The Newly Introduced Small Business Restructuring (SBR) Provisions

The small business restructuring (SBR) provisions within the Corporations Act (“the Act”),[1] introduced 1 January 2021, have provided a gateway to ease pressure on small businesses facing creditor issues amid the COVID-19 pandemic. The provisions allow a company to engage a small business restructuring practitioner (SBRP) to assist with the creation of a restructuring plan to propose to creditors. The purpose of the plan is to allow the company to trade forward while avoiding the costs associated with a formal company administration or liquidation, but while maximising payouts to creditors.

Eligibility Criteria

An SBR Practitioner can be appointed upon application by the business in satisfaction of the following qualifying criteria:

  1. Any other requisite test for eligibility in relation to liabilities is satisfied (i.e. total liabilities upon entering the SBR process equal less than $1m)[2];
  2. No person appointed as director of the company within the preceding 12 months have been subject to other restructuring or simple liquidation processes (or some other prescribed period); and
  3. The company has not been under a restructuring or simplified liquidation process for the preceding 7 years,[3] or for a time as prescribed by the regulations. 

The Small Business Restructuring Practitioner

The role of the SBR Practitioner is to provide advice on the restructuring and related matters of the company; is to assist in preparing a restructuring plan; compile and make a declaration to the company’s creditors on the plan; and any other adjoining functions.[4]

There is a positive duty on directors of a company subject to an SBR plan to assist the SBR Practitioner.[5] The director must provide the SBR Practitioner with all information and books and records as required to assist the SBR Practitioner in their role, regardless of who is in possession of such records (i.e. company accountants, solicitors, etc).[6]

What Can My Business Do Under SBR?

The SBR provisions allow for a ‘debtor-in-control’ model, meaning the company officers maintain full control over the trading and affairs of the company during the restructuring. However, the director in control of the company’s affairs may only continue to trade in matters that are considered the ‘ordinary course of the company’s business.[7] Whilst a business is under the SBR process, they may seek adjournments or cease any current or future legal proceedings in relation to the debts of the company.

Transactions that may not be considered in the ordinary course of business must then be consented to by the SBR Practitioner, or by order of the Court, and are otherwise considered a breach of the Act by the director.

Recent Case Study: Re Dessco Pty Ltd [2021] VSC 94

In the recent Victorian matter of Re Dessco Pty Ltd, a petitioning creditor filed a wind-up application against Dessco Pty Ltd (“Dessco”) for failure to comply with a statutory demand in the amount of $81,748.29 (excl interest). Descco’s board of directors resolved to appoint a SBR Practitioner on 15 February 2021, and sought an adjournment of the wind-up proceedings for 50 days.

The appointment of the SBR Practitioner and adjournment was opposed by the petitioning creditor, based on three key arguments:

  1. The company’s liabilities exceeded the $1m threshold;
  2. As a substantial creditor of the company, the proposed plan was rejected; and
  3. The appointment was not in the interest of creditors due to the late stage of wind-up proceedings.

In consideration of the above points, the Court found company liabilities to total $750,592 (discounting the total claim by the petitioning creditor). Further, such a plan could not be rejected as the petitioning creditor was not yet provided with a restructuring proposal statement and declaration. Finally, a 5c/$ return to creditors was sufficient for the purposes of restructuring, as opposed to a costly liquidation model diminishing creditor returns. His Honour Irving JR, relevantly found these factors to be satisfactory on the basis that it was a ‘sufficient possibility as distinct from mere optimistic speculation’.

Ultimately, the court allowed the adjournment of proceedings and the appointment of the SBR Practitioner. The basis of the finding being that the process would not diminish creditor returns as posed by the petitioning creditor.

Given the success of the SBR plan as a way to avoid liquidation, it can be reasonably speculated that in future decisions, disputes will be brought forward by creditors to determine which is the option of greater value to creditors – a wind-up or SBR. Watch this space!

How Do I Enter the SBR Process?

For a company to enter the SBR process, the company’s board of directors must pass a resolution deeming that the company is, or is likely to be insolvent and that a SBR Practitioner should be appointed.[8] Once these resolutions are passed, and the eligibility criteria is satisfied, an SBR Practitioner can be engaged to commence the company restructuring.

We’re here to help.

If you think the SBR process is appropriate for your business, contact our litigation lawyers now for tailored assistance and advice regarding the next steps. We can help by representing you through the restructuring process and by referring your restructuring request to a qualified practitioner.

