Norman Waterhouse
Norman Waterhouse



Normans Briefly

In this issue

Welcome to the April edition of our Corporate and Commercial Briefly.

>   Smarter, Better, Stronger... Half Day Commercial Seminar
>   Work Health and Safety — Tips from a successfully defended prosecution
>   Business Succession – Trauma, TPD and the grey area in between
>   Employment – Do you have an implied right to require medical information from an employee?
>   Property, Infrastructure & Development – Building upgrade agreements

Smarter, Better, Stronger... Half Day Commercial Seminar

Friday 23 May 2014
Adelaide Oval

The Norman Waterhouse Commercial Team invites you to join them for a half-day in depth analysis of business issues relevant in the current economy. Stay ahead of the game with this invaluable seminar for accounting professionals, business owners and financial planners.

Attendees may be eligible for CPD points with industry associations including FINSIA, CPA and The Tax Institute.

Click here to view the program and register.

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Work Health and Safety — Tips from a successfully defended prosecution

It is the usual course in work safety prosecutions that the defendant will plead guilty.  Where wrongdoing is clear, a plea of guilty has merit, in that it will lead to lesser penalties for the defendant/s.  However, a recent South Australian decision in which a defendant employer pleaded not guilty and successfully defended a prosecution has demonstrated that an employer does not necessarily need to attract criminal liability where a worker is injured due to substandard work practices.

The case

The decision in Perry v Exactmix Pty Ltd [2014] SAIRC 7 dealt with circumstances where an employee sustained a hand injury while trying to clear a blockage from a large piece of equipment known as a rock-crusher. The rock-crusher had an attachment on it called a rock-breaker, the purpose of which was to break up such blockages. However, this attachment was not operative and had not been for some time.  As an alternative, employees regularly threw more rocks in to dislodge any rocks causing blockages. It was in such circumstance that the injury arose.

In the prosecutor’s complaint against the relevant employer, the following was alleged:

  • The defendant failed to provide and maintain, so far as was reasonably practicable, plant in a safe condition, in that it failed to install and maintain a rock-breaker on the plant which was capable of clearing rock blockages and thereby reduce or eliminate the need to clear such blockages by manual means; and
  • The defendant failed to implement and maintain, so far as was reasonably practicable, a safe system of work that used mechanical means to clear rock blockages on the plant and which did not require manual clearance of such blockages. 

The prosecution was not able to make out these complaints against the defendant.

The element of the prosecution’s complaint regarding failure to maintain plant in a safe condition was dismissed due to the presence of other, properly functioning mobile rock breakers, which the employees were trained and instructed to use. The other element of the prosecution’s complaint, being that the systems of work in place did not sufficiently eliminate the requirement for manual clearance of blockages, was also dismissed. It was dismissed because the other equipment existed and employees were trained and instructed to use it in such circumstances. Employees were not, in fact, required to ever clear blockages manually, as the prosecution contended. Rather, this was simply an informal practice of the employees, which the employer in no way endorsed and, in fact, actively discouraged.

Implications of the decision

It is interesting to note that the second part of the prosecution’s complaint was dismissed due to the prosecution wrongly contending that manual clearance was ‘required’. It is certainly conceivable that if the prosecution had framed their complaint differently, the employer may have been found guilty of failing to provide a safe system of work. This case is therefore a useful reminder that employers should closely examine any complaint against them and respond to the complaint against them as it is specifically worded.

Another interesting side note is that this prosecution was conducted under the old Occupational Heath, Safety and Welfare Act 1986 (SA), due to the incident having occurred while that Act remained in force.  Had the circumstances been prosecuted under the new Work Health and Safety Act 2012 (SA), the prosecutor may have exercised scope to spread blame to the ‘officers’ of the organisation for the cultural problem of manual clearance (of which certain officers must have been aware).

Norman Waterhouse has significant experience in defending safety prosecutions and in work health and safety matters generally.  Employers should seek legal advice upon receiving any formal notices or complaints and summonses in relation to workplace safety matters. 

For more specific information on any of the material contained in this article please contact Sathish Dasan on 08 8210 1253 or

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Business Succession – Trauma, TPD and the grey area in between

We have previously discussed the importance of having a robust succession plan for your business (a ‘business will’ if you like) here. One issue that is often overlooked as part of discussions around those issues is the impact of trauma on a business and the point at which a trauma event should trigger the exit of a business partner from a business.

