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Norman Waterhouse

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In this issue

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

>   PPSA – First Case - Owner of assets loses their ownership of property due to the PPSA priority rules
>   Employment – Amendments to the Fair Work Act 2009 (Cth)

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PPSA – First Case - Owner of assets loses their ownership of property due to the PPSA priority rules

The first case to consider, in detail, the new Personal Property Securities Act 2009 (PPSA) has been delivered by the Supreme Court of New South Wales.

The Court held that the rights of the owner of two Caterpillar vehicles, leased to a third party (but unregistered on the Personal Property Securities Register (PPSR)) were inferior to the rights of a secured party who held a registered security interest over all assets of the lessee of the vehicles.

The owner of the two Caterpillar vehicles lost them due to its failure to register its interest on the PPSR.

This is the first case to confirm the intended operation of the PPSA that common law ownership of property does not give the owner superior rights to the property where an interest in that property registered under the PPSR is involved. Instead, the entity with the highest priority under the PPSA has the best rights to the property.

Facts

The name of the case was Maiden Civil (P&E) Pty Ltd and Others (Maiden) v Queensland Excavation Services Pty Ltd (QES) [2013] NSWSC 852.

QES was held to be the owner of two Caterpillar vehicles and leased those two vehicles for an indeterminate amount of time to Maiden. This leasing arrangement created a security interest pursuant to the PPSA which was capable of registration on the PPSR.

The leasing arrangement commenced prior to the PPSR commencement date, however, QES never registered the arrangement either on the Northern Territory motor vehicles register (which it could have done) or on the PPSR following its commencement.

After the PPSR commenced operation, Maiden obtained a loan from Fast Financial Solutions Pty Ltd (Fast), which was secured against all present and after acquired property of Maiden, including the two Caterpillar vehicles leased from QES. Fast registered its security interest on the PPSR.

After an event of default of Maiden, Fast appointed receivers and managers and Maiden subsequently went into administration and liquidation. The receivers took possession of the QES leased vehicles and refused to return them to QES on the basis that Fast’s registered interest had superior priority to QES’s interest.

Held

The Court held that QES had a security interest in the Caterpillar vehicles as the lessor under a PPS Lease, however, QES’s security interest was unperfected due to its failure to register either on the Northern Territory motor vehicles’ register or the PPSR.

Due to QES’s security interest being unperfected, the PPSA applied so that Fast’s perfected security interest in the Caterpillar vehicles had priority over QES’s unperfected security interest in them.

Upon Maiden going into administration and/or liquidation, Maiden became entitled to the Caterpillar vehicles (pursuant to section 267(2) of the PPSA) - subject to the perfected security interest of Fast.
This resulted in Fast having the highest priority in the Caterpillar vehicles which defeated the unperfected interest of QES and hence QES lost its ownership of the Caterpillar vehicles.

Take home message

All lessors who have leased equipment to third parties should register their interest on the PPSA (if they had not otherwise registered their interest on migrated registers) or risk losing ownership of that equipment to other secured parties with higher priorities.

For more specific information on any of the material contained in this article please contact Tom Walrut on (08) 8210 1218 or twalrut@normans.com.au.


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Employment – Amendments to the Fair Work Act 2009 (Cth)

On 28 June 2013, the Federal Parliament passed the Fair Work Amendment Act 2013 (Cth), which amends the Fair Work Act 2009 (Cth) (the Act) in various significant ways. While most of the amendments only have implications for ‘national system employers’ and their employees, others affect those employers retained in the State industrial relations system, and their respective employees.

The amendments were vehemently opposed by employer groups, largely because they failed to address various employer concerns identified in the 2012 review of the Act. Some amendments took effect on 1 July 2013, whilst others do not come into force until 1 January 2014.

The more significant changes are summarised below.

Changes to parental leave provisions – Effective 1July 2013

The amendments to the parental leave provisions that took effect on 1 July 2013 relate to concurrent leave, unpaid special maternity leave and transfer of employees to a safe job, as detailed below:

  • Extends the period of unpaid concurrent leave for employee couples from three weeks to eight weeks;
  • Clarifies that an employee who accesses special unpaid maternity leave will not have the 12-month unpaid parental leave period reduced by the number of weeks taken as special unpaid maternity leave;
  • Expands the provisions relating to the transfer of a pregnant employee to a safe job to those employees with less than 12 month's continuous service, such that a transfer may occur if the opportunity exists and, if an opportunity does not exist, the pregnant employee is entitled to take ‘unpaid no safe job’ leave until the child is born.

Changes to provisions relating to requesting flexible work arrangements – Effective 1 July 2013

The Act now contains an expanded list of circumstances when an employee can request flexible working arrangements from their employer. Previously, such arrangements were only open to employees who were responsible for the care of a child under school age or a disabled child under 18.

