in Bhasin v Hrynew43, good faith is referred to as an organising principle. The notion that it operates as an organising principle, albeit one not openly articulated, accords with views expressed in Australia44. Bhasin v Hrynew however denies good faith the status of a free-standing rule. Rather, it is said to be a standard that underpins specific legal doctrines which may apply in different situations45. The notion that good faith is best expressed as a standard was the view of Priestley JA in Renard46.

The courts will imply certain terms, in order to give "business efficacy" to a contract, for example by requiring the parties to co-operate in order to achieve the objects of the contract, or so that one party can receive the benefit from it, or to secure its performance39. It may be said that in doing so the courts are giving effect to the unexpressed intentions of the parties, but the results often accord with those of other legal systems which employ the requirements of good faith principle40. And it may be observed that the courts are requiring performance by the contracting parties in a way which takes account of the interest of the other. This stands in contrast to claims that contract law recognises the right to act purely in self-interest.

Regardless of whether a requirement of good faith in the performance of contracts is regarded as a legal rule, an organising principle, a standard of conduct or a combination thereof, the question is what does it actually require? The difficulties of attributing a meaning or definitive content to good faith may have contributed to the reluctance of courts in some legal systems to adopt it. In the United States, great controversy surrounds its meaning. In reality it may have many, depending upon the contractual setting and the act to be performed, or not performed.

The duty of a fiduciary requires the fiduciary to act in the best interests of the beneficiary at all times. More is therefore required of a fiduciary than a standard of good faith would require. The relevance of the imposition by the law of a fiduciary duty may be not so much in its likeness with good faith as in the number of persons in the commercial world who are subject to such a high standard – lawyers, agents, financial service providers, to name a few. It may at least suggest that a good faith standard in commercial dealings is not inappropriate. However, the courts in Australia have resisted applying a fiduciary duty more generally to commercial relationships41. On the other hand, courts in Canada have been more willing to do so42. The point to be made about the development and use of other doctrines to ameliorate the harshness of contracts in their requirements of performance and the use made of contractual interpretation to produce normative results is that an acceptance of a more general conception of good faith is regarded by some as a natural progression. A question may be whether this is a sufficient basis for its acceptance. WHAT IS GOOD FAITH? In the United States, good faith is taken to be an overarching principle to be applied

A number of approaches to the question of its content have been suggested in the United States, where, as has been observed, good faith is sought to be maintained as an overarching principle. In these circumstances its definition perhaps assumes greater importance. The commentary on § 205 of the Restatement relies partly on a conception of good faith as an "excluder" of bad faith. Professor Robert S Summers explains47 that this involves identifying conduct which amounts to bad faith and then identifying the opposite. For example where a seller concealing a defect in what he is selling amounts to bad faith, good faith may be said to require full disclosure of material defects. Another conception of good faith performance48 is when a party's discretion is exercised for any purpose within the reasonable contemplation of the parties at the time of formation, interpreted objectively. Yet another suggests that good faith is based upon fundamental notions of fairness and that its scope necessarily varies according to the nature of the agreement. The duty it encompasses may not only proscribe undesirable conduct, it may also require positive steps to be taken. The duty to co-operate is an example of the latter49. An eminent comparative lawyer in Australia50 suggests that good faith as loyalty – a steadfast true adherence to that which has been promised and agreed – may not be an unrealistic description. It accords with the meaning of the phrase in s242 of the German BGB

"Treu und Glauben". He asks: once the law takes the (larger) step of demanding performance of contractual promises, why should it not take the (smaller) step of requiring that promises be performed in good faith in order to fulfil expectations? In Bhasin v Hrynew51, good faith is said to require parties to perform their contractual duties honestly and reasonably and not capriciously or arbitrarily. A minimum requirement of acting honestly was stated by the High Court of Australia in Meehan v Jones52, but not as an aspect of good faith. The Court held that a contract for the sale of land that was subject to the purchaser obtaining satisfactory finance required the purchaser to act honestly in deciding whether or not he was satisfied. The requirement of reasonableness was stated by Priestley JA in Renard. In that case it was said that the power given to a principal under a building contract to take over the whole or any part of the work, or to cancel the contract, if the contractor defaulted, must be exercised reasonably. In Yam Seng53, Leggatt J considered that the test of good faith is whether the conduct in question would be regarded as commercially unacceptable by reasonable people. The following have been put forward as the obligations of good faith54: •

to act honestly;

to act reasonably;

to act with fidelity to the bargain;

to act reasonably and with fair dealing having regard to the interests of the parties; and

to co-operate in achieving the contractual objects.

HOW IS GOOD FAITH TO BE APPLIED? It is observed in Bhasin v Hrynew55 that it is often unclear whether an obligation of good faith is being imposed as a matter of law, of implication, or of interpretation. Cromwell J did not suggest that the requirement of good faith as honesty, applied as a standard of conduct, necessarily reflected the parties' intentions. It was to be imposed as a doctrine despite those intentions, but nevertheless to give effect to their reasonable expectations. Yet in Yam Seng56, it is said that the content of the duty is established by a process of construction, the foundation for which is the presumed intention of the parties. Perhaps this is to say no more than it is an expectation of the parties, for Leggatt J in Yam Seng did not suggest that it gave rise to an implication by law, but rather in fact.

29


CONCLUDING OBSERVATIONS

4.

If good faith merely reflects the reasonable expectations of honest people and is to be applied as a matter of implication, the question arises as to whether a broad doctrine of good faith is really necessary. In the United States, one commentator has observed that "many of the uses to which the new concept of good faith is put today do not go beyond those to which the traditional techniques of interpretation and gap filling were traditionally put."57 Lord Steyn, who has not spoken against its adoption, has observed that there is no need for English law to introduce a general duty of good faith so long as the courts approach contracts by reference to the reasonable expectations of the parties in accordance with the "pragmatic traditions" of English law58. Another observation may be made concerning the need for a general duty of good faith. It is that there are many doctrines which have been developed, and the process of construction has been used, by the courts to regulate contractual performance. One way of testing this may be is to ask whether the decision in Bhasin v Hrynew could have been reached by the application of these doctrines, in which case what may be at stake is methodology. On one view, this regulation by the courts may be thought to fill the gap created by there being no general duty. On the other, it may be that the gaps are now largely closed. If that is the case, the argument for a general duty appears to come down to one of coherence.

5.

Whittaker and Zimmermann, "Good Faith in European Contract Law: Surveying the Legal Landscape", in Zimmermann and Whittaker (eds), Good Faith in European Contract Law, (2000) 7 at 13.

35.

James Spencer & Company Limited v Tame Valey Padding Company Limited unreported, Court of Appeal, 8 April 1998 per Potter LJ.

Mason, "Contract, Good Faith and Equitable Standards in Fair Dealing", (2000) 116 Law Quarterly Review 66 at 89-90.

36.

Foran v Wight (1989) 168 CLR 385 at 411-412, 435.

37.

Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84 at 97 per Gummow J.

CLR 447; [1983] HCA 14.

6.

Chapman v Honig [1963] 2 QB 502 at 520 per Pearson LJ.

7.

[1993] 2 Lloyd's Rep 194 at 196.

38.

8.

See, eg, Mason, "Contract, Good Faith and Equitable Standards in Fair Dealing", (2000) 116 Law Quarterly Review 66 at 72.

Mason, "Contract, Good Faith and Equitable Standards in Fair Dealing", (2000) 116 Law Quarterly Review 66 at 76 fn 56.

39.

9.

[2003] 2 Lloyd's Rep 61 at 68 [15].

10.

[2013] 1 All ER (Comm) 1321 at 1351 [135] per Leggatt J.

Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607; [1979] HCA 51; Dynamic Transport Ltd v OK Detailing Ltd [1978] 2 SCR 1072 at 1083-1084.

11.

[2014] 3 SCR 494 at 514 [32], 518 [41].

40.

12.

Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] 1 All ER (Comm) 1321 at 1348-1349 [123], referring to McKendrick, Contract Law, 9th ed (2011) at 221-222.

Whittaker and Zimmermann, "Good Faith in European Contract Law: Surveying the Legal Landscape", in Zimmermann and Whittaker (eds), Good Faith in European Contract Law, (2000) 7 at 45-46.

41.

13.

Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84 at 96 per Gummow J.

Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64.

42.

Lac Minerals Ltd v International Corona Resources Ltd [1989] 2 SCR 574.

14.

Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] 1 All ER (Comm) 1321 at 1349 [123].

43.

[2014] 3 SCR 494 at 528-529 [62]-[64].

44.

Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 at 192 per Finn J.

15.

Bhasin v Hrynew [2014] 3 SCR 494 at 534 [79].

16.

Lücke, "Good Faith and Contractual Performance", in Finn (ed), Essays on Contract, (1987) 155 at 165-167.

45.

Bhasin v Hrynew [2014] 3 SCR 494 at 528 [64].

46.

(1992) 26 NSWLR 234 at 268.

17.

118 NE 618 (NY 1918) at 619.

47.

18.

Summers, "The Conceptualisation of Good Faith in American Contract Law: A General Account", in Zimmermann and Whittaker (eds), Good Faith in European Contract Law, (2000) 118 at 119.

Summers, "The Conceptualisation of Good Faith in American Contract Law: A General Account", in Zimmermann and Whittaker (eds), Good Faith in European Contract Law, (2000) 118 at 125-129.

48.

19.

[2014] 3 SCR 494 at 514 [32].

20.

Bhasin v Hrynew [2014] 3 SCR 494 at 532 [73], 544 [103].

Burton, "Breach of Contract and the Common Law Duty to Perform in Good Faith", (1980) 94 Harvard Law Review 369, cited in Summers, "The Conceptualisation of Good Faith in American Contract Law: A General Account", in Zimmermann and Whittaker (eds), Good Faith in European Contract Law (2000) 118 at 129-130.

21.

Bhasin v Hrynew [2014] 3 SCR 494 at 545-546 [108].

22.

(2002) 240 CLR 45 at 63 [40]; [2002] HCA 5.

49.

23.

Commonwealth Bank of Australia v Barker (2014) 253 CLR 169; [2014] HCA 32.

Farnsworth, Farnsworth on Contracts, 3rd ed (2004), vol 2 at 361-362.

50.

24.

[1992] 2 AC 128.

Lücke, "Good Faith and Contractual Performance", in Finn (ed), Essays on Contract, (1987) 155 at 162-163.

25.

Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] 1 All ER (Comm) 1321 at 1353 [145].

51.

[2014] 3 SCR 494 at 528 [63].

52.

(1982) 149 CLR 571; [1982] HCA 52.

26.

[2004] 3 HKLRD 1 at 40 [99].

53.

[2013] 1 All ER (Comm) 1321 at 1353 [144].

27.

(1992) 26 NSWLR 234 at 268.

54.

28.

(1992) 26 NSWLR 234 at 263-264.

29.

See, eg, Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 at [12]; Burger King Corporation v Hungry Jack's Pty Ltd (2001) 69 NSWLR 558 at 566-567 [145]-[154]; Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349 at 369.

Mason, "Contract, Good Faith and Equitable Standards in Fair Dealing", (2000) 116 Law Quarterly Review 66 at 69; Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 at [12], referring to Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 and following cases.

55.

[2014] 3 SCR 494 at 521-522 [48]-[49].

56.

[2013] 1 All ER (Comm) 1321 at 1350 [131].

57.

Farnsworth, Farnsworth on Contracts, 3rd ed (2004), vol 2 at 397 (footnotes omitted).

58.

Steyn, "Contract Law: Fulfilling the Reasonable Expectations of Honest Men", (1997) 113 Law Quarterly Review 433 at 439.

30.

See, eg, Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84 at 96-97; Jobern Pty Ltd v BreakFree Resorts (Victoria) Pty Ltd [2007] FCA 1066 at [134]-[136].

31.

[2002] 1 NZLR 506 at 515-516 [40]-[41].

32.

Whittaker and Zimmermann, "Good Faith in European Contract Law: Surveying the Legal Landscape", in Zimmermann and Whittaker (eds), Good Faith in European Contract Law, (2000) at 43-44.

NOTES 1.

