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2019 Partner of the Year Award Winner

Hazelbrook Legal is thrilled to announce that Principal, Hugh Griffin, has been named as Lawyers Weekly Corporate Partner of the Year for 2019.
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The Lawyers Weekly Partner of the Year Awards showcase outstanding performance by partners across individual practice areas within the Australian legal industry—the only national awards program to do so. This year’s Awards, held at The Star, Sydney, recognised the notable achievements of lawyers at the height of their career who demonstrate leadership, technical expertise, mentorship and business development skills.

Hugh Griffin, Principal at Hazelbrook Legal, said that he was humbled to be recognised among Australia’s best partners and believes this is a reflection of the incredible team behind him at Hazelbrook. He would also like to congratulate all of the finalists and winners on the night.

See the full list of winners here.

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Understanding and Addressing Climate Risk: A Quick Guide for Company Directors

Legal pressure continues to mount on Australian company directors to consider, assess and disclose the potential impact of climate change on their business. But what is ‘climate risk’, why is it an issue for company directors, and how might it be disclosed?
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By Petrina Schiavi and Jane Boyer

Globally, litigation relating to corporate climate risk disclosure is on the rise.  In the United States, Peabody Coal has recently been pursued in the US Courts for not disclosing its modelling for the impact of climate change on its business.  Closer to home, proceedings were commenced in 2017 against the Commonwealth Bank (though later withdrawn) in relation to its climate risk disclosure.

In Australia, shareholders have filed climate risk focused resolutions with several listed companies. These companies include: Shell, BHP and Rio Tinto in the resources sector; and CBA and ANZ in the financial sector. Resolutions requiring better climate change risk disclosure have been successfully passed by Shell, BP and Rio Tinto, raising the disclosure bar for these corporations.

Corporate regulators ASIC and APRA have recently highlighted the need for directors to ‘understand and continually reassess existing and emerging risks (including climate risk) that may affect the company’s business’, including short term and long-term risks.1

There are increasing moves from financial regulators towards mandatory reporting of climate-change related risks. In 2020, Taskforce for Climate-related Financial Disclosure (TCFD) based reporting will become mandatory for the almost 2500 global signatories to the Principles for Responsible Investment (PRI) signatories. APRA and the Reserve Bank of Australia have endorsed the TCFD framework, and ASIC has also indicated its support expressing that statutory reporting obligations require climate change risks to be disclosed in a way that is ‘useful and relevant to the market’.2

What are climate risks?

Risks to companies as a result of climate change can be understood as:

  • Physical – for example, direct damage to assets or property, decreased asset values, supply chain disruption and an increased chance of insurance claims.
  • Transitional – such as policy changes, technological innovation and social adaptation to climate change. From this there can be a disruption from the adjustment to a low carbon economy with impacts on pricing and demand, stranded assets and the potential of defaults on loans.
  • Liability – including stakeholder litigation as well as regulatory enforcement from directors not considering or responding to impacts of climate change. This can result in business disruption from litigation as well as penalties from litigation.3

Climate Risk and Directors’ Duties

The Hutley Opinion on Climate Change and Directors’ Duties warns that Australian directors and boards should actively engage with climate change risks in order to meet their statutory requirements of a duty of care and diligence under s 180 of the Corporations Act 2001 (Cth).4 Directors who do turn their attention to the impact of climate change risks on their business will need to form their own assessment as to what action needs to be taken. This is likely to include obtaining and relying upon information and advice provided by employees or experts. Directors who are proactive in this regard may have the protection of a statutory defence ‘the business judgment rule’ under s 180(2) of the Corporations Act.

