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Construction Law

ABCC cracks down on union logos

Construction companies may no longer be able to obtain federal government contracts if certain pro-union practices are performed, or union-affiliated symbols are displayed on clothing, equipment or worksites in general.

The update

The Australian Building and Construction Commission’s (ABCC) update to the freedom of association provisions in the Building Code came into effect on 30 January 2018, with an infringement of the revised, stricter provisions now resulting in companies being precluded from tendering for Commonwealth building work.

The previous Code stipulated that an infringement was constituted by a ‘significant’ display of union affiliated materials, however, the revised Code states that the presence of a Eureka flag or a single union logo, or sticker on a helmet can amount to a substantial infringement of the Code.

What constitutes an infringement of the revised freedom of association provisions?

Under the revised freedom of association provisions, code covered entities, (construction companies to which The Code applies) are subject to far stricter prohibitions regarding the display and performance of union-related materials and practices.

Under s 13 of The Code, code covered entities are prohibited from displaying signage that seeks to vilify or harass employees for their involvement or lack of involvement in industrial activities.

Code covered entities must also ensure company policies allow employees to freely:

  • become members of, or cease to be members of, industrial associations,
  • be represented by and participate in industrial associations and activities.

The ABCC went as far as publishing examples of slogans which amount to breaches of the new provisions, some of the offending phrases include “100% union”, “union site” and “no ticket, no start”.

Perhaps the most significant changes to the code are the rigorous prohibitions on the display of union-affiliated flags, most notably, the Eureka Stockade Flag, a symbol of the powerful CFMEU.

Further details of the changes introduced by the ABCC and which practices and materials to avoid displaying in your workplace, are available in the fact sheet published by the ABCC:

https://www.abcc.gov.au/resources/fact-sheets/building-code-2016/freedom-association-%E2%80%93-logos-mottos-and-indicia

How the update will impact on Australian businesses?

Although there are yet to be any sanctions imposed on any code covered entity for failure to comply with The Code, the loss of a federal government contract as a result of displaying union-affiliated materials or using the pro-union tactics mentioned in the revised Code would be highly detrimental to a construction company’s prospects of getting ahead in such a competitive industry.

If you require further information on the changes introduced by the ABCC, or advice at any stage of the tender process, please do not hesitate to contact Michael Morrissey (m.morrissey@morrisseylaw.com.au) or Morrissey Law & Advisory directly on (02) 8077 0668.

(This article was prepared by Michael Morrissey, Principal, with Patrick Ireland, Paralegal.)

Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.

commercial law

ACCC enforcing unfair contracts regime

The Australian Competition and Consumer Commission (ACCC) has started enforcing compliance of the unfair contract term provisions that came into effect in November 2016 (check out our article on the regime here).  In 2017 the ACCC took action against JJ Richard & Sons Ltd (JJ Richards) in relation to unfair contract terms in their standard form contracts. [1]

JJ Richards is a privately owned waste management company located in Australia and provides recycling, green waste and sanitary waste collection services. The Federal Court held that the eight terms in the JJ Richards standard form contract, which it used with small business, were unfair. Accordingly, the contracts were void.

The Court found the terms had the effect of:[2]

  • Creating an unlimited indemnity in favour of JJ Richards
  • Preventing customers from terminating their contracts if they have payments outstanding and entitling JJ Richards to contain charging their customers’ requirements rental after the termination of the contract
  • Allowing JJ Richards to unilaterally increase its prices
  • Binding customers to subsequent contracts unless they could cancel their contract within 30 days before the end of the term
  • Removing any liability for JJ Richards when its performance is ‘prevented or hindered in any way’
  • Allowing JJ Richards to charge customers’ fees for services that were not rendered even when the cause of the reason were beyond the control of the customer
  • Granting JJ Richard the exclusive rights to remove waste from a customer’s premises
  • Allowing JJ Richards to suspend its services but continue to charge their customers if payment is not made after seven days

JJ Richards consented to orders that restrained them from relying on the unfair terms in existing small business contracts and in future contracts. A corrective notice was published and a copy of the court orders were given to all small business which were affect by the contract. The court order cancelled 2600 contracts that were issued by JJ Richards.

Implications of the decision

This was the first court proceeding by ACCC to enforce the new prohibitions under the ACL against unfair terms in small business contracts that are issued as a standard form contract for a small business contract.

More onus are placed on larger businesses to review their standard form contracts to ensure that it is not inclusive of unfair terms. Under the Australian Consumer Law, terms that create a significant power imbalance between parties will not necessary protect the legitimate interests of parties and could cause significant financial detriment if they are relied on by small businesses and if unfair will be void.

If you want your standard terms reviewed for compliance with the unfair contracts regime, or advice around how to manage your contracts, check out our article on the legislation,  or contact Michael Morrissey (m.morrissey@morrisseylaw.com.au) or Hamish Geddes (h.geddes@morrisseylaw.com.au) or call our office on (02) 4038 1620.

