Qld Court confirms position on vicarious liability

Kristie SwainstonOn 29 November 2016, Judge Dorney of the Queensland District Court handed down his decision in House v Anglo Coal (Callide Management) Pty Ltd & Anor [2016] QDC 303. The plaintiff, Glynn House, was injured when a tipper truck he was driving collided with the rear of another truck on a mine haul road. The plaintiff sued his employer, Workpac Pty Ltd, and Anglo Coal (Callide Management) Pty Ltd, with which his employer had contracted for the hire of the plaintiff’s labouring services at the mine site (which was owned and operated by Anglo Coal).

It was accepted by Anlgo Coal that it owed duties of an employer due to the relationship of proximity and the degree to which it controlled the system of work. Consequently, Anglo Coal was required to exercise reasonable care to avoid unnecessary risks of injury arising out of the ongoing conduct of its operations while it was performing its work. Nonetheless, Anglo Coal was entitled to expect that the plaintiff would exercise care in carrying out straight forward activities, of which Judge Dorney considered that driving a truck in dry conditions on a straight stretch of road in circumstances where the plaintiff had done so countless times before qualified as a straight forward activity.

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ASIC action results in Australia’s largest consumer credit remediation program

1202398876_1_AUGroups(Alex_Samson_lr_Brisbane)Car financier BMW Australia Finance Limited (BMW Finance) has given the Australian Securities and Investments Commission (ASIC) an enforceable undertaking whereby BMW Finance will implement Australia’s largest consumer credit remediation program to compensate customers for its responsible lending failures. BMW Finance provides motor vehicle finance to consumers, both directly and through a network of motor vehicle dealers.

The enforceable undertaking follows previous regulatory actions taken by ASIC in relation to BMW Finance’s lending and collections activities, with ASIC having issued 22 infringement notices to BMW Finance in February 2016 for breaching consumer protection provisions in relation to repossession of motor vehicles and responsible lending breaches.

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Insurer unable to deny third party liability claim for jet ski accident – section 54 strikes again

Belinda_RandallIn Allianz Australia Insurance Ltd v Smeaton [2016] ACTCA 59, the Court of Appeal of the Supreme Court of the ACT dismissed an appeal by Allianz in relation to a claim that arose from a jet ski accident on the Ross River in Queensland and ordered Allianz to pay costs of the appeal. The accident resulted in an 18 year old man having his left leg amputated below the knee.

Todd Smeaton had taken out a Club Marine insurance policy with Allianz over a jet ski. The third party liability provisions of the Policy covered the legal liability of Todd Smeaton when the jet ski was under his control and liability of other persons using the jet ski with his approval. There was an exclusion that operated where the jet ski was under the control of ‘an unlicensed person when a licence is necessary.’ At the time of the accident, Scott Smeaton was driving the jet ski with his brother’s approval and had a NSW boating licence, but not the appropriate Queensland licence.

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Insurers must innovate to stay ahead of existing competitors and pre-empt digital start-ups

dlapiperlogoFor Insurers, an effective digital strategy is critical for long-term success. Insurers are already looking to innovate, both to stay ahead of legacy competitors and to pre-empt the erosion and disruption of established business models by ambitious and nimble digital start-ups.

DLA Piper has put together a Digital Transformation in the Insurance Sector White Paper to examine the key legal, regulatory and commercial challenges and issues facing insurers, as they seek to optimise their operations and processes using new technology to revolutionise their organisation and the wider market.

This paper explores the following key digital transformation themes from an insurance sector perspective:

  • Redesigning the customer journey;
  • Agility and simplification;
  • Rethinking traditional models;
  • Machine learning and advanced analytics;
  • From people to software; and
  • How digital is changing the regulatory landscape.

Click here to read our paper on digital transformation in the Insurance industry.

Yacht insurer sunk on contribution claim – section 54 ahoy!

Belinda_RandallThe Full Court of the Federal Court has dismissed an appeal concerning the operation of section 54 of the Insurance Contracts Act and contribution between insurers, in a case which is understood to have had its genesis in the Court’s Insurance List for short matters:

Watkins Syndicate 0457 at Lloyds v Pantaenius Australia Pty Ltd [2016] FCAFC 150

The appeal was brought by the Watkins Syndicate 0457, which had insured a pleasure craft yacht against damage during the period 1 December 2012 to 1 December 2013. The respondents to the appeal were Pantaenius Australia Pty Ltd (and other insurers), who had issued a policy providing direct cover in relation to a Fremantle to Bali race (and return) that the yacht participated in during the Watkins policy period. The yacht ran aground on the return trip from Bali when heading for Darwin. The Pantaenius policy covered the loss and paid out the owner. Pantaenius claimed contribution from Watkins.

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Consultation open on proposed industry funding model for ASIC

1202398876_1_AUGroups(Alex_Samson_lr_Brisbane)Earlier this year, the Government announced that it would introduce an industry funding model for the Australian Securities and Investments Commission (ASIC), commencing in the second half of 2017. The Government has now released two papers: a proposal paper which provides a high-level overview of how the industry funding framework could be applied and a supplementary technical paper which provides details of ASIC’s costs of regulating each sector and metrics as to how levies could be calculated.

