High Court confirms liquidators may not rely on the peak indebtedness rule

17 July, 2023

In the case of Perilya Limited v Nash [2015] NSWSC 706, Perilya Limited (Perilya), the holding company of Perilya Broken Hill Limited (PBHL) was ordered to pay $40,000 for two offences of not complying with a notice to produce under s155 of the Work Health and Safety Act 2011 (NSW) (the Act) by claiming that the documents were commercially sensitive and contained confidential information. Perilya was also ordered to pay approximately $74,000 in costs.


The plaintiff, Perilya, is an Australian company that has its registered office in Perth and operates mining operations at Broken Hill. In June 2012, an employee of PBHL fell approximately 14 metres down a shaft at the mine at Broken Hill and sustained serious injuries including the amputation of his right leg. The State Department of Trade and Investment (the Department) began investigating the incident. The investigator issued two notices under s155 of the Act requesting minutes from all board meetings between May 2008 and December 2012. The board meeting minutes were provided but the commercially sensitive and confidential information had been redacted. A second notice to produce under s155 was issued requesting ‘un-redacted copies’ of the documents previously requested to be produced.

Perilya was charged with two counts of failing to comply with both notices under s155 of the Act, which amounted to $20,000 for each offence. Perilya appealed to the Supreme Court of New South Wales where it argued that the s155 notices were invalid because the inspector’s power to compel documents to be produced is limited to documents relating to health and safety matters in or related to NSW.

The arguments

It was argued by Perilya that there were limitations to the power under s155 of the Act. Those appearing on behalf of Perilya submitted that because the power is contained in a New South Wales Act, it is confined to New South Wales. Perilya further submitted that the powers under s155 do not extend to a notice compelling production of documents not relating to health and safety. Perilya therefore argued that the Department did not have authority or power under s155 to request production of documents that contained confidential information or commercially sensitive information.

The Department submitted that it requested the documents as it believed the documents may contain relevant information due to the fact there was an accident in 2008 which was thought to have similarities to the accident being investigated in 2012.


It was noted that the functions of the regulator under the Act are “wide-ranging”. Justice Hall stated that the provision of s155 are enlivened where the regulator has reasonable grounds to believe that the person is capable of providing the information, the information concerns or relates to a possible contravention of the Act or the giving of information will assist the regulator to monitor or enforce compliance with the Act. Any information relevant to mine safety at the Broken Hill mine therefore would be relevant and “the fact the particular documents, such as minutes of board meetings of the plaintiff company, may contain information relevant to matters other than mine safety does not, in my opinion, result in the validity of the Notices issued by the Regulator.” It was further noted by Justice Hall that statutory protection is provided under ss 269 and 271 of the Act to preserve confidentiality and legal professional privilege of such information. Board meeting minutes of a company would therefore have relevance to such investigations and in a case such as this one where there is a history of particular accidents, “issues such as the reporting to, supervision by, and response of, the Board of Directors of the company on health and safety issues and for the allocation of financial resources, may have relevance to issue of compliance.” His Honour further found that the regulator does not need to know in advance the actual contents of the documents called for under the notice but must have a belief, on reasonable grounds, concerning a subject matter under s155(1). After such a belief is held, the regulator has a right to issue a notice under s155.

Justice Hall also did not consider there to be territorial limitations to notices issued under s155.

Justice Hall distinguished this case from the Federal Commission of Taxation v Australia and New Zealand Banking Group Ltd (1979) 143 CLR 499 (Smorgon case) and the Deveson v Australian Broadcasting Tribunal (1991) 32 FCR 124 cases which were both relied upon by Perilya in their submissions. In the Smorgon case, the High Court was considering the power under ss 263 and 264 of the Income Tax Assessment Act 1936. Justice Hall held that the power under s155 has a broader scope than under ss 263 and 264 because of the phrases “a possible contravention of this Act” or that will “assist the regulator to monitor or enforce compliance with this Act.” These phrases were held to be broader than under the Income Tax Assessment Act 1936 which requires a “reasonable grounds to believe” provision. Justice Hall went further to describe the power under s155(1) as being so broad that it enables a regulator to obtain and examine documents called for in a notice where there is a belief on reasonable grounds that they may be relevant in some way or that they do or may assist in determining a contravention of the Act has occurred and/or for monitoring or enforcing compliance with the Act. This was held to apply to Perilya. It was further determined that s155 cannot be read as “subject to a qualification or limitation that the person to whom a s155 notice is addressed has an unrestricted right to determine for himself or herself whether document have a connection or a sufficient connection with the matter under investigation.”

As to the case of Deveson v Australian Broadcasting Tribunal the circumstances were very different, particularly as the inquiry being conducted by the tribunal in that case had a “limited ambit”. However, in this case, s155 does not have a “limited ambit” and therefore the scope of the matters is not restricted.

