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Welcome to the annual summer edition of NSW Government Bulletin – a special edition of our fortnightly publication.

A new year marks a new law term and more than ever, we’re optimistic about new beginnings. In this edition, we explore various skills to help you reset and reinvigorate for what lies ahead for the public sector in 2022.

Our discussion includes: 

Our authors and other practice group experts will be looking at these topics in more detail at our annual Government lawyers CLE intensive, which returns as a virtual event from 21 to 25 February 2022. Click here to see the full program and to register.

10 hidden and not so hidden ‘need to knows’ of government commercial practice in NSW

Government is big, high, wide and deep. It has its own statutory and regulatory frameworks on top of those that regulate citizens generally. It is also governed by well-established legal principles of administrative law.

These all converge at the point where you’re designing, advising on and supporting the delivery of commercial transactions, projects and contracts for government. So, commercial lawyers have a lot to take in and process on top of their subject matter disciplines in supporting government.

In this article, I’ve pulled together 10 ‘need to knows’ or tips for a commercial lawyer working in NSW Government. It may be a quirky list, but it seeks to canvas things that are not always top of mind. I will also explore each of these tips in more detail in my session at the upcoming Government lawyers CLE intensive in February.

  1. First and foremost, knowing the statutory foundations or other enabling power behind every project, transaction or other matter you work on is critical. A contract entered into without power is invalid. If you’re working within established frameworks, this may not seem (or even be) important. But I promise you, an investment in reading the enabling statutes you work under will pay off time and again. It enriches your practice and capacity to support your clients in compliance, risk management and informed innovation.
  2. Government is held to higher standards in its commercial and other dealings than are expected of private citizens. There are some really handy formulations of the standards of behaviour and values expected of government officers (and government agencies) in the Government Sector Finance Act 2018 (GSF Act), the Government Sector Employment Act 2013, the Model Litigant Policy and the Independent Corruption Against Corruption Act 1988.

    Important norms for transactional, project and commercial matters include transparency, efficiency, financial prudence, the management of conflicts, public trust, integrity and fairness. The statutory formulations are great for persuading and educating clients about the legal and ethical frameworks they are operating in.
  3. Government funds are highly regulated, reinforcing the accountability of the executive to Parliament for the expenditure of funds.

    The way activities are budgeted and funded drives commercial behaviours, as it does with all organisations. So, investing time in understanding the money side of government builds your insights and commercial nous, just as it does for a private client.

    The laws on government funding also directly influence the ability of the executive to meet contractual payment undertakings. A payment under a contract cannot be made without an appropriation. Expenditure of money for the state (or GSF agency) can only be done in a way that is authorised, as specified in section 5.5 of the GSF Act.
  4. Most government contracts are executed by a delegate. Many of the decisions leading to the award of a contract are made by delegates. It is important to have at least a basic understanding of delegations, ensure they are in place and that there is a clear chain of delegated authority from the person with the power to make the decision. Section 49 of the Interpretation Act 1987 sets out the high-level rules governing delegations.
  5. Special requirements apply to commercial activities involving financial arrangements. Commercial activities that have a financing element, even if permitted by other legislation, may still require the approval of the Treasurer to be valid. The requirements for financial arrangements are set out in Part 6 of the GSF Act.

    “Financial arrangements” is broadly defined. It includes entry into joint ventures and operating concessions for capital assets or infrastructure. “Joint ventures”, in turn, is also broadly defined and has been interpreted to include alliance contracts.

    An approved financial arrangement has the benefit of facilitative provisions in the GSF Act as well. These include broad powers of delegation and protections for private sector counterparties.
  6. There are statutory rules about gifting government property and making ex gratia payments, again in the GSF Act. If a commercial transaction or settlement involves conferring a gift of government property (including disposing of it for inadequate consideration), it needs to be authorised by one of the means specified in section 5.6 of the GSF Act. Ex gratia (“act of grace”) payments require ministerial authorisation under section 5.7 of the GSF Act. The Minister must be satisfied there are special circumstances before making a decision to award an ex gratia payment. The Minister is constrained in delegating this function – limited to a specific class of individuals.
  7. A contract that purports to fetter a future exercise of executive discretion or a statutory power is void. In commercial situations where the economics of the contract is dependent on a current policy setting or legal framework, the rule against fettering means government can’t promise to retain the status quo. In these cases, it is not uncommon for government to recognise the interdependency by agreeing to a compensation regime.

    There are also various precedents for a boilerplate approach to prevent the rule against fettering voiding the contract. These need to be carefully crafted to suit the activities of the agency and the particular commercial transaction.
  8. Where an agency has an immediate right of access to information held by a private sector contractor, that information is government information for the purposes of schedule 4 clause 12 in the Government Information (Public Access) Act 2009 (GIPA Act).

    It is mandatory to include an immediate access right to certain classes of information in “contracts under which the contractor is to provide services to the public on behalf of an agency” (section 121).
  9. When designing contracts, it is useful to have in mind the requirements of the GIPA Act regarding contract publication. Copies of contracts over $5 million (or likely to exceed $5 million) are required to be disclosed unless they’ve been awarded after a tender process without substantial post-close negotiation. To facilitate publication and retain contractor confidence in dealings with government, it is useful to structure the contract so that any parts to be withheld from publication (with the scope of what is permitted by section 32 of the GIPA Act) are identified and agreed upon as part of the procurement process and set out in a separate schedule.
  10. The Procurement Board is established by the Public Works and Procurement Act 1912, and regulated by Part 11 of that Act. Its directions and policies have legislative force. Section 176 sets out the key obligations of government agencies in relation to the procurement of goods and services, including an obligation to ensure they obtain “value for money in the exercise of [their] functions in relation to the procurement of goods and services”.