[1] Corporations Act 2001 (Cth) Part 5.3B.
[2] Corporations Regulations 2001 (Cth) Reg 5.3B.03(1).
[3] Ibid Reg 5.3B.03(3).
[4] Corporations Act (n 1) s 453E.
[5] Ibid s 453F.
[6] Ibid s 453G.
[7] Ibid s 453L(2)(a).
[8] Ibid s 453B(1)(b)




Security for Costs in NSW: Balancing Justice Between the Parties

To minimise the risk of substantial collateral financial loss, the court, on evidence of a plaintiff’s impecuniosity, may make an order that the plaintiff pay money into court as security. In the event that the plaintiff is unsuccessful in its case and is ultimately ordered to pay the defendant’s costs, the defendant may recover its costs from those monies ordered as security – this court process is referred to as security for costs.

While potential litigants should not be discouraged from seeking justice through the legal system, what happens when a plaintiff is unsuccessful in their claim but cannot pay the costs of a defendant that has been put to the substantial expense of successfully defending proceedings?

Power to order security for costs

In NSW, security for costs applications are largely governed by regulation 42.21 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”). Regulation 42.21(1)(d) of the UCPR states that if in any proceedings, it appears on the application of the defendant that the plaintiff will be unable to pay the defendant’s costs if so ordered, the court may order the plaintiff to give such security it thinks fit, in such manner as it directs, for the defendant’s costs of the proceedings. The court may also order that the proceedings be stayed until such time that the security is given.

The court has additional discretionary power to order security for costs if the plaintiff is a corporation. Pursuant to section 1335(1) of the Corporations Act 2001 (Cth), where a corporation is plaintiff in any action or other legal proceeding, the court may require sufficient security be paid into court where there is reason to believe that the corporation will be unable to pay the costs of the defendant, if for example, the plaintiff’s claim is not successful.

Unlike the Local and District Courts, the Supreme Court of NSW also has inherent jurisdiction to regulate court’s procedures to prevent abuses of process – this extends to the making of orders for security for costs.

What will the court consider when making an order for security for costs? 

The court’s power to make an order for security for costs is discretionary and involves considering all relevant circumstances so as to strike a balance between protecting a defendant while avoiding the ‘stifling’ of a plaintiff’s reasonable access to prosecute a claim. 

A non-exhaustive list of relevant factors the court can consider is set out in regulation 42.21(1A) of the UCPR. The common factors are summarised in the table below:

The prospects of success or merits of the proceedings

If the plaintiff’s claim discloses a cause of action and has reasonable prospects of success, the court will generally not make an order for security of costs.

The genuineness of the proceedings

The court may consider the plaintiff’s motivation in commencing proceedings including whether the plaintiff’s claim is bona fide or vexatious.

The impecuniosity of the plaintiff

The threshold factor that ‘triggers’ the court’s discretionary power is whether there is proof of the plaintiff’s unsatisfactory financial position. Mere speculation that a plaintiff is insolvent or experiencing financial difficulties is not sufficient: Warren Mitchell Pty Ltd v Australian Maritime Officers’ Union (1993) 12 ACSR 1.   

Whether the plaintiff’s impecuniosity is attributable to the defendant

A plaintiff may very well be impecunious because of or for reasons including the defendant’s conduct. The court should decline to make an order for security for costs, where the litigation may

Whether the plaintiff is effectively in position of the defendant

The court will not ordinarily make an order for security where a plaintiff has been forced to commence litigation in order to defend themselves.

Whether the plaintiff ordinarily resides outside of the jurisdiction

There may be difficulties in enforcing an adverse costs order against a plaintiff that ordinarily resides outside of the jurisdiction.

How can I apply for security for costs?

An application for security for costs should be made by notice of motion filed by the defendant and should be supported by credible testimony of the plaintiff’s impecuniosity. While applications should be brought as early as possible in proceedings (and this is a factor the court can consider) the Supreme Court of NSW in Idoport Pty Ltd v National Australia Bank [2001] NSWSC 744 noted at [70] that delay “does not necessarily render the application fatal”.

How is the amount of security calculated?

The amount of security fixed by the court is calculated by reference to the amount the defendant is likely to recover in a cost order at the end of the proceedings. Ideally, an estimate will be provided by a costs assessor or an experienced solicitor. The assessment of the requested amount can take into consideration the defendant’s costs for any relevant steps to conclude proceedings, including obtaining witness statements, issuing subpoenas and briefing counsel for hearing.

The court made an order for security for costs – what next?

If the court has made an order for security for costs, the proceedings are generally stayed until the plaintiff complies with the order and makes payment of the security. The security does not necessarily have to be payment of money into court and can, subject to court orders, include bank bonds or be placed into a joint bank account in the name of the parties’ solicitors.

Where the plaintiff fails to comply with an order for security for costs, regulation 42.21(3) of the UCPR allows the court to dismiss the plaintiff’s claim.

We’re here to help.

If you are a defendant to a proceeding and are concerned that the plaintiff may not be able to pay your costs, or if you require any advice on responding to a security for costs application, please contact our experienced litigation lawyers now.