Under Australian Corporations Law, listed reporting companies are required to prepare and lodge a ‘financial report and directors’ report’ every financial year (s 292(2)). If the company’s operations are subject to any significant environmental regulation, the directors’ report is required to give details of the company’s performance in relation to that regulation (s 299(1)(f)). Directors may have a duty to assess the ability of their company to deal with increasing incidences of extreme or varied weather events, particularly those companies whose operations depend significantly on energy transmission or whose business is otherwise exposed to extreme weather events, such as insurance companies. Failure to take these events into account may lead to exposure to shareholders and others who suffer loss as a result. Conversely, those companies that address climate change issues early and in a meaningful way are well-placed to obtain a competitive advantage over competitors through an early transition to an increasingly climate-conscious regulatory environment, as well as reputational and investment benefits.

What should company directors do?

ASIC has recently released a report into climate change risk disclosure by Australian listed companies in 2018.5 ASIC recommends that directors and officers of listed companies:

  • Adopt a proactive approach to emerging risk, including climate risk;
  • Develop and maintain strong corporate governance;
  • Ensure legal compliance, including s 299A(1)(c) of the Corporations Act 2001 (Cth) that requires the disclosure of material business risk affecting prospects in an Operating and Financial Review, which may include climate change.

The current and future impacts of climate change pose significant financial risk to many corporations. APRA’s 2019 Information Paper 3 identified a range of risk management initiatives that companies can use to address and manage climate-related financial risk. These include:

  • Incorporating climate-related financial risks in risk registers;
  • Incorporating climate risk considerations into existing policy documents, and investment and underwriting procedures;
  • Undertaking improved due diligence on customers for lending, underwriting and investing; and;
  • Producing regular board and management reports on climate-related risks.

APRA notes that many of its regulated entities have disclosed climate change related financial risks to their external stakeholders in multiple reports, including: the annual financial report, sustainability reports, investor presentations as well as global reporting requirement and through reporting on their website.

directors take steps to inform themselves about climate related risks to their business. Directors should consider when and how these risks might materialise, and whether there is anything that can be done to alter the risk. In more complex situations which require specialist knowledge, a director should seek out expert advice as described in s 189 of the Corporations Act.

Accurate and timely disclosure of the risks of climate change allows regulators as well as investors to assess whether entities are financially viable, well-governed, compliant with regulators and resilient to the financial impacts of climate change. This is important not only for regulatory compliance, but also helps to ‘future proof’ companies as they adapt to a changing environment.

1 Disclosing Climate Risk

2 Climate Change

3 Climate Change: Awareness to Action

4 Climate Change and Directors’ Duties

5 Climate risk disclosure by Australia’s listed companies

 

Material in this article is available for information purposes only and is a high level summary of the subject matter. It is not, and is not intended to be, legal advice. You should first obtain professional legal advice prior to taking any action on the basis of any information contained in this article. This article is copyright. For permission to reproduce this article please email Hazelbrook Legal: enquiry@hazelbrooklegal.com

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The End of Grandfathered Conflicted Remuneration for Financial Advisers

With effect from 1 January 2021, grandfathered provisions for conflicted remuneration will be repealed. By removing the grandfathered exemptions, the full effect of FOFA laws would apply and conflicted remuneration would be banned in its entirety.
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By Hugh Griffin and Agustina Limpid

The Government has announced its acceptance of Recommendation 2.4 from the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

With effect from 1 January 2021, grandfathered provisions for conflicted remuneration will be repealed.

These grandfathered provisions currently allow conflicted remuneration and other banned remuneration to be paid where the benefit is paid under a grandfathered arrangement. Further, effective from the same date, the Government will implement new regulations that impose rebate schemes for affected retail clients where grandfathered conflicted remuneration are still in contracts.

To ensure full implementation by 1 January 2021, the Government has issued a Ministerial Direction to commission ASIC to monitor and report on industry behaviour in the period between 1 July 2019 to 1 January 2021.

What is Conflicted Remuneration?

Broadly speaking, conflicted remuneration are pay structures that accord benefits (monetary or otherwise) to AFS licensees, or representatives, where the nature of the benefits could reasonably be expected to influence the choices of financial products recommended to retail clients (see: section 963A of the Corporations Act and ASIC’s RG 246). In 2013, conflicted remuneration schemes for financial advisers were banned under the Future of Financial Advice (FOFA) law reforms. However, exemptions allow for grandfathered arrangements (entered into with clients before the application day or prior to 1 July 2013) to have conflicted remuneration benefits paid to financial advisers.

