Norman Waterhouse
   
Norman Waterhouse

 

 

Normans Briefly

In this issue

Welcome to the August edition of our Local Government Briefly.

>   2015 Local Government Conference
>   Local Government – Norman Waterhouse 'decision-making' checklist
>   Corporate & Commercial – Managing risks for volunteer board members
>   Local Government – Do your procurement practices make you an accessory to a breach of the Fair Work Act?
>   Work Health and Safety – Liability of 'Officers' under the harmonised legislation
>   Environment and Planning – Section 86(1)(f) applications for review: Terra Group Pty Ltd v City of Port Adelaide Enfield [2015] SAERDC 26

2015 Local Government Conference

Our annual Local Government Conference for 2015 was held Friday 14th August at Adelaide Oval and attracted an unprecedented attendance of over 270 delegates, the largest attendance to date over the event’s 26 year history. We are thrilled to have received overwhelmingly positive feedback from the event and ensure you stay tuned, as a comprehensive review of the event will follow shortly.

Click here to view photos from the Conference.



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Local Government – Norman Waterhouse 'decision-making' checklist

As with any tier of government, council decision-making is subject to rigorous legal principles and rules. Some of these concepts are based in legislation, others in court-made common law, and others are imposed by councils themselves through procedures and other conditions.

This can be a complex area of law, but it is important to get right. Where mistakes are made, decisions may be invalid, and other consequences may follow not just for the council but for individuals within the council.

Those who attended our “Decision-making under the spotlight” session at the 2015 Local Government Conference received a checklist designed to assist in sound decision-making. An electronic version of that checklist is available here.

The principles in this checklist apply to all decisions of councils, including decisions of the administration, the elected membership of a council, committees, development assessment panels and other instrumentalities of councils.

A comprehensive understanding of the principles set out in this checklist will assist in ensuring decisions are made correctly. Further, where questions arise regarding the validity of a decision (such as a review under Section 270 of the Local Government Act 1999), this checklist will assist in disentangling the issues which may need to be investigated and examined.

We hope that our readership finds this checklist useful. Norman Waterhouse has extensive experience advising upon the public and administrative law principles which regulate government decision-making. We regularly assist councils and other local government authorities in this regard, and would be happy to provide specific advice on any of the matters outlined in the checklist or other related legal queries.

For more specific information on any of the material contained in this article please contact Felice D'Agostino on +61 8 8210 1202 or fdagostino@normans.com.au, or Chris Alexandrides on +61 8 8210 1299 or calexandrides@normans.com.au.



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Corporate & Commercial – Managing risks for volunteer board members

Those of you who serve as volunteer members of boards and committees of not-for-profit organisations may be aware of the Volunteers Protection Act (SA) 2001 (VP Act) and that it affords some legal immunity for volunteers working with organisations. Similarly, Sections 39, 41 and 121 of the Local Government Act (SA) 1999 (LG Act) protect elected members, committee members and employees of councils from personal liability in the honest performance of their roles. In this Briefly, we focus on the protection given by the VP Act and the LG Act to elected members, committee members and employees who sit on community boards (Board Members).

What many Board Members don’t realise is that this immunity is very limited. The Act is no substitute for comprehensive directors’ and officer’s (D&O) and public liability insurance policies and an appropriately drafted Deed of Access and Indemnity between the Board Member and the organisation.

Scope of the Volunteers Protection Act

The VP Act provides that subject to certain exceptions, a volunteer incurs no personal civil liability for any act or omission in the course of carrying out “community work” for “community organisations” provided that the volunteer is acting in good faith and without recklessness. Instead, the community organisation itself will be responsible for such liabilities.

A community organisation includes any kind of incorporated body (i.e. a company or an incorporated association) which directs or coordinates the carrying out of community work.

Community work is work done for purposes which include:

  • religious, charitable, benevolent purposes
  • for promoting literature, science or the arts
  • for sport, recreation or amusement
  • for conserving resources or protecting the natural environment
  • for preserving historical and cultural heritage
  • promoting the interests of the community generally or of a particular section of the community

Although most not-for-profit entities will be treated as community organisations, the work done by their board members in attending board meetings and making strategic decisions about the organisation and management decisions about the organisation’s community work does not constitute carrying out the organisation’s community work.  

