A recent unfair dismissal claim has raised an interesting question of whether a Human Resources Manager (HR Manager) can successfully work in on a dual role basis.
On Monday 12 December 2022, Commissioner Sarah McKinnon handed down a decision in the case of Mr Luke Sadler v Client Care First Pty Ltd T/A Client Care First [2022] FWC 3179, which was merely an application for an unfair dismissal remedy. The Applicant, Mr Sadler, was dismissed, effective immediately, for misconduct. There were a series of events which lead to the Applicant’s dismissal including using course language to the Human Resources Manager, something that the Respondent deemed to be “unwarranted, inappropriate, inconsistent” with the Respondent’s Code of Conduct.
Commissioner McKinnon dismissed the case on the basis “the nature of Mr Sadler’s conduct toward Ms Martin, his lack of acknowledgment and/or remorse, and because by the time of his dismissal, Mr Sadler had already found another, better paying, job”. However, in arriving at her finding, Commissioner McKinnon made several interesting comments regarding the Respondent’s HR manager working dual roles for the Respondent.
Should a HR Manager be employed on a dual role basis?
The most important and primary role of a HR Manager is to help their workplace improve and meet the needs of all employees within the business. This helps employees understand how their role within the business aligns with the purpose of it.
Having a HR Manager employed on a dual-role basis does not allow the employee employed in that position to perform their role effectively and to the highest standard. Commissioner McKinnon stated it was “surprising that its [the Respondent] Human Resources Manager is working in the role on a ‘dual role’ basis, while also juggling his function as a registered nurse and learning on the job.” Commissioner McKinnon went on to state that this very point highlighted the fact that the dismissal of the Applicant was a “peremptory approach to [the worker’s] dismissal”.
Further, having an employee employed, in this instance, as a registered full-time nurse and as a HR Manager, meant that employee did not have adequate knowledge of dealing with the duties of a HR Manager, and did not sufficiently know the law surrounding termination of employees.
As emphasised in Mr Luke Sadler v Client Care First Pty Ltd T/A Client Care First, a HR Department is in charge of ensuring all employees are kept safe, healthy and satisfied at work, including having the responsibility of ensuring all policies and procedures are kept up to date with necessary protective measures and implementation of those protective measures, it is a role which should not be performed in a dual-role basis.
An effective HR Manager knows their workplace, the expectations of employees and when termination of employment is considered to be reasonable. Ultimately, where a HR Manager is working on a dual role basis there is a heightened risk of making decisions without having the knowledge a HR Manager would be expected to have.
This article was prepared with the assistance of Ebony Billett.
Recently, the Fair Work Commission implemented new annualised wage arrangement rules in both the Hospitality Industry (General) Award 2020 (Hospitality Award) and the Restaurant Industry Award 2020 (Restaurant Award). The provisions were implemented on 1 September 2022 and replace the previous annualised salary arrangement provisions. The changes made only apply to full-time employees covered by either the Hospitality Award or the Restaurant Award and do not apply to those employed as managerial staff (hotels) covered by the Hospitality Award.
What does this mean for your business and how should employers ensure they are complying with the annualised wage arrangement obligations?
To put it simply, an annualised wage arrangement enables employers to pay their employees fixed regular amounts every pay period, even when an employees’ hours fluctuate. An annualised wage arrangement allows an employer and an employee to enter into an agreement in writing, for the employee to receive an annual wage, inclusive of entitlements.
If an employee is employed under the Restaurant Award, that employee is entitled to receive an annual wage that is inclusive of:
If an employee is employed under the Hospitality Award, that employee is entitled to receive an annual wage that is inclusive of:
If an employee works overtime…
The changes also bring about new rules governing the maximum number of hours that an employee is allowed to work in a roster cycle which can be included in their annualised wage arrangement. This is referred to as the ‘outer limits’.
If an employee is governed by the Restaurant Award, they may be entitled to additional payments where they work outside the outer limits. Under the Restaurant Award, the outer limits are:
If an employee is governed by the Hospitality Award, they may be entitled to additional payments where they work outside the outer limits. Under the Hospitality Award, the outer limits are:
So what are employers required to pay their employees?
When implementing an annualised wage arrangement, employers are required to pay employees:
Employers needs to ensure the employee’s start and finish times of work are recorded correctly, including unpaid breaks.
An employer should review an annualised salary arrangement:
In Summary
This article was prepared with the assistance of Ebony Billett.