In summary, it was held that the fact that the documents requested would deal with issues other than those concerned with health and safety does not itself put the documents out of reach of s155. The documents are subject to the power under s155 and may be protected by the Act’s protective measures of confidentiality and legal professional privilege.

As to the penalty, it was submitted by Perilya that the second breach caused no additional harm. It was held however that each contravention of s155 was a separate offence, both of which having the effect of delay or hindering investigations into the accident. They were held to be “separate acts of non-compliance such that the criminality involved in one could not comprehend or reflect the criminality in the other.” The offences were held to be in the low to medium range of objective seriousness. The maximum penalty for such an offence is $50,000 and therefore $20,000 imposed for each offence is appropriate as it is a little less than half the maximum penalty.

What does this mean for you?

Where a workplace accident occurs and an employer is being investigated, it is imperative that the employer complies with any notice to produce. This is regardless of whether the employer considers the documents requested might not be relevant to health and safety matters. As is made evident in this case, the power to request information under s155 of the Act is wide-ranging and therefore a wide range of information and documents are permitted to be requested. If the company is concerned that the information requested contains commercially sensitive or confidential information, such information may be protected by the protective provisions provided by ss 269 and 271 of the Act. If the company is still concerned about provided the requested documents, it should seek legal advice.

For a full copy of the Supreme Court decision, click here.

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Canadian Court elevates thumbs-up emoji to signature status

In June 2023, a Canadian Court in South-West Terminal Ltd v Achter Land and Cattle Ltd, 2023 SKKB 116, held that the "thumbs-up" emoji carried enough weight to constitute acceptance of contractual terms, analogous to that of a "signature", to establish a legally binding contract.   Facts This case involved a contractual dispute between two parties namely South-West Terminal ("SWT"), a grain and crop inputs company; and Achter Land & Cattle Ltd ("ALC"), a farming corporation. SWT sought to purchase several tonnes of flax at a price of $17 per bushel, and in March 2021, Mr Mickleborough, SWT's Farm Marketing Representative, sent a "blast" text message to several sellers indicating this intention. Following this text message, Mr Mickleborough spoke with Mr Achter, owner of ALC, whereby both parties verbally agreed by phone that ALC would supply 86 metric tonnes of flax to SWT at a price of $17 per bushel, in November 2021. After the phone call, Mr Mickleborough applied his ink signature to the contract, took a photo of it on his mobile phone and texted it to Mr Archter with the text message, "please confirm flax contract". Mr Archter responded by texting back a "thumbs-up" emoji, but ultimately did not deliver the 87 metric tonnes of flax as agreed.   Issues The parties did not dispute the facts, but rather, "disagreed as to whether there was a formal meeting of the minds" and intention to enter into a legally binding agreement. The primary issue that the Court was tasked with deciding was whether Mr Achter's use of the thumbs-up emoji carried the same weight as a signature to signify acceptance of the terms of the alleged contract. Mr Mickleborough put forward the argument that the emoji sent by Mr Achter conveyed acceptance of the terms of the agreement, however Mr Achter disagreed arguing that his use of the emoji was his way of confirming receipt of the text message. By way of affidavit, Mr Achter stated "I deny that he accepted the thumbs-up emoji as a digital signature of the incomplete contract"; and "I did not have time to review the Flax agreement and merely wanted to indicate that I did receive his text message." Consensus Ad Idem In deciding this issue, the Court needed to determine whether there had been a "formal meeting of the minds". At paragraph [18], Justice Keene considered the reasonable bystander test: " The court is to look at “how each party’s conduct would appear to a reasonable person in the position of the other party” (Aga at para 35). The test for agreement to a contract for legal purposes is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract (Aga at para 36). The question is not what the parties subjectively had in mind, but rather whether their conduct was such that a reasonable person would conclude that they had intended to be bound (Aga at para 37)."   Justice Keene considered several factors including: The nature of the business relationship, notably that Mr Achter had a long-standing business relationship with SWT going back to at least 2015 when Mr Mickleborough started with SWT; and   The consistency in the manner by which the parties conducted their business by way of verbal conversation either in person or over the phone to come to an agreement on price and volume of grain, which would be followed by Mr Mickleborough drafting a contract and sending it to Mr Achter. Mr Mickleborough stated, "I have done approximately fifteen to twenty contracts with Achter"; and   The fact that the parties had both clearly understood responses by Mr Achter such as "looks good", "ok" or "yup" to mean confirmation of the contract and "not a mere acknowledgment of the receipt of the contract" by Mr Achter.   Judgment At paragraph [36], Keene J said: "I am satisfied on the balance of probabilities that Chris okayed or approved the contract just like he had done before except this time he used a thumbs-up emoji. In my opinion, when considering all of the circumstances that meant approval of the flax contract and not simply that he had received the contract and was going to think about it. In my view a reasonable bystander knowing all of the background would come to the objective understanding that the parties had reached consensus ad item – a meeting of the minds – just like they had done on numerous other occasions." The court satisfied that the use of the thumbs-up emoji paralleled the prior abbreviated texts that the parties had used to confirm agreement ("looks good", "yup" and "ok"). This approach had become the established way the parties conducted their business relationship.   Significance of the Thumbs-Up Emoji Justice Keene acknowledged the significance of a thumbs-up emoji as something analogous to a signature at paragraph [63]: "This court readily acknowledges that a thumbs-up emoji is a non-traditional means to "sign" a document but nevertheless under these circumstances this was a valid way to convey the two purposes of a "signature" – to identify the signator… and… to convey Achter's acceptance of the flax contract." In support of this, Justice Keene cited the definition of the thumbs-up emoji: "used to express assent, approval or encouragement in digital communications, especially in western cultures", confirming that the thumbs-up emoji is an "action in an electronic form" that can be used to allow express acceptance as contemplated under the Canadian Electronic Information and Documents Act 2000. Justice Keene dismissed the concerns raised by the defence that accepting the thumbs up emoji as a sign of agreement would "open the flood gates" to new interpretations of other emojis, such as the 'fist bump' and 'handshake'. Significantly, the Court held, "I agree this case is novel (at least in Skatchewan), but nevertheless this Court cannot (nor should it) attempt to stem the tide of technology and common usage." Ultimately the Court found in favour of SWT, holding that there was a valid contract between the parties and that the defendant breached by failing to deliver the flax. Keene J made a judgment against ALC for damages in the amount of $82,200.21 payable to SWT plus interest.   What does this mean for Australia? This is a Canadian decision meaning that it is not precedent in Australia. However, an Australian court is well within its rights to consider this judgment when dealing with matters that come before it with similar circumstances. This judgment is a reminder that the common law of contract has and will continue to evolve to meet the everchanging realities and challenges of our day-to-day lives. As time has progressed, we have seen the courts transition from sole acceptance of the traditional "wet ink" signature, to electronic signatures. Electronic signatures are legally recognised in Australia and are provided for by the Electronic Transactions Act 1999 and the Electronic Transactions Regulations 2020. Companies are also now able to execute certain documents via electronic means under s 127 of the Corporations Act. We have also seen the rise of electronic platforms such as "DocuSign" used in commercial relationships to facilitate the efficient signing of contracts. Furthermore, this case highlights how courts will interpret the element of "intention" when determining whether a valid contract has been formed, confirming the long-standing principle that it is to be assessed objectively from the perspective of a reasonable and objective bystander who is aware of all the relevant facts. Overall, this is an interesting development for parties engaging in commerce via electronic means and an important reminder to all to be conscious of the fact that contracts have the potential to be agreed to by use of an emoji in today's digital age.

