News & Events

  • ACT Supreme Court 2018 Year in Review - Estates, Probate and Family Provision

    ACT Supreme Court 2018 Year in Review - Estates, Probate and Family Provision

    This year did not see a great deal of activity in the ACT Supreme Court with regard to Estates, Probate and Family Provision.

    There were three ex-parte applications before the ACT Supreme Court (each before Associate Justice McWilliam) concerning section 11A Wills (‘informal Wills’). The cases of In the Estate of Kay Maureen Leighton[1], In the Estate of Socrates Paschalidis[2] and In the Estate of Peter Ronald Wiseman[3]coincidentally each had very similar facts. Each case involved an informal Will that had not been correctly executed. Each ‘Will’ had been signed by only one witness or no witnesses at all.

    There was one ‘extension of time’ Application which was considered in the case of Buckman v Lindbeck[4]. This case involved an Application made by the child of the deceased to extend the time to file with the Court a Family Provision Application to receive greater provision from his father’s estate. In the ACT, the time limit within which a Family Provision Application must be made is 6 months of the Grant of Probate being made by the Court.

    In this particular case, Probate was granted on 7 December 2016 which would have meant the Family Provision Application was required to be filed on or before 7 June 2017. The Family Provision Application was filed on 28 August 2018, almost 1 year and 3 months out of time.

    The Deceased’s Will gave his two sons Paul (the Applicant in this case) and Anthony the sum of $25,000 with the residue of the estate being divided between the deceased’s three other children, who were also the executors and defendants in this case. Each residuary beneficiary received at least $220,000 from the division.

    The Deceased acknowledged in his Will that the reason for the differing gifts between his children was due to the lack of support [I] received from, and contact I have had with, either son over a significant period of time’.

    On the same date the Application for the extension of time was filed with the Court, the executors made an interim distribution to themselves following the sale of a major asset in the estate. Despite probably not having been served with the Application on the date it was filed, the executors had notice of the Applicant’s intended Family Provision Application due to correspondence between both parties’ solicitors prior to the Application being filed.

    In deciding whether an extension of time was warranted, the Court (Associate Justice McWilliam) was guided by the case of Smith v Public Trustee of the Australian Capital Territory[5]and had regard to three considerations which must be considered in an Extension of time application

    • explanation for the delay;
    • the strength of the Applicants case if an extension of time was granted;
    • the prejudice to other beneficiaries that might arise; and
    • a forth category was added in the case of Warren v McKnight[6] – whether there has been any unconscionable conduct by the Applicant.

    The relevance of the above factors to the present case was as follows:

    1. The prejudice to other beneficiaries that might arise the executors argued that the prejudice to them in granting an extension of time was significant as the majority of the estate had been already distribution. The Court however held that the prejudice was of the executors own making, having made a distribution with notice of an impending Application, and not having filed a Notice of Intended Distribution.
    2. Explanation for the delay the Applicant’s explanation for the delay was that he was never given a copy of the Will by the executors and did not know Probate was granted. The Court recognised there had been some delay on part of the Applicant from the time he received a copy of the Grant of Probate until formally filing his Application, but ultimately held significant delay arose due to the executors failing to give the Applicant a copy of the Will.
    3. The strength of the Applicants case if an extension of time was granted– the Court recognised that the Applicant was in a dire financial position. He was a truck driver with no real property and significant debts. His partner was unemployed and the Court therefore held the Applicant hat reasonable prospects of a successful claim if an extension of time was granted.
    4. Unconscionable conduct by the Applicantthe Court found no evidence of unconscionable conduct by the Applicant.

    The Court granted the extension of time. At the date of this article, there has been no reported judgement on the Family Provision Application by the Applicant in the present case (and there may not be a reported judgment if the case is ultimately settled between the parties). All parties, including the executors and the other interested beneficiary (Anthony) will of course need to be party to any Family Provision proceedings filed by the applicant and subsequent out of Court settlement (if any).

    Other notable matters to be aware of in the  Estate space  that do affect us in the ACT include:

    • The replacement of the Superannuation Complaints Tribunal with the new Australian Financial Complaints Authority (AFCA) from 1 November 2018;
    • The NSW Law Reform Commission is in the process of examining and reporting to the NSW Attorney General on laws that affect access to a person’s social media accounts and other digital assets in the event of death or incapacity. The report by the Commission will provide some useful guidance to practitioners in the ACT (and Australia wide) when advising their clients on their digital assets; and
    • The changes announce in the 2018 Federal Budget with regard to Testamentary Trusts, Estates and Elder Abuse.

    Written by Golnar Nekoee, Director, Wills and Estate Planning


    [1] [2018] ACTSC 75

    [2] [2018] ACTSC 122

    [3] [2018] ACTSC 292

    [4] [2018] ACTSC 313

    [5] [2012] ACTSC 4

    [6] (1960) 40 NSWLR 390

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  • Sunsets no guarantee of a sunrise in your new unit - the importance of a sunset date when buying otp

    Sunsets, no guarantee of a sunrise in your new unit - the importance of a sunset date when buying off-the-plan

    With the tightening of lending conditions, confidence in the housing market falling and a large number of developments in the pipeline, there poses great opportunity but also risk when buying a unit off-the-plan. Whilst there is of course the attractiveness of living in something ‘new’, with modern appliances and furnishings and living close to shops, cafes and other amenities, how long would you be willing to wait for your unit to be built?

