May 2005
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In this edition:
Note: All hyperlinks below were correct at the time of publication. Generally, it is too onerous a task for us to check and update these and so if a hyperlink is no longer valid, please accept our apologies.
The Government has introduced a Bill to restore certainty for directors of corporate trustees following the decision of the SA Supreme Court in Hanel v O'Neill [2003] SASC 409. The Bill also makes a number of technical amendments to the auditor independence provisions in the Corporations Act 2001. A copy of the Corporations Amendment Bill (No. 1) 2005 and its explanatory memorandum can be viewed at:
The Government has released an exposure draft of Regulations setting out transitional arrangements to more closely aligning the timeframe for common fund disclosure with the new enhanced fee disclosure regulations introduced on 10 March 2005. For a copy of the proposed regulations and commentary, go to:
The Attorney-General has released the Privacy Commissioner’s report, Getting in on the Act: Review of the Private Sector Provisions of the Privacy Act, which makes a number of legislative reform recommendations. A copy of the report can be downloaded from:
http://www.privacy.gov.au/act/review/revreport.pdf
The Government has released an exposure draft of regulations to refine the meaning of "interdependency relationship" for the purposes of payment of superannuation death benefits. For a copy of the proposed regulations, go to:
http://www.treasury.gov.au/documents/978/PDF/Draft_SIS_regs.pdf
http://www.treasury.gov.au/documents/978/PDF/Draft_RSA_regs.pdf
http://www.treasury.gov.au/documents/978/PDF/Draft_IT_regs.pdf
ACCC has published a new small business guide to unconscionable conduct law. For a copy of the guide, go to:
Recruiting employers beware. Following enforcement action by ACCC, Wizard Home Loans has been ordered by the Federal Court to compensate a candidate for a mobile lending manager position after admitting that it had breached section 52 of the Trade Practices Act 1974 by making misleading representations to him in an employment interview about a level of commission that a good performing manager could expect to earn when there were no reasonable grounds for the representations. In addition Wizard has agreed to give a section 87B undertaking to the ACCC that it will not, for a 3 year period, make representations to any mobile lending manager candidate about the annual commission that a person may earn unless there are reasonable grounds, after considering: (1) the average annual commissions earned by mobile lending managers at that time; (2) the average annual commissions earned by mobile lending managers engaged in the geographical area where that mobile lending manager will be or is engaged; (3) the level of residential sales and sale prices in the geographical area where that mobile lending manager will be or is engaged; and (4) the number of mobile lending managers engaged at that time and to be engaged during the next 12 months in the same geographical area. See Media Release 110/05:
http://www.accc.gov.au/content/index.phtml/itemId/606963/fromItemId/2332
A shining example of good regulation. ACCC has extracted court enforceable undertakings from BAT and Philip Morris to remove 'light' and 'mild' descriptors and related numbers from all cigarettes produced for Australian consumers, not to make claims about the health benefits of low yield cigarettes when compared to high yield cigarettes and to pay $4 million each to the ACCC to fund anti-smoking information campaigns and programs concerning low yield cigarettes. ACCC argued that descriptors on cigarette brands and packaging such as 'light', 'mild', 'medium' etc effectively represented to consumers that there were health benefits in smoking those brands compared to higher yielding or full strength cigarette brands. In the ACCC's view, such health claims for low yield cigarettes were likely to have breached section 52 and other sections of the Trade Practices Act 1974, for reasons including the fact that it was generally known that smokers can, and do, compensate for claimed lower yields by smoking cigarettes in ways that obtain higher yields of tar, nicotine and carbon monoxide than indicated on the packets. See Media Release 119/05:
http://www.accc.gov.au/content/index.phtml/itemId/607418/fromItemId/2332
Liquorland has been penalised $4.75 million by the Federal Court after the company admitted that it entered into illegal agreements with a number of applicants for liquor licences for the substantial purpose of restricting and preventing those businesses from competing with its own Liquorland stores in the supply of takeaway liquor. Liquorland's offending conduct took the form of lodging objections to liquor licence applications and then proposing restrictive agreements in return for withdrawing the objections. See Media Release 135/05:
http://www.accc.gov.au/content/index.phtml/itemId/608909/fromItemId/2332
APRA has released a draft prudential standard and authorisation guidelines for providers of purchased payment facilities, a new class of authorised deposit-taking institution. The authorisation guidelines, prudential standard and accompanying discussion paper are available at:
http://www.apra.gov.au/Policy/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=8630
http://www.apra.gov.au/Policy/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=8631
