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Bankruptcy update

September 11th, 2017

Ramsay Health Care Australia v Compton [2017] HCA 28

The High Court has handed down a significant decision which has created uncertainty when it comes to enforcing judgment debts by way of bankruptcy.

Ramsay Health Care Australia (“Ramsay”) was owed money by Compton Fellers Pty Ltd (in liquidation), trading as Medichoice.  Ramsay filed a claim in the NSW Supreme Court against Adrian Compton, the director of Medichoice pursuant to a personal guarantee.

At trial, Mr Compton disputed his liability pursuant to the personal guarantee, but did not dispute the amount of the debt owing. His defence was unsuccessful and he was ordered to pay $9,810,312.33 to Ramsay.  Ramsay then issued a bankruptcy notice to Mr Compton formally demanding payment of the judgment debt within 21 days.  The bankruptcy notice was not complied with.

Relying on Mr Compton’s failure to comply with the bankruptcy notice as an act of bankruptcy, Ramsay presented a creditor’s petition in the Federal Court seeking a sequestration order against Mr Compton, declaring him bankrupt and appointing a trustee in bankruptcy.  Mr Compton defended the petition by disputing the amount of the debt and introducing new evidence of alleged offsets and rebates owed by Ramsay to Medichoice.  In making the sequestration order, the Judge at first instance focussed on the fact that there was a judgment in place which had not been appealed, and determined that it was not appropriate to go behind that judgment and consider fresh evidence.  This decision was appealed by Mr Compton.

Significantly, the Court of Appeal and High Court both disagreed with the conclusion of the primary judge, emphasising that sections 52(1) and (2) of the Bankruptcy Act 1966 requires the court to be satisfied that the debt the subject of the petition is actually owing at the time of the making of a sequestration order.  The High Court held that given the new evidence, there was a substantial question as to whether the debt was actually owing.  The court rejected the contention that Mr Compton should be bound by his conduct during the initial trial, which included a failure to introduce the evidence of the offsets and rebates.

The impact of this decision is that a judgment debt issued after fully contested proceedings which has not been appealed is no longer considered conclusive evidence of a debt.  Instead, a debtor may be able to contest the amount owing in subsequent bankruptcy proceedings initiated by a creditor to enforce the debt.  Whilst there will need to be ‘substantial reasons for questioning’ the existence of a debt before a court will investigate, this decision introduces uncertainty in litigation for creditors and practitioners when it comes to enforcing a judgment debt by way of bankruptcy.

Talacko v Bennett [2017] HCA 15

Earlier this year the High Court considered whether a declaration of bankruptcy in Australia will prevent a creditor from enforcing a judgment for a debt in another country.  This case involved a long history of family dispute, where one sibling had been successful in obtaining judgment against another sibling who was subsequently declared a bankrupt.

The High Court held that because a declaration of bankruptcy prevents a creditor from enforcing a remedy against the bankrupt, it is a ‘stay of enforcement of the judgment’ within the meaning of section 15(2) of the Foreign Judgments Act.  This means that where a person is declared a bankrupt in Australia, an Australian court will not issue a certificate of finality of judgment and orders which would enable a creditor to enforce a judgment debt by instigating proceedings in another jurisdiction.

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Trade mark spotlight

August 30th, 2017

The Trade Marks Act 1995 permits a person to apply for registration of a trade mark in respect of goods and/or services if they claim to be the owner of the mark and they either:

  1. use, or intend to use the mark;
  2. authorise or intend to authorise another to use; or
  3. assign or intend to assign the mark to a body corporate constituted with the view of using the mark,

in relation to the goods/services.

The Full Federal Court has confirmed in Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83 that the basis of trade mark registration is proprietorship, that is, registration is premised on the applicant having created the trade mark and either be using or intending to use or otherwise deal with the mark in accordance with the Act.  The court held that if an applicant is not the ‘owner’ of the trade mark at the time the application is filed, then registration will be invalid and unenforceable.

