Piper Alderman

The Federal Court of Australia handed down its decision in Australian Securities and Investments Commission v. Bekier on March 5.[1]ASIC brought civil penalty proceedings against 11 current and former directors and executives of the Star Entertainment Group in relation to Star’s management of money laundering risks. The court found liability against Star’s former managing director and CEO Matt Bekier, and former general counsel and chief legal and risk officer Paula Martin, but not against the nonexecutive directors.Justice Michael Lee’s judgment has been widely described as a landmark governance case. While the facts arose in the casino sector, the decision is fundamentally about governance architecture, particularly in regulated organisations.The principles it establishes apply with equal force to banks, insurers, superannuation trustees, Australian financial services licensees and any business operating where regulators and other stakeholders expect effective risk governance and personal accountability.Recent enforcement developments show that the matter continues to evolve. Bekier was fined $700,000 on June 17, and banned from managing corporations for six years for breaches of his directors’ duties. On July 14, Bekier and Martin appealed the combined penalties of $1.1 million, and on Aug. 10, Martin secured a stay of her $400,000 ASIC fine, pending appeal. These outcomes underscore the continuing relevance of the Star decision for regulated financial services businesses.This article examines the Star Entertainment decision through a financial services lens, noting that the Australian Prudential Regulation Authority, or APRA, is currently consulting on updates to the cross-industry Prudential Standard 510, which covers governance, reflecting themes that also underpin APRA’s fit and proper and conflicts of interest standards. It then identifies practical implications for executives and boards in regulated entities and sets out what lawyers should now be discussing with their financial services clients.Not Just a Casino CaseMuch of the early commentary on the decision has focused on directors’ duties and the failings of Star’s board and management team. That focus, while understandable, risks obscuring the broader significance of the judgment for entities in other heavily regulated sectors.The court’s analysis is not confined to gaming regulation. It addresses how material risks are identified, synthesised and escalated within complex organisations, and what happens when governance systems that appear adequate on paper fail to deliver critical information to decision-makers in a form that demands action.Those themes are immediately recognisable to any financial services institution grappling with the expectations of ASIC and those of APRA under the financial accountability regime, or FAR, and seeking to implement prudential standards in their organisational structures, processes and culture.For regulated entities, the resonance is clear: The judgment also examines governance through outcomes, not simply through organisational charts, charters and management certifications.Accountability One of the most significant aspects of the decision for the financial services sector is the court’s treatment of accountability. Justice Lee assessed the conduct of the general counsel and chief legal and risk officer not simply by reference to her formal title, role description or reporting line, but also by reference to her proximity to material risks, her access to information not available to the board, her responsibility for synthesising and framing risk, and her influence over whether matters were escalated.This reasoning aligns closely with the philosophy underpinning FAR. Organisations covered by that regime must clearly disclose the responsibilities of accountable persons, whether responsibility is individual or shared, and the outcomes expected from the exercise of those responsibilities.ASIC and APRA, the regulators, have stated that they will query accountability statements that do not appear consistent with other governance documentation.[2] The Star decision reinforces that accountability follows knowledge and influence, not simply formal reporting lines and role descriptions.For financial services executives, this means that structural separation between legal, risk and compliance does not insulate individuals from personal exposure if the practical effect is that material risks fall between roles and are not identified and managed appropriately.Star makes clear that deferring escalation because “someone else owns the risk” is unacceptable where a person has knowledge, proximity and influence, at least when the person deferring escalation is a senior member of the in-house team with board access.Risk AppetiteAt its core, the Star judgment revealed an organisation where commercial imperatives were allowed to displace compliance, without considering the risk that, ultimately, the organisation could lose the right to conduct its business at all.The China UnionPay issues in the Star case illustrate this clearly. Matters that were properly questions of legal compliance and risk management were treated as operational problems to be worked around, rather than escalated through appropriate governance channels. Misleading external communications were prepared and sent with the knowledge of senior legal leaders. The board was not informed of what was occurring or of the material reputational, legal and — ultimately — existential risks that had arisen as a consequence.For financial services institutions, this raises uncomfortable questions that may be familiar to executive teams. When does commercial pragmatism influence decision-makers to cross the line into regulatory exposure and other material risk? How does management know it has crossed that line? And, critically, who is responsible for telling the board about related risks?Control Effectiveness Most financial services businesses invest significant resources in control design and testing. The Star decision challenges the assumption that the existence of controls equates to governance effectiveness.The evidence before the court demonstrated that policies, reporting, committees and external assurance all existed. Yet information reached the board in fragmented ways, if at all, and risks were never escalated in a form that demanded board attention and a board decision.This shifts the discussion from compliance documentation, structures and processes to operational effectiveness. For institutions subject to the cross-industry Prudential Standard 230, which covers operational risk management, requiring boards and senior management to ensure operational risk controls are effective in practice, the Star decision provides a cautionary example of what regulators will scrutinize. That is, not whether the framework exists on paper, but whether it delivers the right information to the right people at the right time, and otherwise operates effectively.Non-financial Risk Financial services regulation has moved beyond purely financial risk to encompass operational risk, conduct risk and culture. The Star decision can be viewed as a case study in each of these categories.The governance failures identified by Justice Lee were not failures of financial modelling or capital adequacy. They were failures of conduct: misleading communications, failures of risk framing and escalation, operational workarounds that circumvented legal obligations, and a culture in which repeated yellow flags were normalised rather than escalated.For institutions operating under APRA prudential standards and the cultural expectations embedded in FAR, the Star decision reinforces that regulators will assess governance not by the sophistication of frameworks, but by whether those frameworks translate into disciplined behaviour and genuine accountability in practice.Questions Arising From StarThe decision invites regulated entities to confront a series of practical questions. What risks within the organisation never reach the board? Where do issues become known but not escalated? Are board papers highlighting key risks or burying them?Could management explain, if asked by a regulator, why a particular matter did not require board attention? Where does accountability become diffused between legal, risk and compliance? Are controls being tested for effectiveness, or merely to confirm that they exist?These are not abstract governance questions. They directly engage issues that APRA and ASIC may scrutinise when assessing FAR compliance, and the effectiveness of risk and governance culture within accountable entities.Implications for Lawyers For lawyers, the Star decision creates an immediate opportunity and expectation to engage financial services clients on the effectiveness of governance frameworks before regulators ask questions.This could include so-called wargaming exercises to ensure that the pathway from risk identification to board decision is deliberate, documented, understood and actively used. Lawyers should be advising on how clients document reasonable steps under FAR, particularly where accountability maps create shared or overlapping responsibilities.Governance reviews should be conducted proactively, not reactively, examining whether committee terms of reference, management papers, board and committee minutes and other decision records reflect what is actually happening within the organisation.Board reporting protocols deserve particular scrutiny: Are papers designed to inform the board or to insulate the authors from risk, and are they oppressive in size? Is the board proactively considering what information directors need to see, and how they want it presented, and ensuring that management complies with the board’s requirements?The interaction between legal, risk and compliance functions should be examined for gaps where material risks might be identified by one function, but not synthesised or escalated by another.Star also has implications for how lawyers advise on legal professional privilege in governance contexts. Where a general counsel also acts as company secretary or sits within a combined legal and risk function, the boundaries between legal advice, risk management and operational reporting must be clearly maintained and documented.ConclusionFor regulated financial services businesses, the Star decision is a reminder that governance is increasingly being assessed through outcomes, rather than simply through organisational charts, role descriptions and structures. Regulators and courts are questioning whether the right information reached the right people at the right time, and whether those with responsibility took reasonable steps to make that happen.The institutions best placed to withstand regulatory scrutiny will not necessarily be those that have the most sophisticated governance frameworks, but rather those that can demonstrate disciplined and consistent escalation, clear accountability and effective information flows in practice.The Star decision reinforces that accountability regimes, whether under the Corporations Act, FAR or prudential standards, share a common expectation. Knowledge, combined with influence, creates an obligation to act, and silence in the face of material risk is not a neutral position for senior executives.For in-house leaders, executives and boards alike, the message is the same: Governance fails not just when risks are unknown, but also when they are known but not escalated appropriately.[1] ASIC Bekier [2026] FCA 196. The Federal Court’s declarations of contravention with respect to Bekier and Martin were handed down on 17 June 2026: [2026] FCA 756.[2] https://www.apra.gov.au/cross-industry/financial-accountability-regime/apra-connect-far-reporting-forms-instruction-0.Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

South Australia and Victoria are currently grappling with significant Royal Commissions. While each inquiry has a different focus, they both underscore the same reality for business leaders: Royal Commissions increasingly scrutinise private organisations, industry participants, boards, executives and operational decision-makers.For many organisations and individuals, their first contact with a Royal Commission comes through a notice to produce documents or information or a summons to attend and give evidence. By then, the opportunity to prepare has often passed.The organisations that navigate Royal Commissions most effectively are usually those that have invested in carefully reviewing the terms of reference, assessing their potential application to their business or operations and then reflecting on their own readiness.Understanding what a Royal Commission can doRoyal Commissions are among the most powerful forms of public inquiry in Australia. Commissioners can compel individuals to give evidence, produce documents and provide written statements or information. Failure to comply can have serious consequences.They are not courts and do not determine liability or award compensation. However, they can make findings, recommendations and referrals to regulators, law enforcement and other authorities. Their reports frequently shape legislation, policies and future industry standards.Royal Commissions: governance issuesInquiries often examine broader systemic issues, including governance structures, decision-making processes, reporting lines, organisational culture, training and oversight. Individual incidents may be used as case studies because they illustrate wider problems.Royal Commission readiness can sometime be less about preparing for a specific inquiry and more about understanding how your organisation would withstand scrutiny if one arose tomorrow.One of the first strategic decisions organisations face is determining their approach to an inquiry.Organisations may respond passively, act defensively by preparing for information requests and exposure early or engage proactively to help an inquiry understand broader industry issues. The right strategy depends on the circumstances, but waiting until an inquiry identifies your organisation is rarely the most effective option.The critical role of information managementOne of the greatest challenges is locating and producing documents within tight timeframes, particularly where information spans several years, business units, systems and personnel.Every organisation should understand where key documents, emails, employee records, financial records and operational data are stored, retained, archived and how they are retrieved.Many organisations discover during an inquiry that critical information sits across multiple systems, legacy platforms or individual employee records. By then, document production becomes significantly more costly and disruptive.Policies matter more than you thinkPolicies and procedures quickly become central to an inquiry. Commissioners and Counsel Assisting will often consider what policies existed, whether staff knew and followed them, whether they were adequate and what changed after issues emerged.Policy registers and version control are important because they help show not only what applies today, but what applied several years ago. Attention should be paid to whistleblower frameworks, codes of conduct, complaint management and incident reporting.Identifying your high-risk areasA useful readiness exercise is identifying potential issues before an inquiry does. This does not necessarily mean searching for wrongdoing, but understanding where historic decisions, incidents or governance arrangements could attract scrutiny.Incident, complaints and risk registers can reveal themes involving significant incidents, regulatory investigations, workplace disputes, whistleblower allegations, major projects or areas where governance has changed over time.Supporting your peopleRoyal Commissions can be highly stressful for employees and executives. Individuals may be asked to provide statements, respond to document requests at short notice or give evidence in public hearings, so witness preparation and staff support should not be left until the last minute.A Practical Readiness ChecklistBusinesses looking to improve readiness should consider:Determining their specific approach to public inquiries and investigations.Mapping where important information and records are stored.Reviewing retention, archiving and backup processes.Testing key governance, compliance, complaint and incident frameworks.Identifying high-risk incidents, projects or stakeholder interactions.Establishing support arrangements for executives and employees.The businesses that manage inquiries most effectively are usually those that have carefully considered the terms of reference and adapted their preparation strategy accordingly. Typically this will involve understanding their records, trusting their governance systems, and being able to explain their decision-making and being confident in the integrity of their data.Royal Commission readiness is not simply a legal exercise. It is a governance exercise and an increasingly important part of good corporate management.Is your organisation Royal Commission ready?Assessing readiness now can reduce risk and improve an organisation’s ability to respond effectively. That means knowing where key information is stored, reviewing governance and reporting frameworks, identifying potential areas of scrutiny and ensuring appropriate policies are in place.As governments increasingly use Royal Commissions and public inquiries to investigate complex economic, social and industry issues, organisations across all sectors should consider whether they are prepared for scrutiny.If you would like to discuss your organisation’s Royal Commission readiness, including governance, document management, investigation preparedness, witness preparation or response strategies, please contact Tom Griffith, Partner at Piper Alderman.Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