Effect of Ban on Conflicted Remuneration

The Royal Commission raised concerns that grandfathered provisions for conflicted remuneration produce the “risk of misaligned incentives, which can lead to inappropriate advice” given to clients.

By removing the grandfathered exemptions, the full effect of FOFA laws would apply.

As a consequence, financial advisers will be required to treat all clients (grandfathered and non-grandfathered) under the same fee structures. Most relevantly, grandfathered clients would now receive the same protections under the regime as non-grandfathered clients who pay fees on an ongoing fee arrangement and benefits on a fee-for-service basis. Under RG 245 and Part 7.7A, Division 3 of the Act, financial advisers are obliged to produce annual Fee Disclosure Statements to clients on ongoing fee arrangements so as to provide transparency regarding fees and services relevant to clients.

By contrast, under grandfathered arrangements, fees paid to financial advisers were either on a commissioned or volume-based benefit basis – classifying it as conflicted remuneration given that fees paid to financial advisers would vary from product to product, as well as by volume; thus, financial advisers may be incentivised to advise clients to materially benefit themselves.

While the effects of fees under either scheme (grandfathered or otherwise) do not materially produce any substantive difference; nevertheless, significantly, the protection of disclosure imposed by RG 245 and Part 7.7A, Division 3 of the Act would not extend to grandfathered clients who are not under ongoing fee arrangements. Distinctively, the benefits paid to financial advisers under grandfathered schemes are not determined at the outset, whereas non-grandfathered schemes are. This means that grandfathered clients would not have the advantage of understanding the fees being charged to them given that the fees are classed as commissions. On the other hand, non-grandfathered clients pay benefits to financial advisers on a fee-for-service model, which allows for a clear outline on the relevant fees and services chargeable to them.

Best Interests Duty

Financial advisers are bound by the duty to act in the best interests of their clients when giving personal advice. In banning conflicted remuneration in totality, the Government seeks to align financial advisers more closely to their duty to act in the best interest of clients, to promote industry professionalism, and to improve the quality of advice given to retail clients. In particular, the effect of the full ban on conflicted remuneration seeks to ensure that benefits flow to consumers and not the industry.

Material in this article is available for information purposes only and is a high level summary of the subject matter. It is not, and is not intended to be, legal advice. You should first obtain professional legal advice prior to taking any action on the basis of any information contained in this article. This article is copyright. For permission to reproduce this article please email Hazelbrook Legal: enquiry@hazelbrooklegal.com

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2019 Partner of the Year Awards Finalist

Hazelbrook Legal is thrilled to announce that Principal, Hugh Griffin, has been named as a finalist in four categories of the Lawyers Weekly’s Partner of the Year Awards for 2019. The categories are Corporate, Commercial, Financial Services, and Mergers and Acquisitions.
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The Lawyers Weekly Partner of the Year Awards showcases outstanding performance by partners across individual practice areas within the Australian legal industry—the only national awards program to do so.

This is Hugh’s second consecutive year as a finalist in multiple categories, and once again recognises Hazelbrook’s high calibre of work, client book and standing amongst Australia’s largest and most prestigious law firms.

“Lawyers Weekly’s Partner of the Year Awards recognises those at the top of their game, showcasing the achievements of leaders going above and beyond for their firm, clients and the community at large,” said Lawyers Weekly editor Emma Ryan.

Hugh Griffin, Principal at Hazelbrook Legal, said that he was humbled to be recognised among Australia’s best partners and believes this is a reflection of the incredible team behind him at Hazelbrook.

The winners will be announced at a black-tie gala dinner on 30 May in Sydney.

 

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2019 Budget Highlight: Financial Sector

In the wake of the Royal Commission into misconduct in the Banking, Superannuation and Financial Services Industry, the Government has provided financial regulators with a suite of new funding in the 2019 Budget.
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By Hugh Griffin and Jane Boyer

Treasurer, Josh Frydenberg announced that new funding to the Australian Securities Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA) and the Federal Court will ‘strengthen the financial system and deliver better outcomes for all Australians’.