In that case the sole director had filed an application for registration of a trade mark in his personal name, instead of the name of his company.  The Full Federal Court concluded that the trade mark registration was defective because it needed to be filed in the company’s name as the mark had been designed for and used by the company in connection with its business, that is, the company was the owner not the director.  Having found that the registration was defective, the court clarified that there was no mechanism for the registration to be remedied by amendment or assignment.

This decision is significant as it clarifies that the assignment of a trade mark is premised on the assumption that the person purporting to assign the trade mark actually owns it.  If a registration is defective because it was not filed in the correct applicants name, then any subsequent assignment will also be defective and invalid.  If you would like more information on trade marks, please contact our commercial law team on 07 4036 9700.

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Attention taxi and limousine licence holders and operators – Government grant closing soon

August 25th, 2017

If you currently hold a taxi or limousine licence, or currently operate a taxi or limousine and you have a registered Queensland business, or are a Queensland resident, then you may be eligible to apply for a Queensland Government grant of up to $5,000.00 (excluding GST) for legal advice and assistance with the transition to the new regulatory framework.

The new regulatory framework introduces new and additional obligations on licence holders and operators and is slowly being introduced in stages commencing from May 2017 and being fully implemented by January 2018.

Applications for the grant close at 4.00 pm on 31 August 2017 and require a quotation from a service provider for the advice that you seek to obtain.  Contact our commercial team on 07 4036 9700 to learn more about the advice we can offer on the new regulatory framework and to obtain a quote.

More information on the grant is available on the Queensland Government webpage.

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Did you get that in writing?

August 24th, 2017

A recent High Court case reminds us that once a written contract is agreed, it is unlikely that other promises will be enforceable.  In Crown Melbourne Limited v Cosmopolitan Hotel (Vic) Pty Ltd & Anor [2016] HCA 26, Crown leased two restaurant premises to Cosmopolitan Hotel (the tenant) for a term of five years.  The leases required the tenant to undertake significant refurbishment works on commencement but did not contain any options to renew.

The refurbishment works cost the tenant $1.8 million and $2.85 million respectively for each premises.  When the initial term of the leases came to an end and Crown issued notices to vacate, the tenant commenced proceedings in the Victorian Civil and Administrative Tribunal.  The proceedings were commenced on the basis that Crown had promised that the tenants ‘would be looked after at renewal time’ and they should be allowed further terms under each lease.

The tenant argued that:

  1. a collateral contract existed where they were entitled to a renewal of the leases; or
  2. they were entitled to a renewal because they had relied on the promise of Crown under the law of estoppel.

The High Court found (by majority) that a collateral contract did not exist and the statement made was not promissory in nature and could not support a claim of estoppel.  Accordingly the tenant was unsuccessful.

The majority of the High Court, agreeing with the findings of the Supreme Court of Appeal, considered that:

  • the statement was not promissory in nature and was no more than ‘vaguely encouraging’;
  • the parties did not intend the statement to be contractually binding;
  • the parties were experienced in leasing negotiations, and in the context of this type of commercial negotiation a reasonable tenant would not have relied on the statement, particularly because important matters are usually recorded in writing;
  • the prospect of a renewal under the lease was specifically rejected by Crown in the lease negotiations.  A prudent tenant would have sought confirmation if their position had changed by seeking to have the change reduced to writing; and
  • the statement was not sufficient to support a collateral contract as it did not adequately address other essential terms of the renewal.

It is important to note that the decision of the High Court was not unanimous.  There were two dissenting judgments, of Gordon and Gageler JJ, finding that a collateral contract regarding renewal did exist.

This decision highlights the difficulties involved in proving oral or implied promises or collateral contracts when a contract is otherwise reduced to writing.  If in doubt, you should make sure promises or other factors that are important to you are included in the contract in writing before any steps are taken in reliance on them.

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Huge fines for misleading and deceptive conduct

August 24th, 2017

Hocking Stuart Richmond, a Victorian real estate agency has been fined $330,000.00 for engaging in misleading and deceptive conduct, by underquoting house prices to potential buyers.  Hocking Stuart Richmond was found by the Federal Court in Director of Consumer Affairs Victoria v Hocking Stuart (Richmond) Pty Ltd to have underquoted house prices for 11 Victorian properties in 2014 and 2015 in contravention of the Australian Consumer Law and the Victorian consumer protection legislation.