Should state government agencies arbitrate?

It is reasonably well established now that Australia, and NSW, are sophisticated ‘pro-arbitration’ jurisdictions.

The NSW Commercial Arbitration Act 2010 (CAA) (like the Commonwealth International Arbitration Act (IAA)) gives effect (in broad terms) to the arbitration ‘Model Law’ published by UNCITRAL (Model Law), regarded globally as the ‘gold standard’ of pro-arbitration law and policy.

However, in the recent CIArb Australia Annual Lecture 2021, Bret Walker SC questioned whether arbitration by government agencies was appropriate. Is he right?

CAA and the advantages of arbitration

The pro-arbitration regime created by the CAA is generally considered to be found in the limitations placed on the ability of courts to intervene in the arbitration process, the autonomy of the parties to determine how the proceedings are conducted (which includes, by default, confidentiality) and the relative ease by which awards (particularly international awards, under the IAA) can be enforced through use of the courts.

That process (as expressed in the Paramount Object at section 1C of the CAA) is intended to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense. Accordingly, the CAA must be interpreted to give effect to that Paramount Object.

However, there is limited scope for recourse against a CAA award, with the grounds of challenge limited by statute based on procedural fairness and natural justice.

Arbitration can be scaleable. Large complex commercial disputes can be arbitrated by senior counsel and jurists and run like superior court litigation. Additional costs, including arbitrator’s fees, will be incurred but can be recovered by the successful party. Smaller disputes can be arbitrated quickly and discretely by appropriate subject matter experts.

‘Party autonomy’ is one of the touchstones of arbitration and is reflected in the Model Law and CAA. The parties themselves can have a significant amount of control over how the process will run. Even before the pandemic, arbitration could be conducted virtually or ‘on documents alone’ without the need for a formal hearing, significantly reducing costs.  

Arbitration can be administered by an appropriate institution or by ‘ad hoc’ appointment of an arbitrator or arbitrators who will administer the dispute in accordance with the parties’ wishes or chosen set of rules.

Arbitration awards can be enforced through courts with the responsibility largely on the award debtor to establish grounds for non-enforcement. 

The result is a considerably more sophisticated environment for domestic and international arbitration than has hitherto been the case, with a cohort of well-qualified arbitrators and experienced institutions operating under some of the most contemporary arbitration legislation in the world. 


One of the more distinctive and attractive features of arbitration is the confidentiality or privacy of the process. Unlike ‘open court’, arbitration proceedings are private to the parties. Strangers to the arbitration cannot attend hearings, and the results and awards remain confidential. Courts called upon to enforce arbitration awards or to hear challenges can and will allow the parties to adopt pseudonyms to protect their identity.

Australian arbitration legislation contains some of the more proscriptive confidentiality provisions found globally. Before the decision of the High Court in Esso v Plowman (1995) 128 ALR 391, it had been assumed by many that the confidentiality of arbitration was a common law right. Even if there was such a right under English law, the High Court determined that there was no such common law right under Australian law.

As a result, our arbitration legislation was amended to rectify that situation, and our express statutory proscription of confidentiality is one of the major differences and attributes of the Australian arbitration environment.

There are a number of reasons why this is relevant:

  1. arbitrators are not bound by the laws of evidence. Subject to any pre-agreed rules, arbitrators are largely able to determine the procedure appropriate to the particular matter and have (subject to natural justice and procedural fairness) significant discretion
  2. matters can and are determined by sole arbitrators, and panels of three
  3. arbitrators need not be lawyers or legally qualified.

As a result, arbitration awards have no precedential value, even though arbitrators will often be required to determine points of law. This is perhaps one of the express ‘trade-offs’ that parties may make by choosing arbitration over litigation.

Can the process be abused?

While there are no Australian examples, some writers in the United States have pointed to (apparent) abuses of the arbitration process.

First, some US corporates have attempted to use arbitration agreements in consumer contracts to avoid class actions. There is no concept of a ‘class’ under Australian arbitration law, and any attempt to bring a court action in respect of a contractual matter subject to an arbitration agreement must be stayed. The court has no discretion in this regard. As a result, a multiplicity of arbitrations would need to be commenced, consolidated and managed together.

Second, it is asserted that some US corporates seek to secure an imbalance of bargaining power by using arbitration agreements in consumer contracts, which could (for example) require a consumer in one US state to pursue or be subject to arbitration in another state.

Finally, it has been suggested that some US employers use arbitration agreements in employment contracts to enforce apparently unfair restrains on former employees.

In a recent address, Bret Walker SC questioned whether it was appropriate that governments might choose to arbitrate disputes if the result was the avoidance of scrutiny of their affairs, or, (in my own words, not his) ‘sweeping mistakes’ under the carpet.

It is possible that Mr Walker had in mind the current dispute between the Federal Government and the Naval Group over the contract to build submarines. I don’t know whether that contract was subject to an arbitration agreement, but if it was, the dispute will be resolved ‘behind closed doors’ and possibly also in another country.