Oldham, The Mansfield Manuscripts and the Growth of English Law in the Eighteenth Century, (1992) vol 1 at 242.

2.

Goode, "The Concept of Good Faith in English Law", speech delivered at Centro di Studi e Ricerche di Diritto Comparato e Straniero, March 1992 at 3.

33.

[1989] 1 QB 433 at 439.

3.

(1766) 3 Burr 1905 at 1910 [97 ER 1162 at 1164].

34.

Commercial Bank of Australia Ltd v Amadio (1983) 151

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30 | BRIEF JUNE 2016


Dennis Eggington: 20 Years as Aboriginal Legal Service of WA (Inc) CEO A version of this article was originally published in Aboriginal Legal Service of WA's Law Matters February/March 2016

Nyungar man Dennis Eggington has been widely acknowledged and recognised as a fierce advocate for advancing the rights of Aboriginal people and for his contributions to the justice system and human rights. 2016 marks his 20th year as CEO of the Aboriginal Legal Service of Western Australia (ALSWA), the state's peak legal body for Aboriginal and Torres Strait Islander peoples. Given WA's alarming over-representation of Aboriginal men, women and children within the court and prison systems and the ongoing tragedy of deaths in custody, dysfunction and oppression, ALSWA's role remains crucially important.

inequality remains today. "When I was ten, my father accepted an Army transfer to Queensland so we spent several years there before moving to Sydney where I finished my primary and secondary schooling. I remember being active in the anti-nuclear movement at high school and some of my friends and I organised protests against the testing of nuclear weapons in the Pacific with slogans like "Ban the Bomb". I guess this was one of my earlier experiences that set the scene for a lifetime of activism".

"When you're born Aboriginal, the challenges start on day one, but our resilience as a people shines through time after time. We have, and will continue to survive". Managing over 100 staff across the state, Dennis Eggington says that the work is compelling, demanding and vital, and without the ALSWA, the State's justice system would grind to a halt. "Our staff are motivated by their commitment to social justice and making real change in the lives of so many people who are doing it tougher than most. When you're born Aboriginal, the challenges start on day one, but our resilience as a people shines through time after time. We have, and will continue to survive". Born in Perth in 1955, the second oldest of four children, Dennis is one of the Hayward Clan and spent his preteen years in the beachside suburb of Scarborough. Perth had a population of 357,000 at this time, and while it was an exciting sun-drenched existence for many, racism, discrimination and exclusion of Aboriginal people were rife. The population has now grown to two million in the nations' fastest-growing capital city, but sadly, much racism and

After completing school, Dennis went to Teachers College in Armidale, New South Wales before taking up his first teaching position in the remote Northern Territory Aboriginal community of Ngukurr. "As a young Aboriginal man I'd experienced direct racism many times, but it was here when I was immersed in Yolngu Culture during the 1970's, that I was hit in the face with blatant systemic racism on a massive scale. While I was in the Community to teach, I was privileged to learn so much from local Community members and students and it is an experience I will never forget". This, coupled with Dennis' second teaching position in the New South Wales outback town of Bourke, proved to be life changing and another chapter in his journey and commitment to social justice.

clubs and bars. Racism was raw and in your face, and this is when I made my personal pledge to take a stand and forever fight for the rights of Aboriginal people and confront racism head on. I saw this injustice in Perth as a young child and while much has changed, there is still far too much injustice in 2016". It was in Bourke that Dennis met his wife Louella. The two are proud parents and grandparents and the journey continues. Having already dedicated a third of his life to his work with WA's Aboriginal Legal Service, Dennis Eggington remains firmly focused on the ongoing work of this integral organisation, which was awarded a National Human Rights Award under his leadership. "We've come such a long way since ALSWA's inception in the late sixties and early seventies when committed Aboriginal and legal fraternity members recognised the crucial need for an Aboriginal legal service. I am extremely proud of our long and strong history and know that our ongoing efforts continue to make a valuable contribution to WA's justice system. The success of ALSWA's work to date is shared, and can be attributed to the thousands of Aboriginal and non-Aboriginal people who have contributed to ALSWA's journey over many years".

"I was shocked to see that that Bourke was as confronting as the Northern Territory with its segregated cinemas, 31


Super, Personal Representatives and Conflicts of Interest Christine Smyth Accredited Specialist — Succession Law (Qld), Partner, Robbins Watson Solicitors

ABSTRACT Recent decisions guide practitioners in advising their clients on non-binding nominations, collection of death benefits and possible conflicts of interest for personal representatives. 2 trillion dollars[1] is the value Australians currently have invested in superannuation products and so it is no surprise, upon death, an interest in the proceeds of these products results in contested applications to the entitlements. While it is commonly understood that certain persons have a right to raise a claim, what is not commonly appreciated is that a conflict of interest will often arise where a personal representative of an estate seeks to raise a claim for themselves, at odds with the estate’s right to raise a claim on whose behalf the personal representative must act. With so much at stake it was only a matter of time before the issue was litigated. The first of which was the Queensland decision of McIntosh v McIntosh where Atkinson J opened her judgement with: “This decision deals with an area of the law which has growing practical importance in view of the growth of personal superannuation: how should the legal personal representative of a deceased person deal with the entitlement to payment of the deceased person’s superannuation upon death’1. Her Honour’s judgement sets out the principles which apply in very common circumstances. NON-BINDING NOMINATIONS AND ADMINISTRATORS James McIntosh died at the age of 40. He had various health issues and resided with his mother. His mother (Mrs McIntosh) described their relationship as inter-dependent, as James assisted with household expenses in various ways, they worked together and she supported him throughout his illnesses and with the limitations he suffered as a result of his 32 | BRIEF JUNE 2016

Katerina Peiros Wills & Estates Lawyer Principal of Hartwell Legal

illnesses, including personal care. James was not particularly close with his father (Mr McIntosh), his parents separated when he was young. The relationship between his parents was acrimonious. As James died without a Will, Mrs McIntosh applied and was appointed as the administrator of his estate with herself and Mr McIntosh being entitled equally. Mr McIntosh did not apply, nor did he oppose her appointment as administrator as she had undertaken to ‘faithfully … comply with [her] duties as personal representative in administering the estate … in accordance with the rules of intestacy’2. The estate was valued at approximately $80,000. However, James had 3 superannuation accounts with large industry funds valued at over $450,000. James had left non-binding nominations in favour of Mrs McIntosh on all the accounts. Mrs McIntosh applied to all three superfunds seeking to have the death benefits paid to her directly on the basis of an inter-dependency relationship. Mrs McIntosh did not inform Mr McIntosh that she was taking this step, though each superfund was provided with information about James’ relationship with his father, an avenue to contact him and about the nature of the grant.

estate, thereby allowing a conflict of personal interest and duty to the estate to occur’4. In addition to equitable principles, Mr McIntosh relied upon section 52(1) (a) of the Succession Act 1981 (Qld) submitting that under that section, Mrs McIntosh as the court appointed Personal Representative of the estate, had a ‘positive duty to get in the assets of the estate’5 and ‘seeking the payment of the …death benefit to herself personally, without also doing so on behalf of the estate or, otherwise informing [him] that he could do so, breached both these duties’6. He claimed that the appropriate remedy for this breach is an account for the profits and the court should order Mrs McIntosh to transfer the funds to the estate. Mrs McIntosh submitted that she was entitled to apply for the release of the funds to her, as superannuation is not an estate asset and the payment to her resulted from the superfund trustee, after making its enquiries, exercising its discretion to pay her. She conceded that as administrator of the estate, she was in a fiduciary relationship with the beneficiaries of the estate, however, ‘given the content of the fiduciary duty in the circumstances of this case she did not breach any such duty’7.

All three superfunds determined that there had been an inter-dependency relationship, paid the death benefits to Mrs McIntosh personally and she received them tax-free.

The content of the duty derives from both from equitable principles and section 52(1)(a) which provided that the duty of a personal representative is to ‘collect and get in the real and personal estate of the deceased [and] did not include the inchoate right to compel the superannuation fund to exercise its discretion according to the superannuation deed’8. She submitted that neither the superannuation benefits nor the inchoate right were an asset of the estate to which the Act applied.

Upon becoming aware of this, Mr McIntosh demanded that James’ death benefits be paid into the estate on the basis that Mrs McIntosh, as administrator, breached her fiduciary duty to the estate by actively seeking payment to herself personally rather than maximising the

Mrs McIntosh also submitted that any potential conflict between her being a potential recipient of the proceeds and her duty as an administrator was known at the time Mr McIntosh consented to her appointment and was therefore, not part of her duty as administrator.

The superfund trustees did not contact Mr McIntosh, even though Mrs McIntosh was notified by at least one of them that ‘every dependent of the deceased and potential claimant must be contacted, and their intentions recorded’3. Mr McIntosh did not contact the superfunds either.


Atkinson J focused her decision on the distinction between ‘administrator’ appointed by the court and ‘executor’ chosen and appointed by the Willmaker. She concluded that, the Willmaker being capable of and should be taken as consenting to any potential or existing known or predictable conflict of personal interest to duty of the executor. She drew on the judgement in Mordecai v Mordecai9 - that the conflict cannot be created by the executor, but can only be pre-existing to enable the implied endorsement of the conflict by the Willmaker. In the case of intestate estates, the court prefers to pass over an administrator who may have a conflict. Atkinson J found that as Mrs McIntosh applied for the release of the death benefits to herself after her appointment as administrator, as at the date of her claim for the death benefits she was already subject to the ‘fiduciary duties reposed in the office of administrator’10. Her Honour said: ‘ it is essential to fiduciary duties that they include the core or irreducible minimum duties necessary for the legal personal representative to perform their obligations ‘honestly and in good faith for the benefit of the beneficiaries’. This is the encapsulation of the fiduciary’s duty of loyalty and fidelity’11’ She also referred to the fiduciary’s duty of trust and confidence, duty not to profit from this trust and a duty not to place themselves in a position where his or her duty and his or her interest may conflict or act for their own benefit or the benefit of another person without the informed consent of the Willmaker or beneficiaries. Atkinson J found that Mrs McIntosh had a clear conflict of duty and had preferred her own interests to the interests of the estate, and as such had breached both the statutory duty and the common law duty. Importantly for practitioners, she also said that in the Queensland statutory framework and at common law, where there are non binding, lapsed or no nominations, an administrator has a duty to seek payment of the death benefits to the estate, by compelling submissions to the trustee calling on the trustee to exercise their discretion in this way but within the realms of the superannuation legislation12. It was her Honour’s view that it is self-evident that in the absence of a conflict of interest, the administrator would apply to have the death benefits paid to the estate. She distinguished this from situations when a binding nomination is in place. Accordingly, Mrs McIntosh was ordered

to account to the estate for all of the death benefits received by her. This case turned on the axis firstly of her being a court appointed administrator, such appointment giving rise to both statutory and equitable duties to the estate and the nomination being nonbinding. NON BINDING NOMINATIONS AND EXECUTORS McIntosh created much debate in the legal community as to the extent and scope of the duty, in particular, the distinction it made between an administrator and an executor. Specifically, an administrator can only be appointed by the court, whereas an executor can only be appointed by the Willmaker in its will, to that end the Willmaker can be taken to waive a potential conflict having regard to its knowledge of the executor it appoints. This distinction between an administrator and an executor, for the purposes of the fiduciary duties owed, may now be largely non-existent as a result of a recent decision issuing out of the Supreme Court of South Australia. In December 2015, the South Australian Supreme Court handed down the decision of Brine v Carter13, which turned on the axis of non-binding nomination and executor common law fiduciary duties. In Brine v Carter, Professor Brine’s long term de facto spouse (Ms Carter) and his three sons (from a prior relationship) were the executors of his Will. His assets were extensive across multiple jurisdictions, including France, the UK and Australia. His Will gave Ms Carter a life interest in his residences and some minor gifts, whereas the balance went to his sons and grandchildren. Professor Brine also had two superannuation accounts with UniSuper, one which was a defined benefit with a reversionary pension to Ms Carter (without a final death benefit), and another account with a non binding nomination in favour of the estate. Ms Carter was aware of the 2 accounts and urgently sought to have them both paid to herself. The court found that from Assoc Prof Brine’s death in December 2012, she had deliberately failed to disclose information and misled her coexecutors about the number and value of the accounts and that the estate or the sons were eligible beneficiaries for one of the accounts. The sons made their own enquiries and ascertained the true position on 4 March 2013. From that point on, Ms Carter continued with her claim for the death

