It is no secret that contractual drafting can be a nightmare: even the smallest grammatical error can change the meaning and effect of a contractual clause, and one ill-considered word could jeopardise the validity of the entire contract. Some contracts contain ‘conditional clauses’, which mandate that certain events must occur or conditions be fulfilled before the contract is binding or enforceable. These clauses can have significant impacts upon the effect and enforceability of a contract, which was at issue in a recent decision of the Federal Court in ACME Properties Pty Ltd v Perpetual Corporate Trust Limited as trustee for Braeside Trust  FCA 1189 (ACME Properties v Perpetual).
The applicant, ACME, leased commercial premises from the registered proprietor of the premises, Perpetual, from 2016 to 30 June 2019. Towards the end of the lease term, the parties entered into negotiations regarding a new lease, in which Perpetual was represented by its agent, ARAM Australia Pty Ltd trading as ARA Australia (ARA).
As a result of these negotiations, ARA provided ACME with a document entitled ‘Offer to Lease’ on 25 March 2019. This ‘Offer to Lease’ document contained two leases, the first lasting a year from 1 July 2019, and the second lease commencing on 1 July 2020 for four years.
The Offer to Lease contained a clear stipulation that it was subject to ‘formal approval of the Landlord to be given or withheld in its absolute discretion; and execution of all legal documentation by the Landlord and Tenant’. On 27 March 2019, ACME signed the Offer to Lease, which was subsequently signed by ARA “for an on behalf of the landlord”, Perpetual.
A little over a month passed before ARA notified ACME that Perpetual would be accepting an offer from a third party to lease the premises instead of proceeding with its previous offer to ACME. While the formal legal documentation had been prepared (in part) it had not been executed by either party. ACME commenced proceedings against Perpetual to enforce the Offer to Lease.
ACME submitted that the Offer to Lease (as signed by both parties) constituted a binding agreement to lease. Perpetual, on the other hand, argued that the Offer to Lease was not binding because the agreement was subject to all the legal documentation for the proposed leases having been executed, which had not yet occurred, and was subject to the Landlord’s formal approval (which had not been given despite ARA signing the Offer to Lease on Perpetual’s behalf).
The Federal Court found in favour of the landlord, Perpetual, deciding that the Offer to Lease did not constitute a binding agreement to lease. His Honour emphasised the significance of the contractual words “subject to execution of all legal documentation by the Landlord and Tenant”, which had the effect of making the contract binding upon fulfilment of that condition. His Honour said that the effect of those words was such that no contract was to come into existence independently of the legal documentation, which had not been executed.
A key distinction was drawn between the facts of this case and the case of RTS Flexible Systems, which had similar facts albeit with a crucial difference. In RTS, unexecuted draft contractual documentation, which contained a ‘subject to contract’ clause, was found to constitute a binding contract because there was substantial subsequent conduct by both parties which indicated the parties had reached a binding agreement, thereby waiving the conditional clause.
This case serves as an important warning to potential contracting parties to read the contract carefully before signing, keeping an eye out for any ‘conditional’ or ‘subject to’ clauses. It is also important to be cognisant of the effect of these clauses, as courts are likely to give full effect to the ordinary language, which may render the contract unenforceable until such conditions are fulfilled.
 ACME Properties Pty Ltd v Perpetual Corporate Trust Limited as trustee for Braeside Trust  FCA 1189 .
 RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Co KG (UK Production)  1 WSLR 753.Read more
This month at the Business Breakfast Club, Golnar Nekoee and Lauren Babic of BAL Lawyers discussed legal incapacity and the impact on your business, voidable transactions and advisors’ responsibilities.
Generally, people think of legal incapacity to include the elderly or those with cognitive decline. Legal incapacity is not just limited to those instances.
Golnar Nekoee explored the three commonly recurring categories of legal incapacity we face in business:
It is important to examine the ability of the decision maker as compared to the task or transaction at hand.
What are some signs of limited capacity to understand the nature and effect of a transaction?
The following are some red flags that you may consider when dealing with a client that you suspect lacks the requisite capacity to contract:
The key point arising from the case law on this issue is that there is no ‘fixed standard of sanity’ or test that can be applied to determine capacity. Rather, you should ensure that the contracting party has such soundness of mind as to be capable of understanding the general nature, purpose, effect and risks of the contract or transaction which they wish to enter into.
If you enter into a transaction with someone who is later found to not have the requisite legal capacity, an interested person can seek to have the contract declared void or voidable.
The concept and consequences of incapacity have been explored in a variety of cases. Many of these cases show that if one party to a contract did not know, or should not reasonably ought to have known of the particular vulnerabilities that creates the incapacity, that party will have a sound defence.
It is always difficult for a professional who has concerns regarding a client’s capacity to contract or transact, given it is a sensitive topic to navigate.
Firstly, you should make a preliminary assessment as to capacity. If doubt arises, you should seek a clinical consultant or formal evaluation by a clinician with expertise in cognitive capacity assessments (if it is appropriate to do so). It is then important to make a final judgment as to whether to continue with the transaction or not.
When making your final assessment of a client:
Legal capacity has far reaching implications for contracting parties and beyond. If you are concerned about this issue or require advice in relation to a topic that arose in this seminar, please contact the Business Team at BAL Lawyers.
Join us at our next Business Breakfast Club addressing Licencing and Leasing in Hospitality on Friday 11 October 2019.Read more
Hoarding programs such as Hoarders and The Hoarder Next Door have become popular in recent times, helping the average citizen understand that living with or near a hoarder can be difficult (Dante himself depicted hoarders in his fourth circle of Hell). Hoarding, a disorder which describes a person’s persistent difficulty to discard possessions, not only affects the person suffering the disorder but also those living around them. It is not difficult to imagine the hygiene and safety issues, both for occupants and for neighbours, which arise due to the over accumulation of property. So, what can you do if you live next to a hoarder? Unfortunately, there is no straight forward answer and there are few effective options available to neighbours affected by hoarding.
In NSW, relief can be sought under the Local Government Act 1993 which permits council, if land or premises are not kept in a safe or healthy condition, to make an order requiring the owner or occupier to refrain from doing certain things to ensure that the safe and healthy condition is maintained. However, council action may not be enough to have any lasting effect.
A good example of the difficulties faced by neighbours and councils is the notorious case of Bobolas v Waverley Council  NSWLEC 442. In this case, the Bobolas family and Waverley Council have been in dispute for decades over the continuing accumulation of garbage on the property. At the centre of this dispute are the neighbours who are dealing with the smell of garbage, and the rats that are attracted to the garbage, on the property. In this matter, Council have forcibly cleaned the property 13 times and have made four attempts to sell the home to pay for the cleaning and legal costs resulting from litigation and the forced clean-up of the property. In each instance Council has been unsuccessful as the Bobolas’ pay the outstanding clean-up costs upon Council commencing litigation. The matter has been a continuing cycle of forced clean-up and litigation, all while the neighbours surrounding the property continue to suffer.
Another option to combat hoarding that exists in some jurisdictions is for the council to seek a zoning declaration that a property is being used for an unlawful purpose such as a “junk yard”. This still provides the challenge of prevention of the refuse from accumulation and only provides a method to force the clean-up. Once the property has been cleaned, the fact remains that despite the nuisance and risk to health and property values of the surrounding neighbours, people are often entitled to do as they please with their own property.
For further information on dealing with a hoarding neighbour, see our previous article. To find out more about seeking resolution regarding a hoarder in your local area, speak with someone in our Litigation & Dispute Resolution Team today.
 See Baulkham Hills Shire Council v Stankovic  NSWLEC 110.Read more
With more cyclists on the road, colliding with an open car door as you ride blissfully down a road, is a recognised hazard of cycling in an urban setting. This is often referred to as “dooring”. Injuries can range from being shaken up, to a broken collar bone, to more serious and life threatening injuries.
So whose fault is it when a cyclist gets “doored”?
Cyclists are usually required to ride in bike lanes or to the left of traffic, which places them close to parked cars. Before opening a car door, a driver and passenger are required to check not just for oncoming cyclists but, in case another car or pedestrian is approaching behind them.
In most cases, the person who opens a door is responsible, if a cyclist gets doored. It is possible for the person who opens the door to argue that the cyclist should have avoided the door. Usually, there is very little a cyclist can do to avoid these accidents. A cyclist may have sufficient time to swerve to avoid a car door but, in a worst case, result in the cyclist end up being struck by an oncoming car. As scary as getting doored is, a cyclist hitting the car door rather than swerving into oncoming traffic could be the better (and less painful) option, avoiding a potential fatal outcome.
When a cyclist makes a personal injury claim against a driver or passenger, the cyclist must prove that the driver or passenger failed to act in a reasonable manner before opening their door. The driver or passenger is required to make sure that no cyclist is approaching or riding by before opening their door.
Legislation exists in the Territory which provides “a person must not cause a hazard to any person or vehicle by opening a door of a vehicle, leaving a door of a vehicle open, or getting off, or out of, a vehicle”. Violators of this law can be subject to a maximum fine of $3,200. However, this fine is minimal compared to the financial costs as well as the pain and suffering that a victim of a dooring accident may incur.
A tricky issue arises when a child opens the door. In this instance, the responsible adult driver or the parent could be held responsible for the child’s actions. This will depend on a close examination of the control that the driver or parent has over the child at the time, and what could be reasonably expected of a child as to their capacity to judge and appreciate the risk of opening the door. The standard of care will vary according to the age of the particular child. Judged by this standard, the closer the age of the child to the age of majority (18 years), the less the standard of care will be expected of the adult.
With the increasing awareness of the dangers of doors, many cyclist-friendly countries have introduced a simple technique that drivers and passengers can adopt to help reduce the danger of opening a door in the path of a cyclist. This is, simply open the car door using the hand furtherest away from the door. Specifically, use your left hand on the driver side, and right hand on the passenger side to open the door. This technique involves the motorist naturally rotating their body and checking over their shoulder for approaching traffic when opening a car door.
Raising awareness that serious injuries can be caused from poor timing when you open a car door as a cyclist approaches or rides by will reduce the potential for injury to cyclists.
If you have been injured in a bike accident, contact us to speak with an experienced injury lawyer.Read more
Joint tenancy has long been the norm for couples owning assets together. But many are unaware that another form of ownership – tenancy in common – may better suit their needs. This article explores the benefits and possible drawbacks of this lesser known form of ownership. For the modern couple more closely resembling the Brady Bunch than the Flintstones, tenancy in common may be the answer.
Joint tenancy and tenancy in common are forms of asset co-ownership, typically written into legal contracts pertaining to home ownership. The key difference between the two is their effect on the distribution of assets at the death of one of the partners. Joint tenancy is governed by the rule of survivorship. This means that at a partner’s death, their share of any joint assets become the sole property of the surviving partner. Tenancy in common, on the other hand, sees asset shares distributed according to the terms of each partner’s will.
Tenancy in common may be preferable where couples wish to bequeath their share of assets in different ways. In a recent example, Re Wilson, a husband (Leonard) and wife (Austral) initially owned their assets as joint tenants. Austral’s will set out her wishes for the distribution of her assets, but she was subsequently diagnosed with dementia and sadly lost the capacity to alter her will. Leonard, assuming on the basis of her diagnosis that she would predecease him, severed their joint tenancy in favour of tenancy in common to ensure his wife’s wishes would come to fruition. Without this action, Austral’s assets on her passing would move to her surviving partner and hence not be distributed according to how she hoped. It was a twist of fate that Leonard passed away first, however his actions ensured both partners’ dying wishes were taken care of.
Where tenancy in common provides flexibility, joint tenancy provides simplicity. If both partners have identical wishes for the distribution of their assets, then joint tenancy is likely to simplify administration of the estate. No matter who passes first, the assets will be distributed in exactly the same way (provided, of course, that the surviving partner does not then change the terms of their will).
Ensuring your affairs are in order can be as simple as considering these two questions:
If you answered no to either or both of the above then it may be worth getting in touch with one of our estates lawyers to discuss severing your joint tenancy in favour of tenancy in common.
Adapted by Reuben Owusu from the original article titled Severing joint tenancies: Getting it right can make all the difference by David Toole, Legal Director, Estates & Business Succession.
  VSC 211; BC201902441Read more
It is every director’s worst nightmare: a rogue co-director locks you out of your business, removes your directorship, reduces your shareholding to nil and absconds with company profits: all without your knowledge or consent. Unfortunately, this nightmare was the reality for the plaintiff in the recent Federal Court case of Miao v I Need A Massage Pty Ltd, in the matter of I Need A Massage Pty Ltd  FCA 1199
The plaintiff, Ms Miao and the defendant, Mr Luo were both directors and shareholders of the company, I Need A Massage Pty Ltd, which was used to purchase and operate a massage business in Brisbane. As part of this arrangement, the parties agreed to contribute equally to the purchase price of the business, thereby taking equal shares in its income and expenses. Approximately one year passed before Ms Miao and Mr Luo had a serious personal dispute which caused their business relationship to break down irretrievably. Following this dispute, Mr Luo took steps to lock Ms Miao out of the business, and subsequently removed her as a director of the company. A month later, Mr Luo altered the company’s share register to reduce Ms Miao’s shareholding to nothing. Finally, Mr Luo sold the company’s business and retained the proceeds of sale for himself. All steps were taken without Ms Miao’s knowledge or consent. Ms Miao claimed this conduct was “oppressive” under ss.232 and 233 of the Corporations Act 2001 (Cth).
Ms Miao applied to the Federal Court seeking orders that she be given access to financial records of the company, company meeting minutes, that the ASIC register be rectified and an order that the company be wound up.
The Federal Court found in favour of Ms Miao, finding that Mr Luo acted without proper authority and in an oppressive manner.
Justice Reeves decided to exercise his discretion to order a winding up of the company under section 233(1)(a) of the Corporations Act 2001 (Cth), due to the fact that the conduct of the company’s affairs, namely Mr Luo’s act of removing Ms Miao as director, reducing her shareholding to zero and excluding her from the operation of the business was oppressive or unfairly prejudicial to Ms Miao as director and member of the company.
His Honour considered the fact that the winding up of a successful and prosperous company is not taken lightly, but instead requires a ‘strong case’. Nevertheless, His Honour found that winding up was justified because there were no other remedies available to Ms Miao for the unfairly prejudicial manner in which Mr Luo had acted and the company was not one which could be said to be “successful and prosperous”; the appointment of a liquidator was the only relief available to Ms Miao.
If you are seeking advice on any disputes between directors or shareholders, contact our Business Team today.
 Kokotovich Constructions Pty Ltd v Wallington (1995) 17 ACSR 478 at 494.
Written by Riley Berry and Maxine ViertmannRead more
This month at the Business Breakfast Club, BAL Lawyer Riley Berry spoke about new developments in combatting illegal phoenix activity and the potential implementation of Director Identification Numbers.
Illegal phoenix activity is a term that is often used when a new company is created to continue the business of a company that will be deliberately liquidated to avoid paying its debts, including taxes, creditors and employee entitlements. The Australian Government is making the prevention and punishment of illegal phoenix activity one of its top priorities.
A primary tool in this fight is the Phoenix Taskforce which is a joint effort comprised of 35 agencies including the ATO and ASIC. We discussed recent prosecutions of phoenix activity that have occurred as a result of the increased scrutiny of the taskforce.
We also canvassed the legislative reform the Government has been undertaking in this space:
This proposed Bill sets out a new term, ‘creditor-defeating dispositions’ which, if passed, will be inserted into the Corporations Act 2001. A ‘creditor-defeating disposition’ is ‘a disposition of company property for less than its market value (or the best price reasonably obtainable) that has the effect of preventing, hindering or significantly delaying the property becoming available to meet the demands of the company’s creditors in winding-up’.
The Bill also proposes to set up new powers, including:
The reintroduction of the Treasury Laws Amendment (Combatting Illegal Phoenixing) Bill also foreshadows the likely reintroduction of proposed changes to amend the Corporations Act 2001 to introduce director identification numbers. This would see that each person who consents to being a director being assigned a unique identifier that they will retain even if their directorship ceases or they become a director of another company. It will allow traceability of a director’s relationships across companies and prevent the use of fictitious identities, whether accidental or intentional. It aims to monitor and deter phoenix activity as well as control and flag any repeated unsavoury behaviours of a director across different companies.
We recommend that all directors keep an eye on this space to see what changes are introduced.
If you are concerned or have questions about how these changes might affect you, please contact BAL Lawyers Business Team.
We hope you can attend our next Business Breakfast Club, which will be held on Friday 13 September 2019. Please RVSP here.Read more
Courts have a range of powers in relation to liquidators, including the power to order an inquiry into the external administration of a company and thus, the conduct of liquidators under sections 90-5 to 90-20 of Schedule 2 to the Corporations Act 2001 (Cth), previously, section 536 of the Corporations Act 2001.
These provisions give Courts the ability to make such orders either on its own initiative or in response to an application made by ‘a person with a financial interest in the external administration of the company, an officer of the company, a creditor or ASIC’. The Court also has a broad power to ‘make such orders as it thinks fit in relation to the external administration of a company’, including an order that a person cease to be the external administrator of the company or an order requiring a person to repay to the company remuneration paid to the person in the course of external administration.
Courts may order an inquiry into the external administration of a company either on their own initiative or on application by creditors. In both cases, Courts have full discretion as to whether or not to order an inquiry or not.
Courts are likely to order an inquiry if:
When Courts are considering whether or not to exercise their discretion to conduct an inquiry, it may take into consideration the following factors:
To put this into context, we will look at a recent case: Australian Securities and Investments Commission v Wily & Hurst  NSWSC 521
In 2016, ASIC made an application to the New South Wales Supreme Court pursuant to the then section 536 of the Corporations Act 2001, seeking an order for an inquiry into the conduct of two liquidators during their involvement in the liquidation of a number of companies linked to Crystal Carwash chain. ASIC alleged that the liquidators were potentially liable for a range of breaches, including failing to disclose potential conflicts of interest, failing to disclose to ASIC suspected shadow directorships and failing to disclose potential conflicts of interest, particularly as many of the liquidated companies in question shared common directors and registered addresses.
In May 2019, the NSW Supreme Court dismissed ASIC’s application with costs. Justice Brereton was not satisfied that there was a “well-based suspicion” indicating a need for further investigation into the liquidators’ conduct, more specifically:
There are two main things to take away from this case.
First, ASIC’s application and involvement in this case demonstrates its increasing willingness to actively investigate and pursue allegations against liquidators.
Second, this case illustrates the Court’s reluctance to make orders granting an inquiry into the conduct of liquidators unless there is a ‘well-based suspicion’ warranting a further investigation, which involves a “positive feeling of actual apprehension or mistrust, as distinct from mere wondering”. Thus, allegations against liquidators must be substantial enough to justify the exercise of the Court’s discretion on this matter. That being said, Courts have shown their willingness to intervene where liquidators are proven to have fallen short of their duties so as to cause or threaten to cause substantial injustice in some way. For more information, see this article.
Written by Katie Innes with the assistance of Maxine Viertmann.
If you have questions about a liquidator’s conduct, or the investigative provisions, talk to our Business Team or Litigation Team.
 Australian Securities and Investments Commission v Wily & Hurst  NSWSC 521 .
 Ibid .
 S 533 of the Corporations Act 2001 (Cth) requires a liquidator of a company to make certain disclosures to ASIC regarding certain offences that may have occurred prior to the liquidation by officers of the company or others.
 Ibid .Read more
Google’s drone delivery service, “Wing” , has been rolled out in the north of Canberra after successful trial runs in Bonython and Royalla. Wing is apparently the world’s first permanent delivery drone service, now serving eligible homes in Crace, Palmerston and Franklin. No longer in a galaxy far, far, away, the introduction of drone delivery has pushed the ACT to the forefront of the Drone Wars, with residents divided on whether the noise and the risks to safety and privacy are worth the convenience.
In July 2018 when the drone trial first began in Bonython, opponents of the program had concerns regarding privacy, noise, and the danger of having someone’s hot coffee (or the drone itself) dropped on them from above.
The ACT Government has very limited scope to regulate drones as most incidents of “fly machines” falls to the Federal Government. The Civil Aviation Safety Authority (CASA) has oversight of drones and approves certified operators, but does not regulate noise or privacy. Airservices Australia can also regulate drone operators where engaged in certain commercial operations within controlled aerodromes, but their primary responsibility at this stage is to monitor aircraft (including drones’) noise. Privacy issues must be raised with the drone operator first, then may be referred to the Office of the Australian Information Commissioner (assuming the drone operator is bound by the Privacy Act). Yet finding out who is the owner of a particular pesky drone is a problem of its own. As a result of this multi-agency regulation, drone delivery currently operates in a regulatory grey area in Australia.
The issues surrounding liability for injury are largely the same issues that arise in other methods of delivery. For a delivery driver that causes injury or damage, the company they work for is still liable through “vicarious liability”. For injury or damage caused by a drone, the drone company would be vicariously liable for the actions of the drone pilot, which would include the operator of the drone’s base computer. However if a person (in accepting a delivery) violated the terms of the agreement and was injured, say, by trying to take the delivered item prior to it being released by the drone or getting too close to the drone, then there may be contributory negligence and the drone company’s liability for damages may be reduced or possibly eliminated.
While Airservices Australia regulates the noise levels of drones, it was originally stated by an Airservices Australia spokesperson that drones of the size and weight used by Wing are currently exempt from the Airservices noise restrictions. Airservices Australia has since retracted this position and will now conduct a review to create noise regulations for drones. When approving Wing, CASA advised that they considered the possible environmental impacts (including noise pollution) and imposed limited hours of operation and the requirement to use “quieter” drones. The drones that Wing uses are measured at 55 decibels at 25 meters which in terms of noise is somewhere between a washing machine (50dB) and a vacuum cleaner (60dB). Despite no current drone specific noise restrictions, the rules of nuisance still apply, yet noting few drones are likely to reach the noise of a lawnmower (70 dB), food blender (90 dB) or diesel truck (100dB) which can be used daily from 7 am to 10 pm.
Research has predicted that delivery drones could inject up to $40 million to the ACT economy by 2030 so we suspect they are here to stay.
If you need advice on personal injuries or breaches of privacy, in relation to drones or generally, contact our Litigation or Business teams.
 Wing Aviation Pty Ltd has been approved by CASA as a ‘licensed and certified drone operator’.
 See, e.g. Victoria Park Racing and Recreation Grounds Co Ltd v Taylor (1937) 58 CLR 479.Read more
In light of this phenomenon, the Parliament of Australia passed the Modern Slavery Act 2018 (Cth) (MS Act) in November last year. The Act, which came into effect 1 January 2019, imposes requirements on entities based, or operating, in Australia, which have an annual consolidated revenue of more than $100 million. Essentially, these entities are required to report annually on the risks of modern slavery in their operations and supply chains, and on actions taken to address those risks. The report will be made to the Minister for Home Affairs and will be listed on the Modern Slavery Statements Register, which will be publicly available. It is envisaged that those who fail to report will be subjected to a ‘name and shame’ regime.
Although there is no universally agreed definition of ‘modern slavery’, under the MS Act, modern slavery means conduct which would constitute an offence under Division 270 or 271 of the Criminal Code (including debt bondage, forced labour, servitude, deceptive recruiting for labour or services, and forced marriage), trafficking in persons, or the worst forms of child labour.
The following are deemed ‘reporting entities’ under the MS Act:
There are slightly different requirements for single reporting entities, joint statements and Commonwealth statements, but all ‘modern slavery statements’ must:
The MS Act does not impose monetary penalties for non-compliance. However, if a reporting entity fails to lodge a modern slavery statement, the entity may be requested to provide an explanation for the failure to comply; and/or
These mechanisms rely on ‘reputation risk’ to incentivise compliance and drive self-enforcement. While the MS Act has faced criticism for being “toothless” in the absence of penalties for non-compliance, such a regime is not dissimilar to the approach taken by the Commonwealth for gender equity reporting in the Workplace Gender Equality Act 2012 (Cth) (and the antecedent Affirmative Action (EEO for Women) Act 1986 (Cth).
Reporting is done through a ‘Modern Slavery Statement,’ basically a document that identifies the reporting entity and gives an overview of their structure, operations and supply chain/s, and most crucially describes the risks of modern slavery within the operations and supply chain/s and actions taken to ‘assess and address’ the risks.
This must be submitted to the Minister for Home Affairs, who keeps these statements in the modern Slavery Statements Register.
The statements cover a reporting period, defined as a financial year. As this section of the Act only came into force 1 January 2019, the reporting period will cover the financial year of 2019/2020.
The statement must be given to the Minister within 6 months after the reporting period has ended. This means entities have until 31st December of that year to lodge their statements (as the financial year ends 30th June). So, for this year (which is the first reporting period for any entity), the reporting entity will have until 31st December 2020 to submit their statement.
Before the statement can be submitted to the Minister, it must be approved by the entity’s principal governing body and signed by ‘responsible member of the entity,’ such as the CEO, a director, a trustee (if the entity is a trust administered by a sole trustee) or the administrator if the company is under administration.
Once executed, the statement must be provided to the Department of Home Affairs for publication in the Statements Register (an online central register). However, the Department of Home Affairs has confirmed that they have not yet created this online register, so stay tuned for more information about how to submit the slavery statement.
In June 2018, the NSW Government passed the Modern Slavery Act 2018 (NSW) which has received assent but has not yet commenced. The NSW MS Act seeks to go further than the Commonwealth MS Act by extending its application to ‘businesses with $50 million in turnover (though only if they have employees in NSW)’, imposing penalties for non-compliance and establishing an Anti-slavery Commissioner who will, among other things, provide assistance and support for victims of modern slavery and make recommendations to prevent and prosecute offences of modern slavery.
Since being passed, the NSW MS Act has been sent to the NSW Legislative Council’s standing committee on social issues, “to determine whether the Commonwealth’s comparable legislation renders part or possibly all of the New South Wales Act unnecessary”.
The Department of Home Affairs has published guidelines, entitled Modern Slavery Act 2018: Draft Guidance for Reporting Entities. This draft guidance contains detailed explanations of the Act’s requirements and provides useful examples.
For anyone who needs help with drafting a modern slavery statement, is aiming to improve supply chain practices, or suspects their business or a business they deal with is non-compliant with the Act, BAL lawyers offers commercially sound advice, and can work with you to resolve these concerns. Contact us today.
This article was written by Gabrielle Sullivan with grateful acknowledgement of the preparatory work of Maxine Viertmann and Sarah-Graham Higgs.
 As defined in Article 3 of the Protocol to Prevent, Suppress and Punish Trafficking in Persons, Especially Women and Children, supplementing the United Nations Convention against Transnational Organized Crime, done at New York on 15 November 2000 ( ATS 27)
 As defined in Article 3 of the ILO Convention (No. 182) concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, Geneva on 17 June 1999 ( ATS 38)Read more
If you tell the truth, you don’t have to remember anything.
– Mark Twain
It is common in popular TV culture for court room dramas to include terrified witnesses facing a barrage of questions from unrelenting counsel donning robes and wigs. In keeping with this popular conception, evidence in court hearings is typically given in person (albeit the case that how this plays out in practice is often less dramatic). In some instances, witnesses can give evidence by written affidavits, though even then a witness is often required to be available in person to have the fullness of their evidence tested in the witness box. The basis for requiring witnesses to give evidence in person is founded in hearsay rules within (almost) uniform evidence legislation across Australia – here, being our Evidence Act 2011 (ACT). Put simply, in the absence of a primary witness giving first hand evidence of what they saw or heard, the hearsay rule prevents another person, or document, giving evidence of what the primary witness would say, if they were available and present in court (“the hearsay rule”).
Of course, like all good laws, there are exceptions to this general starting point. For instance, in civil proceedings, the hearsay rule does not prevent evidence being adduced of earlier representations made by the primary witness, or documents containing the primary witness’ representations, if the primary witness is “not available to give evidence about an asserted fact”.
But what then constitutes the unavailability of a witness? Certainly death is an obvious black and white example, though anything short of that can fall into a grey area. For example, is a witness that is physically “available” to attend a court hearing, but mentally incapable of assisting the court, captured by the hearsay exception?
Justice Mossop of the ACT Supreme Court recently considered the issue in Hughes v Sangster  ACTSC 178. His Honour was asked to consider whether an Alzheimer’s sufferer, who was:
was truly unavailable for the purposes of the hearsay exception. In the unique circumstances in the Hughes case, His Honour ruled that that the particular witness (“Mrs Hughes”), being the plaintiff in the case, was unavailable. That had the effect of allowing a number of documents – in the form of notes and legal instructions – containing previous representations of Mrs Hughes into evidence, notwithstanding she could not be cross-examined on them.
Mrs Hughes and the defendant, are mother and daughter; sadly with a difficult history. In 1999, Mrs Hughes and the defendant purchased a block of land in Nicholls as joint tenants (”the Property”). Mrs Hughes financed the land purchase and construction costs, totalling $380,000. It was Mrs Hughes’ position that the agreement with the defendant required the defendant’s 50% contribution (that is, $190,000) to be paid over time in consideration for her respective interest in the Property.
The defendant did not disagree with this starting position. However, she held that, when calculating the $190,000, Mrs Hughes had also agreed to “take into account” an amount of $125,000 which was previously offered to the defendant by Mrs Hughes but never paid. The defendant also maintained that she had paid for a number of household contributions over the years she resided with Mrs Hughes, which should be applied as contributions towards discharging the $190,000 owed by her. Beyond these contributions, it was common ground that the defendant also made various payments totalling $20,000, prior to moving out of the Property in 2007.
The alleged $125,000 contribution came about from a letter written by Mrs Hughes to the defendant in 1997, two years prior to the Property being purchased. In her 1997 letter, Mrs Hughes expressed a desire to discharge the defendant’s mortgage to the tune of $125,000, “should [she] be able to”. As events transpired, Mrs Hughes did not settle the defendant’s mortgage. Equally, a liability of Mrs Hughes to the defendant in the sum of $125,000 was not documented in any way in relation to the purchase of the Property when that transaction took place in 1999. To the contrary, as the defendant made her various payments towards the purchase, Mrs Hughes wrote receipts which noted the running tally of what was left owing on the defendant’s $190,000 contribution. On one occasion, these receipts were confirmed by a counter-note of the defendant which read “$183,000 owing”.
Despite this, a dispute ensued between Mrs Hughes and the defendant from 2007 onwards, when the defendant moved out of the Property and refused to make any further contribution towards it or its upkeep. Mrs Hughes instructed solicitors to negotiate a buy out of the defendant’s share, though the negotiations were unsuccessful. Due to a combination of financial and health reasons, Mrs Hughes was then unable to pursue the matter.
Eventually, in December 2016, Mrs Hughes was diagnosed with moderate to severe Alzheimer’s dementia. In January 2017, her husband, Mr Hughes, was appointed by the ACT Civil and Administrative Tribunal as guardian and manager of Mrs Hughes’ finances and property. Upon his appointment, Mr Hughes sought to downsize Mrs Hughes to a smaller, more maintainable home, in the south coast. However, the unresolved title issue at the Property meant that he could not do so without the defendant’s consent, which was only given conditional upon her 50% interest on the title being recognised.
Left with little alternative, Mr Hughes commenced proceedings in the ACT Supreme Court seeking the Property be sold, with the beneficial interests of Mrs Hughes and the defendant to be adjusted to reflect their respective contributions to the Property’s purchase. As Mr Hughes was not privy to any of the discussions between Mrs Hughes and the defendant which led to the Property being purchased, Mr Hughes relied almost solely on handwritten and typed instructions of Mrs Hughes to her former lawyers, prior to her losing capacity – arguing that the documents were admissible evidence as Mrs Hughes was otherwise not “not available” for the purposes of the hearsay rule.
Evidence was taken at the hearing from Mrs Hughes’ treating geriatrician, Dr Selvadurai, who confirmed the nature of Mrs Hughes’ Alzheimer’s condition. Relevantly, Dr Selvadurai gave evidence that Mrs Hughes’ condition, despite being in a quite advanced form, did not prevent her from understanding a question. Rather, the difficulty lay in Mrs Hughes inability to retain the question in her mind for long enough to answer it in a reliable way. This medical evidence was relevant in the face of the following nuances to the hearsay rule in the Evidence Act 2011.
Firstly, section 63 of the Evidence Act provides an exception to the hearsay rule, if a person who made a previous representation (here, Mrs Hughes) is not available to give evidence about an asserted fact (here, being what happened in 1999 when the Property was purchased).
Secondly, section 4 to the Dictionary to the Evidence Act defines the ‘Unavailability’ of a person to include, amongst other reasons, if:
… (b) the person is… not competent to give evidence; or
(c) the person is mentally or physically unable to give evidence and it is not reasonably practicable to overcome that difficulty.
Section 13 of the Evidence Act provides guidance as to when a witness may be not competent (for the purposes of the section 4(b) definition above). In the face of section 13, the distinction between the section 4(1)(b) and 4(1)(c) definitions in the Dictionary may often be one with little difference, as section 13 says:
and that incapacity cannot be overcome.
In the context of the evidence given by Mrs Hughes’ geriatrician, the first limb of the section 13 test of competency did not excuse Mrs Hughes from having to give her evidence first hand. If asked a question, her doctor’s evidence was that Mrs Hughes could understand it. However, the argument the followed was whether Mrs Hughes had “the capacity to give an answer that [could] be understood to a question about the fact”. Relevant to that question, the defendant’s submission was that Mrs Hughes’ inability to give a cogent or reliable answer is a distinct issue to whether her answers could be understood. After all, to answer “I don’t remember”, is a response to a question which makes sense. Ultimately though, this is where the broader exclusion at the definition at section 4(1)(c) of the Dictionary was applied by Justice Mossop to find that Mrs Hughes’ Alzheimer’s condition was a mental condition which rendered it ‘not reasonably practicable’ for her to give evidence in person. This permitted her previous instructions to her former lawyers being admitted into evidence, notwithstanding Mrs Hughes was not able to be cross-examined on them.
Of course, just because Mrs Hughes’ notes were capable of being taken into evidence, the question of what weight should be applied to them was a further issue to be considered. In this respect, even in the absence of Mrs Hughes being available to be cross-examined, Justice Mossop considered Mrs Hughes’ notes to be more reliable than the evidence of the defendant, whose evidence on central issues His Honour found to have involved ‘forensically targeted reconstruction’. In particular, His Honour rejected answers provided by the defendant which attempted to avoid the probative value of the receipt signed by the defendant which acknowledged “$183,000 owing”.
Notwithstanding Mrs Hughes was not available at the hearing to give evidence (either to advance her case, or to rebut the defendant’s counter argument), Justice Mossop rejected the defendant’s contention that the amount of $125,000 was to be deducted from the defendant’s contribution. His Honour also rejected the defendant’s ancillary arguments that other day-to-day household contributions were “taken into account”.
The Property was thus ordered to be sold, with the defendant’s interests in the Property adjusted to reflect her contributions towards its purchase. As the evidence showed the defendant contributed $20,000 towards the $380,000 purchase price, the defendant’s interest was, in effect, reduced to only 5.26%.
Exceptions to the hearsay rule can be technical. Whilst the breadth of documentary hearsay evidence admitted in the Hughes case may have been an exception to the norm, it equally is true that a party should not assume that their first-hand evidence will be preferred by the court solely on the basis that their opponent is unavailable to give their evidence in the usual way.
Whilst Mrs Hughes is still alive, many elements of her case were analogous to litigation involving a deceased estate where family members have conflicting evidence as to what promises have been made by a deceased (that is, ‘unavailable’) person. In such situations, the courts have held that:
… in a claim based on communications with a deceased person, the court will treat uncorroborated evidence of such communications with considerable caution.
In the case of Hughes, the court applied such caution in rejecting the evidence of the defendant that went to the critical issues of the case. In doing so, Justice Mossop was left finding in favour of Mrs Hughes, notwithstanding she was unavailable for the entirety of the proceeding. Whilst Mrs Hughes may never fully comprehend the ramifications of the outcome in her favour, she may at least now downsize with her husband, as she had sought to do for several years prior to the court proceedings becoming necessary.
On 31 May 2019 the Federal Court of Australia handed down its judgment in the case of ASIC v Vocation Limited (in liquidation)  FCA 807, providing important insights into the expanded ambit of stepping stone liability. Stepping stone liability refers to the process of finding a director liable for permitting a primary breach of the law (usually the Corporations Act) by the company. More information on stepping stone liability can be found in our previous article here.
Vocation Ltd (Vocation) was a listed entity which provided vocational education, training and assessment services and operated under a series of contracts with the Victorian Department of Education and Early Childhood Development (the Department).
In July 2014 the Department notified Vocation of various concerns regarding the way Vocation was managing its contracts with the Department. The Department subsequently withheld payments to Vocation pursuant to the contracts. Vocation made an announcement in August 2014 stating that the contracts with the Department had not been suspended and that any actions taken by the Department would not have a material impact on the company.
In 2016 ASIC commenced proceedings against Vocation as well as Vocation’s former Chief Executive Officer, former Chair, and former Chief Financial Officer (and Secretary), alleging that Vocation had breached its continuous disclosure obligations under s674(2) of the Corporations Act 2001 (Cth) (the Corporations Act). Specifically, that Vocation had failed to make full and proper disclosure of the nature and extent of the Department’s concerns and the withholding of payments, as this information could materially impact the company’s share price. Hence, the announcement made by Vocation in August 2014 was allegedly misleading.
Justice Nicholas found that:
His Honour also found that:
If you have any questions about stepping stone liability or director duties more generally, contact our Business and Corporate Team.
Written by Lauren Babic and Maxine Viertmann.Read more
In February 2019 the Federal Court delivered its decision in Lock, in the matter of Cedenco JV Australia Pty Ltd (in liq) (No 2). The proceedings were commenced by the liquidators of three companies, SK Foods Australia Pty Ltd (in liquidation), Cedenco JV Australia Pty Ltd (in liquidation) and SS Farms Australia Pty Ltd (in liquidation). The liquidators were seeking an order from the Court to validate the defects in the liquidators’ remuneration reports and hence get an order approving their remuneration. Orders can be granted if:
ASIC intervened in the proceedings alleging that the liquidators had failed to comply with their duties under the then sections 449E and 499(7) of the Corporations Act 2001, on the basis that the remuneration reports were inadequate and insufficient.
The Federal Court rejected the liquidators’ application to validate the creditors’ resolutions which purported to support the liquidators’ charge of $5m in remuneration fees. Justice Besanko took issue with the liquidators’ charge out rates of $700 per hour, finding that the hourly charges were “excessive,” and beyond the realm of reasonable remuneration. His Honour also found that the remuneration reports provided to the creditors were inadequate as they described the work done with such a ‘high level of generality’ such that it could not be said that the creditors were given sufficient information to make an informed assessment about the reasonableness of the proposed remuneration. This, he reasoned, would have caused, or would likely cause, substantial injustice to the creditors of the liquidated companies. Ultimately, Justice Besanko held that these failures amounted to contraventions of the then sections 449E and 499(7) of the Corporations Act 2001.
The Federal Court dealt its final blow to the liquidators in June this year, when it ordered that the liquidators repay approximately $1.9 million (or 30% of the remuneration they were paid) as administrators of the three companies. Justice Besanko ordered that the liquidators also pay interest on the repayment sum, in addition to paying ASIC’s costs as intervener.
The outcome of this case yields important lessons for liquidators, including that:
If you are a liquidator seeking advice on remuneration, or a creditor who is concerned about the remuneration being claimed by a liquidator, contact our Business Team.
  FCA 93
 Pursuant to section 1322 of the Corporations Act 2001 (Cth)
 Lock, in the matter of Cedenco JV Australia Pty Ltd (in liq) (No 3)  FCA 879
Written by Kaite Innes and Maxine Viertmann.Read more
This issue has not been squarely addressed in previous decisions of the Tribunal. By excluding review of a decision as to whether a document is within or outside the scope of a request altogether, the decision in Miskelly goes further than previous decisions, which have simply acknowledged that an agency has no obligation to provide material that has not been requested by an applicant.