Social events are a great way for business to build their workplace culture, whether they be new year celebrations, end of financial year parties, or celebrating workplace milestones. Unfortunately, however misconduct at events organised by employers, or events attended by employees outside of work hours, too often occurs, causing tension in the workplace or leading to disciplinary action being taken against an employee.
But when does an employee’s conduct outside of work hours become an employer’s problem?
Like most circumstances, it depends…
As the short title reads, it depends. It will depend on what the out hours of misconduct was and whether the employer had specific policies in force to deal with the conduct in question. In most circumstances where an employee engages in out of hours misconduct the employer will not be able to take disciplinary action against the employee of dismiss that employee on the basis of misconduct. However, as with most things, there is an exception to that general rule.
Connection between the employment relationship and out of hours conduct
Where out of hours misconduct occurs, the employer may be able to take disciplinary action against the employee where the employer is able to demonstrate there is a significant connection between the employment relationship and the conduct in question. The Court in Rose v Telstra [1998] AIRC 1592, set out the test for this:
When can disciplinary action be taken?
Misconduct which occurs outside of the workplace, irrespective of whether it occurs at events organised by the employer or employee organised events, can be a breach of the employer’s policies and the employee’s contract notwithstanding that the conduct may have occurred outside of work. Where a sufficient nexus to the workplace can be established, such misconduct can constitute a valid reason for termination of an employee’s contract.
In Stephen Keenan v Leighton Boral Army Joint Venture (2015) 250 IR 27 it was held that “the social interaction which occurred was not in any sense organised, authorised, proposed or induced” by the employer. However, in this particular case the matter was dismissed as there was nothing in the employer’s code of conduct or policies relating to out of hours conduct.
On the other hand, in Applicant v Employer (U2014/1450) [2015] FWC 506), it was held that termination of an employee for conduct that occurred after hours at a hotel, where there were allegations of sexual harassment, was valid. The dismissal was held to be valid for the following reasons:
Recent Case – Keron v Westpac Banking Corporation (2022) FWC 221
Recently, in Keron v Westpac Banking Corporation, the Commission examined the question of whether an employer’s actions in terminating a longstanding employee on account of out of hours misconduct was valid.
In this case, Mr Keron was a Westpac employee for a period of 35 years. Following a workplace function, Mr Keron and other employees attended a secondary location where Mr Keron was involved in two incidents of misconduct, for which his employment with Westpac was terminated. As a result, Mr Keron tried to bring an unfair dismissal application against Westpac challenging that there was not a sufficient connection with his employment as the incident occurred outside of work and not at the work function. The Commission held that it was not necessary for the relevant behaviour to occur at the same physical location as the workplace or work function in order for there to be a sufficient connection the employment.
Ultimately, the Commission concluded that the employees were only at the secondary location where the incidents occurred due to the fact they had attended a work event prior. Accordingly, it was held that the incident was sufficiently proximate to the workplace and Mr Keron’s employment, which formed a valid reason for the workplace investigation to be carried out and for his subsequent dismissal to have occurred.
In Summary
*This article was prepared with the assistance of Ebony Billett*
A deduction is when an employer takes a portion of money out of an employees pay before it is given to them. There are limited situations when employers may lawfully make a deduction from an employees pay or ask them to pay back a sum of money.
Employment contracts will often include a clause which states that in certain instances the employer can deduct money that is ‘owed’. Circumstances where this may arise could include where an employee has undergone training at the employer’s expense and then resigned, or where an employee fails to do something, they are obliged to, such as repay a loan.
It can be difficult to determine when an employer can lawfully deduct money from an employee’s wages or final pay. Even if the employment contract states that the employer is entitled to make deductions, it may not be permitted by law and making deductions unlawfully can be met with heavy penalties.
There are very limited circumstances when employers can make deductions from an employees pay. However, there are some common lawful instances in which employers can make deductions. These include deductions made for:
An employer can only deduct other money from an employee’s wages or pay if it is permitted under section 324 of the Fair Work Act 2009 (Cth). This provision permits deductions from employees’ wages where:
The Courts have determined that a deduction will be considered for the ‘employees’ benefit’ when the deduction is the result of a salary sacrifice or making additional elective payments towards their superannuation. Deductions must also be properly and clearly recorded on the employees pay slip and time and wages record.
Generally, deductions that do not comply with the requirements of section 324 of the Fair Work Act 2009 (Cth) are unlawful. Even in circumstances where an award, enterprise agreement or employment contract permits deductions, the deduction must still be reasonable.