This means that although a Board Member may be covered by the Act when, for example, rostered on to cook or serve meals to the needy, in providing advice as part of a community counselling service or in assisting with a community event run by the organisation, Board Members are not covered by the Act in relation to their board activities.

In addition to this limitation, the Act only applies to volunteers. Although a volunteer board member may be reimbursed for expenses incurred or receive a gift as an honorarium, a Board Member who receives a sitting fee or payment for their services to a community organisation is not covered by the Act.

Scope of the LG Act

The LG Act provides that subject to certain exceptions, a Board Member incurs no personal civil liability for any honest act or omission in the course of carrying out their roles and duties.  Instead, the council itself will be responsible for such liabilities. This indemnity for Board Members is broader than that provided under the VP Act, but does expose the council to potential liability. As set out below, it would be advisable, both for the council and the Board Member, for the Board Member to obtain a Deed of Access and Indemnity supported by D&O and public liability insurance policies.  

Indemnities from organisations

Given the above restrictions, it is always advisable that not-for-profit organisations put in place arrangements for the organisation to indemnify the members of their boards for any acts or commissions in the discharge of their duties which are in good faith. Any organisation failing to do so may have difficulty attracting quality candidates for board positions. Equally, councils and Board Members should seek to ensure that such arrangements are put in place.

Although such indemnities may be contained in the organisation’s constitution or other governing rules, it is always preferable for them to be set out in a separate Deed of Indemnity. This is because first, the constitution or governing rules cease to be enforceable by a Board Member against the organisation once the Board Member ceases to hold office. 
Secondly, a constitution may be varied at any time by special resolution passed by the members without the consent of the Board Members.

In contrast, a Deed of Indemnity may and should be drafted so that it is enforceable against the organisation for as long as the Board Member is at risk of action being taken against him or her (i.e. six years after he or she ceases to hold office), and so that it cannot be varied or revoked without the consent of the relevant Board Member.

These indemnities should be drafted very carefully so as to ensure that they operate within the limits permitted by the Associations Incorporation Act (for incorporated associations) and by the Corporations Act (for companies). They should allow the organisation to effectively take over the defence of any claim brought against the Board Member where the Board Member wants to rely on the indemnity, otherwise the organisation is effectively handing a Board Member a blank cheque which may end up being used to defend a claim which is either indefensible, or which should not be defended from a commercial perspective.

Rights of access to documents

A Deed of Access and Indemnity should also include provisions allowing the Board Member access to any records of the organisation which they may need in order to defend themselves from any claims brought against them, or to assist them in bringing action against third parties. Once again, this right should operate for at least six years after the Board Member ceases to hold office.

Although directors (but not secretaries) of companies have a right to access company records along these lines under the Corporations Act, no such rights are provided to board members of incorporated associations under the Associations Incorporation Act.

In the case of both companies and associations, these rights of access should be drafted carefully so as to ensure that they allow the organisation to restrict access where the relevant documents may be subject to legal privilege and where allowing access may be damaging to the organisation.

Legal advice

There may be times when a Board Member wishes to obtain independent professional legal or financial advice in order to properly discharge his or her duties. Once again, a Deed of Access and Indemnity may provide that the organisation will pay the reasonable costs of obtaining such advice where appropriate.

Insurance arrangements

As with all indemnities, the practical value of an indemnity contained in a Deed of Access and Indemnity in favour of a Board Member will depend on the net asset position or reserves of the organisation giving the indemnity. Even large organisations with substantial reserves may have difficulty meeting their liabilities in the event of a claim by a Board Member under such an indemnity. 

For these reasons, any arrangement for an organisation to indemnify a Board Member for claims relating to his or her office should be dovetailed with appropriate D&O insurance and public liability insurance policies. Indeed, it should be a requirement of any Deed of Access and Indemnity that the organisation maintains D&O insurance at an agreed level. 

Once again, these provisions should be drafted carefully so as to ensure that a Board Member can’t “double dip” against an insurance policy and the indemnity, and to ensure that the insurance cover operates to cover the Board Member for at least six years after the Board Member ceases to hold office.