Mr Walker is (with respect) clearly correct in his view that governments must be accountable to their citizens and electors.

He is (again, with respect) clearly correct that there must be some appropriate balance between government accountability and commerciality.

A desire by any government agency to ‘cover-up’ mistakes behind the cloak of arbitration is to be deprecated.

As a starting point, however, there is nothing intrinsically wrong about government agencies choosing to resolve commercial disputes by arbitration just as a commercial corporation might.

It is also likely that the results of any significant arbitration will be subject to scrutiny by the relevant auditor’s office. Therefore, lessons can be learned and perhaps publicised without the dispute being adjudicated in public.

There are also some limited exceptions to the confidentiality rule contained within the CAA.

First, the parties may of course agree to disclose confidential information. Sections 27G, 27H and 27I of the CAA provide the arbitrator and courts with a wide discretion to allow disclosure principally in circumstances where “the public interest in preserving the confidentiality of arbitral proceedings is outweighed by other considerations that render it desirable in the public interest for the confidential information to be disclosed.” 

This occurred in the Queensland Supreme Court case of Wilmar v Burdekin District Cane Growers [2017] QSC 3. In that case, the parties were involved in an arbitration. One party foreshadowed making submissions which the other wished to refer to certain Queensland Government officials.  An application was made to the arbitrator who allowed the disclosure but stayed the operation of his order to allow an application to be made to the Court.

Having considered issues of the public interest, the judge declined to overturn the arbitrator’s order.


Arbitration should not be considered merely as litigation by another name. While there will always be some disputes and matters best resolved in the courts, according to law, arbitration has distinctive merits and should be considered by government agencies as an important alternative to litigation.

Author: Geoff Farnsworth

Model litigant policies – what has changed?

It feels like just a few years ago that we presented on model litigant to Transport for NSW, but the paper, dated 2013, says otherwise. We have been updating the paper for recent developments, ahead of our upcoming Government lawyers CLE intensive program.

Before we review the recent highlights in this space, we briefly recap the model litigant obligation itself.


The obligation has its origins in common law as an expectation of the courts that public bodies adhere, as litigants, to the highest standards of honesty and fair dealing. This has been given various expressions by the courts over time. The Federal Court, in Hughes Aircraft Systems International v Airservices Australia [1997] FCA 1011, neatly identified three policy reasons for governments to act as model litigants:

  • citizens have a reasonable expectation that public bodies act honestly and fairly
  • public bodies must exercise their powers for the public good
  • governments and their agencies should act as moral exemplars.

In NSW, the Model Litigant Policy for Civil Litigation (NSW Policy) was adopted by all agencies in 2008. The Commonwealth obligation was introduced in 1999 and updated in the Legal Services Directions 2005 (Directions).

So what’s changed?

Each policy has been reissued, the Commonwealth policy in 2017, with no substantive changes in content (at all). On the other hand, the revised NSW Policy, released in 2016, introduced new obligations to:

  • not rely on a statutory limitation period as a defence in a civil claim for child abuse
  • consider the use of confidentiality clauses in relation to settlements on a case-by-case basis
  • provide reasonable assistance to the claimants and their legal representatives when identifying the proper defendant to a claim when they have not been identified or incorrectly identified.

A push to make the Commonwealth obligation more widely enforceable against the Commonwealth in the Judiciary Amendment (Commonwealth Model Litigant Obligations) Bill 2017 was sent to the Senate Legal and Constitutional Affairs Legislation Committee before lapsing in July 2019. Presently, under sections 55ZG(2) and (3) of the Judiciary Act 1903, only the Attorney-General can take steps to enforce compliance. Had the Bill passed, this would have marked a fundamental shift.

Not that the provisions of the Judiciary Act have stopped counterparties in proceedings with the Commonwealth from raising the issue, albeit without success. There are numerous decisions where the courts have reinforced section 55ZG when the Commonwealth’s conduct was the subject of complaint within proceedings.

The effectiveness of the Commonwealth approach to enforcement still relies on the Attorney-General. In 2020, the Magna Carta Institute compiled a review of the Attorney-General’s Department’s annual reports on alleged breaches of the Directions and found there was limited transparency in the OLSC’s record-keeping for identified breaches and those under investigation. The Institute also found there was limited publicly available information about non-compliance. A lack of transparency makes effectiveness impossible to assess.

With few developments being made at the policy or legislation level, the evolution of the obligation, in the near term, will be driven by judicial interpretation.

In terms of recent decisions, in NSW, the issue of whether non-compliance with the NSW Policy is relevant to the question of costs remains to an extent at large, in that various decisions in which the costs discretion was exercised can be characterised as based on conduct which also fell short of the obligation, rather than arising from the breach of the obligation.

As to what is required to meet the obligation, in Walpole v Secretary, Department of Communities and Justice [2020] FamCAFC 65, the Family Court found that an agency who had required a party to prove matters which the agency knew to be true had fallen short of meeting the NSW Policy:

“We have been troubled by what occurred in this case and it is timely to mention the importance of adherence to Model Litigant guidelines. The NSW Guidelines, which apply to the Central Authority, requires more than merely acting honestly and in accordance with the law and court rules. Essentially, the guidelines require that the Central Authority acts with complete propriety and in accordance with the highest professional standards. Relevantly, this includes not requiring the other party to prove a matter which the state or an agency knows to be true.”