Examples of unlawful deduction include:
Some modern awards may allow for deductions without the employee’s consent, provided that it is reasonable. For example, some awards provide that if an employee over 18 does not give sufficient notice of resignation, an employer can deduct an equivalent amount from the employee’s wages or final pay.
For instance, the Hospitality Industry (General) Award 2020 allows employers to deduct money from employee’s pay for the costs of accommodation or meals provided to an employee in certain circumstances. As the deduction is authorised under the relevant award, the written consent of the employee is not required but there is still a requirement that the deduction must not be unreasonable in the circumstances.
Unlawful deductions can result in civil penalties of up to $10,200.00 for an individual and $51,000.00 for a corporation. Any deductions made outside the scope of section 324 of the Fair Work Act 2009 (Cth) may expose employers to legal liability and underpayment claims which can result in heavy civil penalties upwards of $10,000.00 per contravention.
In this case the frozen yoghurt chain faced $146,000.00 in penalties after making unlawful deductions from the wages of four employees. Additionally, the part-owner of the organisation was personally penalised $11,000.00 for her involvement in exploiting the workers. The company was ordered to commission a professional external audit of all Yogurberry stores in Australia as well as rectify any underpayments that were uncovered.
This case reflects the importance of clearly drafted provisions surrounding deductions from employees’ wages. In this case it was found that the Department of Education and Early Childhood Development had unlawfully deducted over $20 million from the salaries of over 40,000 employees for the costs of laptops provided by the employer.
It was found that because the Enterprise Agreements and Employment contracts were not drafted clearly enough to get the employees express consent for the deductions, that the deductions were unlawful. The court found that the deductions for the costs of the laptops were not authorised under the Fair Work Act, and the Department of Education and Early Childhood Development were ordered to pay civil penalties for the offences.
The above cases serve to demonstrate the importance of obtaining legal advice before drafting employment contracts seeking to deduct money from employees or making attempts to deduct money from employees’ wages or entitlements. Employer’s need to be on the front foot in ensuring their workplace documents are properly drafted to ensure they are protected, and legal advice should always be sought before any deductions are made.
Contact our Workplace Law Team for any queries regarding permitted deductions.
In Ali v Insurance Australia Limited [2022] NSWCA 174, the Court of Appeal found that Mr Ali (the Appellant) was not statute barred from bringing a claim against Insurance Australia Limited (the Respondent) for its denial of a claim on his home and contents insurance policy.
Background facts and decision at first instance
In June 2013, the Appellant took out a home and contents insurance policy with the Respondent.
On 10 October 2013, following a break-in at the Appellant’s home on the previous day, the Appellant made a claim under his home and contents insurance policy.
On 20 May 2014, the Respondent denied the claim.
On 16 October 2019, the Appellant brought proceedings against the Respondent in the District Court alleging that the Respondent’s denial of his claim was a breach of the policy.
The Respondent relied on section 14 of the Limitation Act 1969 (NSW) to argue that the Appellant was time barred from bringing the proceedings outside the 6-year limitation period.
The Respondent claimed that its liability under the policy started when the break-in occurred (9 October 2013), not when the Appellant’s claim was denied (20 May 2014).
The District Court held that the Respondent’s liability arose at the date of the break-in, not when it denied cover. The result was that limitation period for the Appellant’s claim against the Respondent had expired.
The Appellant appealed the decision.
So, what exactly is the limitation period?
A limitation period refers to the timeframe within which someone can commence legal proceedings against an alleged wrongdoer.
Limitation periods serve to ensure that legal disputes are actioned in a timely fashion and to avoid prospective defendants from being indefinitely exposed to the prospect of legal action.
The Limitation Act 1969 (NSW) prescribes the limitation periods that apply to various types of legal disputes that may be brought before the Court.
For alleged breaches of contract, proceedings must be commenced within 6 years of the alleged breach.
Appeal decision
The Supreme Court held that the primary judge erred in his application of section 14 of the Limitation Act 1969 (NSW) and found that the Appellant was not statute barred. In its decision, the Court noted that:
1. As with any written contract, the Court must examine the intention of the parties expressed in the agreement and in doing so, must approach it objectively “by reference to what a reasonable person would have understood the language of the contract to convey” [28].
2. Ambiguity in policy documents is subject to the contra proferentem rule and “any ambiguity in a policy of insurance should be resolved by adopting the construction favourable to the insured” [41].
3. That the policy documents could not “be construed as a contractual promise to indemnify an insured from the time of occurrence of the listed event” [51].