The Australian Competition and Consumer Act 2010 as well as the Victorian consumer protection legislation prohibit misleading and deceptive conduct, which includes engaging in conduct that misleads or deceives consumers or is likely to do so, irrelevant of a business’s intention.

In addition to the fine of $330,000.00, Hocking Stuart Richmond must also:

  • pay the legal costs for the proceedings, which may be up to an additional $90,000.00;
  • publish a notice in the real estate lift-out of ‘The Age’ summarising the court’s judgment;
  • display a notice regarding their contraventions at their office for six months; and
  • employ a compliance officer to ensure future compliance with the Australian Consumer Law.

This is the largest fine ever ordered for this type of conduct in Victoria and is also unlikely to be the last as Consumer Affairs Victoria has indicated that it is continuing another 13 investigations of potential contraventions of the consumer law in the property sector.

This decision is among the ever increasing court enforcement action under the Australian Consumer Law and comes as an important reminder of the seriousness of business’s obligations under the Australian Consumer Law and the importance of staying compliant.

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Attention farmers: Government announces assistance for primary producers to create succession plans for their businesses

August 14th, 2017

The Queensland Government has introduced a new Farm Management Grants Scheme which provides a rebate of up to 50% to primary producers to seek legal advice in relation to intergenerational succession planning for their farming business within their lifetime.

If you are a primary producer and you intend on transferring or selling your farming business to a member of your family within your lifetime, you may be eligible to a rebate of up to 50% of your legal costs for planning the succession.  The grant will be available for advice received from now up until 30 June 2019.  You may apply for the grant before or after you seek the advice.

Succession planning is essential to ensure a smooth and successful transition of your business when you decide to retire or if you unexpectedly are no longer able to work.  Seeking legal advice now is a good way to avoid family tension and stress and to ensure that the family business continues into the future.  We recommend obtaining advice early on to avoid the undesirable situation of your family being conflicted in trying to make arrangements after you have lost capacity.

We can assist you to:

  • make a decision as to which member of your family will take on the business, or the arrangement if more than one member will be transferred an interest in the business;
  • how the business and assets will be transferred and how the agreement will be structured; and
  • what structure will be most appropriate for the acquisition of the business by your nominated successor.

If you would like more information on succession planning for your business or the current government rebate please contact our office.

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Change to mandatory disclosure on commercial office buildings

August 9th, 2017

Starting from 1 July 2017, it is mandatory for an owner, landlord or agent of commercial buildings or tenancies to produce and register a Building Energy Efficiency Certificate with the Building Energy Efficiency Register before they offer to sell, lease or sublease a commercial building that exceeds 1000 square metres.

A fine of up to $210,000.00 followed by $21,000.00 for each subsequent day of non-compliance may be imposed if this mandatory disclosure is not adhered to.

More information is available on the Australian Government website.

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World Elder Abuse Awareness Day

June 15th, 2017

In the 2016 financial year, the Elder Abuse Prevention Unit estimated that just over $280 million dollars had been misappropriated by 89 attorneys.  The available evidence suggests that most elder abuse occurs within the family and is intergenerational, with mothers most often being the subject of abuse by sons, although abuse by daughters is also common, and fathers are victims too.

Today is World Elder Abuse Awareness Day (WEAAD); day to raise awareness and support for those victims suffering from abuse.

Our wills and estate solicitor, Bianca Stafford feels strongly about the growing trend of elder abuse in the community, and believes that community awareness and education is key in helping detect and prevent elder abuse.

Elder abuse takes many forms (i.e. financial, emotional and physical abuse). The most common form of elder abuse we see as lawyers, is financial abuse, which may include an attorney misusing their powers under an enduring power of attorney, by taking or using money or property improperly.

If you are concerned that you may be, or know a victim of, elder abuse you can discuss this with your doctor or solicitor, or alternatively you may call the Elder Abuse Helpline on 1300 651 192.

