10 June 2020
Introduction
The weekly briefings are prepared to assist you with keeping up to date with the effects of any legislative, regulatory or general changes as a consequence of Coronavirus (COVID-19).
Also, Clyde & Co also has a dedicated COVID-19 Information Hub which hosts many articles from around the world that provide different perspectives and in-depth analysis on many of these issues.
Reopening of pubs, clubs and other entertainment facilities – Scope and nature of duty of care
From 1 June 2020, restaurants, cafes, pubs, clubs, bars and betting establishments, such as TABs, are able to reopen on certain further conditions.
In respect of restaurants and cafes, there is a blanket limit of fifty people per venue or one person per 4m2 in a seated area, whichever is the lesser. Bookings are limited to 10 people and anyone entering the premises must provide their contact details including name, telephone number or email address. This information is to be kept in a secure place for at least 28 days. The information is to be used for the purpose of COVID-19 tracing.
The taking of this information also applies to staff and contractors entering the premises and the operators of the premises must have in place a COVID-19 Safety Plan covering, in particular, physical distancing, hygiene/cleanliness and record keeping.
Pubs, clubs and bars are also subject to the abovementioned restrictions, however, these venues may have multiple seating areas to which they apply.
In the case of TAB's and gaming rooms, the same restrictions vis-a-vis the taking of personal information and a COVID-19 Safety Plan apply, however, no more than ten customers are permitted to be within the betting agency, at a time, or one person is permitted per 4m2 (exclusive of staff), whichever is the lesser.
For completion, food courts remain take-away areas only as tables and chairs are not permitted to be used by consumers for the consumption of food or drink.
At 5pm this evening, a local resident attended her local pub, which was more or less observing the aforementioned regulatory regime and contracted COVID-19, becoming gravely ill – what is the exposure of the Hotel?
The community at large is aware that as some restrictions are lifted there will be an increased risk of infection.
The challenge for both the Parliamentary and the Executive arms of Government is to avoid nourishing a culture that avoids the risks that need to be taken to reinvigorate public and commercial life.
The answer to this question is governed by the NSW Civil Liability Act and no doubt test cases which are to come.
In determining negligence, the aforementioned Act requires a Court to consider the probability of harm occurring if care is not taken, the likely seriousness of the harm, the burden of taking precautions and the social utility of the activity creating the risk.
When determining matters such as the burden of taking precautions, statutory defences of the CLA may apply or alternatively may lessen the scope and content of any duty of care owed. In particular this applies to local councils where the extent of resources is a factor to be taken into account by the Court in determining whether a risk could have been mitigated.
It is significant that the CLA requires the Court to take into consideration factors including the burden of taking precautions and the social utility of the risk.
Can the burden and the social utility be said to include the need to meet the challenge of avoiding a deep and damaging recession by providing a balance between the need for a healthy population and having a healthy economy.
Many commentators have noted that the speed of economic recovery will depend on the willingness of businesses to take risks by investing and hiring despite all the uncertainty.
Returning to the above question, one of the possible answers for the Hotel which was, more or less, observing the abovementioned regulatory regime, for any claim for damages by the patron, is that the burden of policing strict observance would be detrimental both to the economy and, arguably, the mental health of many who seek to see signs of a return to some form of normality over time. Similarly with social utility considerations which in the context of general community wellbeing are significant.
In addition, consideration must also be given to the discretion of the patron deciding to enter the pub ie: accepting that there is a risk. This being consistent with one of the overriding purposes of the CLA , that being personal responsibility.
The development of the law in the above space may well be quite rapid.
Temporary Changes to Continuous Disclosure Provisions
On 25 May 2020, Federal Treasurer Josh Frydenberg announced temporary changes to continuous disclosure obligations of listed entities. The changes were implemented to provide temporary 6 month period to “temporarily modify the scope to commence civil proceedings for breaches of the continuous disclosure obligations in circumstances relating to COVID-19”.
Provisions Prior to the changes
Under the Corporations Act 2001 (Cth) s 674(2), listed entities, once aware of information that is not generally available and that a reasonable person would expect would have a material effect on the price of that entity’s securities, were required to disclose said information immediately to the ASX.
Changes to the Corporations Act provision
The changes to s 674(2) raise the bar with respect to the threshold for necessary disclosures.
Section 674(2)(c) now reads:
“If the entity knows or is reckless or negligent with respect to whether that information would, if it were generally available, have a material effect on the price or value of ED securities of the entity”
Central to the changes is a relaxation of the objective reasonable person assessment of the effect of the information on an entity’s share price. An entity is now required to make disclosures to the ASX where it has actual knowledge or it would be reckless or negligent in failing to make a disclosure where the information would have a material effect on the entity’s share price.