Now, any employee with a minimum period of 12 months’ continuous service may request flexible working arrangements for any of the following reasons:

  • Where the employee is the parent, or has responsibility for the care, of a child who is of school age or younger;
  • Where the employee is a carer, within the meaning of the Carer Recognition Act 2010 (Cth);
  • Where the employee has a disability;
  • Where the employee is 55 years of age or older;
  • Where the employee is experiencing violence from a member of the employee’s family; or
  • Where the employee provides care or support to an immediate family or household member because that person is experiencing violence from a member of their family.

Therefore, the provision that was created to assist families with managing work and child care commitments has been expanded to assist a range of other employees with various domestic circumstances.

Employers maintain the discretion to refuse a flexible working arrangement request on ‘reasonable business grounds’. The Act has been amended to include a non-exhaustive list of business grounds that may be considered reasonable, including where the requested working arrangements would:

  • Be too costly for the employer;
  • Result in a need to alter working arrangements for existing employees, for which the employer considers impractical or not capable of implementing;
  • Require the recruitment of new employees;
  • Likely result in a significant loss in efficiency or productivity;
  • Likely have a significant negative impact on customer service.

It is important for ‘national system employers’ to be aware of the expansion of the categories of employees to whom flexible work arrangements now apply, so that prompt and effective consideration can be given to any request made. We can, of course, provide advice in the evaluation of such a request should your business receive one.

Changes to consultation requirements – Effective 1 January 2014

At present, ‘national system employers’ are bound by the Model Consultation Term (the Term). If the Term is not expressly included in a relevant enterprise agreement, the Term is read into the enterprise agreement by the Fair Work Commission (FWC) as part of the approval process. The Term also applies to those ‘national system employers’ that engage staff pursuant to a modern award.

From 1 January 2014, the Act will be amended to note that the Term applies in circumstances involving, first, significant workplace change, and secondly, ‘a change to...regular roster or ordinary hours of work’. Whilst the Act has always referenced workplace change, the amendment will specifically note changes to rosters and ordinary work hours. Therefore, employers will be required to consult employees about proposed changes to their roster or ordinary hours of work, which includes providing relevant information to employees, engaging with employees to obtain their views and consideration of those views.

In practical terms, it is likely that employers would have applied the existing Term in this way. However, it is worth noting that, from 2014, a change in roster or work hours, no matter how insignificant, will trigger the application of the Term.

Increased power to FWC to deal with workplace bullying – Effective 1 January 2014

One of the most significant amendments to the Act will be the power of the FWC to deal with bullying complaints.

The new provisions apply to ‘employees’ and ‘employers’, as distinct from ‘national system employees’ and ‘national system employers’. The Federal Government, in enacting this provision, has relied on its Constitutional ‘external affairs’ power, specifically, Australia’s obligations under the International Covenant on Economic, Social and Cultural Rights. Academics aside, this means that any employee, whether captured by the Act or State industrial relations legislation, may be able to apply to the FWC to have a workplace bullying complaint dealt with, subject to the details below.

Whilst this is a significant change for ‘national system employers’, those employers retained in the State system, such as Local Government entities, must also be mindful of this new avenue available to employees.

Any employee ‘who reasonably believes that he or she has been bullied at work, may apply to the FWC for an order’. There are various points to note, including:

  • The employee must be bullied at work;
  • Bullying is repeated unreasonable behaviour toward an employee or group of employees that creates a risk to health and safety;
  • The workplace must be a ‘constitutionally-covered business’ (which is defined to mean a ‘person conducting a business or undertaking’ within the meaning of the Work Health and Safety Act 2011 (Cth)) and is, among other things, a ‘constitutional corporation’.

The relevance of a business’ constitutional character is an issue that those within the Local Government will be familiar. It is a matter than remains largely unresolved and, we say, one that may ultimately need to be considered by the FWC should an employee of a Local Government or State-run entity request the FWC’s involvement in a bullying matter.

The orders that may be made by the FWC in circumstances where a complaint is lodged are quite broad, as the FWC can ‘make any order it considers appropriate’. The Explanatory Memorandum to the Bill provides a list of suggested orders, such as issuing orders to individuals to cease behaviour, providing additional support/training, and reviewing an employer’s policy and checking compliance with that policy.

It remains to be seen how this new provision will be used by employees.

Other amendments that come into effect from 1 January 2014 impact upon penalty rates in modern awards, union right of entry into workplaces and FWC’s arbitration powers in respect of general protection applications. We will delve into these amendments in our next Briefly.

If you have any queries about the abovementioned amendments, or any other changes arising from the Fair Work Amendment Act 2013 (Cth), we encourage you to contact a member of the Employment Team for further information and assistance.

For more specific information on any of the material contained in this article please contact Amanda Green on 08 8217 1306 or agreen@normans.com.au, or any other member of the Employment and Industrial Relations Team.


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