In terms of the outer limits of the obligation, in Secretary, Dept of Social Services v Cassaniti (No 2) [2015] NSWSC 1795, the Supreme Court articulated a further limit of the obligation in that the “expectation to act as a model litigant should not discourage the Commonwealth from exploring novel or inventive lines of legal argument that would assist it, so long as they are at least arguable”.

In all, the developments over the last several years have been subtle, along existing themes, rather than marked by drastic change. Imagine how different the landscape would be had the Judiciary Amendment (Commonwealth Model Litigant Obligations) Bill 2017 been passed, or if similar legislation was introduced in NSW.

Author: Christine Jones

Administrative law home truths from the courts

The start of 2022 provided rare entertainment for administrative law enthusiasts in the form of the stoush between Novak Djokovic and the Federal Government, leading to Djokovic’s deportation on 17 January 2021.

Like a number of cases in the last six months, the proceedings involving the World No. 1 directs us to some fundamental ‘home truths’ of administrative law. This article sets out some of these home truths from the courts, with a government decision-maker audience in mind.

Home truth 1: Administrative decisions are subject to a requirement of ‘reasonableness’

While at the date of this article the judgment in the Djokovic Federal Court proceedings has not been published, it is clear that Djokovic failed to convince the Federal Court (Court) that “irrationality, illogicality or unreasonableness pervades every step of the decision-making process” that led to the cancellation of his visa (Applicant’s Outline of Submissions, para. 37).

In Bushfire Survivors for Climate Action Incorporated v Environment Protection Authority [2021] NSWLEC 92A (Bushfire Survivors), the Court briefly reminded us of the uncontroversial home truth that ‘reasonableness’ is a constraint on the exercise of statutory discretion, while the Djokovic case reminds us that invalidity for unreasonableness remains a high bar to meet.

Addressing the argument that a statutory discretion was subject ‘only’ to the control of unreasonableness, the Court in Bushfire Survivors summarised that unreasonableness is understood not only in the Wednesbury sense (i.e. a decision so unreasonable that “no reasonable person could have arrived at it”) but also in the expanded sense set out in Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 (Li) which proscribed decisions “lacking an evident and intelligible justification”. This is why Djokovic’s submissions reference ‘irrationality’ and ‘illogicality’ in addition to ‘unreasonableness’.

Rejecting the argument and finding that unreasonableness was one (but not the only) limitation on the exercise of the statutory discretion in question (at 58), the Court also had the opportunity to remind us that the “legal standard of reasonableness that applies to constrain the exercise of its statutory discretion is the standard indicated by the proper construction of the statute” (at 56). This is reflective of the statement in Li that decision-making authority “must be exercised according to law and to reason within limits set by the subject matter, scope and purpose of the statute” (at 90).

As the government enters another year of decision-making, a reflection on the law of unreasonableness as it stands in Australian jurisdictions gives decision makers impetus not only to avoid unreasonableness, irrationality and illogicality, but more positively, to ensure that decisions are underpinned by robust and rational justification.

Home truth 2: In making and recording decisions, substance can triumph over form

A perhaps less well-known home truth was noted by the court in Anglican Church Property Trust Diocese of Sydney v Camden Council [2021] NSWLEC 118 (Anglican Church Property Trust). The applicant attempted to prove that a condition imposing monetary contributions was invalid. One argument made was that the decision was faulty as the decision-making documents were silent on the statutory basis for imposing the contributions. The court rejected the argument, finding that a failure to state the source of statutory power in that case was insufficient to infer that the decision-maker was unaware of its power.

The court cited two recent cases in support. The first was Local Democracy Matters Incorporated v Infrastructure NSW [2019] NSWCA 65, where the court concluded that the lack of an express statement that an opinion had been formed – in that case as to ‘design excellence’ – did not mean that the opinion had not been formed. The second was Bellenger v Randwick City Council [2017] NSWLEC 1, where the court found that a lack of explicit reference to a section or a failure to recite the words of the section do not indicate that the decision-maker failed to consider the questions required by the section.

In both cases, the court looked to the substance, rather than the form, of the decision. This was in line with the third case cited by the court – Parramatta City Council v Hale (1982) 47 LGERA 319 (Hale). There, the court emphasised that “whether a particular inference should be drawn as to a person's or body's state of mind should be resolved by a consideration of the whole of the relevant evidence.”

Hale was also referred to in Feldkirchen Pty Ltd v Development Implementation Pty Ltd and Anor [2021] NSWLEC 116 (Feldkirchen). Similarly to Anglican Church Property Trust, the court in Feldkirchen was invited to infer that the council did not take a matter into consideration when making a decision relating to a modification. The argument was based on the absence of an explicit statement about the consideration. Citing Hale, the court looked at various indications in a modification assessment report demonstrating that the issue was considered, again in substance if not in form.

Continuing the theme, in Elimatta Pty Ltd v Read and Anor [2021] NSWLEC 75, the applicant attempted to mount an argument based on failure to provide procedural fairness. The applicant argued that the council “alluded to and acknowledged” its submission, but there was “no engagement with the substance of the submission”. The court, however, found that the council’s assessment report “read as a whole” and properly considered Elimatta’s objection. In making its decision, the court referred to Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259, which stated (at 291) that:

“[i]t is erroneous to adopt a narrow approach, combing through the words of the decision-maker with a fine appellate tooth-comb, against the prospect that a verbal slip will be found warranting the inference of an error of law.”