4. The policy’s use of phrase ‘you can make a claim if’ “cannot reasonably be understood as permissive, with the respondent’s liability already having arisen” [52]. Rather, it indicated that an insured would have to meet certain criteria, which on review by the insurer, would be determined as being covered by the policy or declined and, that it was at that point in time, that the Respondent’s liability would arise.
5. The Court determined that the primary judge erroneously concluded that the policy’s references to “cover” were interchangeable with “indemnity”.
6. The Court found that the policy documents and the information provided to Appellant in respect to making an insurance claim with the Respondent “supports the construction of the PDS for which the applicant contended, that the relevant promise for the purpose of his cause of action was to compensate a claimant for their …The cause of action arose on the respondent’s decision to accept or decline the claim” [74].
In short, the policy documents indicated that the Respondent’s liability for the contractual breach alleged by the Appellant did not commence at the time of the break-in but at the time the Respondent denied the claim. Therefore, limitation period for the Appellant’s claim did not start running until 20 May 2014 and he was not statue barred when he commenced proceedings on 16 October 2019.
Implications
The date from which a limitation period runs for a breach of contract claim can turn on the wording used in the contract. Noting the Court ‘s application of the contra proferentem rule, insurers should use unambiguous language to avoid any unfavourable interpretations.
This article was prepared with the assistance of Sherah Knight
In response to the perceived building crisis in NSW, the NSW government enacted the Design & Building Practitioners Act 2020 (NSW) (Act). The Act introduces a range of statutory obligations on builders, architects, engineers and other workers in the building industry, including the enactment of a statutory duty of care under s 37 of the Act.
Since the introduction of the duty of care, there have been a number of judgments seeking to clarify who owes the duty of care and how it applies. In the recent judgment of Stevenson J in Boulus Constructions Pty Ltd v Warrumbungle Shire Council (No 2) [2022] NSWSC 1368 (Boulos), the Court was required to consider who owes the duty of care.
In Boulos, the Council (cross-claimant) sought leave to join the Managing Director of the builder, Boulos Constructions (already a cross-defendant), and the Project Site Supervisor as additional cross-defendants to the proceeding. Leave for the joinder was granted despite the opposition of Boulos on two grounds: (a) the defence of illegality, and (b) that the proposed cross-defendants were not “persons” that owed a duty of care
In relation to the defence of illegality, his Honour took the position that the common law defence of illegality did not apply as the duty of care arising under s 37 is a statutory duty of care, which overrides the common law position.
In relation to the definition of a “person” that owes the duty of care, his Honour confirmed that the “person” who owes the duty of care is not limited to a narrow scope of “persons” such as “building practitioners” but all “persons” involved in carrying out construction work (as defined in the Act) and that this includes a wide range of activities and actors and this goes beyond the definition of a “practitioner” – it will be a question of fact in each case.[1]
His Honour’s judgment appears to have caused some consternation for those involved in the building or construction trade, and their insurers on the basis that it would open the “floodgates” and, as submitted in opposition to the joinder “would also result in building cases that balloon to include huge numbers of defendants, increasing the cost and complexity of what is already a costly and complex area of litigation. This is especially so when one considers the potential for the defence of proportionate liability that can be pleaded in defence of a claim under [the Act] to raise the same issues of liability of multiple third parties even if the plaintiff does not join all potential defendants to their claim.”
There is little doubt that the statutory duty of care will likely result in more claims being brought against those involved in the building and construction industry, but it is submitted that this is what the introduction of the duty of care was intended to achieve – a remedy for property owners where they previously had no or limited rights. Contrary to some of the consternation or worry, the introduction of the duty of care did not introduce any new work practice or standard of work upon those involved in the building trade that did not already exist; it simply allowed a remedy for negligent work for those who previously, arguably through no fault of their own, came to own property which had been constructed negligently or contained negligent work. To that extent, it is submitted that the consternation, is somewhat misplaced. As pointed out by Stevenson J, the proportionate liability defences available under the Civil Liability Act can be relied upon by any defendant and moreover, this will only arise if some of negligent act can be shown to have cause the loss. It is one thing for a plaintiff to make an allegation against all and sundry; it is another to prove the allegation.
Notwithstanding, for insurers of those involved in the building industry, an increase in litigation may very well lead to an increase in claim costs, or at the very least, in the defence of claims. It follows that insurers may very well be more judicious and selective regarding the extent of any insurance coverage they provide to those involved in the building industry and those with a problematic claims history may have trouble obtaining insurance.