An entity knows or is reckless or negligent with respect to whether information would have a material effect on the entity’s price if the entity knows or is reckless or negligent with respect to whether the information would, or would be likely to, influence persons who commonly invest in securities in deciding whether to acquire or dispose of the ED securities.
What impact will be the likely impact of these changes?
COVID-19 and the consequential impact on business operations from various social restrictions has significantly impaired the ability of management and Boards to accurately measure and forecast operational and financial performance during the pandemic. Both accuracy and timely dissemination of information place listed entities and their officers at risk of civil and criminal litigation in the context of the continuous disclosure obligations.
The explanatory statement states that:
“COVID-19 has caused a considerable degree of uncertainty for business. In the current environment it is significantly more challenging for disclosing entities to know whether a given piece of information will have a material effect on the price or value of its ED securities and therefore forecast the entity’s future earnings or prospects.”
In a climate where securities class actions have gained considerable momentum, the changes to the continuous disclosure provisions provide some breathing room for executives and Directors, provided that appropriate measures are taken to assess the nature and materiality of information when determining whether there is a requirement to disclose.
Importantly, the changes do not alter the criminal offence provision. The minister considers that “it is appropriate that serious breaches committed knowingly, recklessly or negligently during the period the instrument is in force may continue to be litigated”.
The changes came into effect on 26 May 2020 and expire 6 months from that date.
Public Health Orders and Mental Health
In our weekly updates, we have been reporting on the decision-making by the National Cabinet. Until now, the National Cabinet has been a group focused on crisis management and Australia's response to COVID-19. The National Cabinet has now announced that a new body, known as the National Federation Reform Council, will be formed with the agenda of creating new jobs. The National Cabinet will sit at the centre of the National Federation Reform Council.
This announcement came out of the National Cabinet meeting which occurred last Friday on 29 May 2020. The National Cabinet has flagged that these meetings will continue to take place every two weeks for the duration of the "COVID-19 period".
In the Friday meeting, the National Cabinet reviewed State and Territory implementation of the three stages of easing restrictions, noting that all States and Territories had established Stage 1 at a minimum. The National Cabinet noted that the trajectory for June 2020 will likely be a push towards allowing business to reopen in a safe way to stimulate economic activity.
As reported last week, the States and Territories continue to relax restrictions. Since last week, there have been a few changes to the reported timelines for when the States and Territories will implement the next stages. We note some of the important developments below.
Queensland has brought forward Stage Two from 12 June 2020 to midday 1 June 2020. From this date, further restrictions will ease around venue capacities and travel. Specifically, the Queensland Government has announced that Queenslanders will be able to travel anywhere within the State. This is a departure from the prior restrictions which required people to stay within a defined limit from their place of residence. We note, however, that some Aboriginal communities remain protected zones and travel into these regions is still prohibited.
South Australia has also brought forward its timeline for easing restrictions, with Stage 2 beginning on 1 June 2020 (previously reported to be 5 June 2020). From this date, there will be relaxations around gatherings, venue capacities and travel.
A similar situation exists in Western Australia, where regional travel has resumed with the exception of the Kimberley region, biosecurity zones and remote Aboriginal communities.
As reported last week, the other States and Territories remain on schedule. ACT partially entered Stage Two on 30 May 2020 (with further restrictions to ease on 20 June 2020) and NSW entered Stage Two on 1 June 2020. However, there have been some variations in the approach to working from home. Notably, Victoria has taken a strong stance against people returning to the workplace unless necessary. In particular, the new Stay Safe Directions which were made on 31 May 2020 provide that people may leave their premises to work at their employer's premises only if it is "not reasonably practicable to work from their premises or another suitable premises which is not the employer's premises".
The COVID-19 orders and directions can be accessed at the following State and Territory websites (as at 1 June 2020):
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Tasmania: https://coronavirus.tas.gov.au/resources
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South Australia: https://www.covid-19.sa.gov.au/emergency-declarations
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Western Australia: https://www.wa.gov.au/government/document-collections/covid-19-coronavirus-state-of-emergency-declarations
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ACT: https://www.covid19.act.gov.au/help-and-advice/public-health-directions
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Northern Territory: https://coronavirus.nt.gov.au/chief-health-officer-directions
In the mental health space, the Royal Commission into Victoria's Mental Health System (Royal Commission) has been granted a three month extension to complete its final report by the Victorian Government. This extension will allow for greater consideration of recent developments in the final report, such as the bushfires and COVID-19. Further, the final report will be able to take into account recent changes such as telehealth services and the inclusion of some mental health telehealth consultations as bulk billed items.