    For many developments, banks (as part of their lending conditions) require the developer to obtain a certain number of pre-sales. This means that part of the development will need to be sold before construction commences. Whilst this may not be an initial concern for most buyers there lies an obvious risk in that the developer may have difficulties obtaining the requisite number of pre-sales and the construction of the development is delayed as a result.

    To accommodate the risk of a delay, whether due to funding or the construction itself, developers will include a provision in the contract to allow for the developer to extend the anticipated date of completion (usually tied to the registration of the units plan) at its discretion. The obvious consequence for buyers then is that they may be bound to a contract under which the construction of their unit may not commence or be completed for a number of years, despite there being initial timeframes stated in the contract.

    To be able to ‘opt out’ of the contract in such circumstances, buyers should ensure a sunset date is included in the contract. A sunset date gives both parties the right to rescind the contract (and for the return of the deposit) where construction of the development has not been completed by the date specified in the contract. In our experience, such a request is generally accommodated if the sunset date provides the developer a reasonable time to complete the development.

    The use of a sunset date though is a double edged sword. It poses another issue: what happens if the value of the unit increases and the sunset date passes, should the developer be entitled to rescind the contract to take advantage of the price increase?

    This practice has occurred in Victoria and New South Wales, leading to the introduction of legislative restrictions. In NSW, the Conveyancing Amendment (Sunset Clauses) Act 2015 requires developers to seek the buyer’s consent prior to bringing the contract to an end once the sunset date has passed. Where the buyer does not consent, the developer must seek an order from the Supreme Court allowing the developer to rescind the Contract with such orders only being granted if the Court considers it just and equitable to do so. Similar restrictions will be introduced in Victoria under the Sale of Land Amendment Bill 2018 (if passed)

    So, will the ACT follow the lead of NSW and Victoria? Or will the ACT follow Queensland and introduce mandatory sunset dates? Whatever the path, clearly the introduction of any such legislative amendments will have a significant impact on both buyers and developers and each should watch this space.

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  • The Problem with Smart Contracts

    The Problem With Smart Contracts

    Smart contracts-computer-encoded sets of instructions that ‘self-perform’ when certain pre-determined criteria are met-are poised to revolutionise the legal landscape in years to come.

    In our first article in this series, we explained the basics of blockchain technology and its application in smart contracts. Far more than a fleeting or niche innovation, smart contracts may have applications in sectors as far reaching as financial services, supply chains, car sales importation, real estate and insurance. However, although they pose exciting opportunities for a great range of businesses, there may be some significant legal challenges on the horizon.

    A square peg in a round hole: difficulties in applying the law

    One issue, yet to be considered by the courts, is the extent to which these smart contracts are valid and enforceable under contract law. Parties to a smart contract effectively cede control over an aspect of performance of a contractual obligation to a digitised process, which (once enlivened) cannot be reasoned with or influenced.

    Utilising the more ‘pure’ types of smart contract, consisting only in machine-readable code, means that the identity of the party is unknown; as such, there is no way to assess their capacity to enter the contract. Moreover, certain contractual principles such as frustration, duress, undue influence, unconscionable dealings or force majeure, by their very nature, require subjective interpretation of judgement on a case-by-case basis-something not countenanced by self-executing instructions.

    It will be necessary for lawyers to keep their finger on the pulse in this regard; although certain dealings could render a smart contract void at law, the activated contract may be unstoppable in the digital world. It will be interesting to see how the law develops and adapts to this problem, noting that practically speaking most modern remedies could be swept away, leaving mere damages.

    Another issue will be determining how rights and entitlements recorded ‘on the chain’ accommodate rights and entitlements that arise ‘off the chain’. For example, what happens if share ownership is recorded on a blockchain as vesting in one entity, but surrounding circumstances place equitable ownership in another? Or if a transfer of ownership of property is recorded on a blockchain but is sought to be set aside under the Corporations Act as a voidable transaction? The immutability of a blockchain system raises some interesting questions in this regard.

    Challenges in litigation

    The nature of the blockchain system means that the players involved will most likely be ‘distributed’ around the globe. Parties intending to implement or utilise a blockchain system should therefore give advanced thought to which laws should apply and what type of forum is most appropriate to resolve disputes. It might be beneficial to have an arbitration dispute resolution cluses rather than relying on the enforcement of a court award from a local court system.

    The governance position of public blockchain systems also poses an interesting challenge from a litigation perspective. While terms of use can be communicated to users of a public blockchain, such terms may be difficult to enforce as no single entity controls the system. The question also remains as to who will bear the liability for any faults in the technical code and who has the right to enforce against them.