[1] See [61]
The General Insurance Code of Practice (GICOP) outlines the standards general insurers must meet when providing services to customers, including being open, fair and honest. It also includes timeframes within which insurers must respond to customers’ claims, complaints and requests for information.
Provisions in relation to buying insurance include prohibiting pressure selling, guidelines for renewing insurance policies, outlining premium comparisons and cancelling insurance policies. There is also a requirement for transparency around making a claim, including information about the claims process, excess amounts, waiting or ‘no cover’ periods, and how to contact the insurer in relation to a claim.
The GICOP also requires transparency around information relied upon in assessing an application for insurance cover or handling a claim or in responding to a complaint. Such information must be made available to customers free of charge.
The GICOP requires insurers to cooperate with parties experiencing vulnerability. Vulnerability may be caused by various factors, including age, disability, mental health conditions, physical health conditions, family violence, language barriers or financial distress. GICOP outlines how insurers must work with parties experiencing vulnerability to achieve acceptable outcomes.
A key provision in the GICOP includes guidelines that insurers must follow when dealing with a person experiencing financial hardship. An individual who owes money to an insurer may be entitled to rely on GICOP’s Financial Hardship provisions.
If an individual is found to be experiencing Financial Hardship, then an insurer must discuss with the individual the various potential arrangements outlined in the GICOP. Arrangements can include delaying payment of the debt, paying in instalments or paying a reduced sum. In certain cases, an individual can ask for their debt to be released, discharged, or waived.
Failure to comply with the GICOP can result in the breach being reported to the Code Governance Committee. This is an independent body that conducts investigations about alleged GICOP breaches.
If you have been dissatisfied in your dealings with an insurer, contact us to discuss whether GICOP may be of assistance to you.
This article was prepared with the assistance of Elinore Rema.
Contact our Insurance Law Team for any queries regarding the General Insurance Code of Practice.
Generally, when legal proceedings are filed against a person (the defendant), a copy of the legal proceedings must be personally delivered to the defendant. This requirement is called ‘personal service’.
Personal service ensures that the defendant is aware of the legal proceedings that have been filed against them.
The significance of serving legal proceedings on a defendant is that the defendant is then required to respond to the proceedings within a specified time. If the defendant fails to do this, there can be severe consequences.
Sometimes, a Court will order that legal proceedings can be delivered to a defendant other than by way of personal service. This is known as ‘substituted service’.
Rule 10.14 of the Uniform Civil Procedure Rules 2005 (NSW) states that if it is not practicable to personally serve a party, the Court may order that “instead of service, such steps be taken as are specified in the order for the purpose of bringing the document to the notice of the person concerned.”
For example, a Court may order that substituted service of legal proceedings be carried out by leaving a copy of the proceedings at a defendant’s property, sending a copy of the proceedings to the defendant by email or text or by sending a copy of the proceedings to an address, or PO Box, used by the defendant.
However, substituted service will not be allowed by the Courts as a matter of course. It will generally only be permitted if the relevant Court is satisfied that:
This may be demonstrated, for example, by evidence that a defendant is deliberately avoiding attempts to personally serve them with legal proceedings.
This may be demonstrated, for example, by evidence of searches undertaken to locate the defendant, attempts to contact the defendant to arrange a convenient time for personal service and reports from process servers detailing attempts to carry out personal service.
For example, an applicant may ask the Court to order that substituted service be carried out by emailing proceedings to the defendant. A court may be satisfied that this is appropriate if there is evidence that the relevant email address is actively used by the defendant.
GRC Project Pty Ltd t/as GRC Property Management & Anor v Lai [2022] NSWDC 514 (GRC Project) dealt with an application by the for substituted service of legal proceedings on the defendant, Lai.
In the GRC Project, the plaintiffs successfully in obtained orders for substituted service by email as the Court was satisfied that the evidence confirmed:
The Court ordered for personal service to be dispensed with and made orders for the legal proceedings to be served on the defendant by a copy being sent to her email address.
In summary, substituted service can be a useful tool to overcome service issues that may be created by a difficult defendant.
GRC Project illustrates that attempts to carry out personal service should be well documented. Such attempts may need to be relied on as evidence if a substituted service application is required.
This matter arises from surgery performed on Mr Dean by Dr Pope in 2014 when Mr Dean was 25 years of age. As a result of the surgery, Mr Dean alleged that he suffered localised back pain, genito-urinary problems and a psychological (somatoform) disorder.