Trauma events can range from critical injuries to the diagnosis of a life threatening disease and the impact that these have on a business will vary greatly. Business owners, and their advisors, should consider the impact of such an event and determine how this should be dealt with in the context of the succession planning process of the business.

In many cases, individuals will hold insurance cover for trauma events or income protection insurance which will ease the impact on them personally, but this may not be of significant assistance to their business, especially where the business relies on that owner for income or productive output. The business owners will need to consider what measures can be put in place to protect the business and its ongoing value.

An important consideration in this respect is to determine the point at which the trauma event becomes a trigger for the affected party to be required to sell out of the business. This may be linked to the point at which the condition can be classified as total and permanent disablement, but this will not necessarily be the case and may differ depending on the type of business or the nature of the trauma event. An injury to a builder may be long term but not be seen to be something which would require a transfer of equity, even after six months because of the capacity for the injury to heal, while a cancer diagnosis may be something which the parties would want to deal with in much shorter order.

Business owners and their advisors should consider these issues when preparing the succession plan for the business and work with their lawyers to incorporate them into the buy-sell arrangements for the business. These may be part of the shareholders’ agreement or partnership agreement of the business or a standalone document, but they should be properly documented with the assistance of a lawyer experienced in the area.

For more specific information on any of the material contained in this article please contact Mark Henderson on 08 82101220 or

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Employment – Do you have an implied right to require medical information from an employee?

The prolonged absence of an employee is a scenario which any employer can find difficult to manage. This is particularly so where the apparent reason for the absence is an injury or illness of the employee.

However, one tool which you may have at your disposal is an implied contractual right to require detailed medical information from an employee. Failure by an employee to observe a direction made pursuant to this right may, like any failure to comply with a lawful direction, be met with disciplinary action.

When is the right implied?

The right to require medical information is implied into a contract automatically, unless any relevant Award or Enterprise Agreement, and/or the contract itself, sets out completely the rights of the parties in relation to accessing medical information.

The mere existence of some provisions which deal with medical information does not mean that the subject is covered completely and the right is not implied. The recent Federal Court decision Australian and International Pilots Association v Qantas Airways Ltd [2014] FCA 32 demonstrated that a provision in an Enterprise Agreement permitting the employer to obtain a medical certificate during a prolonged absence did not extinguish the implied right to require medical information of a more detailed nature.

What does the implied right to require medical information entail?

The implied right to require medical information arises out of the necessity for the employer to adjust its future business arrangements to accommodate an absence, and to fulfil its obligation to ensure the health and safety of its workers. The implied right permits an employer to require an employee, where reasonably necessary:

  • To provide evidence affirming the employee’s continuing fitness to undertake duties; and
  • To attend, on reasonable terms, a medical examination to confirm the employee’s fitness if there is a genuine indication that such an examination is necessary.

The implied right can be exercised during paid and unpaid absences. If a direction is made pursuant to this right, the refusal of an employee to follow the direction may attract disciplinary action from the employer.

Practical considerations for employers

Firstly, employers should consider whether this right is indeed implied into their contracts of employment. The right will only be implied into a contract with an employee where the relevant Award, Enterprise Agreement and the contract itself do not completely set out the rights of the employer to obtain medical information.

Secondly, any exercise of the implied right to require medical information (and the extent of the information being sought) must be reasonable in the circumstances. There must be a relevant operational or work health and safety reason for the direction. Other circumstances will also be relevant.

In the recent case Grant v BHP Coal Pty Ltd [2014] FWC 1712, the Fair Work Commission found that a direction to undergo a medical assessment was reasonable based upon the fact that an employee’s absence had been for several months, and that the only information being provided in that time were entirely non-specific medical certificates. The same factors were relevant in the above Qantas case, where the employer needed to organise pilot schedules many weeks in advance of flights, and where the employer wished to explore what reasonable accommodations it could make in order to return the employee to work.