That substance can triumph over form does not mean that explicit references to decision-making criteria or sections of legislation should be avoided. On the contrary, trouble might be avoided if decisions are evidenced by clear, explicit references to critical sections, thresholds, and criteria.

Nevertheless, hand in hand with the requirement for underlying rationality of decision-making imported by the constraint of reasonableness, the ‘home truth’ in the cases above emphasise that at the heart of the ‘art’ of robust administrative decision making is real engagement with the substance of a decision, evidenced in documentation underpinning the decision.

Home truth 3: If you’re exercising power as a delegate, make sure you have a delegation

A simple ‘home truth’ is to make sure valid delegations are in place if you want to make a decision as a delegate. A reminder of this came in South East Forest Rescue Inc v Allied Natural Wood Exports Pty Ltd and Anor [2021] NSWLEC 89. There, development consent was purported to be granted by the council’s planning and sustainability manager. However, the power to grant consent was not delegated to that role.

Quite simply, it was on that basis that the decision was found to be invalid. The question of acting with proper delegation is particularly important as departments and agencies experience restructure in the wake of the adjustment in ministerial responsibilities at the end of 2021.

As movement occurs within government agencies and new responsibilities are added to an agency’s remit, it is important at the start of the year to consider whether the right delegations and authorisations are in place, and whether officers exercising powers as delegates are conscious of the source of their power to do so. 


Economic recovery from COVID-19 is likely to involve an increase in the volume and criticality of administrative decisions in 2022. We hope the cases above provide a timely reminder of some basic ‘home truths’ that, if followed, would benefit not only government decision makers, but the parties seeking or affected by the government’s actions.

Author: Thomas Kwok

Strengthening contracts for future lockdowns

Throughout 2020 and 2021, the COVID-19 pandemic lockdowns caused social, commercial and legal unpredictability. As a governmental response to potentially widespread harm, lockdowns may become more common. This need not only be for health reasons. Imagine the January 2020 NSW bushfires recurring ­–  evacuating and locking down large regions of the state may be required to free up emergency services and save lives, and there are many other possible lockdown scenarios.

When preparing new contracts, banking on further lockdowns seems reasonable with attention now – in 2022 – being given to what lockdowns later this year or in future years may throw up. The aim is a contract robust and malleable enough to deal with what a future lockdown event may present, which involves some prediction.

Prediction and good lawyering often work hand in glove – like lawyers advising clients on whether to terminate a contract by assessing how a court might one day view the decision. Other times, lawyers may need to predict if legislation will be introduced or amended, and so on. To be worthwhile, predictions will be based upon a lawyer’s experience ­– in this case, experience with the 2020 and 2021 lockdowns – and then integrated with a lawyer’s legal knowledge. Done properly, clients can make more confident decisions.

Dealing with future lockdowns and other catastrophes

Suggestions follow on improving contracts for future lockdown-type events. But what characterises a lockdown-type event? Features include:

  • governments imposing restrictions on what were previously standard commercial dealings – business as usual becomes suspended, shops and offices close, people remain home, manufacturing and transportation become difficult
  • demand for many goods and services flounders. Businesses lose revenue. Landlords, lenders and suppliers go unpaid. Many people have less work and less income, meaning their residential landlords and financiers and mortgagees go unpaid
  • with unsatisfied liabilities, legal dilemmas sprout. But those owed money cannot say, “I don’t care, I’ll end this contract and sue for damages!” Why not? For starters, these businesses likely have sympathy. Regardless, the legislation creating the lockdown event generally includes moratoriums against common enforcement options under common contracts. Also, those owed money often have their own liabilities and need money themselves to satisfy their creditors. Suing broke people, or tearing up agreements, does not turn into money.

In other words, one lesson from the 2020 and 2021 lockdowns was that simply ending contracts can be self-defeating. More realistically, because lockdowns are temporary, the success of a post-lockdown business requires things to resume, just like we’ve all been hibernating. Manufacturers will need orders from wholesalers. To place orders, wholesalers require demand from retailers and service providers. These retailers and service providers need leases for their shops and offices. Shops and offices require staff and employees. Employees will also be customers for other businesses working out of other shops and offices, etc. It’s all connected, and kind of like, well, a society.

This all suggests the benefit of giving time to reflect on the past two years of lockdowns and re-imagining some contract terms.

Re-negotiations and expert determinations

Lockdown legislation targeted certain contracts. Primarily, many retail and commercial landlords were prevented from enforcing leases without first undertaking a prescribed re-negotiation process. If successful, rent would be reduced for the lockdown, with the reduction being partly waived and partly deferred.

While compliance with the re-negotiation procedure became a pre-condition to enforcement, and re-negotiation guidelines were given (i.e. the ‘National Code’), if no agreement was reached, courts were not able to amend lease terms and judicially impose a re-negotiated position (see Sneakerboy Retail Pty Ltd trading as Sneakerboy v Georges Properties Pty Ltd (No 2) [2020] NSWSC 1141).