Mr Miskelly sought review of a decision by RMS to refuse him access to specified information concerning the costs and budget estimates for the Sydney Gateway Project. He argued that there was a ‘manifestly overwhelming public interest’ in the disclosure of the information so that members of the public could know the estimated cost of this major infrastructure project.
Many of the documents for which the RMS refused to allow access were Cabinet documents and much of the decision deals with whether RMS had reasonable grounds for not releasing those documents. (In dealing with a Cabinet information claim under the GIPA Act, the Tribunal is limited to reviewing whether ‘reasonable grounds’ for the claim exist rather than, as is usually the case, deciding for itself what is the correct and preferable decision in relation to the request for access.)
Of more interest to local government, the Tribunal also dealt with a request by Mr Miskelly to review the decision by RMS that a number of documents initially identified during its search for the information requested by the applicant were not within the scope of his request.
In coming to its decision, the Tribunal observed that every Government agency today has some form of computerised records management system (eg TRIM) that captures and manages both paper and electronic information held by the agency.
The GIPA Act requires an agency to undertake reasonable searches to find any Government information held by the agency when the application was received and this obligation expressly extends to carrying out searches using any available electronic information management system. The Tribunal noted that it is not unusual, when conducting an initial search for relevant documents using a computerised document management system, that the search will locate documents which, on closer examination, are found not to contain information relevant to the access request. These records are commonly described as being ‘out of scope’.
This is what happened when the RMS responded to the applicant’s GIPA request. A search was carried out using its computerised document management system and this identified a number of documents as being relevant which, on further review, were determined not to fall within the scope of the applicant’s request. The applicant asked the Tribunal to review that determination. The RMS argued that the Tribunal had no jurisdiction to do so.
The Tribunal agreed with the contention made by the RMS that the Tribunal had no jurisdiction to review a decision that a document is ‘out of scope’. The Tribunal’s reasoning was as follows:
The effect of the Tribunal’s decision Miskelly is that decisions made by councils as to whether documents are outside the scope of a GIPA application are not reviewable by the Tribunal.
In drafting decisions under the GIPA Act, councils should therefore take care to distinguish any information which is determined to be out of scope from the information to which a council decides to refuse access under s.58(1) of the Act.
For more information about this decision or its implications please contact Alan Bradbury.
 See, for example, Ormonde v NSW National Parks and Wildlife Service (No.2)  NSWADT 253 (at  to 
 GIPA Act, s.53(2)
 GIPA Act, s.53(3)
 Administrative Decisions Review Act 1997, s.9
Please note that the law detailed in this Essential Guide is correct as at July 15, 2019.Read more
In the recent ACT Supreme Court decision of Hargrave v Singh  ACTSC 139, the court considered the culpability of an intoxicated passenger, who was struck by a taxi which had dropped him home at the end of an evening, after the passenger had chased down the taxi to dispute the fare.
The plaintiff’s allegation was that, on 24 May 2014, he (a then 21 year old male) was struck by a taxi, causing him to suffer a myriad of bodily injuries, as well as associated psychological trauma, in the aftermath of the accident. In most accidents of this nature, the legal liability that flows is relatively straightforward; the driver of the vehicle owes a duty of care to the pedestrian to not drive the vehicle in a way that may cause injury to another.
In this case though, the facts leading up to the incident were pivotal. Specifically, the plaintiff and his friends had attended the Mooseheads Pub in Civic, where alcohol was consumed. At trial, the plaintiff gave evidence of having pre-drinks at a friend’s home prior to arriving at the Pub at around 11pm. He then consumed five to six schooners of beer between 11pm and 3am.
At around 3am, the plaintiff, his girlfriend and other friends, shared a maxi-taxi home. After the plaintiff’s friends were dropped off at various locations, an argument arose between the plaintiff and the driver in relation to the total of the ultimate fare. In the end, the plaintiff’s girlfriend paid the fare by using the plaintiff’s credit card, and was given a receipt. When the plaintiff and his girlfriend alighted from the taxi, the driver commenced to take off. However, when the plaintiff viewed the receipt given by the driver, he proceeded to flag down the departing taxi to further dispute the charge to his credit card. In the course of doing so, the plaintiff was struck by the taxi, ending up being dragged into in the gutter. The taxi driver did not stop, and kept going on into the night.
Having suffered personal injuries, the plaintiff sued the driver in negligence in the ACT Supreme Court, with the claim ultimately heard and decided by the Honourable Justice Burns.
The driver denied his driving of the taxi was carried out negligently, arguing the collision was caused by the taxi being chased down by the plaintiff (not vice versa). The driver further defended the claim on the basis that the court ought to presume the plaintiff was contributorily negligent for his own injuries, due to his intoxication, pursuant to section 95(1) of the Civil Law (Wrongs) Act 2002 (ACT) (the Wrongs Act).
That section of the Wrongs Act provides that “contributory negligence must be presumed if an injured person was intoxicated at the time of an accident giving rise to a claim for damages for personal injury and the defendant alleges contributory negligence”. That is to say, the court’s starting point must be that the intoxicated party was negligent, and work backwards from there to determine whether that presumption should be rebutted. Subsection 95(2)(a) gives guidance on this, by clarifying that the injured person needs to establish, on the balance of probabilities, that the intoxication did not contribute to the accident; or the intoxication was not self-induced.
Here, after consideration of medical, expert and lay witness evidence from both sides, Justice Burns was not satisfied that the accident was caused by the plaintiff’s chasing down of the taxi, and that a reasonable person in the driver’s position could have avoided the accident. Judgment was thus entered in the plaintiff’s favour for just over $275,000.
However, in arriving at that judgment sum, His Honour did accept that the plaintiff’s intoxication had to be taken into account. In doing so, the effect of His Honour’s findings was that, but for the plaintiff’s intoxication and conduct, the damages awarded to him would have been 10% higher.
The onus to rebut the effect of intoxication in a personal injury case falls on the intoxicated party. In the event an injured intoxicated person is unable to rebut the statutory presumption of contributory negligence, then the damages that injured person may be entitled to, apart from the contributory negligence, must be reduced to the degree that the court considers just and equitable.
In the present case, the plaintiff was lucky to have escaped without sustaining more serious injuries. Arguably though, he was also lucky to have his damages reduced by only 10 per cent, given the starting point under section 95(1) of the Wrongs Act is for the courts to presume contributory negligence exists in cases involving intoxicated plaintiffs, unless the plaintiff can satisfy the court of a good reason why that should not be the case. The legislative effect of section 95(1) may, of course, be a drag for plaintiffs to comply with, though it nevertheless is reflective of public policy that plaintiffs need be aware of when bringing such personal injury claims.
Injured in a motor vehicle accident? Call our team at BAL Lawyers.Read more
The purchasers of an ACT block of land (“the Owners”) entered into a written contract with a head contractor, Maples Winterview Pty Ltd (“the Builder”) to build their family home. A dispute arose when the Owners alleged defects in the building works of the Builder. A separate dispute also arise where a sub-contractor to the Builder, A&A Martins Pty Limited (“the Subcontractor”), claimed monies from the Owners for work completed and materials supplied by the Subcontractor to the Owners’ benefit. The Subcontractor ultimately brought an action against the Owners in the ACT Supreme Court, seeking restitution for unjust enrichment enjoyed by the Owners in receiving the benefit of the Subcontractor’s works. Notably, the Subcontractor and Builder were related companies with common directors. In the primary proceedings, the Supreme Court found in favour of the Subcontractor, and ordered a six figure judgment in its favour against the Owners.
This decision was appealed on the basis that the Owner’s contract was with the Builder, such that the Subcontractor was not entitled to recover against the Owners in the absence of a request by them for the Subcontractor to have provided the services which it did (whether to the Builder, or otherwise).
The building contract in question was a staged building contract whereby payment was due at the completion of each stage. The Owners paid the Builder for stage 1, but argued the Builder failed to install insulation, being a requirement under stage 2. The Owners withheld payment on the basis that the Builder had no entitlement to its progress payments for stage 2 until its requirements were met. The Builder, by its Subcontractor, nevertheless continued work on the house until around 6 March 2012 when building work was suspended – leaving the house unfinished.
On 10 October 2012, the Builder purported to terminate the contract and commenced proceedings in the ACT Supreme Court to recover the cost of the building works.
The Owners defended the claim on the basis that stage 2 was defective, such that the trigger for payment for subsequent stages never arose and the house was incomplete.
The Owners were self-represented in these proceedings, though their defence in this regard was entirely successful.
In obiter, the presiding judge (Mossop J) said that it would have been open to the Builder to complete the contract without insisting on the making of progress payments and then claim payment for the entire cost of the works at the conclusion of the project, at which point it could claim for practical completion once the certificate of occupancy could be obtained. However, the contract was never completed by the Builder, which left the Owners to complete the works themselves.
Following the decision in Maples, the Subcontractor, who was not a party in the Maples proceedings, brought separate proceedings against the Owners seeking quantum meruit or restitution based on unjust enrichment.
Unjust enrichment is an equitable claim that arises where three circumstances are satisfied:
‘Unjustness’ is determined with regard to, amongst other things, lack of consideration and unconscionability.
In these circumstances the Subcontractor argued the Owners had received a benefit at the Subcontractor’s expense which was unconscionable for them to accept without payment. The Owners, meanwhile, denied receiving a benefit at all; having been left, they said, with defective building work that they had to complete without the Builder.
McWilliam AJ recognised that there were intercompany arrangements between the Builder and Subcontractor which made them difficult, at times, to distinguish and further found that:
In the absence of a contract it is clear enough that the work was carried out by A & A Martins at the request of the plaintiff and that there would be an entitlement to reasonable remuneration. That remuneration would be assessed on the basis of the market value of the services provided.
On that basis, Her Honour entered judgment in favour of the Subcontractor in the sum of $198,484.20 plus interest. The Owners were again self-represented during these proceedings.
The Owners appealed the judgment against them, this time represented by Bradley Allen Love Lawyers. The judgment against the Owners was appealed on the basis that the Owners had entered into a written contract expressly with the Builder (that is, not the Subcontractor). Any work done by the Subcontractor thus was not done “at the request of [the Owners].” Rather, to the extent the Subcontractor did work, it must have done so as the request of the Builder – being the party who engaged the Subcontractor.
The Court of Appeal found that it was not open to the primary judge to resolve the proceeding on the basis that the Owners knew, or ought to have known, that the Subcontractor was undertaking the works in some capacity other than as a subcontractor. In the appeal, Justice Elkaim drew an analogy to a subcontracted painter asking a homeowner (whose arrangements are with their builder) what colour they wanted their walls painted. If a homeowner, in that example, were to answer ‘blue’, that would not constitute a direction to undertake the work by the homeowner. Rather, the painter would nevertheless still be on the site at the request of the builder.
It followed that the Court of Appeal found that an essential step in considering a claim in quantum meruit is to ask whether, and how, that claim fits within a particular contract the parties have made. Here, the Owners contracted with the Builder who then chose to undertake the works as a separate corporate entity. Where a company is afforded the advantage of arranging its business in a certain way, they will also bear the risk of the structure and the allocation of resources and risk under the arrangement. Where the Builder was then disentitled to any monies under its contract with the Owners, the Subcontractor was not entitled to claim the same monies, in a roundabout fashion, by arguing quantum meruit principles.
If you are involved in a building dispute, and if you are unsure of your legal rights and obligations under such agreements, this decision highlights the utility of seeking early legal advice. A failure to do so may be complicated and costly.Read more
You may be aware that the ACT Government is introducing changes to the payment of stamp duty in the ACT from 1 July this year. But, what exactly will be changing from the current stamp duty regime?
The current Home Buyer Concession Scheme will be amended from 1 July 2019 so that the concession will be available to both new and established dwellings and there will be no property value threshold.
This means that eligible first home buyers will no longer be required to purchase a new dwelling or vacant land for the concession to apply and will obtain the concession regardless of the value of the property. This will apply to Contracts exchanged after 1 July 2019.
First home buyers will, however, still be required to meet all of the following eligibility criteria:
As the relevant duty determination has not yet been released, some of the detail of the above may change between now and 1 July 2019.
The change to stamp duty coincides with the ACT Government abolishing the first home owners grant. This means that first home buyers purchasing a new dwelling or vacant land below the existing thresholds (and who otherwise satisfy the eligibility requirements) will be able to obtain the first home owners grant only if the Contract is exchanged on or before 30 June 2019.
The ACT government has also released the Taxation Administration (Amounts Payable – Duty) Determination 2019 (No 1) (the Determination). The Determination sets the amounts payable for stamp duty (where no concession applies) from 1 July 2019 for residential and commercial property in the ACT.
The rate of duty payable for residential property has decreased across the board, meaning that all those who are not eligible for a stamp duty concession will pay less duty for contracts exchanged after 1 July 2019. The size of the duty reduction will depend upon the purchase price of the particular property in question.
There has been no change to the rates of duty payable for commercial property, where no duty is payable for property with a dutiable value less than or equal to $1.5 million and $5.00 per $100 is payable for property with a dutiable value greater than $1.5 million.Read more
This month at Business Breakfast Club, Lauren Babic of BAL Lawyers discussed all things intellectual property—how to define your organisation’s intellectual property, how to protect it, how to share it with partners for the purpose of co-development and the rights of joint owners.
Intellectual Property, or “IP”, is a broad umbrella term that encompasses a range of proprietary and related rights over intangible things. It exists in various forms, such as inventions, brands, designs or artistic creations.
“Ideas” are not capable of legal protection, unless you can fit the communication of the idea into one of the categories that allow protection. The communication or expression of the idea usually has to have a certain amount of originality to it.
The key forms of IP (though not exhaustive) are:
Copyright protection is automatic, and springs to life upon the creation of the work (presuming it meets the relevant legal criteria). However, there are several practical things you can do to protect your work, including copyright notices, attributions, keeping work confidential unless you need to publish it, and carefully documenting any rights you assign or licence to third parties.
Trademarks and designs are different from copyright. These rights are not automatic, and depend on successful registration with IP Australia. There are extensive requirements that must be met when submitting such applications, including proof of things such as originality, distinctiveness, novelty, and other requirements. Similar practical considerations also apply – keep the work confidential unless you need to publish it, and document any third party rights.
Joint ownership may arise on the basis of a verbal or written agreement between parties to that effect (apportioning ownership) or where multiple parties simply contribute to the creation of the IP.
Where documented, it is critical that the agreement covers areas such as who has ownership, when ownership will be transferred, whether consents are required, who will cover the costs, the granting of licences, and confidentiality.
Without a written agreement, the law will step in to provide a default position on critical factors concerning interests in the IP, exploitation and licencing. Usually, joint owners will be restrained from exercising their rights without the consent of the other and neither joint owner can realise any economic benefits without doing so together.Read more
With concerns about building construction quality in the ACT becoming more prevalent, those buying a new dwelling or constructing their own may increasingly look to statutory warranties and insurance schemes for protection. However, the recent case of The Owners – Units Plan No. 3115 v The Trustees of the Master Builders Fidelity Fund Scheme  FCA 115 (The Owners – Units Plan 3315) should serve as a cautionary tale, as these protections may not be a robust as they first seem.
The Building Act 2004 (ACT) (the Building Act) requires a builder to obtain one of the following prior to commencing certain residential building work:
The insurance requirements of the Building Act apply to residential building work of no more than three storeys. The requirements are aimed at protecting home owners from the negligence or a breach of statutory warranties by the builder which causes the owner loss. In practice, in the ACT this will often be done by obtaining a fidelity fund certificate from the Master Builders Fidelity Fund scheme (the Scheme).
The Owners – Units Plan No. 3115 involved a claim made by the Owners Corporation of the Elara Apartments. Completed in 2007, the Elara Apartments have been beset by a long list of defects, with owners claiming flaws in the common property, structural load bearing walls, balconies and the provision of services.
The Owners Corporation commenced proceedings against the Developer for breach of the statutory building warranties, however, these were discontinued when the Developer entered liquidation. The Owners Corporation then made a claim against the Fidelity Fund certificates issued by the Scheme in respect of each Unit (the Certificates). The Scheme refused to consider the claim due as it was made outside of the timeframe contained in the Certificates.
In The Owners – Units Plan No. 3115, the Court found:
As a result of the above, the Scheme was entitled to refuse to consider the Owners Corporation’s claim and the Owners Corporation was unable to obtain any relief from the Certificates.
It is clear that when purchasing a new dwelling or constructing your own dwelling, there are important and complex considerations to take into account. The relevant insurance or fidelity fund protection is only one such aspect. Prudent buyers and home owners will conduct their own due diligence into matters concerning the construction of the dwelling (including the insurance cover) to ensure their investment is protected.
Original Article published by Julian Pozza on The RiotACT.Read more
If you take a look around you, the likelihood is that you are surrounded by all sorts of goods that have sailed oceans, crossed plains, and its title traded through many hands all before ending up in your home or workplace. It is estimated that around 90% of global trade annually is carried out by shipping. Yet, despite the enormous scale of the transport and logistics industry, and our immense dependence on it, the sector continues to grapple with—and tolerate—some serious inefficiencies.
Each year, businesses involved in global trade absorb significant losses to account for uncertainty in their systems and records. One simple shipment can be subject to around 200 different transactions or communications, between up to 30 organisations. With so many parties—often with different systems and with competing interests—the margin of error can swell considerably. Add to this the commercial incentives to retrospectively tinker at the edges of the data to cover over delays or damage, for example, and the problem grows larger still. To account for these inaccuracies, businesses often include extra inventory in their consignments, representing a significant ongoing cost over time.
Earlier , we made the case for the incorporation of Blockchain technology in supply chain management. In this article, we explore the need for an innovative solution to data management in the transport and logistics industry, and how Blockchain may be just the right fit.
One of the inevitable downfalls of the current machinery of international trade is that, despite process digitisation on a grand scale, there are still ‘analogue gaps’ that arise whenever goods and accompanying information are transmitted from one party or system to another.
When you multiply this across the entire supply chain, a significant margin of error and uncertainty emerges, leaving open the possibility that any given piece of inventory may be recorded as being in two places at once, or not being anywhere at all.
Blockchain represents a well-matched solution to this problem. As we explained in our first article on the basics of Blockchain, the fundamental premise of the technology is the existence of a real-time, permanent and unchangeable record of information distributed across the entire network of users.
By using Blockchain technology to track the unique identifier of any given item of stock, the status of that item can be ascertained by any party at any given moment, and can be traced right back to the start. Retrospective data manipulation is impossible, as is the existence of the same piece of inventory in two places at once.
These gains in accuracy, certainty and accountability may leave businesses significantly better off in the long run, allowing for more accurate projections to be made and eliminating the need for deliberate oversupply to account for uncertainty.
Not only do ‘analogue gaps’ render the records held by parties along the supply chain somewhat unreliable, they also give rise to one of the most excruciating challenges of modern commerce: debtor management.
One would be hard-pressed to find a business that doesn’t know all too well the pain of preparing and sending invoices, only to have them missed, processed at a glacial pace, or conveniently ‘lost’ altogether. Herein lies a further layer of promise: not only can Blockchain trace transactions, it can be the framework through which the transactions are carried out.
As we explained in one of our earlier articles, smart contracts are self-executing contracts in the form of a set of encoded instructions that self-perform when certain pre-set criteria are met. In this context, Blockchain may be able to alleviate the hair-pulling associated with traditional invoicing. By tracing inventory throughout the supply chain, smart contracts can be used to trigger automatic and instantaneous payment upon confirmed receipt of goods by a consignee.
Not only does this enhance certainty, reduce risk and eliminate delays in payment, it may also significantly reduce administrative costs and personnel requirements. Whatever the outlay of introducing Blockchain throughout the global supply chain, it is certain to pale into comparison to the long-term savings that can be expected.
The promise of Blockchain in the international movement of goods seems, perhaps, obvious. This opportunity hasn’t gone unnoticed; indeed, IBM, Maersk, Accenture and several other companies have all been making headway. Yet still, why haven’t we moved further?
There are some important barriers to be overcome. The fragmentation of the global supply chain across a vast group of players, though making it a natural target for Blockchain-based rationalisation, also makes it uniquely difficult to get everyone to adopt a common system. Commercial incentives, regulatory barriers, limited trust, and the sheer scale of the challenge may all inhibit progress.
The starting point, then, must be a cultural shift. There is a need to convince organisations, and the people within them, of the benefits of collaboration, as well as building up knowledge and understanding of Blockchain and what it might represent for the sector.Read more
In 2009, a (then) 15 year old boy ran across a road after his two friends in Richardson, when he was tragically struck by a passing vehicle. The impact caused the infant plaintiff to suffer catastrophic injuries. When the two friends ran across the road, the driver of the vehicle looked across the road, took her foot off the accelerator. The driver’s foot hovered over the brake pedal in the fear the two would run back onto the road. In looking in the direction of those two boys, the driver did not see the plaintiff then step onto the road. By then it was too late.
The plaintiff commenced an action in negligence against the driver in the ACT Supreme Court, which was heard before Elkaim J in June of 2018. The plaintiff was ultimately unsuccessful in his action, which led to an appeal being hearing this year in the ACT Court of Appeal.
The first instance judge found that the plaintiff failed to prove that the driver was negligent, essentially because she acted reasonably in the (albeit unfortunate) circumstances. In particular, it was found that the plaintiff himself was more negligent than the driver for stepping onto road when it was not safe to do so. The driver, in the court’s view, was not acting unreasonably by having her attention on the two other boys.
In case his decision on liability was appealed, Elkeim J went on to assess the plaintiff’s damages (notwithstanding he would not received any sum with an unsuccessful verdict against him). Had he won though, Elkaim J assessed the plaintiff’s damages quite highly; in excess of $8 million, though held that sum should be reduced by 75% for the plaintiff’s own contributory negligence. As it turns out His Honour’s liability decision was appealed.
On appeal, the ACT Court of Appeal upheld the first instance judge’s findings, concluding that the driver was not liable in negligence. The plaintiff argued that the driver should have looked back across the road to the plaintiff’s direction faster than she did, as to do so may have allowed her to slow down faster to prevent the collision. However, the Court of Appeal accepted that the driver’s distraction by the two boys running across the road was a reasonable response to their emergence. The Court of Appeal also did not find that plaintiff was necessarily visible to the defendant when the first two ran across the road, meaning there was no reason for his presence to have been anticipated. Whilst the outcome of the accident, and the litigation, was tragic for the plaintiff, the duty of care owed by the defendant driver was high, as motor vehicle drivers owe a higher standard of care to pedestrians, due to the level of harm that can be caused. The courts generally look at the circumstances of each case in determining, whether or not, a standard of care has been met. Section 45(1) of the Civil Law (Wrongs) Act 2002 (ACT) (the CL Act) establishes a ‘but for test’ for causation, whereas, section 46 of the CL Act addresses the burden of proof. In determining liability for negligence, the plaintiff always bears the burden of providing, on the balance of probabilities, any fact relevant to the issue of causation. That the driver “may” have done things differently to have avoided the accident, is a distinct question to whether she was acting reasonably – which the courts accepted she was.
This case demonstrates the harsh reality of negligence law, which can leave an individual that is injured in a motor accident without an award of damages if they are unable to prove that the driver was negligent or at fault.
Although such an injured individual may be unable to claim compensation through the courts, they may be eligible for care, support, treatment and rehabilitation under the ACT Lifetime Care and Support Scheme. Individuals that have been catastrophically injured in motor accidents in the ACT, regardless of fault, may be eligible for the scheme. The scheme covers pedestrians, cyclists, motor bikes and motor vehicles as long as one vehicle involved in the motor accident had compulsory third party cover. Catastrophic injuries include:
For more information on the scheme please visit: https://apps.treasury.act.gov.au/ltcss/home
If you need advice about being injured in a motor vehicle accident, please contact the Litigation team at BAL Lawyers.Read more
At the heart of Australia, the Canberra local community encompasses a diverse range of professions, all united by initiative, ambition and drive. Such traits have recently been seen in a meeting of the minds between the ACT Public School Principals, and Canberra’s largest local law firm, Bradley Allen Love Lawyers (BAL), in an initiative created to exchange knowledge between the managers of legal practice and the manager of schools.
Although at first glance it may seem odd for lawyers and teachers to come together – the world of corporate law seems poles apart from primary and secondary school educators – reflection on the role of principals reveals some areas of intersection. School principals are managers (amongst many other things). They need to make peace and order through setting standards and resolving disputes. When you think about, this is not so different from what lawyers do every day.
The professional learning program of the ACT Principal’s Association acknowledges the increasingly complex and diverse role of principals. It aims to engage principals with other non-teaching professionals, to broaden their horizons and learn how the work practices of non-teaching professionals may strengthen their own work.
On a cold winter’s afternoon this week, Gabrielle Sullivan, lawyer and Director in BAL’s Employment and Investigations Group, volunteered her time to welcome the ACT Principals to BAL’s city boardroom. Over wine and hors d’oeuvres, Gabrielle initially noted the ‘unusual gathering’, and commented that such a meeting is ‘potentially highly constructive – when we realise that we all have something to offer to others and to learn’
Gabrielle shared her insights as to how lawyers ‘get the facts straight’, how they negotiate, and how they manage time, staff, documents and emails. Acknowledging that that how principals relate to their staff, students and parents is critical to inspiring Australia’s next generation of leaders, she concluded with tips for persuasive personal and virtual presentation.
The Principals were very engaged in the presentation, and honest and lively exchanges were had. BAL Lawyers was delighted to provide their offices and event coordinator on a pro bono basis for this community –building event.
Mr Jason Holmes, principal of Harrison School, who initiated the venture with BAL, was delighted with the event. He and the ACT Principals Association are looking forward to continuing to explore more professional linkages with the Canberra community.
If you would like more information about this seminar, or have a speaking request, please contact our Employment and Industrial Law Group or call 02 6274 0999.Read more
This role will consist of you handling all the intricacies of Business and Corporate law and a fantastic development opportunity to work with a successful business, gain professional development, and the opportunity for personal growth within the legal sector.
If you think that this role would suit you and you have the relevant experience, please email firstname.lastname@example.org with your CV and a covering letter outlining what experience you have that would make you an ideal candidate for the role.
Applications that do not have a covering letter WILL NOT be considered.Read more
Every State and Territory in Australia has legislation which gives each parent the right to appoint a guardian by Will to take effect after his or her death.
In the ACT the relevant legislation is the Testamentary Guardianship Act 1984 (“the Act”). Section 8 of the Act states that:
“Each parent and each guardian of a child may, by Will or codicil, appoint a person to be a guardian of the child or persons to be guardians of the child”
The State and Territory Acts are similar but in no way identical – there are differences and intricacies among the States and Territories.
You should seek advice on which legislation applies to you.
Times have changed – the State and Territory legislation across the Australian jurisdictions refer to the older concepts of “guardianship” and “custody”. These concepts and terminology were removed from the Family Law Act 1975 in 1996.
Part VII Div 2 of the Family Law Act 1975 introduces the concept of “parental responsibility” and defines the term in Section 61B as meaning “all the duties, powers, responsibilities and authority which, by law, parents have in relation to children”.
“Custody” and “Guardianship” Orders have been replaced with “Parenting Orders” that can govern the long term or day to day care, welfare and development of the child.
The appointment of a testamentary guardian may be affected by the provisions of the Family Law Act 1975.
Section 51(xxi) of the Australian Constitution empowers the Commonwealth to make laws with respect to marriage and Section (xxii) empowers the Commonwealth to make laws with respect to “divorce and matrimonial causes; and in relation thereto, parental rights and the custody and guardianship of infants”.
In all Australian jurisdictions therefore, the Commonwealth can make laws with respect to guardianship of the child of the marriage. However, without a referral of power from the States, the Commonwealth could not legislate in respect of a child who was not a child of the marriage.
Changing familial values over the years and the increase in more and more people having ex-nuptial children meant that between 1986 and 1990, all Australian States (with the exception of Western Australia) referred their powers with respect to guardianship, custody, maintenance and access in relation to ex-nuptial children to the Commonwealth.
A referral of power to the Commonwealth is not required from the ACT, the Northern Territory and Norfolk Island because s 122 of the Australian Constitution assigns to the Commonwealth plenary power to “make laws for the government” of the Territories.
What this means is that each State and Territory legislation regarding the appointment of testamentary guardians must be read in the context of the Family Law Act 1975. It is said that the Family Law Act 1975 is intended to completely “cover the field” with regard to the parental responsibility of children and notwithstanding that Part VII of the Family Law Act 1975 does not deal with the appointment of testamentary guardians it is intended to comprehensively cover parental responsibility.
In the ACT, where there is a no surviving parent of the child and no relevant Parenting Order on foot then the appointment of a testamentary guardian allows the appointed guardian to have daily care and control of the child and the rights and responsibilities to make decisions concerning the child.
But, where there is a surviving parent and/or relevant Parenting Order in place, then the appointment of a testamentary guardian might require a joint guardianship arrangement, or might not take effect at all.
As a general rule of thumb therefore, it is good practice for a parent to appoint a testamentary guardian in their Will to take effect:
a. immediately where they are the sole surviving parent or
b. if the other parent has predeceased the appointing parent.
In all cases, the appointment of a testamentary guardian should be done with the knowledge and acceptance that the Family Law Act 1975 may ultimately take priority and precedence. In all cases, a Court will of course have regard to the best interests of the child at the time of their parent’s death.
Though not an exhaustive list, the following is a list of some of the matters you should consider when deciding who to appoint as at testamentary guardian for your child or children:
It is common knowledge that commercial rates have increased substantially since the commencement of the Territory’s tax reform in 2012. For many owners, the increase in commercial rates now poses the question of affordability and viability. Whether an existing owner or a potential buyer, it is now essential that the terms of the lease and the information contained in the disclosure statement are scrutinised to determine whether the recovery of outgoing costs is valid.
If you are a landlord of a commercial or retail lease that falls within the parameters of the Leases (Commercial and Retail) Act 2001 (the Act), Part 9 is worth a read.
So what are outgoings? And how can they be recovered?
An outgoing includes:
To be recoverable:
The above seems relatively simple, right? Surprisingly, it is not uncommon for a landlord to fall short of the above requirements and for a dispute to then arise between the parties. To reduce the likelihood of a dispute arising, consider the following tips:
If you have any queries relating to commercial leasing in the ACT or NSW, please contact our Real Estate Team.Read more
In O’Keeffe Heneghan Pty Ltd (in liquidation); Aus Life Pty Ltd (in liquidation); Rocky Neill Construction Pty Ltd (in liquidation) trading as KNF Group (a firm) (No 2)  NSWSC 1958, the NSW Supreme Court strongly reminded us of the superior priority that an authorised deposit-taking institute’s unregistered security interest (perfected by control) has over the interests of secured creditors perfected under the personal property securities regime. The proceedings involved three companies in liquidation (together known as KNF Group).
In mid-2016 the KNF Group entered into a loan arrangement with IFG Network Australia Pty Ltd (IFG) that was secured by a General Security Deed which extended IFG’s interest over all present and future acquired property of the KNF Group. On 25 July 2016, IFG registered and perfected this security interest on the PPSR.
KNF Group also held two bank accounts with the Commonwealth Bank of Australia (the Bank). KNF Group’s obligations to the Bank were secured by a general security interest over KNF property but the Bank failed to register its security interest. On the 12, 13 and 15 March 2017 KNF transferred money out of one of their accounts with the Bank to an offshore bank account held by OzForex Ltd for the purpose of acquiring property in Ireland.
On 16 March 2017, KNF Group directors resolved to place each of the three companies into voluntary administration. The OzForex transfer failed and the administrators of the KNF Group were paid $224,409.
The Bank and IFG then started a battle over which party had better security over (and therefore priority to) the $224,409.
The Court upheld that under section 21(1) of the Personal Property Securities Act 2009 (Cth) (the PPSA), a bank with an ADI security interest perfected by control, has automatic priority over any other security interest.
The NSW Supreme Court made the following important findings regarding the priority of creditors under the PPSA regime:
The Court concluded that the Bank (as an ADI), successfully perfected its security interest by control under the PPSA. Therefore, the Bank had priority ahead of IFG’s perfected registered secured interest.
This case is a reminder to registered secured creditors that perfecting your interest under the PPSA regime may not protect their interests against ADI’s.
If you have any questions regarding the priority of your secured interest under the PPSR regime, contact Katie Innes.
Written by Katie Innes with the assistance of Felicity ThurgateRead more
The strength of the global economy is inextricably tied to data. Information has never before been created, stored, used and shared on so large a scale, underpinning trade and commerce, government and public services across the world. The corollary of our total data-dependence is that concerns about information security are at an all-time high. Australia is now just one of many countries to have introduced a mandatory data breach reporting regime, with the EU, Canada and New Zealand following soon after.
The Notifiable Data Breaches (NDB) scheme came into effect in February 2018, requiring Australian Government agencies and private organisations that are subject to privacy obligations under the Privacy Act 1988 (Cth) to report data breaches where personal information they hold has been lost or subject to unauthorised access or disclosure. If that event is likely to cause ‘serious harm’, the entity has to alert both the individual(s) concerned and the Office of the Australian Information Commissioner (OAIC).
One year on, the OAIC has released a 12-month Insights Report to mark the recently held Privacy Awareness Week, in addition to the four Quarterly Statistics Reports it has published since the introduction of the NDB scheme.
One important—if expected—result to note was the substantial increase in reported data breaches. Compared to the previous 12 months under the earlier voluntary scheme, the OAIC has seen a 712% increase in notifications. It seems that entities understand their obligations, bringing to light the scale of the challenges we face as a nation in the field of information security.
So, what else have we learned?
Of the 964 eligible data breaches reported in the 12 months leading up to 31 March 2019, a disquieting 60% of those were related to malicious or criminal attacks. The most common method among these was phishing, with many attackers succeeding in obtaining credentials like usernames and passwords to gain access to protected systems and information.
Also concerning was human error as a significant cause of data breach. Over a third of all reported breaches were occasioned by human error, such as unintended disclosures (accidentally mis-sending an email, anyone?), lost devices, and so on.
Another interesting finding was to do with affected sectors. In this regard, health service providers took first place by a long shot, with over 200 eligible data breaches reported. A startling 55% of these were due to human error, putting in stark relief the need to have robust policies, procedures and training in the health sector. This is particularly so with the advent of My Health Records, rendering the potential scale and impact of a breach much larger as the health data ecosystem continues to grow.
Whether or not your organisation is regulated by the NDB scheme, the OAIC’s Report serves as an important reminder of what can go wrong and the need to take steps to better protect the information you hold.
One key take-away arising out of the staggering proportion of malicious attacks and human errors is the need for comprehensive and regular staff training. All personnel within your organisation should be alert to the ways in which they may unwittingly facilitate access to—and misuse of—personal and sensitive information, and should be reminded that everyone has a role to play in the maintenance of information security.
The NDB scheme has played an important role in highlighting the importance of swift and proactive management of data breaches. As put by the Australian Information Commissioner and Privacy Commissioner, Angelene Falk:
“The requirement to notify individuals of eligible data breaches goes to the core of what should underpin good privacy practice for any entity—transparency and accountability.”
“It’s also an opportunity for organisations to earn back trust by supporting consumers effectively to prevent or manage any potential harm that may result from a breach.”
Even if your organisation is not caught by the obligations, or in cases where you determine that a given data breach does not meet the eligibility threshold, working with affected individuals to minimise the consequences of data breaches promptly and openly represents a positive change in the privacy landscape.
If you have any questions about your privacy risks or obligations, feel free to get in touch with our Business team.
Written by Katie Innes with the assistance of Bryce Robinson.Read more
The New South Wales Court of Appeal has overturned a decision of the New South Wales Supreme Court after it deemed that an indexed annuity of $52,000 per annum was inadequate for a widow and instead awarded the widow a legacy of $1.75 million.
The judgement in the matter of Steinmetz v Shannon  NSWCA 114 can be found here.
The facts of the case were as follows:
The Supreme Court Trial Judge dismissed the widow’s application for further provision on the basis that the annuity was adequate provision to the widow’s proper maintenance.
The Trial Judge further mentioned that the annuity would enable the widow to continue living in the same house as she did during her relationship with the deceased, and to maintain the same lifestyle. In concluding that the annuity was adequate, the Trial Judge stated the following:
She will not be in a position to live extravagantly, but she did not do so when married. She will not have the benefits, the security, the holidays, the comforts and the additional financial advantages that she enjoyed during her relationship with the deceased. But as a matter of law, should she be entitled to expect more?”.
The widow appealed to the Court of Appeal. The Court of Appeal held:
The Court of Appeal allowed the appeal, set aside the orders of the Trial Judge made in the previous year and awarded the widow a legacy of $1.75 million.
The Respondents (the children of the deceased’s first marriage who opposed the application) were ordered to pay the widow’s costs of both the appeal and the proceedings in the first instance.
Whilst not a ground-breaking decision, this case serves as an important warning and a reminder to both Willmakers and litigants as to considerations the Court takes into account when reviewing the adequacy of provision for a widow/widower.
The following two points should be taken into consideration:
In awarding a legacy of $1.75 million to the widow, the Court almost doubled her entitlement but was primarily motivated by ensuring that the widow was not left at the “mercy” of the respondents (the children from the first marriage).
The Court was very much conscious that an ongoing relationship between the widow and the respondents would not be appropriate.
Whether you are considering your Estate Plan, or are a litigant in Court proceedings, it is important to consider the interplay between the parties left behind, in addition to whether provision is adequate to each party. Please contact Golnar Nekoee for more information.Read more
Hoarding involves the collection of an excessive number of items of (often) low value, as well as an inability to throw such items away. Hoarding often results in squalor. Hoarding and squalor can have a significant adverse impact on neighbourhood health and amenity and can be a difficult issue for local councils to resolve.
This Essential Guide provides guidance to councils on the options which are available to them under the Local Government Act 1993 (LG Act) to address hoarding in their communities.
Section 124 of the LG Act contains a range of orders which may be appropriate to address a hoarding situation. These include:
A council can issue a combined order for a number of Items in the Table to s.124 of the LG Act under s.143, but an order under Item 22A cannot be included in a combined order.
To support the giving of an order, a qualified and authorised council officer or contractor will first need to inspect the land or premises to identify the type, volume and location of the hoarded material and assess what order (or combination of orders) is appropriate in the circumstances. As part of this process we recommend that the investigating officer:
The investigating officer will then need to prepare a report indicating whether and why, in their view, the circumstances warrant the giving of an order. We also recommend that the investigating officer makes a record of any complaints received from the neighbours about the hoarding and obtains a written signed statement from the closest neighbours detailing the impacts they experience as a result of the hoarding.
An authorised person can only inspect residential premises (including the curtilage of those premises) with the consent of the occupier. Where the occupier does not give their consent, then it may necessary to consider other options such as inspecting the land from adjacent public land or neighbouring private land (with the consent of the owners of that land). If that is not practicable, it may be necessary to obtain a search warrant.
There is a strict process under Part 2 of Chapter 7 of the LG Act for the issuing of orders. Except in the case of an emergency, or an order to be issued under item 22A, the Council must first give written notice of its intention to issue the order. In drafting the notice, the council should ensure that the terms of the proposed order are realistic, are appropriate to the circumstances and are supported by the evidence gathered by the council. The terms of the proposed order will also need to be as precise as possible to ensure the recipient understands exactly what they are required to do. For example, adopting a general description of the materials as ’waste’ or ‘junk’ can be problematic, especially where the hoarder considers that the items have value. We recommend that an order include a detailed description of the hoarded items where possible, as well as a sketch plan showing the location of those materials. Proposing a staggered approach to disposing of hoarded items can be a good method to achieve a gradual but measurable clean-up process.
After the date specified in the notice of intention for the recipient to make representations has passed the council will need to do another inspection of the site to determine whether the circumstances necessitating the issue of the order are still present. If they are, the council will need to consider any representations which have been made in deciding whether to give the order (or an amended order).
If, after giving proper consideration to any representations received from the person to whom the notice of intention was given, the council decides to issue the order then it should make sure that the order includes the reasons why the council has decided to exercise its discretion to give the order in the circumstances. These reasons should not simply restate the circumstances in which an order may be given that are mentioned in the table to s.124 of the LG Act and should clearly explain why the order is being given.
