Bennett & Philp Director Andrew Lambros has prepared a detailed guide on how to deal with, and manage, director and shareholder disputes in small companies with a limited number of shareholders.
Director and shareholder disputes, of course, can occur in companies of all sizes, however, one of the major differences when dealing with small companies is that, as a general rule, the directors and shareholders will effectively be the same (even if the shareholding is held by other entities controlled by the directors.
Often the parties will have a significant financial interest in the company, which will be the major personal asset of the shareholders and directors as well as their major source of income. On top of this, when the roles are not properly defined, unidentical or the time invested is different, people inevitably value their contribution higher than any other party will. This “sweat equity” is always hard to put a figure on.
Addressing issues of conflict and dispute in small companies without affecting business
Small business ventures are a terrific vehicle for innovation and the pursuit of individual goals and plans. Sometimes a number of individuals share the same focus and goals and utilise small corporate structures to formalise that shared vision and unify individuals in a clean and formalised structure.
In our experience, the business judgement and common sense that would routinely be applied by directors/shareholders in every other facet of running their business often go completely out the window when a dispute has arisen. Getting the parties to focus on a commercially sensible outcome is often the most difficult part of these disputes.
By understanding everyone’s expectations early and being honest about how you value your roles and contributions, you can avoid disagreements and resentment down the track.
What’s inside the Guide?
The paper provides a practical review of the types of disagreements as well as initial considerations to pay attention to and the usual outcomes of what can be achieved in these disputes. It covers:

Types of disputes
Possible resolution options
Types of business and company structures
Dispute prevention
Conflict management
Applications to the Court including the risks involved

If you would like to discuss the guide in more detail, or if you are looking for advice on managing a dispute, please contact Andrew Lambros.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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My attention was drawn recently to an article appearing on the ABC website which outlined the plight of an unfortunate lady who sadly discovered that her husband had unexpectedly passed away during his sleep from an undiagnosed heart condition. The article reveals the stress which she endured caused by the involvement of police officers, ambulance crew, investigators, funeral directors and ultimately the Coroner.
According to the article, the lady in question was quite naturally unprepared for the event given the relatively young age of her husband. Her plight raises the question of what should be done if a death is discovered and when should the Coroner be informed.
The death of a loved one at home can be particularly traumatic as opposed to a death in a hospital or care facility where the trained staff are there to assist and offer comfort and support.
In the case of a home death, a doctor’s certificate must be obtained within 48 hours. A doctor may issue the Medical Certificate provided the deceased’s medical history is known and he or she is prepared to determine cause of death. There is no need to call police or ambulance services at least initially.
As an alternative, you may contact a funeral director or the deceased’s palliative care team if one was involved in the deceased’s care. Either will provide advice and support.
If the death is unexpected it must be reported to the Coroner. This may be done by the attending doctor, via the police or funeral director or indeed by anyone wishing to report the death. Once reported, the Coroner’s duty is to carry out an autopsy to determine the cause of death and provide an appropriate report. This process is by no means a reflection on the deceased’s family or carers but is simply a process to rule out any suspicious circumstances. A funeral may take place once the autopsy has been completed. An autopsy would not usually be required where the death was expected.
In a wider context, a death should be reported to the Coroner when death has occurred due to any of the following factors:

Suicide
Homicide
Drug, alcohol or poison-related
Accident or injury – even if there is a prolonged period between the incident and the death including accidents on the road, on public transport, due to falls, in the workplace, due to electrocution, drowning or animal attacks
A medical certificate cannot name the cause of death
An unexpected death or accident in a healthcare facility, and
A death in care or custody

The death of a person whose identity is unknown is also reportable.
Every death must, of course, also be registered. In most cases, the funeral director will register the death and place an order for the official death certificate. If not, the deceased’s family members or legal personal representative are obliged to do so.
 
 

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Important case update on provisions of the Building Industry Fairness (Security of Payment) Act 2017 (BIF), dealing with “new reasons” and partial invalidity of adjudication decision.
This recent Queensland Supreme Court decision by Justice Bond deals with the new provisions of the BIF Act requiring that the adjudicator “must not” take into account new reasons not raised in the payment schedule. It also importantly deals with whether or not the facts, in this case, allowed the court to order in favour of a subcontractor a remedy in accordance with section 101(4) of the Act, whereby the invalid part of the decision could be excised with the valid portion to continue to have effect.
This was a case where a claimant was applying to the Supreme Court seeking orders that the decision made by the adjudicator was only partially invalid and relying upon S101(4) to urge the court to confirm the balance of the decision that was valid.
Facts
Monadelphous was the head contractor on an upgrade of the existing Kawana sewerage treatment works. It engaged Acciona as a subcontractor to undertake engineering design and support as well as to supply equipment and training.
Monadelphous had already made application to the Supreme Court to restrain the adjudication application without success. Acciona had been successful in four out of the five adjudication applications it made, and this adjudication was the fifth.
The adjudicator’s decision found there was nil owing by Monadelphous on the basis of a set-off allowed by the adjudicator of over $4 million for what was said to be a share of CP costs due and owing by Acciona under a Collaboration Deed forming part of the contract.
Under the terms of the Collaboration Deed a steering committee with a representative of each party, could in certain circumstances make a determination of the amount and timing of the contributions required to be made by the parties. Provisions required a contribution notice to be forwarded to each party, and it was the contribution notice being given that created the obligation to pay.
While Monadelphous asserted an entitlement to recover over $5 million as Acciona’s contribution in respect of the CP costs, on the four previous occasions the matter had been adjudicated each adjudicator determined that in order for Monadelphous to establish such a claim it had to prove that the steering committee had issued a contribution notice and there was a failure to pay by the due date.
The payment schedule delivered by Monadelphous detailed the contribution said to be required under the Collaboration Deed. Monadelphous asserted that account had to be taken of its contractual entitlement to recover the contribution exceeding $5 million.
The adjudication application by Acciona pointed out that since there was no approval of the steering committee, there was no procedure followed, the rates were in excess of what was approved, and they were in excess of budget and no amount was due as no notice had issued.
For the first time, Monadelphous then raised in its adjudication response that: –

despite a purported termination, the parties remained bound by the Collaboration Deed including an obligation to attend steering committee meetings;
in breach of Acciona’s implied obligation to co-operate it refused to attend meetings;
a breach of the obligations resulted in a right to recover either based on the principle that the offending party can’t take advantage of its own breach – (prevention principle) or Acciona was in breach of the implied contractual term, and Monadelphous was entitled to damages as a result. The measure of these damages was said to be the value of the contribution that would have been issued if Acciona had performed its contractual obligation by attending the steering committee;
Monadelphous suggested that it was entitled to a set-off for damages pursuant to clause 37.2A of its subcontract or in equity.

Issues

Whether the matters raised in the adjudication response concerning the steering committee meetings and the purported damages claim and set-off were new issues and unable to be raised;
Whether sufficient reasons were detailed by the adjudicator in allowing the set-off;
What orders should be made and whether section 101(4) BIF could be used excising the invalid parts of the adjudication, with the valid parts of the decision continuing.

Decision
The Court closely examined the language of sections 82(4) and 88(3) which dealt with obligations of a respondent in making responses and obligations of the adjudicator as to what the adjudicator should consider and not consider.
These observations concerning the change in the language used in the new BIF provisions as opposed to the old BCIPA provisions found that the new provisions were starkly different and provide for a more definite directive that a respondent “must not” include within its response new reasons not raised within the payment schedule. Section 88 his Honour observed also used the phrase “must not” when dealing with what the adjudicator should consider.
Monadelphous suggested that these were not new reasons at all because those reasons merely set out a justification of the contention which had been made within the payment schedule.
By way of observation, if the views of Monadelphous were to be accepted, how would it be then, as a question of fairness, that Acciona could ever address these issues raised. In this case, Acciona emailed the adjudicator requesting that he allow time for further submissions. The adjudicator denied that request.
His Honour found that without having raised the damages/contractual claim specifically within the payment schedule, they were in effect new reasons which Monadelphous was prohibited from including within its adjudication response and the adjudicator was obliged not to consider.  
The court was of the view that there are clear policy reasons underlying the new provisions of Section 82 and 88 and that to accede to the submissions of Monadelphous would treat the distinction between a reason in a payment schedule and a new reason in such a way as would undermine that policy.
The court otherwise found the lack of engagement by the adjudicator in the reasons why he agreed with the arguments of Monadelphous indicated jurisdictional error. As his Honour put it “the reasons reveal nothing more than a vote one way”.
The adjudicator had already found in favour of Acciona for a sum but had then had the setoff claims by Monadelphous applied to them. With the setting off claims being found to be invalid, there was an opportunity for Acciona to have the balance of the adjudicator’s decision in its favour continue.  
His Honour was clearly convinced that the provisions of Section 101(4) were applicable. This section allows in certain circumstances for the invalid parts the decision to be excised with the valid parts continuing. His Honour had some regard to the remedial nature of the provision which argued for a beneficial approach to the provision’s interpretation if one was needed.
Takeaways
This case reemphasises the need to raise all arguments within the payment schedule, given the new provisions of BIF. Later significant and unraised arguments within a response will leave a respondent open to attack and any hard-won success in adjudication vulnerable. 
Read the full judgement here.
 
 

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The onset of the COVID-19 pandemic with its associated lockdown and social distancing and isolation restrictions created a dilemma for estate lawyers and the willmaker.
The longstanding strict requirement that a Will must be signed by the willmaker in the physical presence of two (2) witnesses (not being a beneficiary or the spouse of a beneficiary) gave rise to practical obstacles particularly for those who, due to age or compromised health, needed to remain in isolation.
On 15 May 2020, the Justice Legislation (Covid-19 Emergency Response – Wills and Enduring Documents) Regulation 2020 under the COVID-19 Emergency Response Act 2020 (subsequently amended on 21 May to extend its application beyond Wills and enduring documents) was introduced. It remains in force until 31 December 2020 and applies to Wills signed until then.
It follows Practice Direction No 10 of 2020 released by the Chief Justice on 22 April 2020 which applies to Wills executed between 1 March 2020 and 30 September 2020.
The Regulation
The significant feature of the Regulation is that it permits, in certain circumstances, the witnessing of Wills by audio-visual link, dispensing with the requirement for the witnesses to be in the physical presence of the willmaker, and each other.
It does not change the required number of witnesses, namely two (2), to the signing of a Will.
The Regulation requires that at least one of the witnesses must be a  Special Witness. A Special Witness includes an Australian lawyer or a Justice of the Peace or Commissioner for Declarations employed by the law practice that prepared the Will and who witnesses the Will in the course of that employment, a Notary Public, and for Wills prepared by the Public Trustee, an employee of the Public Trustee.
The Requirements for Signing a Will Witnessed by Audio-Visual Link Pursuant to the Regulation

Audio-visual link is defined as “facilities that enable reasonably contemporaneous and continuous audio and visual communication between persons at different places and includes video conferencing”;
The witnesses must observe the signing and be satisfied the signatory is signing the Will;
The witnesses must form that satisfaction in real-time;
The signatory must sign each page of the Will;
The witnesses must be satisfied that the signatory is freely and voluntarily signing the Will;
The witnesses must take steps to verify:

the identity of the signatory; and
that the name of the signatory matches the name of the signatory written on the Will;

Once the Will using audio-visual technology has been signed in front of the witnesses, it must be sent to them either:

by posting or couriering the originally signed document; or
emailing a scanned copy of the signed

The special witness should then:

print the document (if sent electronically);
sign each page;
complete and sign the special witness certificate to accompany the document;
forward it to the second witness to

The Will must then be returned to the willmaker or to a person to whom the willmaker directs.
Special Witness Certificate
The Special Witness Certificate must be kept with the Will. It must state:

That the Will was signed and witnessed during the relevant period; an
That the Will was signed and witnessed in accordance with the Regulation; and
The steps the witness took to verify the identity of the signatory; and
The process followed for signing and witnessing the Will; and
That the Special Witness is a Special Witness; and
Whether an audio-visual recording was made of the signing and witnessing of the Will; and
Any other matters the Special Witness considers relevant to the signing or witnessing of the Will.