While the legislation provided the possibility of one party enforcing if the other did not properly participate in re-negotiation, there was uncertainty and stalemates occurred, and in some cases the stand-offs have continued to date.

Future lockdown legislation is unlikely to empower courts to impose re-negotiated terms. This is not because courts lack competence or expertise, but to avoid jamming courts or tribunals with cases. Not having a judicial circuit breaker also incentivises parties in reaching freely negotiated outcomes.

Given that parties often benefit in achieving contractual certainty via re-negotiation, what can be done? One improvement is including a contractual mechanism for breaking deadlocks with a binding determination on the re-negotiated position. For example, referral to binding expert determination, where an expert would be expressly required to determine the re-negotiated position. When drafting, care is needed so the clause is sufficiently generic to be triggered by future lockdown-type events, including those unrelated to COVID-19. Equally, the clause must be narrow enough to ensure the parties can benefit from any lockdown legislation before appointing an expert, otherwise, the clause may be unenforceable by contracting out of the legislation.

Termination for convenience and rescission

There may be justification for termination rights, such as for convenience during lockdown or giving rescission rights under exchanged but uncompleted contracts. Again, care is needed, most particularly in properly limiting when such rights can be exercised. These clauses may have some benefits, for example, assisting developers unable to progress building work to meet a deadline (where rescission is now notoriously difficult with prohibitive ‘sunset date’ legislation). Equally, a landlord or tenant may feel a lockdown has altered a commercial or retail market that the tenant’s current land use will no longer be viable. For example, an office tenant may need less space as people work from home, or a particular retail enterprise has been overtaken by online suppliers.

But there are risks. Terminating a contract for convenience may cause a party to breach another contract. For instance, a developer’s financier may have set pre-sale levels, or a landlord’s leases affect a building’s value and the landlord’s loan-to-value ratios. Also, terminating upstream – e.g. terminating a sale of land contract – can have downstream consequences, if for example, one party has ongoing liability to a builder.

Force majeure

Not long after the 2020 lockdowns commenced, force majeure clauses attracted attention, or more particularly, the absence of such clauses or their effectiveness in leases. Force majeure clauses, when triggered by specified events, suspend a party’s performance obligations. Sometimes if the causative event continues, termination is permitted.

Because force majeure clauses can have consequences normally prohibited by contracts – i.e. suspending payment obligations –triggering events  are carefully defined. The utility of a force majeure clause is to preserve a contractual relationship where matters outside the parties’ control have intervened. They are the best of the worst ­– it’s better to suspend performance of a mutually beneficial contract than destroy the agreement either by frustration or a party’s inability to perform.

Construction  and off-the-plan sale contracts often provide examples of force majeure. Take off-the-plan  sunset date extension clauses, allowing a vendor-developer further time to build apartments because of matters beyond its control. The clause’s rationale is that, in certain circumstances, it will be preferable to wait a bit longer for an apartment’s sale to complete, under than terminate or rescind.

When it comes to leases, the main type of contract affected by lockdowns, force majeure clauses have narrower roles. At best, commercial leases will suspend a tenant’s obligations if the premises are damaged in particular circumstances – for instance, if the landlord’s building, inside of which are the leased premises, catches fire. These clauses will not typically extend to relief where a tenant’s inability to trade is caused by ‘infectious diseases’ or ‘civil commotions’ or ‘government restrictions’. If a tenant wants protection for this, business risk insurance may be an option. Unfortunately (except for insurers), recent case law shows that such policies may exclude cover for lockdown-causing events (e.g. HDI Global Specialty SE v Wonkana No 3 Pty Ltd [2020] NSWCA 296).

Limited force majeure clauses

While there may be some benefit for force majeure clauses covering lockdown-causing events,   care is needed, and other approaches may be more beneficial. If a force majeure clause is included, it likely requires limitation. Some considerations include:

  • if legislative relief is available or mandated, such as rent moratoriums or government relief packages, this should exclude the operation of any force majeure clause
  • if legislation requires re-negotiation, a deadlock breaking mechanism, like expert determination, can be included where parties cannot agree on re-negotiated positions. This will avoid any need for force majeure
  • where legislation does not apply to a particular contract – including because of the tenant’s size or because of the contract falling outside of a legislative scheme – a force majeure clause may have a role. But again, limitations are sensible. Consider if the counterparty should instead be mandated to obtain insurance and if the counterparty’s corporate size means the counterparty should bear more of the commercial risk – a reason why lockdown laws excluded tenants earning more than a prescribed amount of revenue.

Sale of business contracts

Lockdown laws focus on leases, given their centrality to business life, and the tenant’s ongoing rent liability. Rent obligations must be satisfied from savings if the revenue-generating premises cannot open or can only trade in a government-imposed, demand-reduced market.

But other contracts are also affected, including business sale agreements. Often these contracts exchange with completion some months later. During this period, vendor obligations include trading in the ‘usual and ordinary course’. What happens if a lockdown-type event occurs during this period? A purchaser may wish to contend the vendor is not trading in the usual and ordinary course, and see lockdown as a means to terminate. Having no choice but to comply with the lockdown laws, the vendor will contend such compliance is trading in the usual and ordinary course. What to do?