benefits and the sons, as executors, jointly opposed it and sought to have the death benefits paid to the estate as per their father’s non binding nomination. Ms Carter did not participate in this objection. UniSuper reviewed the submissions of the parties and determined to pay the death benefit to Ms Carter as the dependent. The claim went through two rounds of appeals, including at the Superannuation Complaints Tribunal. Eventually, the death benefit was paid to Ms Carter and the sons sought a declaration that Ms Carter had breached her fiduciary duty as executor and should account to the estate for the benefit she received, similarly to McIntosh’s case. Blue J was not bound by the same statutory framework as Atkinson J. Blue J considered the matter on the basis of common law and equity. He found that although Ms Carter was an unreliable witness, had deliberately deceived her co-executors and had breached her fiduciary duties as executor until 4 March 2013, because she did not participate in the objection to the determination of the trustee and because the trustee had heard the competing evidence of the sons and made its own decision, there was no breach by Ms Carter after 4 March and therefore no remedy was required. There was no causal connection between the breaches before 4 March and the benefit ultimately received by Ms Carter. Blue J summarised the law as: ‘An executor owes a duty to identify, secure and collect assets of the estate. An executor is a fiduciary who owes fiduciary duties. A fiduciary generally owes a fiduciary duty not without prior authorisation: 1. To use knowledge or an opportunity arising out of his or her fiduciary position for his or her personal interest; and 2. To pursue a personal benefit in circumstances in which there is a real or significant possibility of conflict between his or fiduciary duty and personal interest’14 Blue J agreed with Deane J’s judgement in Chan v Zacharia15 that a fiduciary should have no opportunity to be swayed by considerations of personal interest, and if any benefit is derived from their position, the fiduciary should account for it to ensure no actual personal advantage is derived by the fiduciary16. The remedy is that the fiduciary holds the benefit on a constructive trust for the principal (in this case it would be the estate)17. Having found that a fiduciary is not 33


entitled to promote its personal interest or make a profit as a result of knowledge or information gained as a fiduciary without the informed consent of the person to whom the duty is owed, Blue J said that these principles are to be applied flexibly and subjectively on the facts. On the facts, Blue J found that Assoc Prof Brine did not authorise the conflict20 as he could not have envisaged these specific subjective complex circumstances at any time. He also found that the sons did not consent to the conflict for the period from the date of death to 4 March, but the sons had consented to the conflict after 4 March by allowing Ms Carter to remain as their co-executor. Ultimately, Ms Carter did not have to account for the profits. Blue J discussed the McIntosh case22, and concluded that at common law, administrators and executors owe the same fiduciary duties. The distinction between Mrs McIntosh’s conduct and Ms Carter’s was not that Mrs McIntosh was an administrator and Ms Carter an executor, but that Ms Carter recused herself after 4 March from acting as executor with respect to the UniSuper claim whereas Mrs McIntosh did not act in that way at any time.

CONCLUSION Practitioners advising Willmakers might consider having their clients turn their mind to the choice of executors and inclusion of clauses to authorise or prohibit conflict, if conflict is foreseeable or generally. The consequences of reversionary pensions, binding and non-binding nominations and choice of beneficiary for superannuation (whether in SMSFs or large funds) should also be considered. Practitioners advising personal representatives may now need to consider advising their clients about consequences of seeking the payment of death benefits personally to the adverse interest of the estate. Potential administrators of estates may need to be advised to consider making a joint application with another person, not becoming a personal representative of the estate at all or considering the manner, timing and sequence of their application for Letters of Administration and their personal application for superannuation. Practitioners advising beneficiaries or co-personal representatives may need to advise their clients on the duties owed to them by personal representatives and holding the representatives to such high standards. Given that a substantial amount of wealth is now held through superannuation

and there are very few Australians without superannuation, these cases are instructive to practitioners advising their clients as to where the law is headed. Practitioners might now find clients, both at the estate planning stages and at the administration stage of an estate, will spend a great deal more in considering these issues than ever before. NOTES http://www.superannuation.asn.au/resources/superannuationstatistics/ 1. McIntosh v McIntosh [2014] QSC 99 at [1] 2.

At [3] and [9]

3.

At [39]

4.

At [60]

5.

At [60]

6.

At [60]

7.

At [57]

8.

At [58]

9.

(1988) 12 NSWLR 58

10.

At [68]

11.

At [69]

12.

At [71] and [74]

13.

[2015] SASC 205

14.

At [123] – [124]

15.

(19984) 154 CLR 178

16.

At [126]

17.

This argument succeeded in a recent high profile case of FHR European Ventures LLP v Cedar Capital Partners LLC [2014] UKSC 45 where an agent was required to account to the principal for bribe or secret commission by holding it on a constructive trust

18.

At [128]

19.

At [127]

20.

Ms Carter argued that Assoc Prof Brine appointed her as executor with full knowledge of the potential conflict (at [141]

21.

At [145]

22.

At [138]- [39]

IMPORTANT CHANGES TO PROFESSIONAL INDEMNITY INSURANCE ARRANGEMENTS EXEMPTIONS PROCESS From 1 July 2016, the notification of a legal practitioner’s claim for exemption from Law Mutual (WA)’s compulsory Professional Indemnity Insurance arrangements is to be submitted to the Law Society of Western Australia. All notifications must be made online through the Law Society’s website, lawsocietywa.asn.au A new administration levy of $75 (inc GST) is payable for each exemption notification and will apply to non-members of the Law Society*. Until 30 June 2016, notifications of exemption should be submitted to Law Mutual (WA) at no charge using Forms 2, 3 and 3A, which are available on the Law Mutual website, lawmutualwa.com.au, under Insurance - 2016/17 forms. *Law Society members and legal practitioners notifying of an exemption under Regulation 97(1)(e) Community Legal Centre or 97(1)(h) Pro Bono will have this levy waived.

Your essential membership 34 | BRIEF JUNE 2016

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Good Faith in AS 11000: Practical Implications for Contractors Mapanza Nkwilimba1 Associate, Squire Patton Boggs

to risk allocation in language which is focused on brevity and certainty. They include a new early warning procedure based upon an express good faith obligation, which is intended to assist in the management and resolution of issues under contracts”5

BACKGROUND The role of good faith in Australian contract law remains somewhat vague and unsettled. Despite the increased reference to implied and express terms of good faith in commercial contracts, the exact meaning and scope of these terms remains unclear. Add to this, a strong historical opposition to a general duty of good faith with its basis in the concept of freedom of contract, meaning that the common law is yet to fully embrace good faith in all commercial contracts.2 It is in this context that this article considers the scope and extent of the proposed express good faith obligation in the AS 11000 General Conditions of Contracts (AS 11000). AS 11000 A draft of AS 11000 was released for public comment by Standards Australia in early 2015, having been prepared by a drafting team comprising representatives from the Society of Construction Law, the Australian Procurement and Construction Council (APCC), Austroads, Australian Institute of Architects (AIA), Construction Industry Engineering Services Group (CIESG) and Civil Contractors Federation of Australia (CCF).3 AS 11000 is intended to supersede the widely used AS 2124:1992 and AS 4000:1997 suite of general conditions of contract and has been prepared with the objective of providing general guidance for legal contracts in all sectors of industry including construction, engineering, health, manufacturing and infrastructure.4 On its release, Professor Ian Bailey, Chair of Standards Australia Technical Committee MB-010, highlighted the potential impact that AS 11000 may have in the resolution of disputes: “The proposed new general conditions of contract in AS 11000 provide a broadly balanced approach 36 | BRIEF JUNE 2016

EXPRESS GOOD FAITH OBLIGATION Subclause 2.1 of AS 11000 imposes an “overriding obligation” on principals and contractors to act in good faith:

"A: Good faith 2.1 The Principal and the Contractor each agree: (a) to act reasonably in a spirit of mutual trust and cooperation, and generally in good faith towards the other; and (b) that such action shall not derogate from their obligations to comply with the Contract."

In addition, subclauses 2.2 to 2.5 contain reciprocal obligations requiring the parties to initiate (by written notification) an early warning procedure if any issues arise under the contract, these being issues which may impact upon time, cost, scope or quality. Most construction industry disputes are sparked by time, cost, scope or quality related issues, so an express good faith obligation may have significant ramifications to the manner in which parties go about resolving such disputes. Initiation of the early warning procedure is to be exercised in accordance with the express good faith obligation in clause 2.1 and to apply in addition to the notice requirements contained elsewhere in the contract. It is worth noting that although AS 11000 may well be the first Australian standard form contract incorporating express obligations of good faith in Australia,

there are examples of this being done internationally. For example, the third version of the New Engineering Contract (NEC3) provides that parties are to act "in a spirit of mutual trust and cooperation."6 Although the content of this term has been criticised for being uncertain, it has broadly been considered to be analogous to an obligation of good faith.7 THE PROBLEM WITH EXPRESS GOOD FAITH The proposed express good faith obligation in AS 11000 has not been without controversy. AS 11000 neither defines ‘good faith’ nor imposes express limits on the scope of this obligation, leading some to conclude that the obligation is unclear and may make it difficult for parties to precisely identify its scope, particularly in relation to their other rights and obligations under a contract incorporating AS 11000. There is concern that parties could theoretically be exposed to a significant level of risk that a court could interpret other parts of a contract as subject to this obligation, and in doing so, significantly alter the nature of the rights and obligations created by such a contract. This discomfort may stem in part from the fact that, traditionally, the courts have found that an implied duty of good faith will not defeat or override the express provisions of a contract (and the relevant rights and obligations contained therein).8 In that regard, it is understandable how an express good faith obligation may “muddy the waters”. Part of the concern may also be due to the fact that subclause 2.1 of AS 11000 does not expressly specify whether it itself grounds a cause of action, or whether it is to be more properly construed as a principle by which other clauses in the contract should be interpreted. All of these concerns certainly raise critical issues for those contract parties


(and their lawyers) who may soon have to grapple with the practical implications of the express good faith obligation. Fortunately, some clarity can be drawn from the willingness of the courts, in this and other Australian jurisdictions, to uphold express terms imposing an obligation of good faith. It is from those decisions, as well as relevant scholarly discussion, that contract parties and lawyers alike, may take guidance on the content and scope of the good faith obligation in AS 11000. DEFINITION The decision in Automasters remains the most comprehensive discussion of the principles of good faith in WA.9 Relevantly, that decision acknowledges various instances in which the courts have confirmed that effect can be given to express good faith obligations. In Automasters, Hasluck J said: It is apparent from the decided cases and related discussion that an express term concerning good faith, either in negotiation or in performance, is likely to be considered certain and the term will be interpreted to give it meaning. What constitutes good faith will depend on the circumstances of the case and upon the context of the contract.10 That the content of good faith depends on the context of the contract, is consistent with the later NSW Court of Appeal decision in Macquarie where Hodgson JA, Allsop P (as he then was) and Macfarlan JA held that an express obligation of utmost good faith is to be construed having regard to the terms of the contract and the circumstances known to the parties when the contract was formed.11 In Macquarie, the NSW Court of Appeal determined that a contractual obligation of good faith embraced no less than three related notions: (a) co-operation between the parties to achieve the contractual objects; (b) honest standards of conduct; and (c) reasonable standards of conduct, having regard to the parties' interests.12 Importantly, that court found that whilst a party is required to have regard to the legitimate interests of the other party, it does not have to subordinate its own legitimate interests to the interest of the other party.13 Contrast this with the decision in Strzelecki Holdings, where the WA Court of Appeal considered the meaning of an