Published by Foez Dewan
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Venues NSW ats Kerri Kane: Venues NSW successful in overturning a District Court decision

The McCabes Government team are pleased to have assisted Venues NSW in successfully overturning a District Court decision holding it liable in negligence for injuries sustained by a patron who slipped and fell down a set of steps at a sports stadium; Venues NSW v Kane [2023] NSWCA 192 Principles The NSW Court of Appeal has reaffirmed the principles regarding the interpretation of the matters to be considered under sections5B of the Civil Liability Act 2002 (NSW). There is no obligation in negligence for an occupier to ensure that handrails are applied to all sets of steps in its premises. An occupier will not automatically be liable in negligence if its premises are not compliant with the Building Code of Australia (BCA). Background The plaintiff commenced proceedings in the District Court of NSW against Venues NSW (VNSW) alleging she suffered injuries when she fell down a set of steps at McDonald Jones Stadium in Newcastle on 6 July 2019. The plaintiff attended the Stadium with her husband and friend to watch an NRL rugby league match. It was raining heavily on the day. The plaintiff alleged she slipped and fell while descending a stepped aisle which comprised of concrete steps between rows of seating. The plaintiff sued VNSW in negligence alleging the stepped aisle constituted a "stairwell" under the BCA and therefore ought to have had a handrail. The plaintiff also alleged that the chamfered edge of the steps exceeded the allowed tolerance of 5mm. The Decision at Trial In finding in favour of the plaintiff, Norton DCJ found that: the steps constituted a "stairwell" and therefore were in breach of the BCA due to the absence of a handrail and the presence of a chamfered edge exceeding 5mm in length. even if handrails were not required, the use of them would have been good and reasonable practice given the stadium was open during periods of darkness, inclement weather, and used by a persons of varying levels of physical agility. VNSW ought to have arranged a risk assessment of the entire stadium, particularly the areas which provided access along stepped surfaces. installation of a handrail (or building stairs with the required chamfered edge) would not impose a serious burden on VNSW, even if required on other similar steps. Issues on Appeal VNSW appealed the decision of Norton DCJ. The primary challenge was to the trial judge's finding that VNSW was in breach of its duty of care in failing to install a handrail. 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Published by Leighton Hawkes
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Litigation and Dispute Resolution

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