The order will need to be served using one of the methods listed in s.710 of the LG Act, and a file note kept of the method of service.
The recipient of an order under s.124 of the LG Act (other than an order under item 22A) can seek review of the order by the NSW Land and Environment Court (the Court). Any application for review must be commenced within 28 days of the date the order is given. In such an appeal the Court will review the circumstances and decide for itself whether an order should be made and, if so, in what terms. The legal validity of an order can also be challenged under s.674 of the LG Act.
After the period of time for compliance with the order has passed, the council will need to do a further inspection to see if the order has been complied with (in part or at all) or whether it is necessary to take additional steps to enforce compliance.
If the work required by an order is not done within the specified time, a council can 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’. While this seems like a broad power, we do not recommend that this power be exercised without an order from the Court authorising that work to be done, as a council may otherwise be found to be trespassing or unable to recover the costs it incurred in having done the necessary work.
The failure to comply with an order is also a breach of the LG Act which a council can seek to remedy or restrain by bringing Class 4 civil enforcement proceedings in the NSW Land and Environment Court. Civil enforcement proceedings are directed to remedying an existing breach, but can also be forward looking in the sense that they seek to prevent future breaches of the law (eg by ordering that a person not keep specified waste on their property). In such proceedings, the Court has a wide discretion to make such orders as it considers appropriate, including an order enabling the council to take the necessary clean up action and recover the reasonable costs it incurs in doing so.
Alternative options under the Environmental Planning and Assessment Act 1979
In some circumstances a council may be able to take action under the Environmental Planning and Assessment Act (EPA Act) in response to a hoarding situation. For example, the hoarding of material may sometimes constitute prohibited development or development for which consent is required but has not been obtained, amounting to a breach of the EPA Act. Further details on the issue and enforcement of development control orders given under the EPA Act can be found in our two-part Essential Guide series on EPA Act orders, found here.
For further information or assistance on how the Local Government Act 1993 can assist you to manage hoarding in your community, please contact Alan Bradbury and the Local Government & Planning team on (02) 6274 0999.
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.
 Local Government Act 1993 s.200. The wide and beneficial construction of the power to give an order under Item 21 does not authorise a trespass or other infringement of another’s property rights: Mailey v Sutherland Shire Council  NSWCA 343.
 Local Government Act 1993 s.134 and s135. The Council must also consider criteria in any local policy adopted under Part 3 (s.131)
 Local Government Act 1993 s..136
 Local Government Act 1993 s.180
 Local Government Act 1993 s.678
 Local Government Act 1993 s.673
Please note that the law detailed in this Essential Guide is correct as at 20 May, 2019.Read more
Legal professional privilege is a venerable principle. With antecedents in 16th century Elizabethan England, the concept — that there can be no compelled disclosure of communications between a client and their lawyer — remains a fundamental tenet of common law legal systems the world over. Nor is the principle unique to the Anglosphere: although the exact nature and tenor of the rule varies widely, almost every jurisdiction globally recognises some form of confidentiality in lawyer-client communication.
Truth, like all other good things, may be loved unwisely — may be pursued too keenly — may cost too much. -Vice-Chancellor Knight Bruce
…Which makes it somewhat surprising that the principle is under attack. Despite its august lineage, influential international institutions including the World Bank and United Nations Office on Drugs and Crime (UNODC) have recently suggested that privilege is facilitating corruption and illicit asset flows. Prosecutors are increasingly asserting that professional secrecy is being misused, while advocacy group Global Witness secretly filmed eminent American lawyers offering advice on how to move suspicious funds for a (fake) prospective client. In the courts, attempts have been made to narrow the application of privilege — with mixed effect.
In a 2005 article, Stephen Argument asked ‘is legal professional privilege an endangered principle?’ It seems his concerns were prescient. Proponents of privilege watch on with growing concern. Courts in this country and elsewhere have consistently hailed privilege’s significance. The comments of Gummow J are representative: privilege is ‘not a mere rule of evidence but a substantive and fundamental common law doctrine, a rule of law, the best explanation of which is that it affords a practical guarantee of fundamental rights’. Others believe privilege’s importance is overstated. In the same year but in a different case, Gummow’s colleague Toohey J remarked: ‘Important, indeed entrenched as legal professional privilege is, it exists to serve a purpose, that is to promote the public interest by assisting and enhancing the administration of justice. It is not an end in itself.’
Mason J had earlier observed: ‘[I]t is impossible to assess how significantly the privilege advances the policy which it is supposed to serve. The strength of the public interest is open to question.’ All of which makes a case shortly to come before the High Court of Australia, Glencore International AG v Federal Commissioner of Taxation, all the more interesting. In 2014, mining giant Glencore sought advice from Appleby, a law firm now notorious for its offshore restructuring practice. In 2017, documents relating to that advice became publicly available following the Paradise Papers leak. Those documents subsequently came to the attention of the Australian Taxation Office.
Written by John Wilson and Kieran Pender. First published in Ethos.Read more
This month at Business Breakfast Club, Laura Scotton of BAL Lawyers discussed debtor management trends, how to set up good debtor management techniques and strategies, and what the next steps are for debtors who still do not pay. The breakfast ended with Katie Innes introducing BAL Lawyers’ new Debt Recovery Partner Site: Enforce Recoveries.
Getting debtor management right is imperative for the sustained financial health of any business. If poorly managed, the consequences for cash flow and growth can put a business at greater risk of insolvency, which may increase the exposure of your personal assets.
Principles of good debtor management should underpin the entire creditor–debtor relationship, right from the inception of all new contracts. The drafting of terms relating to credit and repayments should be specific and unambiguous, with clear obligations and consequences built into every arrangement.
Amongst other things, businesses should have trading terms (in writing) that stipulate the maximum payment time and any specific terms attaching to late payments, such as accrual of interest. Of course, these trading terms must be communicated to your customers and clients before you commence work; preferably they should be signed as well.
Good debtor management also relies on robust internal systems. Your organisation should be set up so that invoicing occurs regularly and that the terms of the invoicing are clear. You should also ensure that you create and maintain comprehensive records; not only is this essential for meeting your legal requirements, it will help your business render invoices quickly and avoid any uncertainty.
Once things are underway, there are five key steps you can take to ensure you set up good debtor management practices within your business:
When Debtors refuse to pay, even after you have followed up with them, sometimes you need to take it further to get action. While communication and relationships are important, you should be proactive about enforcing your rights to avoid getting deeper into the hole. There are several debt recovery tools available including:
Here in the ACT, many businesses can face unique challenges associated with contracting for the provision of goods or services to the Federal or Territory Governments, including late payment. However, changes will soon be coming into effect to ensure that small to medium businesses don’t have to wait as long. From 1 July 2019, the Commonwealth has committed to paying invoices under $1 million within 20 days, and is requiring large businesses seeking to secure government contracts to make the same commitments.
Chasing unpaid invoices isn’t fun, or an effective use of time for any business. Yet cash flow is king for businesses to grow and be sustainable.
BAL Lawyers is the legal partner of a new debt recovery website, Enforce Recoveries, to help businesses get fast payment from debtors. Once you’re logged in, you submit the details of your debtors and outstanding amounts. We then check the debtor details, perform a conflict check and send a letter of demand straight to the debtor.
Read the RiotACT Article on Enforce Recoveries here.Read more
Entering into a retail lease can seem like a risky business. Leases are often drafted in favour of the Landlord. One common example is the ability of a Landlord to terminate the lease to demolish or renovate the leased premises. But what is to prevent a landlord using a demolition clause to terminate the lease purely because a more commercially advantageous tenant is found?
The Retail Leases Act 1994 (NSW) (‘the Act’) provides some protection for tenants when a landlord seeks to exercise its rights under a demolition clause. Section 35 of the Act limits the operation of demolition clauses to provide security against an invalid termination.
Section 35 relevantly provides that:
Despite the protections provided by the Act, disputes often arise where Landlords seek to terminate a lease due to an impending demolition of the premises. This occurred in the recent NSW case of Wynne Avenue Property Pty Ltd v MJHQ Pty Ltd  NSWCATAP 41 where the Landlord sought to create larger premises to be leased to a tenant with more commercial potential. Indeed, the Landlord had signed a Heads of Agreement in respect of the larger premises with the prospective tenant prior to serving a demolition notice on the Tenant.
The case turned on whether the Landlord had provided a genuine proposal and is indicative of how similar circumstances will be dealt with in the ACT. In the ACT, Section 78(a) of the Leases (Retail and Commercial) Act 2001 (ACT) also provides that a Landlord is unable to terminate a lease under a demolition clause unless the Landlord gives the Tenant notice of a genuine proposal to demolish the building within a reasonable time after the lease is terminated.
In Wynne Avenue Property, the Tenant argued that the notice was not valid as there was no genuine proposal to demolish the premises. Rather the motive behind the demolition was to accommodate a more commercial advantageous tenant. On appeal, the Tribunal ruled that in accordance with Blackler v Felpure Pty Ltd  NSWSC 958, the motivation of the Landlord is mostly irrelevant when determining whether a genuine proposal exists (unless it shows that there is no genuine proposal).
While the Act safeguards tenants from arbitrary termination, these protections only extend so far. As Wynne Avenue Property Pty Ltd v MJHQ Pty Ltd shows, tenants can find themselves at a disadvantage due to the drafting terms of the lease. Tenants in any Australian jurisdiction should seek legal advice on the terms of any lease prior to entering into the Lease, particularly when a demolition clause is contained within the lease terms.
If you have any questions about your rights under a demolition clause, please contact the Real Estate Team at BAL Lawyers.Read more
In many Australian households, nestled somewhere in the pantry between the Vegemite and the Nescafé, there will be an unmistakable jar of semi-liquid gold: Kraft Peanut Butter. Or at least, it was Kraft Peanut Butter. The more observant among us may have noticed that two years ago the Kraft logo at the top of the iconic yellow label was quietly replaced by that of Bega, the Australian dairy powerhouse.
In 2017, Mondelez-the company managing Kraft’s Australian operations-sold its market-dominating peanut butter product to Bega for $460 million, including its Port Melbourne production facility, the recipe, and the associated assets and goodwill.
Despite a voluntary changing of the guard, an ugly legal battle between the food giants soon erupted when Kraft (perhaps realising that it had given up on a good thing) attempted to re-enter the Australian market by pairing up with Sanitarium to develop a peanut butter product with the same taste and feel as the product now made by Bega, clothed in virtually indistinguishable packaging.
On 1 May 2019, the Federal Court handed down its judgment, finding that all rights in the ‘peanut butter trade dress’-comprising the distinctive visual elements of the jar, lid and label-had passed to Bega for their exclusive use when they purchased the iconic product.
In his damning judgment, Justice David O’Callaghan found that Kraft’s new product had misled consumers with three little words.
“Loved since 1935”
Although in relatively fine print under the main logo, the emblazoning of that phrase on the labels of Kraft’s peanut butter proved fatal for the US monolith. Justice O’Callaghan found that this, as well as a press release stating that “Kraft Peanut Butter will … be back on Australian supermarket shelves in 2018”, was designed to mislead consumers.
He agreed with the submissions of Bega that this conduct constituted an “obvious attempt by Kraft to create an association to the product which had been produced by the business owned, first, by Kraft Foods Limited, and then by Bega continuously since 1935” and that, in doing so, they were “seeking to attach themselves to a product that they had never produced and give the impression as though they had”.
Justice O’Callaghan held that the suggestion that Kraft would be bringing its peanut butter “back” also constituted misleading and deceptive conduct under the Australian Consumer Law as “[t]hat peanut butter is surely the very peanut butter product that Bega acquired, along with all the other assets. It was thus not [Kraft’s] to bring “back”.”
While the orders flowing from the Court’s findings have yet to be handed down, Kraft is unlikely to escape lightly given the scope of the wrongdoing identified by Justice O’Callaghan in his 182-page judgment. This case serves as a useful reminder of the immense value in intangible assets in the sale of business, including unregistered trademarks, as well as the need to tread carefully when attempt to piggy-back off the goodwill of popular products.
If you have questions about navigating the ins-and-outs of the Australian Consumer Law and/or peanut butter choices, please feel free to get in touch with the Business team at BAL Lawyers.
 Kraft Foods Group Brands LLC v Bega Cheese Limited (No 8)  FCA 593, .
 Kraft Foods Group Brands LLC v Bega Cheese Limited (No 8)  FCA 593, .Read more
Pole and aerial sling gymnastics has become a mainstream form of fitness practiced by many gym enthusiasts. It requires significant muscular endurance and coordination. Proficiency is achieved after proper instruction and rigorous training. It should come as no surprise that this past time is no stranger to injury leading to claims against pole studio owners.
The liability of one particular pole studio owner was recently considered in the ACT Supreme Court. Specifically, in Cornwall v Jenkins atf the iSpin Family Trust  ACTSC 34, the court found that an owner and operator of an aerial sling and pole fitness studio did not breach its duty of care to a participant who sustained injuries as a result of a fall in the aerial sling class, which the court found had an obvious element of risk to it.
Whilst participating in aerial sling classes, the plaintiff was using a fabric sling attached to the ceiling to perform fitness manoeuvres. She had been attending such classes for about a year when she fell from the sling and broke both her wrists. The plaintiff brought an action in negligence against the owner of the fitness business, and as occupier of the premises. Although the circumstances surrounding the accident were contested, the plaintiff claimed that the owner had breached its duty of care as no explicit warning was given about the risks of falling from the sling. It was also alleged that thick crash mats, and directions to use spotters, were not provided.
The Supreme Court did not accept that the owner acted negligently or breached its duty of care.
There had been very few instances of people injuring themselves whilst undertaking the manoeuvre at the studio. The judge found that it was reasonably foreseeable that someone undertaking this above ground manoeuvre would suffer an injury if they fell. However, the judge concluded that a reasonable person would have been able to identify the risk of falling from the sling and the owner’s failure to warn the participant would not have prevented the accident from occurring.
The court accepted evidence that the instructor directed that a spotter should be used for sling manoeuvres. The instructor’s alleged failure to supervise the participant would not have prevented the harm because it was not the instructor’s responsibility to prevent participants from acting against her instructions.
In relation to the issue regarding the mats, both yoga mats and thick crash mats were available for participants to use. Although the instructor did not urge participants to use the thicker mats, the court found that a reasonable person in the owner’s position would not necessarily have insisted upon the use of the crash mats due to the fact that the instructor had never witnessed a fall from the sling or injury during years of involvement with the business.
Although the plaintiff’s injuries were clearly suffered by the fall from the sling, the plaintiff failed to prove that they were causally connected to any breach of the owner’s duty to exercise due care. The court’s verdict thus swung in favour of the studio owner.
 Vairy v Wyong Shire Council  HCA 62; 223 CLR 422,  – .
Written by Bill McCarthy and Maxine Viertmann.Read more
Bradley Allen Love recently obtained a six figure judgment debt for a tenant who had been locked out of his Fyshwick premises, unlawfully, for failing to pay rent. The proceedings involved a number of claims, including a claim for damages for conversion and detinue of goods – being the wrongful dealing with and detention of another’s goods. The claim was defended by the landlord on the basis that the lease had been properly terminated and so the lockout was lawful.
The ACT Magistrates Court decision, Biedrzycki v Bird & Smith  ACTMC 8, contains a number of important lessons for both tenants and landlords of commercial leases.
During the term of the lease, the tenant withheld rent payments on the basis that he was unable to conduct his business due to flooding and an inoperable door to the premises. The non-payment of rent gave rise to a purported notice of termination. Although the tenant contested the termination, the Court held that the landlord was entitled to terminate the lease by reason of the failure to pay rent – a fundamental breach.
Importantly, under ACT tenancy laws, a tenant must not refuse to pay rent if they are able to fully or partially use the leased premises for their normal purpose. Instead, tenants may make an application to the Court to seek relief, if it is necessary to do so. Put more directly, tenants do not have the power to self-assess what discount they should be entitled to. Absent agreement from the landlord, the court should be applied to for a determination of the dispute.
After lockout, the landlord did not allow sufficient access for the tenant to recover his goods and equipment from the property. When the tenant was later granted access once more, some 85 items were missing. During the lockout period, the landlord was the only party with access to the premises.
The Court found that there must be a balanced approach in considering the reasonableness of access to recover property. For the majority of the goods, the court held that conversion was not upheld, as access was ultimately provided by the landlord. However, the 85 missing items were another matter.
The Court found the landlord liable for the replacement cost of the 85 missing items, stating that the landlord was reckless in failing to keep the premises secure, and therefore assumed liability for those losses. While the evidence did not reveal what happened to the missing items, as the only party with access to the premises, the landlord assumed some responsibility to keep the premises secure and act reasonably to allow the tenant access to recover the goods. By failing to do so, the landlord was ordered to pay the tenant $150,000 – albeit the case that the quantum of this award has been appealed to the Supreme Court, with further judicial consideration to follow.
A lease, like any other contract, must be performed according to its terms. The ordinary principles of contract law apply to leases, including principles of termination for breach of contract. However, even if a lease is properly terminated, the relationship between the landlord and tenant may not yet be. Landlords should take care to ensure that they do not assume liability for unrecovered goods when locking tenants out of premises. Where this may occur, ensure you act reasonably by:
What is reasonable will depend on the circumstances. If you are unsure, we recommend you seek legal advice. A failure to do so may be costly.
If you have any questions about failure to pay rent, or what your options are, please get in touch with our Litigation team.
The ACT Civil and Administrative Tribunal (“the ACAT”) is well known as a ‘no costs’ jurisdiction. This epitomizes the intended purposes of ACAT, to be simple, quick, inexpensive and informal. As such, parties to a matter in the ACAT are intended to bear their own costs unless the ACAT orders otherwise, which the ACAT may do if, for example, one party has caused unreasonable delay or obstruction.
However, the cases below demonstrate that, if the parties to the proceedings were parties to a contract that provided for payment of costs incurred in recovering any moneys owed, the ACAT may still enforce the contract and award “costs” in keeping with the contractual terms, notwithstanding the usual rule that each party should bear their own costs of ACAT proceedings.
Trustees of the Roman Catholic Church for the Archdiocese of Canberra and Goulburn as Trustees for St Mary Mackillop College Canberra v Kenningham  ACAT 97
In 2017, the applicant, St Mary Mackillop College, commenced ACAT proceedings to claim unpaid school fees from the respondent who sent her children to the College. The College also claimed legal and other costs incurred by them in seeking to recover the unpaid school fees in accordance with a recovery clause in the signed enrolment form, which entitled the school to recover any expenses incurred by them as a result of late or no payment.
The Tribunal ordered the respondent to pay the applicant the amount of unpaid school fees owing, as well as the expenses properly incurred by the school in taking action to recover the debt. The ACAT did so without entering a “costs order” in the usual way, but instead ordered the expenses incurred in the proceedings were able to be recovered as a contractual debt in accordance with the contract between the parties in the form of the signed enrolment form. In doing so, the ACAT found it was not being asked to exercise any discretion regarding costs, instead it was required only to apply established principles of contract law.
 Bell & de Castella and Rob de Castella’s Smartstart for Kids Ltd  ACAT 66
If you have any questions regarding ACAT or costs jurisdiction, please contact the Litigation group at BAL Lawyers.
Written by Kate Meller and Maxine Viertmann.Read more
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.
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 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.
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).Read more
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:
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.Read more
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.
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.
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.
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.Read more
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.
The major changes to be aware of are as follows:
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.Read more
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:
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:
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.Read more
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.
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:
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:
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)  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:
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.
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.
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. 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.
 Re Cuming; Nicholls v Public Trustee (South Australia)  HCA 32Read more
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:
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.Read more
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 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 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.
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.Read more
In a decision handed down on 28 March 2019, the NSW Civil and Administrative Tribunal has upheld a Council’s decision to provide ‘view only’ access to copyright documents the subject of an access application under the Government Information (Public Access) Act 2009. BAL Lawyers acted for the Council in the proceedings.
The applicant applied for access to information held by the Council relating to a development application for an abattoir adjacent to the applicant’s property. The Council provided a copy of some information to the applicant but decided that other information was protected by copyright. The Council decided that this information should not be copied but instead made available for inspection only. The copyright information consisted of reports prepared by consultants engaged by the proponent such as surveys, stormwater drainage designs and building plans.
The applicant contended that he required copies of the documents to be able to obtain legal advice about whether the development was ‘designated development’ for the purpose of deciding whether to commence legal proceedings regarding the development. He said this was not practicable if he could not provide his lawyers with copies of the information. He disputed that the documents were subject to copyright and argued that the Council had the onus of establishing that:
The Tribunal observed that, under the Copyright Act, the definition of ‘artistic work’ includes ‘drawings’ which in turn is defined to include a diagram, map, chart or plan and that a ‘literary work’ need not have literary merit but must provide information, instruction or literary enjoyment. To be protected by copyright the work must be original but need not be ‘novel’ – it is sufficient if the work was produced by the application of some independent intellectual effort. It cannot simply be a copy of someone else’s work.
While the applicant argued that there was no evidence that the works were original, the Tribunal found that the reports themselves indicated they were the product of independent effort in that they stated who prepared them and the methodology used in their preparation such as site visits, test results and analysis. The Tribunal accepted the Council’s submission that the likelihood that the reports were mere copies was remote given that they had been brought into existence to address aspects of a particular development application lodged with the Council. In those circumstances the Tribunal found that the works were ‘original’.
The applicant then argued that there was no evidence of the authorship of the documents sufficient to establish that their author was a ‘qualified person’ within the meaning of the Copyright Act. The Tribunal noted that a ‘qualified person’ is, for relevant purposes, an Australian citizen or a person resident in Australia. The Tribunal referred to evidence tendered by the Council at the hearing which included a list of the businesses and companies to which the various reports and plans were attributed which showed that in each case their business address was in Australia. The Tribunal observed that the addresses of the authors and/or owners on the reports were also shown as being located in Australia and that the content of the reports and drawings also indicated that they had been created in Australia. On that basis the Tribunal found that it was more likely than not that the authors of the documents were resident in Australia.
The Tribunal concluded that the information comprised original literary and artistic works within the meaning of the Copyright Act and was therefore subject to copyright protection.
The Tribunal observed that copyright is infringed by a person, who is not the owner of the copyright, doing or authorising the doing of an act comprised in the copyright. Reproducing a work in a material form is an act comprised in the copyright. Therefore reproducing or copying the work or authorising such an act will infringe the copyright unless an exception applies. The Tribunal found that the Council would authorise such an act if it gave express or implied permission to the applicant to reproduce the information, including providing copying facilities to enable the applicant to make his own copies.
The applicant argued that the Council must establish that the owner of copyright had not granted an express or implied licence to copy the document. The Council said that no such licence had been granted. While the applicant gave evidence that he had approached the businesses associated with the reports seeking permission to make copies of the information, no such permission had been forthcoming. The Tribunal pointed out that this did not support the applicant’s argument that a licence may have been granted.
The Tribunal then considered the applicant’s argument that a licence to copy the documents should be implied because, in order for the development application to be processed, third parties would need to reproduce the documents. The Tribunal pointed out that s.10.14 of the Environmental Planning and Assessment Act 1979 provides an indemnity for the copying of documents during the development application process but that this does not extend to licensing the copying of documents for the purposes of the GIPA Act.
The applicant also relied on s.83 of the Local Government Act 1993, which provides that one copy of any plans and specifications accompanying an application for approval becomes the property of the Council. The Tribunal found that this did not include the assignment of copyright in the documents.
The Tribunal concluded that, in the absence of any evidence of any express licence having been granted or facts from which it could be implied, the applicant’s argument could not succeed.
The applicant relied on two exceptions in the Copyright Act, s.41 (fair dealing for the purposes of criticism or review) and s.43 (reproduction for purposes of judicial proceedings or professional advice).
In relation to s.41, the Tribunal followed an earlier decision of the Tribunal in which Senior Member Lucy had held that ‘criticism’ meant the act of analysing and judging the quality of a literary or artistic work. The stated purpose of the applicant in this matter was to provide the information to his legal advisors for the purpose of deciding whether to commence legal proceedings. The Tribunal concluded that this was not consistent with wishing to comment on the quality or merits of the information. The Tribunal added that it was the Council’s purpose in copying the documents which was relevant, not the applicant’s, and that the Council’s purpose would be to fulfil its obligations under the GIPA Act. This also did not fall within s.41.
The Tribunal then went on to consider s.43(1) of the Copyright Act which provides an exception in connection with legal proceedings. The Tribunal observed that there were no legal proceedings currently on foot and that the applicant had stated that he wished to obtain legal advice to determine whether to commence proceedings in the Land and Environment Court. This exception therefore did not apply.
The Tribunal referred to s.43(2) of the Copyright Act, which provides that fair dealing with a literary or artistic work does not constitute an infringement of the copyright in the work if it is done for the purpose of the giving of professional advice by a legal practitioner. The Tribunal held, relying on a decision of the Federal Court, that this provision applied only to dealings done for the purpose of giving legal advice and did not extend to dealings for the purpose of seeking legal advice. The exception therefore also did not apply here.
The Tribunal concluded that the Council would infringe copyright if it reproduced, or authorised the applicant to reproduce, the information in question. In those circumstances the Tribunal found that the Council’s decision should be affirmed.
The Tribunal’s decision highlights the complexities that can arise in deciding GIPA applications involving documents subject to copyright.
Of particular interest is the Tribunal’s finding that the Council would infringe copyright if it permitted the applicant to make his own copies of the copyright material. This aspect of the decision means that Councils should be careful in how they apply the advice contained in section 7 of the Knowledge Update published by the Information and Privacy Commission, “Copyright and the GIPA Act: Frequently asked questions for councils” (July 2014) particularly what is said in relation to the use of photocopiers in areas where people access development applications.
For further information please contact Alan Bradbury.
 Sandy v Kiama Municipal Council  NSWCATAD 49
 University of NSW v Moorehouse (1974) 133 CLR 1
 Amos v Central Coast Council  NSWCATAD 101
 Volunteer Eco Students Abroad P/L v Reach Out Volunteers P/L  FCA 731Read more
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.
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.
The following matters may be relevant in deciding how to proceed where a development control order has not been complied with:
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.
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.
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.
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:
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. 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.
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. 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. 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.
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. It is also possible to give a penalty notice for the offence of failing to comply with a development control order.
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.
For further information or assistance, please contact Alan Bradbury and the Local Government & Planning team on (02) 6274 0999.
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.
 Clause 28 of Schedule 5 of the Act.
 Clause 22 of Schedule 5 of the Act.
 The amount which may be claimed for the costs relating to an investigation is capped under 281C of the Regulation.
 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.
 Grant v Brewarrina Shire Council [No. 2]  NSWLEC 54
 s.9.44(b)(v) of the Act.
 Warringah Shire Council v Sedevcic (1987) 10 NSWLR 335
 s.9.57 of the Act.
 Environmental Planning and Assessment Regulation 2000, Schedule5,
 9.57(7) of the ActRead more
Several important changes to the Real Estate Industry Award came into effect on 2 April 2018 which have and will impact the employment of many in the real estate industry.
The new classifications and wage rates cover employees previously classified as property sales, management and strata/community title management associates. Given these changes, there no longer is a distinction and a remuneration difference between property lease and sale agents, and strata and community title management employees. An employee can perform all these duties concurrently during their employment.
The new classifications and pay levels are:
In order to be eligible for commission only employment, employees must meet all of the following requirements:
The commission-only employees must be reviewed every 12 months to ensure they meet the MITA requirements. If MITA requirements are not met, they can no longer be engaged on a commission-only arrangement as that arrangement would breach the Award’s provisions which may trigger financial penalties to the employer. However, these employees would be eligible to be reassessed the following 12 months in order to establish whether they requalify under the MITA requirements. If they do, they can be paid again as commission-only employees.
The new minimum commission-only rate is now 31.5% (excluding GST and conjunctional agent fees) of an employer’s gross commission.
Commission-only employees are still not entitled under the changed to the Award to annual leave loading, however annual leave must be paid at the employee’s base pay rate for their classification at the time of taking leave. Given that, the employers can no longer have arrangements with commission-only employees where they agree that the commission made by the employee will cover all their statutory entitlements like annual leave, sick leave or long service leave. Such arrangements are now unlawful and they must be reconsidered.
If you do have commission-only arrangements with some of your employees, or you are considering employing real estate agents on such arrangements, it would be best practice to have the agreements reviewed by a solicitor with expertise in employment and industrial law. Our team at BAL Lawyers has the expertise to assist with any employment law matters you may have concerning your employment or your business.
Please contact our Employment and Industrial Law Group if you would like your employment agreements reviewed.Read more
Bradley Allen Love is pleased to announce that 7 lawyers from our Canberra office including 4 Legal Directors and 2 Directors, have been named in The Best Lawyers in Australiaâ„¢ 2019.
The following Bradley Allen Love lawyers are included among the Best Lawyers in Australia for 2019:
This is the tenth consecutive year the Alan Bradbury has been acknowledged for his expertise. Managing Legal Director John Wilson makes his seventh appearance in the list, and Mark Love and John Bradley were recognised for their respective practices for the fifth year. This year, David Toole, Ian Meagher and Bill McCarthy have also been recognised for the first time in Best Lawyers.
John Wilson congratulated his colleagues on their achievements.
“A listing in Best Lawyers is a considerable honour, reflecting as it does the praise of fellow practitioners in each speciality,” he said. “For six of my colleagues and I to be included speaks highly to the calibre of our team at Bradley Allen Love.”
Best Lawyers is the oldest and most respected peer-review publication in the legal profession. A listing in Best Lawyers is widely regarded by both clients and legal professionals as a significant honour, conferred on a lawyer by his or her peers. For more than three decades, Best Lawyers lists have earned the respect of the profession, the media, and the public, as the most reliable, unbiased source of legal referrals anywhere.
Best Lawyers is the oldest and most respected attorney ranking service in the world. Since it was first published in 1983, Best Lawyers has become universally regarded as the definitive guide to legal excellence. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation. 83,000 industry leading attorneys are eligible to vote from around the world, and Best Lawyers received almost 10 million evaluations on the legal abilities of other lawyers based on their specific practice areas. Lawyers are not required or allowed to pay a fee to be listed; therefore inclusion in Best Lawyers is considered a singular honour.Read more
When forming “the deal” considerable focus is often given to “the price”, yet the theory goes: “price” trades off against “certainty” and “timing”; each of “certainty” and “timing” apply pressure to the margins of “price”. Placing pressure on “timing” and “certainty” increases the risk of “non-performance”.
The most critical aspect of contract preparation is to address the risk of “non-performance” and so as a procurement contract unfolds, the “risk of non-performance” relies on the purchaser knowing how well the contractor has been performing and, in turn, help the purchaser predict how well the contractor will continue to perform. These tools are:
A core skill in contract preparation is to determine what performance or lead indicators might exist to help manage contract performance. Having a good contract structure will give you options (whether through re-performance, damages or termination rights) to get the goods or services you bargained for; and critical in that is the delivery of the purpose for which the contract exists.
The foreword to the “Better Practice Guide on Developing and Managing Contracts” published by the Australian National Audit Office in 2012 urges: –
“[C]ontract management is not an end in itself, and it is important that all contracting decisions and actions focus on the outcomes that entities are seeking to achieve and cost-effective delivery approaches”
In the event of a contract breach and in the choices and timing of performance and lead indicators, it is paramount that the parties do not lose sight of what it is they committed to do. In order to effectively manage contract performance, the parties must keep that “goal” in mind.
Where the Commonwealth is a party, it is important to note its obligations under with the Public Governance, Performance and Accountability Act 2013 (PGPA Act). Section 15 requires the “accountable authority” of a Commonwealth entity to promote the “proper” use of public resources i.e. uses which are efficient, effective, economical and ethical. All businesses should keep these principles in mind.
Performance and lead indicators exist to support the decisions you might wish to make in the course of contract management.
Identifying what the deliverable is, the means by which the deliverable will be delivered (the steps that need to be in place in that pathway) and the matters that put that delivery pathway at risk, can be used to efficiently and effectively manage the contract by delivering information on a contractors performance in meeting existing contractual requirements and, where appropriate, ensuring that future requirements will also be met.
Performance measures should be designed to alert the contract manager to potential problems so that remedial action can be taken if needed. Identifying areas for potential dispute early can help you guide compliance with the contract or effectively resolve the potential dispute (without that dispute ever arising).
Further, timing your performance and lead indicators to critical stages of contract delivery should coincide with those points when it becomes most convenient to “cut your losses” and run, if you can. There are many considerations in that decision:
It is important to be cognisant that a given procurement may simply be a building block embedded within a broader purpose or design. In those circumstances, the possible consequence of terminating the contract is that there may be a greater impact on the procuring party as opposed to the losses which flow naturally from the breach of “that contract”.
Rectifiable defaults clauses typically deal with issues such as:
While such clauses should be geared towards repairing the relevant default, when partnered with delay clauses, they are often seen as a procedural step towards “termination”, rather than as a contract management tool to keep the contract alive and address the consequences of loss flowing from the works needed to keep the contract on foot.
Complex procurement must rely on the skill, judgement and expertise of the contract party to identify and deal with issues arising not only from the environment into which a deliverable will be put, but issues arising from the development of the delivery and then the way in which the resulting output (or absence of it) will affect the moving environment into which the outcome will be placed.
While much of the assessment and performance risk can and should be controlled through relationship management and good communication, a good procurement contract should be structured so that there is an action plan for performance, clear milestones and deliverables, along with subsequent action that would result from underperformance.
If you have any questions about procurement or contract management, please get in touch with our Business team.
 Developing and Managing Contracts, Better Practice Guide; ANAO (www.anao.gov.au), forward by Ian McPhee, Auditor General. The ANAO website states that post PGPA, “Substantially the content of this Guide, in particular the underlying concepts and principles of better practice, remain relevant.”Read more
Earlier this month, the ACT Supreme Court released the judgment of Hyblewski v Bellerive Homes Pty Ltd  ACTSC 44. This decision has serious implications for defendants involved in actions over defective building works under the Building Act 2004 (ACT) as it raises serious questions regarding the apportionment of liability in the context of building cases in the ACT.
The plaintiff purchased land in the ACT to build a residential property. She sued the first defendant, the builder of the house and the second defendant, the building certifier, for various defects in building works. During the course of the hearing, the plaintiff settled with the builder, so the case proceeded against the certifier only.
The plaintiff claimed damages against the certifier for a number of defects in the construction of the building, including poor brickwork, the failure to provide an adequate foundation for the building works, the failure to install a moisture barrier between slabs and the failure to build nib walls in accordance with the approved plans.
The certifier denied his responsibility for the defects, arguing that the standard of care required by the certifier is lessened by the fact that the builder has to provide statutory warranties. He also argued that issues relating to aesthetic appearance and quality of building work were not the certifier’s responsibility, and that it was not his role to second guess variations from the approved plans. Both of these arguments were rejected by the Court.
The certifier was found to be liable for the defects in the building works. The Court held that if the certifier had performed his statutory and contractual duties with reasonable care and skill, he would have identified the defects and notified the builder such that the builder would have remedied them. Whilst the certifier was not required to detect and rectify every defect in the works, the judge found that these particular defects were such that the certifier should have caused them to be remedied. As such, the certifier’s breaches were found to cause the whole of the loss suffered.
With regards to apportioning liability, the Building Act 2004 (ACT) only permits apportionment of liability where each defendant was found to be liable. In this case, the certifier was the only defendant who was found to be liable, since the other previous defendant (the builder) had settled with the plaintiff before judgment. Therefore, apportionment of liability to the builder was not available, and the certifier had to bear all liability for the damage suffered.
If you need advice or further clarification on the decision, please do not hesitate to contact the Litigation Team.
Written by Kate Meller and Maxine Viertmann.Read more
On 21 February 2019, the Residential Tenancies Amendment Bill 2018 (No 2) (ACT) passed in nearly identical form as was originally presented in the Legislative Assembly on 1 November 2018. With a default commencement date of 5 March 2020 (and unless an earlier commencement date is fixed by notice) agents have plenty of time to educate themselves and seek guidance on the changes. Though these changes appear to be a conscious push to move the ACT to a more tenant friendly jurisdiction, it does also bring with it the risk of an increase in disputes and other applications before the ACAT. It is important that agents recognise this risk and integrate procedures to properly accommodate the changes to ensure both their business and the rights of the landlord remain adequately protected and (as far as is possible) uninterrupted.
One of the major changes introduced by the Bill is the restriction on a landlord’s right to refuse a tenant’s application to renovate or modify the premises. The grounds for refusal depend on the type of modification requested:
For a request to undertake a special modification, the landlord’s consent will be taken to have been granted if the landlord fails to make an application to the ACAT (for an order to refuse the modification) within 14 days of the tenant making the request. It is imperative then that an agent, upon receiving a modification application from a tenant, passes the tenant’s request onto the landlord as soon as possible.
The modification, whether special or otherwise, is not at the complete discretion of the tenant, however, as a landlord may impose reasonable conditions on the tenant’s modifications. Such conditions might include that the tenant:
If the modifications improve the premises, landlords should also consider including a condition that the modifications are to remain in the premises on expiry of the agreement, though in such circumstances the tenant is likely to expect reasonable compensation or a contribution from the landlord.
Another change introduced by the Bill is the restriction on a landlord’s right to decline a tenant’s application for the keeping of pets on the premises where there is provision in the tenancy agreement allowing the landlord to do so. Like modifications, a landlord may impose conditions, but these conditions may only relate to the number of animals or the cleaning or maintenance of the premises. For any other conditions or for a landlord to validly refuse the tenant’s request, the landlord must apply to the ACAT for approval.
Where an agent receives such a request from a tenant the agent should carefully consider the conditions to be imposed so as to provide the landlord with appropriate options. These might include that the carpet is professionally cleaned (perhaps even on a number of occasions) during the term of the tenant’s occupation or that the premises is fumigated on expiry of the tenant’s occupation.
Another major change introduced by the Bill is the limitation on the fee payable by the tenant under a ‘break lease clause’.
Though a break lease clause is optional, under the new changes, if the tenant terminates the tenancy under a break lease clause during the first half of the fixed term (subject to the fixed term being 3 years or less), the tenant will be liable for:
but where the landlord enters into a new tenancy agreement for the premises prior to the expiry of the above periods (6 weeks or 4 weeks) the liability of the tenant will be reduced by an amount equal to the rent paid by the new tenant during that period. Essentially, the liability of the tenant is capped to the actual loss (in terms of rent at least) suffered by the landlord.
In relation to the tenant’s potential liability to the landlord, other than for rent, under the Bill this is now limited to:
but only where the tenant vacates the premises more than 4 weeks before the end of the fixed term.
It should be noted, however, that these limitations only apply where the landlord enters into a new tenancy agreement within the defined period.
By capping the landlord’s right to recover from the tenant the actual loss suffered, particularly in relation to having to advertise and re-let the premises, this change is likely to lead landlords to refuse to include a break lease clause in the agreement and to instead rely on the provisions of the Act and their rights under contract law.
Though the changes introduced by the Bill do bring with them an inherent risk of encouraging the parties, whether in dispute or simply seeking clarification or approval, to seek an order from the ACAT and thereby overburden the services of the ACAT, the managing agent remains in a unique position to guide the parties to a mutual and commercial resolution within the framework of the Act and the prescribed tenancy terms. Agents then, should take the opportunity now to consider the repercussions of the changes and to start the education process with their landlord clients before the changes take effect.
If you need advice or further clarification on the changes, please do not hesitate to contact the BAL Real Estate Team.Read more
This month at Business Breakfast Club Riley Berry of BAL Lawyers discussed unconscionable conduct and undue influence with a focus on the Australian Consumer Law and what these factors mean for commercial contracts.
There are several instances where a Court will overturn a contract based on the conduct of one of the parties prior to making the contract. Two of the most prevalent are unconscionable conduct and undue influence. Unconscionable conduct requires the innocent party to be subject to a special disadvantage “which seriously affects the ability of the innocent party to make a judgement as to the [the innocent party’s] own self-interest”. The other party must also unconscientiously take advantage of that special disadvantage. There are two types of undue influence: Actual undue influence where it can be proven that one person exerted influence over another to have them enter into the contract, and presumed undue influence which is a deemed relationship of influence were one party is antecedent to the other party. The spheres of undue influence and unconscionable conduct overlap and the line between the two is often blurred.