http://www.apra.gov.au/RePEc/RePEcDocs/Archive/discussion_papers/dp0017.pdf
APRA has released draft prudential standards and a discussion paper outlining proposed governance arrangements for authorised deposit taking institutions, general insurers, life insurers and authorised non-operating holding companies. For a copy, go to:
http://www.apra.gov.au/Policy/Draft-Prudential-Standards-Governance.cfm
APRA has also issued a discussion paper on the prudential supervision of corporate groups which include a general insurer. For a copy, go to:
http://www.apra.gov.au/RePEc/RePEcDocs/Archive/discussion_papers/dp0018.pdf
ASIC has released details on the eight projects it is undertaking as part of the Federal Government's policy statement Refinements to Financial Services Regulation issued on 2 May 2005. See Information Release 05-22:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/21FF3FE6BD56732DCA256FFF0024BC66?opendocument
ASIC has issued Class Order 05/27 granting relief designed to promote the provision of tailored Financial Services Guides. The new class order relieves financial services providers from the need to comply in all situations with the additional remuneration disclosure requirements currently prescribed by the Corporations Regulations 2001. See Information Release 05-17:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/96EBF3AF66F89244CA256FF600189E24?opendocument
ASIC has updated ASIC policy statements PS 166 Licensing: Financial requirements, PS 167 Licensing: Discretionary powers, PS 168 Disclosure: Product disclosure statements (and other disclosure obligations), PS 169 Disclosure: Discretionary powers, PS 175 Licensing: Financial product advisers – Conduct and disclosure and PS 176 Licensing: Discretionary powers – wholesale foreign financial services providers. It has also issued two updated guidance papers entitled The Hawking Prohibitions and Licensing: The Scope of the Licensing Regime: Financial Product Advice and Dealing. They can be downloaded from:
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps166.pdf/$file/ps166.pdf
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps167.pdf/$file/ps167.pdf
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps168.pdf/$file/ps168.pdf
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps169.pdf/$file/ps169.pdf
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps175.pdf/$file/ps175.pdf
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ps176.pdf/$file/ps176.pdf
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/Hawking_Guide.pdf/$file/Hawking_Guide.pdf
ASIC has released an update report outlining decisions on recent applications for relief by financial service providers from the licensing, conduct, disclosure and managed investments provisions of the Corporations Act 2001. The report covers the period from 15 August to 31 December 2004 and provides an overview of the circumstances in which ASIC has exercised, or refused to exercise, its discretionary powers to grant relief from the financial services provisions under Chapter 7, and the managed investments provisions under Chapter 5C, of the Act. The report can be downloaded from:
ASIC has set new limits on the maximum value of small parcels that can be bought back under share buy-backs treated as equal access schemes. For companies with a market capitalisation of less than $1 billion, the new limits are: (a) $2,000 for shares to be bought back from each participating shareholder including the entire holding of participating shareholders whose holding is less than $2,000 (threshold parcel); and (b) $500 where a participating shareholder's remaining shares are worth less than $500 after the threshold parcel is bought back (residual parcel). For companies with a market capitalisation of more than $1 billion, the new limits are: (a) $5,000 for threshold parcels; and (b) $2,000 for residual parcels. See Information Release 05-18:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/54A37ACBDEC05BB6CA256FF90012DE8E?opendocument
ASIC has issued a new Class Order 05/26 Constitutional provisions about the consideration to acquire interests expanding the class order relief available to responsible entities of managed investment schemes allowing them to issue interests in a registered scheme at a discount. See Information Release 05-20:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/3B521A5000CB0400CA256FFE00136960?opendocument
ASIC has released a consultation paper seeking comment on its draft policy for approving a purpose that allows access to the register of members of a mutual entity such as a building society, credit union or credit society. A copy of the consultation paper can be viewed at:
ASIC has published answers to some regularly asked questions about the enhanced fee disclosure regulations made in March 2005. See Information Release 05-19:
http://www.asic.gov.au/asic/ASIC_PUB.NSF/byid/D2808AC87ED853B8CA256FFD000D3A2D?opendocument
ASIC has published a new booklet intended to help Australians to understand Super Choice. The booklet can be downloaded from:
ASX has published a review of Australian listed companies’ corporate governance practices following the introduction of the ASX Corporate Governance Council’s principles and best practice recommendations. The review is available at:
http://www.asx.com.au/supervision/pdf/Analysis_of_CG_practice_disclosure_May_16_2005.pdf