[1] Australian Competition and Consumer Commission v JJ Richards & Son Pty Ltd [2017] FCA 1224.

[2] Australian Competition and Consumer Commission v JJ Richards & Son Pty Ltd [2017] FCA 1224.

Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.

commercial law

What are the unfair contract provisions and what do…

Since 2010, the Australian Consumer Law (ACL) has provided protection to consumers against unfair contract terms that may be imposed through standard form contracts. On 12 November 2016 the unfair contract provisions in the ACL were extended to cover terms of standard form contracts with small businesses.

When do the unfair contract provisions apply?

The provisions apply when supplying goods and/or services to a business where:

  • the business is employing less than 20 people, and
  • the upfront price payable under the contract is less than $300,000, or $1 million if the contract is over 12 months.

What is an unfair contract term?

The ACCC’s guidelines on unfair contracts terms include but are not limited to:

  • Terms which only allow one party to avoid or limit their obligations under the contract
  • Terms which only allow one party to terminate the contract (unilateral termination provisions)
  • Terms which only penalise one party for breaching or terminating the contract
  • Terms that enable only one party to vary the terms of the contract.

However, only a court or tribunal can determine whether a term is unfair.

What are the changes to the ACL and who does it affect?

The provisions of the ACL were extended to cover small business contracts and standard form contracts. A standard form contract is one which is prepared by one party and presented to the other for acceptance with little or no opportunity for negotiation.

It is usually offered on a ‘take it or leave it’ basis and where one party has majority of the bargaining power.

Who does it affect?

The changes amended the Australian Securities and Investments Commission Act 2001 (Cth) and the Australian Consumer Law under the Competition and Consumer Act 2010 (Cth) to apply to all small business contracts (as described above).

This will allow an opportunity for small businesses to negotiate unfair terms under a contract, and the court will be empowered to remove the term without voiding the whole contract. An application for this could be submitted by either party of the contract or ASIC. This means that crucial or important terms may be removed if they are not drafter properly or does not allow the other party to have a reasonable opportunity to negotiate.

It is paramount that businesses ensure their contract terms in standard from contracts are up to date with relevant legislation and complied with. If you have any questions in relation to the unfair contract regime, contact Michael Morrissey (m.morrissey@morrisseylaw.com.au) or Hamish Geddes (h.geddes@morrisseylaw.com.au) or call our office on (02) 4038 1620.

Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.

Construction disputes

Non-jurisdictional error no reason to review adjudications: High Court…

The Building and Construction Industry Security of Payment Act 1999 (NSW) (the Act) was once again before the High Court of Australia. This time the Court was asked to determine whether a non-jurisdictional error should allow a determination to be quashed.

Background

Probuild and Shade System were parties to a construction contract. Shade System served a payment claim on Probuild in the amount of $324,334.26 for the installation of louvres on an apartment building. Probuild responded to with a payment schedule noting the amount to be paid was $0.00, the basis of which being they claimed Shade System owed it liquidated damages in the amount of $1,089,900.00 which it sought to offset against that invoice.

Shade System applied for adjudication of the payment claim and was ultimately awarded $277,755.03.

Probuild’s offsetting claim was rejected in its entirety as the adjudicator found the contract had not been completed or terminated and as such liquidated damages had not crystallised.

Probuild sought a judicial review in the Supreme Court seeking an order to quash the determination. The primary judge held the adjudicator had made errors of law that appeared on the face of the record and allowed Probuild’s application to have the determination quashed – that meant Shade Systems could not enforce the adjudicator’s determination.

In the NSW Court of Appeal, Shade System was successful in their argument that an adjudication can only be reviewed for a jurisdictional error, and that the Act excluded the Supreme Court’s authority to quash decisions for non-jurisdictional errors on the face of the record, which included the claim for liquidated damages.

Probuild appealed to the High Court.

High Court decision?

The High Court dismissed the appeal, the Supreme Court does not have authority to quash determinations for non-jurisdictional errors.

Where to from here for parties to adjudications.

Contractors, builders and any other party who is entitled to use the Act should consider the power the Act wields within the construction industry. The Act is designed to facilitate payment. The Act is not a final determination of all matters in respect of a contract or a dispute. Parties must ensure they are aware of their rights to claim, their responsibility to respond and how to do so most appropriately.

The quick paced nature of the Security of Payment Act means parties should be well advised on their potential to claim and liabilities.

For more information or to discuss a potential payment claim issue, contact Michael Morrissey (m.morrissey@morrisseylaw.com.au) or Hamish Geddes (h.geddes@morrisseylaw.com.au).

Disclaimer: This publication by Morrissey Law & Advisory is for general information and commentary only and should not be considered or relied upon as legal advice. Formal legal advice should be sought in relation to any matters or transactions that may arise in relation with communication.