For Dreamworld, the nightmare continues!

Work Health and Safety Prosecutions- Dreamworld Litigation Case

Work Health and Safety Prosecutions

The recent announcement of charges being laid against Ardent Leisure Ltd, the operator of Dreamworld is a reminder of the consequences of injury and deaths in the workplace, and the failure to have and maintain safe systems of work.

Queensland Work Health and Safety Prosecutor has filed three charges against Ardent Leisure in the Magistrates Court, alleging the company breached the QLD Work Health and Safety Act (2011) (WHSA).

All three charges attract a maximum penalty of $1.5 million.

The prosecution arises from the 2016 Thunder River Rapids Ride tragedy, when the lives of four people were lost when the ride malfunctioned.
In a coronial inquest which followed, the findings of the coroner were damning of the operators:

Coroner James McDougall found the ride was clearly unsafe and “shoddy” record keeping was also to blame, and stated,

“It is clear from the expert evidence that at the time of the incident, the design and construction of the TRRR at the conveyor and unload area posed a significant risk to the health and safety of patrons,” said McDougall.
“This general ignorance of proper safety and adequate assessments was a recurring theme throughout Dreamworld in many of the Departments and reflects a systemic failure to ensure the safety of patrons and staff by the use of a proper safety management system, with the necessary engineering oversight of high- risk plant.”

Under the WHSA, there is a clear and non-delegable duty upon persons carrying on a business or undertaking (PCBU) to ensure the safety of their workplaces for workers and invitees.

This duty includes:
• Having proper and adequate maintenance systems in place
• Actual implementation and use of those systems
• Proper procedures for training of staff
• Keeping accurate and complete records of maintenance and training
• Conducting safety audits and assessments on a regular basis appropriate to the risk,
• Ensuring the design or layout of any operating plant and equipment is safe for users
• Compliance with specific codes
A breach of the duty can result is significant penalties.

The WHS Act provides for the following maximum penalties:

Work Health and Safety Act Maximum Penalties Table

It is an offence for a PCBU or a senior officer to negligently cause the death of a worker.

Where a PCBU or a senior officer is found to have committed industrial manslaughter, a maximum penalty of 20 years’ imprisonment applies for an individual applies, or a fine of up to $10 million for a body corporate.

Categories of offences

The three categories of offences for failing to comply with a WHS duty reflect different degrees of seriousness or culpability.

Category 1 – the most serious breaches, where a duty holder recklessly exposes a person to the risk of death or serious injury.

Category 2 – failure to comply with a health and safety duty that exposes a person to risk of death, serious injury or illness.

Category 3 – failure to comply with a health and safety duty.

The magnitude and seriousness of these penalties should leave no doubt that breaches of the duty can seriously impact upon an employer, and proper regard needs to be had for compliance.

If you conduct a business or undertaking, and have a workplace injury or death, and want legal advice or assistance, please contact us.

Related: What is the role of a litigation lawyer?

Hand sanitiser- not just protection from COVID-19


As restrictions ease and businesses begin to re-open around Australia it is important for business owners to be aware of their obligations to eliminate or as far as possible minimise the risk of their employees, customers and other invitees (such as salespeople, suppliers or service providers) contracting COVID-19 while on their business premises.

As an employer a business owner must comply with their obligations under relevant Workplace Health & Safety legislation such as the model laws that have been implemented in most Australian jurisdictions. These laws impose duties on business owners to protect workers and invitees and if breached can lead to a fine of up to $600,000 and 5 years in jail for an individual or a fine of $3 million for a corporation, depending on the extent of the breach of duty. The severity of the offence increases if the breach of duty causes a person to be exposed to risk of death or serious injury or illness.

More generally a worker or invitee may have a claim for damages in negligence against a business owner who does not act reasonably. While initially a common law action negligence has more recently been enshrined in legislation such as the Queensland Civil Liability Act 2003. In both instances the elements that are required to succeed in a claim of negligence are:
• a person (the defendant) owed a duty of care to the injured party (the plaintiff)
• the defendant breached the duty of care
• the breach caused harm or injury to the plaintiff
In respect of the breach of duty the plaintiff must prove that:
• the risk was foreseeable, or ought reasonably to have been known by the defendant
• the risk was not insignificant
• a reasonable person in the position of the defendant would have taken precautions
In the context of COVID-19, given the widespread publicity about the risk of serious illness or death (particularly for vulnerable persons) and the ease of transmission of novel coronavirus, it would be extremely difficult if not impossible for a defendant to argue that the risk was either unforeseeable or insignificant.