    Interestingly, there have been several suggestions applications such as “JUR” and “Jury.Online” which offer a ‘decentralised’ dispute resolution mechanism. In such systems, members can open a dispute and the blockchain community effectively vote on the issues in question. While these dispute resolution mechanisms sit outside the current legal framework, it will be interesting to see whether such mechanisms gain traction amongst blockchain users or whether users will rely upon traditional legal dispute resolution mechanisms.

    It is clear that the explosive uptake of blockchain technology has the potential to disrupt centuries of settled legal principles. While this may create a headache for lawyers, it is an exciting opportunity to rethink the way we transact in an increasingly globalised and digitised economy. “It will be an ill-wind that blows no lawyer no good”; so watch this space.

    If you’d like to discuss how distributive ledger technologies might impact your business, feel free to get in contact with Mark Love in our Business team.

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  • Residential Tenancies Amendment Bill 2018 No 2 A-CATastrophe

    Residential Tenancies Amendment Bill 2018 (No 2) - A-CATastrophe?

    We certainly hope not, but residential investors are likely to consider that it is, with tenants perhaps ultimately wearing the cost.

    Introduced in the Legislative Assembly on 1 November 2018, the Residential Tenancies Amendment Bill 2018 (No 2) seeks to amend the Residential Tenancies Act 1997 to improve protections for tenants while enabling lessors to be consulted on issues that will affect the properties they own.[1] In summary, the changes:

    1. Restrict a lessor’s right to decline an application for the keeping of pets on the premises. If a lessor wishes to refuse consent or impose conditions on that consent (that do not relate to the number of animals or the cleaning/maintenance of the premises), the lessor must apply to the ACAT for its prior approval.The proposed changes do not allow for the lessor to hold additional security for damage caused to the premises, even where it is predicated that a pet will cause deterioration.
    2. Restrict a lessor’s right to decline an application to modify the premises. Where a tenant makes an application to renovate/alter the premises for the purpose of assisting the tenant in relation to:
      1. the tenant’s disability (on written advice of a health practitioner);
      2. the safety of the tenant;
      3. improving the energy efficiency of the premises; or
      4. the security of the tenant, to be known as ‘special modifications’, the lessor will only be able to decline the application if the lessor obtains the ACAT’s prior approval. For any other modification, the lessor must not unreasonably decline the application.It is important to note that the (currently proposed) grounds on which the ACAT may make orders in favour of the refusal are non-prescriptive, the obvious being that:
      5. the lessor would suffer significant hardship; or
      6. the special modification would result in additional maintenance cost for the lessor.Such grounds, without further clarification, do not provide either tenant or lessor with any certainty and may lead to inconsistent decisions by the ACAT and could prove significant barriers to obtaining consent.

        The proposed changes do not allow for the lessor to hold additional security for damage caused to the premises or to return the premises to its original condition (subject to fair wear and tear) in the event the tenant fails to comply with the lessors conditions of consent (which presumably will require the premises to be restored).

    3. Introduce capped rental increases. If a lessor wishes to increase the rent by a rental rate above that specified by regulations (10% greater than the rents component of the housing group of the CPI for Canberra), the lessor will need to obtain either the tenant’s consent or the ACAT’s prior approval.
    4. Cap the break fee payable by a tenant under a ‘break lease clause’. Where a tenancy agreement is entered into with a new tenant before the expiry of the 4 week period (if more than half of the fixed term period has expired) or 6 week period (if less than half of the fixed term period has expired) following the tenant vacating the premises, the break fee will be reduced by the amount of rent payable by the new tenant during that period.If the tenant vacates the premises more than 4 weeks before the end of the fixed term, the break fee will be increased to include the lessor’s reasonable costs of advertising the premises for lease and providing vacant possession but limited to:
      1. If more than half of the fixed term has expires – an amount equal to 2/3 of 1 weeks rent; or
      2. If less than half of the fixed term has expires – an amount equal to 1 week’s rent.

    The conscious ‘push’ to move the ACT to a more tenant friendly jurisdiction, perhaps which to a degree may be necessary, without incentive, a more amicable resolution process or the substitution of additional security (at least for the lessor) brings about an obvious risk of an increase to the already overburdened number of applications before the ACAT, which obviously increases the cost and risk of owning and renting land.

    The question then is who is ultimately going to bear these costs? Based on the proposed reforms this clearly lays cost and risk at the feet of the lessor, but does it? One observation is that lessors will demand higher rent to cover their risk and mitigate their potential losses and if these changes are too burdensome, to invest elsewhere, reducing available rental supply.

    [1] Residential Tenancies Amendment Bill 2018 (No 2), Explanatory Statement

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  • Business Breakfast Club November Summary - Business Succession Planning

    Business Breakfast Club November Summary - Business Succession Planning, Buy-Sell Agreements And Personal Insurances

    This month at Business Breakfast Club, Golnar Nekoee of BAL Lawyers and Sam Elliot of Macquarie Wealth Management discussed the importance of business succession planning and how to finance the plan. An effective succession plan will ensure that the time and effort invested in building up a business is not jeopardised when a business owner leaves.

    What is a business succession plan?