express promise of the parties to ‘deal with each other in good faith’ (in a MOU). In that decision, Murray J preferred to adopt the natural and ordinary meaning of ‘good faith’, finding that the only requirement was for the parties to deal with each other honestly.14 Notably, Murray J highlighted the potential uncertainty about precisely what is meant by ‘compliance with standards of conduct which are reasonable having regard to the interests of the parties’. In fact, there are those who take the view that reasonableness must be seen as an element of honesty and not as an additional requirement, but only in the sense that “a requirement of honest conduct must exclude conduct which no reasonable person could regard as reasonable in the circumstances”.15 SCOPE: THE ROLE OF GOOD FAITH IN AS 11000 As highlighted above, a potential difficulty may arise due to parties being unable to determine the scope of the other rights and obligations under a contract incorporating an express good faith obligation. Reference should be made to infusion theory of good faith, which advocates that good faith is an underlying principle in every contract, as opposed to the prevailing view that good faith can be incorporated by ‘implication of terms’. Whilst by no means the dominant theory in Australia on the subject of good faith, it may nonetheless provide much needed guidance on the scope of good faith in AS 11000.16 Chief among the supporters of this theory are Peden and Carter who have proposed

that: Good faith is not an independent concept as much as something which is inherent in contract law itself and therefore a concept which must be taken into account when interpreting a contract, determining the scope of contractual rights and so on. In short, good faith informs all of contract law17 and further that: Every aspect of contract law is, or should be consistent with good faith because good faith is the essence of contract. On that basis, illustrations of good faith in contract are infinite. One criticism of recent cases is their failure to acknowledge the good faith element of contract rules. Thus, although it has sometimes been recognised that many rules of contract law give expression to ideas that can only be explained in terms of good faith, the implications of this may not have been fully understood or appreciated in the recent Australian cases.18 Peden and Carter go on to identify several aspects of contract law which, they argue, demonstrate the role of good faith in contract law as a 'construction principle'.19 These include: (a) that good faith is reflected in the requirement that the withdrawal of an offer prior to acceptance be qualified by communication of the revocation, so that the revocation does not take effect until communicated to the offeree; (b) the rules on the implication of terms, in respect of which it is argued, would not exist if good faith were not 37


an essential ingredient of contract law;

is the recognition of an expressed norm reflecting its presence as an informing principle.22

(c) the law of contractual interpretation, in relation to which it is argued that nothing other than good faith would support interpretation as an objective process concerned with insulating each contracting party from the other’s subjective (but uncommunicated intention); and

It follows then that there is arguably nothing controversial about the express good faith obligation in AS 11000 which would merely reinforce the role that good faith has always played in interpreting the scope of contract parties’ contractual rights and obligations.

(d) the second limb of the rule in Hadley v Baxendale20 in respect of which it is argued that the limitation on recovery of damages is based on good faith because it is rooted in the ‘contemplation’ of the parties.

This leaves to be determined the extent of the scope of good faith in clause 2.1(a). It is submitted, for the following reasons, that good faith in clause 2.1(a) is not a separate obligation or independent concept under AS 11000:

An underlying general duty of good faith in contract law may not therefore be an altogether far-fetched proposition. This has been alluded to in the context of other common law jurisdictions. Consider the following observations by Arden:

(a) The parties are required to act "generally in good faith towards the other”;

We can find many instances in contract law where, while not using the concept of an obligation to act in good faith, the law often comes to the same sort of conclusions it would have reached if English law recognised a general duty to act in good faith. For instance, a party may only recover losses attributable to breach of contract. This rule is commonly, but inaccurately, referred to as a duty to mitigate. In a system which recognizes a duty of good faith, a rule limiting the losses that may be claimed may be regarded simply as an instance of the duty to act fairly towards the other party, contrary to the normal common law rule that a party is entitled to exercise his or her rights as he or she thinks fit in his or her own interests. Likewise we have a principle that onerous and unusual terms in a contract must be fairly and reasonably drawn to a party’s attention before they can be incorporated into a contract. This, too is contrary to the normal common law approach that a contract once signed is binding. As I have said, substantially the same result may be achieved in these situations as if there were an obligation to act in good faith.” 21 This was a view endorsed by Allsop P (as he then was) who writing extra-curially, noted that: There is no doubt, however, that our law, including the law of contract, is littered with principles. rules and approaches which have as their elements what can be seen as elements of good faith. What might be said to be absent 38 | BRIEF JUNE 2016

(b) No separate "overriding obligation” of good faith should be construed from the heading of clause 2. This is because by virtue of clause 1.2(a), headings are not relevant to the interpretation of that clause; and (c) Notably, clause 1.2(b) provides that compliance with clause 2.1(a) 'shall not derogate from' the parties' obligations to comply with the Contract'. In particular, the use of the word "derogate" is significant given that this is defined in the Macquarie Dictionary as "to detract from", and from this the deduction can be made that the express good faith obligation will not operate as an independent concept and will not be a separate term of the contract which can be breached entitling the parties to sue for damages. Rather, the good faith obligation will be construed to aid and be consistent with the parties’ rights and obligations under AS 11000. Those rights and obligations will be fettered by the requirement that they may only be exercised in good faith. The exact scope of the good faith obligation will therefore ultimately depend on the terms of each contract (including by amendment to the standard terms of AS 11000).23 This should sufficiently address any concern that an express good faith obligation could significantly alter the nature of rights and obligations created by the contract. As noted by Peden: The exact content of the obligation would of course depend on the type of contract, the factual matrix and the parties involved etc. The most important consideration in forming the content of the obligation in any case would be the words used by the parties in forming the contract.

It may, for example, be very clear that a discretion has been given to one party, effectively overriding any requirement of good faith, in the sense of having regard to the other party’s interests, since the contract allows a self-interested approach, so long as it is loyal and consistent with the contract’s objectives and spirit. 24 and further that: If all contractual powers and rights are construed as requiring ‘good faith’, then the purpose of the contractual provision within the meaning of the contract as a whole must be determined. Obligations and powers will be construed to ensure that they give effect to the objective purposes of the contract as a whole. Parties will be required to perform their obligations and exercise their rights within the objective expectations of reasonable parties in their positions at the time of formation, thus, having regards to the interests of the other party without excluding self-interested behaviour.25 In the case of AS 11000, and if as held by the WA Court of Appeal that the requirement to act “generally in good faith towards the other” merely means that the parties are to deal with each other honestly, contract parties may be expected: (a) by way of conduct generally: (i)

not to act arbitrarily or capriciously;

(ii) not acting with an intention to cause harm; and (iii) to act with due respect for the intent of bargain as a matter of substance not form. (b) in the context of contract performance and the exercise of discretion and rights (depending on the term in question), to: (i)

act for a proper purpose;

(ii) exhibit consistency of conduct; (iii) communicate decisions; (iv) cooperate with the other party; or (v) consider the interests of the other party.26 PRACTICAL IMPLICATIONS FOR DISPUTE RESOLUTION I have highlighted above that an express ‘good faith’ obligation will have practical implications on parties attempting to resolve disputes under AS 11000, either at issue resolution meetings (as part


of the early warning procedure) or at conferences convened as part of the dispute resolution procedure.

faith obligations has been interpreted as part of an attempt to move away from an adversarial approach to contract law.28

Parties unsure about how to conduct themselves in either of these processes would be prudent to have regard to the following guidelines drawn from Einstein J’s decision in Aiton as approved by the WA Court of Appeal in Strzelecki Holdings:

Whether AS 11000 is the catalyst for such a trend in Australia remains to be seen and is subject to several factors including whether clause 2.1(a) will survive the present review process and whether industry participants will embrace this new suite of contracts.

(a) they are to actively subject themselves to the conferral, negotiation or mediation process;

It also remains to be seen whether contractors and principals will be prepared to remove or heavily amend an express good faith clause and risk the perception that they are entering a contractual relationship in bad faith.

(b) they are to approach the process with an open mind by giving serious and genuine consideration to dispute resolution proposals and counterproposals made and received; (c) they are to make and respond to proposals and counterproposals in a reasonably timely manner having regard to the time allotted for conferrals and to the nature and scope of the issues to be negotiated, their technical and factual complexity, and their commercial significance to the parties; (d) they are to refrain from conferring in an arbitrary or capricious manner; and (e) they are to act honestly.27

A certain level of good will usually exists at the commencement of a project and both contractors and principals alike may be hesitant to risk compromising that by making a significant issue of the inclusion of an express good faith obligation. NOTES

Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 at [137] to [146]

12.

In doing so, the Court applied Air Anthony Mason’s tripartite test for good faith in Sir A Mason, ‘Contract, Good Faith and Equitable Standards in Fair Dealing’ (2000) 116 LQR 66 at 69

13.

Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268

14.

Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [2010] WASCA 222; BC201008728 at [59] to [61]

15.

Peden, Elisabeth & Carter, J W ‘Good Faith in Contract Law’ (2003) 19 Journal of Contract Law 155 at 168

16.

Munro, Howard, The 'good faith' controversy in Australian commercial law : a survey of the spectrum of academic legal opinion. University of Queensland Law Journal 28 (1) 2009: 167-179 at 170; Thompson, Clare, Avoiding Claims of Breach of Good Faith, Brief Magazine Volume 42(1) May 2015

17.

Peden, Elisabeth & Carter, J W ‘Good Faith in Contract Law’ (2003) 19 Journal of Contract Law 155 at 156; See also Peden, Elisabeth ‘The meaning of contractual good faith’ (2002) 22 Australian Bar Review 235 & Peden, Elisabeth ‘Incorporating Terms of Good Faith in Contract Law in Australia (2001) 23 Sydney L. Rev 222

18.

ibid at 158

19.

ibid at 158 to 162

20.

(1854) 9 Ex 341 at 354; 156 ER 145 at 151

21.

The Rt Hon Lady Justice Arden ‘Coming to terms with good faith’. Journal of Contract Law; 30 (3) September 2013: 199-213 at 201

22.

The Hon James Leslie Bain Allsop AO ‘Good faith and Australian contract law: A practical issue and a question of theory and principle’ (2011) 85 ALJ 341

23.

Wallwork, Adam ‘A requirement of good faith in construction contracts?’ (2004) 20 BCL 257 at 266; Central Exchange Ltd v Anaconda Nickel Ltd [2002] WASCA 94; Automasters Australia Pty Ltd v Bruness Pty Ltd and Coombes [2002] WASC 286 at [137]

1.

LLB (UNDA) MCRLaw (UWA)

2.

Dixon, Bill, ‘Good faith in contractual performance and enforcement – Australian doctrinal hurdles’ (2011) 39 ABLR 227

3.

http://www.standards.org.au/OurOrganisation/News/ Pages/For-Public-Comment---AS-11000-GeneralConditions-of-Contract.aspx

24.

Peden, Elisabeth ‘The meaning of contractual good faith’ (2002) 22 Australian Bar Review 235 at 246

4.

ibid.

25.

ibid at 247

5.

ibid.

26.

6.

NEC3 Clause 10.

Peden, Elisabeth & Carter, J W ‘Good Faith in Contract Law’ (2003) 19 Journal of Contract Law 155 at 157

7.

David Thomas QC, Keating on NEC3 (Sweet and Maxwell, 1st ed, 2012) 10.

27.

8.

Sunworld Enterprises Pty Ltd v Lacco (2009) WASCA 175 at [24]; Secure Parking (WA) Pty Ltd v Wilson (2008) 38 WAR 350;

Aiton Australia Pty Ltd v Transfield Pty Ltd (1999) 153 FLR 236 at [155] to [156]; Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [2010] WASCA 222; BC201008728 at [62] to [64]

28.

9.

Thompson, Clare, Avoiding Claims of Breach of Good Faith, Brief Magazine Volume 42(1) May 2015 at 30

The Rt Hon Lady Justice Arden ‘Coming to terms with good faith’. Journal of Contract Law; 30 (3) September 2013: 199-213 at 200

10.

Automasters Australia Pty Ltd v Bruness Pty Ltd and Coombes [2002] WASC 286 at [140] to [148]; Theiss Contractors Pty Ltd v Placer (Granny Smith) Pty Ltd (200) 16 BCL 255; Aiton Australia Pty Ltd v Transfield

CONCLUSION AS 1000 is clearly intended to provide general guidance for legal contracts in all sectors of industry. In other jurisdictions, the trend to incorporate express good

Pty Ltd (1999) 153 FLR 236; 11.