The Federal Government will spend $640 million on financial regulators to help build trust in the financial sector and ensure financial system regulators have appropriate resourcing to expand their capability to deliver on their new responsibilities, enforcement and supervision . This is in represents the Government’s response to the Royal Commission that ASIC remains appropriately resourced in order to take on new responsibilities and work on referrals provided to it after the Royal Commission’s findings were handed down.

The 2019 Budget provides $400 million for ASIC for an accelerated enforcement strategy and enhanced on-site supervisory capability for monitoring large institutions to deliver on ASIC’s expanded role in relation to superannuation.

A similar funding arrangement will apply to APRA with $56.9million to be spread over the next three years . This will be dedicated towards strengthening APRA’s supervisory and enforcement activities, including those in relation to governance, culture and renumeration, as well as enhancing APRA’s regulation of superannuation funds.

The Federal Court will also receive a boost with $35 million allocated to expand the jurisdiction of the Federal Court to include corporate crime. The funding will also provide the court with two new judges, extra staff and additional courtrooms to deal with upcoming cases expected to be referred by ASIC to the DPP in the wake of the Banking Royal Commission.

The Budget also provides $2.8 million to the Australian Financial Complaints Authority (AFCA) to consider eligible financial complaints dating back to . This time frame is an improvement on the current scheme which only allowed AFCA to consider matters which occurred in the past six years, or in the case of a complainant who has been through a financial firms’ internal dispute resolution process, this has been reduced to two years. However, there is still uncertainly as to who might qualify as ‘eligible’, AFCA is expected to announce guidance on these matters before 1 July 2019.

The cost for these reforms will be partially offset by revenue received through ASIC’s industry funding model and increases in the APRA Financial Institution Supervisory Levies.

To ensure these reforms achieve lasting change in the sector, Treasury has been allocated a new taskforce – Financial Services Reform Implementation Taskforce. This taskforce will undertake a review of the Royal Commission reforms as well as coordinate reforms efforts between ASIC, APRA and other agencies.

What does this mean for financial service providers?

The Government has implemented these measures of increased funding to address a lack of confidence in the banking and financial sector after the Royal Commission.

After the damning findings of their lack of supervision of the financial sector, with new roles and an increased budget, ASIC and APRA, along with other regulatory bodies should be able to provide confidence and peace of mind for consumers wishing to invest in the financial services .

Financial services institutions should take note of the new responsibilities of financial regulators and ensure their compliance with the appropriate instruments.

However, while industry has welcomed additional funding for the financial regulators and additional resources for the Federal Court, there is some concern about the increases in ASIC’s user pays funding model.

The Federal Government has moved the cost of ASIC and other financial regulatory bodies from the taxpayer to the industries it regulates. Increases in the model could see costs passed on to financial services institutions as well as consumers.

The report of the new Financial Services Reform Implementation Taskforce, which is due in three years’ time will be able to provide some evidence as to how successful these reforms have been in addressing the recommendations of the Royal Commission.

Are these reforms guaranteed?

With an election scheduled to be held before 18 May, and polling suggesting the Government won’t be returned to office after the election there is no guarantee that these measures will be implemented. However, in the wake of the Royal Commission reforms in this area it would appear to be bipartisan. Labor has stated that it will implement 75 of the Royal Commission’s recommendations and will establish a victim compensation package for those effected by financial misconduct in the banking and financial sector.