Only a Court can make a determination if there has been unconscionable conduct or undue influence. As a result if you feel that you have been a victim of this, there are few options except to litigate or to file a complaint with ACCC. Alternately if you are in a position of greater bargaining power and entering into an agreement it is important to ensure that none of your actions risk being viewed as unconscionable or the contract may be undermined by a Court. The best option is to be aware of what actions a Court might consider unconscionable, and avoid engaging in those actions, or avoid entering into contracts with a party engaging in conduct that may be considered unconscionable.
For more information, please contact Riley Berry. The next Business Breakfast Club will be held on 12 April 2019 on “Advertising and Promotion – Pitfalls and Risks”. If you would like to attend, please click here to go to the event listing.Read more
With 2019 being an election year there will be a significant increase in political donations being made to candidates, political parties and special interest groups. The recent changes to the Commonwealth Electoral Act 1918 (the CEA) have manifestly changed the definition of “electoral matter”, and since this phrase is the legislative “hook” for obligations and disclosures required by the CEA, it is important to be aware of how these changes affect your potential involvement in political advocacy.
The CEA has amended the definition of “electoral matter” to matter which has a “dominant purpose of influencing the way voters vote”. The risks associated with the subjectivity of the dominant purpose test, and the fine distinction between a publication being “public education” and an “electoral matter”, should prompt entities to consider whether they need to register as a political campaigner under the CEA. If the electoral expenditure of an entity has:
the entity must register as a “political campaigner” within 90 days of exceeding the threshold or risk civil penalties of $42,000 and in some circumstances up to three times that amount.
Parliament has tightened the rules regarding foreign donations and entities should be conscious of these rules particularly where their cash flow includes international revenue streams. Entities that:
It is highly unlikely that an Australian entity will face any issues where their cash flow includes international revenue streams. Indeed subsidiaries of foreign companies directly fall within the scope of the exceptions to what is a “foreign donor” under the CEA. However an issue can arise where the foreign entity “gives” to its Australian entity a sum which is:
Further, where a “scheme” was thought to exist for the purpose of avoiding CEA restrictions, then the receipt of the “gift” or “expenditure” will have infringed the prohibition against foreign donations. Therefore an Australian subsidiary that funded a political gift or electoral expenditure would be well advised to ensure that it did so from its own profits (where those profits were derived from Australian activities or activities that had Australia as its head/principal office).
Other salient changes to be aware of:
The new regime is intended to be protective of the public putting the onus of a pro-disclosure regime on entities incurring expenses that may be related to electoral matters. Entities interested in making donations or publishing views should explore and consider their legal liabilities before doing so.
If you have any questions or concerns about your obligations under the CEA, get in touch with our Business law team.Read more
In early 2018, the High Court of Australia handed down the landmark cases of Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd  HCA 4. The case regarded the reviewability of adjudicator determinations under the Building and Construction Industry Security of Payment Act 1999 (NSW), which has comparable counterparts in other states and territories in Australia, including the ACT (the SOP Legislation). The decision has serious ramifications for those making payment claims under SOP Legislation. Ultimately, the High Court decided that errors of fact (as opposed to errors of law) made by an adjudicator under the security of payment regime are not reviewable or capable of being quashed by courts.
Non-jurisdictional errors are commonly known as ‘errors of fact’. As the colloquial description suggests, they are errors that do not involve a question of law, but rather as simply factual points which an adjudicator may decide upon, albeit wrongly. If an adjudicator makes an ‘error of fact’ it will not affect their power or authority to make a decision.
However, if an adjudicator makes a jurisdictional error (that is, an ‘error of law’), it means that he or she may lack the power or authority to have made the determination in the first place. Given this, and notwithstanding the intended binding effect of the SOP Legislation, jurisdictional errors can be quashed by the courts.
This said, the distinction between non-jurisdictional error and jurisdictional error is not always clear cut. Much turns on the body making the determination, and the legislative framework underpinning the decision and empowering the decision maker. This difficult distinction has plagued judges for many years.
Probuild Constructions subcontracted Shade Systems to supply and install external louvres for an apartment development. Shade served on Probuild a ‘payment claim’ under the NSW SOP Legislation. In response Probuild provided a ‘payment schedule’ which denied liability on the basis that a higher amount of liquidated damages was payable in Probuild’s favour in relation to delays of Shade in its works.
The adjudicator rejected Probuild’s liquidated damages claim on the basis that liquidated damages could not be calculated until either practical completion (of the works) or termination of the subcontract, and concluded that Probuild was to pay Shade under the claim.
Probuild sought to quash the determination of the adjudicator on the basis of non-jurisdictional errors, meaning that they contained errors of fact, namely that the adjudicator mistakenly considered that:
The question for the High Court in this case was this: Are errors of fact/non-jurisdictional errors in decisions under the SOP Legislation reviewable by the courts?
Ultimately, the High Court held that adjudicator determinations under the SOP Legislation are not reviewable by courts, even if such determinations do contain errors of fact.
The majority held that although the SOP Legislation does not expressly prohibit courts from reviewing non-jurisdictional error, the Act does not intend to permit such review either. Thus, to allow the courts to intervene over factual arguments would conflict with the overarching objectives of the SOP Legislation.
In reaching this conclusion, the High Court specifically took into account:
If you have any questions or concerns about adjudicator decisions or non-jurisdictional error, get in touch with our Litigation team.
Written by Kate Meller with assistance from Maxine Viertmann.
 Fifty Property Investments Pty Ltd v O’Mara  NSWSC 428,  citing Brodyn
 Read more
A dispute between a commercial tenant and its landlord over the air-conditioning (AC) performance in the leased premises has resulted in the tenant abandoning its lease, and the landlord, in attempting to enforce its rights under the lease, being held to have repudiated the lease by the Victorian Civil and Administrative Tribunal (Tribunal). Given the frequent tensions that arise between landlords and tenants over this repeatedly temperamental item of plant in buildings, the Victorian decision sounds a warning to all landlords of commercial property.
The decision made in October 2018 was in the case of S 3 Sth Melb Pty Ltd v Red Pepper Property Group Pty Ltd. The facts of the case were of particular interest as they involved a series of agreements in relation to the AC made between the parties, the details of which were sequentially altered and revised verbally prior to the final lease documentation being executed. This will feel as familiar territory for those involved in commercial leasing. Minor details are often not compensated for in the initial agreement, or are subject to change due to other circumstances. What tends to remain consistent however through the negotiating process is the fundamental commercial agreement which stipulates who has responsibility or liability.
The fundamental agreement was a key consideration in this case as well. The AC special condition in the lease ended up being fairly typical. It made the tenant responsible for maintenance and servicing of the AC, however, the landlord was responsible for capital repairs. This is a very common arrangement in self-contained premises where the AC services a single tenant. The AC in this premises unit was old and, despite being refurbished by the landlord at the start of the lease, it performed so poorly that the tenant who was operating a fitness centre eventually lost customers to other competitors. The dispute between the parties dragged on for over 12 months with frequent periods of non-communication. As expected, the tenant relied on the provision of the lease that required the landlord to address repairs of a capital nature whilst the landlord in return argued that the problem fell within the tenant’s maintenance obligations. The Tribunal considered various arguments as to specific repairs and whether they constituted a tenant or landlord responsibility, but ultimately the Tribunal focused on what it deemed a fundamental term of the lease.
Although the parties eventually agreed to continue with the old (refurbished) AC system, the original agreement, as actually drafted in the Lease, was that the landlord had agreed to install AC to service the premises. This agreement was consistent from the outset and was also documented in a Heads of Agreement, which the Tribunal recognised to be a fundamental agreement between the parties. Therefore by failing to carry out repairs (even disputed repairs) or failing to replace the AC, the landlord was, in the opinion of the Tribunal, actually failing in its contractual duty to provide an AC system which could service the premises and this responsibility was given priority over any failure to maintain by the tenant. It was that failure of a fundamental term of the lease that constituted a repudiation by the landlord. The result was that the tenant could legally walk away from the lease.
What does all this mean? Even though this was a Victorian decision, the reasoning given by that Tribunal could have implications in the ACT where similar cases are examined. Landlords and agents acting on behalf of landlords will need to exercise caution on how commercial agreements between the parties are represented between parties. Needless to say, standard conditions drafted in leases should not be taken for granted as to their effect and care should be taken to record the specifics of the agreement between the parties. Of equal importance is the conduct of the parties in dealing with any disputes. In most cases a tenant will be of the view that AC is a fundamental component of its ability to conduct its business in a leased premises. Similarly a landlord will expect that the AC will function adequately forever if the tenant maintains it as agreed. The potential for disagreement when a problem occurs is high. Landlords should therefore be explicit as to the extent of their commitment towards AC plant from the outset. Upgrading, replacing or repairing the AC should be treated as a specific consideration with care to identify that the cost of such commitment has been contemplated in the final commercial terms of the lease agreement. Otherwise, the risk should be clearly earmarked as resting with the tenant to accept the AC (or any other specific item or service) in the condition as at the commencement of the lease.
Further, given the outcome of this case, it would be prudent to obtain legal advice immediately once a dispute arises. The circumstances of each case will always be different and sometimes the drafting in the lease will not always be accommodating. Seeking advice from an experienced lawyer could influence the strategy on how a party approaches and responds to a dispute. It is reasonable to imagine that the landlord in this case envisaged positive prospects of success or a worst case scenario where the AC had to be replaced at its cost. The likelihood of the Tribunal making a finding of repudiation against the landlord for failure to replace the AC system in its entirety and the subsequent loss of the value of the lease probably did not enter into the equation and was undoubtedly unexpected. Therefore, to reduce the risk of the unexpected it may be wiser for affected parties to contact their legal advisers before committing to a course of action.
The Landlord in this case has been successful in appealing the earlier decision of the Tribunal. The Supreme Court of Victoria has held that the Tribunal wrongly construed the Landlords obligations under the Lease, specifically the obligation to install an AC unit to service the Premises. Further, the Supreme Court ruled that the doctrine of repudiation has been misapplied by the Tribunal.
The Supreme Court’s reasoning again focused on the facts and the drafting in the Lease, highlighting some important points:
The drafting and the manner in which the obligations were expressed were relevant in the Supreme Court’s reasoning.
Importantly, the Supreme Court’s decision commented on the application of the principles of repudiation, emphasising that a Contract cannot be terminated by a party not willing or able to perform its own obligations under the Contract. In this case, the Tenant was also in breach for failing to enter into the requisite maintenance contract for the AC.Read more
Companies are traditionally chosen as the vehicle of choice for operating a business; it is a separate legal entity, with the same rights as a natural person and can incur debt, sue and be sued. It has a ‘corporate veil’ that is designed to limit a shareholder’s and director’s liability – the people are not generally liable for the company’s debts.
Despite the ‘corporate veil’ enabling people to pursue social and commercial ventures without significant fear of personal liability, company directors nonetheless remain subject to a vast array of duties in their individual capacities; these duties tend to expose the director to a form of personal liability. The Corporations Act 2001 (Cth) requires directors to comply with fundamental duties of care, and at all times to act in the best interests of their companies.
Breaches of these directors’ duties can arise in the context of breaches of the law by the company itself giving rise to the notion of ‘stepping stone’ liability where a company contravention leads to the establishment of a director’s individual liability for failing to prevent that contravention.
The earlier approaches to stepping stone liability were dealt with in a series of proceedings brought by ASIC against the directors of the James Hardie group of companies (JHIL) where those directors approved the separation of two subsidiaries facing asbestos related liabilities from the group. As part of the separation, JHIL announced on the ASX that there would be funds available to meet present and future asbestos related claims made against the separated companies.
It was subsequently discovered that this ASX announcement contained misleading statements about the sufficiency of the funds available, thus breaching the ongoing disclosure requirements of the ASX and constituting the first stepping stone. ASIC argued (and the Court subsequently found) that it followed that the directors had breached their duty to act with care and diligence by approving the announcement.
While this is a straightforward example of stepping stone liability, it is not always this simple.
As the recent case of ASIC v Cassimatis (No 8)  FCA 1023 made clear, it is entirely possible to have one step without the other. For example:
The Cassimatis case concerned the directors of a financial advice company (the defunct Storm Financial Ltd) who had allowed the company to provide inappropriate financial advice to clients without having a reasonable basis to do so in breach of the Corporations Act.
The Federal Court found Mr and Mrs Cassimatis breached their directors’ duties by permitting, or failing to prevent Storm from providing inappropriate investment advice. In particular the Court found that a reasonable director with the responsibilities of the Cassimatises would have been aware of a strong likelihood of contravention of the law and would have taken precautions to prevent it.
Cassimatis established a ‘balancing act’. Justice Edelman confirmed that the relevant test of whether a director has exercised their duties will require ‘balancing the foreseeable risk of harm against the potential benefits that could reasonably have been expected to accrue to the company from the conduct in question’. Edelman J further clarified that harm encompassed ‘any of the interests of the corporation’ and that the task of risk-benefit balancing required consideration of what a reasonable person would have done in response to the risk in light of the particular circumstances.
The Cassimatis case is a helpful reminder to company directors that strict compliance with a company’s legal obligations may not always be enough to shield themselves from personal liability, and that they must always exercise their duties honestly, and in the bests interests of the company.
If you have any questions or concerns about your obligations as a company director, get in touch with our Business law team.
Written by Lauren Babic with thanks to Bryce Robinson
 ASIC v Cassimatis (No 8)  FCA 1023, -.
 ASIC v Cassimatis (No 8)  FCA 1023, -.Read more
Since its passing on 9 December 2018, controversy has tainted the Telecommunications and Other Legislation Amendment (Assistance and Access) Act 2018, primarily centring on the need to balance national security concerns and the right to privacy. Put forward by the Department of Home Affairs, the bill was proposed to keep pace with the increasing use of encrypted communications. It was designed to aid law enforcement and intelligence agencies to combat serious crimes, with an emphasis on “terrorism”. In fulfilling its design, it amends several statutes, all with the aim of empowering these agencies to access encrypted electronic devices that would be considered “private”. The amendments further seek to protect law enforcement and intelligence agencies, and providers from legal action. For the agencies, this is done through amending the Administrative Decisions (Judicial Review) Act 1977 to ensure that the actions carried out under the new legislation are not subject to judicial review. For those assisting law enforcement agencies, the Criminal Code Act 1995 is amended to offer protection from criminal liability, provided the conduct is consistent with the requests.
While the effect of this legislation has the potential to ripple outwards, it primarily concerns ‘designated communications providers’, which include carriers, carriage service providers, device manufacturers, and software and application providers. Thus, virtually all electronic communications will be open to scrutiny as there won’t appear to be a reason to exclude device or carriage service suppliers.
The core purpose of this legislation is to create a new scheme that regulates communication providers while allowing them to voluntarily assist intelligence and law enforcement agencies. Yet the legislation empowers these agencies to compel providers to grant them access to encrypted data. There are three mechanisms by which this can occur:
While the former is a voluntarily action, the latter two are mandatory notices; if a communication provider does not comply with a notice, civil penalty provisions apply (with penalties up to $9,999,990).
Both technical assistance requests and technical assistance notices involve law enforcement and intelligence agencies asking or compelling communications providers to assist them in accessing encrypted data where they are already capable of such assistance. Technical capability notices, however, involve these agencies compelling communications providers to create a new capability that gives the law enforcement and intelligence agencies access. The latter is the most controversial, and as such involves a few caveats, one being that the notice cannot require the provider to construct a capability that removes electronic protection. In other words, law enforcement and intelligence agencies cannot compel companies to create a built-in ‘backdoor’ to their system.
Additionally, technical assistance notices and technical capability notices can only be issued if:
Technical assistance requests can be issued for these reasons and to protect Australia’s national economic wellbeing.
Moreover, any request or notice can only be issued if:
Even with the accountability mechanisms described above, concerns still exist about the powers granted to government officials. Scattered throughout the legislation are provisions that enable law enforcement and intelligence agencies to bypass the restrictions “if not practicable”. For example, before issuing technical capability notices it is necessary to provide a written consultation notice to the communication provider, informing them of the proposed notice and inviting them to make submissions to alter the notice. This period must run for at least 28 days. However, section 317W(3) allows this period of consultation to be ignored if it is impractical or if the Attorney-General is ‘satisfied that the technical capability notice should be given as a matter of urgency’.
Ultimately, this newly passed legislation alters the landscape of Australian cyber security. With more changes potentially on the horizon, it would be prudent for those specifically targeted by these changes to understand their obligations.
What it means for us, is that we have more reason to remain vigilant as to what, politically, passes for our “national interest”, and also that we have a means of monitoring potential corrupt access and use of not only these powers but the information that is revealed.
For more information on the Telecommunications and Other Legislation Amendment (Assistance and Access) Act 2018, or any questions relating to this article, please contact Mark Love.
 Telecommunications and other Legislation Amendment (Assistance and Access) Act 2018, s 317C.
 Ibid, s 317ZA(3) and 317ZB(1): 47,619 penalty units for a body corporate; 238 penalty units for any other person or entity.
 Ibid, s 317ZGA(1).
 Ibid, s 317A,.317A and s317B. A serious Australian offence is one which carries a penalty of a minimum 3 year imprisonment.
 s 317P (for technical assistance requests); and s 317V (for technical capability notices).
 Ibid, s 317W(1).
 Ibid, s 317W3(a)and (b).Read more
With the fire to the Melbourne building, Neo200, on 4 February 2019, combustible cladding has again been thrust into focus as a continuing safety risk. Fortunately, no one was injured in the blaze however it is a timely reminder for owners of their responsibilities under the Environmental Planning and Assessment Amendment (Identification of Buildings with External Combustible Cladding) Regulation 2018 (NSW) (the Regulation).
The Regulation applies to:
External combustible cladding is defined in the Regulation as:
The Regulation does not apply to buildings which are solely used for retail or commercial purposes or houses.
The owner or Owners Corporation must register the building on the NSW Cladding Registration Portal.
For existing buildings, registration is required by 22 February 2019. For newly constructed buildings, registration must occur within 4 weeks after the building is first occupied. A failure to register will incur a $1,500 fine for individuals or a $3,000 fine for corporations.
If an owner or Owners Corporation is unsure whether combustible cladding has been applied to the building, they should seek advice from an appropriately qualified building professional.
Seeking legal advice will ensure that you are aware of your obligations and understand the importance of the cladding regulations. If you have any questions about cladding regulations, please get in touch with Julian Pozza or reach out to our Real Estate Team.Read more
Development control orders (orders) are powerful tools for a council to use to deal with compliance issues. Orders are given in accordance with s.9.34 and Schedule 5 of the Environmental Planning and Assessment Act 1979 (the Act), and failure to comply with an order can have significant financial and legal consequences for the recipient.
This Essential Guide will assist local councils to determine when it is appropriate to give an order, how to give a valid order, and what to do in an emergency.
A council has the power to give any order identified in the Table in Schedule 5 of the Act in the circumstances described in that Table. Column 1 of the Table identifies the types of orders a council can give; Column 2 outlines the circumstances in which the various kinds of order can be given; and Column 3 identifies who the order can be given to.
A council must determine whether in the individual circumstances of each case it is appropriate to give an order. Some of the things to be considered are:
The council (or an employee with the appropriate delegation) must first give notice to the person to whom the proposed order is directed of the following:
If the Council ultimately decides to give the order, the terms of the order will need to closely follow the terms of the proposed order set out in this notice. Some care should therefore be taken when drafting the notice to ensure the terms of the proposed order are clear and able to be readily understood by the person to whom it is given.
The language used and information contained in a notice is very important and will affect the clarity, validity, and enforceability of the proposed order – language used in the notice should be consistent. It is also important that the notice correctly identifies the recipient (making sure that the recipient is a legal person and not, for example, simply a business name), their relationship to the land, why they are being given the notice), and the premises (lot/DP reference and street address).
The following checklist can assist to ensure a notice (and therefore an order) is drafted correctly:
For certain kinds of orders, notice must also be given to other people:
A notice, and any subsequent order, must be served using one of the methods prescribed in s.10.11 of the Act. Service must be effected correctly for the notice and any subsequent order to be enforceable.
When a council gives a notice expressing its intention to give an order, sometimes the recipient will remedy the breach of their own accord. If the breach has been remedied, it would be inappropriate and possibly unlawful for the Council to proceed to give the order.
If the recipient of the notice makes representations to the council or nominated person during the time period detailed in the notice, the council must consider those representations before determining whether to give the proposed order. A failure to consider any such representations may invalidate a subsequent order, so it is important to make sure a record is made of how the representations have been taken into account. It is also good practice to set out the consideration of the representations in the body of any subsequent order. Having considered any representations, the council may proceed to give the recipient an order if it is still appropriate to do so (either in the terms proposed in the notice, or amended), or not give an order.
If given, an order must state that the recipient has the right to appeal against the order to the Land and Environment Court of NSW (the LEC) within 28 days of the date of service of the order.
Reasons for giving the order must also be provided to the recipient at the same time (either within the order itself or in an accompanying document), except in an emergency. A council should ensure that the reasons are not a mere restatement of the circumstances specified in the Table in Schedule 5 in which the order may be given. The reasons should be sufficient to enable the recipient to be able to understand why the order has been given and to decide whether to accept the order or to appeal.
An order takes effect from the time of service, or a later time if it is specified in the order itself. Methods of service are set out in s.10.11 of the Act.
A council may proceed straight to giving an order when it is expressed to be given in an emergency. A number of requirements are dispensed with or are different in an emergency:
There is no definition of an “emergency” under the Act. While a council has some discretion to decide whether an emergency exists, its decision needs to be justifiable. To be an emergency, there will usually be harm of some kind if the order is not given.
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.
Please note that the law detailed in this Essential Guide is correct as at February 12, 2019.Read more
The Leases (Commercial and Retail) Act 2001 (ACT) states that a Disclosure Statement must be issued to a tenant but by who, when and what information needs to be included?
For a new lease, the landlord must give the tenant a Disclosure Statement. Where there is an assignment of lease, the tenant must provide a copy of the Disclosure Statement (issued by the landlord) to the assignee.
Where the tenant intends to exercise an option to renew and the tenant requests a Disclosure Statement, the landlord must give the tenant a Disclosure Statement. If the tenant can’t find their copy, they can ask the landlord for a copy to give to the potential assignee or subtenant.
A summary of the terms of the lease and a statement as to the outgoings to be recovered from the tenant (if any).
It is important to note that the Leases Act doesn’t just apply to a ‘lease’, it also applies to some licences meaning that a landlord may be required to provide a Disclosure Statement to a licensee.
A landlord must provide the Disclosure Statement at least 14 days prior to the lease being entered into. That is, upon execution of the lease by the parties or the tenant entering into possession of the premises (whichever is earlier).
If a tenant exercises an option to renew a lease and requests a Disclosure Statement, a landlord must provide the Disclosure Statement within 14 days of the tenant’s request.
A Disclosure Statement must be in the prescribed form, state the landlord’s accounting period (if not a financial year) and contain a written estimate of the outgoings to be recovered from the tenant. It is particularly important for the nature of all outgoings to be stated as they may not otherwise be recoverable from the tenant.
Where the landlord becomes aware of a significant change to the information contained in the Disclosure Statement, the landlord must tell the tenant as soon as possible in writing.
If the landlord is required to provide a Disclosure Statement and fails to do so within the required timeframes, the tenant may terminate the lease within the first three (3) months of the term. In some circumstances though, the landlord may not be able to meet those time frames and in those cases the landlord should request that the tenant waive the time limits. This requires the tenant to obtain independent legal advice and have a “Section 30 Certificate” signed by a solicitor.
The Disclosure Statement is an important part of the lease agreement and the landlord should consider the information to be included in the Disclosure Statement carefully. A failure to state certain information (such as the nature of the outgoings) or state information correctly can lead to serious financial consequences.
Seeking legal advice will ensure that you are aware of your obligations and understand the importance of the Disclosure Statement. If you have any questions about leasing, please get in touch with Benjamin Grady, Sandy Meaney or reach out to our Real Estate Team.Read more
This month at Business Breakfast Club, Lauren Babic of BAL Lawyers discussed unfair contract terms with a specific focus on the remedies available for small businesses and consumers, and the Australian Competition and Consumer Commission’s (ACCC) approach to unfair contract terms. We also had a roundtable discussion about the recent report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Terms that allow one party to unilaterally change the contract without the consent of the other party should be a warning sign that the terms may be unfair. We looked at the case of Australian Competition and Consumer Commission v Servcorp Limited  FCA 1044 and specifically the contracts in that case to identify any unfair terms. The clauses the Court considered unfair related to limiting the performance of the contract, no reciprocal indemnity clauses, automatic renewal clauses, and terminating the contract for convenience without giving the other party any equal rights which might balance the relationship.
Once a term is deemed to be unfair, that term becomes void and is no longer binding on the parties. The rest of the contract will continue to operate without the unfair term. A party who seeks to impose or enforce an unfair term may be held to be engaging in unconscionable conduct or misleading and deceptive conduct.
In 2016, the ACCC conducted a review of standard form contracts in a number of industries. Of the contracts reviewed, the most commonly occurring problems were terms that allowed the contract provider to unilaterally vary all terms, broad and unreasonable power to protect themselves against loss or damage, and an unreasonable ability to terminate the contract.
If you find an unfair term in a contract to which you are a party, the ACCC recommends that you:
For more information, please contact Lauren Babic. The next Business Breakfast Club will be held on 8 March 2019 on Undue Influence and Unconscionable Conduct: What Thorne v Kennedy means for business contracts. If you would like to attend, please contact us.Read more
The issue of how to approach the protection of intellectual property (sometimes referred to as “IP“) can often be a source of difficulty for start-ups. Around 67% of businesses with 0 to 4 employees use no form of IP protection, which can put a start-up at risk of reverse engineering or replication of ideas. We have set out below a brief overview of the main protection methods-copyright, trademarks, patents and trade secrets-as well as some top tips for start-ups.
Copyright is a form of IP that protects the original expression of ideas, and gives the creator the right to determine when and how their work can be used. Protection is free and applies automatically when material is created. It doesn’t protect the ideas themselves, information, styles, techniques, names or phrases. Copyright protects the work itself, be it textual material, computer programs or an artistic work. In practical terms, the capacity to rely on this “right” is founded in proof that the “copier” had access to a version that has been copied without authorisation.
A trade mark protects your brand, and can be licensed or sold. It is not merely a business name, nor is it simply a design. Trade marks are commonly used to protect logos, pictures, particular words or phrases, movements, packaging, or some combination of these things. A trade mark must meet the conditions of the Trade Marks Act 1995 and must distinguish your goods and services from the goods and services of other traders. To gain protection, the trade mark must be registered with IP Australia. You must continue to actively use the mark in the course of business, otherwise it may be removed.
A patent is a legally enforceable right for a device, substance, method or process. It effectively grants the owner a monopoly for a designated period of time as it allows an owner to stop others from manufacturing, using or selling their invention in Australia without permission. The invention or process must be new, useful and either inventive or innovative. In Australia, patent applications must be filed with IP Australia. Patents afford a very strong form of protection for many years, but can often involve a lot of time, effort and money. The decision to patent or not will therefore involve a balancing act between these factors and the potential commercial returns.
Trade secrets are not registered. It is proprietary knowledge that is kept out of competitors’ hands by other means, such as requiring that employees and distributors sign confidentiality agreements. Iconic recipes are protected in this manne, for example.
IP protection can be a difficult area to navigate for start-ups. Ensuring your ideas are protected is critical for future success, and so the most important tip is to seek professional advice on how best to protect your IP. If you need advice on how to protect and manage IP within your organisation, get in contact with our Business team.
 Australian Bureau of Statistics 2012Read more
It has been almost 18 months (from 1 July 2017) since the Federal Government imposed a $1.6 million cap on the total amount that a member can transfer into the tax-free pension phase (known as the “Transfer Balance Cap”).
Now that some time has passed, certain irregularities have been brought to light with regard to the treatment of reversionary Commonwealth Superannuation Scheme (CSS) and Public Sector Superannuation Scheme (PSS) pensions and the Transfer Balance Cap.
This article looks at the current law regarding the Transfer Balance Cap generally and how the Transfer Balance Cap is affected when a “reversionary pensioner” is in receipt of a reversionary CSS or PSS pension. Some of the principles raised in this article will also apply to other defined benefit pension but for this article, we will examine only the CSS and PSS scheme.
The Transfer Balance Cap system operates via a “credits and debits” system – a credit is an assessment against the cap and a debit arises to reduce the assessment against the cap.
The following “ledger” provides some examples of credits and debits against the Transfer Balance Cap:
|Transfer Balance Cap Ledger – $1.6 Million|
(assessment against cap)
(reduction of assessment against cap)
Division 294 of the Income Tax Assessment Act 1997 (“The Act“) deals with the calculation of Transfer Balance Caps and section 294-25 of the Act provides the general rule for credits to the Transfer Balance Account.
It is important to note that investment gains and losses do not alter the transfer balance cap. Income stream payments also will not change the transfer balance cap either.
CSS and PSS pensions are both examples of defined benefit pensions – that is, a type of pension plan based on a predetermined formula.
Defined benefit pensions have special rules which recognise their non-commutable nature. These types of pensions receive a credit to the Transfer Balance Cap by their “Special Value, which is determined by multiplying the “annual entitlement” by a factor of 16.
Consider the case of Joseph and Mary. Joseph becomes entitled to a CSS pension of $100,000 per annum as at 1 July 2018 when he permanently retires from the Public Service and claims his benefits.
Joseph will have reached his Transfer Balance Cap limit ($100,000 x 16 = $1.6 million). One of the great benefits of the CSS is that Joseph’s pension is indexed and will increase every 6 months. In January 2019, the CSS/PSS indexed pension increase was set at 0.8%. Fortunately for Joseph, any subsequent increases to his defined benefit pension will not affect his Transfer Balance Cap.
In the example above, what happens to Mary and her Transfer Balance Cap if Joseph subsequently dies?
The rules of the CSS entitle Mary to a reversionary pension equating to 67% of Joseph’s indexed pension at the time of his death if she satisfies the definition of an “eligible spouse”. Let us assume at the time of Joseph’s death, his CSS pension has been indexed such that the pension as at the date of his death is valued at $110,000 per annum. As we saw above, the subsequent indexation to Joseph’s pension would not affect his Transfer Balance Cap.
Assuming Mary is entitled to receive 67% of Joseph’s CSS pension value as at the date of his death, what would be the credit to Mary’s Transfer Balance Cap. Would it be (a) or (b) below:
From a logical point of view, one would assume the answer is (a) – the credit to Mary’s Transfer Balance Cap would be based on the value of the reversionary pension she receives.
Unfortunately the torturous and arcane provisions of the Superannuation Act 1976 (and in particular, section 94) make more than one interpretation of the Special Value possible in the above example. The Commonwealth Superannuation Corporation have adopted an interpretation which severely prejudices Reversionary Pension recipients.
That view is as follows – based on section 94, the spouse of a deceased pensioner is entitled to receive the first 7 pension payments at the original pension rate (that is, at the same rate the deceased pensioner was receiving). As we saw above, the “Special Value” of a superannuation interest is determined by multiplying the “annual entitlement by a factor of 16. The annual entitlement is worked out taking the “first superannuation income stream” to which the recipient is entitled.
The first superannuation income stream the spouse is entitled to receive is at the original pension rate and as a result, the spouse’s Transfer Balance Cap is assessed as if the spouse was in receipt of the original pension rate. No allowance is made for the fact that after the after 7 pension payments, the spouse’s pension is deceased.
In the above example, Mary’s Transfer Balance Cap would be assessed on her receiving a pension of $110,000 per annum, meaning she would have exceeded her Transfer Balance Cap allowance.
Due to increased queries from the public and financial advisors alike, the Commonwealth Superannuation Corporation has released a Fact Sheet which outlines the interpretation of the current rules regarding reversionary pensions and their Special Value. The Fact Sheet can be found here (document CSF33).
Thankfully, the Federal Government has recognised the unintended consequence arising from the introduction of the Transfer Balance Cap on reversionary defined benefit pensions.
On 31 October 2018 Assistant Treasurer Stuart Robert issued a Media Release titled “Retirement income covenant and ensuring a fair and effective superannuation system” which can be found here. Among other things, the Media Release mentioned the following:
“Finally, the valuation of defined benefit pensions under the transfer balance cap will be amended to reflect when pensions are permanently reduced following an initial higher payment, such as for some public sector defined benefit reversionary pensions or reclassification of invalidity pensions. This will ensure that holders of these pensions are not disadvantaged when reductions occur”
While the Media Release is a promising step in the right direction, until legislative changes are drafted and come into force, the current law stands to assess reversionary pensioners unfairly.
 (following the Australian Bureau of Statistics release of the CPI data for the Section 2018 quarter)Read more
Following the discussion paper “Off-the-plan contracts for residential property” released by the NSW Office of the Registrar General in November 2017, the NSW Government has introduced and assented to the Conveyancing Legislation Amendment Bill 2018. The (now) Conveyancing Legislation Amendment Act 2018 No 75 (NSW) introduces new protections for purchasers buying off-the-plan and brings the legal framework up to speed with the shift to electronic conveyancing. The commencement date of the Act is still to be set by proclamation.
The changes introduced by the Conveyancing Legislation Amendment Act 2018 No 75 (NSW) include:
Vendors will also be required to:
Notify purchasers upon becoming aware that the disclosure statement was inaccurate (at the time of signing) or has become inaccurate to a material particular. This might include a change to the draft plan or a change to the schedule of finishes that is likely to adversely affect the use or enjoyment of the lot.
The purchaser must be informed of the change at least 21 days before completion. In some instances this change will give the purchaser a right to rescind.
It is not surprising that the NSW Government has introduced such protectionist changes, particularly given the media attention surrounding the use of sunset clauses by vendors. Hopefully these changes will also lead to greater confidence and growth in the industry.
If you have any questions about purchasing off-the-plan, please get in touch with our Property Team.
On 1 January 2019 amendments to the Copyright Act 1968 (‘the Act’) took effect. The amendments cover a range of issues, including a new definition of a person with a disability, consolidating the copyright exceptions libraries and archives are privy to and, more significantly, abolishing the previous unlimited copyright term for unpublished works (i.e. works that had not been made public). While mention of the Act may cause people to gloss over, these amendments are far more than purely academic: it essentially allows us to discover a previously veiled cove of original works. Previously unpublished work satisfying the criteria will now enter the public domain, allowing us all to discover hidden parts of our history and connect with those that came before us.
Before these amendments, the Act really only set limitation periods on copyright ownership for works which had been “made public” (for example, written works published, performances or broadcasts in public). In effect, copyright in works which had not been “made public” (unpublished materials) could potentially exist indefinitely.
The copyright term is not identical for all works, but generally where there is a known author the duration of copyright is contingent upon their life (and lasts around 70 years).
So what is the position on copyright duration now?
For works first made public before 1 January 2019:
For works that have either never been made public or have first been made public after 1 January 2019:
So why is copyright important?
The basic premise of copyright is to protect an person’s intellectual property, by granting them exclusive rights to reproduction of the material including the right to sell or licence their works, allowing the public to view or reproduce these works while protecting their own financial and creative interests. Copyright therefore ensures works can be made public, and the interests of the copyright owner protected.
While the scope of these amendments touches upon published works, it is the changes to unpublished works that will create the most excitement. All of us, but particularly authors and educational institutions, should be aware of these new regulations, as it means that previously held material will now, and in the near future, be more readily accessible.
If you have any questions about your copyright, please get in touch with our Business team.
Written by Katie Innes with the assistance of Sarah Graham-Higgs
 Section 33(2) of the Act.
 Section 33(3) of the Act.Read more
Residents of Opal Tower were recently given a rude shock when forced to vacate their apartments on Christmas Eve. Cracks appeared on several levels of the 36 storey mixed use building in Sydney only completed in August 2018. The ongoing saga involving residents, builder Icon and developer Ecove is a cautionary tale for anyone buying an off-the-plan unit or involved in the construction process. However, what steps can you take to avoid a similar situation and remedy structural defects if you are a buyer and conversely, what should you consider if a buyer subsequently claims that the building or renovation you have constructed is defective?
Most contracts in the ACT for the purchase of an off-the-plan unit or construction of a single dwelling contain a defect liability period. This permits the buyer to submit a list of defects to the builder (or developer) which the builder will be required to repair. Defects are generally considered to be flaws in construction due to improper materials or faulty workmanship. However, it is important to be aware of the particular defects liability provisions as these can be drafted to limit the defects required to be repaired. Often this is reasonable, for example by excluding defects covered by manufacturer’s warranties. However, these provisions can also include unreasonable exemptions, for example, ‘settlement cracks’. The defect liability period will also set a defined period for the buyer to submit the defect list. A builder will not be required to rectify any defect notified outside of this period.
Where a defect is revealed after the end of the defect liability period, often the only recourse available for defective building work is for breach of a statutory warranty (found in the Building Act 2004 (the Act). The Act implies important warranties into contracts with respect to carrying out residential building work or for the sale of a residential building, that provides the work will be carried out in accordance with the Act and the approved plans, in a proper and skilful manner and good and proper materials were used.
These warranties exist for a period of 6 years in respect of structural defects and 2 years in respect of non-structural defects. Although considering the case Koundouris v The Owners – Units Plan No 1917 (2017) ACTCA 36 a buyer may be able to make a claim after the end of the six year period if the builder was in breach of the warranty at the end of the warranty period or if further building work is undertaken.
While the ACT has not experienced its own Opal Tower yet, issues with defect building work nonetheless remains topical and the ACT courts have generally adopted a pro-buyer approach. Regardless, those buying off-the-plan should conduct due diligence to ensure that the contract protects their interest and that they seek legal advice on options available if a defect is revealed after the end of the defect liability period. Builders and developers should ensure their contracts are adequately drafted so that only reasonable defects are required to be repaired and seek legal advice if a buyer claims breach of a statutory warranty.Read more
On 18 December 2018, the NSW Court of Appeal handed down a decision that will impact the way a commercial occupier’s duty of care is measured in regards to accidents that may occur on their premises.
In Bruce v Apex Software Pty Limited t/as Lark Ellen Aged Care  NSWCA 330, Mrs Bruce, a retired 70 year old, tripped outside the entrance of an aged care facility where her elderly father resided, causing her to suffer injury. The path on which she tripped was relatively standard, consisting of concrete slabs boarded by rows of red bricks. At the heart of the dispute, there was a height discrepancy of 10-20mm where the edge of the concrete met the red bricks, creating a “lip”. Predictably, Mrs Bruce tripped on the said lip.
The NSW legislation on which the Bruce case was decided is comparable to the ACT’s (and other jurisdiction’s) civil liability legislation, making the NSW Court of Appeal’s decision a cautionary tale for business owners regardless of their location. In the case of each of NSW and the ACT, the general statutory principles for the court to consider are that:
In relation to this, in Bruce, Meagher JA held:
This decision reaffirms the standard required by law for commercial occupants in conducting repairs and their due diligence in mitigating risk of injury on the premises. Specifically in this case, based on several different factors, the defendant was not liable for the injuries sustained by Mrs Bruce. Helpfully for defendants (and not so for plaintiffs), Bruce is a reminder that the presence of a risk that “could” be fixed by some forethought of the occupier does not equate to their being an obligation that the risk “must” be fixed.
All cases will, of course, turn on their own facts. Where safety risks are identified by an occupier that reasonably can be attended to without any great burden arising, taking whatever reasonable steps that are available to prevent an incident from occurring is always the preferable path to follow.
For more information about duty of care please contact our litigation team.
Written by Ian Meagher and Zoe Zhang.Read more
In recent articles in this series, we have explored the basics of blockchain and some of the associated legal challenges that can arise from the proliferation of this technology across various industries. Despite the challenges, however, there are a number of exciting legal applications on the horizon. In particular, there are few areas of law that could benefit quite as much from the real-time, distributed and immutable nature of blockchain as intellectual property (commonly referred to as “IP”).