We recommend that all councils and Board Members their arrangements and make sure that they have in place comprehensive D&O and public liability insurance policies and an appropriately drafted Deed of Access and Indemnity between all Board Members and the organisations on which they sit, both for their benefit, and for the council’s.

For more specific information on any of the material contained in this article please contact Mark Henderson on 8210 1220 or mhenderson@normans.com.au.



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Local Government – Do your procurement practices make you an accessory to a breach of the Fair Work Act?

“If it sounds too good to be true, it probably is.”

This old adage also has application when it comes to council procurement tenders. Like any other organisation, a council will, in most circumstances, select the tender that is best value for money when procuring services. However, when the focus is on the lowest price, other important considerations may be neglected, such as whether the subcontractor engages in employment practices that are compliant with the Fair Work Act 2009 (the Federal Act).

Earlier this year, the Fair Work Ombudsman commenced the Local Government Procurement Initiative, a supply chain-focused compliance audit of procurement practices of local councils, starting with how they procure security services. The aim of the audit is to ensure that local government procurement decisions are not undermining third parties’ compliance with federal workplace laws.

Whilst, in terms of industrial relations, the Federal Act does not extend its jurisdiction to South Australian councils, section 550 of the Federal Act stipulates that a person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision. This includes any person or organisation that aided, abetted, or has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention.

Therefore, turning a blind eye to a subcontractor’s suspicious employment practices could expose a council to financial liability if the council is found to be an accessory to a breach of the Federal Act. Apart from financial liability, the council will also be exposed to the risk of reputational damage, and the interruption, delay or failure to deliver the contracted services to the community or to the end user.

Do your due diligence

The receipt of a tendered quote that is substantially below market rate should serve as a warning to a council, and council officers should turn their mind to how the subcontractor can offer such low prices. This may involve making further enquiries, such as:

  • Does the tender provide information on wages and on-costs?
  • Does the subcontractor pay minimum wage?
  • Does the subcontractor pay penalties, overtime and allowances?
  • Is superannuation, workers compensation, payroll tax, insurance and licences factored into the tendered price?

In addition to the above, a council may also request tenderers to submit a Workplace Relations Management Plan (WRMP) as part of their tender. A WRMP will generally include information, such as:

  • the subcontractor’s organisational structure;
  • any potential industrial relations risks;
  • how the subcontractor intends to select and manage employees or other subcontractors;
  • how the subcontractor will establish terms and conditions of employment;
  • how the subcontractor will attract, recruit and retain suitable labour; and
  • any other relevant considerations.

This will allow the council to make fully informed procurement decisions and assist the council in defending any claims for accessorial liability under section 550 of the Federal Act. Further, tender documentation should require a commitment from the subcontractor that it will comply with all applicable workplace laws and instruments.

Ultimately, it is the council’s responsibility for distinguishing a competitive quote from a dubious quote. Procurement decisions should be assessed based on performance and quality of services, and not just price. However, if price is a key factor, councils should do their due diligence and have an understanding of a subcontractor’s employment practices prior to making a procurement decision.

For more specific information on any of the material contained in this article please contact Lincoln Smith on +61 8 8210 1203 or lsmith@normans.com.au or Virginia Liu on +61 8210 1279 or vliu@normans.com.au.



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Work Health and Safety – Liability of 'Officers' under the harmonised legislation

The nationally harmonised work health and safety legislation (manifested in South Australia by the Work Health and Safety Act 2012 (WHS Act)) has been in force for some years now across numerous jurisdictions. Generally, ‘persons conducting a business or undertaking’ (PCBU), and their ‘officers’ and ‘workers’ under the WHS Act, should now be cognisant of the practical elements of the WHS Act framework.

However, due to prosecution time allowances, and the nature and length of work health and safety criminal prosecutions, it is only now that we are beginning to see the outcomes of criminal prosecutions under the legislative regime. Such decisions will provide important guidance regarding the interpretation of the as-yet largely untested provisions of the WHS Act.

One critical component of the WHS Act is the departure from the old system of having a single ‘responsible officer’ within an organisation, to a framework where all ‘officers’ of a PCBU have a personal, non-delegable obligation to exercise due diligence to ensure the PCBU complies with its obligations under the WHS Act.