In order to overcome the litigation risks brought about by COVID-19 business owners should ensure they adopt an industry approved COVID-safe plan and at the very least introduce policies and procedures that require all persons attending the business premises to practise physical distancing and good hygiene. Physical distancing should reflect government guidelines – 4 square metres per person and 1.5 metres between people – while good hygiene can be achieved by ensuring access to adequate and well-stocked hygiene facilities such as hand sanitisers. More than just a defence to contracting COVID-19 hand sanitiser may ultimately protect business owners from legal liability.

Not a Director-but Are You a Company Officer?

Serious man managing director of big prosperous company is holding touch pad

There are many instances of statutory duties and liabilities being imposed personally on company directors and officers under current legislation.
These duties apply across an ever- widening range of legislation and activities from workplaces to finance, environmental to consumer affairs.

The imposition of such liability on directors has always been readily accepted and understood, but the casting of the net over influence wielding third parties such as managers and advisers, consultants, contractors and others has long been problematical.

More than a director

The recent unanimous High Court decision of Australian Securities & Investments Commission v King and Anor indicates a potentially broader view and clarification of the category of persons who will be regarded at law as company officers.

Mr King was a CEO and executive director of a publicly listed parent company, MFS Pty Ltd.
There were many companies under the umbrella of the parent company, including, MFS Investment Management Pty Ltd (MFSIM), which was the responsible entity of a managed investment scheme, The Premium Income Fund (Fund).

MFSIM used $130M of a loan of almost $200M from RBS to itself to pay down some debts of MFS, without any contractual or legal obligation, without any consideration or basis of doing so. When MFS subsequently went into liquidation, the Fund suffered the loss of the monies used to pay the MFS debts.

The role of Mr King and others was the basis of the ASIC investigation and prosecution and ASIC contended that the payment of the $130 million to pay the debts of MFS amounted to a misappropriation of funds from the Fund.
Mr King, although a director of the Parent Company, was not a director of MFSIM.

ASIC alleged that Mr King, as an “officer” of a responsible entity (MFSIM) of a registered scheme (the Fund), he had not acted honestly, or with a degree of care and diligence, or in the best interests of the members of the Fund had breached s.601FD(1)(e) and (f) of the Corporations Act which requires an officer of a responsible entity to a registered scheme to act honestly, with care and diligence, and in the best interests of members of the scheme.

In the structure of the MFS Group, the Fund was a registered scheme, and MFSIM was its responsible entity.

Part (b) of the definition of “officer” in S. 9 of the Corporations Act defines “officer” as including a person:
i. Who makes or participates in making decisions that affect the whole … of the business of the corporation;
ii. Who has the capacity to affect significantly the corporation’s financial standing; or
iii. In accordance with whose instructions or wishes, the directors of the corporation are accustomed to act.

Mr King’s influence
The evidence at trial indicated that Mr King, whilst not a director of the Fund in fact wielded a great degree of influence over it by:
• regularly giving directions to and initiating steps by MFSIM
• Having an executive director of MFSIM, report directly and frequently to himself in the performance of his own role in MFSIM, and he customarily acted in accordance with Mr King’s instructions and wishes.
• Having a decisive influence over the steps taken by MFSIM,

An objective question of the degree of influence
The High Court found that the question of whether a person was an officer within the meaning of the Corporations Act, is an objective one, both of fact and of degree, and depends upon the level of influence which the person has over the affairs and running of a company. Merely having an influence over company decisions will not necessarily make a person an “officer”, and more was needed to establish the position.

The significance of the decision lies in its opening up of the potential for an increased class of third parties as falling within the definition of “officer” and the consequential liability in any particular instance that would follow such a finding.

For any concerns you may have on this issue, please contact us:

Oops-An $8Million dollar mistake! Rectification for Unilateral Mistake

Rectification for Unilateral Mistake

It often happens that in preparing a legal document, there is an error in drafting which does not reflect the true intention of the parties. In most cases, the error is not significant, and can be quickly and easily rectified by mutual agreement in a simple document and at little cost. In some cases, there needs to be an application to the courts based on the equitable principles of rectification.

In Benaroon Pty Ltd v Larmar & Ors [2020] QCA, the mistake was a failure to include a beneficiary in a trust deed and the consequences were a potential tax liability of some $8Million dollars. Benaroon was the trustee of a family trust (LFT).

Mr Larmar, an accountant and the director of Benaroon, the trustee appellant had caused a family trust to be created in 1977.

The trust deed contained an error in drafting by the omission of the name of Mr Larmar, the director himself and his then wife as beneficiaries. It followed that neither of his 2 wives could be a “spouse of a beneficiary” but all of them had received distributions from the trust fund.

There was evidence that an incorrect precedent trust deed document had been used, but unfortunately, it omitted the relevant name of the director Mr Larmar as a beneficiary.

Benaroon sought a rectification of the trust deed 40 years after operation of the trust to include a beneficiary (the director and his then wife) on the basis that the trust deed (and its practical effect) did not conform with the actual intention of the directors.
The primary judge dismissed an application for rectification of the trust, finding that the evidence before the Court failed to provide clear and convincing evidence as to the trustee’s intention when the trust was created.