Counterfeit Masks
The COVID-19 pandemic has increased the demand and supply of personal protective equipment (PPE) such as face masks and respirators designed to protect the wearer from the spread of disease, illness and infection. These types of PPE are designed to prevent the transmission of disease or micro-organisms (such as SARS-CoV-2) and fall within the criteria of medical devices under the Therapeutic Goods Act 1989 (Cth) (Act).
Medical devices specified for therapeutic use are regulated in accordance with the Act and are required to be in the Australian Register for Therapeutic Goods (ARTG) before they can be supplied in Australia.
Due to the increase in demand for the manufacturing, importation and sale of face masks, there has been an increase in the number of medical devices, that have been manufactured and imported from overseas, being included in the ARTG . The regulatory criteria for medical devices, such as face masks, in overseas jurisdictions do not, however, necessarily meet the criteria under the Australian regulations.
It is the manufacturer and/or supplier's responsibility to ensure all regulatory requirements are met prior to the distribution of any medical device in Australia. There are civil and criminal penalties associated with supplying a medical device that is not included in the ARTG or subject to an exemption, and for providing false or misleading information to the TGA in order to meet the relevant criteria.
Recently, concerns have been raised about the quality and effectiveness of some face masks supplied to Australian health practitioners that purportedly have been sold without meeting the relevant compliance standards . As a consequence, the TGA is currently undertaking a post-market review of face masks included in the ARTG for therapeutic use.
Should the imported face masks be deemed non-compliant, then there is a risk of exposure for the wearer to not only SARS-CoV-2, but also other bacteria and viruses which may be present in hospitals, aged care facilities and medical centres.
Claims
If a health practitioner contracts COVID-19 during the course of their employment as a result of, or partially contributed by, the use of a counterfeit or unregulated face-mask, then they would likely have rights to bring a workers' compensation claim against their employer and/or a civil claim against the supplier/manufacturer of the face-mask.
The Claimant would need to show a causal connection between the use of the face-mask and development of the disease in order to be successful in any claim. This might tend to be a simpler task if a claimant is working full-time in and around persons who have already been infected by COVID-19.
If claims are brought pursuant to alleged breaches of the Workers' Compensation Act, we expect that these claims would trigger standing workers' compensation insuring clauses. Further, whilst it remains possible for some policies, it is unlikely that any workers' compensation policy would include pandemic exclusions that operate to negative cover for an injury, damage or loss sustained during employment.
If civil liability claims are brought against the supplier/manufacturer of a defective facemask, we would expect that organisation to look to claim under either their Public and Products Liability Policy or their Professional Indemnity Policy. If the basis for the claim is that the face mask was poorly designed, not designed in accordance with applicable Australian Standards, or used defective materials, we would expect that the responsive policy would more readily be the organisation’s Professional Indemnity Policy.
Organisations that are responsible for the manufacture of any product, though particular products used in healthcare, need to have regard to the scope of cover provided by their various policies of insurance. It is also important to remember the scope of liability that can attach to organisations that are merely responsible for importing products from overseas markets (i.e. whether provisions relating to deemed manufacturing will apply).
Even if claims are brought by health practitioners, there may be defences available to organisations to deny liability. A particularly important feature to any defence will be a close consideration of contact tracing of the individual claimant in the days leading up to the infection. Another element to any defence may also be alternate locations for infection (i.e. home, shopping, public transport etc) and whether these alternatives call into question the issue of causation.
Environment and Planning
NSW Showgrounds
On 29 May 2020, Minister for Water, Property and Housing Melina Pavey announced the first tranche of projects that would benefit from the NSW Government's COVID-19 Stimulus Package.
$12.5 million is being allocated to 393 projects underway to improve and repair 137 showground sites across NSW this financial year, with another $12.5 million to be allocated next financial year in an attempt to recover from the coronavirus pandemic.
NSW Trees
In partnership with Greening Australia and Landcare NSW, the NSW Government is investing $4.77 million to plant 172,000 new trees across Greater Sydney to expand the city's green canopy.
The NSW Government has signed two contracts. They can be broken up as follows:
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100,000 trees to be planted across Greater Sydney, with a focus on Western Sydney with Landcare NSW; and
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72,000 trees to be planted across parks and community spaces and schools across Greater Sydney with Greening Australia.
This goes towards NSW Government's goal to plant one million trees by 2022.
By expanding the tree canopy, NSW Government aims to lower temperatures and create healthier communities for both people and wildlife. This is particularly important and relevant in urban areas given rising summer temperatures and the World Health Organisation recognising that climate change can contribute to the potential for pandemics and other health conditions.
For further information, please contact:
Michael Tooma, Partner, Clyde & Co
michael.tooma@clydeco.com