Material in this article is available for information purposes only and is a high level summary of the subject matter. It is not, and is not intended to be, legal advice. You should first obtain professional legal advice prior to taking any action on the basis of any information contained in this article. This article is copyright. For permission to reproduce this article please email Hazelbrook Legal: enquiry@hazelbrooklegal.com

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IA-CEPA: Towards an Australian-Indonesian Economic Integration

More than ever, companies need to be ready to orient their businesses towards regional and international relevance and leverage economic integration opportunities provided by FTAs.
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By Hugh Griffin and Agustina Limpid

“Our region, the Indo-Pacific, is now the fulcrum of the global economy” – Scott Morrison

On 4th March 2019, a landmark trade agreement was signed between Australia and Indonesia. Worth approximately USD$11.4 billion in trade value, the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) will open doors on preferential free-flow of trade, capital and ideas that would drive significant economic benefits for the two giant economies in the region. The IA-CEPA, which seeks to facilitate open markets and economic integration between Indonesia and Australia, has been under negotiation since 2010. After nearly ten years, negotiations on the IA-CEPA finally concluded in August last year and the Agreement was signed by the two nations this month. When fully-ratified into force, the IA-CEPA will liberalise trade and open market access between Australia and Indonesia, strengthening economic ties and cooperation. The IA-CEPA is expected to unlock greater trade potentials for the two economies and enhance strategic cooperation in trade, investment, maritime connectivity, as well as boosting many sectors (including e-commerce).

Key Facts on Indonesia:

  • The world’s third largest democracy and fourth most populous country
  • A fast-growing economy, being the third fastest economy in the G20
  • The world’s fastest growing consumer market, with GDP reaching USD$1 trillion in 2017 and is steadily growing at a rate of 5% per annum
  • Expected to be the world’s fourth largest economy by 2030, with GDP predicted to rise to $10.1 trillion (three times of Australia’s)

What IA-CEPA means for Australian and Indonesian businesses:

“A new era of closer economic engagement between our countries”

  • Reduction of trade barriers through preferential or duty-free terms for 99% of Australian goods entering Indonesia, as well as exemption of tariffs for Indonesian exports into Australia
  • Boost Australian agribusiness exports into Indonesia through lower tariffs and improved access to Indonesian markets
  • Expansion of Australian service industries (education, tourism, telecommunications and health) into Indonesia’s growing economy
  • Promote collaboration between industry networks and grow trade opportunities for Australian and Indonesian businesses
  • Increase in bilateral foreign direct investments

Is Your Business Ready to go Regional?

Given Australia and Indonesia’s proximity and economic sizes, mutually open markets facilitated by the IA-CEPA will strategically direct growths for both Australian and Indonesian businesses. Further, given Indonesia’s fast economic development and Australia’s move towards a more service-oriented economy; both countries are uniquely positioned to support one another’s economic progress. IA-CEPA is likely to boost the manufacturing, export, education and agribusiness industries for Australia and Indonesia.

Australia currently has free trade agreements in force with nine other countries, four of which are regional. In 2016, ASEAN’s total GDP was USD$2.5 trillion, with Indonesia accounting for 36.6% of the total. Altogether, Australia’s bilateral investment and trade with ASEAN is worth $224.4 billion and $93 billion respectively, surpassing its trade and investments with the United States, China, Germany and Japan. By 2030, Australia is expected to have FTAs with Asia’s five largest economies (China, India, Indonesia, Japan and South Korea).

More than ever, companies need to be ready to orient their businesses towards regional and international relevance and leverage economic integration opportunities provided by FTAs. IA-CEPA offers a significant gateway for Australian and Indonesian businesses to have a ready advantage within ASEAN market shares.

We will continue to provide more industry updates relating to the IA-CEPA.

Material in this article is available for information purposes only and is a high level summary of the subject matter. It is not, and is not intended to be, legal advice. You should first obtain professional legal advice prior to taking any action on the basis of any information contained in this article. This article is copyright. For permission to reproduce this article please email Hazelbrook Legal: enquiry@hazelbrooklegal.com

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ASIC puts spotlight on fees and costs disclosure regimes for managed investment and superannuation schemes

ASIC has released a consultation paper in a bid to simplify fees and costs disclosures for superannuation and managed investment schemes.
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By Lawrence Monagle and Agustina Limpid

February 2019

Consultation Paper 308 (Consultation Paper) forms the latest attempt by ASIC to get disclosure of fees and costs associated with managed investment schemes and superannuation funds right.  Broadly, ASIC is aiming to improve the ease of use and accessibility of costs and fees information, so that it is more consumer-friendly, with the end goal being that fees and costs are more comparable from product to product and between providers.