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39


Arbitrarily Detained: What the UN opinion means for Julian Assange This article was first published in the Law Society Journal, Issue 21, April 2016, pp 80-81. Stephen Tully Barrister, 6 St. James' Hall Chambers Julian Assange, the founder of the WikiLeaks whistle-bowing website, arrives at the Supreme Court on February 1, 2012 in London, England. (Photo by Oli Scarff)

SNAPSHOT •

A United Nations body determined that Sweden and the United Kingdom violated international norms by arbitrarily detaining Julian Assange. For Ecuador to grant diplomatic asylum to an individual in its London embassy is controversial under international law but not unprecedented, particularly for humanitarian reasons. Australia has several options available to it, including providing consular assistance.

An Australian, Julian Assange, has been found to have been arbitrarily detained by Sweden and the United Kingdom (UK). On 4 December 2015, the United Nations Working Group on Arbitrary Detention ('UN WGAD') adopted Opinion No 54/2015 which also concluded that Mr Assange was entitled to freedom of movement and compensation. This note describes the background, considers Opinion No 54/2015 and identifies options for Australia. BACKGROUND Mr Assange founded Wikileaks which controversially disclosed information about certain activities by the United States ('US'). In mid-2010, a Swedish prosecutor began an investigation into allegations of sexual misconduct by Mr Assange. In November 2010, the prosecutor requested that Mr Assange be detained in his absence on probable cause for committing these offences. The Stockholm District Court decided to detain Mr Assange in his absence. This judgment was upheld by the Svea Court of Appeal. In order to execute the detention order, the Swedish prosecutor issued an international arrest warrant 40 | BRIEF JUNE 2016

as well as a European Arrest Warrant ('EAW'). In December 2010 Mr Assange was detained in isolation in a UK prison for 10 days. He was thereafter subject to house arrest for 550 days. In February 2011, the City of Westminster Magistrates' Court ruled that Mr Assange should be surrendered to Sweden under the EAW. Section 2(2) of the Extradition Act 2003 (UK) requires an EAW to be issued by a 'judicial authority'. This legislation gave effect to the Council of the European Union's Framework Decision 2002/584/ JHA on the European arrest warrant and surrender procedures between Member States of the European Union ('the Framework Decision'). In November 2011 Mr Assange appealed the extradition decision. In Assange v Swedish Prosecution Authority [2011] EWHC 2849, the High Court adjudged that, although the EAW was issued by a prosecutor, that prosecutor was a 'judicial authority' under the UK legislation and the Framework Decision. Dual criminality was satisfied in relation to the offences (at [70]–[103]), Mr Assange was an 'accused' (at [151]) and the decision to issue an EAW could not be said to be disproportionate (at [158]). An appeal was dismissed during May 2012. In Assange v The Swedish Prosecution Authority (Rev 1) [2012] UKSC 22, a majority of the UK Supreme Court primarily reasoned that a Swedish public prosecutor fell within the meaning of 'judicial authority' in the Framework Decision. Lady Hale in dissent, however, concluded that the expression 'judicial authority' under the UK legislation was restricted to a court, tribunal, judge or magistrate (at [192]). Lord Mance similarly found that, whatever may have been the meaning of the Framework Decision under European law, the Parliamentary intention and effect of the UK legislation

restricted the recognition by British courts of incoming EAWs to those issued by a judicial authority understood in the strict sense (at [266]). In June 2012 Mr Assange requested political asylum at the London embassy of the Republic of Ecuador. He was granted asylum in August 2012. Mr Assange has since been confined to the embassy and subject to constant surveillance by UK authorities. The UK considers that using the Ecuadorean embassy premises to avoid arrest is incompatible with the Vienna Convention on Diplomatic Relations [1968] ATS 3. The UK asserts that it must extradite Mr Assange to Sweden because he is subject to an EAW and wanted for questioning in connection with allegations of serious sexual offences. Crucially, Sweden has not formally laid any charges against Mr Assange. He has co-operated with Swedish investigators while in the UK. In July 2014 the Stockholm District Court upheld an arrest warrant for his questioning. Sweden considers that Mr Assange cannot be regarded as being deprived of his liberty due to any decision or action taken by Swedish authorities. Mr Assange has voluntarily chosen to reside at the embassy, was free to leave at any time and Swedish authorities had no control over his decision to stay there. Mr Assange fears extradition first to Sweden and then refoulement to the US under the 1961 Convention on Extradition between the United States of America and Sweden (14 UST 1845) and its 1984 supplement (35 UST 2501). He claims to face a well-founded risk of political persecution or cruel, inhumane and degrading treatment from US authorities. His confinement at the embassy has become so disproportionate as to have become arbitrary. Indeed, he has been deprived of his liberty for more than the maximum sentence that would apply to the Swedish allegations.


In September 2014 Mr Assange filed an application with the WGAD. The WGAD consists of lawyers and academic specialists and is mandated to investigate individual cases (UN Commission on Human Rights (HRC) Resolution 1997/50, at [15]). It applies five categories of arbitrary detention. At issue was whether (i) there had been a 'deprivation' - and not merely a restriction - of liberty; and (ii) that deprivation was 'arbitrary'. On the first question, the distinction is 'a matter of degree or intensity, but not one of nature or substance' (European Court of Human Rights, Guzzardi v Italy [1980] Application No 7367/76, at [92]). THE WGAD DECISION The WGAD concluded that the deprivation of liberty of Mr Assange was arbitrary and contrary to certain articles of the Universal Declaration of Human Rights ('UDHR') and the International Covenant on Civil and Political Rights [1980] ATS No 23 (Opinion, ohchr. org/Documents/Issues/ Detention/A. HRC.WGAD.2015.docx, at [99]). The circumstances fell within category III: when the total or partial nonobservance of international norms relating to the right to a fair trial (established in the UDHR and relevant international instruments) is of such gravity as to give the deprivation of liberty an arbitrary character. Mr Assange had been subjected to a continuous deprivation of his liberty, albeit in different forms: first isolated detention in Wandsworth prison, house arrest and then confinement at the embassy (at [85]-[88]). He had not been guaranteed the international norms of due process and the guarantees to a fair trial at these times. Mr Assange's confinement in the embassy was an arbitrary deprivation of his liberty because: •

he was denied the opportunity to defend himself against criminal allegations by providing statements and accessing exculpatory evidence;

the length of his detention was incompatible with the presumption of innocence;

he was subject to highly intrusive surveillance and detention of an indefinite nature without an effective judicial remedy;

Mr Assange's health was at risk and the embassy lacked appropriate medical facilities;

legislative amendments made by the UK after the Supreme Court judgment - to address a court's inability to conduct a proportionality assessment of the Swedish

prosecutor's international arrest warrant and to bar extradition if no decision to bring a person to trial had been made - were not retrospective (at [98]). Furthermore, Sweden and the UK had substantially failed to exercise due diligence in their criminal administration (at [97]). They were requested to ensure Mr Assange's safety and physical integrity, expediently facilitate the exercise of his right to freedom of movement, ensure the full enjoyment of his human rights and bring detention to an end (at [100]). WGAD member Tochilovsky issued an individual dissenting opinion stating that the WGAD's mandate was not without limits. It was not competent to consider situations that did not involve the deprivation of liberty or issues relating to a fugitives' self-confinement including asylum and extradition (at [1], [5]). The Australian member of the WGAD recused herself. What ought Australia do? OPTIONS FOR AUSTRALIA Foreign Minister Bishop has requested legal advice on the implications of the Opinion. That advice will likely include the view that the WGAD can only issue nonbinding 'opinions' which States need only consider. States are requested 'to take account of the Working Group's views and, where necessary, to take appropriate steps to remedy the situation of persons arbitrarily deprived of their liberty, and to inform the Working Group of the steps they have taken' (HRC Resolution 20/16, at [3]). All States are encouraged 'to give due consideration' to the WGAD's recommendations (at [6]). The result was not entirely unexpected. The WGAD has previously indicated that 'arbitrary' required the elimination, in all its forms, of arbitrariness, whatever the phase of deprivation of liberty concerned (WGAD, Deliberation No 9 concerning the definition and scope of arbitrary deprivation of liberty under customary international law, UN Doc A/HRC/22/44 (2012), at [56]). Putting individuals in temporary custody in any facilities where they remained under constant surveillance could restrict personal freedom of movement and constitute a de facto deprivation of liberty (at [59]). A particular form of deprivation of liberty must be taken in accordance with the applicable law and procedure, and be proportional to the aim sought as well as both reasonable and necessary (at [61]). Mr Assange's circumstances raise broader questions, particularly the legal options available to the UK (which exercises territorial sovereignty), to

secure physical custody of an individual located in a foreign embassy. Embassy premises are protected by the principle of diplomatic inviolability to ensure the unhindered exercise of consular functions. The grant of diplomatic asylum in an embassy is not strictly permitted under international law but is tolerated for exceptional cases. States generally retain the option so as to provide temporary refuge to individuals (particularly political offenders) in an effort to protect them from acute situations of violence. Indeed, Australia instigated a UN study of the humanitarian aspects of diplomatic asylum in 1974. But the practice is not without controversy, even if Latin American countries are relatively more receptive to it. Mr Assange has called on Australia to take positive steps to negotiate a resolution, including releasing his passport or issuing him with a new one. But Australia has been demonstrably restrained. It has offered consular assistance should Mr Assange require it. Article 36 of the Vienna Convention on Consular Relations [1973] ATS 7 provides that our consular officials: •

are free to communicate with Australians and have access to them; and

have the right to visit Australians who are in detention, to converse and correspond with them, and arrange legal representation.

Australia has also declared that, if Mr Assange was extradited to the US, assurances of due process would be sought. The increasing prominence given to an individual's interests, including the prohibition on refoulement to places where human rights violations might occur, further complicates diplomatic relations. Australia has the option of exercising its right of diplomatic protection - to take up Mr Assange's claims and assert his rights against another State, but that prospect is a matter for the Australian Government. Mr Assange might then assert that Australia was obliged to consider an application from him that a request be made to the UK to deliver him to Australian authorities (see Hicks v Ruddock [2007] FCA 299). Many precedents suggest that diplomatic asylum occasions protracted stays. Individuals are either recaptured or granted safe conduct out of a country. The underlying challenge is to identify a solution that satisfies all rights and interests.

41


Lawyer on the Street

Jacinta Dharmananda

As an academic at the Law School of the University of Western Australia, I am in my second legal career. It's one I never contemplated as a UWA law graduate. But then, my career has been one of unexpected, though pleasant, turns. When I graduated (some years ago now), my main objective, not particularly well thought out or profound, was to move overseas. I steered my legal career towards that aim, choosing a large, reputable law firm (then Freehills), an area that could translate internationally (banking and finance) and continued my study of a foreign language (Japanese). After a couple of years of practice, I gained a scholarship to study in Japan. Then came a position as an in-house lawyer with a Japanese oil company in Tokyo, inspiring my interest in energy work. When I left Japan several years later, I continued to focus on energy law, returning to Perth and then moving to Melbourne with BHP. My desire to work overseas had not abated with Japan. When an opportunity to work in the US arose I grabbed it and went back to finance with a law firm in New York (Covington & Burling). I sat the New York Bar Exam and maintain

42 | BRIEF JUNE 2016

my registration to this day, although the chances of me ever making use of it again seem remote.

Aid, as well as undertaking a stint as Legal Associate to Chief Justice Diana Bryant.

Most of us at some stage in our lives start thinking about a partner and family. Luckily, I found a partner and, even more luckily, he liked living abroad as much as me. We moved to Singapore and then Japan (again) where the US experience led me to a US law firm with a Tokyo office (Milbank). Starting a family followed. We returned to Perth when our oldest child was little. Living overseas is wonderful, but when you have a family, there really is no place like home.

My practice is primarily in the Family Court, but my work also takes me to the Children's Court (care and protection) and the Magistrates Court (restraining orders).

This led me to my second career. I was looking for something a little different. A fortuitous opportunity led me to UWA Law School. Starting a second career, even when still in law, has its challenges. The most challenging of all though is balancing a career (legal or otherwise) with your family and having a life. There is no magic bullet, for me at least, and it is a day to day task. Being as organised as possible and constantly reminding myself of what (or who) is truly important, helps. And so does the occasional overseas travel.