When it comes to IP, it’s the nature of the beast that effective enforcement of rights will be predicated on keeping robust and comprehensive records regarding applications, registration, licencing, assignment, use and so on. For certain IP rights, much of this is centrally managed by IP Australia, but the burden is shared across all those who create or use valuable IP.
These processes could be streamlined and strengthened with the use of blockchain. By incorporating the central IP registries onto a blockchain platform, this information could be fed into the system in real time, creating an immutable and time-stamped record of the IP ‘life cycle’. This would not only be of enormous benefit in terms of record keeping and rights management, but may be critically important to certain disputes where evidence of creation, use or goodwill plays a determinative role.
Excitingly, this opportunity is one that has been recognised by IP Australia, which is undertaking trials of a ‘smart’ trademark that can be traced throughout the supply chain using a blockchain platform.
In Australia, as with many jurisdictions, copyright is unregistered and comes into existence automatically on creation of an original work. As such, disputes can arise about creatorship where evidence of conception, originality or use is incomplete or uncertain. By using a blockchain platform as a registry of original works, copyright authors, owners and users can rely on tamper-proof and time-stamped evidence of ownership to give them peace of mind in protecting their IP rights.
Not only can blockchain enhance the establishment and protection of IP rights, it presents a unique opportunity for businesses to improve the management of those rights in everyday governance, dealings and transactions.
For example, IP audits may be greatly simplified if businesses have access to a comprehensive, time-stamped and unchangeable record of all IP generated by or within the business, as well as all third party IP that it uses. This provides an important safeguard against liability for infringement of the IP rights of others due to poor governance or oversight, as well as an enhanced capacity to recognise and protect the value of the IP created within the business.
The use of blockchain in this way may also reduce a lot of the ‘grunt work’ associated with the assignment of IP rights, such as in mergers and acquisitions, for which due diligence must be undertaken.
In a more day-to-day sense, blockchain technology could also be employed in the form of smart contracts to streamline the execution and enforcement of IP licences. The self-executing nature of smart contracts means that IP owners can receive payment automatically and in real-time wherever their IP is used by third parties.
By this point, it should be clear that the potential legal uses of blockchain are endless-and we’ve only just scratched the surface. The protection of IP rights can be enhanced in multiple other ways with the use of this technology, such as tracking and authenticating the provenance of products to tell a genuine from a fake, or helping to keep track of compliance with regulatory requirements.
Stay tuned for our future articles on the potential uses of blockchain. In the meantime, if you have any questions about the protection and management of your IP rights, and how this may be impacted by the rise of blockchain, feel free to get in touch with our Business team.Read more
This month at Business Breakfast Club, we had a roundtable discussion on the standout issues of 2018 and the impact these issues will have in 2019. In particular, we discussed the changes to the Privacy Act, the introduction of the General Data Protections Regulation (GDPR), the proposed changes to bankruptcy legislation, the impacts of the recent Royal Commissions and changes in financial markets (to name a few).
We revisited the changes to the Privacy Act in February of this year, which introduced a mandatory notification procedure for eligible data breaches. All entities bound by the Australian Privacy Principles (APPs) have new reporting obligations if there is an eligible data breach, namely, to notify the Office of the Australian Information Commissioner (OAIC) and any parties at risk because of the breach.
We explored the type of harm individuals have suffered as a result of eligible data breaches and how these breaches have led to an increase in identity theft and online hacking. We discussed a real life experience of scam activity in Canberra that illustrated the high level of sophisticated online hacking that exists in the digital age. Eligible data breaches and instances of scam activity and identity theft must be kept in the forefront of a business’ risk management policies as it can undoubtedly have serious consequences such as loss of personal savings.
We also discussed the proposed changes to insolvency laws, currently before Parliament, which could see the bankruptcy discharge period in Australia reduced from three years to one. The proposals are contained in the Bankruptcy Amendment (Enterprise Incentives) Bill 2017. It’s unlikely the Bill will be enacted before the Federal election next year. Many suggested that the current debt arrangements mean that individuals are paying more to their creditors and are locked in for longer than three years but if the Bill is enacted such arrangements would end altogether.Read more
Rare are the circumstances where “The Tax Man” offers any dispensation from our tax-paying duties. Death is one of those circumstances.
Deceased estates enjoy roll over relief from the payment of capital gains tax. One power of an executor (or administrator, where there is no will) is to decide how assets within an estate are dealt with. Subject to any specific direction in a will, an executor will ordinarily have the power to sell assets. They will also have the power to appropriate certain assets in-specie, and apply them towards a beneficiary’s share of the estate.
For example, an estate may have two equal residuary beneficiaries with the assets comprising $200,000.00 cash and shares Medibank Private Limited also valued at $200,000.00. In discharging their duties, the executor could give beneficiary 1 $200,000.00 and could transfer the shares to beneficiary 2. While these types of decisions are often made in consultation with the beneficiaries, the executor generally does not require the consent of the beneficiaries to make these decisions.
Where there are multiple beneficiaries of an estate, from a practical point of view, often the easiest thing for an executor to do is say “show me the money”. That is, an executor elects to sell an asset within the estate. It is then easy to divide the sale proceeds among the various beneficiaries with little argument. Executors are often pressured by beneficiaries who have large debts and would prefer to receive “liquid” funds. However, from a tax perspective, often it is not prudent for an executor to engage their powers of sale.
The sale of assets within an estate will often attract the payment of capital gains tax liabilities. However, where assets are transferred to beneficiaries of an estate, there are no immediate tax consequences. On transfer, The Tax Man allows you to “roll over” or defer the tax consequences until some later time or event.
The general rule of thumb is that if the deceased person would have been entitled to reduce or disregard a capital gain while they were alive, that right continues in the estate. The right continues for a two year period beyond the date of the deceased’s death.
For example, let’s say that at the date of Lucy’s death, she:
Lucy left a will appointing Matthew her as her sole executor and nominating James as her sole beneficiary.
On Lucy’s death, if Matthew transferred the Commonwealth Bank shares to James, there would be a capital gains tax rollover. No tax is payable on the transfer. James would enjoy the assets with the benefit of regular dividend payments. For calculating any future capital gains tax, James would acquire Lucy’s cost base when she initially purchased the shares ($40.00 per share).
If James later sold the shares for $40,000.00 ($80.00 per share), he would have to pay capital gains tax on $60,000.00 (the difference between the ultimate sale price and Lucy’s purchase price). James may be entitled to a reduction in the tax depending on how long he retained the shares.
If Matthew, as the executor, elected to sell the Commonwealth Bank shares within the estate, there would be a capital gains tax event and the estate would be liable to pay tax on the gain. This would reduce the overall “value” of the inheritance being received by James.
The National Australia Bank shares were acquired by Lucy in 1984, before capital gains tax was introduced. If Matthew sells these shares, there will be no tax payable. If Matthew transfers these shares to James, there will also be no capital gains tax payable. James would acquire the shares at their value on Lucy’s death.
In relation to the main residence of the deceased person, there is an exemption from paying capital gains tax. While it is a complicated area of law, if an executor sells the deceased’s main residence, provided settlement is effect within two years of deceased’s death, the sale proceeds will be exempt from capital gains tax.
Any income earned beyond the date of the deceased’s death (by way of dividend payments, share sales etc.) must be declared in a separate tax return filed on behalf of the estate. This is another obligation of an executor. The estate requires its own tax file number because it is a separate tax paying entity. The estate is treated like an individual for tax purposes and can take advantage of the tax free threshold for three years. Because of this, if assets within an estate are to be sold, there is merit in spanning the sales out over several financial years.
While selling assets within an estate may seem like an easy and efficient way to approach the estate administration, executors should seek legal and accounting advice before relying on the powers of sale bestowed upon them.
 Income Tax Assessment Act 1997 (Cth) Division 128.
 Provided those transfers are consistent with the terms of the will or the applicable intestacy laws.
 Income Tax Assessment Act 1997 (Cth) Section 152.80.
 Income Tax Assessment Act 1997 (Cth) Division 115.
 Income Tax Assessment Act 1997 (Cth) Division 118.Read more
In our first article in this series, we stepped through the basics of blockchain and how it might influence the way we transact with one another. Blockchain is rapidly finding its way into all sorts of enterprises, presenting exciting opportunities for businesses to optimise their business operations. It might be surprising to consider that there are few pairings that are more natural-and perhaps less expected-than blockchain and co-operatives.
Co-operatives and blockchain share a theme of mutual benefit: they exist to serve their members. At their core, the members are a group of people working together towards achieving shared social, cultural or economic goals. Importantly, this form of organisation is distinct from many typical corporate structures where the ultimate purpose for directors is always to serve their shareholders.
In simple terms, a co-operative is a legal entity owned and democratically controlled by its members, who typically have a close association with the business of the co-operative. Common and historically successful co-operatives are those in the agricultural sector, including those in the dairy, grain, and meat export industries. The co-operative model shares risk and reward amongst its members. They are also “decentralised” in that there is no one member in a position of power or control above the others. This element of democratic control is a core element of the co-operative structure. Coincidentally, this decentralised notion of power and democratic control is also a core element of blockchain.
Blockchain is the technology that allows, for example, crypto-currency such as Bitcoin to exist without a central bank. It provides a secure, decentralised and un-editable record of all transactions.
So, think of a co-operative as the corporate structure and blockchain as the technological vehicle.
Blockchain may be of particular use to co-operatives in relation to their governance. For example, it can enable co-operatives to operate on a system in which by-laws, amendments, terms of membership and voting rosters are all written into a blockchain, providing an irrefutable history of all legal and administrative procedures.
Blockchain can provide a trusted mechanism for operational activities such as decision-making, finance and record-keeping without the need for physical proximity. That is, with blockchain, a co-operative can be governed remotely, without the need for members to physically meet or even align schedules (possibly in different time zones) for teleconferences. It can be coded to action and deal with common business matters like voting functions, for example, which could be “built-in” to the chain to record (and action) acceptance or rejection of by-laws, amendments, membership and other matters requiring a vote.
Beyond these legal and administrative functions, co-operative entities around the world are utilising blockchain technology in various ways to support their activities. For example, one of the world’s largest consumer co-operatives, Co-Operative Group Ltd (UK), is working with an organisation called Provenance to use blockchain to trace the journey of fresh produce from ‘paddock to plate’ in real-time. By referring to this immutable and time-stamped record of a product’s processing, final purchasers can be assured of the origin and quality of the product, as well as environmental and social impacts of the business.
Blockchain undoubtedly has the ability to enhance trust and efficiency to the operational activities of a co-operative. We look forward to seeing the benefits of this technology become a reality in Australia.
If you have any questions about how blockchain might benefit you or your business, please get in touch with Mark Love. If you have any questions about co-operatives, please get in touch with Katie Innes.Read more
The Personal Property Securities Register is turning seven! The PPSR came into effect on 30 January 2012 so a number of security interests first registered in 2012 will be due to expire in the coming year. As we have said time and time again, the Personal Property Securities Act and the PPSR are about registration; it is no longer about ownership rights. So maintaining and protecting your registration is essential.
Security interests can be registered for seven years or less, more than seven years but less than 25 years, or with no stated end time. A number of businesses may have chosen to register a security interest for seven years or less for two reasons:
To maintain your security interests (and protect your priority against other creditors who may have registered subsequently) you need to ensure that your registration doesn’t expire. Renewing and extending the registration is simple; the same fees apply to extending a registration as creating a new registration. The PPSR also allows secured parties to generate reports on which registrations are due to expire so you can manage your interests.
The risk to you – once your security interest has expired, is that you cannot extend or renew it. Instead you will have to re-register your security interest and potentially lose your priority to other creditors who have registered earlier.
If you have any questions about when your security interests may expire or security interests generally, please get in touch with our Business team.Read more
We have now had the best part of 5 months to ‘wrap our minds’ around the new GST withholding law in action. The new law broadly means that when new residential premises or potential residential land is sold, it is now the buyer who must account to the ATO for any GST payable. With the exception of the withholding notice that is to be provided to the buyer, the administration of GST in respect of the sale of second-hand residential property has not changed (in most cases), it is still GST exempt as an input-taxed supply.
The result of this law change is nothing new- GST has always been payable on sales of new residential premises and potential residential land. The change means that instead of asking the seller to make sure the GST is paid to the ATO upon the sale of the property, the buyer is now tasked with the job. This change effectively means that the buyer gets to play the role of both compliance officer and tax collector (which, let’s face it, is a bonus for all those buyers out there). But we shouldn’t ‘scoff’; according to the Explanatory Memorandum of the Bill that introduces the change, the GST debt in respect of insolvent entities was at almost $2 billion as of November 2017.
The obligations initiated by the changes are not overly onerous but they are important for anyone looking to either sell or buy one of the qualifying properties. Primarily, the reason for this is the penalties that can be imposed. For instance, if a buyer forgets or fails to withhold and pay to the ATO the required GST amount, then the buyer can be liable for a penalty that matches the GST amount that they should have remitted. Similarly, if the seller forgets or fails to notify the buyer of the need to withhold GST, harsh financial penalties can also be imposed on them as well ($21,000 for individuals and $105,000 for companies). With this in mind, we urge anyone looking to buy or sell to seek advice in relation to these obligations prior to exchanging contracts.
The ACT and NSW Law Societies have adjusted the standard legal provisions used within contracts of sale to reflect these changes; however, we have found that many legal firms are including their own specific clauses to deal directly with the changes. It is important that any potential buyer or seller ensures that they understand these provisions as they won’t always be uniform from firm to firm. If these clauses are drafted incorrectly and do not mirror the law’s requirements they can potentially expose both parties to the onerous penalties outlined above.
Something else to keep in mind here is the actual payment of the GST. For instance, many sellers require that the GST amount is provided to them at settlement to ensure expediency of payment and to allow them to claim the requisite credits in their correct BAS. Buyers on the other hand, need to be wary of this arrangement as it does not (arguably) extinguish their obligations under the law, potentially opening them up to the penalties mentioned above.
Arguably one of the more confusing aspects of the new regime for sellers relates to which entity is actually responsible for the payment of GST. Under the new regime the seller is required to notify the buyer of certain information so that the buyer can make the appropriate payment to the ATO. This information includes the supplier’s name (and other details like ABN etc.). Normally, the supplier is the seller, however in practice this is not always the case. This could be due to the seller acting as trustee of a trust- in this situation the trust itself may be the entity liable for the GST, or there may be a number of sellers which make up a partnership and that partnership may be the entity registered for GST and liable for the GST on the sale. The seller could also belong to a closely held group of entities and another member of that group is in fact the one responsible for the GST.
What this all means is that if the incorrect entity is noted as the supplier and therefore liable for the GST, the associated input tax credits will not be assigned to the correct entity (that is, the one actually registered for GST and liable for it).
On its face this law seems relatively simple to grasp and in most respects it is. The administrative obligations of the new regime (some of which are identified above) are ‘necessary evils’ to facilitate compliance with the law. They are important and both sellers and buyers alike need to be aware of them and the consequences associated with failure to comply.
If you require assistance with GST withholding issues, please contact Benjamin Grady.
 Treasury Laws Amendment (2018 Measures No. 1) Bill 2018
 Paragraph 5.42 of the Explanatory Memorandum to the Bill
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, In the Estate of Socrates Paschalidis and In the Estate of Peter Ronald Wisemancoincidentally 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. 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 Territoryand had regard to three considerations which must be considered in an Extension of time application
The relevance of the above factors to the present case was as follows:
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:
  ACTSC 75
  ACTSC 122
  ACTSC 292
  ACTSC 313
  ACTSC 4
 (1960) 40 NSWLR 390Read more
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.
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.
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.
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.Read more
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. In summary, the changes:
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).
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.
 Residential Tenancies Amendment Bill 2018 (No 2), Explanatory StatementRead more
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.
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.
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.
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.Read more
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. 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. The NSW Government has published three key guidance documents on competitive neutrality which are relevant to local councils:
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. The Neutrality Guide is designed to assist Local Councils to apply the requirements contained in the Policy Statement to their business activities.
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.
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.
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. 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. 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.
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:
 Competition Policy Agreement 11 April 1995
 Clause 7 of the Competition Policy Agreement
 Competitive Tendering Guidelines January 1997 p.5
 Pricing & Costing for Council Businesses: A Guide to Competitive Neutrality (July 1997) p1.
 Policy Statement on the Application of Competitive Neutrality: Policy and Guidelines Paper (June 1996 and amended January 2002) p6.
 Pricing & Costing for Council Businesses: A Guide to Competitive Neutrality (July 1997) p3.
 Policy Statement on the Application of Competitive Neutrality: Policy and Guidelines Paper (June 1996 and amended January 2002) p4.
Please note that the law detailed in this Essential Guide is correct as at November 19, 2018.
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:
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.Read more
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. 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.
The Consultation Paper also includes an overview of what is included in the term digital assets. The overview is not intended to be exhaustive but confirms the concept of digital assets includes the following:
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.
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 as follows:
The Consultation Paper notes the growth in the creating of digital asset registers 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 include the following:
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.
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:
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.
 Consultation Paper 20 New South Wales Law Reform Commission Access to digital assets upon death or incapacity
 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
 Consultation Paper at page 4
 Consultation Paper at page 9
 Consultation Paper from pages 11 to 24.
 Criminal Code ((Cth) s478.1 and Crimes Act 1900 (NSW) s308H
 Consultation Paper at page 35Read more
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):
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.Read more
What better time to write about organs, bodies and burials than now as we approach Halloween. In June last year I wrote an article which looked at the then recent case of Darcy v Duckett – a case which examined the Common Law principles regarding the right to dispose of a body as well as Court’s regard to traditional Aboriginal Law.
In this article I wanted to give a quick summary of the law as it stands today with regard to death, organs, bodies, burials and tissue transplantation (in light of the recent landmark Queensland case of Re Creswell  QSC 142)
The basic principle that there is no property in a body (Doodeward v Spence (1908) 6 CLR 408) means that there can be no ownership in a corpse. As such, one cannot ‘dispose’ or direct what will occur with their body after death.
There is an exception to the basic rule (outlined by Griffith CJ in Doodeward) – where a person has, by the lawful exercise of work and skill, dealt with a human body (or body part) in such a way that it has acquired some attributes differentiating it from a mere corpse awaiting burial and the body (or body part) is displayed in the public interest, then the body (or body part) can be considered property capable of being disposed of.
In the case of Doodeward, a stillborn baby with two heads was preserved by a doctor who displayed it in his office (this was a 1908 case). The Doodeward exception would apply to say, a mummy that is displayed in a museum.
Given the basic principle above, a person’s wishes with respect to the disposal of their body is not legally binding (Smith v Tamworth City Council (1997) 41 NSWLR 680)). Whatever funeral and burial instructions you communicate via your Will, personal documents or verbally can be disregarded at law.
Where there is a Will, the executor (and if there is more than one, then the executors jointly unless contrary intention is expressed in the Will) has the right and responsibility to arrange for the disposal of the deceased person’s body.
Where there is no Will, then the person with the highest rank to apply for a Grant of Representation in that jurisdiction has the same rights as an executor.
(references contained in previous article)
The person with the right to dispose may do so in any manner they choose provided it is not unlawful or unreasonable (Leeburn v Derndorfer (2004) 14 VR 100, 104), or exercised in a way that prevents family and friends from reasonably and appropriately expressing affection for the deceased (Smith v Tamworth City Council (1997) 41 NSWLR 680, 694.)
The Court will generally decide a conflict between them in a ‘practical way paying due regard to the need to have a dead body disposed of without unreasonable delay, but with all proper respect and decency‘ (Calma v Sesar (1992) 106 FLR 446 at )
The practicalities of burial without unreasonable delay will prevail.
A person can be cremated in any outfit but pacemakers and other such devices must be removed from the body before cremation. The body must be contained in a coffin, casket or some other container and must be cremated one body at a time.
Cremation can take one to two hours. Once cooled, the ashes are packed into a plastic container and a name plate is attached before being stored ahead of collection.
In the ACT, the operator of the crematorium must give the ashes to the person who applied for the cremation (which may be at odds with the common law) (Cemeteries and Crematoria Regulation (ACT) 2003 Reg 10).
In the ACT, a statement by a person that his or her body is not to be cremated is legally binding. An injunction or other relief can be obtained against the operator of the crematorium if necessary (Reg 8).
We have three cemeteries in the ACT – Woden, Hall and Gungahlin Cemeteries.
It is an offence (which can be punishably by imprisonment) to bury human remains other than at a cemetery unless the Minister’s prior written permission has been obtained (Cemeteries and Crematoria Act (ACT) 2003 Section 24)
Cremations can only occur within the crematorium (Section 25 of the Act).
Ashes can be:
If ashes are scatted on private land, permission must be obtained by the owners of the private land.
If the ashes are scattered in a public park or other public place, permission may need to be obtained from the local council or park. Councils and local government may set a place and time when these activities can be undertaken and can impose other restrictions.
You may want to carefully consider where you scatter the ashes and in particular, to scatter them at a place that you can revisit later (e.g. if ashes are buried in your backyard and you later move, you may not be able to visit the site in the future).
Ashes can be scattered at sea if permission of the vessel operator is obtained.
Ashes can be taken overseas but it is good practice to:
The short answer – yes! But the operator of the cemetery must not bury human remains in a vault or tomb unless the body has been embalmed and is in a selected corrosion resistant mental container (Reg 10)
In the case of Re Creswell which was handed down earlier this year in Queensland, an application made by a de facto partner to access the deceased sperm the day following his death was granted by the Queensland Supreme Court. His sperm was removed at the Toowoomba Hospital by medical staff and preserved at the Queensland Facility Group Laboratory.
Subsequent to the application for removal of the sperm, Ms Creswell applied to the Queensland Supreme Court seeking a declaration that she be entitled to possession and use off the sperm in assisted reproductive treatment.
The Respondent to the Application, the Attorney-General for the State of Queensland, neither opposed nor consented to Ms Creswell’s application.
It was held that:
In the ACT, a distinction is made in the legislation (Transplantation and Anatomy Act 1978) with regard to the removal of tissue during lifetime as opposed to after death.
In both cases, tissue can be removed where the person expressed their consent for the removal of the tissue for the purposes of donation to the body of another living person, or for the purposes of other therapeutic or medical or scientific purposes.
However, the definition of ‘Tissue’ in the legislation does not include spermatozoa (sperm).
In the ACT case of Roblin v the Public Trustee for the Australian Capital Territory and Labservices Pty Limited  ACTSC 100, the deceased had consented to the removal of his sperm during his lifetime. His sperm was collected and stored cryogenically during his lifetime.
He subsequently died intestate (without a Will) and his wife brought an Application seeking a declaration from the ACT Supreme Court to have the sperm form part of his estate where it would be received by his wife. The Court held that the sperm constituted property of the estate where it was passed to the wife in accordance with the intestacy laws.Read more
As advancements in communication technologies are increasingly bringing people on the other side of the world into our living rooms or office spaces, there is new uncertainty about the extent to which the law is adaptable. One example is the witnessing of documents through electronic means such as Skype or FaceTime. Generally, legislation refers to the need for ‘presence’ without necessarily providing whether virtual presence is sufficient for witnessing purposes. While, for all intents and purposes, Skyping or FaceTiming someone signing a document has the same effect as being physically present, the law generally looks upon both situations differently.
The rationale for the witnessing requirements of certain documents is to reduce the risk of people entering into fraudulent agreements without consent. Ensuring that a document is appropriately witnessed is important for both the signor and witness. The signor may end up with an invalid legal agreement and the witness may be subject to a fine if they fail to comply with his or her obligations. For the most part, witnesses need only be over 18, of sound mind, and not subject to a conflict of interest. In some instances, however, the witness will need to be authorised person who is listed under the Statutory Declarations Regulations 2018 (Cth) such as a doctor, pharmacist or bank officer.
In keeping with the rationale of witnessing requirements, the Attorney-General’s Department provides that a document cannot be witnessed via webcam or Skype on the grounds that the person witnessing the signing must be able to authorise and validate the identity of the declarant. This may seem out of step with modern technology that would enable a witness to identify the signor as they sign the relevant document. However, the New South Wales Law Reform Commission, when considering the joint signing of wills, stressed that physical presence allows for witnesses to pick up on facts relevant to issues of the testator’s capacity, understanding or freedom from pressure. The only jurisdiction that has shown any movement toward accepting witnessing via electronic means is the United Kingdom where, in the case of Re ML (Use of Skype Technology)  EWHC 2091, the Court allowed the signing of adoption consent forms to be witnessed via Skype. However, it is important to note this ruling was specific to the facts of the case and has not yet been heavily relied on.
Although it may seem that the law is lagging behind the realities and opportunities presented by modern technology, it remains the case that in Australia documents must be witnessed physically rather than virtually for the time being.
If you require legal advice regarding contracts or witnessing documents, please contact us.Read more
If we had a Bitcoin for every time we heard the word “blockchain’, we’d be (virtually) rolling in it.
Distributed Ledger Technology, or DLT, has taken the commercial world by storm, but what is it? And what legal issues might arise from a technology that is poised to completely revolutionise the way we transact with one another?
To keep it relatively simple, ‘blockchain’ refers to a list of records or transactions that are linked and secured in ‘blocks’. Each new piece of information is added to the end of the list (producing a continuously growing chain) in a way that is instantaneous, permanent and irreversible.
The information is stored on a ‘distributed ledger’, which means that it is shared across the entire network of participants, rather than in a centralised place managed by a single administrator. This method of storage ensures the quality and security of the data, as any update to the ledger requires the consensus of the majority of participants (or ‘nodes’). If consensus is reached, the latest, agreed-upon version is saved on every node, instantaneously and simultaneously.
As per the image on the left, each new block of information is added to the chain of previous transactions, containing a unique encoded fingerprint, as well as the fingerprint of the previous block.
The benefits of this ever-growing chain are that each block is an accurate, instantaneous and time-stamped record of a transaction. Since every participant in the network verifies a transaction, there is an immutable record that can’t be tampered with later on. Moreover, public blockchains (think Bitcoin) are easily and widely accessible to anyone with a computer.
For our purposes, one of the most interesting uses of blockchain technology is the smart contract. Although these contain a set of rules and consequences, just like a traditional contract, it consists of a set of coded instructions that self-perform when certain pre-set criteria are met. In other words, the contract executes itself. Like any blockchain, actions cannot be completed until validated by other participants in the network.
As an example of how smart contracts work in practice, the Commonwealth Bank of Australia and Wells Fargo completed the first cross-border transaction between banks using blockchain technology in 2016. An Australian cotton-trader purchased a shipment of cotton from Texas on a blockchain platform. Ordinarily, this trade would have relied on an import letter of credit between banks to guarantee payment on arrival, which would have taken weeks. However, a smart contract embedded into the blockchain automatically triggered instantaneous payments when the cargo reached certain geographic locations.
Keeping the law on its toes
Whilst blockchain and smart contracts are exciting developments for the efficiency of commercial dealings, there may be some significant legal consequences. For example, the uptake of blockchain technology may pose new challenges for companies in complying with applicable data protection laws, with the distributed nature of blockchain making some kinds of data breaches harder to predict, detect and manage.
More fundamentally, however, the use of smart contracts sits somewhat uncomfortably with some well-established and highly subjective doctrines of contract law, posing novel challenges for lawyers and businesses alike.
Over the coming months, our blockchain article series will address some of the various legal implications and considerations arising from blockchain use. Although there are some complex challenges ahead, the use of blockchain technology presents some unique and exciting opportunities for businesses, which we will also explore in our upcoming articles.
If you’d like to discuss how distributed ledger technologies may impact your business, feel free to get in contact with Mark Love in our Business team.Read more
This month at Business Breakfast Club, we discussed the types of matters directors should be contemplating when making decisions, and we explored some recent cases around how far directors’ duties may extend including where a failure to fulfil duties becomes criminal. Katie Innes and Shaneel Parikh shared some of their insights on the topic.
Directors are held accountable to a number of duties under the Corporations Act 2001 or, if you are a director of a charitable organisation, duties under the Australian Charities & Not-for-Profit Commission Act 2012. Principally among these duties is the requirement that directors exercise their powers and discharge their duties with the degree of care and diligence a reasonable person would exercise in their position. Directors must actively inform themselves about the subject matter of the decision, must not have a material personal interest, and must make the decision in good faith and for a proper purpose.
When inviting people to become directors of a company, the Board should comprise of individuals who have appropriate skills and knowledge relevant to the company and those invited individuals should inform themselves about the company and its business and whether they can contribute meaningfully to the decision making process. It is not enough to delegate the decision making power or to rely on external advisors without question once you are appointed. By making uninformed decisions about the affairs of a company, directors are exposing themselves to serious risk and personal liability.
The ‘stepping stone’ approach to director’s liability is, on its face, simple. The first stepping stone involves a company breaching the Corporations Act or another law. The establishment of corporate fault then leads to the second stepping stone: a finding that the director has breached their duty of care for failing to prevent the company’s contravention.
To date, most cases involving stepping stone liability have been in relation to breaches of the ASX continuous disclosure regime by public companies. ASIC have used the stepping stone approach to find liability where company conduct has fallen below acceptable community standards, despite not necessarily causing loss to investors. An example of this is the proceedings brought against James Hardie Industries that concluded in 2012.
Interestingly, what recent case law has suggested is that a company does not need to have been found to have breached a provision of the Corporations Act or any other law in order for directors to be found liable for a breach of their duties under stepping stone liability; it may be enough that the director has unreasonably or intentionally committed acts which are extremely likely to involve a serious breach of the law. It is also important to understand that where a company has breached the law, a breach of duty is not presumed. It requires a consideration of whether the director has exercised reasonable care, to ‘prevent a foreseeable risk of harm to the interests of the company‘.
For more information, please contact either Katie Innes. The next Business Breakfast Club will be on Business Succession Planning and will take place on 9 November 2018. If you would like to attend, please contact us.Read more
Okay, you’ve become a party to a contract and that contract requires you to pay money; but then you sell your business (or whatever) and you ‘assign’ the contract â†’ you are free and clear, right? Wrong!
There are a number of reasons why you might want to transfer part or all of an existing contract to another party; it could be part of a sale of business, the contract might be valuable or you might not be able to perform the work anymore. As part of that process, the terms ‘assignment’ and ‘novation’ are often bandied about interchangeably. Unfortunately, they do not mean the same thing, and it is actually important to understand the difference so you get the outcome you are bargaining for.
At the most basic level:
Looking at some of the important differences between the two:
If you want to keep performing your obligations under the agreement but give away some rights, you should seek an assignment. In simple terms, you cannot ‘assign’ your obligations or liabilities. The original agreement will otherwise remain unchanged and will remain enforceable against you.
With an assignment, you will remain a party to the agreement and liable for performance under the contract. Even if you have contracted with some other person to perform the contract on your behalf, unless the terms of the original contract require it (including through some implied term that you had been engaged to perform the contract personally), there is typically no requirement to obtain consent of the other parties to achieve an assignment. But there is a requirement to give the other party ‘notice’ of the assignment, so practically speaking most people either seek consent or there are terms drafted into the contract that set out when an assignment is allowed and on what conditions.
Assignments must be documented in writing to clearly identify what rights are being transferred; they must be unconditional and the assignment, to be effective, must be ‘notified’ to the other contract parties.
If you want to transfer all of your rights and be relieved of all your obligations under a contract (essentially removing yourself from the contract, then you must do so through a ‘novation’. A novation ends the original contract between the original parties, and creates a new contract; this is usually achieved through a single deed of novation. The novation has the effect of substituting one party for another without necessarily changing the rights and obligations under the original contract (although such changes might be agreed).
For a novation, given you are trying to remove yourself from a contract, consent is an essential element. All parties (new and old) must consent.
Unlike an assignment, a novation can be in writing or can be oral.
A court will take into account what the parties have said to each other, their conduct and course of dealings in determining whether there was an agreement to novate or simply and attempt to assign or something altogether different (perhaps a subcontract? or an agency?).
Proving any form of contract requires clear proof of terms and intention. Proving that there was an oral agreement to ‘novate’ can be a lengthy and expensive process, as the reason you might need such proof will be for reason that the other party refuses to acknowledge that is had agreed to what you are asserting, thus claiming you are still bound by the contract. Proving terms and intention is best done through a written document.
Both an assignment and a novation will ‘transfer’ rights under a contract. A document might be called ‘an assignment’ but if it seeks to transfer all rights and obligations of a party, to effectively substitute one party for another and if all parties have consented to that substitution, then, despite the name, it may actually be a ‘novation’.
As you can see, despite the similarities, there are fundamental differences between assigning and novating. Arm yourself with this knowledge before you start the process of ‘assigning’ or ‘novating’ to ensure you are not giving away too little or too much.
A short example: I have used finance to buy my six tractors; I sell the tractors and assign the finance with the consent of the financier. If the assignment is in not writing, then there is no ‘assignment’ at all. If there is an ‘assignment’, I am still liable to the financier, but now so is the assignee.
If you have any questions about how an assignment or novation works, please get in touch with our Business team.
On the 10th October, John Wilson, Managing Legal Director in our Employment section, and James Connolly, Law Clerk, attended the launch of the ACT Law Handbook and the Legal Aid ACT Chat Line. Both initiatives reflect ongoing attempts to make legal services and legal terminology more accessible to the general public as the rate of people seeking legal advice continues to increase. These initiatives complement the in-person services that Legal Aid ACT already provides noting that there are some who will be unable to readily access either initiative and will rely on in-person services.
The event was hosted by Legal Aid ACT and launched by the ACT Attorney-General, Gordon Ramsey MLA. In the Attorney-General’s remarks he thanked all those who had contributed to the ACT Law Handbook, many of whom were present. BAL Lawyers for its part contributed the employment section of the Handbook which is now accessible through Austlii and the Legal Aid ACT website. BAL Lawyers’ contribution in this space reflects the high calibre of employment legal work that the firm provides to the community.
The handbook is available at Legal Aid ACT
The 2018 Doyles Guide listing of leading Wills & Estates Litigation and Wills, Estates and Succession Planning lawyers and law firms has just been released and details solicitors and law firms practising within those areas who have been identified by their peers for their expertise and abilities.
BAL Lawyers has been listed as a First Tier Firm in Wills & Estates Litigation Law Firms and Wills, Estates & Succession Planning Firms – Canberra.
Full listings for all categories can be found here.
Our Estates Team take a holistic approach to estate planning, considering your broader personal, family and financial circumstances to ensure your wealth is passed onto the people you wish to benefit in an efficient and tax-effective way.
If we can assist you with a making a will, appointing a power of attorney, estate litigation or helping you set up a business succession plan, please contact us.Read more
This month at Business Breakfast Club, Lachlan Abbott and Fergus McFarlane of Ernst & Young provided the liquidator’s perspective on legal and illegal phoenix activity. Owing to growing concerns around phoenix activity there has been an increase in regulatory attempts to deter and disrupt illegal phoenix activity.
Phoenix activity involves registering a new company to take over the failed or insolvent business of a predecessor company. This is legitimate where there is genuine company failure and liquidation. Directors may responsibly manage a company, but the company may be unable to pay its debts. If the directors then hand the insolvent company over to a liquidator and register a new company after liquidation to continue the previous business, this will constitute legal phoenix activity.
Phoenix activity involves registering a new company to take over the failed or insolvent business of a predecessor company. This may constitute a legitimate business restructure where there is genuine company failure and the assets are sold at market value and in the best interests of creditors
Directors may responsibly manage a company, but the company may still be unable to pay its debts. If the directors then hand the insolvent company over to a reputable liquidator and the assets are sold at or above market value (before or after liquidation) this would normally constitute legal phoenix activity, even if the assets are sold to a related party.
In the 2018-19 Budget, the Government announced several proposed reforms to corporations and tax laws to deter and disrupt illegal phoenix activity. The draft legislation includes reforms to:
You’d be hard pressed to find a real estate agent who is unfamiliar with the term ‘underquoting’. Indeed the practice of underquoting has become a significant problem in NSW and Victoria, where the average difference between the sale price and the agent’s quote in some suburbs can be as much as 30%. Thankfully, the practice of agents deliberately undervaluing the selling price of a property to ‘bait’ buyers has been relatively infrequent in the ACT, although not without precedent. It is in such a climate of high scrutiny being placed on agents however that you must be aware of the potential penalties of underquoting.
Real estate agents in the ACT who underquote the likely sale price of a residential property face liability under two statutory regimes: the Agents Act 2003 (ACT) and the Australian Consumer Law, found in Schedule 2 of the Competition and Consumer Act 2010 (Cth). Interestingly, these statutory regimes could also apply to an agent over quoting the sale price of a Property.
The Agents Act 2003 makes it an offence for an agent to make a statement about the agent’s business which is false or misleading or to make a dishonest representation (to the Seller or the Buyer) about the agent’s estimate of the selling price of the property. These offences apply to any advertisement published by an agent and cast a wide net in capturing potential dishonest conduct. There are also significant penalties for a breach, being 100 penalty units ($15,000 for an individual or $75,000 for a corporation).
This is supplemented by the misleading and deceptive conduct provisions of the Australian Consumer Law, which make it an offence to engage in misleading and deceptive conduct in the course of trade and commerce (including a specific offence which applies this to conduct in connection with the sale of an interest in land). The potential penalties for being found to have engaged in misleading and deceptive conduct include fines of up to $220,000 for an individual and $1.1 million for a corporation.
In addition to this, agents face a potential disqualification under the Agents Act 2003 should the offence be sufficiently serious.
Despite similar penalties being present, in recent years NSW and Victoria have introduced legislative reforms imposing more comprehensive obligations on agents when estimating selling prices and harsher penalties for those who make misrepresentations. Although these types of reforms have not yet been introduced in the ACT, they may be on the agenda of the Legislative Assembly.
In NSW, agents are now required to keep records substantiating selling price estimates and are prohibited from publishing an indication of the sale price less than the estimated selling price for the property (this even extends to advertisements that indicate a sale price of ‘offers above’ or use similar words or symbols). Similar restrictions apply in Victoria, where agents are also required to prepare a statement of information (taking into account at least three properties considered most comparable) available for inspection by prospective buyers.
While the current ACT regime provides for significant penalties should agents be found to have made false or dishonest representations in underquoting the selling price of a property, legislative amendments in other Australia jurisdictions pose the possibility that a more direct and stricter regime may be legislated in the ACT in the near future. Property agents should ensure that they are aware of these implications.Read more
It has been some time since there was a High Court decision concerning estates and succession law. Earlier this month the High Court of Australia considered whether procedural fairness was afforded to a self-represented litigant, Mr Nobarani during a trial in the New South Wales Supreme Court.
Mr Nobarani was a friend of the late Iris McLaren (‘the deceased’). In December 2013, the deceased made her last Will which named her friend Ms Mariconte as her executrix and sole beneficiary of her estate.
Mr Nobarani was named as a beneficiary of an earlier Will of the deceased. He claimed that the deceased’s 2013 Will was invalid for a number of reasons – he claimed that the deceased’s signature was forged at the time of making her Will, that she lacked testamentary capacity and that she had been under the influence of medication.
Mr Nobarani proceeded to file 2 caveats against a Grant of Probate for the 2013 Will. The executrix then brought proceedings seeking orders that the caveats cease to be in force. The executrix also sought probate of the 2013 Will and also filed a Statement of Claim in which Mr Nobarani was not named as the defendant (and therefore, was not party to the case concerning the validity of the 2013 Will).
Less than a week before the trial concerning the validity of the caveats, Justice Slattery was called upon to determine an issue raised by the executrix, which was to point out that the caveats filed by Mr Nobarani had in fact expired.
The executrix sought that the trial be held as a final probate hearing and the Court accepted. It should be noted that:
At the trial Mr Nobarani advised the Court that he required more time to prepare for the hearing, that he had been denied an opportunity to issue subpoenas, cross examine witnesses and prepare an adequate defence.
Ultimately, the Supreme Court held that the 2013 Will was valid, granted probate to the named executrix and ordered Mr Nobarani to pay costs.
Mr Nobarani appealed to the Court of Appeal on the basis that he had been denied procedural fairness.
The Court of Appeal unanimously held that Mr Nobarani had been denied procedural fairness, but what happens next was important.