The Consultation Paper outlines ASIC’s commitment to ensuring consumers have ready access to information about fees and costs without being misled by advertising or trapped by hidden costs. The Consultation Paper acknowledges the complexity of disclosure regimes for fees and costs applicable to superannuation and managed investment products, but seeks to standardise and streamline disclosure practices so that consumers can make informed value-for-money investment decisions. After many years of continued and unsuccessful efforts to reform disclosure regimes, this Consultation Paper demonstrates ASIC’s resolve to move forward with proposed reforms to RG 97’s fees and costs disclosure requirements.

ASIC has provided a Report (REP 581) to assist industry participants in making submissions. ASIC is also seeking feedback on draft amendments to Schedule 10 of the Corporations Regulations. The chief purpose of ASIC’s inquiry is to empower consumers with full understanding of fees and costs being charged to them, while ensuring that disclosure is also practically feasible for industry participants.

Product Disclosure Statements (PDS) fees and costs disclosures are currently regulated by Pt 7.9 of the Corporations Act (2001) and Schedule 10 of the Corporations Regulations. The current regime requires issuers of superannuation and managed investment products to disclose their fees in a PDS and periodic statements. However, ASIC has identified a number of inconsistencies in the disclosure of fees and costs by many financial service providers, including incorrect disclosure or even non-disclosure in some cases.

In order to address these inconsistencies, ASIC is proposing to implement a number of significant changes to the current regime, including:

  • Simplifying periodic statements;
  • Changing the treatment of transactional and operational costs;
  • Changing the treatment of performance fees;
  • Explaining why fees and costs must be disclosed; and
  • Reducing the differences between superannuation and managed investment products in fee disclosures.

The proposed changes by ASIC would have the effect of streamlining the overwhelming amount of data provided to consumers on fees and costs, eliminating irrelevant components from disclosures, while clearly highlighting expenses deductable from their accounts. Most relevantly, consumers can expect a more organised overall presentation of fees and costs, and a focused on providing only usable information most relevant to them.

What does this mean for the superannuation and managed investment sector?

These proposed changes aim to simplify the framework surrounding fees and costs disclosures, so that consumers can fully understand the fees being charged to them under superannuation and managed investment products.

Industry professionals are invited to provide feedback up until 2 April 2019. ASIC is expected to release its findings in the second half of 2019however, it is not known when any of the proposed changes would be implemented.

Review fees and costs disclosure to ensure compliance

Issuers of superannuation and managed investment products must ensure that they continue to comply with the existing disclosure requirements under the Corporations Act and relevant Regulations. These requirements however, may undergo significant changes within the next twelve months should ASIC follow through with its proposed amendments. Financial service providers likely to be impacted by the new regime are encouraged to conduct a thorough review of their fees and costs disclosure requirements and conduct updates on how fees and costs are represented under PDS and periodic statements.

Material in this article is available for information purposes only and is a high level summary of the subject matter. It is not, and is not intended to be, legal advice. You should first obtain professional legal advice prior to taking any action on the basis of any information contained in this article.  This article is copyright. For permission to reproduce this article please email Hazelbrook Legal: enquiry@hazelbrooklegal.com

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Heatwave on Climate Change for Company Executives this Summer

Australian courts and regulatory authorities are making it clear that director liability for climate change risk management is not a short-term threat.
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By Petrina Schiavi and Nivodita Sharma

February 2019

The heat is rising on senior corporate executives in relation to climate change risk management.

Last year, the class action against Volkswagen in relation to its diesel car emissions scandal experienced some serious judicial action in Australia. The Australian Federal Court in the Volkswagen case has now reportedly ordered the company to reveal the names of relevant directors and executives of Volkswagen to the Court by 1 February 2019.