The key difficulty sought to be overcome by seeking rectification was the rather unfortunate fact that the Australian Taxation Office took the view, after an audit, that the second wife would be entitled to a tax refund if not a beneficiary of the LFT, but would have a tax liability of nearly $8 million if she is a beneficiary.

In order that the trust deed be rectified, Benaroon was required to meet the following criteria referred to in Public Trustee v Smith:

“… there must be clear and convincing evidence that at the time the trust deed was executed the trustee and the settlor had an actual intention as to the effect which the deed was intended to create which was different from the effect which the instrument did have in a clearly identified way. It must be demonstrated with clarity that the parties had a sufficiently precise intention that the court can determine both the substance and the detail of the precise variation to be made to the wording of the instrument.”

The Court of Appeal dismissed the appeal, and found no error in the primary judge’s finding that there was insufficient evidence to support the relief sought. In particular that:

• The director, Mr Larmar sought his then wife’s agreement prior to establishing the trust,
• had taken the document home and discussed it with her,
• there was no evidence of any intention based upon discussion as to the beneficiaries
• no clear and convincing evidence about Suzanne Larmar’s intention concerning who would benefit from capital and who would benefit from income, that is, which names should appear in the second and third schedules
• Mr Larmar has not sworn that he realised the deed executed was not the correct precedent trust deed, and intended the parties to be bound by any, and if so which, provisions in the deed actually executed.

Phillippides JA (with whom Morrison JA and Fraser JA agreed) concluded that:
“the function of the rectification jurisdiction, …is to reform the instrument so that it accords with the relevant intention, not to redraft it into a form it might have taken had the parties thought more about it at the time it was executed.”

The decision seems harsh in the circumstances, (and in its consequence) but it does demonstrate the onus lies on a party seeking rectification to present clear and cogent evidence that it was a mistake made at the time which contrary to the true intention of the parties to invoke the jurisdiction of the Court. It also demonstrates the risk associated in using precedent documents without reading them to ensure they accord with intention. Asking a court to “redraft” a document because of an unpleasant consequence (such as a large tax bill) without clear evidence of original intention and true unilateral mistake may result in failure to persuade a court to rectify the document.

If you have any concerns or questions about rectification of any documents, please contact us.

Litigation in Liquidation: What Do Courts Look at When Granting Leave to Proceed Against a Company in Liquidation

Litigation in liquidation

Litigation may be commenced for various cause of actions. However, it is important to firstly establish that the defendant has legal standing to be pursued.

Section 471B of the Corporations Act 2001 (Cth) (the Act) specifies that while a company is being wound up by the Court, or by a provisional liquidator, a person cannot commence proceedings against the company except with the leave of the Court.

The purpose of this section is to reduce complications associated with the liquidation process and to ensure that funds are not being siphoned from potential dividends to creditors to fund legal battles. Notwithstanding, section 471C of the Act stipulates that if the creditor is secured, by way of real property or otherwise, then section 471B will not affect a creditor’s right to realise or otherwise deal with that security interest.

The Court in Ogilvie-Grant & Anor v East (1983) 7 ACLR 669 noted the process available to creditors was lodging a ‘Proof of Debt’ to identify and attempt to recover its debt via any liquidation dividend. Creditors may appeal to the Court if the ‘Proof of Debt’ is rejected, which provides a cheaper alternative to pursuing an insolvent company.

Litigation in liquidation -what circumstances can leave be sought/granted?

Justice Gilmour in Swaby v Lift Capital Partners Pty Ltd [2009] FCA 749 at [29] established a number of factors which the court may take into consideration to determine whether to grant leave to proceed against a company in liquidation. These include the following:

(a) the amount and seriousness of the claim;
(b) the degree and complexity of the legal and factual issues involved;
(c) the stage to which the proceedings, if commenced, may have progressed;
(d) whether a cross-claim arises out of the same factual matrix as the claims made in the primary proceedings;
(e) the risk that the same issues would be re-litigated if the claims were to be the subject of a proof of debt;
(f) whether the claim has arguable merit;
(g) whether proceedings are already in motion at the time of liquidation;
(h) whether the proceedings will result in prejudice to the creditors;
(i) whether the claim is in the nature of a test case for the interest of a large class of potential claimants;
(j) whether the grant of leave will unleash an “avalanche of litigation”;
(k) whether the cost of the hearing will be disproportionate to the company’s resources;
(l) delay; and
(m) whether pretrial procedures, such as discovery and interrogatories, are likely to be required or beneficial

While the above factors may be considered, generally leave to commence proceedings against a company in liquidation is rarely granted. In any event, in succeeding in obtaining leave, the applicant would need to demonstrate to the court that there is a ‘good reason’ as to why the ‘Proof of Debt’ avenue should be bypassed and that their claim “has a solid foundation and gives rise to a serious dispute.”