    A succession plan outlines who will take over a business when a business owner leaves. An owner might ‘leave’ for a number of reasons and might be voluntary or involuntary. This might be due to retirement, death, disability, a sale of the business, or a falling out between business partners. Creating a plan ensures that you have a strategy in place for the orderly and smooth transfer of business, aiding to maintain economic stability and preserve family and business relationships. The business succession plan can be built into your establishment and ownership documents or can come later separately but it does need to be discussed with the intended beneficiaries and documented so that it can be implemented in a practical and meaningful way.

    Types of succession plans

    A succession plan can come in many forms and will depend on the legal model of business ownership you have chosen. Strategies can include Enduring Powers of Attorney, Wills and Statements of Intent for sole traders, Partnership Agreements, Shareholders Agreements and Buy-Sell Agreements where there are multiple owners. It is important to ensure that the succession plan is funded, whether through a loan or an insurance payout, otherwise the plan cannot be implemented.

    Q&A Corner

    How can Enduring Powers of Attorney and Corporate Powers of Attorney be used?

    An Enduring Power of Attorney (EPA) is a legal document under which an individual (‘the principal’) appoints another to make decisions on their behalf (‘the attorney’). Decisions can include managing an individual’s property, financial and health affairs. An EPA is a simple but powerful document as it continues to operate after the principal loses the ability or capacity to make decisions. This can be a useful tool in the case of a sole trader, allowing the attorney to make not only personal decisions but business decisions to either manage the business until the principal regains capacity, or to sell the business or conduct an orderly winding down in the event the principal no longer has capacity.

    Directors however cannot give an EPA in respect of their role as a director; hence a company power of attorney might be appropriate for sole director / shareholder entities.

    If a sole director and shareholder of a company is incapacitated or has passed away, there is a period of time in which no one can exercise the rights attached to the shares (to appoint an interim director) and the company will be without appropriate management and oversight. The company will be unable to operate effectively (or perhaps at all). In order to allow the company to continue to operate (for instance use bank accounts to pay wages or debts, enter into contracts to preserve the business) a sole director might consider, as part of their succession plan, implement a company power of attorney. The company power of attorney can grant a third party the right to exercise the powers of the company – allowing that third party to step in and manage the business at a critical time.

    For more information, please contact Golnar Nekoee. The next Business Breakfast Club will take place on 14 December 2018. For more details click here. If you would like to attend, please contact us.

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  • Dying with Multiple Partners

    Dying with Multiple Partners: "Playing the Fieldâ€

    To die with multiple partners- what does that mean? In a social context, the meaning is quite obvious. The deceased person was “playing the field”, so to speak. He or she was in an active relationship with at least two individuals at the date of their death. In a legal context, the phrase “dying with multiple partners” has a more obscure meaning.

    When people ask us “why do I need a Will?”, we often find the best way to respond is to highlight what happens if they die without a Will. A person who dies without a Will is said to have died intestate. In each Australian State and Territory, there is intestacy legislation which determines to whom assets are distributed on death.

    The statutory framework is rigid and wholly dependent on the circumstances of the deceased person at death. These “circumstances” are whether the deceased had a spouse or partner at death, and what is the composition of the deceased’s family (both immediate family members and more distant relatives).

    The intestacy legislation varies across jurisdictions, but generally speaking, the order of entitlement is (1) Partner, (2) Children, (3) Parents, (4) Siblings, followed by Nieces and Nephews, Grandparents, Uncles and Aunts, and Cousins. If there are no members of any of those classes, then the deceased person’s estate reverts to the Territory or State Government.[1]

    In relation to the deceased’s family, the categories of eligible beneficiaries are relatively easy to establish. But what is the definition of a “partner” for the purposes of intestacy? In the Australian Capital Territory, a partner is any of the following: the deceased’s spouse (wife or husband), civil union partner, civil partner or “eligible partner”.

    An eligible partner is someone who was in a domestic relationship with the deceased at their death and fulfils one of the following two criteria:

    1. He or she had been the domestic partner of the deceased for a continuous two year period immediately prior to the deceased’s death; or
    2. Is the other parent of the deceased’s child (provided the child was a minor when the deceased died).[2]

    A person is a “spouse” as long as they remain married. Separation, without actual divorce (decree nisi), will not change how the intestacy legislation is applied. The (unfortunate) fact is that a deceased person is unlikely to want someone who they have separated from to benefit from their assets. It is easy to see how the application of the framework can result in inheritances that are unjust.

    Let’s look at an example. Say Bridget and John were married in 1990. They did not have children and separated in 1998. Neither of them thought that the formal process of getting a divorce was worth the time and expense. Bridget and John have not spoken since 1998. Bridget was jaded by the relationship and never re-partnered. Bridget dies in 2018 with an estate valued at $4,000,000.00. Who gets it? John. John is entitled to the whole of Bridget’s estate. It does not matter that they have not spoken in over twenty years. They were legally still married when Bridget died, and John is therefore Bridget’s spouse for the purposes of the intestacy legislation.

