03 Oct 2019

Government Services 5 Minute Fix 01

By the Government Services team

Get your 5 Minute Fix of government sector news. This issue: the impact of the Palace Letters case; do you need to review your contract management practice; can anonymous tweeting breach the APS Code of Conduct and justify termination; and a review of delegations and VOI requirements.

Administrative law

The Palace Letters and You

In Hocking v Director-General of the National Archives of Australia [2019] FCAFC 12, the Full Federal Court considered whether correspondence between the then Governor-General and The Queen or The Queen's Private Secretary (the Palace Letters), were Commonwealth records. It's now bound for the High Court, with the appeal likely to be heard in late 2019 or early 2020.

This case raises fundamental questions of statutory construction and is likely to have an enduring effect on the interpretation of the Archives Act, particularly on the question of when a person who holds high office does something in an official or personal capacity.

You can read our analysis and get more background on the Palace Letters case here.

Contracting and procurement

Contracts ahoy! Navigating your termination rights

When does a party lose their right to terminate, and what is "a reasonable time" when exercising that contractual right? These two core issues in government procurement were recently considered by the NSW Court of Appeal, and the result means agencies might need to review their contract management practices.

In Donau Pty Ltd v ASC AWD Shipbuilder Pty Ltd [2019] NSWCA 185, Donau (formally Forgacs) and ASC entered into a subcontract for the construction of various 'Blocks' of the Royal Australian Navy's "Hobart Class" Air Warfare Destroyers (Original Contract).

Approximately three years later, and after numerous variations to the Original Contract arising from multiple design changes, defects and delays, the Original Contract's remuneration mechanism became untenable, so the parties entered into a Second Heads of Agreement (2HA) with a new mechanism for calculating Forgacs' remuneration.

The 2HA required Forgacs to "use all reasonable endeavours" to complete a Baseline True-Up by 14 December 2012. If this was not agreed by the parties by 28 February 2013, ASC had the express right to terminate the 2HA. Critically, the 2HA did not set a time limit in which ASC had to exercise the termination right. The parties continued negotiations into June 2013, until ASC purportedly terminated the agreement.

When a contract is silent as to the time for when a contractual obligation should be performed, the law says it must be performed in "a reasonable time" – but what constitutes "a reasonable time"?

According to the Court, the legal meaning of a "reasonable time" will be determined as at the date of the contract, but the meaning of "reasonable" as a matter of fact should be determined by when the right is first capable of being exercised. Here, ASC had not done so, as it had not exercised the right to terminate promptly after that right had accrued.

The two most constructive takeaways are:

  • if possible, consider executing a standstill agreement or an express reservation of rights if you anticipate needing more time to negotiate. This is a helpful tool in preserving your rights at that point of time while negotiations between the parties continue and is likely to be persuasive in informing the courts determination as to what is "a reasonable time"; and
  • once the right to terminate accrues and you are contemplating exercising this right, you should communicate this intention expressly with the other party as soon as possible.

Are you allowed to sign that? Reviewing delegations and VOI requirements

Someone asks you to urgently sign a document. You pick up your favourite pen ready to sign and then it occurs to you - am I allowed to sign it? This is an excellent question and one that in the hustle and bustle of our busy work day, isn't asked often enough.

Delegations: Following the Federal election earlier this year and the various machinery of government changes, now is the perfect time to review your land delegations to ensure they are up to date and that your signatories are authorised delegates that can sign on your Department’s behalf. State and Territory Government entities have varying requirements and these should be reviewed individually. However, for Commonwealth departments dealing with land transactions (including leases) a signatory must have delegation under both the Public Governance, Performance and Accountability Act 2013 (Cth) (PGPA Act) and under the Lands Acquisition Act 1989 (Cth) (LAA):

  • PGPA Actprovides the Commonwealth delegate the authority to enter into a contract or agreement (such as a lease) and to expend money under that contract or agreement. PGPA Act delegations can be sub-delegated and so are generally managed internally by Commonwealth Departments.
  • LAA – provides the Commonwealth delegate the authority to acquire or dispose of an interest in land (including entering into a lease). The LAA delegations are set out in the Lands Acquisition Act Delegation 2016, available on the Department of Finance's website. LAA delegations are granted by the Commonwealth Finance Minister only, they cannot be sub-delegated.

VOI: As we transition to online conveyancing across the country, a number of jurisdictions have introduced Verification of Identity (VOI) requirements that apply to all land transactions (including for Commonwealth, State and Territory government entities). VOI requirements differ between jurisdictions in Australia, which can include requiring a VOI to be conducted for the signatory of any dealing registered on title (as in NSW). The VOI is required to be conducted prior to the dealing being registered and so should be conducted at the time of signing or soon thereafter. VOIs can be conducted by Clayton Utz and are valid for 2 years.

If you require any assistance to review your delegations or to comply with your VOI requirements, contact Danielle Mildren or Sarah Mazzer.

Employment

Hold Your Fire! Anonymous tweeting can breach the APS Code of Conduct and justify termination

Restrictions imposed on public servant's abilities to express political views (including when those views are expressed are anonymously) are lawful and constitutional.

On 7 August 2019, the High Court found that an APS employee's anonymous tweets can breach the APS Code of Conduct and justify termination of employment in the highly anticipated Comcare v Michaela Banerji [2019] HCA 23 judgment.

Overturning the Administrative Appeals Tribunal's decision, the High Court unanimously held that the restrictions imposed on a public servant's ability to express political views are lawful and constitutional.

This is a significant decision for all public sector employers. The High Court decision confirms the APS can lawfully regulate its employees' expression of political views and take disciplinary action, up to and including termination of employment, where an employee is critical of the APS and the Government, even if the views are expressed anonymously.

This case is also likely to have impact and relevance (subject to State specific legislation, codes of conduct and policies) to all Government employers.

Public sector employers should be getting back to basics and reviewing their applicable codes of conduct, understanding what, if any, other policies supplement the code in relation to social media use and consider any concerns over social media use against this background.

You can get a more in-depth history of the proceedings and what the decision means for you here.

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Disclaimer

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.