Amanda Thackray

I am a barrister at John Toohey Chambers, having previously worked at a 'boutique' family law firm and at Legal

I became a lawyer to promote values of justice, equality and compassion. I believe these are promoted by the use of therapeutic jurisprudence, which also leads to better outcomes for clients. Family law can be emotionally charged. One of the real challenges is maintaining empathy for clients while keeping enough distance to ensure advice remains objective. I have found that a good way to manage stress and improve my skills is to develop mentoring relationships with senior practitioners. These generous people are invaluable when I need someone to talk through a complex case or a novel problem. Committee work reminds me of the power we have as a profession to improve society. I am a member of the Council of the Family Law Practitioners' Association and a member of its Law Reform Committee. I have previously been on the committee of Women Lawyers WA and took part in the Review of the Chief Justice's Gender Bias Taskforce Report. I also help out Jade Lewis & Friends, an organisation devoted to providing life-skills programs to women in prisons. Cooking, gardening and long walks help keep my mind from wandering to my next trial. Now that work can so easily be done at home, it's important to set aside time when I am "not working" so that I don't feel tempted to reply to 'just one more' email. Hopefully, this means that when I do sit down to work, I'm more likely to be refreshed and work effectively.


YLC CPD: Rules of engagement Law Society CPD Seminar held on Thursday, 17 March 2016 Alex Noonan Solicitor, Macdonald Rudder, Young Lawyers Committee

The Law Society's Young Lawyers Committee hosted a seminar on "Rules of engagement" for its last CPD event of the 2015-2016 CPD period. The panelists drew from a diverse range of legal backgrounds. We thank our speakers the Honourable Justice Pritchard, Supreme Court of Western Australia; Ms Jenny Thornton, managing partner of Clyde & Co Australia's Perth office; and Ms Danielle Flint, a legal officer in

the Investigations Team at the Legal Profession Complaints Committee. Ms Thornton gave attendees an overview of "without prejudice" communications and practical tips for dealing with opponents in legal disputes. Ms Flint addressed legal professionals' ethical obligations with respect to communication. The seminar concluded with a case-study that highlighted

shortcomings in professional courtesy and legal writing. "Rules of engagement" was a great addition to the CPD calendar as it equipped attendees with tools to better serve their clients' interests through their communications with parties and the court, and provided a helpful reminder that lawyers' behaviour should always reflect the upmost of courtesy and professionalism.

Book Review Justice in Tribunals Review by Neil Morrissey, Barrister, Albert Wolff Chambers

Justice in Tribunals (4th ed), by JRS Forbes, is the definitive work in relation to the practice of, and sources of potential challenge to, a wide range of tribunals. It has become a very popular book within my chambers. The content of the book goes beyond material which is, in broad terms, familiar to administrative lawyers. It also addresses discrimination, Royal Commissions, sports tribunals and non-determinative enquiries. The book addresses each topic with reader friendly presentation in a format not dissimilar to the Butterworths guides a lot of us came to rely on at university. The book appears to aim to cover the issues experienced by

participants who appear before all types of tribunal.

person who chooses to challenge a decision of a voluntary association.

A key focus of Justice in Tribunals is natural justice. Nine of its 17 chapters consider that subject. The rule against bias occupies one chapter and deals exhaustively with practical issues on this subject that can commonly arise. This chapter is of considerable assistance to practicing lawyers.

The remaining chapters on natural justice focus on different aspects of the hearing rule. Questions addressed include when the right to be heard arises, what the standard of proof is and who bears it and whether there is a right to an oral hearing. Other chapters explore statutory regimes which require reasons to be provided and what is required to be a sufficient statement of reasons.

A chapter on remedies is exhaustive and deals with judicial remedies, including judicial review remedies and damages. This chapter is complimented by the third and fourth chapters which assess the civil actions possibly open to a

The book is an excellent resource for academics and practitioners alike.

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Young Lawyers Case Notes Compiled by volunteers coordinated by the Law Society's Young Lawyers Committee

Giacci v Piercey [2016] WADC 39 Discovery In this case, Judge Bowden considered an appeal from a Magistrates Court decision dismissing an application for further discovery. The applicant appealed on the basis that the magistrate erred in law by giving no or inadequate reasons for the decision; and further, by not ordering the respondent to disclose relevant documents that had been in the respondent's possession, custody or power, and which, at some stage, had been seized by a liquidator of the respondent's company [15]. Bowden DCJ did not consider that there was any failure by the learned magistrate to give adequate reasons and dismissed that ground of the appeal. Referring to Mineral Crushing Services (WA) Pty Ltd v Edna May Operations Pty Ltd [2016] WASC 57 [18] (Martino J), his Honour noted that the increasing trend of the courts is to have regard to the timely and cost effective disposal of actions in the exercise of the discretion to order further discovery. It could not be said that the appellant did not know the reason for the decision made against him and therefore, Bowden DCJ was not satisfied that the learned magistrate's reasons were inadequate amounting to an error of law [36], [41].

document regardless of the right to its possession. Therefore, the respondent, as a director of a company who had in his physical possession documents of the company, had custody of the documents and was required to disclose them [63].

Section 292(4B) of New Zealand's Companies Act 1993 is identical in its terms. The explanatory note to the Bill amending the NZ Companies Act to insert s292(4B) noted this and recommended that, when New Zealand courts interpret s292(4B), they consider Australian decisions on s588FA(3).

2. If the respondent was unable to say whether there are relevant documents in the liquidator's possession because of his poor recollection and his inability to inspect the documents, he needs to disclose those facts in the second schedule of the affidavit of discovery. The mere fact he could not itemise or describe the documents did not relieve him from the obligation of disclosing the whereabouts and existence of the documents [70].

Since Rees v Bank of New South Wales [1964] HCA 47; (1964) 111 CLR 210, and prior to the enactment of s588FA(3), Australian courts have applied a "Peak Indebtedness" rule, being that where a Running Balance Defence applies, the liquidator can recover the difference between the greatest amount owed by the company to the creditor during the relation-back period, and the amount owed to the creditor on the relation-back date. This is to be contrasted with what could potentially be a much smaller claim if the liquidator could only recover the difference between what was owed by the company at the start of the relationback period and what was owed on the relation-back date.

The case is a helpful reminder of the ambit of discovery obligations, particularly in circumstances in which documents are not presently in one's possession, custody or power. Author: Marc McCaughey, Solicitor, HopgoodGanim

Timberworld Limited v Levin & Ors [2015] NZCA 111 Claw back – Corporations Act

His Honour found that the learned magistrate erred in not ordering discovery of potentially relevant documents. Bowden DCJ explained it was insufficient for the respondent to say that the documents were not discoverable because they were documents of a company of which he was director and had been taken by a liquidator two years prior to the action. His Honour held the respondent's discovery obligation extended to disclosing the documents as having been previously in his possession, custody or power before the liquidation, either in his right, or as agent or director of the company (even if he could not do so by describing those documents by date or detail) [51], [55], [59] - [61].

Section 588FA(1) of the Corporations Act 2001 (Cth) provides that a company liquidator may claw back certain transactions that constitute unfair preferences to creditors of the company. However, s588FA(3) provides a partial defence for the creditor, in that where:

Bowden DCJ clarified:

c) all the transactions forming part of the relationship must be considered as if they constituted a single transaction: (the "Running Balance Defence").

1. 'Custody' means the actual physical or corporeal holding of a 44 | BRIEF JUNE 2016

a) the impugned transaction is part of a continuing business relationship between the company in liquidation and the creditor; and b) in the course of the relationship, the company's net indebtedness increases and reduces from time to time as the result of a series of transactions forming part of the relationship; then

In Timberworld v Levin, it was alleged that the Peak Indebtedness rule was inconsistent with s292(4B) of the Companies Act. The Court of Appeal of New Zealand (New Zealand's second highest court) was referred to extensive Australian authority on s588FA. However, the Court of Appeal found that no Australian court had considered whether the Peak Indebtedness rule (first established in 1964) was inconsistent with s588FA(3) of the Corporations Act (enacted in 2001). The Court of Appeal further held that the Peak Indebtedness rule is inconsistent with s292(4B) and refused to apply it. This would appear to invite Australian courts to reconsider the Peak Indebtedness rule for the first time since it was created by Barwick CJ of the High Court of Australia in 1964. Author: Ray Christensen, Zilkens Lawyers

Van Heerden v Hawkins [2016] WASCA 42 Statutory interpretation - Section 106(a) of the Tobacco Products Control Act 2006 (WA) - Whether e-cigarettes were


designed to resemble tobacco products The appellant operated a business called 'Heavenly Vapours', which sold electronic cigarettes ('e-cigarettes') via a website. He was charged with selling products that were not tobacco products but were designed to resemble tobacco products contrary to s 106(a) of the Tobacco Products Control Act 2006 (WA) (the Act). The appellant was acquitted in the Magistrates Court, but the respondent successfully appealed to the Supreme Court. Pritchard J found that the e-cigarettes were designed to resemble tobacco products because they were intended to be used in a manner very similar to that of cigarettes, and substituted a judgment of conviction. The appellant then appealed to the Court of Appeal. The appellant submitted that s 106(a) should be construed in accordance with the objects set out in s 3 of the Act, in particular the object of reducing the incidence of illness and death related to the use of tobacco products by discouraging the use of such products. It was submitted that a construction of s 106(a) which allowed the sale of e-cigarettes would be in accordance with the objects of the Act, because e-cigarettes provide an alternative to smoking which allows the user to avoid tobacco smoke and cigarette tar. In separate judgments, Buss JA and Murphy JA each rejected that submission. Their Honours found that on the plain meaning of the text, s 106(a) applies to products that are designed to resemble tobacco products, even if they are also designed to reduce tobacco-related harm. There was no justification for construing s 106(a) as if it contained additional words excluding products designed to reduce tobacco-related harm from its operation. Their Honours also found that a construction of s 106(a) which has the effect of prohibiting sales of all products designed to resemble tobacco products is consistent with the objects set out

in s 3 of the Act, including the objects of discouraging the use of tobacco products, restricting the promotion of smoking and assisting in the promotion of healthy lifestyles. Their Honours also found that Pritchard J did not err in considering the manner of use of the e-cigarettes when determining whether they were 'designed to resemble' tobacco products. All attributes and features of the products, not only their physical appearance, were relevant to this assessment. Mazza JA agreed with Buss JA and Murphy JA, and the appeal was dismissed. It was noted by Murphy JA and Mazza JA that the policy issue of whether e-cigarettes should be available for sale is a matter for Parliament. Author anonymous

Ure v The Commonwealth of Australia [2016] FCAFC 8 Public international law - whether an individual can acquire proprietary rights over land unclaimed by sovereign States In 1970, Mr Ure asserted title to the Elizabeth and Middleton Reef islands, approximately 80 nm north of Lord Howe Island, on the basis that the islands were terra nullius. Some years later in the Federal Court, Mrs Ure claimed Mr Ure's property rights through inheritance. The Commonwealth had not definitively asserted sovereignty over the islands until 1987, and so Mrs Ure sought recognition of her property rights traceable to Mr Ure's actions in 1970. At first instance and on appeal, Mrs Ure's primary argument was that customary international law was the source of the principle that private individuals could acquire title to land not yet claimed by a sovereign State. Both the trial judge and the Full Court of the Federal Court rejected this argument based on the lack of evidence of State practice and opinio juris required to ground a customary international law rule.