    Now let’s retain that example, but change one fact. Say Bridget re-partnered with Luke in 2014. They have been in a continuous (and exclusive) domestic relationship since that date. In 2017, they got engaged. Bridget was not “playing the field”, but the law says she died with multiple partners. She was survived by her husband, John, and her eligible partner, Luke. What happens to Bridget’s assets in these circumstances? John receives $2,000,000.00 and her fiancé, Luke, receives $2,000,000.00.[3]

    Remember that mere separation without divorce has no impact on the intestacy legislation, despite the fact that the person’s testamentary intentions are likely to have changed. What can you do to avoid these arbitrary and unintended results?  You should ensure that you obtain proper estate planning advice and have a Will that reflects your current circumstances and testamentary intentions.

    If you require assistance in relation to your estate planning arrangements, please contact the Estates Team at BAL Lawyers.


    [1] Administration and Probate Act 1929 (ACT) s 49 and Schedule 6.

    [2] Administration and Probate Act 1929 (ACT) s 44.

    [3] Administration and Probate Act 1929 (ACT) s 45A.


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  • Competitive Neutrality for NSW Councils

    Essential Guide to Local Government Law: Competitive Neutrality for NSW Councils

    What is competitive neutrality and why is it important?

    Competitive neutrality is about creating a level playing field between in-house and external tenderers in a tender process. It aims to eliminate resource allocation distortions which can arise when public entities participate in significant business activities[1]. Competitive neutrality principles are therefore relevant when councils are undertaking a tender process and also wish to submit an in-house bid for the service. Applying competitive neutrality principles can encourage participation in a tender process. More competition generally increases the prospect of a council achieving a good value for money outcome and reduces the likelihood of a challenge to the outcome of a tender process. It is also appropriate for councils to consider the principles of competitive neutrality when they use internal cost data as a tender evaluation benchmark to ensure they are comparing like with like.

    The Competition Principles Agreement underpins the National Competition Principles. Local councils are bound by this Agreement even though they are not a party to that document[2]. The NSW Government has published three key guidance documents on competitive neutrality which are relevant to local councils:

    1. the Policy Statement on the Application of Competitive Neutrality: Policy and Guidelines Paper January 2002 (the Policy Statement);
    2. Competitive Tendering Guidelines January 1997 (the Guidelines); and
    3. Pricing & Costing for Council Businesses: A Guide to Competitive NeutralityJuly 1997 (the Neutrality Guide).

    The Policy Statement sets out the broad requirements of competitive neutrality as they apply to all government businesses at the State and Local level. The Guidelines are intended to assist local councils to decide when to engage in competitive tendering and outline the processes involved generally[3]. The Neutrality Guide is designed to assist Local Councils to apply the requirements contained in the Policy Statement to their business activities.[4]

    When should a council consider participating in a competitive tender process?

    Councils often participate in a competitive tender process to assist them to decide whether to transition from a model of public service provision to private service provision under contract. The Guidelines list a number of procurement areas in which councils regularly participate in competitive tendering. This includes waste and recycling collection, maintenance of council properties, roadworks and management of public facilities such as swimming pools, caravan parks and libraries. However, this list is not exhaustive. Depending on the in-house capabilities of the council, there may be other services for which it is appropriate that a council participate in a competitive tender process.

    When is a council required to maintain competitive neutrality?

    Under the Policy Statement, councils have an obligation to maintain competitive neutrality during a tender process for a business activity of a council in which the council also intends to submit an in-house bid.[5]

    When determining whether an activity is a business activity the Neutrality Guide requires a council to consider the nature of the activity, whether it is, or is likely to be, subject to competition from other providers and its importance to the council’s customers. Matters which indicate that an activity is not a business activity include where it is a small-scale activity included within a larger function of a council, or where it forms part of a community service function of the council. The Policy Statement identifies activities such as water supply, sewerage services, abattoirs and gas production and reticulation as business activities.

    The competitive neutrality obligations which apply to a council will also depend on the income generated (or proposed to be generated) from the business activity which is being tendered for. The Neutrality Guide imposes different obligations depending on whether or not the annual sales turnover/annual gross operating income of the business activity is over or under $2 million. The competitive neutrality obligations imposed on a procurement for a Category 1 business activity ($2 million or over) are greater than those which apply for Category 2 business procurement (under $2 million). For Category 1 business activities it is expected that the benefits of applying competitive neutrality will outweigh the costs of doing so[6]. For the procurement of a Category 2 business activity a council must still compete on the basis that they do not use their public sector position to gain an unfair advantage in the tender process, but they have flexibility in how they apply the Neutrality Guide. For example, councils have discretion to determine the extent to which the activity is separated from the other operations of the council, and need only adopt a full cost attribution where practicable.[7] For Category 2 business activities, applying the principles of competitive neutrality on this flexible basis may still be helpful to encourage competition and reduce the likelihood of a challenge to a council’s decision to award the contract to any particular tenderer.