While identifying officers and the content of the duty of due diligence has, until now, been an exercise uninformed by any judicial consideration, a recent decision in the Australian Capital Territory now provides some valuable exposition in relation to these matters.

McKie v Al-Hasani & Kenoss Contractors Pty Ltd (In Liq) [2015] ACTIC 1

This case involved the death of a worker by electrocution, when the truck being driven by the worker came into contact with live power lines at a worksite. The relevant regulator pursued criminal proceedings against both the company (in its capacity as PCBU) and against the project manager responsible for the site at which the fatal incident occurred (purportedly in his capacity as an ‘officer’ of the PCBU).

While the Industrial Court of the Australian Capital Territory found against the company, the more interesting aspect of this matter is the outcome in respect of the purported officer.

Was the project manager an officer?

The relevant legislation (which mirrors the South Australian WHS Act) defines ‘officer’ as including numerous categories of persons. These include some clear categories, such as directors and secretaries of corporations. However, certain other categories of person captured by the definition of ‘officer’ require some evidentiary analysis, namely:

‘a person:

(i) who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or
(ii) who has the capacity to affect significantly the corporation's financial standing; or
(iii) in accordance with whose instructions or wishes the directors of the corporation are accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person's professional capacity or their business relationship with the directors or the corporation).’

Even though the project manager was at the head of the particular project connected with the fatal incident, the Court determined that it was necessary to look at the project manager’s role and influence across the whole PCBU, not just in relation to that discrete aspect of the PCBU’s operations.

After examining the project manager’s place within the wider organisational structure of the PCBU, the Court determined that the project manager did not satisfy any component of the definition of ‘officer’ and accordingly was not an officer.

This finding demonstrates that courts will take a forensic approach to determining whether a person is an officer, requiring proof beyond a reasonable doubt that an individual was indeed an officer within the broader organisation of the PCBU. This is a factual inquiry which will be different for every PCBU, and will depend on the roles and responsibilities of the relevant person, as well as the nature of the PCBU and its decision-making processes and functions.

Content of the duty of due diligence

While the project manager was ultimately held not to be an officer and therefore not subject to the duty of ‘due diligence’, the Court nevertheless provided some analysis of that duty.

Importantly, the Court reinforced the position that the duty upon officers to exercise due diligence to ensure the PCBU complies with its obligations under the WHS Act is a proactive duty. By adopting the words of an earlier case, the Court indicated that ‘due diligence’:

‘is not done by merely hoping others would or could do what they were told, but also ensuring they have the skills to execute the job they are required to do and then ensuring compliance with that in accordance with the safe standards established. Compliance requires a process of review and auditing, both formal and random, in order to ensure that the safe standards established are in fact being adhered to and under ongoing review’.

The Court listed numerous things that the project manager ought to have done were he subject to a duty of due diligence, but these matters were moot given that the project manager was ultimately held not to be an officer.

Take home message

This case represents the first of what will no doubt be many decisions interpreting the vexed question of who is an ‘officer’ and what their duty of ‘due diligence’ requires them to do. It is a matter which must necessarily be determined on a case-by-case basis.

It is worthwhile to identify who, within your PCBU, is an officer, and to consider whether those persons are discharging their proactive obligation to exercise due diligence to ensure the PCBU complies with its obligations under the WHS Act. Bare minimum requirements for officers in this regard include understanding the operations of the PCBU and the general hazards and risks associated with those operations, ensuring appropriate resources are available for eliminating or minimising such risks, and ensuring adequate procedures and reporting mechanisms are in place. However, the operations of each PCBU will entail further, more specific ‘due diligence’ obligations.

Norman Waterhouse has significant experience in providing advice and representation in work health and safety matters. Further, Norman Waterhouse regularly provides audit services regarding work health and safety documentation and practices, and training regarding PCBU duties, officers’ duties, worker’s duties, bullying and harassment, and other matters.

For more specific information on any of the material contained in this article please contact Amanda Green on +61 8 8217 1306 or agreen@normans.com.au or Chris Alexandrides on +61 8 8210 1299 or calexandrides@normans.com.au.



