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Norman Waterhouse

 

 

Normans Briefly

In this issue

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

On Friday 23 May 2014, Norman Waterhouse held its inaugural Commercial Conference. Over 50 attendees were at the newly opened Cathedral Room at the Adelaide Oval to hear sessions on a variety of issues which are relevant to businesses in the current economic environment. The issues covered included business structuring, asset protection, trust and superannuation fund use, state taxes, business succession, privacy and consumer law.

The sessions provided attendees with tools and ideas to help them and their clients live up to the theme of the conference – “Smarter, Better, Stronger”. We thank those who attended and invite you to look at some photos from the event. We hope to see you at the event next year and would welcome suggestions as to topics of interest which can be sent to normans@normans.com.au.

>   Employment – Last chance: gender reports due 31 May 2014 - 3 days to go!
>   Contract Negotiation - What does “reasonable endeavours” mean?
>   Employment — The changing landscape of discrimination law

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Employment – Last chance: gender reports due 31 May 2014 - 3 days to go!

Are you a private sector employer with 100 or more employees? If so, you must ensure that your report to the Workplace Gender Equality Agency (WGEA) for the period ending 31 March 2014 under the Workplace Gender Equality Act 2012 (Cth) is lodged by 31 May 2014.

The matters which must be included in the report are specified in the Workplace Gender Equality (Matters in Relation to Gender Equality Indicators) Instrument 2013 (No.1) (Cth), and relate to the following:

  • Gender composition of the workforce (including employment status, and composition of managerial roles);
  • Gender composition of governing body;
  • Remuneration details;
  • Availability and utility of flexible working arrangements;
  • Consultation with employees regarding gender equality issues; and
  • Sex-based harassment and discrimination.

Reports can be prepared and submitted through the website of the WGEA. Following submission of the report, you must notify employees, members, shareholders and relevant unions of submission and must provide them with access to the report. Employees and relevant unions must be provided with an opportunity to comment on the report.

Failure to submit a report or to properly carry out the subsequent notification requirements can result in your organisation being publicly named by the WGEA on its website, or by other means.  The WGEA may also name an employer in its report to the Minister. The consequences of this could include ineligibility of the employer for certain contracts or for grants or financial assistance under the Commonwealth procurement and financial frameworks (an opportunity to respond will be granted before any ‘naming’).

For more specific information on any of the material contained in this article please contact Sathish Dasan on 08 8210 1253 or sdasan@normans.com.au.



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Contract Negotiation - What does “reasonable endeavours” mean?

The term “reasonable endeavours” is often used in commercial contracts to impose a standard of performance on one or more parties to the contract.

The standard required pursuant to a “reasonable endeavours” provision was recently considered in the case of Woodside Energy Limited v Electricity Generation Corporation.

Facts

Woodside Energy Limited is a gas supplier. Electricity Generation Corporation, which trades as Verve, is a statutory corporation responsible for generating and supplying electricity to a large area of Western Australia.

Woodside Energy and Verve were parties to a Gas Sale Agreement (GSA). Under the GSA, Woodside Energy was obligated to supply Verve with gas up to a maximum daily quantity and to “use reasonable endeavours to make available” a supplemental maximum daily quantity of gas.

In June 2008, there was an explosion at a gas production facility owned by a third party, resulting in a significant increase in the demand and market price for gas in Western Australia.  Following the explosion, Woodside Energy informed Verve it could no longer supply Verve with the supplemental maximum daily quantity gas under the GSA, but could instead supply an equivalent quantity of gas under a different short term agreement at prices higher than that stipulated under the GSA.

Verve commenced proceedings against Woodside Energy in March 2009 in the Supreme Court of Western Australia, arguing that Woodside Energy had breached its obligation to use “reasonable endeavours” to supply supplemental gas in accordance with the GSA.  Woodside Energy, in return, argued that its obligation to use reasonable endeavours was mitigated by another provision in the GSA which provides that Woodside Energy must take into account “all relevant commercial, economic and operation matters” in deciding whether it was able to supply the supplemental gas.

In the first instance, the Supreme Court of Western Australia found that Woodside Energy had not breached its reasonable endeavours obligation by refusing to supply supplemental gas where it was more profitable to supply the gas under the short-term arrangement.

On appeal, the Court of Appeal held that a relevant consideration was Woodside Energy’s capacity to supply supplemental gas, and accordingly, Woodside Energy had breached its “reasonable endeavours” obligation.

Decision of the High Court

The High Court considered the issue of “reasonable endeavours” and held that it is not an absolute or unconditional obligation.

It considered that the primary objective of the GSA was to secure minimum gas supply, with a secondary objective of supplying supplemental gas – it held that Woodside Energy was not obliged to sacrifice its business interest for the secondary purpose of the GSA.

The High Court also held that Woodside Energy was not required to sacrifice its own commercial interests in exercising “reasonable endeavours” – the Court held that Woodside Energy was entitled to rely on the additional provision in the GSA and to take into account its commercial, economic and operational interests. This meant that market conditions caused by the third party gas production explosion was able to be taken into account in considering Woodside Energy’s capacity to supply supplemental gas to Verve. Therefore, the decision not to supply Verve with supplemental gas did not constitute a breach of the GSA.

Lessons Learned

  1. An obligation to use “reasonable endeavours” is not an absolute obligation;
  2. A contract can stipulate its own standard of performance; and
  3. What constitutes “reasonable endeavours” depends on the circumstances, including circumstances which may affect a party’s business.

For more specific information on any of the material contained in this article, please contact Mabel Tam on 8210 1218 or at mtam@normans.com.au.