Justice Ward and acting Justice Emmett held that although Mr Nobarani had been denied procedural fairness, that the miscarriage of justice was not so substantial to warrant a retrial, and that the denial of procedural fairness did not deprive Mr Nobarani of the possibility of a successful outcome.
Justice Simpson had a different opinion and found that there was a possibility that retrial would have resulted in a different outcome and therefore there had been a miscarriage of justice.
As the Court was divided, the majority decision took precedence and Mr Nobarani’s appeal was dismissed. A retrial was not ordered.
Mr Nobarani then appealed to the High Court of Australia.
The High Court unanimously allowed Mr Nobarani’s appeal from the Court of Appeal and held that a new trial should be granted on the basis that Mr Nobarani was denied procedural fairness.
Some of the notable points made by the High Court included the following:
Citing Stead v State Government Insurance Commission, the High Court stated that ‘[a]ll the Appellant needed to show was that the denial of natural justice deprived him of the possibility of a successful outcome’. The High Court confirmed that there were several denials of procedural fairness through the course of the trial however they mostly arose from the last minute change of the issue to be decided during the hearing. Ultimately, this was determined to be sufficient enough to deny the appellant ‘the possibility a successful outcome’.
The High Court held that contrary to the assertions of the trial judge, the appellant did not have sufficient time to prepare for his matter.
Mr Nobarani only had 3 clear business days to:
The trial judge had made this assertion of the basis that the matter had been set down for some time. However, the trial judge had not taken into account that the trial date was set for the issues surrounding the appellant’s caveats and not the substantive Will challenge. In fact, no directions had been given in relation to the substantive Will challenge.
Mr Nobarani had a limited understanding of court procedure and evidence rules. In addition, his command of the English language was lacking.
The High Court found it unsurprising therefore that his case was vague and disordered but was careful not to give the appellant a privileged status as a self-represented litigant. The fact that Mr Nobarani was a self-represented litigant did play a factor in the High Court’s decision.
Unfortunately for the parties involved, due to the procedural irregularity, the matter remains unresolved and is now set for a new trial at the New South Wales Supreme Court. Interestingly, Mr Nobarani does not stand to benefit significantly under the earlier Will of the deceased, and receives only some specific items of the deceased jewellery. Given the matter has now spanned over 2 years, one wonders whether the parties (and particularly Mr Nobarani who may continue to be unrepresented and is due to receive little from the earlier Will) still have the ‘stamina’ to continue with the re-trial.
This case will serve as a warning to all practitioners (and judges alike) of the importance of affording sufficient time to both sides of a case in order to allow adequate case preparation and therefore afford each party procedural fairness.
 (1986) 161 CLR 141 at 147.Read more
This month at Business Breakfast Club, we discussed asset protection strategies and transactions which are voidable by a Trustee in Bankruptcy. There are a number of asset protection strategies to consider, particularly when carrying on a business, and there is no one perfect strategy. BAL Director, Katie Innes shared some of her insights on the topic. In addition to discussing some of the more common asset protection strategies Katie touched on:
There are a number of transactions that are voidable by a Court where companies are in administration or liquidation, and when individuals become bankrupt. In particular, we focused on three types of voidable transactions under the Bankruptcy Act 1966 (Cth).
Undervalued Transactions – s 120 Where a transfer of property may be void if the transfer took place in the period of 5 years before the commencement of the bankruptcy and the transferee gave no consideration (or less than market value) for the transfer.
Intention to Defeat Creditors – s 121 Where a transfer of property may be void if the property ‘would probably have’ become part of the bankrupt’s estate or ‘would probably have’ been available to creditors if the property had not been transferred. The transferor’s main purpose in making the transfer must be to either to prevent the property from becoming divisible amongst their creditors or to delay the process of making the property available. This purpose can be reasonably inferred from the circumstances, particularly if the transferor was, or was about to become, insolvent at the time of the transaction.
Avoidance of preferences – s122 A transfer of property by a person in favour of a creditor can be void if the transfer had the effect of giving the creditor a preference, priority, or advantage over other creditors and was made within certain time periods.
Case studies help demonstrate how transactions can be scrutinised in practice. We looked at the seminal case of Cummins v Cummins and whether quarantining assets against possible future liabilities can be for the purpose of defeating creditors, and Silvia v Williams which reiterates the benefits of documenting loans contemporaneously and seeking professional advice on protection of assets (to show the intention behind certain transfers).
 The Trustees of the Property of John Daniel Cummins, a Bankrupt, v Cummins  227 CLR 278.
 Silvia (Trustee) v Williams, in the matter of Williams (Bankrupt)  FCA 189Read more
We all know and recognise the green triangle with the yellow kangaroo, a mark of products that are proudly Australian. Due to changes in the rules governing its use, we may be about to see a lot more of it.
The Country of Origin Food Labelling Information Standard 2016 (the Standard) has been in place since 1 July 2016 but in a voluntary capacity only. As of 1 July 2018 Country of Origin (COO) labelling under this Standard is now mandatory, which means greater certainty for consumers who want to know whether their food is Australian made and grown. So what does this mean for you?
The Standard provides for mandatory COO labelling requirements for food that is sold (including offered or displayed for sale) in Australia. It is designed to regulate country of origin food claims by prohibiting businesses and individuals from:
The Standard applies to most foods offered or suitable for ‘retail sale’ in Australia. The net is cast widely capturing anything used or represented as being for human consumption, as well as any ingredients, additives or substances used for preparing those things. There are a number of exceptions, including certain unpackaged products, products for export, those made and packaged on the premises where it is sold, and food or products sold in facilities such as schools, restaurants, prisons, hospitals and fundraisers. ‘Therapeutic goods’ under the Therapeutic Goods Act 1989 also escape the reach of the Standard.
The new law establishes different labelling requirements depending on whether an item is classified as a priority or non-priority food. Non-priority food categories include seasonings, confectionery, biscuits and snack foods, soft drinks and sports drinks, alcoholic drinks, tea, coffee and bottled water. Everything else is a priority food. While all foods must include a statement of origin and the minimum proportion of Australian ingredients in a bar chart, the kangaroo symbol is only mandatory for priority foods.
It is important that businesses understand the concepts that apply under the Standard to ensure that accurate claims are made about their products. ‘Grown’, ‘produced’ and ‘made’ all have very particular meanings under the Standard, referring to the provenance of the food and its ingredients, as well as changes in their size, substance, identity and character. The Australian Competition & Consumer Commission (ACCC) has released useful guidance for businesses to help them better understand these terms and their obligations under the Standard.
It is important to note that a food cannot be considered as being grown, produced, or made in Australia unless it has also been packed in Australia.
If businesses fail to comply with the Standard, they risk breaching the Australian Consumer Law. The ACCC are responsible for enforcing the new laws and will conduct market surveillance checks on over 10,000 products. ACCC Deputy Chair, Mick Keogh, noted that companies have had two years to implement the new labelling system, indicating that those who have failed to do so risk serious financial hardship. The ACCC will be scrutinising the truth in labelling so that if a company claims that its product is 100% produced or grown in Australia, the company will be required to document or provide evidence to justify that claim to the ACCC.
If you have any questions about how the mandatory country of origin labelling laws apply to you or your business, please get in touch with our Business team.
 Australian Competition & Consumer Commission, Country of Origin food labelling: A guide for business (24 April 2017)
 Rachel Carbonell, Farmers hope new food labelling laws spur consumers to buy more Australian produce, 29 June 2018, ABC NewsRead more
There is plenty of hype surrounding the potential for blockchain-based smart contracts to revolutionise the real estate industry.
Smart contracts are computerised contracts under which a party can pre-authorise its terms to be performed automatically. Though the risk of ‘computer hacking’ immediately comes to mind, these contracts use and share encryption and distributed ledgers which are designed to be resistant to manipulation. A simple example is a vending machine. The consumer and the vending machine company both trust that the machine will dispense a can of soft drink if, and only if, a coin is dropped in the coin slot.
Supporters of smart contracts suggest the technology offers many benefits for commercial leasing, including:
However the technology still faces many difficulties in overcoming:
We can expect smart contracts to become a hotly debated topic in the real estate industry but, at least in these early stages, smart contracts for commercial leasing may be more likely to be used in standard form contracts, such as for pop-ups or co-sharing spaces. For more complicated leasing arrangements solicitors will likely stay at the forefront to ensure the proper preparation and execution of the terms of the contract (lucky for us!).
If you require assistance with your commercial leasing arrangements, please contact us.Read more
Restraint of trade clauses are a staple inclusion in many employment contracts, and for good reason. Employers have a legitimate interest in protecting their confidential information, maintaining customer relationships and preserving a stable and trained workforce. In fact, one academic suggests that restraint of trade clauses are so essential to the preservation of an employer’s interests that any lawyer who fails to advise on and draft an enforceable clause may well be considered negligent. However, for a clause that has such a ubiquitous presence in employment contracts, it is remarkable that their enforceability is so uncertain in any given circumstance. This is particularly true in jurisdictions, such as the ACT and Victoria, where the common law restraint of trade doctrine has remained largely unaltered by statute.
There are a number of reasons for this uncertainty, not the least of which is that a covenant in restraint of trade is considered to be ‘contrary to public policy’ and therefore presumed to be void unless the party seeking to rely on its protection can demonstrate that it is ‘reasonable’ in the circumstances to protect the party’s legitimate interests. Specifically, the clause must be ‘framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is in no way injurious to the public’. This, in turn, touches upon the second key reason for the uncertainty surrounding the enforcement of restraint of trade clauses: the unenviable drafting exercise faced by a lawyer attempting to balance these competing imperatives. Failing to properly achieve this balance either means the employer’s legitimate interests are not adequately protected or the clause is rendered void on the grounds of unreasonableness.
The task of drafting restraint of trade clauses is in no small way comparable to a high-stakes game of snakes and ladders. The lawyer tries to climb up the board to reach a point where all of the employer’s interests are adequately protected, but if the clause is drafted too ambitiously, the lawyer risks stepping on a snake and sliding back down into unenforceability. Unsurprisingly, resourceful lawyers have sought to craft a way around the pesky problem of balancing the need to adequately protect their employer client’s interests, whilst seeking to minimise the risk of leaving the client without the protection of a restraint of trade – ladder clauses.
Many practitioners will be familiar with ladder clauses, also known as cascading clauses. I will therefore keep my description of their operation brief.
Ladder clauses are a tool used to bypass the common law rule that courts cannot restate an unenforceable contractual clause in terms that would permit its continued operation. This is achieved by harnessing the operation of the doctrine of severance. In short, ladder clauses are drafted in such a way so that the offending portion of the term can easily be severed from the contract, thereby preventing that portion of the term impugning the operation of the entire clause. Whether or not any particular restraint of trade term can successfully be severed from the contract in the event it is found to be unenforceable depends on the application of the ‘blue pencil test’ (discussed further below).
Broadly speaking, restraint of trade ladder clauses operate in two different ways.
The first kind of ladder clause operates by creating a cascading series of reducing obligations. Each particular obligation is only triggered when the more onerous restraint preceding it is held by the court to be unreasonable. In other words, the obligations in the clauses cascade down with ever diminishing burdens on the restrained party until the court finds that one of the clauses is reasonable and, therefore, enforceable. For reasons that I discuss below, ladder clauses of this kind run a relatively high risk of being held to be void on the grounds of uncertainty.
The second kind of ladder clause, although on one conception they are not truly ladder clauses at all, purports to create multiple individual restraints operating simultaneously, with each restraint providing for a varying degree of burden on the restrained party. For example, one clause may create one obligation on the restrained employee to not work for a competitor for a period of three months, while another clause operates simultaneously to create a separate obligation to not work for a competitor for a period of six months.
Clauses of the second kind have a number of advantages over the first kind. Firstly, multiple clauses of this second kind operating separately are able to cast a net of obligations on the restrained party which is far wider than any individual term could achieve without a significant risk it would be found to be unreasonable. Secondly, separate clauses of this kind are more amenable to the ‘blue pencil test’ for severance, allowing for unreasonably broad restraints to be removed from the contract with less risk of the whole clause being held to be invalid. Thirdly, courts have been more reluctant to find these sorts of clauses to be void for uncertainty. This is because, properly drafted, clauses of this kind create multiple yet fundamentally distinct restraints that are, when viewed individually, ‘tolerably clear’ in each separate instance. However, some recent decisions suggest that this second kind of restraint clause may increasingly become the subject of more critical judicial scrutiny.
Ladder clauses are somewhat analogous to their counterparts in the game snakes and ladders. They permit a lawyer to climb quickly to the top of the board, ensuring that their client’s interests are entirely covered by the restraint of trade obligations while skipping untouched over the pitfalls of unreasonableness and unenforceability. Just like ladders in the board game, ladder clauses have becomes a legitimate and integral part of restraints of trade. However, unlike the game, the use of ladder clauses in restraint of trade provisions in employment contracts gives rise to policy questions about whether their operation is entirely fair on the restrained party.Read more
Australia has long been a country where owning a home has been an achievable reality. In recent years, however, falling home ownership rates nationwide has seen this become merely a dream for many. To counteract this, the ACT Government released a new Affordable Housing Action Plan earlier this year. The new Action Plan includes changes for those providing and purchasing affordable housing in the ACT. In particular it adds a significant degree of administrative obligations on Developers. But what do you need to know?
Developers purchasing multi-unit sites directly from the ACT Government will now find additional obligations regarding affordable housing in the Project Delivery Agreement (PDA). In addition to a requirement to provide a minimum number of affordable homes, the PDA requires Developers to provide the Suburban Land Agency (SLA) with a copy of the development application (including a plan showing the location of the affordable homes) upon lodging the DA and again once upon the DA being approved by ACTPLA.
The SLA must also approve the DA and provide the Developer with a list of eligible affordable home buyers. If the SLA does not approve the DA, the Developer must within seven working days amend the DA and provide the amended DA to the SLA for review before the SLA will provide a list of buyers to the Developer.
The Developer is then required to make reasonable efforts to sell the affordable homes to the Buyers on the list provided by the SLA. This includes contacting buyers and providing a Contract for Sale in the form required by the PDA (which must be substantially consistent with the ACT Law Society Contract for Sale, allow part payment of the deposit with the sum of 1% or $5,000 to be provided on exchange and include the Scheduled of Finishes mandated by the SLA).
Should any buyer not exchange a Contract within the mandated timeframe despite the reasonable efforts of the Developer, the Developer may withdraw from negotiations. In these circumstances, the Developer must request the details of another eligible buyer from the SLA and begin the negotiation process with any new buyer once such details are provided. While providing a list of eligible buyers may speed up the process of exchange, if buyers are not agreeable to exchange occurring within the timeframes or if there are delays with buyers being found, the Developer may find it difficult to sell affordable housing stock as it will be unable to put such stock on the market until all eligible buyers have been exhausted or the date 60 days after a certificate of occupancy and use has issued for the complex.
To secure a Developer’s obligations under the PDA, the Developer is required to provide a security deposit directly to the SLA. This will be released following compliance with the Developer’s obligations under the PDA (including providing evidence of completed sales of affordable homes to the SLA). Developers must also be aware of the right of the SLA to restrict the Developer (or any associated entity) from participating in any future release of Land in the ACT if the Developer does not comply with its affordable housing obligations. Accordingly, Developers must ensure compliance with the new obligations of the PDA or be exposed to these risks.
The process of applying to purchase an affordable home has also changed. Those who meet the eligibility criteria must now register their interest directly with the SLA. The SLA will then contact Buyers once a Developer has submitted the DA to request a formal application be submitted. This application must be submitted within 14 days of being contacted by the SLA and any further information required must be provided within 30 days of request.
Those who have an application to become an eligible buyer accepted will enter into a ballot to purchase affordable housing and, if successful, their details will be provided to the Developer to commence negotiations to enter into a Contract for Sale.
Once the details of the buyer have been provided to the Developer, the buyer will be required to exchange contracts within 15 working days (unless the developer is acting unreasonably). While there are restrictions on the form of Contract for Sale provided by the Developer and the Contract must include the mandated inclusions list provided by the SLA, there is a risk buyers will be pressured into exchanging a Contract in a form that is not in their best interests.
There are risks involved for both Developers and Buyers of affordable homes under the new Action Plan. We suggest that you contact our Real Estate team to discuss your particular circumstances.Read more
For many suppliers, creditors and landlords, the threat of their counterparty’s insolvency is mitigated by a right to terminate or vary their contracts if there is an ‘insolvency event’. From July 1 2018 changes to the Corporation Act 2001 (Cth) may, however, limit those rights. The amendments which make ipso facto clauses in contracts unenforceable during certain insolvency-related processes, comes as a package of two major reforms, the other part of the packing being the ‘safe harbour’ provisions for company directors in periods of financial distress which took effect in September 2017.
These changes arose from an acknowledgment by the Australian Government that our insolvency laws disproportionately stigmatise and penalise company failure, at the expense of entrepreneurship and innovation. It is hoped that these reforms will reduce instances of the premature resort to formal insolvency processes, resulting in better prospects of turnaround for companies and the preservation of value for creditors and shareholders. In turn, the Government hopes to see a cultural shift away from the stigmatisation of failure and towards reasonable risk-taking for the ultimate benefit of the companies and people involved.
So what are the changes?
Ipso facto clauses create a contractual right to modify or terminate a contract upon the occurrence of a ‘specific event’. Relevant here is the right to terminate a contract if the company enters administration, is wound up in insolvency or a manager controller is appointed. Ipso facto clauses have been long viewed as an important self-protection mechanism for suppliers, credit providers and landlords, but they do have the effect of inhibiting the successful turnaround of struggling companies.
By cutting off vital contractual relationships, businesses in financial distress are deprived of their capacity to continue trading while they restructure, destroying its enterprise value and potentially deterring potential investors who may have otherwise bought out the business and attempted to turn it around. This may defeat the very purpose of entering into administration or schemes of compromise or arrangement, and may prejudice creditors should the company be wound up.
From 1 July 2018 new provisions in the Corporations Act prevent a party from enforcing an ipso facto clause during a ‘stay period’. While a party can apply to have the stay lifted ‘in the interests of justice’  or to seek an order that the ipso facto clause is enforceable, the stay period will usually end only if the company exits administration or if the compromise or arrangement period ends, otherwise it will continue until the liquidation has been completed.
Ipso facto clauses in contracts that were entered into prior to 30 June 2018 are still enforceable. Further, ipso facto clauses that:
are also still enforceable.
Despite the amendments to the Corporations Act, counterparties to a contract may still terminate or amend the contract on other grounds, such as breach. As a trade-off, the company that benefits from the ‘stay’ of the counterparty’s rights to terminate will not be able to exercise their own rights to seek further advances of money or credit under the contract, therefore minimising risk of ongoing exposure for the counterparties.
The aim of these changes is to provide a struggling company some breathing space, allowing the company to continue operating while directors attempt to restructure the business. Not only does this improving its bargaining position when attempting to negotiate restructure options with creditors, it may preserve the value of the business for the benefit of the company, its employees and its creditors.
That said, the amendments create further motivation on contracting parties to ensure that they are closely managing contract performance addressing underperformance early and often to minimise exposure to the other’s insolvency, and reserving their rights to terminate for breach if the default is not rectified. For more information on termination of contracts click here.
Written by Katie Innes with the help of Bryce Robinson.
 Sections 415D, 434J, 451E
 Sections 415E, 434K, 451F
 Sections 415F, 434L, 451G
 Section 5 of Companies (Stay on Enforcing Certain Rights) Declaration 2018Read more
For company directors, the threat of personal liability for debts incurred in periods of actual or potential insolvency looms large. The creation of the ‘safe harbour’ provisions in the Corporation Act 2001 (Cth) that took effect in September 2017 may provide some welcome relief to company directors in periods of financial distress.
These changes arose from an acknowledgement by the Australian Government that our insolvency laws disproportionately stigmatise and penalise company failure, at the expense of entrepreneurship and innovation. It is hoped that these reforms will reduce instances of prematurely resorting to formal insolvency processes, resulting in better prospects of turnaround for companies and the preservation of value for creditors and shareholders. In turn, the Government hopes to see a cultural shift away from the stigmatisation of failure and towards reasonable risk-taking for the ultimate benefit of the companies and people involved.
So what are the safe harbour provisions?
Under the Corporations Act, a company director may be personally liable for debts incurred by the company if, at the time, they had reasonable grounds to suspect that the company was insolvent. The threat of personal liability can leads directors to liquidate companies that are in fact solvent or able to be turned around.
From 19 September 2017 a new section 588GA allows company directors to be protected from such liability if it can be shown that they were developing or taking a course of action which was reasonably likely to lead to a better outcome for the company, rather than proceeding directly to administration or liquidation. Section 588GA(2) contains a list of considerations that may support such a finding, such as steps taken to prevent misconduct, whether appropriate financial records have been kept, whether the director is obtaining advice from qualified parties, and whether they are developing or implementing a restructuring plan to improve the financial position.
The new provisions encourage directors to take reasonable risks aimed at turning their company around, without feeling pressure to leap straight into administration or liquidation. Whilst directors must still abide by all other duties owed to the company, the changes aim to encourage honest, diligent and competent directors to retain control of their companies and to be innovative in their recovery efforts.
While this reform is certainly a step in the right direction, it contains some significant ambiguities and judicial interpretation will be a key determinant of its effectiveness. For example, the requirement to ‘start developing courses of action that are reasonably likely to lead to a better outcome for the company’ is riddled with uncertainties. What kinds of actions have to be taken? When is something ‘reasonably likely’ to lead to a better outcome?
The failure to give directors specific steps they can pursue to feel confident in their protection may inhibit its effectiveness in preventing premature administration or winding up. Directors may not find out until several years down the track whether they made it into safe harbour. Coupled with the uncertainty of the provisions, these changes may do little to dissipate the spectre of personal liability hanging over the heads of company directors.
Many of these issues may remain unresolved until directly contested in court. For now, it is crucial that directors who wish to take advantage of the safe harbour protections maintain a comprehensive record of evidence that demonstrates their compliance with the new obligations.
If you have any questions about how these provisions may apply to you or your company, please get in touch with our Business team. For information on changes to the Corporations Act about ipso facto clauses click here.
Written by Katie Innes with the help of Bryce Robinson.Read more
When we think of consumer law, we often think of dodgy goods. What we don’t often think of is the sale of a business.
The Uni Pub, a well-known Canberra institution for many years, is currently the subject of ACT Supreme Court proceedings. In August 2016 Sapme Pty Ltd (the Seller) sold the business of The Uni Pub to Jornad Pty Ltd (the Buyer). After apparently struggling for some time, in March 2017 The Uni Pub closed its doors. The Buyer commenced proceedings against the Seller and its directors in March 2017 for misleading and deceptive conduct, a breach of section 18 of the Australian Consumer Law (ACL).
The Buyer and its director claim that they would not have gone through with the purchase had it not been for the misleading representations by the Seller that the business was supporting itself financially, was up to date with its bills and rent, and that the fit out was serviced and working well. The Seller’s defence appears to be that the Buyer was aware the business wasn’t doing well (pointing to a sale price of $1 plus stock) and that the Buyer was obliged by the contract (and warned by the business broker) to satisfy themselves about the truth and accuracy of all information given in relation to the sale.
This case is one worth watching – applying the ACL in a sale of business context would be a powerful tool to deter sellers and business brokers from making misleading representations when selling a business.
We have already seen from cases concerning the sale of land that the latitude of potential misrepresentations has been cast pretty widely by the courts. Failing to disclose road widening proposals, inflated claims in advertising brochures, false answers to questions about pending litigation, and even ‘silence’ have all been held to constitute misleading and deceptive conduct entitling a buyer to rescind the sale contract. It is important to recognise section 18 of the ACL does not distinguish between fraudulent and innocent misrepresentations and there is no requirement that the conduct is intentional. This is mitigated only by whether it is ‘reasonable’ to rely on the representations and whether there has been actual reliance on the representations.
So, what can you do to protect yourself if you are selling your business?
To minimise risk:
Contractual provisions excluding prior representations might not always be enough (as evidenced by this case); however, having the buyer sign a contract which declares that they have satisfied themselves about the state of the business can be a strong protection for claims such as these.
If you require any legal advice about the sale of your business, please contact us.
 CH Real Estate Pty Ltd v Jainran Pty Ltd; Boyana Pty Ltd v Jainran Pty Ltd  NSWCA 37; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31.Read more
This month at Business Breakfast Club, we discussed how to manage contractual non-performance. In particular, we focused on performance measures, reporting requirements, breaches, rights to damages, and rights to terminate. BAL Legal Director, Mark Love shared some of his insights on the topic. Mark touched on:
Contract management involves contract performance which can be determined via ‘performance indicators’. These indicators demonstrate that a party has satisfied the criteria to become entitled to payment. ‘Lead indicators’ can provide information on future performance including whether the desired result will be achieved within the agreed time period. It can also provide an early warning of any potential issues that may arise in contract delivery. A well drafted contract will include the following milestones:
Damages for breach of contract are compensatory for the other party’s failure to perform the contract. Compensation is rooted in the notion that where a party sustains a loss by reason of a breach of contract, that party should be placed in the same position as if the contract had been performed. To address the breach, you must turn your mind to:
Arrangements should be put in place to monitor and assess the underperformance in a contract. This may include the parties engaging in an ‘action plan’. The action plan may require the contract manager to be aware of the contractor’s capabilities, so that the acquiring entity is informed about the goods or services being provided and is able to determine whether the agreed performance standards and rectification path are capable of being met.
Termination of a contract leaves the parties free from any further obligations to perform the contract. Only certain breaches permit you to validly terminate the contract. These include:
Ultimately, identifying the common intention of the parties before entering into a contract will ensure that the issues of underperformance or non-performance in a contract are minimised.Read more
Due to an ageing population and the evolution of medical treatment, people are increasingly formulating and asserting their end of life decisions. A ‘Do Not Resuscitate’ directive is now common. Although most frequently seen on a physical document, there are also tattoos stating “Do Not Resuscitate” or sometimes it is simply the letters “DNR” on a person’s chest.
People believe that these tattoos (compared to paperwork and medical bracelets) cannot be misplaced, removed or lost. Emergency responders are also unlikely to miss a tattoo on a person’s chest when attempting to resuscitate. Although a patient may see these tattoos as adding clarity to their convictions, these tattoos are presenting confusion for doctors and emergency responders.
A valid heath care directive (such as a DNR) must be respected by health care professionals. Providing life-saving treatment contrary to a valid directive may be considered an assault. Therefore, for the person providing a DNR and for the doctors respecting it, it is essential that the directive be valid and clear.
Clarity is made more difficult by the fact that in Australia there is inconsistency in law and terminology across all States and Territories. In the ACT, a written health direction must be signed by the maker of the direction and be witnessed by two other people at the same time and in each other’s presence. The health professional must not withhold medical treatment unless they believe on reasonable grounds that the direction has complied with the above conditions and that the person has not revoked the direction.
There are various legal issues with “DNR” tattoos.
Firstly, many of these tattoos merely state “DNR” or an alternative formulation with the same meaning. Some tattoos may have a signature below the letters but are extremely unlikely to have the signatures of two witnesses. Therefore this will not satisfy the law in the ACT as to valid written health directions. Studies have also shown that a substantial percentage of patients change their minds as to preferences for attempted resuscitation. Amending or revoking a written health directive or a medical bracelet would normally be relatively straightforward. The cost and effort of removing a tattoo is not always practical. This poses the question – how can such a ‘directive’ be confirmed as still being current?
Secondly, the intentions and reasoning of a tattoo are not as clear as an executed legal document. A recent incident in the USA demonstrates the issues. In that case, a conscious man admitted to hospital had “DNR” tattooed on his chest as a result of losing a badly conceived drinking game and whose preference was actually for resuscitation. The man had stated that he “did not think anyone would take his tattoo seriously”. If the patient is unconscious, it is impossible to determine in the available short time frame whether the tattoo was intended to be a binding directive.
Thirdly, there are capacity issues that need to be examined for such a serious end of life directive. Advanced health care directives are usually executed in the presence of a health care professional or a lawyer who as part of the process assess the capacity of the person to make such a direction. It would be practically impossible to ascertain whether a person had capacity at the time of getting a tattoo perhaps many years later when it might become applicable. Would the alternative be having a health care professional or lawyer to sit with you at the time of the tattoo and document the procedure? That leads to the further question of how would this be subsequently confirmed in an emergency situation?
Finally, especially if no signature is marked on the tattoo, it is difficult to confirm whether the person was influenced into making the decision to get a DNR tattoo. In a time where there is a prevalence of Elder Abuse we must ask additional questions. What are the checks to ensure the letters “DNR” was tattooed on a person without the influence of another and in circumstances where the person clearly understood the potential significance of the DNR tattoo?
Many people who find the tattoo appealing strongly desire not be resuscitated and value the ability to direct their end of life. However, a “DNR’ tattoo in the ACT is unlikely to be a clear direction and may result in your wishes not being carried out. These tattoos can cause confusion in a time where urgency is essential no matter what your wishes are. The only way to ensure that your directives are carried out is by having an advanced care directive.
 Medical Treatment (Health Directions) Act 2006 (ACT) s 8.
 Medical Treatment (Health Directions) Act 2006 (ACT) s 12.
 Lori Cooper and Paul Aronowitz, DNR Tattoos: A Cautionary Tale (2012) 27(10) Journal of General Internal Medicine 1383, 1383.Read more
Commercial and retail leases often contain make good clauses which require the tenant to return the premises to their previous condition at the end of the lease. Make good clauses can often be a cause of disputes when parties have different understandings of what the obligations are. This can be a serious issue, as fitouts can be very expensive to install and remove.
Parties may be so eager for a lease to commence that they forget to give proper consideration to what will happen when the lease ends. However, it is important that make good obligations are carefully considered before a lease commences.
The key to avoiding make good disputes is to clarify what the make good obligations are, so that each party understands what is required at the end of the lease. Issues that should be considered include:
If a tenant fails to make good and leaves the landlord with a costly clean-up bill, the landlord’s only resort may to be take legal action. Courts will rarely make an order for specific performance of a tenant’s make good obligations. More usually courts will award damages to the landlord, which may not cover the costs of making good the premises.
To simplify the process of litigation, landlords should ensure that the lease clearly sets out a right to recover costs of the landlord undertaking the make good works so those costs can be recovered as a contractual debt, rather than as damages.
In addition, landlords should ensure that the tenant’s bond or bank guarantee covers any breach of make good obligations under the lease. Even if this does not cover the full cost of the landlord undertaking the make good works, it will ensure that at least some of the costs can be recovered immediately.
As an alternative to the potential uncertainties around make good, a lease can provide for a cash payment by the tenant in return for a partial or complete release from their make good obligations. However, this requires more effort on the part of the landlord and raises its own issues:
Make good clauses are a potential minefield for disputes, but most of these problems can be avoided if parties understand the position before entering into a lease, and the lease reflects that understanding.
If you require expert assistance with your commercial leasing, contact us.Read more
Trustees must look forward towards the risks on the horizon. Proactive responses to emerging issues are essential to fulfil the duties of a trustee. Too often trustees are not sufficiently aware of their legal obligations and the issues they may face.
A trustee is obliged to fulfil the terms of the trust instrument (usually a trust deed). In doing so, the trustee must determine in what proportion the capital and income of the trust will be distributed to the beneficiaries. Given the trustee holds legal title to the trust’s assets, he or she owes fiduciary duties to the beneficiaries who hold the equitable title in those assets. Fiduciary duties include:
A trustee who breaches one of their duties risks being liable for any loss arising from that breach.
In 2017 there were numerous reports that sixty of the 100 largest superannuation funds in Australia were failing to comprehensively assess the impact of climate change on their investment portfolios and failed to disclose that assessment to their shareholders and members.
Trustee directors have an implied obligation to proactively assess emerging risks including the threat of climate change to the extent that it may intersect with a beneficiary’s financial interests in a superannuation fund. Failing to consider such a material risk as climate change has left many trustee directors at risk of breaching their duty to members.
Climate change is not just a matter of rising sea levels, but note that Local Government on the South Coast has already resolved to stop repairing roads or permit improvements in certain low lying areas.
In some commercial arrangements, the courts are willing to allow the parties to reduce the fiduciary content of a trustee’s obligations almost entirely. However, in doing so, the arrangement may then cease to be a trust and may be re-characterised as something else. In Leerac Pty Ltd v Garrick E Fay  NSWSC 1082 the NSW Court of Appeal held that other than the irreducible core of trustee obligations to act ‘honestly and in good faith’, it is not contrary to public policy to exclude a trustee’s liability even for gross negligence. But it is contrary to public policy to exclude a trustee’s liability for dishonesty or bad faith. Thus, if the trustee takes a risk in good faith with the best intentions but defaults on that action, the trustee can be protected by an exemption clause which excludes personal liability.
Trustees usually seek to limit their personal liability through express written limitation clauses protecting them from personal loss, and the risk of insolvency through indemnities from the trust fund. The lack of uniformity in limitation clauses has led to differences in style, content and quality of the clauses. The courts often treat limitation clauses with caution as poor drafting of the clause can lead to unintended consequences. However, the advantages of a limitation clause usually outweigh the caution with which Courts treat them. Some of those advantages include:
Both rights are often conflated as they save trustees from the consequences of incurring trust liabilities. However, the former is for the trustee’s personal benefit while the latter forms part of a general power enabling the trustee to apply trust assets.
Ultimately, proactive (not reactive) solutions are required by trustees to foresee the risks of emerging issues and ensure that trustees act within the scope of their legal obligations to secure the financial interests of the beneficiaries, and not simply rely upon the ‘exoneration right’ in any trust document.
If you require legal advice regarding your options as a trustee, please contact us.Read more
The delegation of Council functions is essential to the effective and efficient governance of a local Council. This guide will offer an overview of the fundamentals of delegating and sub-delegating Council functions under legislation and the common law.
The Local Government Act 1993 (LGA) establishes the statutory framework for the delegation of Council’s authority. Further guidance is also given in the Interpretation Act 1987 (Interpretation Act).
Principally, section 377 of the LGA provides the Council with the power to delegate certain functions to the General Manager or any other person or body (not including another employee of the council). However, the scope of the power to delegate is not without restrictions and Councils need to be aware of the legal principles governing delegations.
As mentioned above, a Council may delegate functions to the General Manager and to other persons or bodies. However, a Council cannot delegate any of its functions directly to an employee of the Council, other than the General Manager.
The delegation must be made to either a specified person or body (by name) or to a particular officer or the holder of a particular office. Where a function has been delegated to the holder of a particular office or position, the delegation does not cease to have effect merely because the person in the particular office or position ceases to hold that office or position. In that case, the person occupying the office or position is taken to be the delegate.
A function can only be delegated to an office or position that is in existence at the time that the delegation is made.
There are certain practical steps which must be taken to validly delegate Council functions. Delegation by a Council to the General Manager, or any other person or body, must be done by resolution. The delegation must also be in, or be evidenced in, writing.
Delegations may also be limited by being made subject to conditions. Where the conditions are not met, the delegate will have no power to exercise the function and any resulting decision will be liable to be set aside. This means that Councils need to be careful when drafting conditional delegations to ensure that any conditions are clearly expressed and, preferably, do not involve subjective elements which can invite legal challenge. Some examples include delegations that are conditional on whether a conflict with a Council policy is ‘minor’, that require a determination to be made as to whether strict compliance with a Council policy would be ‘unreasonable’ or ‘unnecessary’ or a condition allowing exercise of the delegation where, following public notification of an application, no ‘well founded objection’ is received.
A delegation can cover a wide range of Council functions both under the LGA and also under any other Act. The General Manager may also delegate any of his or her functions, as well as sub-delegate any functions that have been delegated to the General Manager by the Council. In the exercise of a function by a delegate, the delegate may also exercise any other function that is incidental to the delegated function.
A Council cannot delegate a function that comprises any of the matters listed in subsections 377(1)(a) to (u) of the LGA. Those matters include (but are not limited to):
Neither the Council nor the General Manager can delegate their power of delegation.
A function cannot be delegated if the function is not in existence at the time that the delegation is made. For example, in the case of Australian Chemical Refiners Pty Ltd v Bradwell a prosecution was commenced under a delegation that had been given before the enactment of the section creating the offence. The Court of Criminal Appeal held that the delegation was ineffective.
Where a function of the Council depends on the Council forming an opinion, belief or state of mind and the function has been delegated, the function may be exercised by the delegate on the basis of his or her own opinion, belief or state of mind.
Where discretion is involved in the exercise of a function, a delegation of the function cannot limit or eliminate the discretion. An example of this type of function is the determination of a development application under section 4.16(1) of the Environmental Planning and Assessment Act 1979. That function involves the exercise of discretion as to whether or not to approve an application unconditionally, to approve it subject to conditions or to refuse it. A Council (or General Manager) cannot delegate the power to approve a development application without also delegating the power to impose conditions or refuse it.
When a Council or General Manager delegates a function, the Council or the General Manager still retains the ability to exercise the function at any time before the delegate does so. A delegation may also be wholly or partly revoked by the delegator.
Councils are also required to review all of their delegations during the first 12 months of each term of office.
Keeping track of delegations for Council Officers and staff, when structures, titles and personnel are constantly changing, can cause major headaches. This is exacerbated when records are kept manually, using old-fashioned documents and spreadsheets. Bradley Allen Love Lawyers (BAL) has partnered with RelianSys Australia’s leading provider of automated governance solutions, to provide a fully-integrated web-based solution for Council Delegations.
The BAL – RelianSys Delegations Software is easy to learn, simple to use, and streamlines your delegations by automating the process saving time and improving efficiency. Because it is web-based, it can be accessed by anyone, from anywhere, at any time, on any device. More importantly, the BAL – RelianSys Delegations solution is designed specifically for the Local Government sector, by people who understand governance in Local Government, making it highly intuitive – it thinks the way you think.
The pricing model is very cost-effective – with all set up, updates, ongoing development, telephone training and support all included in one low-cost annual subscription.
More importantly, the solution simplifies the process, so it takes the stress and headaches out of managing delegations.
For a personal guided tour, please start a conversation with Febin Philip, Business Development Manager at RelianSys, on 1300 793 905.
 LGA, s.377(1).
 Interpretation Act, s.49.
 Interpretation Act, s.49(8). See also Martin v Minister for Mineral and Forest Resources  NSWLEC 131 and  NSWCA 286.
 Australian Chemical Refiners Pty Ltd v Bradwell (1986) 10 ALN at N96.
 LGA, s.377.
 Interpretation Act, s.49(2)(b).
 Interpretation Act, s.49(3).
 Aldous v Greater Taree City Council  NSWLEC 17.
 See Kinloch v Newcastle City Council  NSWLEC 109.
 Lyons v Sutherland Shire Council  NSWCA 430.
 LGA, s.378.
 Interpretation Act, s.49(4).
 LGA, ss.377(1)(t) and 378(1).
 (unreported) NSWCCA No. 236 of 1985 28/2/86.
 Interpretation Act, s.49(7).
 Belmorgan Property Development Pty Ltd v GPT Re Ltd & Anor  NSWCA 171.
 Interpretation Act, s.49(9).
 Interpretation Act, s. 49(2)(c).
 LGA, s.380.
Please note that the law detailed in this Essential Guide is correct as at May 28, 2019.Read more
This month at Business Breakfast Club, Shaneel Parikh and Harry Hoang of Tailored Accounts, discussed blockchain and distributed ledger technology. Whilst Bitcoin and cryptocurrency has certainly created much hype and challenged the legal and financial landscape, Blockchain is much bigger than Bitcoin. It has the potential to revolutionise multiple industries as well as alter our social and economic infrastructure.
Some of the topics covered:
Blockchain is a continuously growing list of records or transactions which are linked and secured in blocks using cryptography. These blocks subsequently reside within the ledger amongst all users. Important to an understanding of blockchain is a consideration of what distributed ledger technology is as whilst every blockchain is a distributed ledger, not every distributed ledger, is a blockchain.
A distributed ledger is a database of transactions (or data) that is shared across a network of participants. It is ‘distributed’ because the record is held by each of the users of the network, and when a record is added, each user’s copy is updated with new information both instantaneously and simultaneously.