The International Convention for the Protection of New Varieties of Plants (‘UPOV Convention’) provides the international framework for plant variety protection and underlies the Plant Breeder’s Rights Act 1994 (Cth) (‘PBR Act’).[1] Under this regime, new plant varieties are recognised as a form of protectable intellectual property,[2] with rights granted following a successful application to the Registrar of Plant Breeder’s Rights.BackgroundUnder the PBR Act, applications for plant breeder’s rights (PBR) are filed with and examined by IP Australia (through the Plant Breeder’s Rights Office). PBR provides certain exclusive rights in relation to the propagating material of a registered plant variety.RightsOverviewPBR are a form of intellectual property protection for new varieties of plants, conferring exclusive rights over the production and commercialisation of a variety’s propagating material (being the plant’s reproductive material, such as seeds, cuttings, or tissue cultures). Specifically, PBR confers the exclusive right to do, or to licence another person to do, the following acts in relation to propagating material of the variety:Produce or reproduce the material;Condition the material for the purpose of propagation;Offer the material for sale;Sell the material;Import the material;Export the material;Stock the material for any of the purposes described above.[1]PBR will be infringed where any of these acts occurs in relation to propagating material of the variety without authorisation from the rights holder (being the grantee, an assignee, or an exclusive licensee).DurationPBR is a qualified right having a fixed term, [2] commencing on the day the right is granted and[3] continues for 25 years for trees and vines, and 20 years for all other plant species.[4] Failure to pay the annual renewal fee will result in the rights lapsing. Importantly, once PBR expires, the designated[5] variety name cannot be registered as a trade mark because, as the official name of the variety, it lacks both inherent and acquired distinctiveness.[6]Requirements for RegistrationArticle 5(1) of the UPOV Convention establishes that PBR may be granted where the variety is new, distinct, uniform and stable (often referred to as the ‘DUS criteria’).[7] In addition to these requirements, the PBR Act requires that the plant variety have a breeder and either not have been commercially exploited, or only recently so.[8]Of particular relevance for intellectual property purposes, a plant variety will be considered distinct if ‘it is clearly distinguishable from any other variety whose existence is a matter of common knowledge’.[9] ‘Clearly distinguishable’ means that the difference is clear and consistent, and ‘common knowledge’ is given its ordinary meaning.[10]FormalitiesTo acquire PBR, the breeder of a plant variety must make an application to the Registrar of Plant Breeder’s Rights.[11] If the Registrar is satisfied on a prima facie basis that distinctness has been established, that the application is in proper form, and that no other application for the same variety has an earlier priority date, the application must be accepted.[12]ObjectionsA person may object to the grant of PBR if their commercial interests would be adversely affected by the granting of the right. Any objection must set out particulars of how the objector’s[13] commercial interests would be affected, and why the Registrar cannot be satisfied of the relevant matters under sections 26(2) and/or 44(1)(b) of the PBR Act.[14] The applicant is given a period of time to respond to the objection, and both parties may make further submissions. Notably, the Act does not provide for opposition to an already granted PBR or a procedure for the grant to be reassessed.[15]EnforcementWho and what action can be taken?An action for infringement of PBR may be brought in the Federal Court of Australia or the Federal Circuit and Family Court of Australia, but only by the grantee or an exclusive licensee of the grantee.[16] A ‘grantee’ is defined in the PBR Act as the person currently entered on the Register as the holder of that right.[17]What constitutes an infringement of PBR?PBR in a plant variety is infringed when an unauthorised person performs any of the acts referred to in section 11 of the PBR Act.[18] Infringement may also occur through use of a variety name or synonym that is not the registered name of a variety.[19] Section 53 creates strict liability,[20] meaning the court will not consider the infringer’s intention when determining liability.[21]Are any defences available?The grantee of PBR cannot exert monopoly rights over the registered plant variety in all circumstances. Examples of acts that will not infringe PBR include:[22]acts done privately and for non-commercial purposes; oracts done for experimental purposes; oracts done for the purpose of breeding other plant varieties.Of these exceptions, the most contentious in practice is the experimental purposes defence. This defence will likely fail where the experiment has a commercial or profit-making purpose. Accordingly, both the nature and purpose of the act must be considered.[23]The court will decline to award damages or order an account of profits against an ‘innocent’ infringer.[24] However, to rely on this protection, the infringer must satisfy the court that, at the time of the infringement, they were not aware of, and had no reasonable grounds for suspecting, the existence of the relevant PBR.[25] Otherwise, the infringer may be liable for damages or an account of profits.ExhaustionPBR is exhausted after the first authorised sale of the registered variety.[26] However, exhaustion will not occur if there is further production or reproduction of the material, or the material is exported to a country that does not provide PBR protection for the variety, and the material is used in that country for purposes other than final consumption.[27] These exceptions protect PBR holders when their varieties are used outside Australia.Key TakeawaysPBR are a form of intellectual property which protects new varieties of plants. It attaches certain rights associated with producing and commercialising the propagation material of a plant variety.PBR will only be granted if the variety has a breeder, is distinct, uniform, stable and has not been exploited. It must also comply with the formalities within the PBRA Act.Infringement proceedings may be brought in the Federal Court of Australia or the Federal Circuit and Family Court of Australia. Several defences are available, including protection for innocent infringers who were unaware of the relevant PBR.[1] PBRA s 11.[2] Buchanan Turf Supplies Pty Ltd v Registrar of Trade Marks [2015] FCA 756 at 19.[3] PBRA s 22(1).[4] PBRA s 22(2).[5] Plant Breeder’s Rights Regulations 1994 reg 4, Sch 1.[6] Ibid n.4.[7] UPOV Convention art 5(1).[8] PBRA s 43(1).[9] PBRA s 43(2).[10] Westlaw AU, The Laws of Australia, vol 23 (at 17 July 2026) 23 Plant Breeder’s Rights [23.5.220] (‘The Laws of Australia’); PBRA s 43(9).[11] PBRA s 24(1).[12] PBRA s 30(2).[13] PBRA s 35(1).[14] PBRA ss 26(2), 44(1)(b).[15] The Laws of Australia 23.5.570.[16] PBRA s 54(1).[17] PBRA s 3.[18] PBRA s 11; s 53(1)(a).[19] PBRA s 53(1)(c).[20] PBRA s 74(1A).[21] Criminal Code Act 1995 (Cth) s 6.1.[22] PBRA s 16.[23] The Laws of Australia 23.5.970.[24] PBRA s 57(1).[25] Ibid.[26] PBRA s 23.[27] Ibid.Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

The ACCC continues to demonstrate its determination to protect consumers from potentially unlawful subscription services by filing proceedings against Amazon AU alleging various breaches of ACL relating to unfair contract terms.The Australian Competition and Consumer Commission (ACCC) has brought proceedings in the Federal Court of Australia against Amazon Commercial Services Pty Ltd (Amazon AU) alleging that contracts entered into by consumers for a subscription to the streaming service Amazon Prime contain unfair contract terms that allow Amazon AU to make significant changes to its services without affording the subscriber the opportunity to receive a refund or reasonable redress.Unfair Contract TermsThe Australian Consumer Law (the ACL) is found in Schedule 2 of the Competition and Consumer Law Act 2010 (Cth). The unfair contract terms provisions are set out at Part 2-3 of Schedule 2. For context, below we set out the sections of Part 2-3 relevant to the ACCC’s proceedings against Amazon AU that are discussed in this insight.Pursuant to section 24(1), a term is considered ‘unfair’ if:it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; andit is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; andit would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.If a term in a standard form contract is found to be unfair within the meaning of section 24(1), the term will be void pursuant to section 23(1). Further, pursuant to section 23(2A) a person is in contravention of the ACL if:the person makes a contract; andthe contract is a consumer contract or small business contract; andthe contract is a standard form contract; anda term of the contract is unfair; andthe person proposed the unfair term.It is also noted that section 23(2B) provides that a person who contravenes subsection (2A) commits a separate contravention of that subsection in respect of each term that is unfair and that the person proposed. Section 23(2C) provides that a person will also be in contravention of the ACL if:the person applies or relies on, or purports to apply or rely on, a term of a contract; andthe contract is a consumer contract or small business contract; andthe contract is a standard form contract; andthe term is unfair.Section 25 sets out examples of the kinds of terms of a consumer contract or small business contract that may be considered unfair. Particularly relevant here is section 25(d) which gives an example of ‘a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract.’Amazon AU’s ConductAmazon Prime is a very well-known subscription service offered by Amazon AU and available in Australia. This service provides a variety of services including, the streaming service Prime Video (Amazon Prime) which up until 2 July 2024, offered advertisement free streaming of all its content. Subscribers to Amazon Prime could enter into monthly or annual subscriptions and according to the Concise Statement filed by the ACCC, Amazon AU had more than a million annual subscribers enter into consumer contracts for Amazon Prime between 1 November 2023 and 18 August 2025 (the contracts).The ACCC alleges that the contracts contain terms that allow Amazon AU to make significant changes to the services it would provide under the contracts and further to be able to make changes to the terms governing Amazon AU’s services. The ACCC’s Concise Statement provides that Amazon AU can make these changes without the subscriber’s knowledge, nor will the subscriber be entitled to a refund or any other meaningful redress (the relevant contract terms).Unfortunately for Amazon Prime subscribers who enjoyed uninterrupted ad-free streaming of Amazon AU content, a notification was received on 21 May 2024 advising that from 2 July 2024 advertisements would be introduced to Amazon Prime streaming content in Australia. If subscribers wanted to continue to enjoy streaming ad-free, they would be required to pay an additional monthly fee on top of the current subscription fee.According to the Concise Statement, on 2 July 2024 more than 850,000 subscribers who had paid for an annual subscription were “degraded” to a service providing streaming with ads. When this occurred the subscribers with annual subscriptions were offered the option of:continuing their current subscription however streaming would be with ads; orpaying an additional amount to continue streaming without ads.No refund or other redress was available if the subscriber chose to cancel the subscription in light of the introduction of ads.Alleged BreachesThe ACCC alleges that the relevant contract terms fall within the meaning of “unfair” pursuant to section 24(1) of the ACL. Particular emphasis is placed on the fact that the term only benefits Amazon AU and therefore causes a significant imbalance in the parties’ rights and obligations. While there was a requirement that Amazon AU was to give the subscribers notice of the material change in their contract, which did occur, the ACCC submits that this does not address the imbalance. The ACCC considers that relying on the relevant contract terms would cause ‘obvious detriment to consumers’ and that this type of clause is seen in the example set out at section 25(d) of the ACL as it is a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract.It is noted that Amazon AU later amended the relevant contract terms to introduce a right to a pro rata refund for annual Amazon Prime subscribers if they cancel their subscription in response to materially adverse changes to the terms. The ACCC submits that by making this amendment, Amazon AU has demonstrated that the relevant contract terms were not reasonably necessary to protect Amazon AU’s legitimate interests in accordance with section 24(1)(b).In light of the above, it is the ACCC’s submission that on each occasion that Amazon AU proposed the inclusion of the relevant contract terms between 9 November 2023 and 18 August 2025 it was in breach of section 23(2A). Further, the ACCC submits that Amazon AU contravened s 23(2C) on each occasion that it relied, or purported to rely, on the relevant contract terms in respect of each annual Amazon Prime subscriber who subscribed or renewed their subscription from 9 November 2023.We note that the proceedings have also been brought against Amazon.com Services LLC (Amazon US) as the ACCC alleges Amazon US was directly or indirectly knowingly concerned in or party to the contraventions of Amazon AU and is therefore vicariously liable pursuant to section s 224(1)(e) of the ACL.ConclusionThis is the second alleged ACL breach that the ACCC has brought against Amazon AU in 2026 with Federal Court proceedings announced in May alleging Amazon AU was selling kids backpacks that did not comply with mandatory button battery warning requirements. The ACCC continues to monitor the conduct of global technology giants with proceedings also brought against Microsoft Australia late last year alleging misleading conduct attributed to communicating subscription options and price increases for Microsoft 365 plans when it introduced its AI Copilot. This was also followed by Google Asia Pacific being ordered to pay $55 million in penalties for anti-competitive conduct involving reaching understandings with Telstra and Optus about pre-installing the Google Search app on Android mobiles in December 2025.The matter VID702/2026 has been listed in the Victoria Registry for its first Case Management Hearing on 31 July 2026. If you wish to read more about the ACCC’s case, you can find a copy of the Concise Statement here.Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