Practice Direction 10 of 2020
The Practice Direction issued by the Chief Justice authorises the Registrar to grant Probate of a Will witnessed by video-conference in the following circumstances:

The Will is executed between 1 March 2020 and 30 September 2020;
The willmaker is unable to comply with the formal requirements governing Will execution due to the Covid-19 restrictions;
The Will is witnessed by either one (1) or two (2) witnesses in the presence of the willmaker by way of video-conference;
A solicitor is involved in the process by either:

being the drafter of the Will; or
being a witness to the signing of the Will; or
supervising the execution of the

The willmaker intends that the Will is to take immediate effect as his or her Will; and
The witnesses are able to identify the document as being will

Observations Generally
The relaxations permitted by the Practice Direction and the Regulation provided a welcome relief for willmakers and their lawyers previously impeded by the COVID-19 restrictions. Nevertheless, it is recommended that the permitted relaxations should be applied with caution and used only when absolutely necessary for the following reasons:

The act of execution of Wills pursuant to the Regulation and Practice Direction is by necessity far more complex and involves significant more record preparation and record-keeping than required in the traditional Will execution process;
The audio-visual facility may not adequately enable the witnesses, in particular the Special Witness, to make an assessment as to the testamentary capacity and/or absence of duress of the willmaker;
The process of later proving the Will is likely to become more complex and

It is recommended that as soon as the opportunity arises, and provided there is no legal impediment to doing so, the Will should be re-executed pursuant to the traditional process whereby the willmaker and the two (2) witnesses are in each other’s physical presence at the time of execution.
How We Can Assist
Our Wills and Estates Team can assist you or any family member overcome any will making or Enduring Power of Attorney issues or difficulties presented during this COVID-19 environment.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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 The second reading of the Associations Incorporation and Other Legislation Amendment Bill 2019 (“Bill”) has been included in the order of business of the Queensland Parliament on 16 June 2020. The Bill has been through the Committee stage and carries the Committee’s recommendation that it be passed.
The policy objectives of the Bill are to:
 clarify the operation of the Associations Incorporation Act 1981 (“AI Act”);

improve the internal governance of incorporated associations;
reduce regulatory burden for incorporated associations and charitable entities; and
streamline, enhance or otherwise improve government processes.

 The Bill comprises 76 pages and is a culmination of work predominantly undertaken through two discussion papers released in 2010 and 2012. The more salient features of the Bill are:

 all incorporated associations (Association) must abide by a set of operating rules. Those rules can be developed by the Association, pursuant to the AI Act and AI Regulation or by adopting the “model rules” from the AI Regulation. Where the Association’s rules do not provide for a matter which is provided for in the model rules (additional provision) the Association’s rules are taken to include the additional provision. This does not apply if the rules of the Association provide otherwise in which case the rules of the Association apply except for those rules which the AI Act mandates e.g. grievance procedure discussed at item 2 below.;
the rules of an Association may set out a grievance procedure for dealing with any dispute between:

a member and another member; or
a member and the management committee; or
a member and the Association.

Where the Association’s rules do not provide a grievance procedure the procedure set forth in the AI Act shall apply. When the Bill is passed Associations should familiarise themselves with the grievance procedures in the AI Act or seek to amend their rules to include grievance procedures which must not be inconsistent with the AI Act;

Associations may hold general meetings using any technology which reasonably allows members to hear and take part in discussions irrespective of whether such provision is included in the Association’s rules i.e. there is no obligation on the Association to amend its rules to include such provision;
a member of the management committee of the Association who has a material personal interest in a matter being considered at a management committee meeting must, as soon as possible after he or she becomes aware of the interest, disclose the nature and extent of interest to the management committee and must disclose the nature and extent of the interest at the next general meeting of the Association. Such member must not be present while the matter is being considered at the meeting or vote on the matter;
the members of the management committee of an Association must ensure “the prescribed details of the remuneration paid or other benefits given for the financial year” to:

each member of the management committee;
each senior staff member of the Association;
each relative of a person mentioned in paragraph (a) or (b);

are presented to the Association’s annual general meeting in accordance with the prescribed regulation. It is expected that the regulation will provide that such information may be disclosed in the aggregate/s rather than for each member of the management committee or senior staff member;

officers of an Association must act in good faith in the best interests of the Association and for a proper purpose. Officers must not improperly use their position to gain, directly or indirectly, a pecuniary benefit or material advantage for an officer or another person or cause detriment to the Association;
a person who was a member of the management committee or took part in the management of an Association, at the time the Association incurred a debt commits an offence if:

the Association was insolvent at the time the debt was incurred or becomes insolvent by incurring that debt; and
immediately before the debt was incurred there were reasonable grounds to expect that the Association was insolvent or if the Association incurred the debt, the Association would become insolvent. This effectively reverses the onus of proof unless the member of the management committee proves one or more of the defences contained in the AI Act;

in certain circumstances an Association may be wound up voluntarily if the Association so resolves by special resolution without the requirement of applying to the Supreme Court;
the burden of financial reporting is relieved for an “exempt” Association prescribed by regulation. It is envisaged that an Association which is also registered pursuant to the Australian Charities and Not-For-Profits Commission Act 2012 (ACNC Act) will be an “exempt” Association if its financial statements are lodged with the ACNC;
the Bill also expands the investigative powers of the AI Act by incorporating the powers of an inspector under the Fair Trading Inspectors Act 2014.

As would be expected of a Bill comprising 76 pages there are a number of other amendments which have not been highlighted and because of the need for brevity even those dealt with have not been fully or comprehensively canvassed. Accordingly, when the Bill is passed into law, Associations, particularly through their members of the management committee, should fully familiarise themselves with the new provisions and to the extent necessary take legal advice for the purpose of compliance and risk management.
 
 

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On 3 April 2020, the National Cabinet, which consists of the Prime Minister of Australia and all state and territory premiers and chief ministers, agreed to a document called National Cabinet mandatory code of conduct – SME commercial leasing principles during COVID-19. In this article, that document is referred to as the National Code.
On 28 May 2020, the Queensland Government made a regulation under the Covid-19 Emergency Response Act 2020 (Qld) and the Retail Shop Leases Act 1994 (Qld), principally for the purposes of –

lessening the effect of a COVID-19 emergency on landlords and tenants who are parties to particular categories of small to medium business leases by giving effect to the good faith leasing principles in the National Code.
establishing a process for resolving disputes between landlords and tenants under those types of leases.

The regulation is called the Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020.
The regulation will apply until the end of what is described as the response period.
The response period is a period which will commence on 29 March 2020 and end on 30 September 2020.
This article is intended as a summary of the regulation with the exception of its provisions which relate to dispute resolution. Those provisions will be summarised in a later article.
The article uses the more common expressions of landlord and tenant instead of the technical words lessor and lessee which is used in the regulation.
The regulation is not without complexity and, occasionally, this article will attempt to explain a provision by reference to an example.
Affected leases
Except for certain leases for farming businesses and certain leases, subleases, permits and licenses under the Land Act 1994 (Qld), the regulation creates laws for –

retail shop leases; and
other leases of premises which are used (wholly or predominantly) for the carrying on a business (prescribed leases)

where–

the lease (or agreement for lease) is binding on the tenant when the regulation commenced (i.e., 28 May 2020); and
the tenant is what is known as a SME entity; and
the tenant (or another person which is connected with or an affiliate of the tenant employs staff for the business at the premises, which would include a tenant’s service company or the trustee of its service trust) is eligible to participate in the JobKeeper scheme, or
the lease is a head lease to a franchisor (or a leasing entity which is connected with or an affiliate of the franchisor – see Example 1) and the premises are sublet to its franchisee.

Example 1 – It is common, in the case of large franchises, for the franchisor to take its leases through a corporate entity which is separate to the entity which is the franchisor, and which owns the goodwill and other assets of the franchise business and sublet the premises to a franchisee.

The regulation describes those types of leases as affected leases.
In the regulation, a reference to a small business means –

a business carried on by a sole trader; or
a business employing fewer than 20 full-time, or full-time equivalent, employees.

In the regulation, the expressions affiliate and connected with are taken to have the meanings given to them by the Income Tax Assessment Act 1997 (Cth).
Turnover and SME entities
If the tenant is connected with or an affiliate of another entity, the aggregate annual turnover of the entities will be treated as the annual turnover of the tenant for the purposes of determining whether the tenant is an SME entity or not – see Example 2.

Example 2 – The tenant is a member of a group of companies which has an annual turnover of $90 million. The annual turnover of the business at the premises is $2 million. The annual turnover of the tenant is regarded as $90 million.

In any other case, the regulation will regard the tenant’s annual turnover to be the turnover the business carried on by the tenant at the premises – see Example 3 and 4.

Example 3 – The tenant is a sole trader and runs its business out of one set of leased premises. The tenant’s annual turnover from the business at the premises is $175,000. That amount is the tenant’s annual turnover.

Example 4 – The tenant is a sole trader and runs its business out of two sets of leased premises (Shop A and Shop B) from the same landlord. The annual turnover from Shop A is $50,000 and from Shop B is $90,000. The tenant’s annual turnover for Shop A or Shop B will not be the aggregate annual turnover of Shops A and B. The position would be the same if each shop has a different landlord.

Not-for-profits
The regulation regards not-for-profit operations or activities undertaken by a tenant to be a business.
Action by landlords restrained – after 27 May 2020
With certain exceptions (see below), the regulation makes it unlawful for a landlord to take action (known as prescribed action) against a tenant under an affected lease in respect of

failure to pay rent for a period occurring (wholly or partially) during the response period;
failure to pay outgoings for a period occurring (wholly or partially) during the response period;
the business carried on at the premises not being open for business during the response period according to the terms of the lease.

A tenant under an affected lease has the right to apply to QCAT or a court to restrain a landlord which takes restricted action in breach of the regulation.
Upon hearing an application of that kind, QCAT or a court may award costs against the party in the proceeding.
In the typical franchise arrangement, that is, where the franchisor takes a lease of premises and sublets the premises to its franchisee, the application may be made by the franchisor and the franchisee (jointly) against the head lessor.
If in that type of franchising arrangement, the franchisee makes an application in respect of action taken by the franchisor, the franchisor may apply to have the head lessor joined in the matter.
The category of prescribed action under a lease is very broad and includes –

an action relating to the leased premises; or
starting a proceeding in a court or tribunal

for any of the following purposes –

recovery of possession of premises;
termination of the lease (except with the tenant’s agreement);
eviction of the tenant;
re-entry of premises;
seizure of property;
forfeiture;
damages;
interest or other charges on arrears of rent or outgoings;
enforcement of a bank guarantee, indemnity or security deposit for arrears of rent or outgoings;
exercising or enforcing any other right by the landlord under the lease – see Example 5.

Example 5 – a landlord must not sue for rent payable during the response period under an affected lease.

If a landlord takes a prescribed action in contravention of the regulation, a court or tribunal may award costs against the landlord in any proceedings brought before the court or tribunal in relation to the action taken.
But a landlord is not prevented from taking a prescribed action if –

the landlord and the tenant, as a consequence of renegotiations under the regulation, agree to vary the conditions of an affected lease by –

reducing the rent for the response period; or
providing conditions which relate to the reduction an

 the action is in accordance with the agreement; or

an agreement between the landlord and the tenant is entered into about –

failure to pay rent for a period occurring (wholly or partially) during the response period;
failure to pay outgoings for a period occurring (wholly or partially) during the response period;
the business carried on at the premises not being open for business during the response period according to the terms of the lease and

the action is in accordance with the agreement; or

a court or tribunal so permits; or
the tenant has substantially failed to comply with the tenant’s obligations to cooperate et cetera (see below) in compulsory negotiation in circumstances where the landlord has genuinely attempted to renegotiate rent payable or other lease conditions; or
there exists a ground for taking action which is not related to the effects of the COVID-19 emergency – see Example 6.

Example 6 – the tenant uses the premises other than as permitted by the lease; the tenant uses the premises for a purpose in breach of the Planning Act 2016 (Qld) or the Liquor Act 1992 (Qld); the tenant fails to take out insurance required by the lease.