Finally, in making a direction pursuant to the implied right to require medical information, employers should ensure that they provide a clear explanation to employees as to why the direction is being made. The employer should also state that disciplinary action may be taken if the direction is not complied with. Upon non-compliance, an employee should also be given an opportunity to account for their failure to observe the direction. This is necessary in order to justify disciplinary action which might be taken as a result of a failure to observe the direction.

Care should be taken before making any direction based upon an implied right to require medical information. The right itself must exist, and the direction must be reasonable in all of the circumstances.

For more specific information on any of the material contained in this article please contact Lincoln Smith on 8201 1203 or

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Property, Infrastructure & Development – Building upgrade agreements


The State Government is currently finalising the Local Government (Building Upgrade Agreements) Amendment Bill 2014 (the Bill).  Public consultation on a draft form of the Bill closed on 11 April 2014.  If enacted, the Bill will assist building owners (in association with councils and finance providers) to retrofit existing buildings in a way that improves their energy, water or environmental efficiency or sustainability.  It is intended that regulations (yet to be drafted) will limit the operation of these amendments, at least in the first instance, to commercial buildings (i.e. those used wholly or predominantly for commercial, industrial or other non-residential purposes).

Building upgrade agreements

If enacted, certain amendments will be made to the Local Government Act 1999, which will allow a ‘building upgrade agreement’ to be entered into between a council, building owner and finance provider.  Under this agreement:

  • The building owner would agree to undertake certain environmental ‘upgrade works’ to the building (although regulations may specify certain types of other upgrade works or exclude some types of upgrade works);
  • The finance provider would agree to advance money to the building owner for the purpose of funding the upgrade works;
  • The council would agree to levy a ‘building upgrade charge’ on the land for the purpose of recouping the money advanced by the finance provider; and
  • The building owner would then be required to pay the charge to the council, and the council would then pay the amount received to the finance provider (not including any service fee or late payment fee that the council is permitted to retain).

It is anticipated that there will be a standard building upgrade agreement template developed by the State Government for use by the relevant parties.

Main features

The main features of building upgrade agreements are:

  • An agreement may allow a building owner to recover contributions from a lessee, which will be based on the estimated cost savings to be made by the lessee from the upgrade works. Although this provision is intended to operate despite the Retail and Commercial Leases Act 1995 (SA), the draft Bill does not specify this.  This issue has been raised through public comment.
  • An agreement may only be made in respect of a building constructed at least two years prior to the making of the agreement.
  • Agreements must be voluntarily entered into and councils cannot require building owners to enter into such agreements, such as by a condition of development authorisation.
  • The total amount owing on the land (including taxes, rates, charges and mortgages), in addition to the building upgrade charge, cannot exceed the capital value of the land.
  • If a building upgrade charge remains unpaid for more than three years, a council will have the right to sell the land and will then receive priority in the proceeds of the sale.

Considerations for building owners/managers

If enacted, the Bill will create a new mechanism for building owners (which includes community and strata corporations) to obtain financing to undertake environmental upgrade works.  Building owners who intend to enter into a building upgrade agreement will need to:

  • give notice of that intention and details of the proposed building upgrade charge to be levied to any existing mortgagee; and
  • a statutory declaration verifying the particulars of all registered and unregistered mortgages and a statement that the building owner has notified any mortgagees to the council.

Under a building upgrade agreement, a building owner may be required to pay the building upgrade charge in instalments, repay any amount payable under the agreement early or report periodically on the performance of the upgrade works to the council and finance provider. 

Building owners, like with any standard loan, will need to ensure that they can pay any building upgrade charge as it becomes due.  A failure to pay a building upgrade charge will not make the council liable for any outstanding amount owing to the finance provider and therefore a building owner cannot escape liability for the charge whilst being the owner of the land.  However, because a building upgrade charge is levied on the land, any loan obtained under a building upgrade agreement will run with the land rather than being personal to the owner.  Therefore, if the building owner subsequently sells the land, liability for the charge will fall onto the new building owner.

The amount of any liability for such a charge will be displayed on a certificate of liabilities (i.e. under section 187 of the Local Government Act 1999) rather than the Certificate of Title, as is the case with a mortgage.  It will therefore be essential for potential purchasers to obtain a certificate of liabilities to check whether a building upgrade charge has been charged in respect of the land.

For more specific information on any of the material contained in this article please contact Yari McCall on 08 8210 1265 or

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