Resolution depends on the contract’s terms and scope of what, in the particular contract, the phrase “in the usual and ordinary course” means. There are two broad candidates. First, does the ordinary and usual course reference businesses of a similar type (e.g. a car dealership in Sydney), and not just how the contract’s particular business operated? Secondly, and more narrowly, does the contract make the obligation specific to the actual business being sold, regardless of other similar businesses? If a vendor ran its car dealership this way in the past, then it must do so up to completion regardless of any lockdown. This very issue was recently considered by NSW’s Court of Appeal in Dyco Hotels Pty Ltd & Ors v Laundy Hotels (Quarry) Pty Ltd [2021] NSWCA 332. This decision also explains why frustration should generally be expected not to apply – lockdowns do not prevent the vendor from transferring the sale assets. The issue instead is how the business was to be conducted up to completion. If parties want to make ‘usual and ordinary’ broad enough so the effect of a lockdown will not affect completion, the clause should say so. This passes the business risk to the purchaser between exchange and completion – unlikely to be palatable.

The alternative is for the vendor being obliged to trade up to completion regardless of   lockdown restrictions, so the purchaser’s risk is only from completion. If the vendor cannot reasonably trade this way because of a lockdown (or anything else), the sale contract could allow a purchaser to delay completion. This was the practical consequence of the contract in Dyco (but for other reasons, the purchaser was able to terminate). Dyco is illustrative by showing the benefit in parties having their own agreement deal with this, by a clause to delay completion, rather than having a court make this finding.

Future contracting

The above points only sketch issues capable of improvements after the lockdown experiences. There are other areas that warrant attention, from notice provisions to guarantees to assignments. When the time for new contracts arrives, one benefit from 2020 and 2021 is that safeguards can now be added to agreements.

Responding to changes in discrimination and work health and safety laws in 2022

Recent changes to discrimination laws will impact government agencies and departments as the wider application of these laws result in potentially more claims and the importance for managers to proactively build a culture of tolerance and inclusiveness.

In late 2021, the most significant change was the Sex Discrimination and Fair Work (Respect at Work) Amendment Act 2021 (Respect at Work Act), which amended legislation including the Sex Discrimination Act 1984 (Cth) (SD Act) and the Fair Work Act 2009 (Cth) (FW Act).

This article will focus on the Respect at Work Act which commenced on 11 September 2021, including key steps government agencies and departments should take to ensure they have appropriately responded to the changes. We also outline the additional reforms to state and federal legislation regarding religious discrimination, which are likely to be passed this year.

Reforms to federal sexual harassment legislation  

The Respect at Work Act aims to combat the prevalence of sexual harassment in Australia by clarifying and simplifying sexual harassment laws and encouraging meaningful cultural change in workplaces. To achieve this, the Respect at Work Act introduces some of the recommendations made in the Australian Human Rights Commission (AHRC) report, ‘Respect@Work: A National Inquiry into Sexual Harassment in the Australian Workplace’.

Government agencies and departments have a positive obligation to prevent sexual harassment from occurring.

Major changes

The Respect at Work Act amends the FW Act, SD Act and the Australian Human Rights Commission Act 1986 (Cth) (AHRC Act). Major changes include:

  • compassionate leave for miscarriages
  • “stop sexual harassment orders” available in the Fair Work Commission (FWC)
  • section 28AA prohibits harassment on the grounds of sex under the SD Act
  • sexual harassment is a “valid reason” for dismissal under the FW Act.

Responding to the changes

In response to the commencement of the Respect at Work Act, government agencies and departments should review and refresh strategies to prevent sexual harassment. We outline some key steps below.

1. Review your workplace culture

An effective workplace culture is fundamental to preventing sexual harassment. As an employer, government agencies and departments need to understand their culture in order to create targeted strategies to prevent sexual harassment.

A culture founded on mutual respect and acceptable workplace behaviour is key to ensuring a safe workplace. Therefore, government agencies and departments should review and critically assess their culture. For example, they should observe how managers, supervisors and workers interact with each other. Other data sources such as exit interviews given by former staff and/or confidential workplace surveys may also shed light on workplace behaviour.

While overt forms of sexual harassment are easily identified, government agencies and departments should observe interactions between colleagues for more subtle forms of sexual harassment. More subtle sexual harassment, such as crude language or sexist remarks, can constitute either sexual harassment or harassment on the grounds of sex, which is prohibited under the new section 28AA in the SD Act).

The new section 28AA prohibiting “harassment on the grounds of sex" captures behaviour such as:

  • asking intrusive personal questions based on a person’s sex
  • making inappropriate comments and jokes to a person based on their sex
  • displaying images or materials that are sexist, misogynistic or misandrist.

Under the SD Act, a government agency or department, as an employer, can also be liable if they “cause, instruct, induce, aid or permit” another person to do an unlawful act of discrimination, including harassment on the grounds of sex or sexual harassment. The liability is broad and the agency must be able to demonstrate that they have implemented reasonable steps to prevent the harassment.

2. Create preventative strategies

The #MeToo movement has brought an organisation’s attitudes about sexual harassment into the public conversation. The focus on sexual harassment in Parliament House has brought this issue much closer to home for Australian government agencies and departments.

The way a government agency or department responds to and prevents sexual harassment can directly impact an agency or department’s reputation and the careers of public servants. As such, all government agencies should ensure they take a clear preventative position on sexual harassment and not just reactive. This approach includes taking steps to ensure everyone in the organisation clearly understands what constitutes sexual harassment and their responsibility to eliminate it. Importantly, managers should proactively implement steps in the strategy to seek out and eliminate harassment.