On 8 July 2026, the Treasury released its much anticipated consultation paper “Minimum tax on discretionary trusts” on the implementation of the 30 per cent minimum tax on discretionary trusts (Consultation Paper), which was announced as part of the 2026-27 Budget. The Treasury consultation paper provides helpful insight into the intended operation of the 30% tax on discretionary trusts, but, in our view, there are a lot of questions still to be determined and a three-week consultation period is unlikely to be long enough to adequately uncover and comprehensively understand the breadth of issues. SummaryThe issues raised and matters covered in the Consultation Paper have implications for many of our clients and taxpayers more broadly. In this Insight, we unpack the specific details of the Consultation Paper and outline some of our views regarding where we still need more guidance from Treasury.This is the latest in our series of insights on the 2026 tax reform measures. Our earlier articles have covered the 2026 Budget, Unit Trusts after the Federal Budget, Tax reform updates, Bendel – The High Court has spoken and the ATO’s releases of a Decision Impact Statement on Bendel.The Consultation Paper covers a range of topics including:the scope of the minimum tax and exclusions;the taxing point and its interaction with individual, corporate and trustee beneficiaries;rollover relief;the treatment of excess franking credits for trusts;collection mechanisms; andthe implications of the High Court’s decision in Commissioner of Taxation v Bendel [2026] HCA 18 (Bendel).The paper raises 17 discussion questions across these topics, signaling that the Government is still working through a number of significant design and implementation issues. Notably, the closing date for submissions is 31 July 2026, giving stakeholders a consultation window of just three weeks to respond to what is a complex and far-reaching set of proposals.There is a lot to unpack in the Consultation Paper, our overarching observations following our review include:CGT rollover and overlay with state/territory law: The CGT rollover relief for restructuring out of discretionary trusts to other structures may be viewed as somewhat broader than envisaged on budget night. However, there is an intersect between federal law, trust law and state law which hasn’t yet been resolved in the Consultation Paper. The appeal of the rollover may be diminished if the restructure would otherwise trigger a significant transfer duty liability for taxpayers, particularly those operating in property or energy and resource sectors. Without state and territory government collaboration, taxpayers may be exposing themselves to significant amounts of unnecessary tax. In our view, consideration needs to be given to providing an exemption to exclude such restructures from the scope of transfer duty where they are undertaken in accordance with the proposed CGT rollover.CGT rollover and trust law exposure: If the transfer duty hurdle can be managed, there is a bigger question of trust law that arises. The trust deed of the discretionary trust needs to be carefully reviewed to ensure the trustee is empowered to undertake the rollover on the terms imposed by the concession. A trust is generally established for a broad beneficiary class and transferring the assets of the trust fund to a company with restricted shareholders may either result in a breach of the trustee’s fiduciary duty or trigger a raft of disputes from potential beneficiaries who were left out of getting shares in the transferee company. We’ve seen recent cases such as Owies v JJE Nominees Pty Ltd [2022] VSCA 142, where the exercise of trustee discretion was called into question from displeased beneficiaries. There may be a wave of similar litigation for disgruntled beneficiaries following the implementation of the CGT rollover and very significant financial consequence, greater than the 30% minimum tax, for those that act in breach of their fiduciary duties. If the trust deed is not clear application to the Court could be necessary to achieve restructure for some.Double taxation for corporate beneficiaries: The Consultation Paper confirms our thoughts after budget night that distributions to corporate beneficiaries will be subject to double tax – at both the trust level and then again at the company level. The Consultation Paper example makes clear the effective tax rate for companies of 42.9% of the after-tax amount they receive for companies that ordinarily have a 30% tax rate. This appears to be an intentional design feature and, in our view, will effectively leave the era of the bucket company behind for those taxpayers who continue to maintain discretionary trust structures post 1 July 2028.Franking credits for companies from trust distributions: Despite the 42.9% effective tax rate for companies ordinarily having the 30% tax rate, companies will only receive franking credits for the amount paid by the company. That will result in the present formula for franking credits to avoid double taxation not fully compensating in some circumstances.Franking credits for discretionary trusts: There is an interesting question posed regarding whether excess franking credits of a trust should be refundable or carried forward and utilised in future income years. There are practical considerations at play, if franking credits were carried forward, a trustee would in effect need to maintain a franking credit account and the question remains: would the trustee need to attempt to trace which beneficiary received the distribution to which the franking credits attached and are they required to use those carried forward franking credits only against future income distributed to that beneficiary?Overlay of Bendel: Given the High Court’s recent decision in Bendel, the Consultation Paper also addresses the announced but unenacted (ABUM) measure from the 2018-19 Budget to bring unpaid present entitlements within the scope of Division 7A. Whilst comments have been requested as to the interplay between this ABUM and the minimum tax, it is unlikely that this change will remain unenacted for much longer.Below, we examine some of the more detailed aspects of the Consultation Paper.Rollover reliefThe Consultation Paper proposes expanded rollover relief to assist taxpayers wishing to restructure out of a discretionary trust into other arrangements, such as a company or a fixed trust, without capital gains and other immediate income tax consequences applying. The relief will be available for three years from 1 July 2027.The proposed rollover is based on the existing Small Business Restructure Rollover (SBRR) but is significantly broader in scope than what many have envisaged. Unlike the SBRR, the new rollover would:extend beyond small business entities and would be available to discretionary trusts regardless of size, removing the existing $10 million aggregated turnover threshold.not require the restructure to be a “genuine restructure” of an ongoing business – expanding access to all discretionary trusts within the scope of the 30% minimum tax.apply to all trust assets capable of being transferred, including assets earning passive income, which is broader than the SBRR which only applies to CGT assets, trading stock, revenue assets and depreciating assets used in carrying on anot require continuity of identical legal ownership following a restructuring, provided ultimate economic ownership remains within the same ‘family unit’ (a new definition which is broader than the existing ‘family group’ definition used for trust loss and family trust election provisions).There are some exemptions that need to be worked through by taxpayers looking to implement the rollover:The transferee must be an entity that is not a discretionary trust within the scope of the minimum tax, meaning the transferee must be a company, fixed trust, individual, or one of the listed entities in a partnership.Where assets are transferred into a company structure, the company must have a single class of ordinary shares. Relief will be denied where multiple classes of shares exist which permit dividends or capital returns to be directed between participants on a discretionary basis.The company cannot be owned by another discretionary trust, where no family members have any clearly defined rights. This effectively prevents the transferee company from being owned by a discretionary trust at the time of the rollover.All assets of the discretionary trust must be transferred to the transferee entity – you can’t pick and choose which assets get transferred. The trustee is permitted to retain a nominal asset amount to prevent the trust from being required to wind up following completion of the rollover.Where there are changes in the membership of the transferee company, other than equity injections or sales to genuine third parties, within a set time period the rollover will be denied. The time period has not been announced.The 30 per cent minimum taxUnder the proposed framework, from 1 July 2028, the trustee of a discretionary trust will pay 30 per cent tax on the taxable income of the trust, and individual and other non-corporate beneficiaries will receive a non-refundable tax offset (minimum tax offset) for the tax payable by the trustee. The underlying basis on which trusts are taxed will remain unchanged, with beneficiaries continuing to be assessed on their share of the trust’s taxable income in proportion to their entitlement to the income of the trust.Three aspects of the proposed framework are worth highlighting.Franking credits refund or carry forward?A quirk of the proposed framework relates to the treatment of excess franking credits. Where a trustee receives franked dividends, the franking credits must first be used to offset the trustee’s income tax liabilities, including the minimum tax liability. Where franking credits exceed the trustee’s income tax liability, the Government is considering two options: refunding the excess franking credits to the trustee or allowing them to be carried forward to reduce the trustee’s future income tax liabilities. Whether a trust will be entitled to a refund or only a carry forward of excess franking credits it receives from a company is still up in the air, and the Consultation Paper invites feedback on the implications of each approach.Foreign resident beneficiaries carved outThe Consultation Paper confirms that distributions to foreign resident beneficiaries of discretionary trusts, to the extent they comprise dividends, interest and royalties to which foreign resident withholding tax applies, will be excluded from the minimum tax. This exclusion is designed to ensure that Australia’s double tax agreements, as well as the multilateral global and domestic tax regimes, continue to operate effectively. Given that many jurisdictions have agreed tax rates on dividends, interest and royalties lower than 30 per cent under those agreements, this carve-out provides important clarity for trusts with cross-border distribution arrangements.Effectively more than double taxation for corporate beneficiaries with no concession in sightPerhaps the most striking aspect of the Consultation Paper is the treatment of corporate beneficiaries. Corporate beneficiaries will be assessed based on their entitlement to trust income but will not be able to claim a minimum tax offset based on the tax payable by the trustee to reduce their income tax liability. This means a corporate beneficiary which pays 30 per cent corporate tax on its share of the trust’s taxable income, would pay that in addition to the 30 per cent minimum tax already paid by the trustee on that same income, with no offset or credit to avoid what is effectively double taxation.On $100,000 of taxable income this would trigger a $60,000 tax bill – $30,000 at the trust level and then $30,000 at the company level.But at the Company level the effective tax rate is greater than 30% – it is 42.9% for a corporate entity to which a 30% tax rate ordinarily applies on the amount actually received. That arises from the 30% minimum tax at trust level meaning that the maximum amount the trust is entitled to actually receive is really $70,000 (being the $100,000 less trustee tax of $30,000). Yet the company pays $30,000 on that $70,000. Consequently, the effective tax rate is 42.9% calculated as $30,000 divided by $70,000.The Government’s rationale is that allowing companies access to the offset would enable the corporate beneficiary to convert the benefit of the minimum tax offset into refundable franking credits, which could then be passed on and refunded to non-corporate shareholders that are also trust beneficiaries, thereby undermining the minimum tax. The Consultation Paper states that not allowing companies to access the minimum tax offset is “the simplest mechanism” to prevent this outcome “without changing the imputation system”. In our opinion the mechanism chosen is far from simple. Indeed, that 42.9% effective rate will in turn result in the formula for gross up for franking credits also breaking down and not appropriately compensating for distributions received from trusts unless also amended.There does not appear to be any concession or relief contemplated for distributions to corporate beneficiaries. Rather, this appears to be an intentional design feature of the regime.Meaning of fixed trust not finalisedOne threshold issue that remains unresolved is what exactly constitutes a “fixed trust” versus “discretionary trust” for the purposes of the minimum tax. The current tax framework defines discretionary trusts by exclusion, as any trust that is not a fixed trust, with the concept of a fixed trust relying on beneficiaries having “vested and indefeasible” interests.However, after stakeholder feedback, the Treasury acknowledges that relying on the existing definition of fixed trusts may result in the scope of discretionary trusts being broader than intended. The Consultation Paper seeks feedback on the appropriate treatment of cases such as modern commercial trusts, where trustees typically retain powers to change entitlements, add beneficiaries, or amend trust deeds, whether or not those powers are exercised. This is a significant open question, as the breadth of the definition will determine which trusts are caught by the minimum tax and which are not.Looking aheadThe Consultation Paper represents an important step in the design and implementation of the minimum tax on discretionary trusts, but with a three-week consultation window and 17 discussion questions spanning rollover relief, franking credits, collection mechanisms and the implications after Bendel, there is so much to cover in a short period.We will continue to monitor developments and provide updates as the legislation progresses. In the meantime, please reach out if you would like to discuss how any of these proposals may impact you or your business. Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

The latest instalment of the Defence Industry Development Strategy sets out the Government’s renewed action plan to grow Australia’s sovereign defence industrial base and boost self-reliance.On 2 July 2026, the Federal Government released the 2026 Defence Industry Development Strategy (Strategy), identifying the key areas of reform required to strengthen Australia’s sovereign defence industrial base.The Strategy is guided by the following Sovereign Defence Industrial Priorities:Maintenance, repair, overhaul and upgrade of Australian Defence Force aircraft;Continuous naval shipbuilding and sustainment (CSS);Sustainment and enhancement of the combined-arms land system;Domestic manufacture of guided weapons, explosive ordnance and munitions;Development and integration of autonomous systems; andIntegration and enhancement of battlespace awareness and management systems; andTest and evaluation, certification and systems assurance (TESCA)[1].While the overarching priorities above remain unchanged from the 2024 strategy, the underlying details for each priority have been refined. For more information, see Figure 5 of the Strategy.This insight briefly summarises the key aspects arising from the Strategy that relate to growing the industrial base, procurement and procurement reform, and exports and international collaboration.Growing the Industrial BaseOne of the key action items in this area is “the accelerated identification of healthy and mature businesses capable of solving specific challenges”.[2] This will be achieved through the establishment of the Defence Industry Hub, which will provide, among other things:a first point of contact for new entrants seeking to engage with Defence;connection to industry support programs such as Grants, Australian Industrial Capability and Global Supply Chain programs; andbusiness maturity assessments.[3]The focus of this support will be on Tier 2 businesses, which are those delivering major equipment, systems, assemblies and services realising specific functions. The Strategy further subdivides Tier 2 into three categories: Tier 2a (functional sub-systems); Tier 2b (major sub-assemblies); and Tier 2c (assemblies with specific functions).[4] Additional priority will be given to those businesses aligned with the Sovereign Defence Industrial Priorities.[5]The Government will establish Industrial Development Agreements (IDAs) with key Tier 1 businesses, with the aim of streamlining reporting obligations and achieving supply chain visibility across all tiers and businesses. These IDAs will consolidate Australian Industry Capability and Global Supply Chain reporting at the enterprise level.[6] The Government will also develop a Defence Industry Investment Plan which sets out the Government’s equity and investment priorities, and will extend the Defence Industry Development Grants Program for a further two years at an additional $80 million (bringing total program value to $250 million), while also expanding the scope to include domestic supply chain opportunities.[7]The Strategy also announces the establishment of the Defence Delivery Agency on 1 July 2027, which will consolidate capability acquisition and sustainment functions under a single National Armaments Director.[8] This reform is designed to create clearer accountabilities for delivery and a more coherent industry engagement model.Finally, the Government will work with major industry primes to set targets to grow the number of new apprentices, trainees, interns and graduates in the sovereign defence industrial base.[9] This will be achieved through the establishment of a Defence Industry Advisory Committee, and will involve reporting obligations to be detailed further in the yet-to-be-finalised Defence Policy for Industry Engagement and Partnership.[10]ProcurementA key focus of the Strategy is the acceleration of procurement to ensure that capability can be delivered at speed. Defence will adopt a “minimum viable contracting approach” to procurement, which will allow Defence and industry to act more quickly and effectively, while maintaining appropriate governance.[11] This approach will involve:modular and flexible contract structures that ensure information requests, evaluation criteria and administrative requirements are targeted to only what is essential;early and ongoing engagement with industry to increase understanding of the necessary requirements; andthe ability to adapt scope and requirements over the life of a capability.[12]The adoption of the minimum viable contracting approach means that the Australian Standard for Defence Contracting (ASDC) suite of templates and guidance will be updated to include the Continuous Capability Development and Delivery approach, enabling appropriate contracts for agile delivery.[13]Defence will also look to implement AI where it can to support efficient procurement. The focus will be on:automation of low-risk, repeatable procurement-related activities;early identification of procurement risk, complexity and governance needs; andthe establishment of an AI procurement advisor.[14]The Strategy also emphasises the importance of early and constructive engagement with industry, supported by an updated Defence Commercial Framework that will guide officials on compliant engagement practices.[15]ExportsAreas of reform in the exports space include a complete review and refresh of the underlying initiatives of the 2018 Defence Export Strategy, and a reform and relaunch of the USD $3 billion Defence Export Facility (administered by Export Finance Australia), with the aim of providing more flexible and timely support for defence industry, particularly small and medium-sized businesses.[16]Changes will be made to the way data and reporting for exports is carried out, with Defence, in collaboration with Austrade, establishing an export market analysis function that “will identify export market opportunities with international partners to further enable a targeted, data-driven approach to supporting defence exports”.[17]A focus will also be placed on continued promotion and advocacy of Australian-made capabilities. At the centre of Defence’s new approach is the Australian Defence Strategic Sales Office (ADSSO), which will partner with industry to develop and execute strategic sales campaigns in support of priority capability exports. Current ADSSO capability priorities include the Bushmaster, Hawkei, Boxer, AS9 Huntsman, Redback Infantry Fighting Vehicle, MQ-28A Ghost Bat, Jindalee Operational Radar Network, and Ghost Shark autonomous underwater vehicle.[18]SecurityThe Strategy acknowledges the deteriorating threat environment facing Defence and defence industry, including from espionage, foreign interference and sabotage. Defence has launched the ‘Defence.Secured’. program to uplift security across Defence and industry.[19] The Defence Industry Security Program will remain the foundation for industry security and is being enhanced with a Cyber Uplift Program to help companies meet Essential Eight Level 2 mitigations required under the Protective Security Policy Framework.[20]TakeawaysWhile further implementation details will emerge over time, the Strategy serves as a useful reference for understanding the Federal Government’s current priorities in strengthening Australia’s defence industry. The next Defence Industry Development Strategy update will be delivered in 2028, aligned with the biennial National Defence Strategy cycle.Businesses seeking to engage with Defence can access further information and support through the Defence Industry Hub at www.defence.gov.au/business-industry.Piper Alderman has a long and proud history of serving Australia’s Defence industry.  From being a founding member of the Defence Teaming Centre to possessing the specialist experience needed to service both industry and government, our team has consulted on a number of key projects, consistently demonstrates thought leadership, and is active in the wider industry.[1] Australian Government, Defence Industry Development Strategy 2026, Figure 5.[2] Ibid [4.9].[3] Ibid [4.5].[4] Ibid [4.6], Figure 2.[5] Ibid.[6] Ibid [4.18]-[4.20].[7] Ibid [4.24], [4.28]-[4.30].[8] Ibid [1.16]-[1.20].[9] Ibid [8.24].[10] Ibid [8.24]-[8.25][11] Ibid [5.1].[12] Ibid p 46.[13] Ibid [5.8]-[5.12].[14] Ibid [5.13]-[5.16].[15] Ibid [5.19].[16] Ibid [9.5]-[9.6].[17] Ibid [9.9].[18] Ibid [9.13]-[9.14].[19] Ibid [10.8]-[10.10].[20] Ibid [10.21]-[10.22].Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

The High Court of Australia has ruled in favour of the Australian Securities and Investments Commission (ASIC) against Web3 Ventures Pty Ltd, trading as Block Earner. In the judgment delivered on 17 June 2026, the High Court of Australia found in favour of ASIC, holding that Block Earner’s fixed‑yield ‘Earner’ product fell within Chapter 7 of the Corporations Act 2001 (Cth).The decision overturns the earlier Full Federal Court decision which found that the offering was not a financial product and marks a decisive development in one of Australia’s most closely watched crypto‑related licensing cases. This landmark decision is the first time a crypto-asset product has been examined by the High Court of Australia under financial services laws. The decision endorses a broad approach to defining the regulatory perimeter concerning financial products, suggesting an expansive approach to the financial investment test under the general definition of a financial product. Meanwhile, its relatively short analysis of the definition of a derivative could well prove problematic as it blurs the line between ordinary contractual arrangements and the conventional understanding of what is a derivative in financial markets.Financial investment: contributions, nexus and purposeSection 763B of the Corporations Act sets out when a person is taken to ‘make a financial investment’ for the purposes of the financial product definition in s 763A.In simple terms, a financial investment exists where:an investor provides money or something of value to another person (the “contribution”); andthat contribution is used (or intended to be used) to generate a financial return or benefit for the investor (even if no return or benefit is generated); andthe investor does not have day‑to‑day control over how the contribution is used.The High Court’s reasoning regarding the Earner product is as follows:Characterising the contributionA key step in the High Court’s reasoning was identifying the user’s contribution. Under the Earner product, users deposited AUD into their account and, by selecting ‘Lend’, nominated an eligible cryptocurrency and the amount of AUD to be invested. Block Earner then allocated the nominated AUD and ‘converted’ it into the specified cryptocurrency.However, in substance, the user’s funds were not themselves converted into cryptocurrency. Rather, users were entitled to a fixed rate of return on the money’s-worth contribution, denominated and paid in the relevant cryptocurrency. The economic reality was that Block Earner deployed the contributed AUD within its broader business activities, and the return paid to users was not directly referable to the specific use of those funds.The High Court rejected the Full Federal Court’s characterisation of the Earner product as a loan of cryptocurrency paying fixed interest. Instead, it disavowed the premise underlying the analysis that users ‘lent’ crypto‑assets, and held that the relevant ‘contribution’ was AUD.In doing so, the Court expressly critiqued the terminology used in Block Earner’s Terms of Use. It observed that labels such as ‘Lend’ and ‘loan’ were ‘inapposite’, noting that users did not in fact possess or transfer cryptocurrency in the relevant sense. The Court instead emphasised that legal characterisation turns on the rights and obligations created by the arrangement, rather than the product’s description, stating:At no stage did any user have any cryptocurrency and at no stage did any user ‘lend’ any cryptocurrency to Block Earner.In essence, the High Court took a substance-over-form approach, meaning that even if a product is structured as a fixed return loan, it does not necessarily fall outside of the Australian financial services regime depending on the affect of deeming provisions in the Corporations Act. It also suggests some judicial discretion in defining the boundaries between what is a credit facility (and outside the financial services regime), and what is a financial product in substance.Nexus of contributionThe Full Federal Court placed significant weight on the absence of a close nexus between the actual use of user contributions and the returns paid to users. The return was fixed and did not depend on the success or failure of any particular downstream activity undertaken by Block Earner.The High Court rejected that narrower approach. It held that the contribution of AUD was used, or intended to be used, to generate the promised return, even though the return was fixed and not directly tied to the performance of any identified pool of assets or activity. The Court accepted that Block Earner used the contributed value in its business to generate both the customer return and its own profit.This reflects a broader conception of contribution than the Full Court had adopted. On the High Court’s reasoning, the analysis does not depend on tracing a particular asset through a particular use. The focus is instead on the contractual contribution made by the user and whether that contribution is used, or intended to be used (in some manner), by the issuer to generate the promised return. That approach may have wider implications for other fixed-yield crypto products, including those involving direct transfers of stablecoins or other digital assets.‘For’ whom the investment is made forOne of the most pragmatic aspects of the Court’s judgment was its commercial interpretation of the word ‘for’ in s 763B. The High Court rejected the idea that a return must be generated only ‘for’ the investor. It held that a return can be generated for both the issuer and the investor at the same time, reflecting the commercial reality of such arrangements:Contrary to the Full Court’s reasoning, the conclusion that the Earner Product is captured by s 763B(a) does not “conflate” the generation of a return that would enable Block Earner to meet its obligations to its users with the generation of a return or other benefit ‘for’ those users”. The text of s 763B(a) does not confine the way in which a contribution may be used to generate a financial return “for” the investor. For example, there is nothing in the text of s 763B(a) that suggests that the “financial return, or other benefit” must be only for the investor. Any contention otherwise would ignore the commercial reality of any such financial investment. In any profit-making investment business, the business uses the funds invested to generate a return both for it, and for its investors. Every provider of a financial product is looking to make a profit out of the venture. This paragraph indicates a very expansive approach to the financial investment product definition in section 763B. Under the High Court’s reasoning, a product is not excluded from section 763B merely because the issuer bears the underlying business risk, and keeps the upside or funds the return from its broader business activities. The focus is on whether the investor’s contribution is used, or intended to be used, to support the return promised to the investor.So framed, the concept of a financial investment may extend more readily to fixed-rate and account-style products, and potentially capture products presently structured as loans.Derivative: can any contract qualify?Under s 761D, a derivative is broadly an arrangement under which one party must, or may be required to, provide value to another at a future time and the amount payable, or the value of the underlying arrangement, is determined, derived or varies by reference to something else (e.g., an asset, rate, index or commodity).The High Court held that the Earner Product was also a derivative because of their view that the ‘arrangement’ started when a user contributed AUD to Blockearner and became entitled to receive AUD back at a future time, but the amount received ultimately varied by reference to the value of the nominated cryptocurrency and the relevant exchange rates. In the Court’s view, that was sufficient satisfy s 761D(1)(c).In reaching that conclusion, the High Court rejected the Full Federal Court’s view that the exchange functionality was separate from the Earner product. By characterising the Earner product as a single, integrated facility, entered into when the user completed the first steps of depositing AUD and opting into the ‘Lend’ product and accepting the Terms of Use, the conversion of AUD into cryptocurrency and back again was part of the product itself, not an ancillary or severable service.This broad interpretation, if applied to traditional finance and commercial contracts, may lead to many other products or arrangements being unintentionally caught within the derivative definition. To that end, this Court did not engage with the traditional understanding of a derivative in financial markets or the scope of the definition which debated by the Full Federal Court in the Chameleon Mining case.The Court did not squarely engage with the more difficult question of statutory purpose, namely whether this was really the kind of arrangement Parliament intended to capture when it created a distinct derivative category in Chapter 7. The Earner product was, in substance, a fixed yield product. The fact that the final AUD amount moved by reference to a stablecoin value may be viewed as part of the settlement mechanics rather than the essential commercial object of the arrangement. By treating that feature as sufficient, the judgment risks extending an already broad definition of derivative into territory more naturally occupied by investment and account-style products, or even ordinary contracts with future performance.As such, the court’s derivative analysis is open to criticism, being comparatively flat and moving from the existence of exchange-rate and crypto-price variability to the conclusion that the product was a derivative without much detailed analysis of why that variability should attract the specific classification in s 761D. In our view, the High Court’s expansive approach to the definition of a derivative is problematic and likely to be distinguished in future.Credit facility point left unresolvedAnother challenging aspect of the judgment is the Court’s analysis of the ‘credit facility’ arguments raised by Block Earner, as the Court did not engage with the issue in a substantive way. Rather, the issue was held not to arise because regulation 7.1.06(1)(a)(iv) of the Corporations Regulations 2001 (Cth) defines a credit facility as the provision of credit that is not a financial product within section 763A(1)(a). On the basis that the Court concluded that the Earner product was a facility through which a person made a financial investment, it followed, on the terms of the regulation, that the product could not be a credit facility for the purposes of the exclusion. Again, the absence of reasoning is problematic, and we query if the same result would be reached if the High Court had first asked itself whether the product was a credit facility.The arrangement in this case had features commonly associated with credit facilities in use in traditional finance. Users advancing value to a provider, who then assumes an obligation to repay value at a future time together with a fixed return are now in a difficult position. The Court reasons that such an arrangement is a financial product only because they determined first that Earn was a financial product. As a matter of substance, and perhaps for good policy reasons, the judgment suggests that a product structured as a loan by the investor to the company cannot escape financial product classification either as a debenture or under the general financial product definition.Deference to the RegulatorA key takeaway from the decision is confirmation from the High Court that “overinclusiveness” is a feature (not a bug) of the Australian licensing regime – the decision quoted from the Chameleon Mining case where it was said that:Rights and liabilities are drawn in overtly broad terms, on the footing that instances of overreach which become apparent in the administration of the legislation may be remedied by adjustments to the Act made not by remedial legislation but by exercise of powers conferred upon the Executive Government or bodies such as the Australian Securities and Investments Commission.News that part of ASIC’s role is to protect against ‘instances of overreach’ under the Corporations Act raises an important question as to how much bright line guidance should be expected from a regulator. INFO225 at present features the word “may” 86 times, “could” 16 times and suggests readers obtain their own legal advice 3 times. In the present case, Block Earner obtained legal advice, which was a point taken into account on penalties at first instance (although the company has still faced substantial legal costs). The position of foreign regulators is markedly different. The US Securities and Exchanges Commission (SEC) has reversed its earlier position which implied expansive securities laws definitions and was considered “regulation by enforcement”. Under Chair Atkin the SEC has moved to give guidance in consultation with industry to provide “rules of the road” which to date have been welcomed by the industry. Europe’s MiCA regime is extremely lengthy but has made clear when and how token sales can be made and in Cayman the line between a VASP and a non-VASP activity is relatively clear. Important policy questions remain when the regulatory perimeter is effectively left to the regulator to define by the courts. When a regulator states they are merely applying the law and does not wish to be seen to be making law, but the courts point out that the regulator’s decisions very much define where the edges of the laws are, market participants are a difficult very position unless the regulator provides clear and bright line guidance and a pathway to compliance for novel products.It is worth remembering that the facts in this case included the Earner product in question being novel, and being quickly withdrawn from the market once the regulator raised concerns.ConclusionThe High Court’s judgment fundamentally endorses very broad financial product definitions although these definitions must still be applied rigorously on a case by case basis. That task will continue under the Corporations Amendment (Digital Assets Framework) Act 2026 which introduces new regulated product categories for ‘Digital Asset Platforms’ (DAP) and ‘Tokenised Custody Platforms’ from 9 April 2027, bringing digital asset exchanges and custody providers within the Chapter 7 provisions of licensing in Australia, but does not define the financial product status of specific products.Meanwhile, the High Court has now made clear that most Earn style products will need to be offered under financial services laws in one form or another – albeit intermediated staking services will occupy a special status under the DAP framework.The decision also makes clear that crypto product labels will carry little weight if, in ASIC’s view, the substance of the arrangement involves a financial investment or otherwise satisfies the criteria of another financial product category. To that end, the decision is consistent with the regulator’s policy position of treating crypto-asset related offerings as requiring full regulation under financial services laws. Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

Australian directors and officers face a rapidly evolving landscape of personal liability. One development that demands particular attention is the emergence of so-called “stepping-stone” claims, a theory of liability that has the potential to create a second front of exposure for directors long after the regulator has completed its work.What is Stepping-Stone Liability?The concept is deceptively straightforward. Where a company has been found to have breached the law, whether by regulatory enforcement, a penalty proceeding, or an agreed settlement, a shareholder may subsequently bring a derivative action against the company’s directors, alleging that those directors breached their duty of care and diligence under s 180(1) of the Corporations Act 2001 (Cth) by causing or permitting the company to commit the underlying contravention. The company’s own breach becomes the “stepping stone” to a finding of personal liability against the directors.The shareholder then seeks an order that the directors personally compensate the company for its loss, typically measured by reference to the fine imposed on the company, though the claim may extend to consequential losses that exceed the penalty itself.The theoretical foundations of this approach were laid in ASIC v Maxwell [2006] NSWSC 1052, where Brereton J observed that “[r]elevant jeopardy to the interests of the company may be found in the actual or potential exposure of the company to civil penalties or other liability under the Act.”[1]  However, the doctrine received its fullest articulation in the Storm Financial litigation, ASIC v Cassimatis (No 8) [2016] FCA 1023; (2016) 336 ALR 209.[2] In that case, Edelman J (as his Honour then was) found that ASIC had relied upon an actual breach by Storm Financial as a “stepping stone” for a finding that Mr and Mrs Cassimatis contravened s 180(1).[3]ASIC’s case in Cassimatis proceeded in two steps. First, ASIC proved that Storm Financial had actually contravened the Corporations Act by providing inappropriate financial advice in breach of s 945A(1)(b) and (c).[4] Second, ASIC demonstrated that the directors had breached s 180(1) by exercising their powers in a manner which caused or permitted (by omission to prevent) that inappropriate advice, thereby exposing Storm to a foreseeable risk of harm, including the loss of its Australian Financial Services Licence. Critically, Edelman J noted that s 180(1) does not impose a general obligation on directors to ensure corporate compliance with the law; the duty is not one of strict liability. Nevertheless, his Honour held that there will be cases where it constitutes a contravention of s 180(1) for directors to authorise or permit the company to commit contraventions, particularly where relevant jeopardy to the interests of the company exists.The Full Federal Court upheld ASIC’s case on appeal in Cassimatis v ASIC [2020] FCAFC 52.[5] Greenwood J emphasised that the duty under s 180(1) was a norm of conduct of a public character, and that while the company’s contraventions were a necessary element of the harm, they were not sufficient by themselves to result in a contravention of s 180 by the directors, the foundation of liability resided entirely in the directors’ own conduct. Thawley J agreed, holding that s 180(1) applies according to its terms and that a company’s contravention might be a material fact relevant to whether a director failed to meet the requisite standard, but it is not an essential ingredient of liability in the way it is under accessorial liability.  Rares J dissented, viewing ASIC’s approach as an arcane and backdoor use of s 180(1).The High Court subsequently refused special leave to appeal, leaving the Full Court’s decision as settled law.The stepping-stone doctrine has since been applied and confirmed in subsequent decisions. In ASIC v GetSwift Ltd, Lee J confirmed that liability under s 180(1) is triggered where a director’s failure to exercise reasonable care and diligence has caused, or allowed, the company to contravene the Corporations Act, at least where it was reasonably foreseeable that such contravention might harm the company’s interests.[6]For more than a decade, ASIC has relied upon the stepping-stone theory as a tool of regulatory enforcement.  However, a new and arguably more significant development is now emerging: the deployment of stepping-stone reasoning by private litigants, specifically, shareholders backed by litigation funders, to pursue derivative claims against directors for the company’s benefit.Under ss 236 and 237 of the Corporations Act, a member may bring proceedings on behalf of a company with leave of the Court.[7] Where a director is found to have contravened s 180(1), the Court may order compensation to the corporation under s 1317H for damage resulting from the contravention.[8]  The combination of these provisions creates a pathway by which shareholders can effectively require directors to reimburse the company for fines and penalties that resulted from the directors’ alleged failure to prevent corporate wrongdoing.The role of litigation funders in this emerging landscape cannot be understated.  Australian litigation funders commonly finance complex proceedings in return for a share of any recovery.  This economic model enables claims to be pursued that might otherwise never be brought, because the individual shareholder need not bear the financial risk of the proceedings.  For funders, stepping-stone claims represent an attractive proposition: the quantum of a potential recovery is often large (being measured by reference to a regulatory penalty already imposed) and the factual substratum of the claim, the company’s own contravention, has frequently already been established by a regulator or admitted by the company.The first stepping-stone derivative action filed in Australia was brought against former directors and officers of SkyCity Adelaide Pty Ltd, following the imposition of a $67 million penalty on SkyCity for breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth).  That claim, sought to recover the company’s losses from its former directors. The SkyCity derivative action ultimately failed.A second matter now looms.  ASX Limited settled ASIC proceedings in connection with misleading statements made to the market about the progress of its CHESS replacement project, agreeing to pay a $20.5 million penalty and contribute $3 million towards ASIC’s costs.  ASX has now disclosed that shareholder Rosherville Pty Ltd intends to seek leave to commence derivative proceedings against certain former officers and directors of ASX in connection with the failed project.  ASX itself is not accused of wrongdoing in the proposed action.To the authors’ knowledge, if the anticipated ASX matter is filed, it will be only the second stepping-stone derivative action brought in Australia.What is the Risk to Directors?The emergence of stepping-stone derivative actions introduces a qualitatively different risk for Australian directors and officers. Whereas the regulatory enforcement model involves ASIC pursuing directors for breaches of their duties, with the attendant constraints of prosecutorial discretion, public interest considerations, and limited regulatory resources, the private derivative model is subject to no such limitations. Where an economic incentive exists for a litigation funder to back a claim, directors may face proceedings regardless of whether the regulator considered director-level enforcement appropriate.The most immediate risk is personal financial liability for the full amount of any fine imposed on the company, or potentially greater damages encompassing consequential losses. In the ASX matter, the penalty and costs contribution total approximately $23.5 million. In the SkyCity matter, the AUSTRAC penalty was $67 million. These are not insignificant sums, and they represent the floor rather than the ceiling of potential exposure in a successful derivative claim.The economics of litigation funding make stepping-stone claims particularly attractive to funders and therefore particularly dangerous for directors.  The essential elements of the claim, the company’s own contravention and the quantum of loss, are often already established by the time the derivative action is filed.  The company may have admitted the contravention, paid the penalty, or had liability determined against it in separate proceedings. The derivative claimant’s remaining task is to establish the causal nexus between the directors’ conduct and the company’s breach. For well-resourced funders assessing the merits of potential investments, this significantly de-risks the claim.A further dimension of risk lies in the individual nature of liability under s 180(1). The standard of care is objective but applied by reference to the corporation’s circumstances and the office and responsibilities within the corporation that the officer held.  This means that exposure may differ markedly between co-directors, depending on their specific roles, committee memberships, and degree of involvement in the impugned decisions.  A director with portfolio responsibility for a failed project may face materially greater exposure than a non-executive colleague.  This divergence of interests has practical consequences for the conduct of any defence.Beyond the immediate financial exposure, directors face a constellation of ancillary risks.  A finding of contravention of s 180(1) may support an application for a disqualification order, preventing the individual from managing corporations for a period.  The reputational damage attendant upon being named as a defendant in high-profile derivative proceedings, particularly where the underlying corporate failure has already attracted public attention, may be severe and enduring.  The distraction of defending such proceedings diverts management attention at precisely the moment when the company may be seeking to recover from the underlying compliance failure.What Do Directors Need to Do to Protect Themselves?The emergence of stepping-stone derivative actions demands that directors take proactive steps to manage their exposure. While the doctrinal landscape continues to develop, three areas of practical preparation warrant immediate attention.First, directors must ensure they maintain adequate coverage under directors’ and officers’ liability insurance, and specifically review whether their existing policies contemplate stepping-stone claims. Many D&O policies were drafted in an era where director liability principally arose from regulatory enforcement or shareholder class actions alleging misleading disclosure. Derivative actions brought on behalf of the company against its own directors represent a different species of claim, and it cannot be assumed that all existing policies will respond. Directors should work with their brokers and insurers to confirm that their coverage extends to derivative proceedings, including those brought by shareholders with the backing of litigation funders. Particular attention should be paid to policy exclusions, sub-limits applicable to regulatory proceedings, and the treatment of penalties and fines.Second, directors should obtain proper legal advice before making any decision that may financially impact the company and its shareholders. The business judgment rule under s 180(2) of the Corporations Act provides a safe harbour for directors who make informed, good-faith decisions. Directors who can demonstrate that they sought and considered appropriate legal and compliance advice before taking material decisions will be better placed to resist allegations that they failed to exercise reasonable care and diligence. The maintenance of contemporaneous records, board papers, risk assessments, legal opinions, and minutes recording the deliberative process, is essential to establishing this defence.Third, in the event that a director is named in a stepping-stone claim, it is critical that the director obtains independent legal representation. Because the standard of care under s 180(1) is assessed by reference to each director’s individual office and responsibilities, the interests of co-directors named in the same proceedings may diverge significantly.  A director who served on the relevant committee, who had direct oversight of the impugned activity, or who received specific warnings about the risk in question may face materially different exposure from a colleague who did not. The individual nature of the enquiry means that what was reasonable for one director may not be the measure of what was reasonable for another. Joint representation in such circumstances carries obvious risks of conflict, and directors should ensure from the outset that their legal advisers are acting solely in their individual interests.There is a legitimate debate about where responsibility for corporate failures should end. Large organisations make decisions through complex governance structures involving boards, executives, management committees, advisers, and regulators.  The prospect of shareholders retrospectively seeking to recover major corporate losses from individual directors may lead some to question whether the balance has shifted too far from entrepreneurial risk-taking towards defensive governance.The resolution of that policy tension will be shaped, in significant part, by the outcome of the matters now before the courts.About the Authors – Piper AldermanMark Williamson is a corporate partner at Piper Alderman who advises boards and individual directors on governance obligations, risk management frameworks, and the structuring of decision-making processes to withstand subsequent challenge. His practice encompasses both preventative advisory work, helping directors to establish the systems, processes, and documentary records that may ultimately constitute their defence, and responsive work when regulatory scrutiny or litigation arises.McKenzie Moore is a litigation lawyer and Deputy Managing Partner at Piper Alderman with extensive experience in complex commercial proceedings, including directors’ duties claims, regulatory enforcement actions, and funded litigation. McKenzie understands the particular dynamics of litigation-funder-backed claims and the strategic considerations that arise.[1]ASIC v Maxwell [2006] NSWSC 1052 per Brereton J at [104].[2]ASIC v Cassimatis (No 8) [2016] FCA 1023; (2016) 336 ALR 209.[3]The expression “stepping stone” was borrowed from Keane CJ in ASIC v Fortescue Metals Group Ltd [2011] FCAFC 19.[4] Section 945A has been repealed and replaced by the best interests and appropriate-advice regime in Part 7.7A, Division 2 of the Corporations Act (sections 961B – 961Q).[5]Cassimatis v ASIC [2020] FCAFC 52.[6]ASIC v GetSwift Ltd (Liability Hearing) [2021] FCA 1384.[7]Corporations Act 2001 (Cth), ss 236–237.[8]Ibid, s 1317H. Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

The Building (Approvals and Practitioners) Bill 2026 (NSW) (Building Bill) will reshape building regulation in New South Wales. Passed by the Legislative Assembly (Lower House) on 28 May 2026, and introduced to the Legislative Council (Upper House) on the same date, it consolidates approvals, certification and practitioner obligations into one regime.In doing so, it establishes a ‘one-stop-shop’ regime that seeks to enhance accountability and public confidence through stricter regulation of certifiers and new obligations for building practitioners, while promoting housing affordability and supply through Australia’s first regulatory framework for modern methods of construction, including prefabricated and modular buildings.Key changes at a glanceOne consolidated regime – repeals and replaces the Design and Building Practitioners Act 2020 (NSW) (DBP Act), the Building and Development Certifiers Act 2018 (NSW) and their associated regulations, and repeals and replaces the Environmental Planning and Assessment (Development Certification and Fire Safety) Regulation 2021 (NSW);New terminology – ‘construction certificates’ become ‘building approvals’, and ‘occupation certificates’ become ‘completion approvals’;Only owners can apply – builders cannot apply for a building approval unless they are also the owner;Staged approvals permitted – early works can proceed while later stages are still being designed;Completion approval consistency – a completion approval cannot be issued unless the building work is consistent with the development consent;Prefabricated and modular construction recognised – new ‘prefabricated building’ concept with manufacturer declaration/instruction obligations; Home Building Act 1989 (NSW) (HBA) protections/requirements may be extended;Stricter approval regime – maximum penalties increased from $33,000 to $1,100,000 for approval authority (previously known as ‘certifier’) breach of conflict-of-interest provision; automatic suspension on conviction;Design compliance framework retained – regulated designs and declarations integrated into approvals process; andStatutory duty of care preserved – the statutory duty of care introduced in the DPB Act in 2020 remains in its non-delegable form and is not subject to proportionate liability.For principals: building approvals, completion approvals, staging and occupationEspecially those considering commencing projects in the near future, the change in approvals pathway may be the most immediate change. The familiar ‘construction certificate’ and ‘occupation certificate’ of the DBP Act, as defined in Part 6 of the Environmental Planning & Assessment Act 1979 (NSW) (EPA Act) are to be replaced by ‘building approvals’ and ‘completion approvals’ respectively. ‘Building work’[1] requires a building approval unless it is complying development, and development consent alone does not authorise building work.Staged issue of building approvals and completion approvals will be important for project programming. Facilitating earlier stages to commence while later stages remain in design, this will  require careful sequencing of regulated designs and design compliance declarations. Completion approvals are now the sole authority to occupy – penalties apply for occupation without one.Principals will need to review their contract forms where payment, practical completion, handover and access rights are triggered by ‘construction certificates’ or ‘occupation certificates’.Such references will likely need to be updated, to reflect building approvals and completion approvals. Consistent with the DBP Act, it remains that applications for building approval must be accompanied by a regulated design and design compliance declaration before building work can commence.Another key consideration is that builders cannot apply for a building approval unless they are also the owner. Construction contracts and development agreements will need to allocate responsibility for obtaining building approvals (and completion approvals), providing information, responding to approval authority queries and managing the consequences of delay.Post-commencement authorisation can also be important, both commercially and practically during the project. Where building work has already commenced, the changes propose that post-commencement authorisation be sought from the Secretary of the Department of Customer Service,[2] for issue or variation of a building approval.For prefabricated and modular manufacturers/suppliers: prefabricated building declarations, prefabricated building instructions and HBA exposureThe Bill formally recognises prefabricated and modular construction by introducing the concept of a ‘prefabricated building’. This encompasses substantially complete buildings or rooms, and modular components that become building elements once installed. However, a ‘moveable dwelling’ will not be considered a prefabricated building.By omitting ‘manufactured homes’ from the s 1.4(1) definition of ‘building’ in the EPA Act, the Building Bill may also bring prefabricating building within the HBA where the work constitutes residential building work. Additionally, manufacturers and suppliers must prepare a prefabricated building declaration confirming compliance with the Building Code of Australia, and prefabricated building instructions addressing transport and erection requirements, and provide them to the approval authority.[3] As such, contracts will need to expressly allocate responsibility for prefabricated building declarations and prefabricated building instructions, and any obligations or warranties that may apply under the HBA.Complying development certificates has the same meaning as in the EPA Act.For approval authorities (certifiers): conflict of interest and penalties,For approval authorities, the Building Bill raises the stakes materially. Maximum penalties for breach of conflict-of-interest provisions[4] by approval authorities (certifiers) have increased from $33,000[5] to $1,100,000. Approval authorities should therefore have internal systems that identify conflicts early, before approvals work is undertaken.The key maximum penalties[6] applicable to approval authorities are set out in the table below:Building Bill provisionOffenceMaximum penaltyClause 63(1)Carrying out building work without taking all reasonable steps to ensure the work complies with the Building Code of Australia.Individual: $33,000Company: $165,000 + automatic suspension for at least 120 daysClause 64(1)Knowingly or recklessly making or issuing false or misleading documents, declarations or certificates under the Act.Individual: $66,000Company: $330,000 + automatic suspension for at least 120 daysClause 65Carrying out approvals work other than impartially, seeking or accepting benefits in connection with approvals work, or being improperly influenced by other parties.$1,100,000 or 2 years imprisonment + automatic suspension for at least 120 days For principals and contractors (and approval authorities): duty of careDBP Act ss 36-41 provide that any person who carries out ‘construction work’ holds a statutory duty of care. Clauses 177-184 of the Building Bill largely preserves the existing statutory duty of care provisions.Similar to the DBP Act ss 39 and 41(3), the Building Bill provides that the statutory duty of care cannot be delegated and is subject to the Civil Liability Act 2002 (NSW). For the trainspotters, the statutory duty is unlikely to be subject to the proportionate liability provisions of the Civil Liability Act 2002 (NSW), consistent with the High Court’s decision in Pafburn.[7]Whether approval authorities and consultants owe a statutory duty of care – that is, whether they carry out ‘construction work’ for the purposes of those provisions – and how it applies to prefabricated buildings, will be addressed by the Regulations that have yet to been developed.Nonetheless, it is notable that the definition of ‘construction work’ no longer refers to ‘building work’, but instead to constructing, altering or adding to, repairing, renovating or providing a protective treatment to a building. Manufacturers and suppliers of building products should therefore be aware that manufacturing or supplying a product constitutes the carrying out of construction work.The Second Reading Speech states that the Building Bill’s key provisions will not commence until the Regulations are developed and approved.For any person performing registered workThe Regulations will prescribe the specific types of work that will require registration and classes (intended to apply to those currently registered under the DBP Act: engineers, designers and builders for class 2, 3 and 9c buildings) within each registration type.‘Registered work’ carried out by a person who is not authorised to carry out such work attracts a penalty of $66,000 for individuals or $330,000 otherwise.The penalty is the same for those who seek or receive payment for unauthorised ‘registered work’, making false representations in relation to the same, or falsely representing work.For persons involved in residential apartment projectsThe Building Bill amends the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) to allow the Regulations to provide for a dispute resolution scheme involving building work and related work. No draft Regulations have been released. So matters such as the type of alternative dispute resolution procedures involved, whether the scheme will be mandatory, and how limitation periods are to be managed, are unknowns.Key takeawaysAll parties (both upstream and downstream) – if the Building Bill is implemented, then contracts and development agreements will need to update references to construction certificates and occupation certificates. The DBP Act s 37 duty of care remains non-delegable, unapportionable and non-excludable.Approval authorities (i.e. certifiers) – should strengthen conflict checks, given the materially higher penalties and automatic suspension risk for conflict-of-interest breaches.Consultants and principals/superintendents/project managers – regulated design and design compliance declarations need to be carefully coordinated at each stage, noting the staged approval process and post-commencement authorisation process.Prefabricated and modular manufacturers and suppliers – should prepare for greater scrutiny of Building Code of Australia compliance and new requirements including declarations and instructions. Manufacture and supply contracts should allocate these risks clearly.Commencement – since the Building Bill’s introduction to the Upper House on 28 May 2026, it was sent back to the Lower House on 25 June 2026 for concurrence – a commencement date is therefore yet to be announced. Much of the Building Bill’s operational detail remains to be prescribed by the Regulations before the key reforms can commence.[1] ‘Building work’ as defined at Building Bill cl 10 is defined as physical activity involved in the erection of a building. The broad definition will be narrowed by the Regulations.[2] The Bill is administered by the Secretary of the Department of Customer Service, on behalf of the Minister for Building: see Statement of Public Interest.[3] ‘Approval authority’ is defined as the local council, registered person or Planning Minister.[4] Defined very prescriptively at Building Bill cl 55.[5] Building and Development Certifiers Act 2018 (NSW) s 28.[6] Crimes (Sentencing Procedure) Act 1999 (NSW) s 17 provides the monetary sum of one penalty unit as $110.[7] Pafburn Pty Ltd v Owners – Strata Plan No 84674 (2024) 421 ALR 133 (‘Pafburn’).Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

The Victorian Government’s announcement of a Royal Commission into the Integrity of Major Public and Civil Infrastructure Construction Projects marks a significant development for Australia’s construction sector.While the inquiry is focused on Victoria’s major public infrastructure projects, the issues it will examine are not unique to any one state or project. The Commission will scrutinise allegations of corruption, criminal conduct and serious misconduct across major construction projects, while also examining procurement practices, labour hire arrangements, subcontracting models, supply chains, project governance and government oversight.The Letters Patent establishing the Royal Commission expressly note that in a national context, the allegations of corruption, criminal conduct and serious misconduct indicate that there may be further cross-border and systemic issues that have compromised the effectiveness of the legal, regulatory and licensing frameworks and the contractual practices that apply to the construction sector in Victoria.A broad and far-reaching InquiryThe Terms of Reference require the Commission to inquire into and report on:The extent of corruption, criminal conduct and serious misconduct on major construction projects.Whether government agencies adequately exercised oversight and governance responsibilities.The causes and contributing factors that may have enabled misconduct.The impact of misconduct on project delivery, construction costs, worker safety, competition and productivity.The adequacy of existing compliance, reporting and regulatory frameworks.Reforms that may be required to prevent future misconduct and measures that could be taken to recover misappropriated funds.Importantly, the inquiry’s focus is not limited to unlawful conduct by a particular organisation or group. It extends to the systems, controls and governance frameworks that may have allowed misconduct to occur or remain undetected.Unlike other Royal Commissions or Inquiries, this Royal Commission is not limited to conduct within a defined time period. However, given the Terms of Reference expressly refer to the “Big Build period”, affected organisations and individuals will naturally focus on those projects as a first priority.Of note, the Letters Patent make no reference to property developers. However, the term “Contracting Entities” is given a particularly broad definition and means head-contractors and consortia, sub-contractors, labour-hire companies, third parties who offer mediation or other dispute resolution services and other commercial entities materially involved in Major Construction Projects.The relevance of Contracting Entities is that the inquiry is expressly required to inquire into the actions (and their adequacy) of Contracting Entities to respond to or to mitigate the risk of corruption, criminal conduct or serious misconduct occurring on or in relation to any Major Construction Projects, including immediately responding to emerging risks or allegations.This means that from a private sector perspective, the Commission will be inquiring into the adequacy of governance measures to respond to the risks of corrupt conduct.Why businesses should pay attentionRoyal Commissions often have consequences that extend well beyond their immediate terms of reference. Findings and recommendations frequently influence regulatory reform,  compliance expectations and industry standards.Businesses involved in government-funded infrastructure projects should expect increased scrutiny of areas such as:Procurement and tendering processes.Contract administration and variation management.Labour hire and workforce arrangements.Supplier engagement and due diligence.Governance and board oversight.Whistleblower and complaints processes.Record management and document retention.Workplace conduct and reporting systems.Even organisations that have not been directly involved in any alleged misconduct may find themselves responding to requests for information, producing documents or reviewing historical project decisions.The importance of Royal Commission ReadinessOne of the consistent lessons from major inquiries across Australia is that organisations rarely receive significant notice before being required to produce large volumes of documents or explain historical decision-making.Businesses should use the announcement of this Commission as an opportunity to assess their readiness. Key questions include:Can we quickly locate project records, contracts and correspondence?Are governance decisions adequately documented?Do we have clear escalation pathways for compliance concerns?Have allegations or complaints been investigated appropriately?Are our subcontractor and supplier due diligence processes fit for purpose?Do our executives and project leaders understand their obligations if approached by an inquiry?The ability to demonstrate strong governance can be as important as the underlying conduct itself.Governance will be a key themeThe Commission’s Terms of Reference repeatedly focus on oversight, accountability and the adequacy of systems designed to prevent misconduct. This suggests that the effectiveness of governance frameworks may become as important as identifying individual wrongdoing.Boards and executive teams should consider whether their current governance arrangements provide sufficient visibility over high-risk activities across projects, supply chains and workforce arrangements.This is particularly important for organisations operating across multiple jurisdictions, where differing regulatory regimes and project delivery models can create compliance complexity.Looking aheadThe Commission is required to report within 12 months and may provide interim recommendations where urgent action is required.Regardless of the eventual findings, the direction is clear. Governments, regulators and project owners are increasingly focused on integrity, transparency and accountability across major projects.For industry participants, now is an appropriate time to review governance frameworks, assess potential areas of exposure and ensure the organisation is prepared to respond effectively should regulatory scrutiny arise.Organisations that proactively strengthen governance, compliance and project oversight today will be better placed to manage both the risks and opportunities that emerge as the Commission progresses.How Piper Alderman can assistPiper Alderman advises contractors, project owners, consultants and suppliers on governance, regulatory investigations, procurement integrity, document management, compliance reviews, Royal Commission readiness and responding to requests from regulators and inquiry bodies. Our team can assist organisations to assess potential risks, strengthen governance frameworks and prepare for heightened scrutiny arising from major public inquiries.Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

Entries in a company’s management accounts and year end financials are often the starting point for a liquidator’s claim. But without more, how strong is that evidence? Is it enough to sue someone to recover a debt?The factsIn Marsden, in the matter of Empire Consortium Group (in liq) v Nationwide Plant Hire [2026] FCA 911, liquidators pursued Nationwide for a substantial debt allegedly owed to Empire—despite the MYOB ledger recording a nil balance between the parties at the appointment date.The liquidators argued that two book entries made close to the appointment date—when Empire was clearly insolvent—were not legitimate transactions. These “Zero Entries” (credits of $795,450 and $842,253.84) wiped out Nationwide’s indebtedness shortly before the appointment.The outcomeDerrington J dismissed the claim. Despite the suspicious circumstances, the Court found there was insufficient evidence—beyond mere suspicion—that the transactions were not legitimate.Critically, the Court held that a Jones v Dunkel inference could not be used to patch up deficiencies in the liquidators’ evidence. The voidable transaction claims were also dismissed for the same reasons. The liquidators were ordered to pay Nationwide’s costs.Key takeawaysAccounting entries attract prima facie evidentiary status under s 1305 of the Corporations Act—but that presumption cuts both ways. If the ledger shows nil, you need positive evidence to displace it.Suspicion is not proof. Suspicious timing and circumstances alone are not enough to establish that transactions were not genuine.Jones v Dunkel cannot fill evidentiary gaps. Where a plaintiff has access to evidence (such as source documents in MYOB) but chooses not to pursue and adduce that evidence, the Court will not allow adverse inferences to compensate for that forensic decision.Cost-driven forensic choices carry risk. The Court observed that the liquidators appeared to have made a forensic decision to advance a “relatively slim case”, likely influenced by cost considerations—but that choice resulted in a paucity of evidence that could not be remedied.A salutary reminder for liquidators – dig deeper before you litigate.Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

A link to a file-sharing repository might get your documents into a recipient’s inbox – but does it satisfy the statutory requirement to “give” them the documents? What is the consequence of failure to serve a Western Australian review adjudication application within one business day of filing it?These issues are addressed in Reward Interiors Pty Ltd t/s Reward Group v Tackelly No 8 Pty Ltd atf Tackelly No 8 Trust [2026] NSWCA 133 (Tackelly), another instance of NSW courts meddling in the WA security of payment space, but with useful guidance for all.BackgroundReward Interiors Pty Ltd (Claimant) was engaged by Tackelly No 8 Pty Ltd (Respondent) to undertake design and construction works at a hotel in Perth, WA. The Claimant took a payment claim to an adjudication under the Building and Construction Industry (Security of Payment) Act 2021 (WA) (WA SOP Act), the adjudicator determined in favour of the Claimant. The Respondent then applied for a review of the adjudication determination under the WA SOP Act’s unique review provisions.On 2 December 2024, the Respondent’s solicitors emailed the Claimant, purporting to serve the many any varied documents required in a review adjudication application. That email did not attach the review application itself, but rather a further email containing a Mimecast link from which the application could be downloaded. The Claimant did not click through the layered email and link until 4 December 2024.Section 42(3) of the WA SOP Act requires an applicant for review to give a copy of the review application to the other party within one business day after the application is made. Yes, it is brutal.The Claimant argued that the review adjudicator lacked jurisdiction because the documents had not been validly “given” in time, i.e. within the one business day required under s 42(3). The review adjudicator agreed with the Claimant and determined that he lacked jurisdiction.The aggrieved Respondent/review applicant unsuccessfully applied, in the NSW Supreme Court of NSW, to have the review determination set aside. Her Honour, Peden J, held that whilst there was no strict compliance with s 42(3)’s one business day for service, that requirement was not a jurisdictional precondition – meaning the review adjudicator had wrongly declined jurisdiction – and accordingly, she quashed the review determination.The Respondent did not accept that outcome and appealed Her Honour’s findings.IssuesTwo questions came before the NSW Court of Appeal:The jurisdiction issue – is s 42(3)’s requirement for service of the review a jurisdictional precondition, such that non-compliance results in the review adjudicator being denied jurisdiction to determine the review application?The service issue – did an email containing a link to a Mimecast repository amount to “giving” the review application “by email” within the meaning of s 113(3)(d) of the WA SOP Act?DecisionJurisdiction issueOn the jurisdiction issue, and somewhat surprisingly, three judge bench of the NSW Court of Appeal unanimously held that s 42(3)’s one business day for service of the review application is a jurisdictional requirement, given:the mandatory language i.e. use of the term “must” in s 42(3) (contrasted with permissive language elsewhere in the Act, though not determinative on its own);the deliberate inclusion of a one business day time limit signalled Parliament’s intention to expedite the WA review process; andthe uncertainty a directory (as opposed to mandatory) application of the time limit would create uncertainty as to when the balance of the statutory timetable (including the ten business day period for a review response) begins to run. This would undermine the intentionally and brutally fast determination review scheme the WA SOP Act was designed to deliver.Service issueOn the service issue, the majority (Free JA, with McHugh JA agreeing) held that the Respondent had not validly given the review application by email. Ward P, in dissent, found that it had.The Court referred to two clauses in the parties’ contract: one clause deeming a notice or communication “given under the contract documents” to have been given and received if sent in accordance with that clause; and another clause deeming the date on which such service occurred.The Respondent contended that the manner of services documents was “provided” for in the contract, as permitted in s 113(2)(a). The majority held that the adjudication review application was not a notice or other communication “given under the contract documents” (as phrased in the contract).The majority’s reasoning turned on the proper construction of s 113 of the WA SOP Act, which defines “give” to include “serve, send or otherwise provide”, and sets out five methods of “giving” a document, including “by email to an email address specified by the person” (s 113(3)(d)). Those do include the use of “an electronic database, document system or any other means by which a document can be accessed electronically” (s 113(3)(e)), but only those “authorised by the Regulations”. The Regulations to the WA SOP Act currently provides no such authorisation, so s 113(3)(e) has not been activated, and service by providing a link in an email is therefore unreliable.The majority drew a distinction between “giving/providing” a document,[1] and providing a means by which a person “can access” a document.[2] A document attached to an email is received, and therefore given, once it arrives at the recipient’s email service. A document sitting in an online document repository is not given until the recipient clicks through and downloads it, and even then, the sender may retain the ability to alter or remove what is held in the repository in the meantime.On this analysis, the Respondent’s email did not give the review application “by email”. It only gave the Claimant a means of accessing it electronically.The Court held that since the Respondent’s documents were not validly “given” within one business day, and that as that requirement is jurisdictional, the review adjudicator was correct to decline jurisdiction.Key takeawaysDespite being a decision based on the Western Australian legislation, the issues decided in Tackelly rely largely on principals applicable to almost all East Coast Models. The lessons in Tackelly have much wider application than Western Australia alone.A link is not a document – emailing a link to a Mimecast, Dropbox or similar online document repository does not, without more, constitute “giving” a document “by email” for the purposes of the WA SOP Act’s service provisions. This is also the case in many other states and territories.[3] If your process relies on sending large materials via a file-sharing link rather than as an attachment, that practice may not satisfy statutory service requirements – regardless of how quickly, or whether, the recipient could theoretically retrieve the files.Volume is not an excuse – the impracticality of attaching hundreds of megabytes of material to an email will not cause a court to read “giving… by email” (s 113(3)(d)) expansively. Where parties expect to put on large documents, the contract should include a provision to allow service by way of an online document repository.Service of SoP documents by email is generally unreliable.Timing matters, and mistakes are unforgiving – the WA SOP Act’s one business day service requirement for review applications is jurisdictional. Being even a few hours late – let alone almost two days, as occurred here – will cause an adjudicator to lack jurisdiction to determine a review adjudication application.[1] Which results in the recipient having the document in its possession once the sender’s task is complete, as occurs when a document is attached to an email.[2] Which leaves the document in the sender’s possession and control until the recipient takes further steps to retrieve it.[3] In Queensland, the use of repository links does not satisfy s 11 of the Electronic Transactions (Queensland) Act 2001 (Qld) – see Tackelly at [110].In New South Wales, service of documents via an online platform is only effective if it is permitted under the contract, pursuant to Building and Construction Industry Security of Payment Act 1999 (NSW) s 31(e) – see Tackelly at [86]. See our insight article on Roberts Co (NSW) Pty Ltd v Sharvain Facades Pty Ltd (Administrators Appointed) [2025] NSWCA 161 for further guidance on the application of deeming provisions where documents are served via email: https://piperalderman.com.au/insight/a-bad-weekend-for-deemed-service-roberts-co-nsw-pty-ltd-v-sharvain-facades-pty-ltd-administrators-appointed/Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

Every patent application filed in Australia must clear a deceptively simple hurdle: the invention must be a ‘manner of manufacture’ within the meaning of the Statute of Monopolies.[1]The long-running litigation of Aristocrat v Commissioner of Patents[1] has thrown this basic concept back into the lights, given its impact on the patentability of computer-implemented inventions. But what is a ‘manner of manufacture’?This phrase remains the gatekeeping concept for what can and cannot be patented under Australian patent law.  It sits alongside novelty[2] and inventive step[3] as one of the core requirements for a valid patent, but unlike those requirements, it asks a more fundamental question: Is this the kind of thing the patent system is meant to protect?For businesses assessing freedom to operate, for researchers commercialising new technology, and for investors evaluating the strength of a target’s IP portfolio, understanding this threshold is essential.  A patent that fails on ‘manner of manufacture’ is invalid from the outset, regardless of how novel or commercially valuable the underlying technology might be thought to be.General Law and the Importance of ‘Manner of Manufacture’The concept of ‘manner of manufacture’ in patent law has a long history.  It originates in section 6 of the Statute of Monopolies 1623 (UK), an English law enacted to curb the Crown’s practice of granting arbitrary monopolies while preserving a carve‑out for genuine inventions described as “any manner of new manufactures“.  That phrase has survived into section 18(1)(a) of the Patents Act 1990 (Cth), which requires that an invention, so far as claimed, be “a manner of manufacture within the meaning of section 6 of the Statute of Monopolies“.  Given the ambiguity of this phrase, much of the substantive content of this element has been developed by the courts.The leading authority is the High Court’s decision in National Research Development Corporation v Commissioner of Patents[4] (NRDC).  This decision concerned a method for eradicating weeds using a known chemical compound applied in a new way. The Commissioner had rejected the application on the basis that a method of using a known substance could not be a “manufacture” in the literal sense of producing a physical article.[5]  The High Court rejected that narrow reading, holding instead that the test should focus on whether the invention produces an “artificially created state of affairs” that has economic utility.[6]In other words, a ‘manner of manufacture’ assesses whether the contribution of the invention is directed to the type or nature of subject matter that should attract patent protection. This is different to ‘novelty’ and ‘inventive step’, which assess whether that contribution is significant enough or sufficiently advances the art when compared with prior art.The reformulation in NRDC shifted the inquiry away from whether something physical was made, and towards whether the invention generates a useful, artificial effect.  NRDC is significant because it established that a ‘manner of manufacture’ is a broad, flexible, and evolving concept, capable of adapting to new fields of technology as they emerge, rather than a fixed category.Subsequent case law expanded on this foundation.  In Joos v Commissioner of Patents,[7] the High Court confirmed that methods of cosmetic treatment (strength and elasticity of hair and nails) could meet the manner of manufacture test,[8] and in Anaesthetic Supplies Pty Ltd v Rescare Ltd[9] and Bristol‑Myers Squibb Co v F H Faulding & Co Ltd,[10] the Full Federal Court confirmed that methods of medical treatment of humans are patentable subject matter in Australia. Further, in Grant v Commissioner of Patents,[11] the Court considered a scheme for protecting assets from creditors and held that, to satisfy the test, an invention must involve a physical effect or transformation to be an artificially created state of affairs of economic utility; a pure abstract scheme, absent any physical consequence, would not suffice.[12]In D’Arcy v Myriad Genetics Inc,[13] the High Court emphasised that the first step in the analysis of an invention is the characterisation of that invention. This is decided on the construction of the claim in light of the specification as a whole and common general knowledge, determined as a matter of substance, not merely the form of the claim.[14]Recent DevelopmentsThe most contested aspect recently has been computer‑implemented inventions, including software and business methods.  In Research Affiliates LLC v Commissioner of Patents[15] and Commissioner of Patents v RPL Central Pty Ltd,[16] the Full Federal Court held that merely implementing an abstract idea, scheme, or business method on a generic computer, without more, did not confer patentability. The courts drew a distinction between inventions where the computer is integral to the invention and produces a new and useful result, and those where the computer is simply a vehicle for carrying out an otherwise unpatentable scheme.No decision looms larger over this area than Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents,[17] concerning electronic gaming machines, in which the High Court divided evenly, three judges to three, on whether a claim combining conventional hardware with novel gameplay software was a manner of manufacture.  The split crystallised a substantive debate: whether a computer‑implemented invention must show an advance in computing technology itself, as proposed in the Full Federal Court, or whether it suffices that the claimed hardware and software combination, considered as a whole, produces an artificially created state of affairs with a useful result, consistent with the flexible NRDC inquiry.That debate was resolved in Aristocrat’s favour by 2025, when the Full Federal Court in Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents[18] held that it is too rigid an approach to say that implementing an idea on a computer, using conventional and well‑understood computing functions, can never be patentable, and found that an EGM incorporating interdependent physical and software components was properly characterised as a manner of manufacture.  Following the High Court refusal of special leave to appeal in early 2026, the 2025 decision now stands as the leading Australian authority on computer‑implemented inventions.  The practical guidance for applicants is whether, properly characterised, the subject matter that is alleged to be patentable is an abstract idea which is manipulated on a computer or an abstract idea which is implemented on a computer to produce an artificial state of affairs and a useful result.[19]Other areas of relevance include genetic material, addressed by the High Court in the seminal case of D’Arcy v Myriad Genetics Inc, which held by majority that claims to an isolated nucleic acid coding for a mutated BRCA1 polypeptide were not a manner of manufacture. The plurality (French CJ, Kiefel, Bell and Keane JJ), accepted that isolation produces differences from nucleic acid as it existed in the cell, but held that these differences played no part in the definition of the invention as claimed and were therefore immaterial to characterising the claims as a manner of manufacture.[20]This decision confirmed that merely isolating a product of nature, without more, will not satisfy the threshold, and it sits alongside the computer‑implemented invention cases as evidence that the courts are prepared to scrutinise the true ‘substance’ of a claim rather than its form.Excluded Subject MatterEven where an invention clears the manner of manufacture threshold, the Patents Act 1990 (Cth) carves out one absolute exclusion of particular relevance to life sciences and reproductive technology.  Section 18(2) provides that human beings, and the biological processes for their generation, are not patentable inventions, and this exclusion applies regardless of whether the underlying invention would otherwise satisfy the NRDC test.This provision was inserted into the Act following amendments driven by ethical concerns about cloning and human reproduction, and the Patent Office has since had to grapple with defining its boundaries in the absence of any statutory definition of a human being.  In Re Fertilitescentrum AB and Luminis Pty Ltd,[21] the Deputy Commissioner held that the exclusion covers any entity that might reasonably claim the status of a human being from fertilisation through to birth, together with the biological processes applied during that period, while in Re Hwang[22] the exclusion was held to extend to a hybrid embryo containing human nuclear DNA.In International Stem Cell Corporation [2016] APO 52, the Patent Office accepted that parthenogenetically activated blastocysts, lacking the capacity to develop to birth, fall outside the exclusion, illustrating that s 18(2) is assessed by reference to developmental potential rather than mere biological origin.[23] The exclusion sits alongside, but is analytically distinct from, the High Court’s reasoning in D’Arcy v Myriad Genetics Inc, which turned on the general manner of manufacture inquiry under section 18(1)(a) rather than on section 18(2), confirming that isolated genetic material must still be assessed under the general manner of manufacture inquiry in section 18(1)(a), which turns on the substance of the claimed invention and whether it resides in genetic information rather than in any artificially created difference, quite apart from the separate question of human generation under section 18(2).For general counsel and investors in fertility and regenerative medicine, this means claims must be must first clear the section 18(2) exclusion by not constituting, or resulting from a biological process for generating, a human being (per Fertilitescentrum, Hwang, and International Stem Cell Corporation), and must separately satisfy the manner of manufacture inquiry under section 18(1)(a) by residing in something more than naturally occurring information (as held in D’Arcy).TakeawaysThe practical lesson is that ‘manner of manufacture’ cannot be treated as a formality.  It is a substantive inquiry into whether an invention produces a genuinely artificial, useful effect, and Australian courts have shown a consistent willingness to look past clever claim drafting to the true character of what is claimed.Software, business methods, and biotechnology inventions face high scrutiny, and while the decade‑long uncertainty surrounding computer‑implemented inventions has been clarified, applicants should still draft patent claims carefully to demonstrate a genuine, substantive combination of physical and software elements producing a useful result, rather than dressing up an abstract scheme or business method in computer language.Given that failure on this ground renders a patent invalid outright, due diligence on any Australian patent portfolio, whether for licensing, litigation, or investment purposes, should always include a considered assessment of whether the claimed subject matter would survive a manner of manufacture challenge.Piper Alderman has a nationally recognised intellectual property & technology practice, with experience in patent litigation. Please contact us if you require advice.[1] (2025) 311 FCR 493; Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd [2026] HCADisp 15.[2] Patents Act 1990 (Cth) s 18(1)(b)(i).[3] Ibid s 18(1)(b)(ii).[4] (1959) 102 CLR 252 (Dixon CJ, Kitto and Windeyer JJ).[5] Ibid [4].[6] Ibid [25] – [28].[7] (1972) 126 CLR 611.[8] Ibid [26] – [27] (Barwick CJ).[9] (1994) 50 FCR 1.[10] (2000) 97 FCR 524.[11] (2006) 154 FCR 62.[12] Ibid.[13] (2015) 258 CLR 334.[14] Ibid [11], [87] – [88] (French CJ, Kiefel, Bell and Keane JJ), [144] – [145] (Gageler and Nettle JJ).[15] (2014) 227 FCR 378.[16] (2015) 238 FCR 27.[17] (2022) 274 CLR 115.[18] [2025] FCAFC 131.[19] Ibid [131].[20] D’Arcy v Myriad Genetics Inc (2015) 258 CLR 334[21] [2004] APO 19.[22]  [2004] APO 24.[23] International Stem Cell Corporation [2016] APO 52, [23] – [32] (Delegate S Calanni).Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

The Federal Circuit and Family Court of Australia has delivered a timely warning about the risks of relying on generative AI in litigation. In this article, Tim Capelin (Partner), Emily Setter (Senior Associate), and Julia Torrisi (Law Clerk) outline the Court’s decision in Ba v Sterling Parts Australia Pty Ltd [2026] FedCFamC2G 1245 and its implications for employers in dealing with self-represented litigants.BackgroundThe Applicant, Mr Ba, commenced proceedings in the Federal Circuit and Family Court of Australia against Sterling Parts Australia Pty Ltd and Sterling Parts (Melbourne) Pty Ltd. Mr Ba had performed work for the respondent entities as a delivery driver. His claims broadly included a claim that he had been dismissed in contravention of the general protections provisions of the Fair Work Act 2009 (Cth) and that he had been incorrectly classified as an independent contractor, when instead he alleged he was an employee of either of the First or Second Respondents. He also claimed alleged underpayments due to classification errors, as well as unpaid annual leave and superannuation.In support of his claim, Mr Ba relied upon a Schedule of Documents (Evidence List) containing 38 separate entries that each referred to a document that was said to prove a “Key Point” in his claim. Each document in the Evidence List was assigned a reference number. Those reference numbers appeared throughout Mr Ba’s Statement of Claim.The Respondent entities made various efforts to attempt to obtain the documents referred to in Mr Ba’s Evidence List, including written requests to Mr Ba, and serving a Notice to Produce.  The Notice to Produce again required Mr Ba to produce the documents referred to in his Evidence List.In one of the written requests, the Second Respondent’s solicitor (Mr Tang) noted to Mr Ba that he had previously referred to his artificial intelligence (AI) chatbot as his “industry expert” in correspondence with Sterling Parts before the proceedings commenced. Mr Tang also referred Mr Ba to the Court’s Practice Note concerning the responsible use of AI. Mr Tang cautioned Mr Ba that continued misuse of chatbots in the proceeding, including by having it generate evidence, might result in an application for costs being made against him.Application to DismissThe Respondent entities ultimately sought orders from the Court requiring Mr Ba to produce each document identified in the Notice to Produce, and if Mr Ba failed to comply, that Mr Ba’s claim be dismissed. After hearing from the parties, the Court made Orders to this effect.After the Court made those Orders, Mr Ba produced a “Submission Letter”. The Submission Letter referred to photographs and an email which was sent by the Second Respondent. Mr Ba did not produce the photographs he referenced, and other than the email, again failed to produce any other documents from the Evidence List.In light of Mr Ba’s non-compliance, the Court determined to dismiss Mr Ba’s claim.AI is not a legal advisorIn its judgment, the Court described Mr Ba’s conduct as demonstrating a “pattern of obstruction and prevarication” and stated it had “little hesitation” in granting the Respondents’ application to dismiss his claim. The Court also noted that Mr Ba’s continued reliance upon AI-generated documents that could not be produced or verified had “arguably gave rise to an abuse of process”, which came perilously close to involving a contempt of Court (and the penal sanctions which can potentially apply).The Court acknowledged that generative AI has the potential to improve efficiency and access to justice, particularly for self-represented litigants and those for whom English is not their native language. However, the decision reinforces that responsibility of all litigants for ensuring the accuracy of documents such as pleadings, submissions and evidence, and the significant consequences which can follow from blind reliance on AI in running a claim.Importantly, the Court also made it clear that AI is not a legal practitioner. Unlike legal practitioners, AI does not owe any overarching duty to the Court or to the proper administration of justice, does not hold a practising certificate and is not authorised to provide legal advice in any Australian jurisdiction. AI is also not subject to the professional and ethical obligations that govern the legal profession. By contrast, the Court referred to the “sycophantic tendency” of AI large language models to prioritise user approval over truth, which was said to make them “especially dangerous and unpredictable unless careful oversight, calibration and verification is applied”.Both Respondents denied that Mr Ba’s claim had any legal merit. However, Mr Ba did not have the benefit of the Court’s adjudication of his claim as a result of his use of AI in preparing his claim and referring to documents which the Court inferred did not exist (save for the one document he produced). The Court emphasized that it would be an unsatisfactory outcome for litigants if the misuse of AI resulted in good (or at least arguable) claims being “thrown on the proverbial scrap heap”.Key takeawaysThe Court’s decision in Ba v Sterling Parts Australia Pty Ltd provides one of the clearest judicial warnings to date about the risks associated with the use of generative AI by unrepresented litigants.There is no doubt that the use of artificial intelligence can be a very effective tool, particularly when it is used by legal practitioners who are familiar with the substantive law, and the practice and procedure of the jurisdiction in question. However, use of artificial intelligence by self-represented litigants can pose particular challenges for employers in responding to claims. Employers should:Ensure that they are aware of and comply with any Practice Notes or other restrictions which inform the manner in which AI can be used in the relevant court or tribunal.Ensure they scrutinise all cases and legislation cited by the employee carefully. It is well known that AI can “hallucinate”, including by fabricating case citations or referring to legislation that does not exist. Employers should ensure that the cases and legislation cited by an employee in fact exist, support the proposition made, and have been accurately characterised.Ensure they verify that any documents referred to by the employee in their pleadings and evidence exist and stand for the propositions made by the employee. If a respondent employer does not have copies of documents referred to by an employee in their pleadings, copies of those documents should usually be sought ahead of the filing of a defence (in court proceedings).Focus on responding to the underlying claim, rather than on the suspicion that AI was used to prepare it. Particularly in proceedings before the Fair Work Commission, the substantive allegations should be assessed independently of the quality of the drafting.Where appropriate, seek that the court or tribunal holds the employee to account. For example, if the employee has failed to comply with the requirements of that jurisdiction concerning use of AI, or where they have referred to legislation, case law or documents which do not exist.Expect that additional time and resourcing will be required to respond to voluminous AI generated claims, and plan ahead. For example, it may be reasonable to seek longer timeframes for the filing of a defence and evidence, having regard to the nature of the material filed by an employee.If you have any queries about this decision for your business, please do not hesitate to contact a member of Piper Alderman’s Employment Relations Team.Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

Artificial intelligence (AI) is rapidly becoming embedded in the way organisations operate, make decisions and manage risk. From recruitment and customer service to forecasting, reporting and strategic planning, AI is influencing information that reaches executives and boards every day.For many organisations, the conversation remains focused on productivity and innovation. In the context of increased regulatory scrutiny and an upcoming Royal Commission into AI, boards should be asking a different question: could we explain and defend our use of AI if we were called before a regulator or Royal Commission tomorrow?The emergence of AI as a governance issue is not creating new directors’ duties. Rather, it is creating new circumstances in which existing duties will be tested. Increasingly, regulators, courts and inquiries are focused not only on decisions themselves, but on the systems, controls and information flows that supported those decisions.In the age of AI, governance is becoming as important as technology.Royal Commissions don’t start with technologyRoyal Commissions rarely focus on whether an organisation embraced innovation or adopted the latest technology. They focus on governance.They ask whether risks were identified, whether concerns were escalated appropriately, whether decision-makers had sufficient information, and whether organisations acted when problems became apparent.The same questions are likely to arise in relation to AI.If an AI system contributes to discriminatory outcomes, privacy breaches, cyber incidents, misleading conduct or flawed operational decisions, investigators will not simply ask whether the technology worked correctly. They will examine the governance framework surrounding its deployment.For directors, the issue is no longer whether AI is being used. In most organisations, it already is. The issue is whether the organisation can demonstrate that its use is properly governed.Why AI is now a board issueMany boards continue to view AI as a technology issue delegated to management or technology teams.  That distinction no longer holds.  AI is not confined to operational processes.  It is influencing risk assessments, management reporting, compliance monitoring, workforce decisions and strategic planning. It is also increasingly being used to assist directors in reviewing and distilling board materials. While these tools may improve efficiency and comprehension, they do not replace the need for informed human judgement or personal accountability.  Directors may never directly interact with these systems, but they regularly receive information that has been influenced, filtered or generated by them.This creates a governance challenge.Boards do not need to understand the technical architecture of every AI system. They do need confidence that management understands where AI is being used, what risks it creates, and what controls are in place to manage those risks.The key governance question is no longer:“Did AI make a bad decision?”It is:“What governance arrangements existed to identify, monitor and escalate AI-related risks before a problem occurred?”Effective governance requires visibility. Directors cannot oversee risks they cannot see.What a Royal Commission would ask forIf an organisation faced regulatory scrutiny tomorrow, boards should expect management to produce evidence in three key areas.VisibilityCan the organisation identify:which AI tools are being used;where they are deployed;who owns them;which vendors provide them; andwhich business processes rely on them?Without this visibility, meaningful oversight is impossible.  Directors cannot effectively oversee AI-related risks if they do not understand where AI is being used, how it influences decision-making, or how AI-generated outputs enter management reporting and board materials.  Effective governance requires visibility over both the technology itself and the information flows it creates.GovernanceIs there:an AI policy;executive accountability;board or committee oversight;an approval process for new AI use cases; anda framework for assessing legal, operational and reputational risks?AI governance should be integrated into the organisation’s broader risk management framework, not treated as a standalone technology initiative. Governance arrangements should influence the information reaching the boardroom, the questions directors ask and the issues that are escalated. The existence of a policy alone is unlikely to be persuasive if there is no evidence that AI-related risks are being actively monitored and discussed.EvidenceCan the organisation demonstrate:how AI was used in decision-making;what human oversight occurred;who made the final decision;how incidents were reported; andwhat remediation steps were taken when issues arose?When regulators examine governance, documentation matters. Organisations need to be able to do more than say they had controls in place. They need to show it.  Board and committee records should demonstrate not only what information was provided, but how that information was considered, challenged and acted upon. Effective oversight leaves an evidentiary trail.Five questions every board should askBoards looking to assess their current level of AI governance should start with five simple questions:Where is AI being used across the organisation today?What decisions or processes does it influence?Which AI uses create the greatest legal, operational or reputational risk?How are AI incidents identified, reported and escalated?What evidence could we produce if regulators examined our AI governance tomorrow?If boards cannot confidently answer these questions, there may be governance gaps that warrant closer attention.Governance will matter more than technologyAI presents immense opportunities for organisations willing to innovate. However, the organisations best positioned for future scrutiny may not be those with the most sophisticated technology.They will be those with the strongest governance.For boards, AI is increasingly both a strategic opportunity and a governance challenge.  Focusing only on risk may mean missing value creation opportunities.  Focusing only on opportunity may mean overlooking governance obligations.  Both require oversight.Directors are not expected to understand every algorithm operating within their organisation, but they do need sufficient oversight to ensure opportunities are being pursued appropriately, risks are being managed, and accountability remains clear.That obligation is not new. What is changing is the environment in which it must be discharged.As AI becomes increasingly embedded in business operations, boards should assume that regulators, inquiries and Royal Commissions will eventually turn their attention to how organisations govern these systems.When that happens, the critical question will not be whether the organisation used AI.It will be whether the organisation can clearly explain how AI was governed, who was accountable, and what oversight existed before the problem arose.Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.

On 10 August 2026, the South Australian Government announced the establishment of a Royal Commission into Artificial Intelligence. The inquiry is expected to commence on 1 October 2026, with a final report due to government no later than 1 July 2027. The announcement positions South Australia as an early mover in examining how AI should be developed, deployed and regulated in a way that captures its economic and social benefits while managing risks to people, work, public services and infrastructure.What is the inquiry likely to cover?The final Terms of Reference are yet to be released, but the Royal Commission is expected to examine the economic and social opportunities and challenges that AI will bring to South Australia. Based on the announcement, the inquiry is likely to cover five broad areas:Policy and regulatory settings at both state and national levels, including the guardrails needed for responsible AI deployment;Education impacts and opportunities, spanning schools, tertiary institutions and vocational training;Public services, including health, and the role AI may play in service delivery and transformation;Skills and workforce, including how AI will reshape labour markets, workforce needs and reskilling pathways; andInfrastructure, including its interrelationship with energy transformation, water usage and electricity grid implications.The breadth of these categories signals that the Royal Commission will not be a narrow technical inquiry. It is likely to be a wide-ranging policy inquiry that examines the legal, regulatory, operational, workforce, infrastructure and reputational issues raised by AI. Its recommendations may also influence Commonwealth policy settings, particularly where national regulation, privacy, workplace obligations, consumer protection and sector-specific regulation intersect with AI deployment.Why does this matter to business?Royal Commissions carry significant weight in Australian public policy, and their recommendations frequently translate into legislative, regulatory or administrative reform. Businesses using, developing, procuring or investing in AI should expect that the inquiry may shape future expectations about governance, transparency, accountability and risk management. This will be relevant not only to technology companies, but also to organisations in health, education, infrastructure, resources, financial services, professional services, government contracting, public services and any sector using AI to make or support decisions.Businesses may also have an opportunity to shape the policy response. Royal Commissions typically invite submissions from affected stakeholders, and companies with practical experience in AI governance, workforce transition, data management, procurement, infrastructure, intellectual property or risk controls will be well placed to contribute evidence. Early preparation will help organisations decide whether to engage directly, participate through industry bodies, or monitor the inquiry as part of their regulatory strategy.The inclusion of AI infrastructure, energy transformation, water usage and electricity grid implications also demonstrates that the inquiry is likely to consider the physical and environmental footprint of AI. Businesses involved in cloud infrastructure, major technology procurement or large-scale AI deployment should anticipate closer scrutiny of planning, approvals, sustainability and supply chain issues.The focus on skills and workforce means employers deploying AI should be prepared for public discussion about job redesign, displacement, augmentation, training and consultation. Workforce decisions linked to AI may intersect with employment law, industrial relations, discrimination, privacy, work health and safety, procurement and governance obligations. Organisations that can demonstrate responsible, evidence-based approaches to AI adoption will be better positioned to manage legal and reputational risk.Five practical steps businesses should take nowAs the Royal Commission takes shape, businesses with AI operations, AI-related investments, AI procurement exposure or workforce exposure to AI-driven change should consider the following practical steps:Map AI use, investments and dependencies. Identify where AI is being used, developed, procured or embedded in business processes, products, services, customer interactions, workplace tools or infrastructure. This should include third-party systems and vendors, not just internally developed tools.Review AI governance and accountability. Assess whether your organisation has clear policies for AI approval, oversight, human review, data use, record keeping, risk assessment and escalation. Boards and senior executives should be able to explain who is accountable for AI-related decisions and how risk is managed.Assess workforce impacts and consultation requirements. Review whether AI deployment may displace, augment or materially change roles. Consider training, consultation, redeployment, change management and employment law risks, including potential issues under the Fair Work Act 2009 (Cth), discrimination laws and work health and safety duties.Prepare for regulatory and public engagement. Consider whether your organisation should make a submission, participate through an industry body, brief government stakeholders, or prepare evidence of responsible AI use. Submissions are more persuasive when supported by practical examples, data and constructive policy recommendations.Manage reputational, procurement and contractual exposure. Review public-facing AI claims, customer terms, supplier contracts, privacy notices, data rights, intellectual property arrangements and incident response plans. Royal Commissions attract media attention, and organisations should align their legal, policy and communications strategies early.How Piper Alderman can assistPiper Alderman can assist businesses to prepare for and respond to the Royal Commission by providing integrated legal, regulatory, policy and strategic advice. This includes monitoring the Terms of Reference, assessing whether and how to engage with the inquiry, preparing submissions, reviewing AI governance frameworks, advising on workforce and employment implications, assessing privacy, data and intellectual property issues, and reviewing commercial arrangements with AI vendors and technology partners.We are monitoring developments closely and can help organisations identify immediate legal and operational risks, prepare evidence-based submissions and position themselves as constructive participants in the policy process. Businesses that act early will be better placed to influence the outcome of the inquiry, respond to potential evidence requests and manage any regulatory, legal or reputational issues that emerge. Disclaimer: This publication is for general information only and is not legal advice. You should seek specific legal advice for your own circumstances.