If you would like more information about elder abuse you can find factsheets on the Queensland Government website, or alternatively by contacting our wills and estates solicitor Bianca Stafford on 40369 700 or by email biancastafford@millerharris.com.au.

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Sunday penalty rate changes as of 1 July 2017

June 13th, 2017

Earlier this year, the Full Bench of the Fair Work Commission made a decision to reduce public holiday and Sunday penalty rates.  The reduction to the Sunday penalty rates will be introduced gradually over the next 4 years.

Summarised below are the changes that will take effect as of 1 July 2017:

Retail  award


Changes  to  Sunday  rates:
Full-time  and  part-time  employees

Casual employees

Change  from  200%  to 195%

Change  from  200%  to  195%

Changes  to  public  holiday  rates:
Full-time  and  part-time  employees

Casual  employees

Change  from  250%  to  225%

Change  from  275/250%  to  250%

 

Hospitality  award 


Changes  to  Sunday  rates:
Full-time  and  part-time  employeesChange  from  175%  to  170%
Changes  to  public  holiday  rates:
Full-time  and  part-time  employees

Casual  employees

Change  from  250%  to  225%

Change  from  275%  to 250%

 

Fast food award 


Changes  to  Sunday  rates:

Level  1  full-time  and  part-time  employees

Casual  employees 

Change  from  150%  to  145%

Change  from  175%  to  170%

Changes  to  public  holiday  rates:
Full-time  and  part-time  employees

Casual  employees

Change  from  250%  to 225%

Change  from  275%  to 250%

 

Restaurant award


Changes to Sunday rates No changes
Changes to public holiday rates:
Full-time  and  part-time  employees

No change to casual employees

Change  from  250%  to 225%

 

 

Pharmacy award


Changes to Sunday rates:

Only affects employees working between 7:00 am  and  9:00 pm

Full-time  and  part-time  employees

Casual employees 

Change  from  200%  to  195%

Change  from  225%  to 220%

Changes to public holiday rates:
Full-time  and  part-time  employees

Casual  employees

Change  from  250%  to 225%

Change  from  275%  to 250%

 

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Miller Harris Lawyers wins Queensland Law Society Equity and Diversity Award for the second year in a row

May 24th, 2017

Miller Harris Lawyers, one of the leading law firms in North Queensland, has won the Queensland Law Society (QLS)’s Equity and Diversity Award for 2017 in the Small Legal Practice Category (legal practices with 20 or fewer legal practitioners).  This is the second year in a row that Miller Harris Lawyers has won the award.  Nominations came from throughout Queensland and were judged across four main criteria:

  • Promotion of diversity within the law profession
  • Equity initiatives
  • Policies supporting equal opportunity
  • Flexible work practices

“We’re delighted to win the award again in 2017.” Partner Melissa Nielsen said.  “To top the state in this award category is something we are extremely proud of.  It recognises the variety of initiatives we have put in place to support equity and diversity within our workplace.  The diversity of thought and opinion that comes from employing people from a range of different backgrounds is a key strength of our business and provides us with a competitive edge.  We are also conscious of the evolution of our workplace over time.  More and more people are seeking flexible working arrangements and as an employer, we have adapted our policies to provide this flexibility to ensure we attract and retain high calibre people.  Of our team of over 30 people, 42% are currently employed on flexible working arrangements.  It’s a two way street.  Our team certainly go the extra mile when needed and we’re flexible in return.  Unfortunately it is not possible to accommodate every request, but being open minded to innovative and practical ideas from our staff has certainly contributed to staff retention and happiness in our workplace”  Melissa went onto say.  “I personally have benefited from the firm’s flexible working arrangements through a flexible return to work following parental leave on a number of occasions.  This flexibility has enabled me to appropriately balance my continued career progression with the commitments associated with raising a young family.  All three of our senior associates are also currently employed on flexible working arrangements whilst caring for young families.”

Miller Harris Lawyers has operated successfully in North Queensland for over 25 years providing a wide range of business and personal legal services to corporates, government agencies, not for profit organisations, businesses and individuals.

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