    Implementation of competitive neutrality

    The first step is to consider when your council needs a new service, or an existing contract is coming to an end, is whether the Council may wish to participate in the tender process. It is important to identify this early in the process so that the Council can ensure that the in-house business unit is separated from the team running the tender process and that the relevant systems (such as the complaints handling system) are put in place prior to the release of the tender documents

    Where a council is participating in a tender process then steps a council can take to implement the competitive neutrality principles include:

    1. Separating the operations of the business activity from the general operations of the council. This does not mean that the council needs to establish a separate legal entity for the business, but the parameters of the business within the council need to be able to be identified. This means there needs to be an accounting and reporting framework for the business which is separate to the other activities of council and, for probity reasons, the council must be able to restrict access to tender material and documents by members of the business unit.Separating the business activity from the general operations of the council will also assist councils to identify and protect access to information under the Government Information (Public Access) Act 2009 (GIPA Act) which could prejudice the competitiveness of the business unit. Section 14 item 4 of the GIPA Act provides that there is a public interest consideration against disclosure of information if disclosure could reasonably be expected to undermine competitive neutrality in connection with any functions of an agency in respect of which it competes with any person, or otherwise places an agency at a competitive advantage or disadvantage in any market.
    2. Establishing a complaints handling system for competitive neutrality issues. Your council’s existing complaints management process may already be adequate for this purpose.
    3. Adopting a full cost attributionto the council’s provision of the service. For example, adjusting the price of the good or service in question to make allowance for taxes, the cost of capital, and any other material costs not borne by a government business purely as a result of its public ownership status for the purpose of tender evaluation. This principle is also relevant where councils use internal costing information as a benchmark to inform tender evaluation.
    4. Where the council decides that the social benefit of subsidising a good or service outweighs passing on full costs to consumers, making those subsidies an explicit transaction; and
    5. Complying with the same regulatory requirements as the private sector (which in most cases local councils are already required to do).
    6. Identifying the possibility that an in-house business unit will tender for the services in the request for tender documentation and will be taken to be a complying tender (notwithstanding that the council will not be able to comply with the contract and conflict of interest declaration requirements etc).

    Additional detail on some of these steps is set out in the Neutrality Guide. For step by step guidance to assist with your council’s next procurement, please contact Alan Bradbury or Alice Menyhart.


    [1]  Competition Policy Agreement 11 April 1995

    [2] Clause 7 of the Competition Policy Agreement

    [3] Competitive Tendering Guidelines January 1997 p.5

    [4] Pricing & Costing for Council Businesses: A Guide to Competitive Neutrality (July 1997) p1.

    [5]  Policy Statement on the Application of Competitive Neutrality: Policy and Guidelines Paper (June 1996 and amended January 2002) p6.

    [6]  Pricing & Costing for Council Businesses: A Guide to Competitive Neutrality (July 1997) p3.

    [7]  Policy Statement on the Application of Competitive Neutrality: Policy and Guidelines Paper (June 1996 and amended January 2002) p4.



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  • Capital Raising things are about to get Mutually Friendly

    Capital Raising - things are about to get Mutually friendly!

    Co-operative and mutual enterprises account for approximately 8.3% of Australia’s GDP when including the member-owned super funds, and eight in ten Australians are a member of at least one co-operative or mutual business. Operating across the economy from health care to motoring services, in banking and finance and insurance services, social services to retailing, these businesses are a staple in the Australian economy.

    Historically mutuals have had difficulties in raising capital without jeopardising their mutual status. Mutual enterprises are incorporated as public companies under the Corporations Act 2001 which must have a special constitution that imports the co-operative principles and provides for one member-one vote, democratic governance and a community driven ethic. The members of mutual enterprises are its customers.

    In July 2017 the Report on Reforms for Cooperatives, Mutuals and Member-owned Firms (commonly known as the Hammond Report) was handed down. The report set out eleven recommendations which aimed to improve access to capital, remove uncertainties facing the mutual sector and reduce barriers to enable cooperative and mutual enterprises to grow.

    On 4 October 2018 the Government released draft legislation for consultation to give effect to two of the eleven recommendations by:

    1. introducing a definition of a ‘mutual entity’ into a new section 51M of the Corporations Act 2001; and
    2. amending what the trigger event is which requires a company to disclose a proposed demutualisation in Schedule 4 of the Corporations Act 2001.

    The amendments will address the lack of recognition and understanding of the mutual sector, make it easier to determine when an entity has or is intending to “demutualise”, and to allow mutual entities to raise capital without risk of demutualisation or the risks associated with a failure to adhere to the disclosure provisions (which are civil penalty provisions).

    To date, mutual enterprises have been restricted in the ways they could raise capital to avoid triggering the demutualisation provisions. The Corporations Act 2001 currently provides that if there is a proposed constitutional change or share issue, which may vary or cancel a member’s rights in respect of shares, then the company must disclose ‘the proposed demutualisation’ (even if that may not be the intention of the company).

    The proposed legislative amendments would make it clear that the disclosure provisions are only triggered if a constitutional change would result in a mutual entity no longer being a ‘mutual entity’. Provided the mutual entity retains its “one member-one vote” requirements, it remains a mutual entity.