Duty to cooperate
The landlord and the tenant under an affected lease must

cooperate;
act reasonably; and
act in good faith

in all discussions and actions which are associated with –

lessening the effect of the COVID-19 emergency; and
other matters such as –
renegotiating rent;
renegotiating conditions of the lease
exchanging information relevant to those negotiations
extending the term of the lease
reducing services at the premises.

Rent increases
A landlord under affected leases may review rent in accordance with the terms of the lease during the response period, but must not apply the increased rent during the response period (i.e. before 1 October 2020) unless the rent is based on turnover – see Example 7.

Example 7– The lease provides for annual increases calculated at 3% on 1 July in each year. The monthly rent for year ending 30 June 2020 is $20,000. The landlord may apply the calculation, in which event the monthly increase will be $600. The landlord cannot charge the monthly increase for any month before October 2020 but may charge the increase at the rate of $600 per month from October onwards.

After the response period (i.e., after 30 September 2020), a landlord may not take any action of the kind which is described above as prescribed action over failure to pay the amount of any increase which would otherwise have been chargeable during the response period.
 Compulsory negotiation
Either party under an affected lease may request the other party to renegotiate –

the rent payable under the lease; and.
other terms of the lease.

The request must be in writing.
As soon as practicable after the request to negotiate has been made, the landlord and the tenant must give each other information which is relevant to the request.
That supporting information must be –

true, accurate, correct and not misleading;
sufficient to enable the landlord and the tenant to negotiate in a fair and transparent way.

The regulation provides a number of examples of sufficient information and those examples are reproduced in the Appendix to this article.
Negotiation is compulsory once the supporting information has been given.
Landlord’s offer
When the supporting information has been given, the landlord must give the tenant–

if a rent reduction had been requested or proposed – an offer to reduce the rent payable under the lease;
if changes to the lease conditions have been requested or proposed – an offer in relation to those conditions see Example 8.

Example 8 – Changing a condition which requires rent to be paid in advance to a condition which permits rent to be paid in arrears; changing a condition which restricts trading hours.

The landlord’s offer must be made within 30 days.
In making the offer, the landlord must have regard to all the circumstances of –

the tenant; and
the affected lease.

The landlord’s offer must –

be for any or all of the rent which would be payable under the affected lease during the response period; and
agree to waive at least 50% of the amount of the rent reduction offered – see Example 9.

Example 9 
The rent is $20,000 per month. The landlord offers to reduce the monthly rent payable by $4000. The offer must provide for at least $2000 per month to be waived (written off). In that case, there should be an offer to defer payment of the other $2000
The rent is $20,000 per month. The landlord offers to reduce the monthly rent payable by $15,000. The offer provides for $10,000 per month to be waived. In that case, there should be an offer to defer $5000.
The rent is $20,000 per month. The landlord offers to waive the monthly rent. In that case, there is no need to offer a deferral.

Also, the landlord’s offer must have regard to the following matters –

reduction of turnover of the business carried on at the leased premises during the response period;
the extent to which a failure to reduce rent would affect the tenant’s ability to pay rent and comply with its other obligations under the lease;
the landlord’s financial position which must take into account any financial relief provided to the landlord as a COVID-19 response measure;
any reduction or waiver of any outgoings in the case of a lease under which those outgoings are included in rent or are otherwise payable by the tenant (e.g. a State government land tax rebate; waived local government charges).

When the tenant receives a landlord’s offer, the landlord and the tenant must cooperate and act reasonably and in good faith in negotiating –

a rent reduction for the response period; and
any conditions relating to the reduction in rent.

If those matters are agreed, they may be recorded by –

a variation of the lease; or
another type of agreement between the landlord and the tenant.

Further rent negotiations
If –

a rent reduction has previously been agreed; and
the grounds upon which the agreement was based change, materially, during the response period

either party to the lease may ask the other party to negotiate a further rent reduction during the response period – see Example 10.

Example 10 – A rent reduction of $10,000 per month based on the assumption that the business would stay open with an anticipated monthly turnover of $100,000. Two months later trading is so bad that the tenant closes the premises and only trades online with a heavy reduction in turnover. The grounds have changed materially.

The rules which apply to initial negotiations (see above) will apply to further negotiations except that a landlord will not be obliged to offer to further waive any part of a further rent reduction.
Deferred rent
If the process referred to above is applied and agreement is reached to defer payment of rent, the variation of lease or other form of agreement between the landlord and tenant must –

not require payment of the deferred rent to commence until the day after the response period ends (in other words, not before 1 October 2020); and
require payment of the deferred rent to be amortised over period of at least 2 years and not more than 3 years; and
provide that the landlord must not apply any provision of the lease which would otherwise permit the payment of interest or other charges on the deferred rent.

But it should be noted that the landlord will be entitled to charge interest or impose other charges under the lease if the tenant does not comply with the conditions upon which rent is deferred.
Lease extension
If the parties agree that rent is to be waived or deferred, under the process referred to above –

the landlord must offer the tenant an extension of the lease term on the same terms and conditions as those which are contained in the lease; and
the rent payable during the term of the extension must be adjusted to take into account the amount of rent waived or deferred – see Example 11.
the extension offered must be for a period equal to the period of the waiver or deferral.

Example 11 – Rent payable under the lease is $20,000 per month. The rent is reduced by $4,000 per month. Of that, $2,000 per month is waived and $2,000 per month is deferred. For the term of the extension the rent per month would be $16,000.

But. the landlord will not be obliged to offer the tenant an extension –

to the extent that the landlord is under an inconsistent legal obligation to a third party – see Example 12; or
If the landlord demonstrates that it intends to use the premises for its own commercial purpose.

Example 12 – On 1 February 2020, the tenant informs the landlord that the tenant does not intend to exercise its option to renew the lease when it expires on 30 June 2020. Relying upon that, the landlord enters into an agreement to lease the premises to third party for a term commencing on 1 July 2020. The landlord thereby assumes and inconsistent legal obligation to a third party.

Security deposits
Even if an affected lease requires the landlord to return a security deposit at the end of the lease term, the landlord-

may hold the security deposit until all deferred rent has been paid; and
must hold the security deposit under the conditions of the lease which applied immediately before the lease ended; and
may claim against the security deposit in accordance with those conditions when the response period

Services reduction
If a tenant under an affected lease is unable to operate its business at the leased premises during any part of the response period because of the COVID-19 emergency the landlord may stop or reduce any service at the premises –
But, the stopping or reduction of services must –

not be more than reasonable in the circumstances (e.g. cancelling cleaning services to the premises if they are closed might not be unreasonable); and
be subject to any reasonable request by the tenant for the maintenance of services (e.g. a request by a tenant of a bottle shop which has been forced to close by COVID-19 to maintain a refrigeration power could be unreasonable).

Confidentiality
During the course of a dispute, under the regulation, in relation to an affected lease or a small business tenancy, landlords and tenants are likely to exchange or receive confidential information and, with five exceptions, the regulation requires them not to disclose that information.
For the purposes of the regulation, confidential information is categorised as personal information and protected information.
Personal information simply means the name, address and contact details of an individual other than the landlord or the tenant.
Protected information means –

personal information; or
other information which relates to –
business processes;
financial information;
information about the trade of the business.

A landlord or a tenant under an affected lease or a small business lease will commit an offence under the regulation if it discloses protected information obtained by it under the regulation unless –

the person to whom the information relates consents to its disclosure;
the information is given to a professional adviser or financiers who agrees to keep it confidential;
the information is in the public domain;
the small business commissioner authorises its disclosure;
its disclosure is permitted by law.

The maximum penalty for an offence of the kind described is 60 penalty points ($8,007.00)
Dispute resolution
Part 3 of the regulation establishes provisions for resolving –

small business tenancy disputes; and
disputes about affected leases.

The dispute resolution provisions will be explained in a later article. But, in the meantime, the following comments may be worth noting.
The regulation makes provision for disputes concerning retail shop leases to be resolved under the regulation – instead of under the Retail Shop Leases Act 1994 (RSLA).
However, if before the commencement of the regulation on 28 May 2020, –

the dispute resolution provisions under the RSLA have been instigated by a landlord or a tenant in relation to a retail shop lease; and
the dispute relates to an affected lease or a small business tenancy; and
the dispute has not been resolved or withdrawn under RSLA

that Act (not the regulation) will continue to apply to the dispute.
If an affected lease or a small business lease –

contains provisions for the resolution of disputes between the parties to the lease; and
whether or not those provisions have been complied with

the provisions do not prevent a landlord or the tenant under the lease from starting a mediation under Part 3.
On the other hand, the regulation does not prevent the parties to an eligible lease dispute undertaking a dispute resolution process outside of Part 3.
Suspension of earlier dispute proceedings
The regulation uses the expression pre-commencement period and defines it as the period –

starting on 29 March 2020; and
ending immediately before 28 May 2020.

Until the response period ends on 30 September 2020, certain lease dispute proceedings or other action started or taken by a party to a lease during the period which started on 29 March 2020 and which ended at midnight on 27 May 2020 without being resolved, completed or finalised before 28 May 2020 will be stopped until the response period ends.
Exemptions given to tenants
Part 4 of the regulation uses the expression COVID-19 response measure for the purposes of–

identifying obligations under retail shop leases, prescribed leases and other small business leases; and
excusing tenants from complying with those obligations if they are required not to be performed because of –
a COVID-19 response measure; or
a law of the Commonwealth or another State in response to the COVID-19 emergency.

If a tenant fails to comply with that type of obligation, the failure will not –

amount to a breach of the lease; or
constitute a ground for terminating the lease or taking prescribed action against the tenant.

Conclusion
It has taken almost two months for the Queensland government to make this regulation and, as a consequence of the delay Queensland landlords and their tenants and their respective legal advisers have been left to guess or rely upon the rumour mill about how the National Code will be implemented in Queensland.
During that period, tenants claiming to rely upon the National Code, which until now has not been enforceable in Queensland, have stopped paying rent or outgoings, reduced rent or outgoings payments or have sought to have rent reduced. It appears that in some cases tenants’ endeavours have been borne out of a genuine need for rent relief. In other cases, tenants who would not be entitled to rent relief, under the belated Queensland regulation, have conducted themselves, unfairly, in ways which have been detrimental to landlords.  On the other hand, in some cases, there has been conduct on the part of landlords which has been unfair to tenants.
Queensland is, by far, the last government (State or Territory) in Australia to regulate the implementation of the National Code.
Please contact Bill Purcell, Jacob Duane to Dan Ronan to discuss your situation and options.
 

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As restrictions begin to ease, businesses across Australia will need access to COVID-19 financial support measures to battle the economic downturn and bring themselves back into a profitable position.
This article outlines some of the economic measures available to businesses, including COVID-19 financial assistance announced by the Federal and Queensland State Governments.
Note for Individuals
This article outlines economic measures available to businesses. For individuals, please see our article “Available financial measures for individuals affected by COVID-19/Coronavirus economic downturn” available from our COVID-19 Resource Centre.
Federal Government Economic Measures and Incentives
Jobkeeper
The JobKeeper payment assists employers and employees by providing a wage supplement of a fixed $1,500 per employee per fortnight.  JobKeeper is also available to sole traders and self-employed, who may nominate up to one principal to receive JobKeeper.
The JobKeeper payment is available to businesses (including not-for-profit entities and sole traders) that:

carried on a business in Australia as at 1 March 2020; and
have experienced a fall in turnover of:

30% for entities with an aggregated turnover of $1 billion or less;
50% for entities with an aggregated turnover of more than $1 billion; or
15% for ACNC-registered charities other than universities and schools.