An example of where leave may be granted, is where the relief sought does not directly result in monetary relief, such as seeking that a ‘declaration’ be made. This may be necessary to commence legal action against another party but does not hinder the liquidation process or siphon funds from creditors for the party in liquidation.

How can we help?

If you are looking at commencing proceedings against a company in liquidation, or would like further advice in relation to liquidation and/or security interests, please contact the team at Rostron Carlyle Rojas Lawyers on (07) 3009 8444 or email us at [email protected]

What is the role of a litigation lawyer?

What Is The Role Of A Litigation Lawyer

Civil Litigation is a process of resolving disputes between parties. Generally, parties use the court process to enforce, exercise or defend a legal right. A litigation lawyer or litigator can represent either the applicant (plaintiff) or the respondent (defendant) in the matter.

As lawyers, our first duty is to the court. Our role is to advocate in the best interests of the client, though without misleading the court. It is a common misconception that litigation lawyers spend most of their day (and the case) fighting for their client’s rights in a court room. In truth, the majority of litigation matters are dealt with and settled without the need to appear before a judge.

What qualifications do you need to be a litigation lawyer?

A litigation lawyer is a lawyer who practises in the area of litigation. As such, the qualifications required to be a litigation lawyer is the same as that to be a lawyer. To be eligible to practise as a lawyer in Australia, one must:

  • have completed a law degree from a recognised university;
  • have completed an accredited practical legal training course;
  • be formally admitted to practise in their respective state; and
  • hold a current practising certificate.

It is an offence to hold yourself out as a lawyer without completing the above steps.

Set out below is a general overview of the litigation process.

Initial case assessment and investigation

Generally, prior to proceeding with any matter, a lawyer would initiate a preliminary investigation of the case. The purpose of this initial case assessment is to understand and collect information to establish the issues in dispute and the outcomes sought by the client. After an investigation of all available information, the lawyer should provide their client with an advice as to their prospects of success and options moving forward (if any). In this advice, the litigation lawyer may request their client’s further instructions or documents to verify their initial position.

Commencing proceedings

Generally (and depending on the jurisdiction), court action can be initiated by way of Application or Statement of Claim (originating document).

Should a litigation lawyer be instructed to commence a court action, they will draft the pleadings, file a final version of that document with the relevant court and have a sealed (a copy stamped by the court) version served on the other side.

If the client is served with an originating document, then the next step (depending on the jurisdiction) is to prepare, file and serve their client’s defence to that originating document. The relevant state rules provide a timeframe which parties are to adhere to in such proceedings.

The discovery process

The litigation process places an ongoing obligation on both parties (and their representatives) to disclose (or exchange) documents held in their possession which relates to the issues in dispute to the other party, this is also known as discovery. The purpose of discovery is to make the parties aware of the evidence to be relied upon, and prevent surprise at the trial. This formal exchange of documents is usually commenced by serving of a list of documents that a party has in its possession or control that are directly relevant to the case.

However, it is noted that not all documents held in a party’s possession can be exchanged in discovery, especially if they are subject to privilege.

During the discovery process, the lawyer may also assess and analyse the significance of the discoverable documents. This process is very important as it may assist with identifying issues, and planning strategic ways of strengthening their client’s position.

Pre-trial processes

Once the discovery is complete, the parties will (if they have not previously) commence trial preparation.
At this time, the parties may attempt to resolve the dispute through an alternative dispute resolution (ADR) method such as mediation. Prior to requesting a date for trial, the parties are expected to make genuine attempts to resolve or reduce the disputes in issue. Genuine attempts by the parties to resolve the dispute prior to requesting a trial date is beneficial to both sides as it can assist in resolving the dispute in a mutually agreeable way (as opposed to being arbitrarily decided upon by a judge) and minimises further costs and delays.

Settlement Conference

In the Magistrates court of Queensland, engaging in a settlement conference is a required preliminary step before requesting a date for trial.

The purpose of a settlement conference is to convene the parties before a court registrar to discuss and attempt to narrow or resolve the issues in dispute. If a party fails to attend the conference, the registrar can grant judgment against the absent party.
In this process, a registrar acts as a neutral facilitator. The conference is normally conducted in person (however, parties can appear by telephone upon request). The conference provides for a without prejudice discussion of the contentious issues by the parties. A settlement conference may result in several outcomes, including but not limited to:

  • no agreement being reached; or
  • agreement in writing between parties; or
  • admissions being made to narrow the issues in dispute, and subsequently the potential length of any trial.

All discussions (save for the terms of an agreement, if reached) are confidential.