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Environment and Planning – Section 86(1)(f) applications for review: Terra Group Pty Ltd v City of Port Adelaide Enfield [2015] SAERDC 26

Terra Group Pty Ltd v City of Port Adelaide Enfield [2015] SAERDC 16 concerned a challenge to a number of decisions relating to an application for a bulky goods outlet determined by the City of Port Adelaide Enfield.

Facts

Bunnings Group Ltd had applied to the Council for a development including the demolition of existing buildings, the construction of a Bunnings bulky goods outlet, a cafe, signage, retaining walls, landscaping and tree damaging activity (the Application).

Terra Group, the owner of the land adjacent to the subject site brought proceedings pursuant to Section 86(1)(f) (Section 86(1)(f) Review) challenging the public notification category of the Application, the characterisation of the development (on the basis that it involved a “timber yard” which was a non-complying form of development and therefore should have been treated as such) and the decision that the Application was not seriously at variance with the Development Plan.

Decision

The Environment, Resources and Development Court (Court) held that the Council was correct in its decisions regarding public notification, characterisation of the proposal and that the development was not seriously at variance with the relevant Development Plan. Accordingly, it dismissed the proceedings.

In reaching its decision, the Court made a number of interesting findings.

Jurisdiction of the Court

The Court followed the findings of several of its previous decisions which held that Section 86(1)(f) Reviews are limited to challenging procedural errors and are not in the nature of “de novo” hearings which consider the merits of the development proposed. 

Meaning of “timber yard”

In deciding whether the proposal was for a non-complying form of development, the Court considered the meaning of “timber yard” and held that a “timber yard” involves the sale and storage of timber in a yard.

The Court held that a “timber yard” must involve timber (or something bordering exclusively on timber) being stored/put aside and sold at a later time in an enclosed area.

In this case, the timber was not put aside for sale at a later time but rather it was stocked in shelves for immediate sale, the proposed timber trade sales area was not an enclosed area and contained other non-timber products which were also available for sale. On that basis, the Court found that the proposal was not a “timber yard” (nor included one) and therefore was not non-complying. The Application was correctly characterised as a bulky goods outlet and an on-merit form of development.

Seriously at variance

The Court held that a review of the decision as to whether a development is seriously at variance with the Development Plan is available in a Section 86(1)(f) Review.

In so deciding, the Court chose not to follow its previous decision in Ciccarello v City of Charles Sturt where Her Honour Judge Trenorden reached a contrary conclusion.

The Court said that the provisions of Section 86(1)(f) and the wording of Section 86(1)(f)(i) contemplated a challenge to a decision as to whether a development is seriously at variance with a Development Plan. It held that such a challenge was limited to an examination of the existence of any demonstrable procedural errors in the decision made by the Council.  In other words, such a challenge was limited to jurisdictional review type grounds. 

The Court found that the Council’s decision here could not be challenged on the grounds of unreasonableness or that it took into account an irrelevant consideration or failed to take into account relevant considerations. 

The Court went on to find that in the event that it was wrong about the nature of a Section 86(1)(f) Review, it was not persuaded that the Application constituted the “important or grave departure” from the Development Plan which was required or that the existence or seriousness of such variance was “plainly discernible” without the necessity of resolving debatable planning issues. In other words, the Court was not persuaded that the Application on its merits was seriously at variance with the Development Plan. 

Extension of time

The proceedings were commenced out of time and the Court decided it was not in the interests of justice to grant permission to extend the time to challenge the decisions as to the public notification, category, seriously at variance or the characterisation of the proposal as an on-merit form of development.

Conclusion

The Court’s decision gives some guidance about the meaning of a “timber yard”.

Contrary to Ciccarello, His Honour Judge Costello’s decision in Terra Group gives the Court power to consider a challenge to the decision as to whether a development is seriously at variance with the Development Plan in Section 86(1)(f) Reviews.

However, in light of the decisions in Terra Group and Ciccarello the law remains unsettled on the issue.

For more specific information on any of the material contained in this article please contact Jacqueline Plant on +61 8 8210 1230 or jplant@normans.com.au.



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