For more information on the eligibility requirements (including turnover test rules), the pre-requisites for payment to employees and other important information about accessing JobKeeper, refer to the ATO website JobKeeper webpage.
You may also wish to read our in-depth article ‘JobKeeper Payment – A Comprehensive Review’ available from our COVID-19 Resource Centre.
Wage Subsidy for Apprentices and Trainees
If you are a small business (with fewer than 20 employees) who employs one or more apprentices or trainees, you can apply for a wage subsidy of 50 per cent of the apprentice or trainee’s wages (up to a maximum of $7,000 per quarter) for the nine months from 1 January 2020 to 30 September 2020.  The apprentice or trainee must have been in an Australian Apprenticeship with a small business as of 1 March 2020.
More information on this measure can be obtained from the Department of Education Skills and Employment website, the Australian Apprenticeship website, or via the relevant Australian Apprenticeship Support Network provider.
SME Loan Guarantee
Under the Coronavirus SME Guarantee Scheme, the Federal Government will be providing a guarantee of 50% on SME business loans to businesses with a turnover of up to $50 million.
The loans will be:

up to $250,000 credit;
up to 3 years with no repayments for the first 6 months; and
unsecured

The Scheme runs from April 2020 to 30 September 2020.  A list of the participating lenders can be found on the Treasury’s dedicated webpage.
Cashflow Boosts to Employers
If you are a business that:

held an ABN on 12 March 2020 and continues to operate;
has an aggregated turnover of less than $50million (based on prior year turnover);
made eligible payments the subject of withholding tax (wages, director fees, eligible retirement or termination payments, compensation payments, voluntary withholding from payments to contractors); and
has:

derived business income in the FY2018-2019 and lodged its 2019 tax return before 12 March 2020; or
made GST taxable, GST-free or input taxed sales in the FY2018-2019 and lodged the relevant activity statement on or before 12 March 2020.

you should see cashflow boosts (in the form of tax-free credit) applied to your next business activity statement (BAS).
The Federal Government cashflow boosts will be applied to BAS lodged on or after 28 April 2020 as a credit generally based on the PAYG withholding reported by the business.  The initial credit will be the higher of $10,000 or to the PAYG withholding up to a maximum of $50,000.  Businesses will be eligible for further cashflow boosts when their PAYG withholding exceeds $10,000 over the relevant periods.
If your business does not need to lodge a BAS but would otherwise qualify, we recommend that you enquire with your accountant as the ATO is making alternative measures in these cases.
The credits are a grant and do not need to be repaid if your cash flow improves.
More information on the cash flow boosts is available on the ATO dedicated website.
Instant Asset Write-Off
For the period between 12 March 2020 until 30 June 2020, the instant asset write-off limit has been increased to $150,000 (up from $30,000) and is available to businesses with an aggregated turnover of less than $500 million (up from $50 million).
There is a wide range of expenses that may be written off as an instant asset write-off.  We recommend that you speak to your accountant as soon as possible and before 30 June 2020.  From 1 July 2020, the instant asset write-off will only be available for small businesses with a turnover of less than $10 million and the maximum write off will be $1,000.
Accelerated depreciation
Businesses with an aggregated turnover of less than $500 million are also eligible for accelerated depreciation on depreciable assets purchased between March 2020 and 30 June 2021.  The business will be entitled to claim an initial deduction of 50% of the cost of the asset, with the existing depreciation rules applying to the balance of the asset cost.
Other ATO COVID-19 Financial Measures
In addition to the above measures, the ATO has also published the following relief measures:

Consideration of remitting interest and penalties incurred after 23 January 2020 due to COVID-19 financial difficulties in payment.
Consideration of low-interest payment plans for existing and ongoing tax liabilities.
Payment deferrals of tax obligations such as income tax, Fringe benefits tax (FBT) and excise payment with due dates up to 12 September.
Stopping interest accrual on tax liabilities and low-interest payment arrangements.
No penalties or interest charged for varying PAYG instalments. In some instances, businesses may be able to claim a refund for any instalments made during the 2019-2020 financial year.
Superannuation obligations will not be deferred or waived.

We recommend you speak to your accountant with respect to all tax measures and subsidies.  You may also visit the ATO’s website [www.ato.gov.au].
Queensland State Government
Coronavirus Land Tax Relief
If you operate a rental business you may be eligible for one or more of the following land tax relief measures:

a land tax rebate reducing land tax liabilities by 25% for eligible properties for the 2019-20 assessment year;
a waiver of the 2% land tax foreign surcharge for foreign entities for the 2019-20 assessment year; and
a 3-month deferral of land tax liabilities for the 2020-21 assessment year.

Businesses will not need to apply for the foreign surcharge waiver or the 3-month deferral. The Office of State Revenue will reassess land tax accounts and provide a refund where applicable. However, you will need to apply for the land tax rebate.
Eligibility for the land tax rebate may be granted if you meet the following criteria:

You are a landowner who leases all or part of a property to one or more tenants and all the following apply:

The ability of one or more tenants to pay their normal rent is affected by the coronavirus (COVID-19) pandemic.
You will provide rent relief to the affected tenant(s) of an amount at least commensurate with the land tax rebate.
You will comply with the leasing principles even if the relevant lease is not regulated.

You are a landowner, and all the following apply:

All or part of your property is available for lease.
Your ability to secure tenants has been affected by the COVID-19 pandemic.
You require relief to meet your financial obligations.
You will comply with the leasing principles even if the relevant lease is not regulated.

The Qld Government requires you to apply the rebate firstly to provide rent relief to your residential or commercial tenants and then to your own financial obligations (e.g. property mortgage and bills).
The land tax rebate is determined in respect of each property individually.  Where there are multiple tenancies in a single property, including mixed-use developments, the eligibility requirements must be met for at least one tenancy.
More information on the land tax rebate can be found at the Qld Government dedicated Coronavirus land tax relief webpage.
Grants and COVID-19 Financial Support Measures
Unfortunately, the Small Business Adaptation Grant and Jobs Support Loan Scheme have both been exhausted, and applications for these financial measures are now closed.  However, the Queensland Government has several grants and COVID-19 financial support measures available from time to time to eligible business and industries, and these can be found at the dedicated Qld Government grants website
Tax relief for pubs and clubs
The Attorney-General and Minister for Justice announced $50 million extra tax relief for Queensland pubs and clubs affected by the COVID-19 restrictions.
More information on these measures can be found at the dedicated Qld Government webpage for hospitality tourism and sport
Other COID-19 Financial Measures
Mortgage and SME Loan repayments payment pause
The Australian Bankers Association (ABA) announced some time ago a relief package which will provide a payments pause on SME loan repayments for six months.
The ABA announced that to be eligible for the payment pause relief package your business must have less than $10 million total debt to all credit providers and the subject facility will need to be current, and not in arrears, as of 1 January 2020.  However, some banks are applying these criteria more flexibly so even if you don’t immediately qualify, still contact your bank to see what they can offer.
Note that while you won’t need to make any repayment during the payment pause, interest will still accrue and your repayments may be increased from the date you recommence payment or the facility period extended (subject to the bank’s policy).
During the COVID-19 period, banks have also agreed not to enforce any business loans for non-financial breaches of the loan contract.
A list of the ABA member banks and credit institutions, as well as more information on the ABA relief package, can be found at the ABA dedicated COVID-19 page [https://www.ausbanking.org.au/covid-19/].
Commercial Tenancies Relief
If you are a business leasing premises, you may be entitled to rent relief by application of the principles in the National Cabinet’s Commercial Tenancy Code of Conduct.
The Code applies to commercial tenants who:

have a turnover of less than $50 million; and
have suffered a 30% or greater loss in revenue.

The Code lists some principles to be applied during the COVID-19 period, which include a moratorium on evictions, and a reduction in rent proportionate to the decrease in turnover in the form of a combined waiver and deferral of rent.  The waiver component must comprise at least 50% of the total rent reduction.
To find out more on your rights as a commercial tenant under the Code, refer to our in-depth analysis article, “Commercial Leasing Principles for SME During COVID-19 – Analysis” available from our COVID-19 resource centre.
Industry-specific Measures
Many industry bodies have adopted measures to alleviate the strain on businesses such as extending reporting deadlines, discounted fees and flexibility on other obligations. We recommend that you consult with your industry association or authority to see what financial assistance is available to your business.
Get In Touch!
In these uncertain times, businesses of all sizes will face serious questions on the road to economic recovery.  Please remember to seek legal and financial advice when making important decisions for your business.
Don’t forget to consider the opportunity available during this down-time to implement those changes and improvements you’ve been putting off, like obtaining advice on business structuring, templates, policies and procedures to recommence trading from a stronger position.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
The post COVID-19 Financial Support Measures for Businesses appeared first on Bennett and Philp Lawyers.

Trusts can arise in various ways but usually (for the discussion) are usually created by the Trustee entering into a trust deed which sets out the terms of the trust.
In addition to the rights and obligations of the Trustee as set out in the trust deed, there are hundreds of years of decided cases under the general law and various pieces of legislation in Queensland. These precedents have a lot to say about the rights and obligations of Trustees in their conduct of the trust.
Relevant pieces of legislation:

Trusts Act 1973
Property Law Act 1974
The Corporations Act

Trustee Liabilities for Debts – An Overview
Under Australian trust law, a Trustee bears unlimited personal liability for all debts, liabilities and expenses incurred by the trust.
This liability comes about because whilst trusts are commonly spoken about as entities which exist in their own right, this is not correct. Trusts are not legal entities with separate legal personalities.
Rather trusts are nothing more than a series of solemn undertakings between the parties to the trust and particularly the Trustee in favour of the beneficiaries. The trust can only deal with the outside world through the actions of the Trustee.
Accordingly, all debts, liabilities and expenses incurred by a Trustee while acting as Trustee are personal to that Trustee.
Personal Liability in Trusts Explained
Because of this personal liability many Trustees when dealing in large commercial transactions, e.g. when the trustee is the “responsible entity” under a large managed investment scheme attempt to specifically limit their liability within the contractual document being negotiated. The Trustee may seek to limit his liability to the net value of trust assets (see below) or a fixed amount with which he is comfortable.
A company, like an individual person, does have a separate legal identity so can be appointed Trustee in the same way as an individual can.
While a Trustee is personally liable, they do have the right to be indemnified out of trust assets and to use trust assets in satisfaction of trust debts (this is so under the general law and dealt with specifically in section 72 of the Trusts Act) and various other protections as set out in Part 6 of that Act. Section 65 of that Act states that the indemnities and protections of trustees as set out in Part 6 apply regardless of what the trust deed itself may say.
These protections of the Trustee are subject to the Trustee having acted properly and responsibly in his administration of the trust.
If an individual is acting as the Trustee, they are personally liable to third parties. Similarly, if a company is appointed Trustee it is directly liable – is the answer to avoiding personal liability simply the appointment of a company of which the individual is a director?
Sadly, Section 197 (1) of the Corporations Act provides that a director of a company which acts as Trustee of a trust is personally liable for debts incurred by the company in that capacity if the company is not able to pay those debts and be fully indemnified out of trust assets due to the company having acted improperly or outside the terms of the trust in incurring the debts.
Interestingly, this section does not make a director personally liable merely because there are insufficient trust assets to fully indemnify the company for the third-party debts. In other words, provided the Trustee company acts properly in incurring the debt on behalf of the trust (meaning the directors of that Trustee company have acted properly and in the best interests of the Trust), they do not have personal liability to third party creditors just because there are not enough trust assets to pay the debt.
In this case, the company itself would still be liable to the third-party creditors. It could be placed into Administration like any other insolvent company and this could well expose the directors to allegations of insolvent trading etc.
From a liability point of view, there is probably not much difference between an individual being the Trustee and the individual being director of a company which is the Trustee.
Final Thoughts
From my experience, the real benefit in having a company as Trustee is to avoid any confusion about the capacity in which the Trustee is acting i.e. in his own right or as Trustee. Humans do all sorts of things for themselves and only occasionally something in their capacity as Trustee of a trust, and sometimes they do not make it clear what capacity they are acting in particularly when they are Trustee of several trusts.
I always encourage clients to incorporate a company to do nothing else except act as Trustee of a specific trust. This is made very clear in the first set of directors’ minutes recording the fact that the company consents to become Trustee of the relevant trust and the directors acknowledge that all actions of the company in future will be in that capacity unless specifically noted in the meeting minutes otherwise.
The relatively small cost of setting up a company and maintaining its registration is well worth the certainty of the capacity in which it always acts.
If you would like to discuss this article in more detail, please contact me directly.
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
The post Should the Trustee of a Family Trust be an Individual or a Company? appeared first on Bennett and Philp Lawyers.