Court action taken against Volkswagen in other jurisdictions across the world has resulted in the prosecution of a number of senior executives and employees in those countries. Although Volkswagen is one of a handful of major cases in the headlines, this is indicative of a broader shift towards potential director liability for the management of climate change risk.

Environmental groups are increasingly using court action to hold corporations accountable for their climate impacts.  For example:

  • 2017: The Environmental Justice Australia (EJA) sued the Commonwealth Bank of Australia[1] on behalf of the bank’s shareholders for concealing major climate change risks and painting a deceptive picture on climate change strategies in its 2016 annual report. Although the case was ultimately dropped, it highlighted the gravity of the threat on companies and their boards and created an urgency for companies to consider and manage climate change risks.
  • 2019: The Federal Court on January 17, 2019 once again acted on a law suit filed by EJA involving Super fund REST[2]. Justice Perram reflected upon the sensitivity of these cases and stated that the case appears to raise a socially significant issue about the role of superannuation trusts and trustees in the current public controversy about climate change. It is legitimate to describe the Applicant’s litigation as being of a public interest nature.

It is highly likely that the spell of climate change related cases will continue to rise in the future and the fate of all those holding fiduciary powers will turn if appropriate corporate strategies are not adopted. Australian courts and regulatory authorities are making it clear that director liability for climate change risk management is not a short-term threat.

Are director liabilities on climate change a foreseeable risk or a material risk?

Regulators have been identifying climate change risks as not only foreseeable but material and actionable now. The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) are together working on a broader movement towards adequate and consistent reporting on climate change risks and indications are that company directors could be liable for failure to disclose these risks.

Are you or your company exposed to climate change risks?

Considering recent developments in the legal and regulatory space, no company can afford to ignore climate change risks. There are not only the physical risks but also the transition risks that trigger the fiduciary duties of directors. The Centre for Policy Development (CPD) together with Future Business Council commissioned legal advice on liabilities of directors in relation to climate change. CPD reported that the directors need to act on climate change before it’s too late. As pointed out in the CPD Opinion, Directors who fail to consider climate change risks now, could be found liable for breaching their duty of care and diligence in the future.

How to mitigate the risk of getting sued

According to ASIC’s Report[3] issued in the second half of 2018, directors and officers of listed companies are recommended to adopt a probative and proactive approach to emerging risks of climate risk. In relation to rising investor litigation cases on companies relating to inadequate disclosures on climate risks, ASIC reported that the voluntary framework developed by the Taskforce on Climate-related Financial Disclosures[4] can assist in this regard.

The scope of director’s duty of care and diligence is broad enough to hold directors individually liable for risks relating to climate change. Legal strategists and policy-makers are formulating frameworks and methodologies to effectively handle this issue and make the climate change journey smooth for corporates and their executives.

Material in this article is available for information purposes only and is a high level summary of the subject matter. It is not, and is not intended to be, legal advice. You should first obtain professional legal advice prior to taking any action on the basis of any information contained in this article.  This article is copyright. For permission to reproduce this article please email Hazelbrook Legal: enquiry@hazelbrooklegal.com

[1] Concise Statement (as filed)

[2] McVeigh v Retail Employees Superannuation Pty Ltd [2019] FCA 14 

[3] Report 593: Climate risk disclosure by Australia’s listed companies, September 2018

[4] https://www.fsb-tcfd.org/

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Agreement or Deed: What’s the Difference?

At first glance, Agreements and Deeds appear to be similar however contractual requirements, methods of execution and time limitations give rise to distinct differences.
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By Hugh Griffin and Michaela Janu 

January 2019

At first glance, Agreements and Deeds appear to be similar. Both documents record and impose legally binding terms on the contracting parties, and are frequently used to avoid the cost, uncertainty and, often undesired, publicity associated with judgments arising out of litigation.

However contractual requirements, methods of execution and time limitations give rise to distinct differences, and parties should be aware of these differences when drafting and executing documents.