Mediation is an alternative ADR process that also assists parties in settling or narrowing the issues in dispute prior to trial (though without the presence of a court registrar). Similar to a settlement conference, mediations are without prejudice and points discussed or agreed upon cannot be relied upon by either party at a later date.

During mediation, a mediator (generally a barrister) would conduct and guide the parties through a structured process. A mediator is impartial and does not give advice or make decisions. A mediator also creates an environment where all parties have the opportunity to speak and be heard so that they can eventually agree on a mutually agreeable outcome.
Actively taking part in ADR can save time, stress, further legal fees and court costs.

Settlements in litigation cases

The parties are entitled (and encouraged) to settle their dispute at any time. Where appropriate, a lawyer may encourage the parties to settle the dispute. However, a lawyer cannot settle the dispute without their client’s instructions.
Once the terms are finalised, the lawyers for each party will organise the terms to be formalised in an appropriate deed, copies of which will be provided to and executed by each party.

The appeal process

After delivery of initial judgment of a civil court in Australia, if it is disputed, parties can appeal that decision to a superior court. Lawyers can assist their client in identifying the grounds of appeal, such as a significant and relevant error of fact or law decided in the first instance. The appealing party proceeds by submitting the necessary evidence and the requisite legal documents in order to start the appeal process.

Overall, the court process can be a confusing and overwhelming experience. It is important for individuals to understand their rights and obligations when dealing with the courts. Litigation lawyers at Rostron Carlyle Rojas Lawyers have experience in, and can assist with, all types of legal proceedings.

The above information is intended only as general information and should not be interpreted or relied upon as legal advice. If you require assistance to understand your rights and obligations when dealing with the courts, please do not hesitate to contact our office.

Accessorial Liability under the Fair Work Act

fair work act

Being kept in the dark about the true facts can be an advantage.

In the recent decision of Fair Work Ombudsman v Hu [2019] FCAFC 133 – the Full Court of the Federal Court dealt with whether parties were “knowingly involved” in contraventions of the Fair Work Act, and thereby personally liable for the contravention.

The contraventions involved an underpayment of casual workers engaged to pick mushrooms on a mushroom farm by a company who supplied workers to the farm under contract.

The payments actually made to the workers were not at the level required under the applicable award for casual workers.

Fair Work Act: Ombudsman seeks to prosecute farm owner

The Fair Work Ombudsman sought to prosecute a claim that the company farm owner and its director was knowingly involved in the contravention by the labour hire company.

Section 550 of the Fair Work Act provides in relevant part as follows:

“Involvement in contravention treated in same way as actual contravention

(1)        A person who is involved in a contravention of a civil remedy provision is taken to have contravened that provision.

(2)       A person is involved in a contravention of a civil remedy provision if, and only if, the person:

(a)       has aided, abetted, counselled or procured the contravention; or

(b)     has induced the contravention, whether by threats or promises or otherwise; or

(c)     has been in any way, by act or omission, directly or indirectly, knowingly concerned in or party to the contravention; or

(d)     has conspired with others to effect the contravention.”

The FCA cited with approval the summary by White J in Fair Work Ombudsman v Devine Marine Group Pty Ltd [2014] FCA 1365 when he said:

“In order to aid, abet, counsel or procure the relevant contravention, the person must intentionally participate in the contravention with the requisite intention: Yorke v Lucas (1984) 158 CLR 661.

In order to have the requisite intention, the person must have knowledge of “the essential matters” which go to make up the events, whether or not the person knows that those matters amount to a crime: Yorke v Lucas.

Although it is necessary for the person to be an intentional participant and to have knowledge of the matters or things constituting the contravention, it is not necessary for the person to know those matters or things do constitute a contravention: Rural Press Ltd v Australian Competition and Consumer Commission [2002] FCAFC 213;

That is to say, it is not necessary that the accessory should appreciate that the conduct in question is unlawful…

Actual, rather than imputed, knowledge is required. Giorgianni v The Queen (1985) 156 CLR 473

The notion of being “knowingly concerned” in a contravention has a different emphasis from that of aiding, abetting, counselling or procuring” a contravention. To be knowingly concerned in a contravention, the person must have engaged in some act or conduct which “implicates or involves him or her” in the contravention so that there be a “practical connection between” the person and the contravention: Construction, Forestry, Mining and Energy Union v Clarke [2007] FCAFC 87;  Qantas Airways Ltd v Transport Workers’ Union of Australia [2011] FCA 470; (2011)”


Ombudsman fails to prove case against farmer owner

In reviewing the evidence of meetings between the labour hire parties and the mushroom farm owners and its director, the FCA accepted that the Fair Work Ombudsman had failed to prove to the requisite onus that the farm owners and its director was aware of the casual employment status of the workers and therefore of the rates of pay made in contravention of the award, and refused to draw an inference of such knowledge from the meetings held.