Since the mandated lockdown it has been difficult to have documents signed due to self-isolation and working from home. That has caused a delay in the completion of legal documents.
The Justice Legislation (COVID-19 Emergency Response – Wills and Enduring Documents) Amendment Regulation 2020 (Regulation) commenced today.
As of today, the process for the signing of affidavits, declarations, oaths and affirmations, deeds, powers of attorney and some mortgages has been simplified.
In relation to deeds, the Regulation provides:

An instrument that is to have effect as a deed may be made in the form of an electronic document and may be electronically signed.
An instrument that is to have effect as a deed may be made in the form of an electronic document by or for a person even without consent to the making of it in that form from another signatory or any other person.
An instrument that is to have effect as a deed may be electronically signed by a person even without consent to the signing in that way from any other person who is to sign the deed.
An instrument that is to have effect as a deed for an individual or a corporation may be signed by or for the individual or corporation by signing a counterpart or true copy of the instrument.
The counterpart or true copy signed by a person need not include the signature of any other person who is to sign the instrument.
If the counterpart or true copy is electronically signed by a person, the counterpart or true copy need not include any material included in the instrument about the method used for electronically signing the instrument.

An instrument that is to have effect as a deed may be signed in accordance with this division whether or not in the presence of a witness.
To reflect that documents were signed during the pandemic, and to minimise the possibility of future disputes, it would be prudent to note that they were signed under the Regulation.
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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Case Study
Parwood Pty LTD v Trinity Constructions
Is a suspension of payment when work is taken out of the contractor’s hands, contracting out of the Building and Construction Industry Security of Payment Act 1999 (NSW)?
A decision of Parrwood Pty LTD v Trinity Constructions in the New South Wales Supreme Court raises some interesting questions concerning the validity of a decision of an adjudicator and what should be done by a contractor in certain circumstances where it is arguable that a decision has not been made in accordance with the provisions of the Sopa legislation.
It also raises interesting questions concerning a common provision in most Australian Standard contracts where a show-cause notice is issued to a contractor and then the principal takes the work out of contractors hands suspending any payments to the contractor pending an accounting following the balance of the works being completed.
Facts
Parwood engaged Trinity to construct two buildings containing 59 Apartments at Caringbah in New South Wales. The contract provided for liquidated damages at $5000 per day and allowed for delay damages to be claimed by Trinity if there were breaches by Parwood.
Clause 39.2 the AS 4902 2000 General Terms provided that the principal could issue a notice to show cause if the contract was in substantial breach and if the contractor failed to show cause the principle could take the work out of the contractor’s hands or terminate. In the circumstances of the work being taken out of the contractor’s hands, there would be an adjustment on completion of the works by others but until such time was reached payments were suspended.
In this case, a notice to show cause was issued and there was a failure to show cause and the works were taken out of the hands of the contractor. A payment claim was made three days later. The payment schedule provided for a payment of nil and the contractor proceeded to pursue what is referred to in the judgement as to the first adjudication. The determination by the adjudicator was that there was no amount owing at the time of the adjudication because there was no money due and owing until after the setoff procedure had occurred. Effectively there needed to be completion of the contract by others before any determination could be made. It was in effect premature to determine issues such as delay damages and liquidated damages. The adjudicator held that the provision suspending payment was not contracting out of the provisions of the Act. The adjudicator suggested that the suspension of payment was merely effecting the timing of any progress claim rather than doing away with the right to make the progress claim.
On receipt of the ‘decision’, Trinity withdrew its adjudication application with the first adjudicator and made a second adjudication application. The second adjudication application was based upon the belief that the first adjudicator failed to undertake his statutory function by declining to determine the application and was therefore void. It was on this basis that the second adjudicator decided she was able to make a determination. The second adjudicator found for the contractor for a value of over $400000. The provisions of the New South Wales Act are similar to the Queensland legislation in that in certain circumstances where an adjudicator does not make a decision within the time required an applicant can seek to have the adjudication application determined by another adjudicator so long as such application is made within five business days of the end of the period within which the initial adjudicator was to have made a decision
Issues
1. Is the first determination void?
There was considerable discussion in the judgement concerning the position of the contractor and whether the contractor should have made application immediately for a declaration as to the validity of the first adjudicator’s decision. As matters occurred that application occurred much later but was already implicit in the attitude the contractor had taken in relation to the first adjudication. If the contractor had not taken any action to deliver the second adjudication application, there was no guarantee these matters would be determined for some time as another reference date may not occur until there was an accounting between the parties on completion of the works. The court was supportive of the actions the contractor to apply for a second adjudication and agreed that the first adjudication was indeed void. Any right to a further adjudication would be dependent upon an agreement between the parties which was never guaranteed.
The court found that the adjudicator did fail to undertake its statutory task by essentially deferring a decision and not making one. Should the first adjudicator have made a determination that the adjudicated amount was nil there may have been less criticism of the adjudicator. As it was the court said there was no determination made. The court rejected the argument that the wording used by deferring consideration did not imply any determination at all.
2. Is a suspension of payment contracting out of the Act?
It was conceded that as of 25 August the contractor had a right to make a payment claim. The attempted suspension of payment that right to make a payment claim for works completed prior to any notice of the works being taken out of the hands of the contractor was held to be a modification of that right and as a consequence an attempt to contract out of the Act. Our section 200 under BIF might result in a Queensland Court making a similar finding.
Other matters, observations and takeaways
The New South Wales Act has requirements concerning supporting statements accompanying payment claims. It was alleged in these proceedings that some of the information in the accompanying statement was false and misleading and the question arose as to whether these provisions were a precondition to a valid payment claim. While the court didn’t find it necessary to determine these matters conclusively, it did make the observation that, because of the seriousness of the allegations, proof that the contractor knew of the falsity of the allegations needed to be made to a very high standard. The court wasn’t satisfied that it was proven to that standard and as such didn’t take these matters any further.
The proposed provisions of the BIF amendments yet to be passed have two stark differences to the New South Wales legislation:

the proposed Queensland legislation provides that a failure of the claimant to comply with the provision of a supporting statement does not affect the validity of the payment claim, and
the provision of misleading information within a supporting statement will result in a financial penalty.

This would seem to suggest that there is no legislative intent to make it a precondition for a valid payment claim that such supporting statement is supplied and is accurate.
Faced with a ‘ decision’  that might technically not be in compliance with the Act to be a decision, this case gives clear pointers to the process a contractor might need to take very quickly (within five days). The decision encourages proactive options available for an initially unsuccessful applicant.
Should this decision be followed in Queensland it may mean that in circumstances where work has been taken out of the hands of the contractor issues of set-off following the contract completion will need to be delayed to separate litigation rather than being determined within the SOPA provisions.
If you would like to discuss this article and its implications on your business, please contact Tony Mylne from our Construction Litigation team.
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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Because of COVID-19, Federal, State and Territory governments have imposed restrictions on how and where persons may gather including but not limited to quarantining, social (physical) distancing, border closures et cetera. Such restrictions will impact how Annual General Meetings (AGM) may be held while such restrictions are in place.
Not-For-Profit’s (NFP) generally fall under one of the following two legal regimes:

Corporations Act 2001 Cth; or
State or Territory based legislation regulating the incorporation of associations e.g. Associations Incorporation Act 1981 Qld.

They are also likely governed by the Australian Charities and Not-For-Profits Commission Act 2012 (ACNC Act) if they have a charitable purpose and meet other criteria.
In any case, your NFP will be governed by its Rules or Constitution and by the applicable legislation.
Corporations Act 2001 
The Corporations Act mandates that a public company must hold its AGM at least once in each calendar year and within five months after the end of its financial year.
However, section 111L of such Act relieves bodies corporate of a number of provisions and relevantly for the purpose of this article, the provisions relating to the holding of Meetings of Members where those bodies corporate are registered under the ACNC Act.
On the premise that your NFP is registered under the ACNC Act your organisation’s obligation to hold an AGM will be directed by its Constitution. The template Constitution published by the ACNC provides that an AGM must be held at least once in every calendar year. Accordingly, there should be an opportunity to hold your AGM in the manner previously adopted by your NFP.
If, however, the Constitution of your NFP contains more demanding provisions for the timing of the AGM you will need to establish if there is provision in the Constitution for the use of technology. Accordingly, if your NFP has utilised the ACNC template constitution or has similar provisions your AGM can be held any time before 31 December 2020. It is debatable if such provision entitles the company to hold a “virtual” AGM. However, the holding of what is referred to as a “hybrid” AGM, meaning there are some parties assembled in a physical location while other members participate in the AGM by audio and/or video conferencing, may be possible.
So what are the constraints on holding a “hybrid” AGM? The following potential difficulties are identified: –

technological challenges inherent in managing many people in diverse locations;
voting on motions. The ACNC template Constitution permits voting to be conducted and decided by:
(a) a show of hands
(b) a vote in writing, or
(c) another method is chosen by the chairperson that is fair and reasonable in the circumstances;
undertaking a vote in writing if demanded by the requisite number or percentage of members present or deemed to be present for the AGM.

Associations Incorporation Act 1981 Qld (Associations Act)
Pursuant to section 55 of the Associations Act an incorporated association must hold its annual general meeting within 6 months after the end date of the association’s reportable financial year. Accordingly, for those associations whose financial year ended on 31 December 2019 its AGM is to be held by 30 June 2020. Accordingly, the AGM is likely to be required to be held while Queensland is still being impacted by the coronavirus.
The Associations Act provides that the rules of an incorporated association may permit the Association to hold meetings or permit members to take part in its meetings, by using any technology that reasonably allows members to hear and take part in discussions as they happen. The Model Rules in Schedule 4 of the Associations Incorporation Regulation 1999 contain such provision. If your Rules do not contain that Model Rule or a similar provision, the AGM may only proceed with members personally or by proxy present at the venue where the AGM is to be held and observing the constraints of social (physical) distancing and/or assembly. In the absence of any such provision, serious consideration should be given to ultimately amending the Rules by means of a special resolution to incorporate such provision for the use of technology in or about the calling and holding of the AGM. Any such amendment is valid only if it is registered.
Grace Period for Your AGM
In Queensland, the Associations Act is administered by the Office of Fair Trading (OFT). The Chief Executive OFT has exercised his power to “allow a grace period of a further 6 months to hold your AGM, if required, without the need for you to make a written application”. The Chief Executive notes that “In effect, this may result in a management committee’s term being longer than is described in the rules, but, given the current circumstances, we hope members will be accepting of this”. The Chief Executive’s directive does not contain a sunset clause but prudence would dictate that an NFP should only avail itself of the period of grace while the coronavirus is still impacting the holding of an AGM.
In effect, if your NFP’s financial year ended 31 December 2019 it has until 31 December 2020 to conduct its AGM. If, however, your NFP has a financial year ending 30 September 2019 it would only have until 30 September 2020 to hold its AGM. In this last-mentioned example, your NFP has two options if social distancing and restrictions on assembly continue:-

apply to the chief executive officer for an extension of time to hold its AGM, or
conducting its AGM by use of technology if so permitted by its rules. In this respect the observations above relating to NFP companies are apposite.

The Impacts of COVID-19
The COVID-19 pandemic is having a profound impact on society’s functioning. While the measures and timing of measures implemented by various governments may vary, their priority is clearly the preservation of life. What is also clear is that the legislators and those administering the legislation are taking steps, where they can, to facilitate or postpone obligations under relevant legislation.
Accordingly, you should keep a close eye on the above-mentioned legislation for any relief in the short to medium term.
If you would like to discuss this article in more detail, please contact Greg Moroney from our Business Advisory team.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
The post How Will Your NFP Hold Its AGM During COVID-19? appeared first on Bennett and Philp Lawyers.

Case Study
Grocon (Belgrave ST) Developer Pty Ltd (Grocon) v Construction Profile Pty Ltd (CP)
This Supreme Court of NSW decision by Justice Ball has interest for both claimants and respondents and deals with a circumstance where guarantees are called upon by the principal to satisfy a claim for liquidated damages and how a claimant might deal with that circumstance.
Facts
CP was engaged by Grocon to construct an apartment block at what is referred to as the Telstra Exchange at Manly for an amount of approximately $21 Million. CP made a Payment claim for $3.22 million. Grocon provided a payment schedule for $-1.36 million allowing only $29,500.04 for works but setting off liquidated damages of $1.655 million.
An adjudicator allowed various extensions of time and allowed an adjudicated amount of $1.264 million.
There were two bank guarantees just shy of $1 million in total which was called in by Grocon. Grocon paid the adjudicated amount. PC then issued a further payment claim effectively trying to “cover the liquidated damages under the contract”.
Grocon sought injunctive relief prior to the second adjudication application proceeding as it claimed the adjudicator could not have jurisdiction as essentially the claims to cover liquidated damages can’t be construction work or related goods or services and as a result cannot be the subject of adjudication.
Issues

Whether a claim to cover liquidated damages was construction work or related goods or services.
Whether responses of CP could be sustained:

The question can be determined by adjudicator;
It is a claim for construction work as it includes the value of the whole of the work undertaken less the amount it had been paid;
Clause 42.8 of the general conditions of the contract (allowing set-off) is rendered void by reason of section 34 of the SOP act (dealing with anti-avoidance provisions).

3.Whether the right to call on the guarantee modified or restricted operation of the Building and Construction Industry Security of Payment Act (the Act).
While the issue at paragraph numbered 3 above, was not a matter raised by the parties explicitly and the matter was not decided on this point, there were some very interesting comments that might give rise to further arguments in future for claimants.
Result and takeaways
Dealing with the first issue raised the court was strong of the view that the claim was not for construction work or related goods and services. While an adjudicator may address issues of jurisdiction to deal with matters raised, jurisdiction is ultimately a question for the court and not the adjudicator. While normally these issues of jurisdiction might be dealt with by a court following a determination by an adjudicator in an appropriate case it can be determined in advance of any adjudication by application to the court. As in this case, it was appropriate for a court to consider these issues where it was contended that the whole or a substantial part of the claim falls outside of the Act.
The court also took little time to deal with the second of CP’s claims as it was plainly not construction work. While some claims were available, they were comparatively small in nature and didn’t provide a sufficient basis for refusing relief to Grocon.
The Court in relation to the third issue, criticised the CP submission in that it focused on clause 42.8 (sett off) of the contract. The court found that Grocons claim to the bank guarantees did not depend on the right of set-off but rather CP’s real complaint was that Grocon called on the guarantees even though the adjudicator determined that it had no claim for liquidated damages. The court suggested that a more successful submission might have been that the effect of the provisions of the contract permitting Grocon to call on the guarantees regardless of the determination of adjudicator, was to modify or restrict the operation of the Act, therefore, making those provisions void under the anti-avoidance provisions. It could be said the effect of these provisions was to reduce the amount that CP was entitled to recover on an interim basis as a consequence of the adjudicator’s determination.
The court made the comment that it saw no reason why an adjudicator could not adjust to take into account bank guarantees called upon should there be a conflict between the adjudicator’s decision on liquidated damages and the claims of the principal.
The method of dealing with this issue by the contractor was ineffective according to Ball J. and it seems the contractor would have been much better challenging the call on the bank guarantees seeking injunctive relief.
The court was not directly required to deal with the calling in of the guarantees and as a result, Grocon succeeded in its challenge and an injunction was granted stopping the second adjudication.
Takeaways
The court will likely consider a challenge to jurisdiction prior to the adjudication in the appropriate circumstances that might include, avoiding large costs of a defective application, and where it is clear that jurisdiction is lacking.
Timing and consideration of when to call in a guarantee or when to challenge such an action are crucial to the success of either side.
If you would like to discuss this article and its implications on your business, please contact Tony Mylne from our Construction Litigation team.
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
The post Bank Guarantees and Adjudications appeared first on Bennett and Philp Lawyers.

A Landlord’s Perspective
This Regulation was made on 24 April 2020 under the COVID-19 Emergency Response Act 2020.
This article seeks to explain the Regulation from the perspective of landlords of residential premises under the RTRA Act (Residential Tenancies and Rooming Accommodation Act 2008) who enter into tenancy agreements under that Act.
In this article, for simplicity, those types of agreements will be referred to as “tenancy agreements”. Also, the article prefers to use “landlord” to describe a person which is known in the Act as a lessor.
Proposed application to residential tenancies
The Regulation applies to-

all residential tenancy agreements entered into before or after 29 March 2020
landlords, tenants and their agents involved in those agreements.

Evictions
A landlord (including its agent) must not evict a tenant by reason of its failure to pay rent in accordance with the tenancy agreement if –

the tenant is suffering excessive hardship; and
the cause of the hardship is the COVID-19 emergency.

To do so would give rise to an offence carrying a maximum penalty of 50 penalty points (currently $6,672.50).
The word “evict” has a very broad meaning and includes, for example, the landlord or its agent –

giving a notice to leave;
applying to QCAT for an order terminating the tenancy agreement;
coercing a tenant into signing an agreement which terminates the tenancy;
preventing free access to the subject premises, including by intimidation;
causing the tenant to vacate by giving false or misleading information; or
causing the tenant to vacate by committing other acts of intimidation.

But a landlord may evict the tenant-

for any other reason which would be lawful under the RTRA Act – an example of which would be a tenant’s failure to comply with a notice to remedy a breach within the allowed remedy period; or
for failure to pay rent under a Tenancy agreement other than because of excessive hardship caused by the COVID-19 emergency; or
if, before 29 March 2020, the landlord gave the tenant notice to leave or applied to QCAT for an order terminating the Tenancy agreement.

The restriction on evictions applies during the period commencing 29 March 2020 and ending on the earlier of –

29 September 2020;
the last day of the COVID-19 emergency period.

What is the COVID-19 emergency period
The COVID-19 emergency period commenced on 29 January 2020 and will continue until the relevant Minister puts an end to the declared public health emergency under section 324 of the Public Health Act 2005 (Qld).
Extensions of fixed-term tenancy agreements
Where there is a fixed-term tenancy agreement which will end on or before 29 September 2020 and the tenant is suffering excessive hardship because of the COVID-19 emergency –

the landlord must offer the tenant an extension of the term until 30 September 2020;
the landlord must make the offer before the term of the tenancy agreement ends;
the tenant does not have to pay any costs incurred by the landlord for the extension.

The extension may be for a shorter period if that is requested by the tenant.
When the offer is accepted by the tenant the terms of the tenancy agreement continue to apply.
If a landlord does not offer that kind of extension to the tenant, the landlord will commit an offence for which the maximum penalty is 50 penalty points (see above).
But, if before 29 March 2020 –

the tenancy agreement ended; or
the landlord gave the tenant a notice to leave; or
the tenant gave the landlord a notice of intention to leave; or
the landlord (or the landlord’s agent which is a party to the agreement) or the tenant applied to QCAT for a termination order

the landlord is not required to offer the tenant an extension of the term, unless –

the landlord’s notice to leave is invalid; or
the tenant’s notice of intention to leave is invalid; or
the QCAT application is rejected.

None of those three events occurring before 29 March 2020 will bring the tenancy to an end and, consequently, would not relieve a landlord from its obligation to offer to extend the term.
Unpaid rent
When a landlord believes on reasonable grounds that –

rent payable under a tenancy agreement has remained unpaid for 7 days; or
the tenant has breached another term of the agreement and the breach has not been remedied

Section 280 of the RTRA Act permits the landlord to give the tenant a notice requiring the tenant to pay the rent or remedy the other breach.
However, despite section 280, a landlord must not give the tenant a notice, under that section, to pay rent, but, instead, may give the tenant a show cause notice for the unpaid rent.
The show cause notice for unpaid rent must be in a form which will be approved under the Regulation.
Within 14 days after being given the show cause notice the tenant must –

pay the unpaid rent; or
tell the landlord that the reason for non-payment is that the tenant has been or is suffering excessive hardship because of the COVID-19 emergency.

If the tenant takes neither of those steps, the landlord may give the tenant a notice under section 280 requiring the tenant to pay the unpaid rent.
If the tenant is given a show cause notice and –

does not pay the unpaid rent within 14 days; and
tells the landlord (as mentioned above) that the reason for non-payment is that the tenant has been or is suffering excessive hardship because of the COVID-19 emergency

the landlord may request the tenant to enter into an agreement varying the tenancy agreement.
Tenancy variation agreements
A landlord and tenant may enter into a tenancy variation agreement which provides for a rent reduction for a stated period or a payment plan for unpaid rent.
The tenancy variation agreement must be in a form which will be approved under the Regulation and must be signed by the landlord and the tenant.
A tenancy variation agreement may exclude, change or restrict the application or operation of any provision of the RTRA Act and may be entered into at any time.
Conciliation of dispute about unpaid rent.
A landlord or a tenant may make a dispute resolution request to the Residential Tenancies Authority to try to resolve a dispute over unpaid rent under the RTRA Act if –

the landlord has requested the tenant to enter into a residential variation agreement, as mentioned above; and
the landlord and the tenant are unable to agree upon such an agreement.

Rent decreases under a residential tenancy variation agreement
If a variation agreement reduces rent for an agreed part of the term of the tenancy agreement and rent is increased when the rent reduction period ends, the provisions of the RTRA Act which control rent increases will apply. Those provisions prescribe what landlords must do if they propose to increase rent; and permit tenants to apply to QCAT for an order to reduce or set aside the rent increase.
But those provisions will not apply so as to prevent the rent returning to the amount payable under the tenancy agreement before the variation agreement was signed by the landlord and the tenant.
Tenant’s failure to leave because of unpaid rent
If a landlord –

gives a tenant a notice to leave because of an unremedied breach; and
makes an application to QCAT for a termination order because of the tenant’s failure to leave

QCAT must not grant the application if –

the unremedied breach relates to unpaid rent in breach of the residential tenancies agreement; and
the rent is unpaid because the tenant has been or is suffering excessive hardship because of the COVID-19 emergency.

Rental bonds
The maximum penalty bond payable under a residential tenancy agreement is the aggregate of four weeks rent.
The RTRA Act makes it an offence for a person, for example, a landlord or landlord’s agent, to require payment of or accept a rental bond which exceeds the maximum permitted by the Act.
That Act makes provision for the amount of a rental bond to be reduced and the amount of the reduction to be paid to a tenant when, during the first 6 months of the term of the tenancy agreement, the rent payable decreases or is decreased.
That provision will not apply if, before the COVID-19 emergency period, a rental bond under a tenancy agreement has been paid in accordance with the RTRA Act and-

is not more than the maximum permitted under the Act, and
during that period the rent payable under the tenancy agreement decreases.

Entry to the premises
A landlord or its agent may enter premises –

to comply with the Fire and Emergency Services Act 1990, in relation to smoke alarms;
to comply with the Electrical Safety Act 2002, in relation to approved safety switches;
if the tenant agrees;
in an emergency;
if it is believed, on reasonable grounds, that entry is necessary to protect the premises or contents from imminent or further damage.

Entry for any other reason which normally would be permitted under the RTRA Act is prohibited if –

a person at the premises is subject to a quarantine direction by the Chief Health Officer under the Public Health Act 2005 (Qld); or
the landlord or its agent is subject to a quarantine direction; or
the entry would contravene a public health direction by the Chief Health Officer under the Public Health Act 2005 (Qld); or
the tenant refuses entry because any person staying at the premises is a vulnerable person.

For the purposes of the Regulation, a vulnerable person is a person –

over the age of 70 years;
over the age of 65 years who has an existing health condition or a combination of health conditions;
who is an Aboriginal or Torres Strait Islander who suffers from those types of conditions.

Virtual inspections
If  –

a landlord or its agent wishes to enter premises to inspect them or to show them to a prospective buyer or tenant; and
the tenant refuses entry because a person staying at the premises is a vulnerable person

the tenant must allow the landlord or its agent to conduct an inspection by –

virtual inspection – an electronic means of conducting visual inspection;
video conferencing;
giving access to photographs or videos sufficient to enable a judgement to be made on the condition of the premises and contents.

Repairs and maintenance
The RTRA Act imposes obligations on landlords while a tenancy continues (“statutory obligations”). For example, they included obligations in relation to maintenance and repair.
If a statutory obligation is inconsistent with a public health direction or social distancing, the landlord does not have to comply with it to the extent of inconsistency, unless it is an obligation to make emergency repairs.
If the Regulation does not permit entry to undertake a statutory obligation, the landlord does not have to comply with it until the landlord may enter the premises, lawfully.
If the Regulation permits a landlord to undertake a statutory obligation in relation to repairs or maintenance and –

another person, for example, a tradesperson, is needed to undertake the repairs or maintenance is not available; or
the supplies which are needed for the repairs or maintenance are not available

the landlord is released from the statutory obligation during the period of such unavailability.
A landlord need not comply with a tenant’s notice to remedy breach if the Regulation releases the landlord from doing so.
Landlords’ breaches
If a tenant gives its landlord a notice to remedy a breach which relates to an obligation from which the landlord is released, the period of time which the notice gives (“allowed remedy period”) is extended until the earlier of the day when –

a public health direction or social distancing stops applying to what needs to be done to comply with the notice;
the COVID-19 emergency period ends.

If the breach relates to an obligation to undertake repairs or maintenance and the tradesperson or necessary supplies are not available, the allowed remedy period is extended until the earlier of the day when –

the tradesperson or supplies become available;
the COVID-19 emergency period ends.

Termination by landlords wanting to sell
If a landlord –

is preparing to sell the premises with vacant possession; or
has entered into a contract to sell the premises with vacant possession

the landlord may give notice to leave the premises to the tenant.
That notice to leave must be in a form which is approved under the RTRA Act.  The notice must be accompanied by the evidence which the form requires and must otherwise be given in accordance with section 326 of the Act.
The notice must state the date upon which the tenant must vacate the premises (“handover day”) and the handover day –

must not be earlier than 2 months after the notice is given to the tenant; and
may be earlier than the end of the term, in the case of a fixed term agreement.

Termination by landlords for a State government program
If premises are required for use of a program administered under a Queensland legislation, the landlord may give the existing tenant notice to leave. Section 326 of the RTRA Act will apply and the handover date must not be earlier than 2 months after the notice is given to the tenant.
Termination for occupation by landlords
 If a landlord or a member of his or her immediate family needs to occupy premises, the landlord may give notice to leave to the tenant. The expression “immediate family” means a landlords’ spouse, child, parent or another person who normally lives with and is financially dependent upon the landlord.
Section 326 of the RTRA Act will apply and the handover date must not be earlier than 2 months after the notice is given to the tenant.
Termination without grounds
Under section 291 of the RTRA Act, a landlord may give notice to leave to a tenant without stating a ground for the notice.
Under the Regulation, a landlord must not give a notice of that kind if the tenant is or has been suffering excessive hardship because of the COVID-19 emergency.
But if a notice to leave without grounds is given in contravention of the Regulation, it may take effect at the end of the COVID-19 emergency.
Failure to leave
 A landlord may apply to QCAT for a termination order if the tenant has –

been given notice to leave under the Regulation; and
failed to handover possession in accordance with the notice.

The application must be made within 2 weeks after the handover date which is stated in the notice and the provisions of the RTRA Act which relate to an urgent application will apply.
Misuse of notice to leave
If a residential tenancy comes to an end as a consequence of a notice to leave being given because of an intended or actual sale or because of the need for owner occupation, the landlord will commit an offence under the Regulation if, without reasonable excuse –

the landlord includes information in the notice that is false or misleading in a material particular; or
the landlord lets the premises to someone other than the existing tenant.

The maximum penalty for the type of offence is 50 penalty points (see above).
Reasonable excuse would include the cancellation of a sale contract or a job transfer.
Notices of intention to leave
This topic will be discussed in a later article which will examine the Regulation from a tenant’s perspective.
Termination for excessive hardship
The Regulation deals with applications for termination of tenancy agreements by tenants suffering excessive hardship because of the COVID-19 emergency.
That topic will be discussed in a later article which will examine the Regulation from a tenant’s perspective.
Reletting costs
The RTRA Act permits landlords to recover reletting costs from tenants in certain circumstances. But, the regulation overrides those provisions to some extent and puts a limit on any amount which would otherwise be payable under the Act.
That topic will be discussed in an article which will examine the Regulation from a tenant’s perspective.
Tenancy databases
Under the RTRA Act there is provision about the recording of personal information about tenants in tenancy databases.
Personal information means information or an opinion, whether or not true about a person whose identity is apparent or can be ascertained from the information or opinion.
The regulation makes it an offence for any person (for example, a letting agent) to list personal information in a tenancy database, if –

the information relates to the failure to pay rent under a tenancy agreement or the termination of the tenancy agreement during the COVID-19 emergency; and
the failure or termination was because the personal information related to a person (for example, a tenant) suffering excessive hardship because of the COVID-19 emergency or such person complying with a public health direction.

The maximum penalty for that type of offence is 20 penalty units ($2,669.00).
A landlord or a landlord’s agent which lists personal information in tenancy databases will not commit an offence if the person who owns information does not inform them of those circumstances.
Summary offences
A proceeding for an offence against the Regulation may be taken within 2 years after the commission of the offence.
Ministerial guidelines
The relevant Minister may make guidelines to provide guidance to persons about the application of the Regulation to the rights and obligations of landlords and tenants under the RTRA Act as modified by the Regulation
Those guidelines must be consistent with the Act and the Regulation.
If any landlords require assistance in negotiating commercial leasing relief, then please contact Bill Purcell, Jacob Duane or Daniel Ronan in our Property and Real Estate team.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
The post Residential Tenancies and Rooming Accommodation (COVID-19 Emergency Response) Regulation 2020 appeared first on Bennett and Philp Lawyers.

Parents are understandably concerned about the safety of their children and how the COVID-19 virus will affect their lives. Having shared-parenting arrangements can also add layers of complexity to what is already an incredibly difficult time. 
Consistent with a parent’s or carer’s responsibilities to act in the children’s best interests, parents and carers are still expected to comply with Court orders in relation to shared-parenting arrangements during the coronavirus pandemic.  This includes facilitating time being spent by the children with each parent or carer pursuant to parenting orders.
Some Australian States and Territories have applied restrictions on residents who are travelling across State and Territory borders in response to the Government’s protocols for non-essential travel. Some of the restrictions also involve strict quarantine requirements.
These border restrictions may affect families that have court orders in place that involve shared-parenting arrangements that require children to move from one household to another, across State borders.
These border arrangements are primarily a matter for each State or Territory government, and unfortunately, there is currently no national approach to how parents should deal with this situation.
The Courts strongly advise that families seek advice from the relevant State and Territory authorities about how the border restrictions and quarantine requirements may impact them and their circumstances. For example, there may be exemptions that enable families with court orders in place, to travel across State or Territory borders. Parents and carers should check their relevant State or Territory website for information or updates prior to engaging in any travel or contact their lawyer.
When crossing State or Territory borders parents or carers may be required to provide the appropriate court order, as evidence of essential movement, to border control personnel. Parents and carers should ensure that they also carry current photo identification and ideally, a hardcopy of the appropriate court order, or at least, an electronic copy or photo of the court orders.
The Courts have published general information on their websites that may be of assistance to parents and carers.  This information is updated as new information is provided.

Family Court 
Federal Circuit Court 

If you need help navigating this difficult and unprecedented time, talk to one of our experienced family lawyers Kristy Perdriau, Barbara Houlihan or Chai Hoe.
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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Late on Wednesday 22 April 2020 the COVID-19 Emergency Response Bill 2020 (COVID-19 Act) was passed. In our latest article, we look at the impacts of the Bill on commercial and residential landlords
It is important to firstly understand the intent behind the Bill.
Understanding the COVID-19 Act 
Its purposes are:

to protect the health, safety and welfare of persons affected by the COVID-19 emergency;
to facilitate the continuance of public administration, judicial process, small business and other activities disrupted by the COVID-19 emergency, including by easing regulatory requirements and establishing an office of the Small Business Commissioner;
to provide for matters related to residential, retail and prescribed leases affected by the COVID-19 emergency; and
to support the Queensland rental sector during the COVID-19 emergency period.

What the Act does is allow Ministers to make extraordinary regulations that override other Acts only if the Minister is satisfied the regulation is necessary for the purposes of the COVID-19 Act. Effectively the COVID-19 Act allows the adoption of Henry VIII clauses.
In 1997 the Scrutiny of Legislation Committee of the Queensland Parliament published “The use of Henry VIII clauses in Queensland Legislation” (Report). It defined a Henry VIII Clause as one of an Act of Parliament which enables an Act to be “expressly or impliedly amended by subordinate legislation or executive action.
The Queensland Legislation Handbook states that Henry VIII clauses should not be used. It is interesting that COVID-19 is considered so significant an impact on Queensland that such clauses will now be permitted.
The Report concluded that Henry VIII clauses may be justified for a number of reasons, including “to facilitate the application of national schemes of legislation”. Clearly that is what is happening now.
So what does this mean for Queenslanders?

Unfortunately, it does not guarantee the holding of the State of Origin this year.
It allows Ministers of various Queensland Departments to make regulations to ensure the health and safety due to the COVID-19 emergency and the continuance of public administration, small business and other activities.

Regulations of the Act 
The regulations the COVID-19 Act will include, among others, are:

The establishment of the Small Business Commissioner to provide a single point of information and advice, especially in relation to dispute resolution;
Protect residential tenants who are not able to meet their obligations;
Remove landlord obligations to undertake routine maintenance if the landlord is unable to enter the premises; and
Introduce good faith leasing principles for landlords and tenants of non-residential tenancies.

At the time of writing, the only Regulation that has been tabled in the Residential Tenancies and Rooming Accommodation (COVID-19 Emergency Response) Regulation 2020 (Regulation).
The Regulation will override provisions in the Residential Tenancies and Rooming Accommodation Act 2008. The Regulation is detailed and provides for:

Protection of tenants who suffer a 25% loss of income or where the rent payable is more than 30% of the tenant’s income;
A moratorium on evictions until the earlier of 29 September 2020 or the last day of the COVID-19 emergency period;
If a tenant is suffering excessive hardship an extension of the term until 30 September 2020; and
A limitation to recover reletting costs to one week’s rent if the tenant suffers a loss of income of 75% or more and the tenant has less than $5,000 in savings.

It is interesting to note that the moratorium on evictions does not prevent a landlord ending a residential tenancy for any reason other than a failure to pay rent. Presumably, that would allow a landlord to end a residential tenancy agreement if the tenant is damaging the landlord’s property. The usual process to end the agreement would need to be observed.
We will not know the impact of the COVID-19 Act and new regulations until more are tabled.
You can review the tabling of regulations at this link.
If any landlords and tenants require assistance in negotiating commercial leasing relief, then please contact Bill Purcell, Jacob Duane or Daniel Ronan in our Property and Real Estate team.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
The post COVID-19 Act Passed – Impact on Residential & Commercial Landlords appeared first on Bennett and Philp Lawyers.

Social distancing, isolation and quarantine restrictions brought on by the coronavirus have made it difficult, and sometimes impossible, for persons to make and/or get witnessed certain legal documents. Charlie Young discusses the dawn of the Corona Will. 
Examples include Wills, enduring power of attorney instruments, deeds and statutory declarations, each of which requires at least one witness of the maker’s signature.
This problem often leads to major financial implications.
COVID-19 Emergency Response Bill
Late last night, the Queensland Parliament passed the COVID-19 Emergency Response Bill which was a step towards addressing this ‘witnessing issue’ caused by the current coronavirus restrictions. More laws will no doubt follow.
As of yesterday, there has been a significant shift by the Supreme Court of Queensland in relation to the witnessing of Wills.
A will-maker’s signature must be witnessed by two persons. The Court can ‘approve’ (probate) a Will not properly witnessed but it is difficult, often risky and requires a hearing before a Judge.
However, for Wills that cannot be witnessed properly due to COVID-19 isolation or quarantine restrictions, the Court has made a direction which essentially means that people will be able to make ‘Corona Wills’ knowing there is a very good chance they will be approved (probated).
Requirements for a Corona Will
There are several requirements for a Corona Will, which include:

It having at least one witness;
That witness being ‘present’ by video conference; and
A solicitor drafted the Corona Will, or was a witness or supervised its signing.

It is unclear at this stage what is meant by ‘video conference’; presumably, this includes where a witness is on a mobile phone application such as Skype, Zoom or Facetime and witnesses the will-maker’s signature that way.
This change will prove to be very useful during the pandemic, but it is not a sign that everyone can assume they can now get Corona Wills witnessed by a friend using their mobile phone.  There are other requirements.
Also, this only applies to Wills made in March to September this year (at this stage).
As to whether laws will be made permitting other documents to be witnessed by mobile phone, we will no doubt find out soon.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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The Fair Work Commission (“FWC”) has ordered that a company was entitled to reduce the number of redundancy entitlements due and payable to an employee, as a direct result of COVID-19 crisis. However, in a separate matter (handed down on the same day), the FWC refused to order such a reduction after determining that the employer was likely eligible for the JobKeeper scheme and had the means to pay the entitlements.
Section 120 of the Fair Work Act 2009 (Cth) allows the FWC to reduce the amount of redundancy pay (including to zero) if the employer cannot pay the stipulated amount of the entitlements.
Permitted reduction of redundancy entitlement payable
Application by Mason Architectural Joinery [2020] FWC 1897 
Mason Architectural Joinery sought the FWC’s permission to reduce an employee’s redundancy pay from 7 weeks to 1 week because it could not afford to pay the full entitlement.
The ruling is the first to reduce redundancy pay during the COVID-19 crisis and was issued despite the Government’s plan to avoid job losses through its JobKeeper scheme.
In finding for the employer, Commissioner McKinnon determined that “the business is trying to work through the current crisis and much depends on how long the situation lasts“.
Further, Commissioner McKinnon said, “I am satisfied that Mason Joinery is under significant financial strain and that it cannot afford to pay Mr Grant’s full entitlement to redundancy pay”.
Relevantly, Commissioner McKinnon also considered and determined that the former employee had already been paid 3 weeks’ notice and was only out of work (and unpaid) for 8 days as a result of his employment coming to an end by way of redundancy (as the employee had commenced alternative employment with a $2 per hour pay rise 8 days after the termination date).
Of important note, Commissioner McKinnon makes no reference in the decision to the employer’s potential eligibility for the JobKeeper scheme.
Employer not permitted to reduce redundancy entitlements
Application by Worthington Industries Pty Ltd [2020] FWC 1912 
The employer sought to reduce the amount of redundancy pay for three employees from 4 weeks’ pay to 1.
The employer had made the employees redundant as a result of a reduction in production output. Moreover, the employer submitted to the FWC that it anticipated sales would significantly reduce in the coming months by up to 50%, as a combined result of increased competition and the COVID-19 crisis.
Although the employer claimed that paying the full entitlement to the employees would cause financial hardship, Deputy President Clancy determined that the employer currently had the means to pay the full entitlements and would likely be eligible for the JobKeeper scheme. Further, Deputy President Clancy determined that if the employer was eligible for JobKeeper scheme, 90 per cent of the redundant employees’ wages would be covered by the scheme.
The employer accepted that it had the means to pay the full amount of the entitlements (although the employer further submitted that paying the entitlements now would create cash flow issues in the weeks to come). This concession was significant in the employer’s application being ultimately rejected and the employees remaining entitled to 4 weeks’ redundancy pay.
Interestingly, prior to determining the matter, Deputy President Clancy proposed adjourning the hearing so that the employer had time to ascertain whether it was eligible for the JobKeeper scheme and if so, to give consideration to rehiring the relevant employees. However, the employer rejected this proposal and pressed to have its application heard on the basis that the decision would achieve “certainty” for its business.
Considerations
It is apparent from the Worthington Industries decision that when consideration is given to the JobKeeper scheme, the FWC may endeavour to follow the Federal Government’s position – being that eligible businesses should apply for the JobKeeper subsidy to keep employees employed and connected to the business.
Moreover, that decision provides guidance that if an employer terminates an employee’s employment by way of redundancy and has the means to pay the stipulated redundancy entitlements, it is likely that the employer will be required to adhere to its full statutory obligations. Particularly, in circumstances where the employer is or will likely be eligible for the JobKeeper scheme.
Given the Mason Architectural Joinery decision did not take into consideration the employer’s potential eligibility for the JobKeeper scheme, it may be arguable that this decision will be distinguishable in matters involving a JobKeeper eligible employer.
Accordingly, a JobKeeper eligible employer must be aware that if it ends an employee’s employment by way of redundancy, it runs the real risk that it may be liable for the full entitlements due and payable to the employee (especially if that employer has the means to pay the employee his/her full entitlements).
If you are an employer and would like to learn more about your redundancy obligations, please contact Lachlan Thorburn.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
 
 
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The coronavirus pandemic has had an enormous impact on families and the Australian community, particularly those families with family court orders in place and matters that are currently before the Family Court of Australia and the Federal Circuit Court of Australia.
Parents are naturally genuinely concerned about the safety of their children and how the COVID-19 virus will affect their lives.  Part of that concern in family law proceedings can extend to a parent’s or carer’s ability to comply with parenting orders and what should be properly expected of them by the Courts in these extraordinary times.
Statement from Chief Justice on Family Court Orders
In a recent Statement from the Chief Justice of the Family Court of Australia, it was clarified that the Courts remain open to assist parties and to provide parents with some general guidance.  The Chief Justice provided the following helpful directions:

It is imperative that parents and carers act in the best interests of their children.  This includes ensuring their children’s safety and wellbeing. Whilst the Courts make orders that are determined to be in the best interests of a child, caring for and determining the practical day-to-day best interests of a child is primarily the responsibility of parents and carers.
Consistent with their responsibilities to act in the children’s best interests, parents and carers are expected to comply with Court orders in relation to parenting arrangements.  This includes facilitating time being spent by the children with each parent or carer pursuant to parenting orders.
In the highly unusual circumstances now faced by Australian parents and carers, there may be situations that arise that make strict compliance with court orders very difficult, if not, impossible.  This may be caused, for instance, where orders stipulate that contact with a parent occurs at a designated contact centre, which may not currently be operating. Or, the “pick up” arrangements of a child may nominate a particular school, and that school is now closed. Many state borders are also closed. In addition, there may be genuine safety issues that have arisen whereby one parent, or someone in close contact with that parent, has been exposed to COVID-19, and this may restrict the safe movement of a child from one house to another.
As a first step, and only if it is safe to do so, parties should communicate with each other about their ability to comply with current orders and they should attempt to find a practical solution to these difficulties.  These should be considered sensibly and reasonably.  Each parent should always consider the safety and best interests of the child, but also appreciate the concerns of the other parent when attempting to reach new or revised arrangements. This includes understanding that family members are important to children and the risk of infection to vulnerable members of the child’s family and household should also be considered.
If an agreement can be reached about new parenting arrangements, even if they are to be adjusted for a short period of time, this agreement should ideally be in writing, even if by way of email, text message or WhatsApp between each other. This will be particularly important if there are later family law hearings and will assist all concerned, including the Court, to understand what agreement may have been reached.
Parents and carers can also mediate their differences through lawyers and electronic mediation services are available.
If an agreement has been reached and consent orders have been developed to outline new or varied parenting orders, consent order applications can be filed electronically with the Court. This process is quick and usually conducted without a hearing.
If the parties are unable to agree to vary the arrangement, or if it is unsafe to do so, and one or both parents continue to have real concerns, the parties are at liberty to approach the Court electronically and seek a variation of the orders.
Where there is no agreement, parents should keep the children safe until the dispute can be resolved. Also, during this period of dispute, parents should ensure that each parent or carer continues to have some contact with the children consistent with the parenting arrangements such as by videoconferencing, social media, or if that is not possible, by telephone.
At all times, parents or carers must act reasonably. To act reasonably, or to have a reasonable excuse for not complying with Court orders, is a matter that is considered by the Court (pursuant to s70NAE of the Family Law Act 1975(Cth)).
It is imperative that, even if the orders cannot be strictly adhered to and are varied by the parties, the parties ensure that the purpose or spirit of the orders are respected when considering altering arrangements and that they act in the best interest of the children.
The Courts appreciate that agreement by mutual consent may not be reached, particularly if one party has concern for their physical safety. Therefore, the Courts advise that if a parent, carer or child is in immediate danger, they should contact their local police.
The perpetration or threat of family violence is never in the best interests of the child. Again, therefore, the Courts advise that if a parent, carer or child is in immediate danger, they should contact their local police and seek medical advice if required.

If you need help navigating this difficult and unprecedented time, talk to one of our experienced family lawyers Kristy Perdriau, Barbara Houlihan or Chai Hoe.
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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The latest Doyle’s Guide for 2020 is out, and Bennett & Philp Lawyers is proud to congratulate Tony Bennett on his inclusion.
Tony achieved Leading Status in this year’s list for intellectual property lawyers in Queensland.
Similarly, Bennett & Philp has been recognised again as one of Australia’s leading IP firms a status it has enjoyed over the last decade.
This is an outstanding result and reflects our position in the Queensland marketplace
The Doyle’s Guide to the Australian Legal Profession is the most comprehensive guide to Australia’s best lawyers, law firms and barristers.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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If the answer is not an immediate “yes”, CI is likely to at least provoke discussion of the topic at NFP Board meetings.
In each year from 2016 to 2019:

6% of % of all NFP directors discussed mergers; and
Between 7% and 9NFP’s completed a merger in the last 12 months;
No fewer than 30% discussed winding up. 1

What will the figures be in 2020 and 2021?
CI has been a wake-up call to not only NFP organisations but to the mainstream business community. We read daily of sporting codes living beyond their means with the cost of business disproportionate to its revenue; public companies needing to raise capital to strengthen their balance sheets; companies having to be bailed out by the government; and businesses which are unlikely to survive CI.
Many NFP’s live hand to mouth and survive only on volunteer labour and/or government grants. They may survive but the days of government grants without full accountability are likely to be numbered particularly in an economic environment where the government can no longer afford to be generous post CI.
So what should your NFP organisation do at this time?

if your organisation is financially stressed “survival” is the only game in town. Your external accountants should be immediately consulted to ensure that you are not trading while insolvent after which a way forward may be planned. We have previously published articles on insolvency which can be viewed at XXX. We can also put you in touch with accountants with the requisite skills if you do not have an existing relationship with an accountant;
a merger for merger’s sake at this time is unlikely to be productive of survival. A merger by whatever means (they may take a number of forms) requires careful initial evaluation at the Board level and subsequent planning with professional input. Due diligence from afar is first required and then formally undertaken as a condition precedent to the merger. In the merger scenario, due diligence is a two-way street and you may expect to have your organisation critically analysed. Accordingly, early legal advice in this process is essential;
the scope of this article does not permit the space to flesh out the criteria for merging but the reasons revealed in the study referenced below are instructive:

we are not financially sustainable – 14%
we were encouraged by government to merge – 9%
to increase the number of people we serve – 18%
to broaden our range of services to existing users – 24%
to develop or maintain market share – 22%
to better meet our mission – 35%
to increase our size – 12%
to improve efficiency – 18%.

It will be interesting to see the results of a post-CI survey.

the merger may be affected in a number of ways:

transfer of assets
transfer of membership
creation of a new legal entity while retaining the “merging” entities
creation of a new legal entity following which the “merging” entities are deregistered or wound up.

while there is a degree of permanency with a merger (what can be done by the pen can be undone by pen except for the last mentioned method above) your organisation may find other business relationships more attractive and permitting your organisation to retain its own identity and culture. Some of those other means are:

Collaboration – sharing resources and/or space; referring less profitable work to an organisation which can undertake the work more profitably in the expectation of reciprocity; shared service delivery et cetera;
Strategic alliance – an arrangement between two organisations for a common purpose beneficial to both while each retains its independence;\
Auspicing – generally used in one-off events where an organisation uses its business standing and attributes to assist or support another organisation lacking that standing or those attributes to be awarded and/or undertake a project;
Partnership – each organisation retains its own legal identity while agreeing upon the terms upon which they will conduct a common business.

Whichever way forward is being considered, two matters are extremely important:

is your organisation legally permitted to enter into the proposed business arrangement with the party contemplated; and
the arrangement should be reduced to writing so that both parties to the arrangement fully understand their rights and obligations.

If CI is adversely affecting your organisation or it has enlivened dormant thoughts of mergers or how your business may look in 12 to 24 months’ time we are happy to discuss your objectives with you and to assist in your near-term planning.
 
 

Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).
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