In practice, there are two key types of ‘Blockchain’ systems that exist: permissioned or private blockchain and unpermissioned or public blockchain systems. Whilst the courts are yet to consider the legal structure of either system, it is important to consider how the courts could analyse such structures and in particular, which players in such systems the court may ultimately deem liable if something goes wrong.
With the recent changes to the Privacy Act, there are certain considerations for Privacy with blockchains. For the owners of private blockchain systems, there are concerns regarding assumption of responsibility for an eligible mandatory data breach that occurs on the private blockchain system. If you operate private blockchains and provide ‘administrator’ access to a third-party contractor for example, and that third-party contractor unlawfully discloses information, irrespective of whether you played any part in the disclosure, there is a strong chance that you will be held jointly-liable for the privacy breach as ultimately you control the system and the information within.Read more
Financial agreements are an increasingly common part of 21st century relationships. Financial Agreements may be made by those contemplating marriage (commonly referred to as a Prenuptial Agreement or ‘pre-nup’) or made during the marriage or made following separation to divide property.
These agreements are a private determination of the parties’ rights and obligations. The terms of the Agreements deal with the couple’s assets during the relationship, at the end of the relationship and can even have an impact on the death of one of the parties.
It is commonly held that a will-maker has a freedom of testation to determine how they would like their assets to be distributed upon their death. However, certain people who meet legislative requirements such as a spouse or former spouse who are not provided for to their satisfaction in a will may be entitled to make a Family Provision application for an order that they receive a greater share of an estate.
When a Court determines a Family Provision application it will take into account a myriad of considerations. A Court will consider whether a Financial Agreement has been signed between the applicant and the deceased person.
The general view taken by the High Court is that rights given by Family Provision are inalienable and it is contrary to public policy to hold a person disentitled to relief merely because they entered into an agreement with the deceased person. Courts in most states have also held that you cannot contract out of making a Family Provision application by signing a Financial Agreement.
In some cases a Financial Agreement can be relevant to a Family Provision application as it explains the totality of a relationship and shows that a person may not expect to receive anything more from their partner’s estate than what the deceased decided to leave them. However, a Family Provision application will still be available to someone even if there is a Financial Agreement but the Agreement can be used as evidence of the nature of the relationship.
New South Wales is the only jurisdiction in Australia that gives parties the ability to ‘contract out’ of their rights to make a Family Provision application. This is usually done with a release of rights clause in a Financial Agreement. However, the release must be approved by the Court to be valid. The Court may approve the release before the deceased’s death in a Family Law property settlement or after the deceased’s death as part of the settlement of a family provision claim.
The release will not be approved by the Court merely because both parties consented to it. The Court will consider whether the release was to the releasing person’s financial advantage or otherwise, whether the provisions of the release were fair and reasonable at the time, and whether independent legal advice was taken and considered.
In Colosi v Colosi, a release clause in a Financial Agreement was not approved by the Court as the judge held that a clause warranting that legal advice was sought is valueless where the other party must have known the warranty to be untrue.
Similarly, in Neil v Jacovou, the Court did not approve a release clause as it found that the independent legal advice sought by the widow was not proper and her entitlement was not fair and reasonable as the release of the rights was not for the widow’s benefit.
Therefore, in all States and Territories, when preparing a Financial Agreement with your partner or former partner, you must also have considerations as to how the document affects your estate plan. Signing a Financial Agreement is not always enough to ensure the intended division of assets after death or prevent a claim. Making your intentions clear and ensuring that both parties have sought appropriate independent legal advice is integral to protecting your interests.
 Lieberman v Morris (1944) 69 CLR 69.
 Kozak v Matthews  QCA 296.
 Hills v Chalk & Ors  QCA 159; Kozak v Matthews  QCA 296.
 Succession Act 2006 (NSW) s 95.
 Succession Act 2006 (NSW) s 95(1).
 Succession Act 2006 (NSW) s 95(4).
 Colosi v Colosi  NSWSC 1892
 Neil v Jacovou  NSWSC 87.Read more
The 2018 Federal Budget was handed down by Treasurer Scott Morrison at 7.30pm on Tuesday 8 May 2018.
Of particular interest to those in the Estate and Elder Law ‘space’ was the Government’s clarification on the taxation of income derived within a Testamentary Trust and the Government’s $22 million funding to protect the ageing population from elder abuse.
The Federal Government has stated that from 1 July 2019, the concessional tax rates available for minors receiving income from Testamentary Trusts will be limited to income derived from assets that are transferred from the deceased estate or the proceeds of the disposal or investment of those assets.
Currently, income received by minors from Testamentary Trusts is taxed at normal adult rates rather than the higher tax rates that generally apply to minors.
This measure clarifies that minors will be taxed at adult marginal tax rates only in respect of income a Testamentary Trust generates from assets of the deceased estate (or the proceeds of the disposal or investment of these assets).
(Source – Budget Measures 2018-2019 – Part 1 Page 44)
In other words, if a Testamentary Trust is ‘topped up’ or injected with new assets that have not derived from a deceased estate, the concessional treatment will not apply.
The short answer is “no” – we believe this has always been the case.
Section 6AA of the Income Tax Assessment Act 1936 applies penalty tax rates to unearned income of a minor except where the income is considered ‘Excepted Trust Income’.
Section 102AG (2) of the Income Tax Assessment Act 1936 defines ‘Excepted Trust Income’ to include (among other things) amounts which:
So in other words, income of a minor which derived from a deceased estate does not attract penalty tax rates but instead, is taxed at adult progressive tax rates. This is precisely one of the major reasons why Testamentary Trusts are (and continue to be) a major tax planning tool for families when drafting their Wills.
The Budget measure simply serves to clarify and remind us that assets injected into a Testamentary Trust that have not been derived from the deceased estate will not receive the concessional tax treatment with regard to minors.
This measure does not mean that assets which have not derived from the deceased estate cannot (or should not) be injected into a Testamentary Trust that has already been established. Assets held within a Testamentary Trust structure (provided it is drafted carefully and correctly) can be significantly safeguarded when it comes to Family Law separation or bankruptcy.
Of course, specialist advice should always be obtained if assets are subsequently injected into a Testamentary Trust for the sole purpose of defeating a Family Law or creditors claim.
The 2018 Budget has also announced a $22 million commitment to protect the ageing population from elder abuse. The Government has committed to the creation of an Elder Abuse Knowledge Hub, a National Prevalence Research scoping study, and development of a National Plan.
The Law Council of Australia has provided some comment as to the spending of these funds, but no doubt in the weeks and months that follow, we should hear more about how the Federal Government intends to use these funds towards the combat of elder abuse.Read more
As the popularity of the ‘sharing economy’ continues to grow unabated, issues can arise where regulations and commercial practices struggle to keep pace with technological change. While Airbnb hasn’t yet attracted the storm of controversy that Uber has, this may be starting to change as cities around the world, including in Australia, crack down on the home-sharing site.
In Australia the use of property for Airbnb is subject to regulation at multiple levels. For owners of units in apartment buildings however, there is an additional layer of regulation, the strata company by-laws. Since strata units are in such close proximity to each other, conflicts between unit owners can easily arise. Some unit owners may want to use Airbnb to let their units, because of the high returns, and indeed may have purchased an investment property on the basis of those returns. Other unit owners may object to short stay holiday accommodation in their complex because of fears of noise, disruption, security, loss of amenity and insurance and repair costs.
This situation has seen an increasing number of by-laws which purport to restrict short term letting. But are such by-laws valid?
The ability of strata by-laws to restrict short term letting varies between states. In NSW, the largest market for Airbnb in Australia, the position has been summarised by NSW Fair Trading’s ‘Strata Living’ fact sheet as follows:
“Strata laws prevent an owners corporation restricting an owner from letting their lot, including short-term letting. The only way short-term letting can be restricted is by council planning regulations.”
This is because of s.139(2) of the Strata Schemes Management Act 2015 (NSW) (SSMA) which states:
“No by-law is capable of operating to prohibit or restrict the devolution of a lot or a transfer, lease, mortgage or other dealing relating to a lot”
NSW tribunal decisions such as Estens v Owners Corporation SP 11825  NSWCATCD 63 have followed the interpretation outlined by NSW Fair Trading and struck down by-laws restricting short term letting. The position is similar in Victoria, where in Owners Corp PS 510391P v Balcombe  VSC 384 the Supreme Court found that owners’ corporations did not have the power to restrict short term letting.
In contrast, the recent WA decision Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 WASCA 104 saw the Court of Appeal uphold a by-law restricting short term letting to no more than 3 months in 12. The Court of Appeal found that the by-law did not present a restriction on disposal of units in the strata scheme, but only a restriction on how the units could be used.
The Byrne decision has been well-received in a recent UK Privy Council decision, O’Connor (Senior) and others v The Proprietors, Strata Plan No. 51  UKPC 45, dealing with by-laws in the Turks and Caicos Islands. It may seem odd that a Privy Council decision should be seen as relevant in Australia, given the Privy Council is no longer a part of the Australian legal system, however the relevant provisions in the legislation of the Turks and Caicos Island had been lifted directly from NSW legislation and was identical to s.139(2) of the SSMA.
The Privy Council found that:
‘statutes prohibiting restrictions on dealing in strata lots do not prevent reasonable restrictions on the uses of the property, even though such restrictions may have the inevitable effect of restricting the potential market for the property.”
Decisions of the Privy Council are no longer binding in Australia. However, the expectation of many is that NSW courts and tribunals will now follow WA and Privy Council decisions and determine that s.139(2) of the SSMA does not prevent by-laws from restricting short term letting.
In fact, there is already a NSW Supreme Court decision, White v Betalli  NSWSC 537, which sets out that principle. In that case it was held that a restriction on the use of part of a strata complex for boat storage was not a restriction on dealing in granting an easement for boat storage.
There is now considerable doubt over whether the SSMA actually does prevent strata company by-laws from prohibiting short term letting in NSW. The uncertainty resulting from recent case law provides an extra headache for strata unit owners wishing to let their apartment on Airbnb, in addition to complying with zoning and planning requirements. It remains to be seen whether there will be legislative changes to clarify whether a body corporate can prevent short-term letting.
In the meantime, if you are purchasing a unit in a strata complex and you intend to use it for Airbnb, you need to pay close attention to the by-laws that exist in that complex, and be well aware that those can change over time. It is important to be involved in your strata body corporate and to be active in figuring out how to best manage any downsides associated with short term letting
If you are considering purchasing property in the ACT and require expert advice, contact us.Read more
In our article, ‘Can strata subdivision avoid minimum lot sizes in NSW?’ we reported on the decision of the Land and Environment Court in DM & Longbow Pty Ltd v Willoughby City Council  NSWLEC 17. In that case the Court held that the minimum lot sizes specified under clause 4.1(4) of the Standard Instrument LEP applied to lots being created under a strata scheme. While no doubt legally correct, this outcome came as a great surprise to many of us and was clearly not what was intended.
The Standard Instrument (Local Environmental Plans) Order 2006 (the Standard Instrument Order) has now been amended to clarify that lots under a strata plan or community title scheme are not required to meet the minimum lot sizes shown on the applicable Lot Size Map of a local environmental plan. This amendment effectively reverses the Court’s decision in the Longbow case.
Where a Council has adopted clause 4.1(4) of the Standard Instrument in its LEP, following the amendment of the Order on 20 April 2018, the sub-clause should now read:
4. This clause does not apply in relation to the subdivision of any land:
Clause 8 of the Standard Instrument Order provides that the amendments made by an amending order ‘do not apply to or in respect of any development application that was made, but not determined, before the commencement of the amending order’.
This means that the amended provision won’t apply to any pre-existing DA and that, to take advantage of the changes brought about by the amendment, existing DA’s will need to be withdrawn and replaced with a new DA.
Unless a further amendment is made to apply a different savings provision, Councils will need to be careful to apply the correct version of clause 4.1(4) having regard to the date on which a DA was made. Any DA lodged prior to 20 April 2018 proposing the creation of lots by registration of a strata plan will still need to comply with the relevant minimum lot size specified in the local environmental plan despite the amendment of the Standard Instrument Order.
For more information about this decision, or Strata subdivision, please contact Alan Bradbury.Read more
This month John Wilson, Managing Legal Director at Bradley Allen Love, spoke about recovering overpayments from employees.
John Wilson is Canberra’s leading employment lawyer. He is the Managing Legal Director at Bradley Allen Love and has been a NSW Law Society accredited specialist in Industrial Relations and Employment Law for over a decade. In 2017, John became a member of the NSW Specialist Accreditation Employment and Industrial Law Advisory Committee
Some enterprise agreements will allow employers to make deductions from wages to offset overpayments. In absence of any enterprise agreement, an employer should come to an agreement with the employee (in writing) about any future deductions from their wages.
This can happen in two ways, (1) the employee can refuse to pay back the money or (2) the employee can withdraw their consent to have deductions made from their wages.
In these circumstances the employer can seek to recover the overpayments by applying to the courts for an order of restitution. This is not a desirable outcome – it is much easier to come to an agreement with your employee in the first instance.
You can only recover an overpayment for up to 6 years. If a person has been overpaid for 10 years you will only be able to seek repayment for the last 6 (equally, an employee can only seek to be reimbursed for underpayments for up to six years).
Generally employers are not able to recover overpayments that arise out of a contract. If the employer accidentally gave the employee a contract with a larger bonus than intended the employer is most likely contractually bound to provide this bonus – even if it was not what they had had in mind.
Q: What if an overpayment happened 10 years ago but you only just discovered it today? Do you have 6 years from today to reclaim the overpayment?
A: No, you can only recover overpayments from the last 6 years regardless of whether the parties did or did not know about it.
The HR Breakfast Club runs on the third Friday of every month at BAL Lawyers. If you would like to be added to the invite list, please contact us. The next HR Breakfast club will be held on 18 May 2018 – for more details, please click here.Read more
Shareholder activism has been growing in popularity in Australia. It is a means by which minority shareholders can band together to pressure boards to act in certain ways (usually to the benefit of the minority shareholders with social goals, sometimes not). Advocates contend that shareholder activism is an important way of ensuring that company management remain accountable to their shareholders. Many directors and boards, on the other hand, view the actions of shareholder activists as myopic for focusing on short term earnings for shareholders or misguided for promoting goals that are extraneous to the company’s business, instead of long term growth and value creation.
Shareholder activism is made possible by the permissive regulatory framework which governs the rights of shareholders, including the Corporations Act which:
The Federal Court in RBC Investor Services Australia Nominees Pty Ltd v Brickworks Ltd  FCA 756 dealt an apparent blow to shareholder activism, instead preferencing board autonomy. The Court’s decision demonstrates that where directors have a basis to believe they are acting with the best interests of the Company in mind, the Court will be reluctant to intervene.
Brickworks Ltd (Brickworks) and Washington H. Soul Pattinson & Company Ltd (Soul Pattinson) are two companies that operate under a cross-shareholding structure implemented in the 1960s, meaning that each company owned approximately 40% in the other (such arrangements cannot be implemented today due to a prohibition in the Corporations Act). Perpetual Investment Management Ltd (Perpetual) is a minority shareholder of both Brickworks and Soul Pattinson.
Perpetual had engaged in shareholder activism against Brickworks and Soul Pattinson for many years, putting multiple proposals to the Board to have the cross-shareholding dismantled. In this case, Perpetual claimed it had been ‘oppressed’ (as a minority shareholder) due to the maintenance of the cross shareholding structure, which Perpetual argued entrenched the incumbent boards, thereby depressing the share price in each company.
Justice Jagot dismissed Perpetual’s claim for oppressive conduct stating there was no evidence that the dismantling would yield material longer term financial benefits to the shareholders of either company. In respect of Perpetual’s many failed attempts to dismantle the cross-shareholding structure, her Honour reaffirmed the principle that it is the responsibility of the directors (not the Court) to determine what is in the best interests of the company as a whole. Her Honour found that the Board had considered the range of potential effects of the each of Perpetual’s proposals (both positive and negative) and acknowledged the Board’s decisions to preserve the structure were duly informed and considered.
This outcome is in line with the Court’s traditional reluctance to intervene in or to punish directors for the result of ‘commercial business decisions’, lest it is unequivocally clear that irrationality, illegality, unfairness or oppression has occurred as a result.
Despite the loss by Perpetual in this case and the Court’s tendency to favour board autonomy, the rise in shareholder activism is a warning against corporate complicity and complacency. Boards should ensure that they at all times act in the best interests of the company, communicate proactively and clearly with shareholders, think strategically about all external communication and be ready to engage in dialogue if and when activists come knocking; even if only to save the costs of expensive litigation..Read more
Expert witnesses are special because they are allowed to give evidence about their opinion and not only about matters of fact.
The usual rule is that evidence given in Court must relate to matters of fact: what a witness did, saw or heard; and not matters of opinion: what the witness thought about what they did, saw or heard.
It is the judge’s role to listen to the evidence of what people did, saw or heard (i.e. ‘facts’) and draw inferences from those facts to form an opinion about what actually happened.
Expert opinion is an exception to the usual rule that allows a person who has specialised knowledge based on the person’s training, study or experience to give opinion evidence in Court proceedings that is based on that person’s expert knowledge.
The Evidence Act provides that, if a person has specialised knowledge based on the person’s training, study or experience, they are allowed to give opinion evidence that is wholly or substantially based on that knowledge. However, there are some rules about when and how this will be allowed. These are:
1. Relevance or helpfulness test
This is fundamental – evidence in any court proceedings is only admissible if it is relevant. Unless the expert evidence is relevant and will help the Court make its decision, the evidence will not be allowed.
2. Specialised knowledge test
This has two elements:
3. Qualifications test
The witness must be an expert in their field and must have acquired specialised knowledge on the topic based on their training, study or experience. Academic qualifications and experience usually go together – simply holding an academic qualification with no real experience would not be accepted by most of us as qualifying a person as an expert. However, sometimes people are recognised as experts even though they do not have the relevant academic qualifications if they have significant practical experience. For an example of this in a local government context, see our recent newsletter: https://ballawyers.com.au/2018/04/22/expert-witness/
4. Basis test
Again there are two aspects to this test:
The key instruments listed at the top of this Guide contain detailed requirements about the preparation and giving of expert evidence in the Land and Environment Court of NSW (the Court). The most important thing to be aware of is that the overarching duty of an expert witness is to the Court, not to any particular party.
The Court may require ‘competing’ experts to discuss their views to try and narrow or resolve the expert issues in dispute. This is called joint conferencing. The Expert Witness Code of Conduct sets out requirements in relation to the joint conferencing of experts. The Code currently requires the experts:
The Code requires each expert witness to exercise his or her independent judgment in relation to every conference in which they participate and in relation to the preparation of each expert witness report. It provides that the expert must not act on any instruction or request to withhold or avoid agreement.
The Court’s Practice Notes provide that legal representatives are not to be involved in the preparation of expert reports and are not to attend joint conferences of experts without leave of the Court. The legal representatives should however ensure that experts are familiar with the relevant parts of the key instruments listed above.
Where a dispute arises between the experts in the preparation of their joint report it is possible to seek directions from the Court to resolve the dispute – Landco (NSW) P/L v Camden Council  NSWLEC 86.
The Court’s Joint Expert Reports Policy provides that an expert report should:
1. Be prepared – thorough preparation is the key to being a credible and confident expert witness:
2. Take care in writing your expert report:
3. Be punctual and ready – Make yourself feel comfortable about the exercise and don’t arrive at Court feeling rushed. Talk to your party’s lawyers beforehand about how your evidence will be taken and make sure you are ready for what is coming. Even little things like being asked whether you will give your evidence on oath or affirmation can throw you if you are not expecting to be asked – especially if you are already feeling a little nervous. Have any papers you need ready to take with you into the witness box. Make sure documents are stapled, or logically organised in a folder, and paginated so you can find and refer to them easily.
4. Prepare thoroughly – make sure you have thoroughly read your individual and any joint report. There is nothing more embarrassing than finding that the other side’s lawyer has read something to you from your own report that contradicts your argument.
5. Make sure you understand each question before answering it – guessing what the question was can get you into trouble. There is nothing wrong with asking a lawyer to repeat a question.
6. Answer the question that was asked as directly, concisely, honestly and courteously as you can. Don’t try to work out where the questioning is going or answer the question that you think should have been asked – but wasn’t. Take your time – If you need to refer to your papers to be able to answer a question, say so. Don’t fall into the trap of trying to appear knowledgeable by answering too quickly. If you need a moment to consider your answer – take it.
7. Direct your answers to the judge/commissioner – they will be the one who will decide the case, not the lawyers asking you questions. Also, don’t look to your own party’s lawyer for approval when answering questions from the other side. And stay interested in what’s being said especially during ‘hot tubbing’ when questions are being directed to another expert – looking bored or distracted will not reflect well on you.
8. Make necessary and appropriate concessions – your objectivity is essential to the credibility and reliability of your expert evidence. This will not be lost by forcefully defending your opinion but it may be compromised if you are unwilling to give genuine consideration to other points of view.
9. Don’t lose sight of your primary obligation to assist the Court – it is very easy to fall into the trap of being an advocate for the party who engaged you. Your role is to provide an impartial opinion to assist the Court make an informed and fair decision. Don’t undermine your credibility by starting to argue for your client’s position.
10. Finally, don’t engage in personal exchanges with the other side’s lawyer – you will nearly always come off second best!
Read more Essential Guides to Local Government Law: https://ballawyers.com.au/local-government-guides/
If you would like to be notified when new Essential Guides are published, sign up to our mailing list at https://ballawyers.com.au/.
 We acknowledge the helpful assistance derived from the following articles in the preparation of these tips:
‘The Art of Giving Expert Evidence’ by Gerry Lagerberg published in The Lawyer 10 April 2000
‘Medical Expert Witnesses: Tips and Traps When Giving Evidence’ by Harry McCay and Dr Walid Jammal, Avant Mutual, 20 July 2017
Please note that the law detailed in this Essential Guide is correct as at April 26, 2018.Read more
The appeal arose from an application to modify a development consent for the construction of a dwelling house. The consent, which was granted in 2001, incorporated a design for a driveway to access the dwelling and the modification application involved a significant reconfiguration of the driveway. The driveway was steep and engineering evidence was called by both sides.
The council’s evidence was given by its development engineer. He held formal academic qualifications in engineering surveying but not in engineering. He did however have extensive experience, spanning almost 40 years in local government, in domestic driveway design.
His evidence was challenged by the applicant on two grounds. One was that he did not have appropriate qualifications to give expert engineering evidence to the Court as he had no formal engineering qualifications. The other was that, as an officer of the council, he had a conflict of interests and could not be regarded as an appropriate person to give expert evidence to the Court.
Both grounds of challenge were rejected by the Court in a decision handed down on 10 April 2018.
On the first ground, Moore J held that the qualification for a person to give expert evidence does not necessarily require that they have a university-based qualification. Instead, they should be able to demonstrate from their specialised training, knowledge or experience that they have obtained the necessary degree of specialised knowledge or skill to be regarded able to speak authoritatively about the subject matter in question. In this case the council witness clearly had significant relevant experience and an appropriate and relevant qualification to give expert evidence on the technical aspects of the proposed driveway design. His Honour commented (at ) that:
Indeed, to hold that the absence of a university-based qualification would disentitle Mr Clare from being accepted as an expert for the purposes of assessing Mr Doyle’s application would be intellectual arrogance of the highest order. It would also be bad at law!
The Court also rejected the second ground of challenge, saying that neither the expert witness nor the council as his employer had any pecuniary interest or other direct or indirect interest in the outcome of the proceedings.
Moore J said that a conflict of interests could arise where an expert witness might be perceived as having a direct or indirect pecuniary interest arising out of their employer’s role in particular proceedings and therefore did not meet the independence obligations imposed on expert witnesses. Excluding a potential witness in such a case may not be unreasonable, depending on the particular circumstances. However, his Honour observed that such a situation does not arise in the case of a council employee when the council’s position in the proceedings is consistent with the position adopted by the council employee. The Court noted that a contrary position arises where the position adopted by the council is inconsistent with the approach recommended by the council officer and observed that, to avoid such a conflict, it was customary for councils to engage external experts when that situation occurred.
 Doyle v Hornsby Shire Council  NSWLEC 45.
For more information about this case, or on council expert witnesses, please contact Alan Bradbury.Read more
As we start down the slippery slope towards the end of the 2017-18 financial year, conveyancers, solicitors, buyers and developers alike need to come to terms with the likely impact of the Treasury Laws Amendment (2018 Measures No.1) Act 2018 (Treasury Act) on real property transactions.
With the Treasury Act commencing on 1 April 2018, buyers (yes, buyers!) rather than the developer (or the supplier) must now withhold and pay directly to the Australian Taxation Office the GST payable on a taxable supply that is made by way of sale or long term lease of:
However, the withholding regime will not apply to new residential premises which have been created through substantial renovations.
The amount to be withheld by buyers will be equal to:
The amount must be withheld and paid to the Australian Taxation Office on the day on which consideration is first provided. In most circumstances, this will be on the day of settlement.
The Treasury Act applies to all contracts under which any consideration (other than the deposit) is first provided on or after 1 July 2018, though there is an exemption for those contracts entered into before 1 July 2018 and under which the consideration is first provided before 1 July 2020.
So what are the practical implications of the Treasury Act? Well, for a developer, they will still need to account for the GST amount in its BAS and will be entitled to a credit for the GST amount once paid by the buyer to the ATO. They will also need to give buyers notice specifying whether the buyer is required to withhold payment from the supply, and if relevant, the amount to be withheld and paid to the ATO.
It would be prudent for developers to consider a review of their existing developments and future sales to ensure both administrative processes and contract terms facilitate the requirements of the withholding regime.
Whilst the intention of the Treasury Act is to discourage GST avoidance, we expect the changes will be somewhat detrimental to developers and likely to lead to increased transaction costs.
For property developers who require further advice on these reforms, please contact a member of our Real Estate Development team.Read more
This month at Business Breakfast Club, we discussed changes to the Competition and Consumer Act 2010 (the Act) which change the notification regime and extend the type of prohibited conduct. The changes make it easier for small businesses to obtain legal protection from potential breaches of the competition laws which usually prohibit businesses from collectively bargaining with a customer or supplier. In particular, we focused on the illegal practices of ‘concerted practice’, ‘cartel conduct’ and ‘collective bargaining’. BAL Legal Director, Mark Love shared some of his insights on the topic. Mark touched on:
Competitors who engage in collective bargaining may be in breach of the Act. The most effective way for businesses to collectively bargain without risk of breaching the Act is to lodge a ‘notification’ with the Australian Competition and Consumer Commission (ACCC) which identifies the proposed bargaining group and the type of conduct they intend to engage in. The notification process has been available since 2007, but has historically been viewed by the business community as not providing a substantive practical benefit. This is because the notifications were interpreted narrowly by the ACCC so it was still possible to breach the Act. Now, notification can be given for a class of persons both in relation to the beneficiaries of the bargaining group and the targets (customers or suppliers). However, with the broadening of the notification regime comes a third basis for infringement: concerted practice.
Collective bargaining is an arrangement whereby two or more competitors come together to negotiate terms, conditions and prices with a supplier or a customer. Essentially, collective bargaining tends to benefit smaller businesses who do not have the volume (of sales or purchases) alone to give them bargaining power. Permission to collectively bargain can be obtained through the notification or authorisation procedures of the Act provided there is some ‘public interest’ in allowing the conduct.
Cartel conduct encompasses agreements between competitors to fix prices, divide markets, rig bids, or restrict outputs thus restricting competition. To prove “cartel conduct” the ACCC is not required to prove that there has been a lessening of competition as a result of the conduct, rather the ACCC must demonstrate that:
The Court considered ‘cartel conduct’ in ACCC v Australian Egg Corporation Limited  FCAFC 152. In that case, the ACCC alleged that Australian Egg Corporation Limited (AECL) and two egg producing companies, Ironside Management Services Pty Ltd (T/A Twelve Oak Poultry) and Farm Pride Foods Limited attempted to induce egg producers who were members of AECL ‘to enter into an arrangement to cull hens or otherwise dispose of eggs, for the purpose of reducing the amount of eggs available for supply to consumers and businesses in Australia’.
Virtually every aspect of the ACCC’s case against AECL was found by the presiding judge to be true and based on largely uncontested facts, specifically the conduct of the parties at an industry summit brought together urgently to address the very issue of the oversupply of eggs and the damage that was apt to do to egg producers and the Australian Egg industry. However, despite the findings of fact the Court found AECL was not in breach of the Act because the conduct was something ‘less than a binding contract or arrangement’.
As a result of the AECL decision, the Act now includes a third basis of infringement which is a hybrid of the cartel and collective bargaining provisions. Concerted practice is a form of coordination between competing businesses by which, without them having entered a contract, arrangement or understanding, practical cooperation between them is substituted for the risks of competition. There must be the purpose or likely effect of substantially lessening competition which has been held to be ‘whether the effect of the arrangement was substantial in the sense of being meaningful or relevant to the competitive process’.
Q. What are the risks associated with lodging a notification to the ACCC?
A. Lodging a notification to the ACCC requires businesses to disclose information regarding the proposed conduct in a sufficiently precise manner. The ACCC can then consult with interested parties and assess the notification. As part of the notification, it is important that you:
Some businesses may be reluctant to disclose this information as it may prompt the ACCC to carefully scrutinise the conduct of the businesses engaged in exclusive dealing. Further, once notification is lodged with the ACCC, it is published on the ACCC’s public register. Businesses must determine whether the risks associated with notifying the ACCC of the proposed conduct (the publication of business information) outweighs the risks of not obtaining the ACCC’s “blessing” for the conduct. Remember, breaches of the cartel, collective bargaining (and now) concerted practice provisions can result in criminal prosecution.
The Business Breakfast Club is held on the second Friday of each month, the next one is on 11 May. If you would like to attend, please contact us to be added to the invite list.Read more
Four BAL Directors have been recognised for their legal excellence in the 2018 edition of the Australian Financial Review’s Best Lawyers Australia list. Produced by a peer review company and published by the Australian Financial Review, the list is compiled following an extensive evaluation process. The list includes more than 3,300 lawyers from 330 law firms nationwide, up from more than 3000 last year.
The directors have been successful in the following practice areas:
This is the ninth consecutive year the Alan Bradbury has been acknowledged for his expertise. Managing Legal Director John Wilson makes his sixth appearance in the list, while Mark Love and John Bradley were again recognised for their respective practices.
John Wilson congratulated his fellow Legal Directors on their achievements.
“A listing in Best Lawyers is a considerable honour, reflecting as it does the praise of fellow practitioners in each speciality,” he said. “For three of my colleagues and I to be included speaks highly to the calibre of our team at Bradley Allen Love.”
Best Lawyers is the oldest and most respected peer-review publication in the legal profession. A listing in Best Lawyers is widely regarded by both clients and legal professionals as a significant honour, conferred on a lawyer by his or her peers. For more than three decades, Best Lawyers lists have earned the respect of the profession, the media, and the public, as the most reliable, unbiased source of legal referrals anywhere.
Best Lawyers is the oldest and most respected attorney ranking service in the world. Since it was first published in 1983, Best Lawyers has become universally regarded as the definitive guide to legal excellence. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation. 83,000 industry leading attorneys are eligible to vote from around the world, and Best Lawyers received almost 10 million evaluations on the legal abilities of other lawyers based on their specific practice areas. Lawyers are not required or allowed to pay a fee to be listed; therefore inclusion in Best Lawyers is considered a singular honour.Read more
A building dispute running for the better half of two decades between the owners of Units Plan 1917 and the developer, Koundouris Projects, appears to have finally come to an end on 16 February 2018 with the High Court refusing Koundouris’ application for leave to appeal against the decision of the ACT Court of Appeal in Koundouris v Owners – Units Plan No 1917  ACTCA 36.
Originally heard in 2016, the matter concerns a claim by the owners of Units Plan 1917 against the builder, Mr Koundouris, in relation to the construction of the Lagani apartment complex and the various issues in the complex following its completion, including the existence and ongoing water leaking and damage in units and the cracking of masonry and facades. The matter heard was complex, particularly due to the various changes in legislation having taken place during the construction phase, and turned on the interpretation of the statutory warranties contained in the Building Act 1972 (ACT) (now repealed) and the Building Act 2004 (ACT). Though the primary judge held that Mr Koundouris had indeed breached these statutory warranties, it was the decision of the ACT Court of Appeal that provides greater certainty to unit owners, builders and developers alike as to the application of the statutory warranties in off-the-plan contracts for sale.
The ACT Court of Appeal largely upheld the primary judge’s decision but made the following important distinctions:
Though some might suggest that the decision of the ACT Court of Appeal may discourage builders from attempting to repair building defects for fear of inadvertently extending the limitation period under the statutory warranty, the decision makes clear that the intention of the statutory warranties are to protect the consumer from shoddy building work and that the provisions of the legislation should be interpreted accordingly.Read more
Thankfully, more people are becoming aware and talking more openly about Elder Abuse and its prevalence among the Australian community. The most common type of elder abuse is the financial exploitation of a close elderly family member (followed by psychological and physical abuse).
Unfortunately, much of the financial exploitation stems from misuse by an attorney appointed pursuant to a Power of Attorney document.
This article presents a brief summary on how financial exploitation through a Power of Attorney can take place, and the remedies available against a ‘rogue’ attorney.
Putting in place a Power of Attorney has practical advantages – it is a relatively low cost, informal and private appointment by a donor allowing the appointment of a person or persons (the ‘attorney’) to make decisions on the donor’s behalf with regard to their financial and property matters.
Unfortunately, it is the informal, private and unregulated nature of a Power of Attorney that makes it susceptible to misuse.
A Financial Management Order by contrast requires a formal application to the relevant State or Territory Guardianship or Financial Management Board or Tribunal (in the ACT, this would be the ACT Civil and Administrative Tribunal or simply, ‘ACAT’). The Board or Tribunal is then responsible for ensuring a decision is arrived at having regard to all the evidence, including medical evidence, arguments and submissions by interested persons and that a decision is ultimately made in the best interests of the interested person.
Perhaps one of the most notable cases of financial exploitation was highlighted in the case of Brennan v State of Western Australia. Mr Kopec was a polish migrant living in Western Australia with very few relatives in Australia. He lived by himself on a farm and was suffering from deteriorating physical and mental health. Mr Kopec appointed Damien Brennan, a legal practitioner as his attorney pursuant to an Enduring Power of Attorney. Over the span of the next 8 years, Mr Brennan continued to misappropriate close to $900,000 of Mr Kopec’s estate including continuing to operate the Enduring Power of Attorney well after Mr Brennan had died.
A more recent case involving the misappropriation of funds by an attorney is the case of Mezzapica v Mezzapica which was handed down in November 2017. This case involved an elderly Italian mother who had appointed her two sons as her attorneys. After the mother’s death, one of the sons (Robert, the Plaintiff) questioned a number of transactions which were entered into by the other son (Renato, the Defendant) including a number of cheques which Renato had drawn from his mother’s Commonwealth Bank account in favour of himself.
The Court held that the cheques were not actually drawn in the exercise of Renato’s power as his mother’s attorney. The Court did however find that Renato had misappropriated other funds (totalling over $62,000) from a trust account which held in his mother’s name for the benefit of her grandchildren. This misappropriation by Renato constituted a breach of trust by his mother such that the mother’s estate had to account for the loss.
Fortunately in this case, it was held that the mother did not suffer a loss. At the date of this article it is not clear whether further action will be taken against Renato for his acts as his mother’s attorney.
The range of remedies available in circumstances of financial exploitation and misappropriation can be broadly classified into three categories:
A brief overview of each of these is discussed further below:
Victoria, Queensland, South Australia, the ACT and Tasmania have specifically legislated to impose substantial penalties or allow for compensation for the donor (or their estate) caused by the failure of an attorney to comply with their statutory duties in the exercise of their powers
The remaining States and Territory (Western Australia, Northern Territory and New South Wales) do not provide any legislative right to seek compensation or damages from an attorney where the donors assets have been misappropriated if there has been proof of financial exploitation. The only statutory remedy in Western Australia, Northern Territory and New South Wales is that an application can be made to the relevant State and Territory Court or Tribunal (or, the Court or Tribunal can make a decision on their own initiative) to revoke a Power of Attorney if they are satisfied it is in the best interests of the Donor.
There are three fundamental equitable grounds upon which a Court can set aside a transaction involving financial exploitation by an attorney:
At the present time, there is no specific criminal offence in any Australian jurisdiction that deals with financial exploitation of an elderly person, through a Power of Attorney or otherwise. Financial abuse and exploitation can be prosecuted through a variety of property offensive including misappropriation of property, theft or fraud and in some cases, domestic violence or abuse. In the ACT, there is a separate offence for dishonestly obtaining a financial advantage by deception 
In reality however, there has been a noted failure by police to investigate and subsequently prosecute for criminal offences in cases where there has been financial exploitation of an older person generally. There is also typically a strong desire by older persons to maintain family privacy and as a result, financial exploitation is often unreported.
 Brennan v The State of Western Australia  WASCA 19
 Mezzapica v Mezzapica  NSWSC 1553
 Powers of Attorney Act 2014 (VIC) s77, Powers of Attorney Act 2006 (ACT) s 50 – time limits apply from when the application must be made to compensate the principal or the estate, Powers of Attorney Act 1998 (Qld) s106-107, Powers of Attorney and Agency Act 1984 (SA) s 7, Powers of Attorney Act 2000(TAS) s32
 Commercial Bank of Australia Ltd v Amadio  HCA 14
 Part 3.3 Division 3.3.2 of the Criminal Code 2002 (ACT)Read more
Class 1 appeals dominate the Land and Environment Court’s caseload. Many of these are commenced against the ‘deemed refusal’ of a development application. This occurs when the consent authority fails to determine the application within the assessment period prescribed by the Environmental Planning and Assessment Act 1979 (the Act) and the Environmental Planning and Assessment Regulation 2000 (the Regulation). It is therefore important that applicants and consent authorities understand the correct approach to calculating when a ‘deemed refusal’ will occur, and also know how to extend the development assessment period where necessary. This essential guide will look at when the development assessment clock stops and what events will restart it.
Under the Regulation consent authorities have 40, 60 or 90 days to determine a development application, depending on what type of application it is. This is known as the assessment period. ‘Days’ in this context means all days – not just business days. If the consent authority does not determine the application within the assessment period then the application is deemed to have been refused. The applicant then has the right to seek review of that decision in the NSW Land and Environment Court within six months of that date.
When calculating the length of the assessment period, the day on which the development application is lodged, as well as the following day, are not included. This is to allow the consent authority time to register and check the application for compliance with the requirements of Schedule 1 of the Regulation before the merits assessment is commenced.
If the application does not identify all relevant integrated development approvals or concurrence requirements then the consent authority might take longer than the two days to check the application. To allow for this, for integrated development or development requiring concurrence, the assessment period starts at the earlier of 14 days after the development application is lodged or the date the application is referred to the relevant concurrence authority or approvals body.
The assessment period ‘clock’ can be stopped by:
How these two processes operate to stop the assessment clock is set out below.
It is common during the development assessment process for a decision maker to require additional information in order to properly consider an application. The assessment ‘clock’ can be ‘stopped’ if:
In practice, the relevant period in which a request for further information can be made that will have the effect of stopping the assessment clock is 27 days (because of the additional two days allowed under clause 106(c) of the Regulation) unless the application is for integrated development or development which requires concurrence or an approval from another body. If the consent authority asks for additional information in this period then the assessment period clock stops on the day of the request. If a concurrence or approvals body makes the request, then the assessment clock stops on the day that the consent authority receives the request from the concurrence or approvals body. If more than one request for additional information is made while the assessment clock is stopped then the clock stays stopped until all requests have been addressed.
The assessment clock can also be stopped if, in relation to integrated development which requires consent under the National Parks and Wildlife Act 1974, the Chief Executive of the Office of Environment and Heritage is of the opinion that it necessary to consult with an Aboriginal person, land council or other organisation before a decision concerning the general terms of approval can be made and the consultation commences within 25 days after the date on which the development application is forwarded to the Secretary of the Office of Environment and Heritage In this case the clock is paused for the consultation period, provided this is not longer than 46 days from the date on which the development application was lodged with the consent authority.