    While there are still restrictions on the process of capital raising, as Melina Morrison, chief executive of the Business Council of Co-operatives & Mutuals has said, “this will ensure there is genuine competition for member-owned business to compete with the big corporates and create real competition to benefit all Australians”.

    If you have any questions about the proposed changes or mutual enterprises, please get in touch with our Business team.

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  • Significant Focus on Digital Assets Estate Planning in Australia

    Significant Focus on Digital Assets & Estate Planning in Australia

    The increasing importance of digital assets to an individual’s estate planning has been recognised by the NSW State Government. The NSW Attorney General has asked the NSW Law Reform Commission to review and report on the laws that effect who can access a person’s digital assets after they die or when they become incapacitated, and in what circumstances. The purpose of the Commission’s report is to consider whether NSW needs new laws in this area and if it does, what should be included in those new laws.

    It is evident from this development that the significance of considering digital assets as part of an individual’s estate planning continues to be an issue that is front of stage.

    After requesting preliminary submissions from interested parties, the Law Reform Commission has published a Consultation Paper[1]. This paper, in addition to outlining how the Commission intends to conduct the review, also describes the current laws that impact access to digital assets in circumstances where a person is incapacitated or is deceased. The very apparent and extraordinary increase in the use of digital assets by many of us has clearly motivated these questions being referred to the Law Reform Commission.

    The paper also outlines the approaches that have been taken in other jurisdictions including the United States, Canada, the European Union and the Council of Europe.

    The Commissioners have noted that their preliminary view is that there are substantial policy grounds for legislative reform to govern when third parties can access a person’s digital assets upon death or incapacity.

    The timing of the comparable legislative reforms in other jurisdictions is relatively recent. For example, the Uniform Law Commission in the US adopted the Uniform Fiduciary Access to Digital Assets Act in 2014. It is encouraging that an Australian jurisdiction is now embarking on a review of the relevant laws in Australia.

    In response to the suggestion that it is an area of reform that should be conducted on a national level rather than by a State Government, the Consultation Paper notes that national coverage can be achieved where one State or Territory enacts model provisions that are adopted elsewhere. The approach of each jurisdiction following suit may take significant time and national coverage is not guaranteed.

    Digital Assets

    The Consultation Paper also includes an overview of what is included in the term digital assets.[2] The overview is not intended to be exhaustive but confirms the concept of digital assets includes the following:

    • Personal assets such as email accounts, text messages, social media profiles and accounts and similar accounts;
    • Financial assets such as online bank accounts and cryptocurrency;
    • Business assets such as online store accounts (such as eBay);
    • Intellectual property rights that are attached to assets such as domain names and images;
    • Loyalty program benefits such as frequent flyer points;
    • Sports gambling accounts; and
    • Online gaming accounts.

    In addition to being a useful reminder of the extensive nature of the term digital assets, the overview in the Consultation Paper confirms the proposed reforms should extend to all categories of digital assets.

    The focus on Access to Digital Assets

    It is clear from the above that the question being asked is in relation to access of those digital assets upon death or incapacity. The Consultation Paper also identifies the importance for this right of access for the relevant people including executors, attorneys, financial managers and personal representatives generally. The paper confirms these reasons[3] as follows:

    • Financial value. For example, the deceased person may have significant funds in a bank account or a bitcoin account, or there may be other social media accounts which generate value. There may even be a valuable copyright interest in a literary work that only exists online;
    • Sentimental value. This reason will be relevant where a deceased person has family members that have an attachment to electronic photos or messages on social media such as Facebook;
    • Loss of paper trails. Access to certain account statements will be important for personal representatives to manage business accounts or personal banking accounts of the deceased or incapacitated person;
    • Protecting privacy and confidentiality. Often online accounts will contain personal information which a personal representative will look to protect by either closing or deleting the relevant account; and
    • Reducing the risk of identity fraud. Where the relevant individual is not monitoring their online accounts, it clearly will be more open to hacking by others.

    Guidelines for current practice

    The Consultation Paper notes the growth in the creating of digital asset registers[4] and digital asset inventories especially as part of the estate planning process.

    As the Commissioners note in the Consultation paper, there are currently some significant limitations with how individuals can successfully deal with their digital assets as part of their estate plan. This point is important for estate planning practitioners and their clients.

    The existing laws effecting third party access to digital assets (including for the nominated representatives) as noted in the Consultation Paper[5] include the following:

    1. The definition of property in succession laws may not extend to the rights that are commonly referred to as digital assets;
    2. The legislation dealing with the administration of an estate does not specifically cover access by the executor to digital assets of the deceased. Without the required access to these assets there is a real problem for an executor or administrator being able to demonstrate that they have fully discharged their responsibilities in respect of the administration of the estate;
    3. The service agreements of internet and social media platform providers often maintain the intellectual property rights to material that form part of the digital asset. In particular, on the death of the owner of the account, there is no right to transfer any rights to the material to another party (the rights are often non-transferable);
    4. Existing criminal law legislation makes it an offence for a person to cause any unauthorised access to or modification of restricted data held in a computer.[6]As a result, an executor who accesses a computer upon death or incapacity of a person when they should know that they do not have clear authorisation, is at risk of having committed a criminal offence. As indicated in the Consultation Paper, the scope of the offence is quite broad as there is no requirement for intention to commit or facilitate the commission of the offence. There is no defence of lawful excuse in these circumstances. It is quite likely that the executor or administrator will know, or should know that the access to or modification of the material on the computer is unauthorised. The phrase ‘unauthorised access’ is defined in the legislation in broad terms.