Bequests Help Save Cats’ Lives As a charity, Cat Haven relies heavily on the kind donations and bequests of West Australians. We are WA’s premier cat welfare organisation, accepting over 6500 cats a year and rehoming as many as possible. We can assure your clients that their cat will be looked after and rehomed if they are left behind if a bequest is

On appeal, Mrs Ure also submitted that Roman law recognised this principle and therefore it fell within another source of international law: general principles of law recognised by civilised nations. The Full Court rejected this argument on the basis that Roman law generally did not support any such principle, and in any event the mere existence of a Roman law doctrine or historical natural law theory in support of the principle did not satisfy the meaning of the phrase 'general principles of law recognised by civilised nations'. Various academic writings said to be in support of the principle were also largely discarded by the Court. What is interesting about this litigation is that it provides a recent example of Australian courts tackling the often obscure task of ruling upon whether a customary international law norm exists. Certainly both the trial judge and the Full Court approached the exercise in a more methodical and detailed manner than in many cases before the International Court of Justice. Questions also arise as to potential interplay and inconsistency between customary international law and general principles of law recognised by civilised nations. The Full Court seemingly left it open to be proved that the principle for which Mrs Ure contended was a general principle recognised by civilised nations,1 but this principle may not sit well with established international custom relating to land. Any inconsistency is likely to be resolved in favour of custom, given the prevailing view that 'general principles' derived from municipal legal systems must be appropriate in the international context and not simply mechanically adopted.2 Author: Ralph Timpani, Associate to the Hon Chief Justice Martin NOTES 1.

Ure v The Commonwealth of Australia [2016] FCAFC 8 [133].

2.

See the discussion in Ure v The Commonwealth of Australia [2016] FCAFC 8 [130], [133], [144].

Please Donate, Adopt Foster, Bequeath, Volunteer

made to Cat Haven. By suggesting and guiding your clients on how to bequeath a gift, you will also be providing much needed support for the homeless cats of Perth. For more information or a brochure, go to www.cathaven.com.au or call Chandra Woodley on 9442 3600.

45


Family Law Case Notes Robert Glade-Wright Former barrister and accredited family law specialist

Divorce – Validity of foreign marriage under Part VA of the Marriage Act In Ghazel and Anor [2016] FamCAFC 31 (4 March 2016) the Full Court (Finn, May & Austin JJ) heard the wife's appeal against Hogan J's dismissal of her application under s88D of the Marriage Act 1961 (Cth) ("MA") for a declaration of validity of the parties' marriage which was valid under the law of Iran. The wife (who was born in England) married the husband in Iran in 1981. Hogan J said that the law of that country "permitted a husband subject to certain conditions to take up to three additional wives. Thus, the marriage of the parties in Iran can be described … as a 'potentially polygamous marriage'" ([2]). Hogan J had held that the definition of marriage in s5(1) MA as a union "to the exclusion of all others voluntarily entered into for life" meant that under Part VA (s 88B(4) MA) a marriage solemnised in a foreign country "must be monogamous for it to be recognised in Australia" ([10]). The Full Court disagreed, saying (at [23][26]) that under s88D MA a foreign marriage recognised as valid under the relevant foreign law shall be recognised in Australia as valid except where at the time of the marriage a party was married to another person, was not of marriageable age or was within a prohibited relationship; or the consent of either party was not real. The Full Court observed that "[a] potentially polygamous marriage is not expressly included in the exceptions to the … rule of recognition … in s88D(1)" and noted the explanation of the Solicitor-General (the intervener) that the exception as to a party at the time of the marriage being married to another person "was 'a first in time rule' [which] would only preclude recognition of a second marriage not of a first potentially polygamous marriage" ([36]). The appeal was allowed and a declaration made that the marriage was valid. Property – Stay of wife's property case under Trans-Tasman Proceedings Act 2010 (Cth) – "The more appropriate court" in NZ – Connecting factors In Nevill [2016] FamCAFC 41 (17 March 2016) the Full Court (May, Ryan & Murphy JJ) upheld an order made by Kent J staying the wife's property proceedings brought initially in the Federal Circuit Court. Kent J did so after holding that the High Court of New Zealand was "the more appropriate

46 | BRIEF JUNE 2016

court" within the meaning of s19 of the Trans-Tasman Proceedings Act 2010 (Cth) ("the TTP Act"). The husband had applied for the stay under s17 on the ground that a New Zealand court was the more appropriate court to determine the matters in issue. The Full Court said (at [5]): … the Australian court is given a discretion that is constrained by two matters. First, the court must take into account a number of matters prescribed in s19(2). Secondly, the court must not take into account 'the fact that the proceeding was commenced in Australia'. Otherwise, the discretion is at large. ( … ) The Full Court said (at [30]): Stripped to its bare essentials, the submission … is that there was a juridical disadvantage for the wife in proceeding in New Zealand which his Honour did not take into account in considering s19(2)(e) … [and which] is said to derive from the different system in New Zealand by which settlements of property … are decided, which … the wife contends might result in her receiving less … than … she might receive from an Australian court. Kent J had rejected the wife's claimed juridical disadvantage ([32]), saying that s19(2) expressly excludes any juridical advantage from proceedings being instituted first in Australia. His Honour added ([33]) that "the 'clearly inappropriate forum test' established … in Voth v Manildra Flour Mills Pty Ltd [1990] HCA 55 … is fundamentally different to the 'more appropriate forum test' … to be applied under the TTP Act" and ([38]) that "the … question should be answered not by reference to juridical advantage … but to the connecting factors with the law of New Zealand as compared to the law of Australia". In dismissing the wife's appeal with costs, the Full Court ([38]-[41]) agreed with Kent J who held that "connecting factors" overwhelmingly favoured the law of NZ, those factors being that the parties were both NZ nationals who lived for most of their married life there; most of their substantial property was acquired there; and their respective trusts were NZ trusts. Property – $90,000 withdrawn by wife from her superannuation to invest in a business that failed not added back

In Martin & Wilson [2016] FCCA 235 (11 February 2016) Ms Wilson withdrew $90,000 of her superannuation at separation to establish a business but lost it when the venture failed. After citing Miller [2009] FamCAFC 121 (in which the Full Court followed AJO & GRO (Omacini) [2005] FamCA 195 (FC)) Judge Phipps said (at [23]): The evidence does not show that the expenditure … was reckless, negligent or wanton. The respondent may have been naïve in thinking that she could successfully conduct a (business omitted), but the evidence does not show that the success of the venture was impossible or even improbable. It may have been successful in which case the applicant would have benefited. The Court added (at [25]): Another consideration is the small value of the … pool. If the $90,000 was added back … the respondent's share of the property available for distribution would be very small if not completely eliminated unless there was a contribution assessment and adjustment very much in her favour. ( …) No adjustment was made in her favour under s90SF(3) despite uncertainty about her employment, the Court ([35]) "taking into account the loss of her superannuation as a circumstance which the justice of the case requires to be taken into account [under s90SF(3)(r)]" and adding ([36]): If the respondent had remained in her employment she would still have that income and would have $90,000 superannuation … [and] no adjustment would be appropriate. ( … ) The applicant had no part in the respondent's decision to use her superannuation … He did not know of [the business] and had no opportunity to assess the risks and influence the use of the money. The respondent took the risk.

Robert Glade-Wright is the founder, principal author and editor of The Family Law Book, a one-volume, looseleaf and online subscription service. thefamilylawbook.com.au. He is assisted by accredited family law specialist Craig Nicol.


The Law Society of Western Australia, the Law Council of Australia, and other Law Societies and Bar Associations in Australia have joined together to raise awareness of the crisis facing Australia’s legal aid system. Why Legal Aid Matters Australia’s legal aid system is in crisis. Justice is being denied to thousands of Australians each year. Successive Federal Governments have ripped hundreds of millions of dollars from legal aid, crippling this vital justice safety net. Legal aid services are closing down and more cuts are on the way.

PETITION

The system is at a point where most Australians who can’t afford a lawyer now simply won’t get one – in many cases even if they are belowthe the poverty line. Australians are being forced to represent themselves in court or, worse, To To all all Members Members of of the Australian Australian Parliament, ignore their legal issues. The crisis isParliament, ruining lives. II believe that is and is denied. believe thattolegal legal aid is in in crisis and justice justice is being being denied. Legal aid goes the aid heart ofcrisis Australia’s notions of fairness and the kind of society we want to be. Is it one in which everyone has access to justice – or only those who can afford lawyer? Hundreds governments has pushed pushed legal legal aid aid to to the the brink brink of of Hundreds of of millions millions of of dollars dollars in in cuts cuts by by successive successive federal federal a governments has collapse. Funding legal aid properly would actually save money, according to the Productivity Commission, which has collapse.  recommended an immediate $200 million injection. Today, Today, many many people living below the poverty line are too wealthy to qualify for legal aid. Each teams, or or Each day day Australians end up representing themselves in court against powerful and expensive legal teams, worse worse ignoring ignoring their legal problems, with devastating results. ItIt isn’t are not not isn’t just just Australia’s most disadvantaged missing out. Many are middle-class Australians, people who are wealthy and cannot afford to pay for legal representation. wealthy They are are women trying to escape domestic violence, average workers who unfairly lose their job or young They young men men Lucy is turned represented under Ash had just 18 and was in his HSC yeara at grant of Legal Aid in Family Court proceedings. prospect of prison. children together. The eldest son lives with Joe whilst school, he was by police and searched Lucywhen has an stopped intellectual disability. During her marriage, her partner inflicted the younger two children live with Sue. Joe applied for on the street. He had no criminal record. Police found a Infuriatingly, according the Productivity harrowing family violence upon That’s her and the final to incident almost took her Infuriatingly, funding legal aid would actually save money. a grant of legal aid to arrange mediation with Sue for properly fishing knife and $2500 in cash. issues he has been having contacting and seeing his life. Interim orders permitted the mother to move interstate and the child to Commission, which has recommended an immediate $200 million injection. Ash was advised he was ineligible for a grant of Legal Aid Commission, children. His grant was approved. as he was not facing jail. He pleaded guilty to custody have supervised time with the father at a contact centre. The family report Sue did not want to mediate without a solicitor and she of knife and pleaded not guilty to the Goods in Custody As it stands, stands, Australia spends less on on legal aid than to most comparable legal For the spends Australia spends less legal than most comparable systems. For example, example, thea UK UK spends feltAs she it would be intimidated negotiating with Joe and charge, and aid was prepared give evidence that thisonly was legal recommended that the child ever systems. have supervised time at contact his double solicitor. So she applied for a grantper of legal aid but on legal his money. the amount capita aid than we do. double the amount per capita on legal aid than we do. centre. was refused on the grounds of means. Sue is in receipt Sue and Joe separated 6 years ago and have three and women and women who are facing the

of Centrelink but had a small amount of money in the bank which meant that she was ineligible. But Sue’s savings have been dwindling in the care of the two children she lives with, and she cannot afford a solicitor.

He was not represented at the court hearing. He felt

intimidated and didn’t know what was happening. am calling calling on on the the next next Federal Federal Government Government to reverse the damage put end this This can The father has no insight intoHehis and violence and is to pressing fornow. the child return II am to reverse the damage and put an an end to this crisis crisis now. This to can was cross-examined after giving evidence about how he to live with him on the basis that Lucy does not have the intellect to properly be done by: possessed the cash. He was given a chance to crossbe done by: examine the police but didn’t know what to ask. care for the child. The family report recommendations have meant that the Now, as mediation could not take place, Sue and Joe • Increasing the Commonwealth’s share ofthe legal aid funding 50 cent Ash was found guilty of goods inaid custody offence to • resolve Increasing the Commonwealth’s of legal funding 50 per per cent with with the the states states and and territories. territories. father share lost his grant of aid and istonow self-represented. are unable to their dispute. Sue is worried that and was sentenced straight away to a section 9 good she won’t be ableThis to contact her son,amount and that Joe won’t would to an additional $126 million. behaviour bond for 6 months with a conviction. He was This would amount to an additional $126 million. have contact with the two children living with her. The matter has been repeatedly adjourned at court to allow the father also fined $220, with a conviction, for possessing the

fishing knife. Immediately providing providing $120 $120 million to cover cover civil civil assistance, the Territories procedural fairness aslegal a self-represented Thisand meant Lucy had to keep •• Immediately million to legal assistance, with withlitigant. the States States and Territories Ash now has a criminal record. He has just startedread through the harrowing things that were done updating trial affidavits and contributing $80 million, for a total of $200 million. contributing $80 million, for a total $200 million. University, but isof worried his record will affect his job to her whereas the father has not filed a thing and the whole process has been prospects. • Immediately reverse the further Commonwealth funding cuts to community legal centres and Aboriginal dragged on for Lucy. funding cuts to community legal centres and Aboriginal • Immediately reverse the further Commonwealth and Torres Strait Islander legal services to take effect from July 2017. Torres Strait Islander legal services to take effect fromcomes July 2017. She is beingand traumatised repeatedly by the process. When the case to hearing, Lucy will be cross-examined Legalby aidthe goes to the heart of our notion of fairness and her what kind how of society wecope. want to be. Is it one in which directly father. Lucy is scared and those who know worry she Legal aid goes to the heart of our notion of fairness and what kind of societywill we want to be. Is it one in which everyone has access to justice, or only those who can afford a lawyer? It would be easier if the father wasor represented was cross-examined by counsel. If he had legal everyone has access to justice, only those and whoLucy can afford a lawyer? representation, the father may also have agreed to the matters proposed in the family report before the hearing. I believe that legal aid matters. I believe that legal aid matters.