To be effective, the request for additional information must be made in writing , must inform the applicant that the clock has stopped and must be made within the time allowed in the Regulation. It may also specify a reasonable period within which the information must be provided.
An authority can ask for additional information outside the period described above; however, this will not have the effect of ‘stopping the clock’ and will not extend the assessment period or delay the deemed refusal date.
Amending a development application under clause 55 of the Regulation can also have the effect of resetting the ‘clock’ for the assessment period. Whilst this in itself is no longer controversial, it can be difficult to determine whether and when a particular development application has been amended.
This issue was considered in two recent Land and Environment Court decisions: Australian Consulting Architects Pty Ltd v Liverpool City Council  NSWLEC 129 and Lateral Estate Pty Ltd v The Council of the City of Sydney  NSWLEC 6. In both cases the applicant argued that an exchange of correspondence between the applicant and council constituted an amendment of the development application such as to restart the assessment period and push back the deemed refusal date to a date within 6 months of the commencement of the appeal. In each case the Court found that the ‘dribs and drabs’ approach to making changes to the application was insufficient to constitute an amendment to the development application for the purpose of clause 55, and did not restart the clock for assessing the application. In Australian Consulting Architects the Court clarified that, for this to occur, it would be necessary for the applicant to put a settled, composite proposal to the consent authority and for this to be accepted by the authority for assessment and determination.
The assessment period clock restarts when the applicant:
If the request for additional information came from a concurrence authority or referral body, then the assessment clock restarts 2 days after the consent authority refers the requested information to that entity (or notifies it that the information will not be provided).
When identifying when the assessment periods ends, it is also important to remember that s 36 of the Interpretation Act 1987 prevents any assessment period from ending on a Saturday, Sunday, or public holiday. In these cases the next working day is taken to be the last day of the assessment period.
It may be difficult to work out whether the clocks have restarted where:
If the information provided in response to a request for additional information is inadequate, or if further additional information is required, the consent authority can stop the assessment ‘clock’ again and request further information. If the new request is made within the relevant 27 day period then this subsequent request can also ‘stop the clock’. In calculating the 27 day period in which any subsequent request for additional information may be made, any days for which the assessment clock has already been stopped are not counted.
As noted above, if an applicant does not provide the information within the time specified in the request for additional information/the stop the clock notice, then the clock will generally restart after that date has passed. However, the time for the provision of the additional information can be deemed to have been extended by the authority in certain circumstances.
This situation arose in Corbett Constructions P/L v Wollondilly Shire Council  NSWLEC-135. In that case the Council had asked the applicant to provide a substantial amount of additional information within 28 days in relation to a development application for a large medium-density residential development. After the deadline had passed an exchange of emails took place between the applicant and the Council in which the applicant indicated that the additional information would be provided ‘in the coming weeks’ and the Council acknowledged and appeared to accept the delay. The Land and Environment Court found that the Council’s actions effectively amounted to an implied extension of time for the provision of the additional information, thus delaying the restarting of the assessment clock and the date on which the 6 month appeal period started. To avoid this uncertainty, any extensions of time for the provision of the additional information should be given formally in writing by the Council and expressly state that the stop the clock provisions remain in effect.
It is important for a development applicant and consent authority to know the date when an application must be determined or will otherwise be deemed to be refused. To be able to do this it is necessary to consider whether, when and for how long the assessment clock was ‘stopped’ in accordance with the principles set out above.
 Land and Environment Court – Class 1: Environmental Planning and Protection Appeals – Fast Facts at http://www.lec.justice.nsw.gov.au/Pages/types_of_disputes/class_1/class_1.aspx accessed at 9 March 2018
 Section 8.11 of the Act
 Section 8.10 of the Act.
 Clause 107 of the Regulation
 Clause 108 of the Regulation
 Clause 109 of the Regulation
 Clause 110 of the Regulation
 For those applications, the assessment period starts at the earlier of 14 days after the development application is lodged or the date the application is referred to the relevant concurrence authority or approvals body: clause 108 of the Regulation
 Clause 111 of the Regulation
 Clause 54(2)(a) of the Regulation
 Clause 112 of the Regulation
 Clause 54(2)(b) of the Regulation
 Clauses 54 and 109 of the Regulation
Please note that the law detailed in this Essential Guide is correct as at March 22, 2018.Read more
This month, guest speaker, Lauren Sayers – Deputy HR Manager at the ANU spoke about the importance of developing a wellbeing program for the workplace, and some tips on how to implement one successfully.
Lauren is an ACT Australian HR Institute (AHRI) Council member & forum convenor and has 15+ years of management and HR experience across Hospitality, Telecommunications and Tertiary Education sectors. Lauren spoke about:
Employee health and wellness programs can include activities that promote good employee health, identify health-related risks in the employee population, and
look to support any potential health-related problems present in the employee population.
Employers should work to create a healthy workplace for a few broad strategic reasons:
A further example of reasons to invest in employee health and wellbeing and the relationship between employee healthand engagement.
The following examples can be used to build a workplace wellbeing program.
The HR Breakfast Club runs on the third Friday of every month at BAL Lawyers. If you would like to be added to the invite list, please contact us. The next HR Breakfast club will be held of 20 April 2018 – for more details, please click here.Read more
This month at Business Breakfast Club, we discussed the changes to the Privacy Act which introduced a mandatory notification procedure for eligible data breaches. BAL Director, Katie Innes shared some of her insights on the new responsibilities surrounding information and Privacy law. Katie touched on:
An eligible data breach is either:
Notification relating to an eligible data breach is a written statement to the individuals affected by the breach and the Office of the Australian Information Commissioner and must include:
In certain circumstances, the Commissioner may declare that notification and a written statement about the eligible data breach is not necessary. The Commissioner may make this determination having considered factors such as the public interest, advice given to the Commissioner by an enforcement body or any other matters the Commissioner considers relevant.
If you follow one of the above steps, then you may not be required to notify the individual affected by the data breach.
A. Where the breach has occurred by one or more other entities, only one entity is required to undertake the process of investigation and notification. Essentially, compliance by one is compliance by all. You will need to determine how to allocate responsibility for compliance, and establish who has the most direct relationship with the individuals at risk to take the lead in investigation.
A. In certain circumstances, yes. Organisations that hold personal information about an individual can only use or disclose the information for the purpose or purposes for which it was collected (known as the ‘primary purpose’ of collection). However you can use the information for a ‘secondary purpose’ if:
(a) the individual has consented; or
(b) the individual would reasonably expect you to use the information for the secondary purpose and the secondary purpose is:
(i) directly related to the primary purpose (if it is sensitive information); or
(ii) related to the primary purpose (if it is any other personal information).
(c) the use or disclosure is required by law or a Court; or
(d) a general permitted situation exists.
In respect of mailing lists, individuals have the right to update their preferences, by asking the organisation to correct their information or ‘opt out’ of the mailing list entirely.
A. No. The recent changes to the Privacy Act focus on the obligation to notify the OAIC or the individuals affected if there is an ‘eligible data breach’. Individuals remain entitled to access their own personal information through Australian Privacy Principle 12 (and could exercise that right through a lawyer).
If the organisation disclosed information to a third party (without consent or without the legislative obligation to) then it could be considered a data breach and, depending on the potential risk to the individual affected, may be an eligible data breach.Read more
Aluminium Composite Panelling, also known as cladding, fuelled the devastating Melbourne Lacrosse building fire in November 2014 and the Grenfell Tower fire in London in June 2017. Cladding can be combustible when it uses flammable aluminium composite panels with a highly flammable polyethylene core. The polyethylene core is comparable to pouring petrol on a fire – the result is the devastating spread and severity of a fire.
Combustible cladding has been used on thousands of commercial buildings, shopping centres, government buildings and a number of residential buildings throughout Australia, including the ACT.
Private building certifiers currently regulate builders, architects and suppliers in the ACT. They determine and regulate the safety of buildings and as such, the approval process is assessed on a case by case basis that is not regulated by the ACT Government. The result has been, at times, a failure by the building industry to self-regulate.
The Building Products (Safety) Bill 2017 was introduced in NSW to help prevent the use of dangerous building products such as dangerous cladding. This Bill delegates power to the Commissioner of Fair Trading to ban building products that may create safety risks in the event of fire. The objective of the Bill is to prohibit builders, building product suppliers, manufactures and importers from using dangerous products by imposing heavy penalties if they do not produce their records of building materials following a request by Fair Trading. The Bill also empowers Councils to order buildings be rectified if dangerous cladding is identified or if banned products have been used.
At the Federal level, the Customs Amendment (Safer Cladding) Bill 2017 was introduced in September 2017. It set out in its explanatory memorandum that the cladding issue is a most serious public safety issue that requires urgent action. The Bill prohibits the importation into Australia of polyethylene core aluminium composite panels. The Bill was introduced on an urgent basis due to the Federal and State failure to adequately respond to the requirement for safer cladding. Although it prevents the importation of polyethylene core aluminium panels, it does not prevent the use of polyethylene which has already been imported to Australia or is already used in buildings.
Combustible cladding has been found on a number of buildings. But what does this mean for someone who has purchased a unit in one of these buildings or is a potential purchaser? Two recent cases in the High Court have shown that a builder does not owe a duty of care to the owners corporation or a subsequent buyer for a latent and previously unknown defect in a building. A latent defect is a defect in the property that could not have been discovered by a reasonably thorough inspection. The question of whether dangerous cladding is a latent defect has yet to be considered by the Courts.
The consequences of the decision of the High Court are that if you discover your building is affected by dangerous cladding, you may not be able to make a claim against the builder, architect or suppliers for the costs of the removal or any damage caused by the dangerous cladding, such as a fire. As such, combustible cladding not only poses a serious health and safety hazard to its occupants but may also expose subsequent buyers and owners corporations to serious liability and costs.
If you are purchasing a new unit or property which uses cladding, we recommend you make an appointment with one of our specialist Real Estate lawyers. Due to the complicated nature of contract negotiation and our extensive experience representing buyers in new developments, we are able to assist you in negotiating the terms of your contract to include warranties that protect you from the risks associated with dangerous cladding.
For more information or how to protect yourself and your property against dangerous cladding, please contact George Kordis, Special Counsel.Read more
In order to prevent children from falling from windows, new requirements for window safety devices to be installed on windows in strata schemes are set to come into force in NSW.
Safety devices must be installed by 13 March 2018. NSW Fair Trading advises that non-compliant Owners Corporations may face fines if safety devices are not installed on all relevant windows by the 13 March deadline.
Owners Corporations may be able to pass the cost onto individual unit owners for installing the safety devices. We recommend you contact BAL Lawyers for advice on applicable scenarios.
The new requirements apply to any strata building containing Lots used for residential purposes.
Safety devices must be installed on any openable windows where the floor inside is more than 2m above the ground outside and the lowest part of the window is less than 1.7m above the floor inside. This applies to windows in individual residential units, as well as on Common Property.
Safety devices must be capable of limiting the maximum opening of the window to be less than 12.5cm and be capable of withstanding a certain amount of force (250 Newtons).
Yes, the safety devices can be temporarily disengaged and windows fully opened, if residents choose.Read more
Gone are the days when someone’s assets consisted of their house, a car and some black and white photos. A whopping 3.431 billion people are plugged into the internet worldwide as of August 2016and most clients we see have some form of Digital Assets – that is, anything you own or have certain rights over that exists online or are stored on computers or other digital technology.
Take a moment to consider your digital technology, which may include any one (or perhaps all) of the following:
Now take a moment to consider what would happen to your digital technology once you die. Specifically, consider:
A proper Estate Plan therefore requires a consideration of the rights to the asset and/or intellectual property as well as the policies with regard to the service or host provider.
Let’s run through some of the most commonly used platforms and assets:
Social Media eg Facebook , Instagram, Youtube – the basis of most social media sites is to provide free content hosting in exchange for the user granting the site a licence to use the content. The Terms of Service set out the terms of the licence.
It is a well-known fact these days that a Facebook user for example, has no ownership in the content of the material they upload onto their social media account. The Facebook Statement of Rights and Responsibilities specifically states that ‘you grant us (Facebook) a non-exclusive, transferable, sub-licensable, royalty free, worldwide licence to use any IP content that you post on or in connection with Facebook’.
If the user does not ‘own’ the content posted on these social media sites, neither does their executor of their estate. Using the example of Facebook, once you die, a friend, family member, or your executor can request to have your user account memorialised or permanently removed from Facebook. Even if an account is permanently deleted, Facebook is entitled to retain the rights and sublicense to everything that has ever been uploaded onto the user account.
Apple ID Account – The Apple Media Services Terms and Conditions generally states that once media is downloaded, you do not actually own or obtain legal title to the media – you simply obtain a licence to use the media. Licences are generally not transferable to your executor or beneficiaries. Generally speaking therefore, your Apple ID account and downloaded content will not form part of the estate. There is the option however with family sharing to transfer material from one computer to the next, and therefore that might be the solution to ensuring the digital library is accessible after death.
Google Account – your Google Account is perhaps the most important account to access after you die. Google offers a number of online services including Gmail, Google Drive, Picasa and Google Plus. The Google Terms of Service that’s that the user retains ownership in the intellectual property, but (similar to most social media sites) when content is uploaded onto any Google product, google is given a worldwide licence to use the content and that licence continues indefinitely.
If your Executor wants access to your Google Account, they will need to contact Google administrators and seek access, which may not always be granted (as per the Terms of Service).
Cryptocurrencies – Cryptocurrencies are not backed by any government regulator. Instead people often store their Bitcoins in an encrypted ‘digital wallet’, usually via an app on their phone or laptop. Digital wallets often use two keys to allow the owner access – a public key that anyone can see and a private key. If your Executor or Beneficiaries do not know this key, there is almost no way they can access your Bitcoin. On the other hand, providing this information to your Executors or Beneficiaries during your lifetime may compromise the security of the Cryptocurrency.
Once our digital assets are identified, they are treated much the same as any other asset. From a practical sense, what should you do to assist your family, next of kin or executor in dealing with or even erasing your ‘digital footprint’ once you have died?
This question is very personal and specific to many. In some cases, it would be appropriate to leave a list of your usernames, passwords and ‘keys’ to the online assets so they can be dealt with. But perhaps not always.
A holistic review of your Estate Plan should involve a consideration of your digital assets, Intellectual Property laws, an understanding of common platforms and a sensible approach in managing these assets after you are gone. To create or review your will and estate plan, please contact us.Read more
Assignments of lease are common, but even experienced landlords might be caught by surprise by the strict timeframes legislation imposes for responding to a request for assignment. The process for dealing with a request for consent to the assignment of a lease contains many potential pitfalls for a landlord, and failure to address such a request properly can have dire consequences.
A tenant wishing to assign its lease under the Leases (Commercial and Retail) Act 2001 (ACT) (LCRA) must first provide a disclosure statement to the prospective assignee and then make a request in writing for the landlord’s consent to the assignment.
Once the tenant has requested consent, the landlord has 14 days to request further information. The LCRA limits the information that can be requested, however it includes information about the financial standing of the assignee and/or guarantor, a certificate of occupancy for the premises, information about the business skills of the prospective assignee, information about the proposed use of the premises by the assignee and references relating to the ability of the prospective assignee to operate the business on the premises.
The landlord must respond to the tenant’s request by either providing or withholding consent within 28 days after receiving the request, or within 21 days of receiving any information requested. If the landlord does not provide a response within that timeframe, the landlord is deemed to have consented to the assignment.
A landlord can only withhold consent to an assignment of the lease where it is reasonable in all the circumstances to do so. There are certain grounds where refusal is taken to be reasonable, such as if the proposed use of the premises is for a purpose not allowed under the lease or if the proposed use of the premises will not be compatible with other tenants in the building or if the existing tenant is in breach, but otherwise the landlord has the burden of proving it was reasonable. The reasonableness of a decision to withhold consent can be difficult to determine. Under the LCRA a landlord may recover the legal costs of making the decision about whether to consent, so it is worth seeking professional advice.
In NSW the governing legislation is the Retail Leases Act 1994 (NSW) (RLA). The request for landlord consent must be made in writing and the tenant must first provide the assignee with an up to date disclosure statement.
The tenant must also provide the landlord with such information as the landlord may reasonably require about the finances and retail skills of the assignee. Unlike the ACT however, there are not clear timeframes for seeking and providing this information.
The landlord must deal with a request ‘expeditiously’ and if the landlord has not responded within 28 days, the landlord is deemed to have given consent.
A landlord may, in the provisions of the lease, reserve the right to refuse to consent to the tenant assigning the lease. However, absent of any specific provision in the lease, a landlord may only withhold consent in specific circumstances, including if the assignee proposes to change the use of the premises, has inferior finances or retail skills to the tenant, or the tenant has not complied with the legislated process for assignment, including providing requested information.
Disputes often arise in the course of a request for consent to assignment of a lease, particularly over whether information has been requested in time, whether adequate information has been provided, and whether the request for information conforms to the legislation. If a landlord mistakenly believed it was waiting on further information on the proposed assignee and failed to respond to the tenant’s request within 28 days, the landlord would be deemed to have consented to the assignment. In such a situation, not only would the landlord have a new tenant it may not have wanted, but the lease will no longer be enforceable against the original tenant should any issues arise (s.103 LCRA and s.41A RLA).
The key lesson is being aware of timeframes for responding to requests for assignment of a lease and understanding the complexity surrounding requests for further information and grounds for refusal. Correctly responding to a request for consent to assignment of a lease is a process that requires expert guidance. Failure to respond in the correct time period can result in a landlord being deemed to have consented to a transfer. In order to reduce the risk, landlords should contact their legal advisors as soon as they receive a request for assignment.
If you require expert advice in your commercial leasing matters, contact BAL Lawyers.Read more
Following on from our introduction to the Agreement for Lease (AFL), there are a number of matters that prospective landlords and tenants need to watch out for when negotiating an AFL. We provide the following tips so that you can know your rights and the associated risks, to ensure your agreements reflect your interests.
As we have noted, an AFL is often more complicated that the eventual Lease, and negotiations for both these documents can last upwards of several months, depending on the complexities. An option that parties often turn to is entering into a shorter, less formal document setting out their agreement in brief terms. This is often referred to as a Heads of Agreement (HOA).
A distinct advantage of an AFL is that it is enforceable, including by way of specific performance. A party disadvantaged by a non-complying party can seek relief by way of Court orders that the other party perform their side of the bargain. However, does a HOA give rise to the same level of protection?
This depends. The Court will seek to uphold the bargain reached by the parties, so the first issue it faces is to work out what the parties actually intended. The options for parties when negotiating an AFL are to enter into a HOA that will:
Ideally, your AFL will contain a greater amount of detail than a HOA; however, both documents may be enforceable provided agreement is reached on the following fundamental criteria:
Beyond the “four P’s” above, a Court may imply standard terms required to make an AFL and Lease, particularly if there is evidence as to the parties’ intentions (for example, a reference to entry into a landlord’s standard leasing documents). In this case, a detailed HOA may contain enough agreed terms to operate as an AFL.
If the four Ps are not agreed, there is insufficient certainty for a HOA or AFL to be enforced.
Consider your needs carefully. Is the property/tenant a rare opportunity, such that you are willing to enter into an immediately binding agreement, notwithstanding the fact that your negotiations are not finalised? In circumstances where parties agree to be immediately bound, a Court will enforce that agreement by determining (where possible) additional terms required for performance.
Alternatively, you may wish to secure the property for a period of time, without yet locking yourself into an AFL and a binding commitment to enter into a lease. In this case, you have the option of agreeing to continue negotiations in an exclusive dealing period, without a binding obligation to enter into an AFL.
There are risks regardless of whether or not you choose to be bound at this preliminary stage. If you are unsure as to the most suitable option for you, we recommend that you seek advice. In all respects, remember that whether or not a binding agreement exists depends on the intention of the parties, as can be inferred from the agreement itself. Whether you are negotiating a HOA or an AFL, ensure that it clearly sets out what you understand to be the agreement, and what you are willing to perform.
For advice on negotiating an Agreement for Lease, please contact Laura Scotton.Read more
You would assume that a Vendor who agrees to complete works on a Property prior to completion of the Contract is required to do so prior to the agreed completion date specified in the Auction Contract, especially if the Contract required them to do so. You may equally assume that, if a Vendor fails to complete such works prior to the completion date, the Purchaser would be entitled to terminate the Contract. However, as shown by the NSW Court of Appeal case of Namrood v Ebedeh-Ahvazi  NSWWCA 310, nothing in the world of Contract law can be so readily assumed.
Mr Namrood (the Purchaser) was the successful bidder at auction to purchase a vacant residential block of land from Mr Ebedeh-Alwah (the Vendor). The Purchaser only became aware of the auction on the auction date and did not seek legal advice on the terms of the auction contract. The Contract entered into between the parties contained a special condition under which the Vendor undertook to remove loads of soil and restore the level of the Property in accordance with a Council Notice issued to the Vendor prior to ‘Completion’ (the Vendor Works). The Council Notice made non-compliance an offence open to prosecution.
The ‘Completion Date’ in the Contract was 20 June 2015. By this date, the Vendor had not completed the Vendor Works. After protracted correspondence between the parties, the Purchaser purported to terminate the Contract due to the Vendor’s non-compliance. The Vendor did not agree that the Purchaser had validly terminated the Contract and continued to complete the Vendor Works; following which the Vendor sought to compel the Purchaser to complete the Contract. When the Purchaser refused to complete, the Vendor sought to terminate the Contract and keep the deposit.
The NSW Court of Appeal determined there was a clear distinction in the Contract between the terms ‘Completion” and “Completion Date”. The Completion Date was defined as 20 June 2015. The term Completion, however, meant the date on which title to the Property was actually transferred. This date (as would be the case) was not necessarily 20 June 2015.
As the parties had chosen ‘Completion’ and not the ‘Completion Date’ as the time by which the Vendor was required to complete the Vendor Works, the Vendor was not required to do so prior to 20 June 2015. Rather the Vendor was only required to complete the Vendor Works prior to the date on which the Contract was actually completed. This meant the Vendor was not in breach when the Purchaser purported to terminate the Contract and, as the Contract remained on foot, had later validly terminated the Contract. This Vendor was therefore entitled to retain the 10% Deposit.
The ruling in Namrood v Ebedeh-Ahvazi may seem like a strange result. However, it emphasises the importance courts place on the specific drafting of contractual clauses. Those entering into property deals must be sure to obtain legal advice on the specific terms of the Contract and should not assume that the meaning of any contract clause is clear and unambiguous.
This is difficult with auction contracts, which are disclosed to would be purchasers a short time before the auction or even at the point of signing. Make sure you obtain a copy of the auction contract as early as possible before the auction date and seek legal advice on the terms of the Contract before bidding at auction. Otherwise you can be caught out in the most unexpected of circumstances.
For advice on auction contracts, please contact us.Read more
The focus of Australian labour law continues to move beyond securing core industrial rights regarding wages, towards issues surrounding wellbeing, mental health, reputation and workplace privacy. Speaking on workplace privacy and surveillance, Rebecca’s presentation focused on:
Q: We share so much of our lives online these days, how can people expect to have privacy in the workplace? What are employers supposed to do when sensitive information is disclosed outside the workplace (for example, on Facebook) and is subsequently the topic of discussion among employees?
A: These days a lot of individuals are willing to share their private lives on social media – but not in their workplaces. It is important that employers comply with the relevant privacy legislation when it comes to information they receive from the employee. Two employees discussing a colleague’s broken leg (after seeing a picture of it shared on Instagram) is not equivalent to an employer discussing an employee’s medical certificate at morning tea.
Q: What constitutes a ‘health record’ for the purposes of the Health Records (Privacy and Access) Act 1997 (ACT)?
A: A ‘health record’ is any ‘record’ which contains ‘personal health information’.
‘Personal health information’ is any information:
A Record is a record in documentary or electronic form that consists of personal health information. Examples of records are:
This answer is, of course, general commentary only. It is not legal advice. Readers must contact us and receive our specific advice on the particular situation that concerns them before acting or refraining from acting.
For more information about workplace privacy, please contact Rebecca Richardson.Read more
This month at Business Breakfast Club, we discussed the crowd funding regime including the current legislation that applies to public companies and the proposed bill to extend that regime to proprietary companies. BAL Director, Katie Innes shared some of her insights on the topic. Katie touched on:
Raising funds to kick start a business is a central concern of all business entrepreneurs. Traditionally, the two methods used to raise those funds include taking out a loan or raising capital through selling shares.
Amendments to the Corporations Act in 2017 were designed to support innovation and entrepreneurship (by simplifying the capital raising provisions of the Act and reducing compliance costs) while balancing and protecting the interests of retail investors.
Currently only public companies can access crowd sourced funding but they must only do so through an approved intermediary who holds a specific type of AFSL. Only seven entities are currently approved for these types of AFSLs. Like the previous capital raising provisions, there are a number of similar disclosures that must be made by a public company in its offer document, so whether the legislation actually delivers a practical reduction in compliance costs is yet to be seen.
Proprietary companies cannot access the crowd sourced funding regime as they were intended to be ‘closely-held’, i.e. shareholders who have a direct connection to (or rights to appoint) management. Under the Corporations Act there are currently two restrictions on proprietary companies which hinders their ability to raise funds:
A bill is before Parliament to amend the legislation and extend the regime to propriety companies.
If the Bill is passed, proprietary companies would be able to access crowd sourced funding but their structure and reporting obligations will change. Such changes would include:
Generally, the crowd funding regime is going to benefit established companies whose products have already been tested and where there is a desire to expand those businesses.
The regime will also benefit retail investors by providing them with access to new types of share offerings that were previously off limits under the Corporations Act, allowing them to diversify their investments in equity other than in ASX listed shares.
Early-stage companies could access the crowd funding regime and there is the potential for higher returns for investors but with that is the potential for higher risk. Investors may be reluctant to invest where the financial statements or business plan in the offer document is lacking.
The Business Breakfast Club is held on the second Friday of each month. If you would like to attend, please contact us to be added to the invite list.Read more
The process of acquiring land or an in interest in land, such as an easement, is underpinned by the Land Acquisition (Just Terms Compensation Act) Act 1991 (the Act). Whilst the NSW State Government has published a number of resources to guide stakeholders through the acquisition process, this brief commentary will discuss the key steps involved and provide some practical guidance for council staff.
There are two main processes by which a council may acquire land: by a private agreement (by contract or deed) or compulsory acquisition. Another method, less frequently adopted, is where the parties agree that the acquisition is to occur via the compulsory process.
The most common method of land acquisition is by negotiation and agreement. In this situation, the council and the landowner agree on the price to be paid for the land and the transaction takes place just as it would if the land was being purchased by an ordinary person.
To improve fairness and transparency in the land acquisition process, NSW State government policy requires the council, when first notifying a landowner that their land is required for a public purpose, to approach the landowner in person (except in exceptional circumstances) and to appoint a designated person to coordinate all interactions between it and the affected landowner. The council must also provide the landowner with a copy of the NSW Government’s “Land Acquisition Information Guide” or an equivalent document.
When contact is established with the landowner, the terms of the acquisition can then be negotiated to suit the specific needs of the parties.
The ultimate decision to acquire land needs to be made by a resolution of the council as this is not a decision that can be delegated. However, an in-principle agreement may be negotiated with a landowner prior to a council resolution provided that the ‘agreement’ is then subject to the passing of a council resolution approving the purchase. It is important for the person conducting the negotiations to ensure that the landowner understands that any offer is subject to approval by the council.
Except in certain specified circumstances, the Act requires councils to make genuine attempts, for at least 6 months, to acquire land by agreement before any action is taken to compulsorily acquire the land.The specified circumstances include where agreement is reached before the end of the 6 month period, as well as where the affected owner refuses to negotiate, cannot be located, or agrees to a shorter timeframe. The 6 month negotiation period also does not apply to the acquisition of Crown land or land below the surface.
If a private agreement cannot be reached, the acquisition can occur via the compulsory process, subject to the Minister and the Governor’s approval. The decision to apply for the Minister and Governor’s approval needs to be made by a council resolution. The application should then be prepared in accordance with the NSW Office of Local Government’s guidelines.
If the council’s application is approved, the compulsory acquisition can then occur in accordance with the procedures set out in the Act. This will involve the service of a ‘Proposed Acquisition Notice’ on relevant land interest holder(s), notifying the NSW Registrar General, and notifying the NSW Valuer-General.
After the period of notice (usually 90 days) has expired, the land is acquired by the publication of an ‘Acquisition Notice’ in the Government Gazette. A copy of the Acquisition Notice must also be published in at least one newspaper circulating in the local area or on a website that the council believes is appropriate to bring the acquisition to the notice of people in the local area.
This process involves the council and the landowner agreeing that the acquisition is to occur via the compulsory acquisition process described in (2) above. In our experience this method is preferred by the NSW Department of Crown Lands when the land to be acquired by the council is Crown land.
Council staff should conduct a title search of the land designated for acquisition early in the process to identify any relevant encumbrances and stakeholders. If the land is subject to a caveat, mortgage or lease, a landowner may need to procure the consent of any third parties for the acquisition to occur by agreement.
If the council is not proposing to acquire an entire lot in a deposited plan, it will need to engage a surveyor to prepare a survey plan of the land to be acquired. The type of plan required will depend on the nature of the interest being acquired and whether the land is to be acquired privately or via the compulsory process.
If the council applies for the acquisition to occur via the compulsory process, a plan of acquisition identifying the land will need to be registered at the NSW Land Registry Service before the NSW Office of Local Government will process the council’s compulsory acquisition application on behalf of the Minister.
Each landowner affected by an acquisition is entitled to be compensated ‘on just terms’ in accordance with the Act. The Act contains a statutory guarantee that the compensation will not be less than the market value of the land assessed in accordance with the Act and unaffected by the proposal for acquisition.
The Act specifies the matters which need to be taken into consideration when determining the value of the compensation payable. These matters include not only the market value of the land to be acquired, but also disturbance costs of the landowner, including their reasonable legal and valuation fees, financial costs (such as fees imposed by their mortgagee), any special value of the land and any disadvantage resulting from relocating a person’s residence (if relocation is necessary).
The matters which need to be taken into consideration when land is being acquired by compulsory acquisition must also be taken into account when land is being acquired by negotiation and agreement, unless the land is available for public sale . The land is available for public sale if the landowner holds it out as being for sale.
Briefing a qualified valuer early in the negotiation process will assist the parties to reach agreement on the compensation payable.
If no agreement is reached and the acquisition occurs via the compulsory process, the compensation will be determined by the NSW Valuer-General, at the council’s cost.
When the compensation is determined by the Valuer-General the council must offer that amount to the landowner in a ‘compensation notice’. If the landowner objects to the amount offered they may lodge their objection with the Land and Environment Court of NSW and the Court will determine the amount of compensation. If this occurs it is open to the council to argue in the Court proceedings that a lower compensation amount should be payable rather than the amount which was determined by the Valuer-General.
The acquisition of land, or an interest in land, is often undertaken for the purposes of constructing public infrastructure that is the subject of a specific funding grant and which will be carried out by contractors. When procuring contractors and estimating project delivery timeframes, council staff should keep in mind the following matters, as they can significantly delay delivery of a public infrastructure project:
While the acquisition of land can appear to be straight forward process, there can be numerous issues that can add complications and delay. Keeping the matters outlined in this short guide in mind will assist you to plan and acquire land effectively and efficiently.
 Local Government Act 1993, section 377(1)(h).
 Section 10A.
 Local Government Act 1993, section 377(1)(s).
 Section 11.
 Section 17.
 Section 18.
 Sections 19(1) and 20(1).
 Section 19(2).
 Section 10.
 Section 55.
 Section 38.
 Section 47.
 Section 42.
 Section 66.
 Section 10A.
 Section 13.
Please note that the law detailed in this Essential Guide is correct as at February 2, 2018.Read more
Granny flat arrangements are becoming increasingly popular. Too often however a granny flat arrangement will fail to deliver what the parties were expecting. On many occasions the arrangement leads to family disputes or even to litigation.
There are a number of key considerations that family members need to take into account when entering into a granny flat arrangement.
This article focuses on those key considerations and includes a checklist for practitioners to follow when considering a granny flat arrangement for their clients.
The following article focuses on ‘granny flat arrangements’ that involve the grant of a ‘granny flat interest’ as the term is defined in the Social Security Act 1991 (Cth). The elements of this definition are noted below.
It is also relevant to note that the phrase ‘granny flat’ has its own meaning in a real estate context being a self-contained living area that is part of an existing residential dwelling.
Although a granny flat interest will often relate to a separate living area, it does not have to. A granny flat interest can be created where there is no separate living area.
A granny flat interest is where the person resides in a private home and acquires for valuable consideration, or has retained a right to accommodation for life, in the residence or acquires (or has retained) a life interest in the residence.
Importantly, the payment made or the consideration provided by the person (invariably the parent) is generally an ‘exempt asset’ for social security purposes. Therefore the deprivation or gifting rules do not apply. The rationale for this approach was described by Centrelink as follows:
We don’t use market value to work out how much a granny flat interest is worth. Instead, we value it at the same value as the assets you transferred or paid if you are:
[Provided you pay in one of these ways and do not transfer additional assets as well, no deprivation will occur.]
If an additional payment or consideration is provided, Centrelink will apply the ‘reasonableness test’. This test is based on the combined partnered rate of the annual pension and is multiplied by the age-related factor. If the payment or consideration being provided exceeds the reasonableness amount, then there will be a reduction in the pension.
The typical situation is where the parent transfers the home to their child or where the parent pays for renovation of the house on the child’s property to create a self-contained living area.
Where the parent is a self-funded retiree who is not reliant on the Commonwealth pension, options other than the creation of a granny flat interest would be preferred. Those options would include the parent being registered as a co-owner (either as a joint tenant or as tenants in common). This option may have stamp duty and taxation implication for the parties.
The most common and problematical situation is where the parent is a pensioner so is subject to Centrelink rules including the deprivation (gifting) rules. As indicated above, in certain cases there is a specific exemption of those rules to the grant of a granny flat interest.
The challenge when advising in these situations is evident, especially when acting for the parent. It will be critical for the exemption to apply and for a granny flat interest to be created. This is because the parent will need to continue to receive the pension and will need their pension to be unaffected by the gifting rules.
To achieve that result it necessarily means that the parent is restricted to receiving a life tenancy or life interest in the property. Although this life interest can be transferred to any replacement property, the level of faith being placed by the parent in the arrangement is significant.
Importantly the granny flat interest cannot be revoked by the child as the owner of the property just because they want to sell. The child can either transfer the life tenancy or interest to another property or compensate the parent financially for losing the granny flat interest. The property can also be sold subject to the life tenancy or life interest but such a sale will be unlikely where the purchaser is an unrelated party.
Despite these protections, the parent transferring their property to a child for simply the grant of life interest or tenancy is taking a step that assumes that the life tenancy or interest will deliver important personal benefits for them.
As described by one commentator,  there is an element of counter intuitive regulation with these rules. The situation is that there is a transfer of property by the parent for no payment and the only right obtained by the parent is a right of residence in the property. Such a situation is at odds with the well-established equitable principles in relation to constructive trusts and resulting trusts.
An adviser for the parent must recognise the context and carefully address the risks for the parent who is making the gift in exchange for the right of residence or life tenancy.
There are situations when the question of a granny flat interest will be appropriate.
The following are circumstances that will reinforce the suitability of the arrangement:
Ideally there would have already been a history of having recently resided in the same residence, thereby confirming such living arrangements can work for both parties.
If the factual context is consistent with the above, then a granny flat arrangement could well be appropriate. If the situation being considered does not include the above elements, there will need to be a close assessment as to the desirability of the parties entering into a granny flat arrangement.
If the parties proceed with the granny flat arrangement, it is critical that the arrangement be documented. To cover the required issues, the relevant deed of family arrangement will be quite detailed.
It is also critical that each party receive independent advice, both legal and financial. Clearly financial advice for the parent will be critical but financial advice for the child will often be just as important. For instance where the child is likely to also be a pensioner or social security benefit recipient in the short term, the transfer of the parent’s home may have an impact on those benefits as a result of the assets test.
The following aspects should be covered in some detail in the deed:
If the parties reach the stage of finalising a deed of family arrangement one of the important additional aspects to consider is the impact that the deed will have on their estate planning. A granny flat arrangement will have significant implications on the estate planning for both parties.
In essence, the parent is disposing of a significant asset during their lifetime which results in their estate being significantly depleted. In relation to the child, they are receiving a significant asset as part of their inheritance in advance.
There is likely to be some interest and perhaps concerns from any siblings of the carer/child that received the benefit from their parent. The recommendation is that any other siblings be informed and consulted in relation to the option of arranging a granny flat interest.
It is clear that the granting of a granny flat interest can also achieve the parent’s objective of providing specific and significant support for one of their children.
It may also be that there are concerns of the parent that if the benefit was provided to the child under the will, that provision could be the subject of a claim for further provision by any other child that is not party to the deed of family arrangement. If the parties have a connection with New South Wales, the entry into a granny flat arrangement is likely to be relevant under the notional estate provisions.
Whilst this objective of providing a benefit to a particular child may well be a sought after outcome of creating the granny flat interest, it would only be in the very rare circumstances (if at all) that this estate planning objective should be the determinative factor in entering into the arrangement. The important matters referred to above would also need to be considered.
For granny flat arrangements to be workable for both parties and for the review of the arrangement to be kept out of the courts, there will need to be some serious assessment and consideration of whether or not the arrangement is appropriate for the particular clients.
Even where appropriate, the arrangement would need to deal with a possibility of there being a change in circumstances for the parties.
In the right context and after thorough and careful advice, a granny flat arrangement can achieve significant and beneficial outcomes for the parties. The benefit of a parent being able to live in a family home for as long as possible has both significant financial and personal benefits. The child/carer receives a significant financial benefit but in return they have also taken on a significant care responsibility. There is also an important sense of fulfilling a common personal goal that allows their parent to receive care in the preferred place of a family home.
To achieve these outcomes advisers will need to walk the parties carefully through a proposed granny flat arrangement to ensure that these objectives are achieved.
To learn more about if a granny flat arrangement is right for you and your family, contact our estates team.
 Section 12A.
 Department of Human Services, Granny Flat Interest, 27 August 2017,www.humanservices.gov.au/individuals/enablers/granny-flat-interest
 R McCullagh, The tangled web of granny flats, 22 August 2015.Read more
From 22 February 2018 amendments to the Privacy Act 1988 will take effect and introduce a mandatory notification procedure for data breaches. Currently, there are no requirements to notify individuals affected by a data breach.
All entities which are bound by the Australian Privacy Principles will have new reporting obligations if there is an eligible data breach. Those entities will need to notify the Office of the Australian Information Commissioner (OAIC) and any parties who are at risk because of the breach.
An eligible data breach is either:
To determine whether an individual is at risk of serious harm you will need to consider factors such as the sensitivity of the information, whether the information is protected by one or more security measures, the kind of persons who could obtain the information and the nature of the harm.
If you suspect there has been a data breach but you are not aware of the circumstances or whether it is actually an eligible data breach then you must carry out a reasonable and expeditious assessment within 30 days of becoming aware of the breach.
If there are reasonable grounds to believe there has been an eligible data breach then you need to notify the OAIC and the individuals whose data was affected or individuals who are at risk with:
In some circumstances if you take action in response to the breach before any disclosure or serious harm occurs then the Act provides that it may not be an eligible data breach and you do not need to go through the notification steps.
Failure to abide by the investigation and notification regime will be an interference with an individual’s privacy and therefore a breach of the Privacy Act. The OAIC may investigate, make a determination and pursue civil penalties against you for such a breach.
So what should you be doing?
For advice on the changes to the Privacy Act or to update your privacy policies please contact us.Read more
This month, we discussed the tricky minefield which is workplace psychological injuries, how they arise, and when they are compensable. Bill McCarthy, BAL Special Counsel who has extensive experience in workers compensation and insurance law, shared some of his insights on the topic. Bill touched on: