News & Events

  • Advertising and Promotion – Pitfalls and Risks Business Breakfast Club March Summary

    Advertising and Promotion – Pitfalls and Risks: Business Breakfast Club March Summary

    This month at Business Breakfast Club Katie Innes of BAL Lawyers discussed the pitfalls and risks of advertising and promotion for businesses. While there is significant breadth to this area of the law, the focus lay on discussing cases which dealt with misleading and deceptive conduct, the concept of puffery, and the impact of using social media and managing online reviews.

    Misleading and deceptive or mere puffery?

    The power of advertising and the societal need to protect the consumer are real, despite most of us having a fair amount of cynicism when reading or watching advertisements. Under the Australian Consumer Law a person must not (in trade or commerce) engage in conduct which is misleading and deceptive or likely to mislead and deceive. This establishes a norm of conduct for businesses to ensure they are truthful in all their advertising. This doesn’t prevent traders from being able to reflect their products or services in a favourable light. Instances where your claims are so wildly exaggerated are “puffery” and are not illegal – such advertising statements are not considered misleading and deceptive because the reasonable person could not possibly treat the statement as being serious as to lead them into confusion.

    Comparative Advertising

    Comparative advertising is allowed, and encouraged as it enables better informed choices which can assist consumers. It would be inconsistent with public policy and the Australian Consumer Law to restrict an advertiser from publicising, truthfully, a feature of its product that is superior to the same feature of a competitor’s product. That said, Courts are likely to consider this type of advertising more closely and more likely to mislead or deceive if the comparisons are inaccurate.


    1. any factual assertions made by an advertiser must be true and accurate;
    2. comparative advertising should be between actual competitors and competing products; and
    3. comparisons should be ‘appropriate comparisons’ to enable better informed choices.

    Does the fine print mean anything?

    Yes, but you need to be mindful to use these carefully. Advertisers can use fine print (or those fast talking disclaimers) to alert the consumer to any terms or conditions governing the principal message. However the information in the fine print must not contradict the overall message of the advertisement. The fine print also needs to be sufficiently prominent to ensure that, taken overall, the advertisement is not misleading. Consumers don’t look at advertisements in isolation; it is the overall impression left so don’t use “Terms and Conditions apply” in tiny font which can barely be seen in a full page ad (for example).

    For more information, please contact Katie Innes. The next Business Breakfast Club will be held on 10 May 2019. If you would like to attend, please click here.

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  • It’s all about trust

    It’s all about trust

    There has been a string of convictions against real estate agents in Western Australia, Victoria and New South Wales over the last 12 months, with many of those convictions resulting from the misuse of trust money. Given the trust and faith placed in a real estate agent to hold monies on behalf of another party, it is no surprise that the use of trust monies continues to be heavily regulated.

    The Agents Act 2003 (ACT) defines ‘trust money’ as money that is received by a licensed agent (in the course of conducting business) on behalf of someone else and on the basis that the money is to be paid to the other person or as the other person directs. The definition is broad and will include the deposit paid in relation to the sale of a property, rental bonds and monies withheld from the sale of a property (for instance, where the parties have agreed for some obligation to be satisfied after settlement and the monies are held as security for performance of that obligation).

    Part 7 of the Agents Act 2003 (ACT) sets out the regulatory framework surrounding trust accounting and requires that a licensed agent:

    • upon receiving trust money, ensures that the money is paid it into the agents trust account (which must be an account of an Authorised Deposit Taking Institution) by the next business day;
    • only deals with trust money as directed by the person for whom the money is held on trust;
    • (though it may seem obvious) does not use trust money to pay any debts or other expenses of the agent’s business; and
    • upon becoming aware that the trust account has become overdrawn, notifies the Commissioner (within 5 business days) and provides the Commissioner with details of the account, the amount by which the account was overdrawn and the reason for the account being overdrawn.

    There are various other requirements under Part 7 regulating the use of trust money, the opening and closing of the trust account and the auditing of trust accounts. A failure to comply with these requirements can lead an agent liable for penalties, loss or suspension of license and even jail time. For a license holder, these liabilities may even arise for failing to properly supervise the proper accounting procedures of the business.

    Due to the requirement for a licensed agent to record the material details of every transaction and to keep those records for 5 years, agents should be particularly mindful that any audit of the agent’s records by the Commissioner will likely identify any discrepancy or misuse of trust monies, including a failure to keep proper records.

    If you have any questions regarding trust account procedures, please do not hesitate to contact the BAL Real Estate Team.

    Written by Benjamin Grady and Riley Berry.

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  • Supply Chain Management in the 21st Century—The Case for Blockchain (1)

    Supply Chain Management in the 21st Century—The Case for Blockchain

    When we purchase goods, from food to clothes to cars, we often forget that our transaction represents one small final step at the end of a long and complex supply chain. Effective supply chain management is a crucial and demanding commercial exercise. Yet, the supply chains of today have evolved far beyond their relatively static and linear character of several decades ago, and new approaches are needed.

    This is where Blockchain comes in. We explained the basics of Blockchain in an earlier article. Although the applications of Blockchain are numerous, there are few as compelling as its use in supply chain management. It isn’t purely a matter of theory either; global powerhouses such as BHP Billiton, Walmart, Maersk and IBM have all made moves to utilise Blockchain in their own supply chains.

    The changing nature of supply chains

    Whichever way you look at it, supply chains are evolving are much more dynamic than they once were. Supply chains are now constituted in much more expansive and complex networks, comprising multiple parties dealing with particular variants, components or stages of a product.

    Despite the great pace of change the core frameworks underlying supply chains have not necessarily been adapting. Businesses have been relying on the same technologies for years, some of which are becoming outdated and ill-suited.

    The promise of Blockchain

    Blockchain technology presents a unique opportunity for businesses to rethink the way they manage their dealings with suppliers and manufacturers. The potential applications of Blockchain in this regard are virtually boundless, but the key uses essentially revolve around tracing products throughout their lifecycle.

    Blockchain can be used to keep real-time and essentially ‘gapless’ records of a product’s movements, tracking its unique identifier through every assembly, modification, process, transit, and transfer. By ensuring an instantaneous and immutable record is created every time a product changes hands—all of which is recorded in the one place—the scope for the errors, costs and delays associated with intermediaries radically diminishes. Not only does this have commercial benefits for the parties involved, it can lend itself to other functions, such as verifying product certifications (e.g. fair trade, organic).

    The benefits of using Blockchain in this way are inherent in the technology itself. Reliance by all parties on a common, tamper-proof and real-time record of a product’s lifecycle not only eases administrative burden and reduces the need for audits, it promotes transparency. The requirement for ‘consensus’ between the different parties in the distributed network means that every transaction is validated, so disputes should arise less often.  Consumers will be able to have confidence in the provenance of the products they buy.

    In theory, Blockchain is an ideal solution to the changing needs of supply chains. However, it is not quite that simple—Blockchain is, after all, still an emerging technology. Though the potential benefits are enormous, there are some key challenges that must be considered.

    Challenges on the horizon

    Implementing a new technological framework underpinning large and complex supply chains will require time and money, not only in terms of system overhauls, but in terms of retraining staff, hiring new personnel, developing outsourcing relationships, and so on. Exactly what the costs will be isn’t yet clear, as we don’t have a many examples of relevant scale. Given the recent uptake by larger organisations it will certainly be a space to keep an eye on.

    If you are interested to know more or have questions about how changing supply chains or Blockchain might affect your business, please get in touch with Shaneel Parikh in our Business team.

    Written by Shaneel Parikh and Bryce Robinson.

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  • Changes to Retirement Village Legislation How will it affect you

    Changes to Retirement Village Legislation: How will it affect you?

    On 29 November 2018, the ACT Government introduced the Retirement Village Legislation Amendment Bill 2018 (the Bill) to the Legislative Assembly. According to the Explanatory Statement, the Bill introduced the second set of amendments to be made as a result of the Government’s 2015/16 review of the Retirement Village Legislation. The amendments brought in will affect those currently living in and seeking to live in a retirement village in the ACT.

    Retirement Village Legislation Changes

    The major changes to be aware of are as follows:

    • Contract for Sale requirements – the Bill creates two classes of required documents when selling retirement village premises within a registered Units Plan (a Retirement Village Unit). These are the initial required documents (the Crown Lease, title search, deposited plan, Units Plan and any asbestos report) and the later required documents (copies of encumbrances noted on title, the Lease Conveyancing Enquiry, the Owners Corporation Information certificate (section 119 certificate), the EER and the Building and Pest Report). The initial required documents are to be made available at all times the Retirement Village Unit is marketed for sale. The later required documents will not need to be provided to a Buyer until either 14 days prior to exchange of Contracts (unless the Buyer agrees otherwise) or within 14 days of the Buyer making a request.
    • One vote one Unit – where two or more residents occupy the same residential premises within a retirement village, only one will be permitted to cast a vote. Currently, each resident is entitled to vote at a residents meeting. All residents may, however, by special resolution resolve that each resident within the retirement village will be permitted to vote (even where they live with another resident).
    • Capital maintenance and capital replacement – the Bill expands the definition of capital replacement to extend to replacement of a part of a capital item. This will ensure that recurrent charges paid by residents are not used by the operator to replace any part of a capital item, which is the responsibility of the Operator. The ACT Government may also make guidelines specifying a particular item falls under the definition of capital replacement.
    • Optional Conciliation – Retirement village residents will now have the option of requiring the Operator to conciliate any dispute under the Retirement Villages Act 2012 (ACT). Once finalised, the conciliated agreement will have the same effect as an order of the ACT Civil and Administrative Tribunal.


    While many of the amendments may be considered relatively minor they do reflect the detailed complexities of Retirement Village Contracts. Any person entering into a Retirement Village Contract will often be faced with considerations and risks which they are often not made aware of until they receive formal legal advice. Should you require further information on the Retirement Villages Act 2012 (ACT), please contact a member of our Real Estate team.

    Written by Julian Pozza.

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  • Bank Guarantees – It Pays To Be Pedantic bw

    Bank Guarantees – It Pays To Be Pedantic

    It is common practice for a landlord to require that a bond be provided by a tenant to secure its obligations under the lease. Rather than a cash bond (which brings with it additional administrative requirements for a landlord), this security is commonly provided by way of a bank guarantee.

    A bank guarantee is an unconditional undertaking, provided by a bank, to pay the amount secured to the favouree on written demand, without reference to the customer or tenant. The bank issuing the bank guarantee will require that the funds are ‘held’ by the tenant, ensuring that they are always available in the event that a claim is made against the bank guarantee. A landlord may only claim against a bank guarantee if the tenant is in default under the lease.

    There are several matters that a landlord should consider when reviewing or accepting the form of a bank guarantee. These include:

    • Whether the bank guarantee has been issued from a bank trading in Australia (that holds an Australian banking licence).
    • If there is an expiry date, if the expiry date allows for an appropriate period after the expiry date of the lease to ensure that the landlord is still able to claim against the bank guarantee for any existing breaches of the lease or any rental or make good obligations.
    • The terms of the bank guarantee to ensure that they do not contain any restrictions.

    Many landlords prefer that the bank guarantee does not contain an expiry date at all so that if the tenant remains in the premises beyond the expiry date of the bank guarantee, the landlord still holds security for any potential loss or damages arising out of a default under the lease by the tenant. Some banks will not issue a bank guarantee without an expiry date and, in those circumstances, it is common practice to select an expiry date that is several months after the lease expiry date.

    To ensure the bank guarantee is valid and can actually be used as security for the tenant’s obligations under the lease, the following should be stated on the bank guarantee:

    • The names of the parties. They should appear exactly as they do on the lease.
    • The address of the premises. It is good practice for the bank guarantee to also state the title details for the property.
    • A statement to the effect that the bank guarantee is given in favour of the landlord as security for the tenants obligations under the lease.
    • The secured amount (inclusive of GST).

    It is important to understand that the original bank guarantee must be presented at the bank in order to make a claim against it. Due to this requirement, a landlord should only release the original bank guarantee in very limited circumstances, for instance, following the expiry of the lease (and within 30 days in the ACT). The original bank guarantee should otherwise be kept in a safe and secure storage space.

    Many people underestimate the importance of the bank guarantee and more so, its form. It is not just a piece of paper but an effective and tangible form of security that can be claimed upon with relative ease, if prepared correctly. Often this is the only form of security called upon by the landlord to properly compensate the landlord for any damages or loss arising from a breach of the lease by the tenant.

    If you have any questions about bank guarantees, please get in touch with our Real Estate Team.

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  • Conditional Gifts in Wills

    Conditional Gifts in Wills

    Tim Winton’s seminal novel Cloudstreet begins with the inheritance of a large house, with a covenant that it cannot be sold for twenty years. So begins a decade’s long saga that never questioned the legality of such a condition that potentially comes close to being invalid. While conditional gifts in Wills are not usually contentious, their impact can be significant. This article provides a summary of the present law surrounding conditional gifting in Wills.

    What are Conditional Gifts?

    As the name suggests a conditional gift is a gift that has some condition attached to it in a Will. The condition can be framed in one of two ways:

    1. a condition precedent – where an event must occur before the beneficiary can receive the gift; or
    2. a condition subsequent – where a beneficiary loses a gift they have already received if a later event occurs.

    The laws surrounding conditional gifting are entirely based on the common law (judge made law). Over the decades, the Courts have attempted to strike a compromise between the freedom of testation and imposing certain restrictions which, if not adhered to, would find the condition void.

    The distinction between a condition precedent and a condition subsequent is important if the condition is held to be void:

    • in the case of a condition precedent – If the condition is held to be void then the gift fails entirely;
    • in the case of a condition subsequent – if the condition is held to be void, the gift takes effect as an unconditional gift.

    Over the years the Courts have seen conditions placed with respect to marriage, relationships, religion and preservation of property.

    In 2014, the case of Carolyn Margaret Hicken v Robyn Patricia Carroll & Ors (No 2) [2014] NSWSC 1059 (“Hicken v Carroll) saw the Supreme Court of New South Wales uphold the validity of conditional gifts that required the children of the deceased to adopt a particular religion prior to becoming entitled to their inheritance. This case presented the New South Wales Supreme Court with the perfect opportunity to lay the groundwork for the common law surrounding condition precedents in Wills.

    In this particular case, Patrick Carroll was survived by 4 children when he died. He bequeathed gifts to them in his Will on the following condition:

    “subject to and dependent upon them becoming baptised in the Catholic Church within a period of 3 months from the date of my death and such gifts are also subject to and dependent (sic) my children attending my funeral”.

    Two conditions were present – (1) the children had to become baptised in a Catholic Church within 3 months of their father’s death and (2) the children were required to attend their father’s funeral.

    Each child attended the funeral but was deeply opposed to being baptised in a Catholic Church (they were practicing Jehovah’s Witnesses). After 3 months lapsed, one of the children sought a declaration from the Supreme Court that the conditions were “void and of no effect”.

    The Supreme Court of New South Wales set down the following principles:

    1. Uncertainty

    A condition precedent or condition subsequent can be held to be void if it is uncertain (but not merely because it is not completely clear).

    The children in Hicken v Carroll argued that the relevant clause did not specify a particular Catholic denomination and the concept of “baptism” was open to interpretation.

    The Court held that a clear interpretation of the words in the Will were required. The term “baptised in the Catholic Church” meant “being ritually initiated into the Roman Catholic Church”.  The Court therefore held that the condition was sufficiently certain.

    2. Impossibility

    If a condition is impossible to fulfil, it can be held to be void. Impossibility requires more than the condition being simply “difficult” or “improbable”.

    In this case, the Court held that it would not be impossible for the children to arrange for a baptism within a 3 month window.

    3. Public Policy

    A condition against public policy will be held to be void.

    This was the strongest argument run by the children – all four children submitted that in modern Australia (2014 as it was then), a clause containing the baptism condition was against public policy.

    In what seemed to be a bizarre move, the New South Wales Supreme Court opted for a narrow interpretation of the High Court’s decision in Re Cuming; Nicholls v Public Trustee[1]. The Court in Hicken v Carroll held that a condition with regard to religion would be void for uncertainty if there was an “interference with the parental right to bringing up a child in a particular faith”. To include a condition that required a beneficiary to be baptised was therefore not held to be against public policy.

    The Court went on to say:

    I am unable to discern from the legislation, treaties and other considerations referred to by the Children a public policy of the kind for which they contend that would overcome the longstanding significance which the law has accorded to freedom of testation.

    Insofar as they invoke religious discrimination, the various anti-discrimination statutes to which they referred do not prevent discrimination on the grounds of religion generally…. The conditions, in particular the Baptism Condition, do not impinge upon whatever right to the free exercise of their religion the law now accords the Children. The Gifts do not compel the Children to do anything. If they had chosen to do so, they could have complied with the Baptism Condition. They have maintained their adherence to the Jehovah’s Witness faith. That choice is to be accorded every respect but does not relieve them from the consequences of that choice on their eligibility under the Gifts”

    Ultimately the Court held the baptism condition was neither uncertain, impossible nor contrary to public policy. The gifts to the children were valid but failed because the children failed to satisfy the (valid) conditions.

    One final principle regarding conditional gifts that was not explored in the above case (it did not need to be) is the principle that conditional gifts cannot prevent future generations from being able to sell or otherwise dispose of property left to them.

    With all this being considered perhaps it is best that no one questioned the legality of the covenant in Cloudstreet as a great novel might have been reduced to merely a few pages. If you are considering attaching conditions to gifts in your will or are subject to conditions that appear unfair then you should seek legal advice from our Wills and Estate Planning Team.

    Written by Golnar Nekoee and James Connolly.

    [1] Re Cuming; Nicholls v Public Trustee (South Australia) [1945] HCA 32

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  • Indemnity Clauses: Everyone wants them; no one wants to give them.

    Indemnities: Everyone wants them; no one wants to give them

    Indemnity clauses can play an important role in managing the risks associated with commercial transactions. The tendency is to seek an indemnity which will protect a party to the greatest possible extent against all liabilities arising from the actions of another. Yet, too often, the indemnity is based on a boilerplate clause perhaps obtained from a precedent, so the drafting doesn’t reflect the inherent or underlying risk of a particular business relationship and the parties end up fighting over who is giving an indemnity and to what extent. But is an indemnity really necessary?

    At common law, the right to damages is implied by law and does not need to be stated in the contract. It follows that once you have established that a primary obligation has been breached the law implies a secondary obligation to pay damages. A contract can, and usually does, provide for its own regime for breach of contract – here is where an indemnity comes in to play.

    An indemnity is a promise made by one party (“the indemnifier”) to cover loss or damage suffered by another party (“the principal”) which may be suffered as a result of a specified event. Indemnities are frequently used to expand the range of losses that a principal could otherwise recover at common law, can alter the contractual rules of interpretation, and can deliver procedural advantages when it comes time to enforce.

    So what can indemnities actually do? Indemnities can:

    1. Alter the test for causation, remoteness of damage and foreseeability: In certain circumstances and depending on the form of words used, it may not be necessary for the innocent party to demonstrate that the indemnifier caused the loss claimed, simply that the event has occurred. Similarly you can remove the tests of foreseeability and remoteness and replace them with other criterion for assessing what loss is recoverable. If this occurs, then the principal can essentially pick and choose what it will be protected from and may no longer be confined in its recovery by how far the loss extends;
    2. Modify the common law duty of the principal to mitigate its loss (thus increasing the losses to be paid for by the indemnifier);
    3. Protect the principal from damage suffered by the conduct of strangers to the contract (i.e. third party actions or claims); and
    4. Extend the statutory limitation period. In the ACT, section 11 of the Limitations Act 1985 limits the time period within which a claim may be brought for breach of contract. Normally, that period is 6 years calculated from the date of the breach.  However, the limitation period in relation to an indemnity commences from the date on which the indemnifier refuses to honour the indemnity. The principal has a period of 6 years from that date within which to bring legal proceedings to enforce the indemnity.

    Depending on how the indemnity is drafted, an indemnity can turn what would otherwise be a claim for compensatory damages (subject to the principal proving breach of contract, damages suffered, and an assessment of those damages) into a straight claim for debt. The principal may only need to establish that the event triggering the obligation to pay has occurred.

    There can be many benefits to getting an indemnity in your favour but these all assume the indemnity is drafted properly and clearly. Courts will construe indemnities narrowly and if there are any ambiguities Courts will construe indemnities in favour of the indemnifier (because a party should know what liability they are agreeing to).

    Indemnities can be useful and provide peace of mind, but not necessarily at the expense of achieving the commercial transaction or maintaining an ongoing working relationship. There are always rights to common law damages if something does go wrong.

    If you have any questions about indemnities (or how to enforce them), please get in touch with our Business team.

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  • Risks and Rewards for Start-Ups seeking Venture Capital

    Risks and Rewards for Start-Ups seeking Venture Capital

    For start-up businesses, venture capital (VC) investment represents an opportunity to obtain financing, strategic advice and access to potential markets at the outset of their business venture. Funding of this nature is becoming increasingly popular, and often necessary for start-ups who lack access to loans, capital markets or other traditional sources of finance.

    Investments in start-ups are high-risk, high-reward. VC firms are poised to win big if their investment pays off but, because of the inherently precarious nature of many new businesses, they will often be eager to have a hand in controlling the decisions and activities of the new enterprise.

    We look at some of the risks and rewards of VC for start-ups, as well as issues to bear in mind if you decide that VC is the right option for you.

    The rewards

    The most obvious benefit of venture capital is precisely that: capital. VC can represent a significant injection of money that can often be decisive in a start-up’s capacity to enter the market as a genuine competitor. This can help start-ups realise their goals much faster, and potentially beat other competitors to the market. What’s more, the money is yours. You are not bound to repay them (as you would be with a lender) which can court

    educe the immediate cash-flow pressure.

    Other benefits include access to a wealth of business experience, mentoring and networks. The expertise of a large and sophisticated VC firm can be immeasurably valuable as you start out on your new venture. The investors have a vested interest in the growth of your business, and will be able to assist you wpith managing your business and developing your skills as an entrepreneur.  It will also often mean access to additional resources to assist with your business’ growth, with the VC firm often willing to provide—or at the very least facilitate access to—legal, advisory, tax and other support.  Start-ups are often able to leverage the well-established connections that their investors have within the industry, including with other potential investors, potential clients and others key stakeholders that can help push your business ahead within the market.

    The risks

    The key risk is the loss of control over the business. Naturally, investors with a lot to lose will want to have a hand in the decisions of the business they’re backing. A corollary of seeking VC investment is that start-ups will usually have to relinquish a significant degree of control in their companies. VC firms will often negotiate seats on the board, priority shareholding, and significant stakes in the business that allow them to influence, veto or even make key decisions. You may even be relegated to minority ownership status. This shift in the ownership dynamic can be problematic where your goals, priorities and values are misaligned with those of your investor.

    A related problem is the counter intuitive issue of ‘growing too fast’. Starting with a bang may mean that your business may quickly become too big for you to manage without further investment and significant resources. This can be problematic if your VC investor, contrary to the micro-managing kind described above, is more “hands off” in their approach and does not provide you with the guidance, connections and support that you need.

    Things to consider

    The choice about whether to seek VC will be one that is unique to your business and to you.

    Before making your decision it is important that you do your research. Be clear on what potential VC firms might expect out of your relationship, and whether they are more ‘hands on’ or ‘hands off’ in their approach. Also investigate other financing possibilities, as there may be other sources of capital that align more closely to your values and the needs of your business.

    Take the time to reflect on what you want to get out of your business. Think about your business’ core goals and values, and whether you’re willing to compromise on any of them (or on any decision at all) if it means allowing the business to grow. Think about whether the additional expertise, connections and resources would outweigh losing a degree of ownership or control.

    All of these factors are important and none of them will be decisive by themselves. If you think that VC might be the best option for your start-up ensure that you consult professional advisors to help you understand what it will mean for you and your business.

    If you are considering pursuing VC funding or want to understand how it might affect your start-up, please feel free to get in touch with our Business team.

    Written by Shaneel Parikh with the assistance of Bryce Robinson.

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  • Essential Guide to Local Government Law Development Control Orders Under the EPA Act (2)

    Essential Guide to Local Government Law: Enforcement of Development Control Orders under the EPA Act

    Our essential guide to development control orders addressed when local councils can give development control orders under the Environmental Planning and Assessment Act 1979 and when development control orders are likely to be an appropriate tool to deal with a compliance issue. This Essential Guide outlines the options available to councils to enforce compliance with a development control order, and the advantages and risks of the different enforcement options available.

    When is it appropriate to take steps to enforce compliance with an order?

    After the time specified in an order for compliance has passed the Council will need to determine whether or not the order has been complied with (at all or in part). Where an order contains multiple requirements which must be satisfied at different times then a Council can choose whether to monitor compliance progressively or after the last date for compliance has passed. Where the time frame for compliance is relatively long, it can be helpful to send a reminder letter prior to the end of the compliance period, as some recipients may mistakenly assume that an absence of correspondence from a council means that the issue has simply gone away. However, even after the date for compliance has passed, the order continues to have effect.[1]

    The following matters may be relevant in deciding how to proceed where a development control order has not been complied with:

    1. the nature and amount of work required to comply with the order;
    2. the likely costs of doing the outstanding works;
    3. whether there have been any factors out of the recipient’s control which have contributed to them failing to comply with the order such as bad weather, illness, limited contractor availability etc.
    4. any public interest considerations, such as impacts on third parties arising from ongoing noncompliance; and
    5. the attitude of the recipient towards compliance.

    In some circumstances it may be appropriate for the council to grant an extension of time for the recipient to comply with the order before taking enforcement action. In this situation, any extension of time which is allowed should be recorded in writing as a modification of the order.[2]

    If the Council considers that enforcement action is appropriate then, in order to afford procedural fairness to the recipient, it should first send a letter before action putting the recipient on notice of how it proposes to proceed.

    Options for a council to enforce compliance with an order:

    1. Mediation

    In some situations it may be appropriate to consider mediation, prior to taking other enforcement steps. Factors relevant to whether mediation is likely to succeed include whether there are a variety of ways to achieve compliance with the order, the relationship between the parties, whether immediate action is required, whether there is scope for flexibility, the impact of the non-compliance etc. Mediation can be done on its own or as part of court proceedings.  If mediation is successful it is usually more time and cost effective than proceeding to a contested court hearing.

    2. Council giving effect to the order

    If the recipient has failed to comply with an order given by the council then, under cl.33 of Schedule 5 of the Act, a council may do ‘all such things as are necessary or convenient to give effect to the terms of the order (including the carrying out of any work required by the order)’.  That section also states that a council may issue a compliance costs notice to recover ‘all or any reasonable costs and expenses incurred in connection with the following things:

    1. monitoring action under the order;
    2. ensuring that the order is complied with;
    3. any costs or expenses relating to an investigation that leads to the giving of the order;[3]
    4. any costs or expenses relating to the preparation or serving of the notice of the intention to give the order;[4] and
    5. any other matters associated with the order.

    The council can then recover any unpaid amounts specified in a notice as a debt in a court of competent jurisdiction (the choice of court will depend on how much is owed to the council).

    While this seems like a convenient option, it can be risky for a council to give effect to an order without first obtaining an order from the Court allowing this. This is because giving effect to order will often involve accessing and, in some cases damaging or interfering with, another person’s property. If the order is subsequently found to be invalid a council can be liable to the land owner for damages arising from the work involved in giving effect to the order.[5]  As a matter of practicality, it can also be difficult to recover costs after work has been done, especially from individuals who may have limited capacity to pay.

    3. Civil enforcement proceedings

    A council can commence civil enforcement proceedings in Class 4 of the NSW Land and Environment Court under s.9.45 of the Act to remedy or restrain a breach of the Act, including the failure to comply with a development control order.[6]  Class 4 proceedings enable a council to seek a range of orders, including a declaration from the Court that the development control order has not been complied with, a court order that the recipient to comply with the outstanding order requirements as well as an order for costs.  To be successful in the proceedings the council will need to establish that the recipient has not complied with the order ‘on the balance of probabilities’. However, even where the Court finds that a breach of the Act has occurred or is likely to occur, it has discretion as to whether or not to enforce compliance.[7] Factors such as the nature of the breach, including the environmental impacts associated with the breach, whether the breach is a purely technical breach, and excessive delay in taking the proceedings, can all be considered by the Court in deciding whether to make orders requiring compliance.

    4. Criminal proceedings

    Under s.9.37 of the Act, non-compliance with a development control order is also an offence under the Act for which a council can commence criminal proceedings in the Local Court or the NSW Land and Environment Court[8]. It is also possible to give a penalty notice for the offence of failing to comply with a development control order[9].

    Criminal proceedings do not directly bring about compliance with an order (unless compliance is achieved as the result of the prosecution having a deterrence effect), and this option is therefore usually appropriate where the intention of an order has been frustrated or compliance is no longer possible.

    To be successful in criminal proceedings a council will need to prove its case ‘beyond reasonable doubt’. This requires the Council to be able to exclude any possibility that the development could have been lawfully carried out without the need for development consent (e.g as exempt development). Any such proceedings must also be brought within the statutory time frame (within 2 years of the offence occurring, or within 2 years of the offence coming to the attention of the relevant council investigating officer).

    It is also not possible to prosecute for an offence where the same conduct is already the subject of orders made by the LEC in civil enforcement proceedings[10].

    For further information or assistance, please contact  Alan Bradbury and the Local Government & Planning team on (02) 6274 0999.

    More Essential Guides to Local Government Law are available here.

    The content contained in this guide is, of course, general commentary only. It is not legal advice. Readers should contact us and receive our specific advice on the particular situation that concerns them.


    [1] Clause 28 of Schedule 5 of the Act.

    [2] Clause 22 of Schedule 5 of the Act.

    [3] The amount which may be claimed for the costs relating to an investigation is capped under 281C of the Regulation.

    [4] The amount which may be claimed for the costs relating to the preparation and giving of a notice of intention is capped under 281C of the Regulation.

    [5] Grant v Brewarrina Shire Council [No. 2] [2003] NSWLEC 54

    [6] s.9.44(b)(v) of the Act.

    [7] Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335

    [8] s.9.57 of the Act.

    [9] Environmental Planning and Assessment Regulation 2000, Schedule5,

    [10] 9.57(7) of the Act

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