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Employment — The changing landscape of discrimination law

Several high-profile, and quite different, developments in relation to Australian discrimination law have occurred recently, which affect both State and Federal system employers. Here, we set out what these recent occurrences mean for employers.

Proposed changes to the Racial Discrimination Act 1975 (Cth)

Perhaps the most prominent discrimination-related news in recent months has been a particular proposed change to the Racial Discrimination Act 1975 (Cth) (RD Act). The proposals are not yet before Parliament. An initial period of public consultation has closed, and the Government is considering the submissions before progressing the issue further.

The law at present

Currently under the RD Act, it is unlawful to engage in an act (including making a remark) on a racial basis, otherwise than in private, which is ‘likely to offend, insult, humiliate or intimidate’ a person or group of persons. An employer will be vicariously liable for acts of an employee unless all reasonable steps have been taken by the employer to prevent the act of the employee. In the view of the Federal Government, the present provisions infringe too greatly upon (to quote the Attorney-General) the ‘right to be [a] bigot’.

The proposed changes

It is proposed that the current relevant provisions be replaced by a prohibition upon engaging in an act (again, including a remark) on a racial basis, otherwise than in private, which is reasonably likely to ‘vilify or intimidate’ a person or group of persons. This is a higher bar than the existing ‘offend, insult, humiliate or intimidate’ provisions. The proposal also seeks to repeal the vicarious liability provision.

What it means for employers

The Australian Human Rights Commission is of the view that acts carried out in the workplace are not ‘in private’. Thus, the provisions in their current form and, if passed, the replacement provisions will likely apply to workplace conduct. If the change occurs, then certain conduct which previously fell afoul of the ‘insult, offend, humiliate or intimidate provisions might not be captured by the replacement ‘vilify or intimidate’ provision. Furthermore, the repeal of the vicarious liability provision may make it less likely for racially vilifying/intimidating acts of employees to be attributed to employers.

However, many other avenues for complaint would still exist in respect of racially offensive or insulting comments. If the act can be characterised as discriminatory then it will be captured by other provisions of the RD Act. Moreover, jurisdictions concerning equal opportunity and bullying are available to employees. The proposed changes have no effect on these other avenues.

A change in the law is not guaranteed, given the relatively preliminary stage at which the proposal currently sits and the prominent public and political opposition. Even if the change does go ahead, employers must not relax any anti-discrimination standards.

A new definition of “sex”

Norrie was born with male reproductive organs and in 1989 underwent a “sex affirmation procedure” to remove male reproductive organs. The procedure did not identify Norrie as being either male or female. Norrie applied to the NSW Registrar of Births, Deaths and Marriages for registration of sex as “not specified.” The Registrar rejected the application on the basis that it could only change a person’s sex from male to female or vice versa, and did not have the authority to record sex as ‘non-specific’. The argument made its way through the NSW Administrative Decisions Tribunal to the NSW Court of Appeal and finally to the High Court.

In the unanimous decision of NSW Registrar of Births, Deaths and Marriages v Norrie [2014] HCA 11, the High Court of Australia found that it was possible for the NSW Registrar of Births Deaths and Marriages to register a person’s gender as non-specific. The Court affirmed that sex is not a binary characteristic, that it may be ambiguous, and that the Registrar had the power to record Norrie’s sex as ‘non-specific’.

This finding builds on the statutory protections that already exist for gender identity and intersex status. These statutory provisions have been in South Australian legislation for several years, and have been in Federal legislation since August last year. Employers must respect the gender identity of any employee, including a ‘non-specific’ gender identity, as well as physical ‘intersex’ status. These rights are protected in the same way and to the same extent as other characteristics, such as race and pregnancy. The gender identity or intersex status of an employee must be accommodated by employers, regardless of any reservations of other employees.

Higher compensation and penalties – and possible personal liability – for discriminatory conduct

Ms Sagona, a photographer, worked for a portrait photography business for 12 years. When she announced her pregnancy in August 2012, her involvement with photo shoots and sales appointments was significantly curtailed, because her pregnancy would supposedly have a negative impact on the business’s image. After that, she was told to take a pay cut and to work longer hours. Ms Sagona resigned, alleging constructive dismissal. It was found in the Federal Circuit Court (Sagona v R & C Piccoli Investments Pty Ltd & Ors [2014] FCCA 875) that the business owners were going to retire soon, and were worried about the impact of Ms Sagona’s maternity leave. Ms Sagona was successful in her claim.

While this may sound like a reasonably standard discrimination claim, the Federal Circuit Court awarded Ms Sagona over $200,000. This sum consisted partly of compensation and partly of penalties, and is one of the higher monetary awards for discrimination in Australian history. Also of significance is that the husband and wife owners of the business were joined as parties to the claim. They were personally found liable to pay (along with their business) the compensation component of the award to Ms Sagona (which totalled $174,000). They also had penalties ordered against them personally, in the amount of $8000 each.

It is important for business owners, directors, managers and other persons to understand that, regardless of their corporate or other business structure, they can nevertheless be personally joined to a claim. This is in fact a common practice. Where a person is then found to be knowingly involved in breaches of discrimination protections, significant liability can be imposed on those persons. This case is an extreme reflection of a current upward trend towards severity in personal liability in relation not only to discrimination matters, but also employment disputes generally.

All three of the developments set out above are relevant to both State and Federal system employers.

For more specific information on any of the material contained in this article please contact Lincoln Smith on 08 8210 1203 or lsmith@normans.com.au.



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