Under the proposed industry funding model, ASIC’s costs of regulating each sector will be recovered from entities operating in that sector. The financial advice sector and insurance sector are each subject to a range of potential levies which are summarised below.

The proposed levies for the financial advice sector depend on the type of advice provided:

  • Licensees that provide personal advice providers on Tier 1 products to retail clients will pay a levy of $960 per adviser listed on the financial advisers register (minimum of $960 levy is payable for entities with no advisers listed on the register);
  • Licensees that provide personal advice providers on Tier 2 products to retail clients will pay a $1,500 annual levy;
  • Licensees that provide general advice only to retail or wholesale clients will pay a $920 annual levy; and
  • Licensees that provide personal advice to wholesale clients only will pay a $170 annual levy.

The proposed levies for the insurance sector depend on whether the entity is an insurance product issuer or an insurance product distributor:

  • Issuers will have to pay an anticipated minimum levy of $20,000, plus $0.59 for each $10,000 of net premium review or net earned premium above $5 million;
  • Distributors will pay a $2,400 annual levy; and
  • Risk management product providers will pay a $4,500 annual levy.

The Government is seeking feedback to the measures outlined in the papers, with roundtables being held during the week commencing 28 November 2016 to provide stakeholders with the opportunity to share their views. Parties interested in participating in these roundtables should send their contact details and sector of interest to ASICfunding@treasury.gov.au. Written submissions may also be made during the consultation period, which ends on 16 December 2016. However, additional public consultations will be held on any legislation prior to it being introduced before Parliament.

Further information can be found here

This blog was co-authored by DLA Piper graduate solicitor Ann-Marie Coleman.

Climate change risk heats up for directors

Benjamin Hine

Today marks the formal adoption of the Paris Agreement on climate change in many countries across the globe. When ratified in Australia, the Agreement will give legal effect to the development of an economy dedicated to low carbon emissions. The Agreement ushers in a new age for corporate Australia, in which company directors will be required to give careful and detailed consideration to environmental risks to effectively discharge their legal duties.

Earlier this year, we reported on amendments to the ASX Corporate Governance Principles that require ‘a listed entity [to] disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.’ See: Disclosure Requirements for Environmental Risks in DLA Piper’s Insurance Review.

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Ground breaking ruling set to make commencing class actions easier

Benjamin HineThe Full Court of the Federal Court of Australia has made a ground-breaking order in a proceeding that all class members pay for litigation funding costs, not just funded class members (full decision available here).

This decision is significant because it is the first time that a Court has made a ‘common fund order’ in Australia. The judges commented in their reasons that ‘by encouraging open class proceedings, a common fund approach may reduce the prospect of overlapping or competing class actions and reduce the multiplicity of actions that sometimes occurs with class actions.’ There have been several parallel class actions relating to the same subject matter commenced in Australia in the last two years, so these comments (and the Court’s approach) are perhaps unsurprising. Read the rest of this entry »

High Court of Australia unanimously decides against granting time extension to an abuse victim in a case of extraordinary delay

dlapiperlogoIn Prince Alfred College Inc v ADC [2016] HCA 37, the High Court of Australia has unanimously decided that a victim of child sex abuse in the 1960s should not have been granted an extension of time to issue proceedings in the Supreme Court of South Australia in 2008.

This decision relates to South Australian legislation (the Limitation of Actions Act 1936), but it is an important reminder of the judicial discretion with respect to extending limitation periods in all Australian jurisdictions. Of particular relevance to this decision was:

  • The significant prejudice to Prince Alfred College (PAC) due to the absence or death of critical witnesses and the loss of documentary evidence, particularly in determining whether the school could be found vicariously liable for the acts of its employee; and
  • The victim’s decision in 1997 not to commence proceedings against PAC and the victim’s earlier financial settlements with the school.

Whilst the High Court’s decision in Prince Alfred College Inc v ADC can to some extent be confined to its individual facts, it provides an important reminder to all parties involved in litigation that the judiciary still possesses a broad discretion with respect to limitation periods, and that time-based defences can be a potent tool for defendants in certain circumstances. It is an all too rare instance of the key element of prejudice being triggered by the liability trail having gone cold, as opposed to deficiencies in medical records and the like.

To read the full article and implications for the industry please click here.

This blog was co-authored by DLA Piper partner Kieran O’Brien and DLA Piper solicitor Tim Brown.

ASIC releases Regulatory Guide on review and remediation for retail clients

Sophie DevittThe Australian Securities and Investments Commission (ASIC) has released Regulatory Guide 256 ‘Client review and remediation conducted by advice licensees’. This guide sets out ASIC’s guidance on review and remediation conducted by Australian financial services (AFS) licensees who provide personal advice to retail clients.

All AFS licensees have an obligation to ensure their financial services are provided efficiently, honestly and fairly and this includes taking responsibility for the consequences of their actions if things go wrong and remediating clients who have suffered loss or detriment as a result of misconduct or compliance failure. The review and remediation process is generally a set of activities within the business to review the services provided to clients (where a systemic issues caused by misconduct or compliance failure has been identified) and to remediate those clients who have suffered loss/detriment as a result.

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