ASX has released a consultation document on proposed amendments to the ASX Warrant Rules. The proposed changes mostly relate to the approval criteria for warrant issuers and market making obligations. See Participant Circular 260/05 and attachment:
ASX has made miscellaneous amendments to the ASX Market Rules as part of its twice-yearly house-keeping of the Rules. The amendments mostly consist of typographical, formatting and other minor drafting amendments. See Participant Circular 258/05 and attachments:
Following a number of recent disciplinary proceedings in this area, SFE has issued a bulletin clarifying the procedural requirements related to the execution of pre-negotiated business orders. See SFE Bulletin 28/05:
http://www.sfe.com.au/content/bulletins/sfe/2005/sfe2005_028.pdf
SFE has launched a listed property trust futures contract, which is based upon the Dow Jones Australia LPT Index, cash settled, with two quarterly expiries available at all times. See SFE Bulletin 31/05:
http://www.sfe.com.au/content/bulletins/sfe/2005/sfe2005_031.pdf
The Federal Court has ruled that foreign-based websites must specifically target or be directed at Australian customers before the court will find liability or grant relief for claims of trade mark infringement or passing off. See Allens Arthur Robinson, Focus: Trade Marks – May 2005:
http://www.aar.com.au/pubs/pdf/ip/fotmmay05.pdf
For a general discussion of recent developments in employee relations law, see Allens Arthur Robinson, Focus: Workplace Relations – May 2005 and Blake Dawson Waldron, IR Bulletin - May 2005 (the latter has an interesting discussion of a case concerning that vexed question of whether a discretionary bonus forms part of the "rate of remuneration" in unfair dismissal proceedings under the Workplace Relations Act 1996):
http://www.aar.com.au/pubs/pdf/wr/fowrmay05.pdf
http://www.bdw.com.au/publications/ir/ir052005.pdf
For a summary of the NSW Workplace Surveillance Bill 2005, which further protects employees from workplace surveillance, see Blake Dawson Waldron, Privacy Update - May 2005:
http://www.bdw.com.au/publications/privacy/privacy052005.pdf
A recent decision by the Western Australian Industrial Relations Commission means that all Western Australian employees will now be entitled under a general order to certain redundancy entitlements (including severance pay) irrespective of whether they are employed under or subject to awards or industrial agreements. See Minter Ellison, New Severance Pay Entitlement for Redundant Workers in WA - 17 May 2005:
For a summary of the refinements to financial services regulation proposed by Treasury in its discussion paper issued at the commencement of the month (and referred to in our April edition of Inhouse Updates), see Blake Dawson Waldron, i-on-FSR - May 2005:
http://www.bdw.com.au/publications/i-on-fsr/i-on-FSR052005.pdf
Clayton Utz, Litigation & Dispute Resolution Insights - 31 May 2005 has an interesting piece on the discoverability of computer back-up tapes. See:
http://www.claytonutz.com/downloads/Backup%20tapes.pdf
Allens Arthur Robinson, Focus: Commercial Litigation – May 2005 discusses two recent decisions of the NSW Supreme Court, one holding a disclosure about potential settlement sums in an audit comfort letter sent from a law firm to an auditor, and the other holding that an expert report commissioned by a law firm on its own initiative about the cause of an accident, were not subject to legal professional privilege. It goes on to suggest some steps that should be taken to increase the prospect of attracting privilege for audit comfort letters and expert reports. See:
http://www.aar.com.au/pubs/pdf/ldr/foclmay05.pdf
For those interested in reading Rodney Adler's sentencing decision (R v Adler [2005] NSWSC 274), it can be viewed at:
http://cclsr.law.unimelb.edu.au/judgments/states/nsw/2005/april/2005nswsc274.htm
Bart Doff's appeal against his conviction for insider trading in Qantas shares and the Crown's appeal against the leniency of his sentence (350 hours of community service, a $30,000 fine and a $37,225.75 penalty under the Proceeds of Crime Act 2002) have both been rejected. A copy of the decision in R v Doff [2005] NSWCCA 119 can be viewed at:
http://cclsr.law.unimelb.edu.au/judgments/states/nsw/2005/april/2005nswcca119.htm
In ACCC v Gary Peer & Associates Pty Ltd [2005] FCA 404, the Federal Court found that an auction advertisement published by a real estate agent about a property stating "Price Guide $600,000 Buyers Should Inspect" was effectively a representation that the vendor would sell for not substantially more than $600,000 and was misleading on the facts (the vendor wanted $780,000+ and the agent believed that the property would in fact sell for $700,000+). Interestingly, the court declined to make an order sought by the ACCC requiring the agent to implement and maintain for 3 years a trade practices compliance program. Sundberg J noted that the "institution of the proceeding, its conduct, its outcome, including the findings of contravention, the making of the declarations and the costs order, will in my view sufficiently concentrate the minds of the respondent and its officers on the need in the future to avoid contravening conduct to make it unnecessary for a compliance program to be imposed on them". The decision can be viewed at:
http://cclsr.law.unimelb.edu.au/judgments/states/federal/2005/april/2005fca404.htm
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