3. Update and review workplace policies

Government agencies and departments should review and identify gaps within workplace policies, and ensure these policies address the Respect at Work Act changes and meet existing statutory obligations and AHRC guidelines. As a best practice, policies should be reviewed yearly.

Government agencies and departments should review any:

  • appropriate workplace behaviour or sexual harassment policies to ensure they extend to “workers”, such as contractors, work experience trainees and volunteers
  • leave policies, which should include compassionate leave for miscarriages to allow full-time and part-time employees to take up to two days of paid leave (unpaid for casuals) if the employee, employee’s spouse or de facto partner has a miscarriage
  • grievance or disciplinary policies, which should clearly state that sexual harassment constitutes serious misconduct and is a valid reason for dismissal.

Government agencies and departments should also consider obtaining legal advice to ensure their policies meet all statutory obligations and guidelines.

4. Review reporting procedures

Government agencies and departments should ensure that reporting of sexual harassment is encouraged.

The AHRC’s 2018 survey found that only 17 per cent of people who experience sexual harassment report it to their employer. As the majority of sexual harassment cases are not reported, government agencies and departments should not take a lack of reporting at face value, but rather, they should critically reflect on sexual harassment reporting policies and practices.  

Government agencies and departments should ensure workers know how to report sexual harassment and are provided with a range of mechanisms to report unwanted conduct that will encourage greater reporting. They should also conduct training for those who might receive sexual harassment complaints. It is important that these individuals know how to correctly respond and provide support.

Any complaint of sexual harassment should be dealt with promptly, and government agencies and departments should ensure the worker is protected from victimisation, such as bullying or intimidation.

5. Educate and train

Training and educating all workers is a key component to prevent sexual harassment. Training should be provided to workers at all levels and in a form that all workers can understand. Government agencies and departments should consider running targeted training sessions based on a worker’s seniority and responsibility. As a best practice, training seminars should be compulsory and run once a year. 

6. Discharge your positive duty

During the development of the Respect at Work Act, a point of contention was whether the SD Act should be amended to include a positive duty on employers to take reasonable steps to eliminate sexual harassment in the workplace. The Labour and Green Senators raised this amendment during the Senate Debate, but the amendment failed after a 12-12 tied vote. The Federal Government explained that they would not introduce a positive duty because it already exists under the model Work Health and Safety Legislation (WHS Legislation).

Under WHS Legislation, government agencies and departments have a positive duty to eliminate the risk of sexual harassment, so far as reasonably practicable. If eliminating the risk of sexual harassment is not practical, they must minimise the risk so far as reasonably practicable. In January 2021, SafeWork Australia released a Preventing Workplace Sexual Harassment Guide to assist employers in meeting their obligations under WHS Legislation.

To satisfy a government agency or department’s safety duty, they must put in place control measures to eliminate or, if not possible, minimise the risk of sexual harassment. Therefore, they must implement higher order controls that eliminate or otherwise minimise the risk.

Control measures will differ depending on the nature of the business, its associated risks and any other relevant factors, and should be reviewed regularly. Some control measures may include:

  • reviewing the physical work environment, including the layout of the workspace and installing surveillance in common areas for safety and security
  • implementing policies which set out standards of behaviour and address any power imbalances
  • encourage reporting through policies, training and open dialogue
  • implementing training for all, including supervisors and managers.

Government agencies and departments should seek specific legal advice to identify the necessary control measures to help them meet their safety duty.

Proposed religious discrimination legislation

In addition to the Respect at Work Act, there are proposed changes to religious discrimination laws. In the federal jurisdiction, there is currently no explicit protection for religious discrimination or harassment. The Racial Discrimination Act 1975 (Cth) provides protection for a person’s “ethnic origin”, which has been used by courts to cover a person’s religion in certain circumstances. 

To address this gap, the Federal Government introduced the following three bills on 25 November 2021:

(together, Federal Religious Discrimination Bills).

The aim of the Religious Discrimination Bill 2021 is to prohibit discrimination on the grounds of religious belief or activity in key areas of public life, such as employment. The right to freedom of religion is intended to protect both those who have or adopt a religious belief and those who do not. At this point in time, it is unclear when or if the Federal Religious Discrimination Bills will be passed through the Senate.

Similarly, the Anti-Discrimination Amendment (Religious Freedoms and Equality) Bill 2020 (NSW Religious Discrimination Bill) has been proposed in NSW. A Joint Select Committee recommended that the Anti-Discrimination Act 1977 (NSW) (AD Act) be amended to prohibit discrimination on the grounds of religious belief or activity. The NSW Government released their response on 6 September 2021, stating that they are committed to amending the AD Act following the passage of the Religious Discrimination Bill 2021.

Government agencies and departments should consider pre-emptively reviewing their policies and practices and implementing cultural and religious sensitivities training in preparation for the introduction of the Federal Religious Discrimination Bills and the NSW Religious Discrimination Bill.

Given the evolving nature of discrimination law, government agencies and departments should ensure they appropriately respond to these amendments and update their policies and practices accordingly.

Authors: Michael Selinger, Jennifer van Bronswijk & Olivia Lawrence

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

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