The corporate team discuss recent developments concerning side deals and indemnities in commercial contracts as well as directors’ liability changes in NSW, changes in Work Health and Safety Laws and changes to corporate penalties.
Adicho v Dankeith Homes Pty Ltd  NSWCA 316
Any side deals and collateral contracts should be evidenced in writing and drafted as deeds or supported by some consideration (payment) to ensure the terms are enforceable, especially if the terms are inconsistent with the main agreement.
Indemnities in commercial contracts
McLeary v Swift  NSWSC 1403
Indemnities need to clearly cover the relevant liability. And if it is likely that a third party will need the benefit of the indemnity then either: a) name that party in the indemnity, b) ensure the indemnity is held on trust for the third party, or c) execute the document as a deed poll.
Directors’ liability changes in NSW
On 20 November 2012, the New South Wales Legislative Council passed the Miscellaneous Acts Amendment (Directors’ Liability) Bill 2012. Key changes include:
- Directors and officers will no longer be automatically liable for offences committed by a corporation unless they acted as an accessory.
- The reverse onus of proof (“guilty until proven innocent”, found currently in many corporate offences) will be removed except for some environmental and safety offences.
- The number of offences to which special directors’ liability provisions apply will be reduced from over 1,000 to about 50.
Changes in Work Health and Safety Laws (WHS) effective early 2013
These new laws will create a positive obligation on directors and officers to ensure their company complies with WHS laws. An officer failing to exercise due diligence could be guilty of an offence where his or her company has not even breached any WHS laws.
Commonwealth Penalty Units to Rise by end 2012
The monetary amount of penalties for offences under Commonwealth legislation are set to increase significantly by the end of 2012 under legislation recently passed by Parliament.
The legislation implementing the increase is contained in the Crimes Legislation Amendment (Serious Drugs, Identity Crime and Other Measures) Bill 2012, which was assented to on 28 November 2012. The effect of the legislation is that the value of penalty units imposed for offences under Commonwealth legislation will increase from $110.00 to $170.00. The amendments are said to reflect changes in the Consumer Price Index (CPI) and they also provide for three-yearly reviews of penalty unit values going forward.
The increase will apply to penalties for offences under all Commonwealth legislation to which the penalty unit definition set out sub-section 4AA(1) of the Crimes Act 1914 (Cth) applies. This includes for example, offences under the Corporations Act 2001 (Cth), Fair Work Act 2009 (Cth), Competition and Consumer Act 2010 (Cth) and Copyright Act 1968 (Cth).
The increases are due to take effect by 28 December 2012, and will only apply to offences committed after the commencement of the new penalty unit value.