    Preliminary suggestions for reform

    The Law Reform Commission also identifies some difficult situations for the State Government to address. For instance, in relation to the service agreements where the service provider is a foreign entity, the agreement will often nominate the foreign law as the proper law for dispute resolution rather than a law of Australia even if the client signing the service agreement is in Australia.

    The paper foreshadows that the final report may include a legislative approach that tries to address some of the issues referred to above. As part of that suggestion, it identifies some examples of what has been done overseas and potential approaches.

    As the paper is a preliminary report with a final report to follow after further consultation, at this stage these suggestions are only preliminary ideas.

    Importantly, in respect to the definition of a digital asset, the paper makes the following comment:

    The definition of digital asset should be defined in a way that is sufficiently broad to cover the types of assets currently in existence, but also flexible enough to encompass relevant classes or types of assets that may come into existence in the future.[7]

    At the end of the paper, there are a number of suggestions in relation to potential reforms. The following suggestions by the Commissioners are particularly relevant to the area of estate planning:

    • To determine which third parties should have access rights to the assets;
    • Who should have the authority to decide what happens to a person’s digital assets;
    • What should happen if the relevant parties disagree;
    • To clarify how the wishes of a person should be taken into account when deciding about their digital assets where upon death or incapacity; and
    • To be able to freeze or suspend a person’s digital assets after their death or incapacity to avoid issues of identity theft.

    The Consultation Paper produced by the NSW Law Reform Commission is an excellent summary of the issues and makes some thought provoking suggestions as to the reform.

    There is already eager anticipation by many for the release of the final report by the Law Reform Commission and the discussion that will follow the release of the final report.

    Written by David Toole, Legal Director and Ellen Bradley, Senior Associate. To create or review your will and estate plan, please contact our Estate & Business Succession team


    [1] Consultation Paper 20 New South Wales Law Reform Commission Access to digital assets upon death or incapacity

    [2] Consultation Paper 20 New South Wales Law Reform Commission Access to digital assets upon death or incapacity , August 2018 (the Consultation Paper) at page 4

    [3] Consultation Paper at page 4

    [4] Consultation Paper at page 9

    [5] Consultation Paper from pages 11 to 24.

    [6] Criminal Code ((Cth) s478.1 and Crimes Act 1900 (NSW) s308H

    [7] Consultation Paper at page 35

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  • Assignment of Lease Dealing with an initial request

    Assignment of Lease: Dealing with an initial request

    A lease grants a tenant exclusive use to a premises for a period of time. Often circumstances change within that period of time and lead to the tenant seeking an assignment of the lease to a new party. This is often as a result of the sale of the tenant’s business.

    Assignments of lease are not at all uncommon, however there are a few things to remember to ensure that they run smoothly and both parties comply with their obligations under the lease and the relevant legislation.

    From a tenant’s perspective, it is important to be aware of what you are required to do under your lease when seeking the consent of your landlord to an assignment. The Leases (Commercial and Retail) Act 2001 states that, before requesting the landlord’s consent to an assignment of lease, a tenant must give any proposed new tenant a copy of the disclosure statement (if any) that was given to them in relation to the lease.

    It shouldn’t be taken for granted that a landlord will consent to an assignment, here in the ACT the legislation allows a landlord to request particular information on a proposed new tenant and, if that information is not satisfactory to the landlord, they are able to refuse to provide consent. Further information that the landlord can request may include (but is not limited to):

    • the financial position of the prospective tenant;
    • information in respect of the tenant’s prospective ability to conduct the nominated business; and
    • information about what the tenant intends to use the premises for.

    Once the landlord obtains this further information they are able to make an informed decision and provide their consent, or not. However, it should be noted that a landlord is not able to unreasonably withhold consent. The refusal of consent can often cause dispute between the parties which may be drawn out and costly to both parties, so it is important to obtain the appropriate legal advice early on in the process.

    From a landlord’s perspective, arguably the most important factor when dealing with assignments are the time frames stipulated under the Leases (Commercial and Retail) Act 2001. If a tenant requests an assignment of lease, the landlord must either consent or refuse within 28 days of receiving the request – or within 21 days of receiving further information or documents (the request for which must be made within 14 days of receiving the request for assignment).  If a landlord does not comply with these strict timeframes they can be deemed to have consented to the assignment of lease.

    In order to ensure compliance with the legislation and your obligations under a lease, we recommend that you contact our office as soon as an assignment of lease is considered. We can assist in managing the strict timeframes and help you achieve a smooth transaction, resulting in a positive outcome for all involved.

    For more information, please contact our Leasing Team.

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