If you have any queries in respect of personal liability under the Fair Work Act, or the matters raised in this article, please contact us.


Social Media: An Employee’s Freedom of Speech has Limits

social media and freedom of speech

What are the limits of free speech and the right to publish personal political views and opinions about your employer as an employee?

Is there an unrestricted right to freedom of speech and expression of political views?

In Comcare v Banerji, (2019) HCA 7 August 2019, the High Court ruled that a dismissal of a public servant who used a Twitter account to post some 9000 tweets, many of which were variously critical of the Department, other employees of the Department, departmental policies and administration, Government and Opposition immigration policies, and Government and Opposition members of Parliament, was justified.

The decision has been widely criticised in some circles as contrary to and an erosion of a right of freedom of speech and political opinion.

Facts: Social Media and Freedom of Speech Case Study

The employee who was employed by the Department of Immigration and Citizenship began broadcasting tweets under the name, “Lalegale”.

A complaint was received that the employee was inappropriately using social media in contravention of the APS Code of Conduct.

The departmental guidelines explained that “[p]ublic comment, in its broadest sense, includes comment made on political or social issues at public speaking engagements, during radio or television interviews, [and] on the internet”, and cautioned that it was not appropriate for a Department employee to make unofficial public comment that is, or is perceived as, compromising the employee’s ability to fulfil his or her duties professionally in an unbiased manner (particularly where comment is made about Department policy and programmes); so harsh or extreme in its criticism of the Government, a member of Parliament or other political party and their respective policies that it calls into question the employee’s ability to work professionally, efficiently or impartially; so strongly critical of departmental administration that it could disrupt the workplace; or unreasonably or harshly critical of departmental stakeholders, their clients or staff. Similar, more extensive guidance was provided in Australian Public Service Commission Circular 2012/1 (“the APS Guidelines”), which recorded that, “[a]s a rule of thumb, irrespective of the forum, anyone who posts material online should make an assumption that at some point their identity and the nature of their employment will be revealed”.

In turn, the tenor of the APS Guidelines was further reiterated for employees of the Department in a document entitled “’What is Public Comment?’ Workplace Relations and Conduct Section Fact Sheet”.

Following an investigation, which found the account, “LaLegale” to be that of the employee, the employee was terminated for breaching the Australian Public Service (APS) Code of Conduct.

The employee challenged her termination including on grounds of an implied freedom of political communication guaranteed in the Constitution.

The Public Service as an Employer

Much of the Court’s judgement revolved around the specific provisions of the Public Service Act, and the essential elements for the functioning of the APS. The majority commented:

“Regardless of the political complexion of the government of the day, or its policies, it is highly desirable if not essential to the proper functioning of the system of representative and responsible government that the government have confidence in the ability of the APS to provide high quality, impartial, professional advice, and that the APS will faithfully and professionally implement accepted government policy, irrespective of APS employees’ individual personal political beliefs and predilections. To the same end, it is most desirable if not essential that management and staffing decisions within the APS be capable of being made on a basis that is independent of the party-political system, free from political bias, and uninfluenced by individual employees’ political beliefs. The requirement imposed on employees of the APS by ss 10(1) and 13(11) of the Public Service Act at all times to behave in a way that upholds the APS Values and the integrity and good reputation of the APS represents a rational means of realising those objectives and thus of maintaining and protecting an apolitical and professional public service. The impugned provisions are suitable in the necessary sense.”

The final comments before upholding the appeal were that:

“The respondent must be taken to have accepted that her conduct in broadcasting the “anonymous” tweets was conduct which failed to uphold the APS Values and the integrity and good reputation of the APS within the meaning of s 13(11), and that, but for the implied freedom, the sanction of dismissal was warranted.”


Comment on Social Media and Freedom of Speech

It should be noted that this was not a case based upon the Fair Work Act provisions.

While this decision was based upon the particular environment of the public service in which the employee worked, and the specific regulatory framework around that environment, there are clear messages for employees in the private sector, that tweets or similar social media activity, even if anonymous, which are critical of the employer may lead to a lawful dismissal, particularly where there are clear policies prohibiting such conduct.

The publication of individual political views, and beliefs which offend the express policies of the employer, and the basic principles of the duties of fidelity owed to the employer, and go so far as to be critical of the activities of the employer and its business activities may well result in a lawful dismissal.

Social Media Policy- Message for Employers

The message for employers from this decision is to ensure that there are robust, but clear, fair and reasonable workplace policies in place, that employees are aware of and acknowledge the existence of them, and that any investigation into a breach of such policies which may result in a termination of employment is conducted with due regard to procedural fairness.


If you have any concerns about your workplace policies and claims for dismissal, please don’t hesitate to contact us: