Acumen June 2017

Acumen

acumen: noun – quickness of perception; keen insight.

A range of legal issues from April to June 2017 relevant to corporate counsel and senior executives, written by our senior practitioners.

 

Competition

  • Aggregation of knowledge: can the knowledge of several employees be aggregated and attributed to the company?
    In certain circumstances, knowledge of fraud by employees may be aggregated to determine culpability of a company where there is a duty and opportunity to communicate it to the other.
  • Final destination: High Court decides market ‘in Australia’ for the Air Cargo Cartel
    The High Court’s decision is the final (Australian) chapter in the long running Air Cargo Cartel matter.
  • Merger with benefits: Lessons from the Tabcorp/Tatts case
    The Australian Competition Tribunal has given competition approval for the $11bn merger of Tabcorp and Tatts.
  • ACCC’s electrical cartel zapped out by the Federal Court
    The Federal Court of Australia dismissed allegations brought by the ACCC against a cartel that the ACCC considered so serious that it, in consultation with the CDPP, deliberated prosecuting as a criminal action initially.read more

Employment

  • Recent changes to penalty rates and minimum wage rates in modern awards  
    Two recent decisions of the Fair Work Commission mean that employers, particularly in the retail and hospitality industries, should confirm their minimum rate obligations to employees.
  • Redundancy – NES relied on to interpret employment contracts
    As highlighted by a recent Full Bench decision of the WA AIRC (Spotless Group v Dennis Buckle [2017] WAIRC 00024), tribunals are prepared to refer to the National Employment Standards to resolve ambiguity in contracts.

Energy & resources

  • Approvals for CSG water treatment facilities in NSW
    We examine the key findings of Ward JA, who gave the leading judgment in the Supreme Court of NSW decision (with Meagher and Payne JJA agreeing with her Honour’s reasons) in People for the Plains Incorporated v Santos NSW (Eastern) Pty Ltd [2017] NSWCA 46.
  • Draft regulations and guideline for the Australian Domestic Gas Security Mechanism (ADGSM)
    The ADGSM ensures there is a sufficient supply of natural gas to meet Australia’s domestic demand; it allows the Minister to impose export controls on LNG projects where the Minister considers that such measure could increase gas supply to domestic consumers during periods of domestic gas shortfall.
  • Victorian Government legislation on hydraulic fracturing and coal seam gas extraction
    The Fracking Act bans the use of hydraulic fracturing as well as the exploration and extraction of coal seam gas (CSG) in Victoria and also places a moratorium on any onshore conventional gas extraction until 30 June 2020.
  • The ‘Powering Queensland Plan’ - Queensland’s attempt at solving the energy trilemma
    On 7 June 2017 the Queensland government announced its new ‘Powering Queensland Plan’, aimed at ensuring the affordability, security and sustainability of the supply of electricity in the state.
  • Development or production? Case note on Santos v Apache Northwest
    The Court of Appeal of the Western Australian Supreme Court delivered its judgment in Santos (BOL) Pty Ltd v Apache Northwest Pty Ltd (now known as Quadrant Northwest Pty Ltd) 2017 WASCA 101 on 6 June 2017.

Tax

  • Clarity without cohesion: the taxation of retail premiums in respect of rights issues
    More than a decade after the High Court of Australia handed down its decision in Commissioner of Taxation v McNeil, there is finally some certainty as to the taxation of retail premiums paid in respect of both renounceable and non-renounceable rights issues.
  • Chevron loses the latest instalment in its transfer pricing battle with the ATO
    The Full Federal Court of Australia handed down its decision in Chevron Australia Holdings Pty Ltd v Commissioner of Taxation [2017] FCAFC 62 (Chevron) on 21 April 2017. The decision was keenly anticipated. Chevron represents the first occasion on which the Courts have considered the application of Australia’s transfer pricing rules to related party borrowings. 
  • New PRioRTies? Final report on the design and operation of the Petroleum Resource Rent Tax
    On 30 November 2016, the Australian Government announced it would conduct a review, chaired by former Treasury officer, Mike Callaghan, into the design and operation of the Petroleum Resource Rent Tax (PRRT) to “help better protect Australia’s revenue base and ensure that companies are paying the right amount of tax” (Callaghan Review).
  • Acumen Federal Budget Special Edition 2017
    This special edition of Acumen discusses the key taxation reforms for business announced on the evening of 9 May 2017 by Treasurer Scott Morrison in the 2017 Australian Federal Budget.

Foreign Bribery

  • Foreign Bribery Update - April 2017
    This Update covers a range of important developments in Australia and overseas in the area of foreign bribery policy, investigations and regulation to 1 April 2017.

Restructuring & insolvency

  • PPS leases get another makeover
    The Personal Property Securities Act 2009 (Cth) applies to security interests in personal property including, but not limited to leases that “in substance” secure the payment or performance of an obligation; and the interest of a lessor of goods under a “PPS lease”, regardless of whether the interest secures the payment or performance of an obligation.
  • In the matter of Boart Longyear Limited
    Justice Black in In the matter of Boart Longyear Limited [2017] NSWSC 537 has confirmed that section 411(16) of the Corporations Act 2011 (Cth) (the Act), can be used to provide companies proposing schemes of arrangement with appropriate protections from its creditors in a form that can be recognised under Chapter 15 of the US Bankruptcy Code.
  • What to do when ASIC comes knocking: failure by liquidators to lodge public notifications and other documents
    As you may recall, in 2013 ASIC wrote to all liquidators to announce the commencement of an industry-wide project to test all registered liquidators’ compliance with the requirement to publish certain notices on ASIC’s “published notices website” and to lodge forms with ASIC. ASIC refers to this initiative as the “PNW Project”.
  • PPSR registration – Route [1]66 now closed
    The New South Wales Supreme Court has found that a secured party cannot rely on its own mistake when registering on the Personal Property Securities Register to claim that the defective registration “temporarily perfects” its security interest.
  • High Court upholds constitutionality of s596A mandatory examinations
    The High Court’s decision in Palmer v Ayres; Ferguson v Ayres [2017] HCA 5 is a reassurance to administrators and liquidators that section 596A mandatory examinations remain a legitimate tool for investigating the affairs of a company in administration or liquidation.
  • Linc Energy Ltd (In Liq): Liquidators obliged to give State environmental laws priority despite disclaimer
    The Supreme Court of Queensland has delivered a significant judgement concerning the obligations of liquidators to cause an insolvent company to incur the costs of complying with State environmental laws, in priority to other unsecured creditors.
  • Reforms for restructures
    The Australian Federal Government has released the Exposure Draft for the much anticipated introduction of a safe harbour for company directors from personal liability for insolvent trading; and a stay on the enforcement of ipso facto clauses in limited circumstances.
  • Pari Passu now the norm in trust distributions
    Section 433 of the Corporations Act 2001 (Cth) concerns the payment to employees as priority creditors by a receiver from the assets subject to a circulating security interest. This provision in large part mirrors the payment waterfall contained in section 556 that applies in a winding-up.
  • Options and risks: Extending time for commencing or serving proceedings
    There are a number of reasons why liquidators might want to slow things down when it comes to commencing or prosecuting proceedings. A liquidator might want more time to fully investigate certain claims or secure appropriate funding before incurring substantial costs or adverse costs exposure. While there are options available to liquidators looking to delay either the commencement or service of a particular proceeding, each comes with its own risks.
  • To Have and to Hold
    The recent decision of the Supreme Court of Western Australia in Mighty River International Ltd v Hughes & Bredenkamp [2017] WASC 69 (Mighty River v Hughes) has confirmed the legality and the utility of ‘holding’ deeds of company arrangement (colloquially referred to as ‘Holding DOCAs’).

Investment Funds

  • AFS licensing exemption under the FFSP Class Orders - reporting and disclosure requirements  
    Foreign financial service providers (FFSPs), that provide financial services to wholesale clients in Australia relying on one of the FFSP Class Order exemptions from holding an Australian financial service licence (AFSL), should note the recent enforceable undertakings (EUs) that the Australian Securities & Investments Commission (ASIC) issued to three Barclays FFSPs. 

Corporate Governance

  • 2016 AGM Season Survey Results
    At the conclusion of the 2016 AGM season, we conducted our annual survey of remuneration report voting for S&P/ASX 100 entities. First strikes were at an unprecedented level for S&P/ASX 100 remuneration reports – 7 strikes, compared to 4 in 2015.

Projects & construction

  • Three important proposals for projects in Queensland
    The Queensland State government has published particulars of three important proposals which will affect projects in Queensland, including new arrangements for Financial Assurance (environmental security bonds); rehabilitation reforms; Cultural Heritage guidelines.

Dispute resolution

Enforcing royalty payments while in dispute – Part II

The recent Western Australian Supreme Court of Appeal case of Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 is another decision in the long running litigation between Clive Palmer’s Mineralogy Pty Ltd (Mineralogy) and CITIC Ltd (CITIC).

This article follows on from our previous piece entitled “Enforcing royalty payments while in dispute”, in which we considered the findings of the Western Australian Court of Appeal in Sino Iron Pty Ltd v Mineralogy Pty Ltd [2016] WASCA 105.

Changes to subpoenas in WA

On 7 June 2017, amendments introduced by the Supreme Court Amendment (Subpoenas) Rules 2017 (WA) came into force (Amendments). The Amendments have resulted in a reorganisation of the subpoena regime under the Rules of the Supreme Court 1971 (WA) (Rules), which clarifies and simplifies aspects of the process. Corresponding changes have also been made to the Supreme Court of Western Australia’s Consolidated Practice Directions (Practice Directions).

Calls on bank guarantees and enforcement of arbitration agreements

A recent decision of the Supreme Court of Western Australia has applied the important legal principles regarding calls on performance security and enforcement of arbitration clauses under construction contracts.

Federal Court approves class action settlement despite funder’s “exorbitant” commission rate

Justice Wigney in the Federal Court has added to a recent line of judgments concerning class action settlement approvals. Although the decision, HFPS Pty Limited (Trustee) v Tamaya Resources Limited (In Liq) (No 3) [2017] FCA 650, does not develop the law to the extent of the 2016 decisions of Money Max (as to common fund orders) and Newcrest (as to reduction of funders’ commissions), there are still a number of points of interest.  

Regulatory

Australian Energy Regulator v Australian Competition Tribunal (Ausgrid decisions)

On 24 May 2017, the Full Federal Court handed down its decisions regarding the NSW/ACT electricity price determinations for 2016-2019 and the Jemena Gas Networks (NSW) access arrangement decision for 2015-2020. The AER had sought judicial review of the Australian Competition Tribunal’s February 2016 decisions in favour of the networks on the following issues...

Foreign investment

  • Transparency on the beneficial ownership of companies
    In February 2017, the Australian Government released a consultation paper titled ‘Increasing Transparency of the Beneficial Ownership of Companies’ (Consultation Paper) to explore the potential to implement a beneficial ownership register for companies. The consultation was in response efforts by the G20 and related bodies to combat money laundering, the financing of terrorism and tax evasion.
  • ATO to provide guidance for new financial reporting requirements of significant global entities
    As part of a wider effort to combat corporate tax avoidance and improve the transparency of multinational companies’ financial affairs, in late 2015 the Australian Parliament amended existing Australian tax legislation to require significant global entities (SGE), or their Australian subsidiaries or branch offices, to prepare and lodge general purpose financial statements (GPFS) with the Australian Taxation Office (ATO).
  • Continuous Disclosure Shareholder Class Actions in Australia
    Shareholder class actions for alleged breaches of a listed company’s continuous disclosure obligations are an established part of the Australian legal landscape with more than 50 shareholder class actions being commenced since 1999.
Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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