Join the #legalaidmatters conversation today

#legalaidmatters legalaidmatters.org.au

#legalaidmatters #legalaidmatters legalaidmatters.org.au legalaidmatters.org.au

47


Law Council Update

CONGRATULATIONS TO NEW COMMONWEALTH DPP AND HUMAN RIGHTS COMMISSIONERS The Law Council of Australia applauded the appointment of the new Commonwealth Director of Public Prosecutions (DPP) as well as the new Disability Commissioner, Age Discrimination Commissioner and Human Rights Commissioner – all announced by the Attorney-General today. The President of the Law Council, Stuart Clark AM, said that the appointment of Ms Sarah McNaughton SC as the new Commonwealth DPP was an outstanding choice. "Ms McNaughton's skills and experience make her an ideal candidate to fill the role of Commonwealth DPP," Mr Clark said. "With almost three decades experience as a legal practitioner, and a respected member of the NSW Bar, Ms McNaughton is extremely well placed to serve as the nation's lead criminal prosecutor. "We look forward to working with Ms McNaughton throughout her five year tenure in this vital role. Mr Clark also welcomed the appointment of Mr Alastair McEwin as Disability Discrimination Commissioner, Hon Dr Kay Patterson as Age Discrimination Commissioner and Mr Edward Santow as Human Rights Commissioner. "Mr Santow and Mr McEwin are both fellow members of the legal profession," Mr Clark said. "As well as a legal academic and Director of the Australian Pro Bono Centre, Mr Santow has also worked at the Australian Law Reform Commission and as a solicitor in private practice. His sharp legal skillset will serve him well as he promotes and protects the human rights of all Australians." Mr Clark said that Mr McEwin is a strident advocate for the rights of people with a disability. "His long and distinguished resume includes being the former manager of the Australian Centre for Disability Law. In this former role he was charged with promoting and protecting the human and legal rights of people with disability and their supporters through legal advocacy,"

48 | BRIEF JUNE 2016

Mr Clark said. Mr Clark said that Dr Patterson's former Parliamentary and Ministerial career made her very well positioned to take on the role of Australia's Aged Discrimination Commissioner. "Not only is Dr Patterson the current Commissioner of the National Mental Health Commission, she is also a former Cabinet Minister for Health and Ageing, among other portfolios," Mr Clark said. Mr Clark also acknowledged the bipartisan support for stand-alone Commissioners. "The Law Council considers that it is important that stand-alone Commissioners are appointed to the Australian Human Rights Commission so that they can adequately perform their statutory functions and address the causes of individual and systemic forms of discrimination," Mr Clark said. The Law Council also considers that it is important for the Australian Human Rights Commission to be adequately funded to perform this work. We congratulate outgoing Commissioner the Hon Susan Ryan AO, who has performed her dual roles as both Age Discrimination Commissioner and Disability Discrimination Commissioner expertly and to the best of her ability since July 2014. We look forward to working with Commissioners McEwin, Patterson and Santow and the Australian Human Rights Commission. RECOMMENDATION OF STRATEGY FOR THE ABOLITION OF THE DEATH PENALTY APPLAUDED The Law Council of Australia today commended Parliament on adopting its recommendation to develop, fund and implement a whole-of-government Strategy for the Abolition of the Death Penalty – with a particular focus on countries in the Indo-Pacific and the United States of America. The recommendations are contained in the Joint Standing Committee on Foreign Affairs, Defence and Trade's report into Australia's advocacy for the abolition of the death penalty tabled today. The President of the Law Council of Australia, Stuart Clark AM, said the legal

sector was delighted that the bi-partisan report has responded to the Law Council's and the Australian Bar Associations' submission – which called for the development of a Strategy for the Abolition of the Death Penalty. "The legal profession has strongly and consistently argued that no person, anywhere in the world, should ever be subjected to the death penalty," said Mr Clark. "This is irrespective of their nationality, personal characteristics, the nature of the crime of which they have been convicted, or the time and place of its alleged commission. "The report's focus on countries in the Indo-Pacific sends a clear message to our regional neighbours that we will relentlessly campaign for worldwide abolition of the death penalty." Mr Clark said that another recommendation – that the AttorneyGeneral's Department conduct a review of the current legislative arrangements for extradition and mutual assistance – was also strongly supported by the legal profession. "The Law Council recommended that Australia's legal framework and arrangements should be strengthened to ensure Australia does not expose a person elsewhere to the real risk of execution," Mr Clark said. "The review of the extradition and mutual assistance arrangements has the potential to offer constructive recommendations to ensure that robust protections are in place." The report also includes a number of important recommendations aimed at strengthening the Australian Federal Police's (AFP) processes when it provides assistance to international counterparts. "We are also pleased with the recommendation for appropriate protocols for agency-to-agency assistance," Mr Clark said. Mr Clark commended the report's recommendations to the Government and committed the Law Council to continuing to work with Government in Australia's advocacy for the abolition of the death penalty.


pam sawyer

49


Professional Announcements Career moves and changes in your profession

Leach Legal are delighted to advise that Damien Bowen has joined the firm as a Senior Consultant.

Rothstein Lawyers

Glen McLeod Legal www.glenmcleodlegal.com

Leach Legal

Glen McLeod Legal is pleased to announce: Damien Bowen

Damien was, until his recent appointment, the Family Law director at Bowen Buchbinder Vilensky Lawyers. Damien has been practising Anna Westphal in Family Law for more than 35 years and has been an accredited Family Law specialist for 20 years. Anna Westphal has also joined Leach Legal as a lawyer from Bowen Buchbinder Vilensky. Anna practises in Family Law.

Chris Wark and Merinda Logie have been appointed Special Counsel. They each bring 15 years planning, environmental and development law experience to the firm. The admission of Jessica Hamdorf and Connor Fisher, who will continue to work for the firm, now as planning and environmental lawyers. The appointment of Ross Fletcher as a planning and environmental lawyer. Ross was previously the Associate to Judge Parry in the State Administrative Tribunal.

Avon Legal (Bunbury) Tony Fifield and Joe Scurria are proud to announce the merger of Avon Legal and Joe Scurria & Associates to establish Avon Legal (Bunbury) of Suite 3, 3 Victoria Street, Bunbury as of 2 May 2016.

Chris Wark

Merinda Logie

Jess Hamdorf

Ross Fletcher

Connor Fisher

Caring for the Legal Profession in Western Australia •

Professional, confidential and free counselling and information services to support the mental health and wellbeing of members.

• Free access to online resources for life, family and relationship; health and wellbeing; and education, work and career. • Members can also access up to three free counselling session a year. 24 hours phone support 1300 361 008 or lawsocietywa.asn.au/lawcarewa LawCare WA is provided to members by

50 | BRIEF JUNE 2016

Services provided by Optum

Rothstein Lawyers is delighted to announce the elevation of Sophie Manera to Associate within the firm’s migration law and employment law team. We are also very pleased to announce that Jay Raja has joined us in our migration section. Jay was previously the Associate to his Honour Justice Siopis of the Federal Court.

Sophie Manera

Jay Raja


New Members New members joining the Law Society (April 2016)

Associate Membership

Ordinary Membership

Miss Emily Bradley

King & Wood Mallesons

Ms Anna Bond

King & Wood Mallesons

Mr Chris Brydon

Deakin University

Restricted Practitioner

Miss Michelle Ko

Herbert Smith Freehills

Ms Yan Thye

Ideal Legal Services

Mr Adam Fewster

Edith Cowan University

Ms Meghann Blakeman

Lynn & Brown Lawyers

Mr Phillip Paul

University of Notre Dame Australia

Ms Nia Lumley

HHG Legal Group

Ms DeeAnna Luong

University of Western Australia

Mr Matthew Di Mario

Herbert Smith Freehills

Mr Salvador Jose

Herbert Smith Freehills

Miss Sarah Ward

Tolson & Co

Mr Lewis Page

Herbert Smith Freehills

Mr Daniel Murdzoski

Tait and Co

Mr David Thomas

Herbert Smith Freehills

Ms Alice McShera

ETDK Pty Ltd Trading as DCH Legal Group

Ms Clare Oborne

University of Western Australia

Mr Zhong Kai Ong

Murdoch University

Mr David Russell-Smith

Murdoch University

Mr Daniel Fry

Ernst & Young

MISSING WILL

Classifieds

Any person knowing the whereabouts of the last Will made by GWENNETH JOYCE HUNTER formerly of 54 Ford Road, Busselton, late of William Carey Court Residential Aged Care Facility, 450 Bussell Highway, Busselton in the State of Western Australia born on 9 February 1937 died on 19 March 2016, please contact Maria Fifield of Avon Legal, Suite 7, 9 The Avenue MIDLAND WA 6056.

Telephone: 9274 1977 Email: shemali@avonlegal.com.au

LIFE-STYLE LEGAL PRACTICE

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Experienced criminal lawyer (sole practitioner) available to assist any practice either on locum, part-time or casual basis. Contact: 0411 217 203 or sedward@iinet.net.au

Office to let East Vic Park – be part of a progressive team Furnished office $450 per month plus outgoings. Long or short term lease available. Includes • Shared reception area • Use of conference room • Shared kitchen facilities • Wifi • Parking • Opportunity to lease additional space Contact us on 0414 500 055 or 0412 180 823 Email: keanes1@optusnet.com.au

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51


Events Calendar

With thanks to our CPD partner

Stay up-to-date with the latest Law Society member and CPD seminars

DATE

EVENT

LOCATION

JUNE MEMBERSHIP EVENTS Friday, 17 June

Society Club

Ocean Centre Hotel, Geraldton

Thursday, 23 June

Society Club

Halford Bar

JUNE CPD SEMINARS Thursday, 9 June

QPS Accreditation workshop one

The Law Society of Western Australia

Monday, 13 June

Accounting systems

The Law Society of Western Australia

Thursday, 16 June

QPS Accreditation workshop two

The Law Society of Western Australia

Friday, 17 June

Country Roadshow: Geraldton

Ocean Centre Hotel, Geraldton

Friday, 24 June

Essentials of Advocacy

The Law Society of Western Australia

JULY CPD SEMINARS Tuesday, 19 July

Changes to the Office of State Revenue's assessment practices

The Law Society of Western Australia

AUGUST CPD SEMINARS Friday, 5 August Sunday, 7 August

Practical Advocacy Weekend

Seashells Resort Mandurah

SEPTEMBER MEMBERSHIP EVENTS Friday, 9 September

Gala Dinner Celebration – Marking 10 years of service by the Hon Wayne Martin AC as Chief Justice of Western Australia

Perth Convention and Exhibition Centre

For all CPD-related enquiries please contact cpd@lawsocietywa.asn.au or (08) 9324 8614 For all membership-related enquiries please contact membership@lawsocietywa.asn.au or (08) 9324 8638 For all upcoming events and further information please visit lawsocietywa.asn.au

OW RN E T GIS RE

Marking 10 years of service by the Hon Wayne Martin AC as Chief Justice of Western Australia Friday, 9 September 2016 • 6.30pm for pre-dinner drinks BelleVue Ballroom, Perth Convention and Exhibition Centre

Principal sponsor

52 | BRIEF JUNE 2016

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