Consideration

Agreements are documents that set out ‘bargains’ made between parties where one party promises something to the other party in exchange for something else (otherwise known as consideration).

Deeds on the other hand, are a type of promise or commitment that doesn’t require anything in return.

The subject matter of a Deed can vary greatly. Purposes include to create a binding obligation on another person, such as through a Deed of termination or an indemnity Deed, or to affirm an agreement that passes a legal or equitable interest in specified rights, such as in a financial guarantee.

Form

An Agreement can take a flexible form and be made up of multiple documents. However, a Deed is required to be in writing, signed, and witnessed, with an explicit indication that it is intended to be a Deed. For example, case law has found that by using the words ‘by executing this Deed’ or ‘executed as a Deed’, specifying how delivery will be made and not referencing central concepts of Agreements, such as “consideration”, a Deed will be validly drafted (although not effective until properly executed).

Execution

A Deed will only become enforceable when it is delivered to the other party. When made between individuals, the signing of a Deed is dealt with under state legislation so it’s always best to check local state requirements to make sure that the Deed is properly executed. In many jurisdictions, Deeds passing an interest in real property that is devoid of consideration, for example, a transfer of title in land to another person such as a family member, are required to be witnessed.

Agreements need only be signed by both parties to be enforceable and can be executed by an agent on behalf of a party, such as a lawyer.

Section 127 of the Corporations Act 2001 governs execution of documents by Corporations, which is inclusive of both Agreements and Deeds.

Limitation Period

Claims for breach of an Agreement must generally be brought within six years of execution, while complaints pertaining to a Deed must be brought (in New South Wales and the Australian Capital Territory) within twelve years. Exact limitation periods are dependent on the governing law of the Deed, which should be explicitly outlined to avoid future uncertainty.

In circumstances where longevity of rights is desired, such as in contracts surrounding issues of confidentiality, termination of agreements, or financial guarantees, a Deed may be preferable.

The decision to execute a document as an Agreement or a Deed is dependent on many circumstances. Where there is any doubt over the most suitable form of contract, parties are encouraged to seek legal advice.

Material in this article is available for information purposes only and is a high level summary of the subject matter. It is not, and is not intended to be, legal advice. You should first obtain professional legal advice prior to taking any action on the basis of any information contained in this article.  This article is copyright. For permission to reproduce this article please email Hazelbrook Legal: enquiry@hazelbrooklegal.com

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Hazelbrook bolsters team with Senior Promotions

Hazelbrook is committed to recognising and promoting high performing talent and to providing genuine progression opportunities for its team members.
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January 2019

Principal Hugh Griffin said “We congratulate Lawrence, Aabid and Mayson on these well deserved promotions, and thank them for their outstanding contribution.  We are proud of creating an environment that invests in its people, and supports them to succeed – this was a founding principle of the Hazelbrook business.”

Aabid Farouk to Senior Associate

This is a well deserved promotion recognising Aabid’s hard work, dedication and consistent delivery of outstanding work.

Aabid is a lawyer in pursuit of excellence and this promotion recognises the quality of his work, his management of critical tasks and his standing with our key clients.

Aabid’s specialties include Corporate Law, Intellectual Property and Mergers & Acquisitions.

Lawrence Monagle to Senior Associate

This promotion recognises the significant contribution that Lawrence has made to the Firm and to Hazelbrook’s clients and their respective businesses.  He is a dedicated counsel to his clients, and a tireless advocate for his clients’ interests.

Lawrence has been with Hazelbrook almost since its inception, and has been a core part of our growth and success over the past 5 years.

Lawrence was recognised as a national finalist in the Lawyers Weekly “Thirty under Thirty” awards in 2018.

Lawrence’s specialties include Financial Services and Mergers & Acquisitions.

Mayson Brommer to Hazelbrook Practice Manager

Mayson has thrived in her role as practice administrator and this promotion recognises the vital role she plays in the successful operation of the business.

Mayson meets challenges with dedication and poise, and her can-do attitude, sharp intellect and excellent initiative means she is a steadfast support to the team and to our clients.

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