In 2013 Mr Dean consulted with Dr Pope about concerns of sensory issues relating to his right leg. After subsequent consultations, Dr Pope recommended surgery at the lumbar level of Mr Dean’s spine.
Mr Dean argued that Dr Pope performed a lumbar spine surgery when (as argued by Mr Dean) his symptoms were related to a problem in his thoracic spine. At no point during multiple consultations with Dr Pope did Mr Dean disclose that he was suffering from other sensory symptoms elsewhere at the thoracic level.
Dr Pope denied the allegations and defended the matter (successfully) on the basis that it was reasonable for him to perform the lumbar spine surgery and not the thoracic spine surgery, based on the history provided by Mr Dean and Mr Dean’s clinical presentation to Dr Pope.
It is important to note that no criticism was made of the surgical technique performed by Dr Pope. The allegation was that the lumbar surgery was unnecessary, as the cause of Mr Dean’s symptoms arose because of cord compression at the thoracic level, which was not identified by Dr Pope. MRI and CT scans taken in 2015 revealed that Mr Dean had a large benign bone lesion or tumour that compressed his spinal cord at the thoracic level.
Mr Dean argued two aspects of the alleged negligence:
Section 5O of the Civil Liability Act 2002 (NSW) says that a professional does not incur a liability in negligence arising from the provision of a professional service if it is established that the professional acted in a manner that (at the time the service was provided) was widely accepted in Australia by peer professional opinion as competent professional practice.
Dr Pope successfully defended the allegations of negligence on the basis that his management and treatment of Mr Dean was in accordance with peer professional practice that was at the time widely accepted in Australia.
Although Mr Dean lost his case before the primary judge (and again on appeal to the NSW Court of Appeal), it was necessary for the primary judge to determine the damages that Mr Dean would have received, had he succeeded. His Honour determined that Mr Dean would have been awarded $611,850 in damages had he won the case.
Australian Karting Association Ltd V Karting (New South Wales) Incorporated [2022] NSWCA 188
The Appellant was the national body responsible for go-karting in Australia and trustee of a related trust.
The Respondent was responsible for go-karting in NSW and the ACT, and a member of the Appellants national body.
The Appellant’s constitution obliged its members to pay on the fees they collected from go-kart drivers in races that the Appellant approved.
Appellant was Trustee of a fund for the construction of new go-kart tracks. The trust deed empowered the Appellant to distribute trust capital and income to its beneficiaries who were its members.
The Appellant, as trustee, would loan funds for track construction to the relevant state body. The loans were 5 for 10 years with interest not charged if terms were complied with. On default, the loan was repayable in full plus the interest.
From 2014 the Respondent queried the Appellant’s management asked for return of funds held on trust for it.
In 2019 the members of the Appellant voted to expel Respondent as a member, a default event. The net assets of the trust were recorded in the annual financial statements of the trust as $1.00.
The trust’s financial statements were audited and approved by the Appellant’s board (and Appellant’s predecessor’s management committee) in the relevant years.
The Appellant sought repayment of its loan plus interest. The Respondent cross-claimed seeking unpaid distributions.
The Appellant lost on both points and appealed.
The Appellant said the money it recorded as held in a loan account for the Respondent showed what was to be paid to Respondent (and other beneficiaries in the Respondent’s position) when the trust vested, and so was not a distribution.
The question of whether it was a distribution was pivotal. If it was, it would have to be paid to the Respondent on demand.
The primary judge had found that the recording of the loans in the Respondent’s favour were distributions, held by the Appellant on bare trust and not as part of the track construction trust.
Importantly, no estoppel by convention claim was raised at first instance, and so was not available on appeal.
On appeal, the Appellant argued the loan were a liability contingent on the vesting of the trust, though this new argument was no available on appeal.
In any case, the audited accounts recorded the loans as actual liabilities, not contingent liabilities.
There was no evidence that the beneficiaries intended to make a loan to the Appellant, and the financial records acknowledged debt to the beneficiaries in the amount of the unpaid distributions.
The Appellant’s argument that it intended to accumulate income was unfounded because of what the financial statements showed: (i) the profit and loss reflected income as distributed to beneficiaries; (ii) the accounts reflected a corresponding liability; and (iii) the trust assets remained $1.00 rather than increasing.
The resolution of the Appellant’s directors to approve the accounts in the relevant years gives rise to an inference the Appellant resolved to make distributions to the beneficiaries (including the Respondent).
There was no error by the primary judge. The Appellant’s appeal was dismissed. Costs followed the event.