Nikki

BY NATALIE SMYTH

Presently, the Australian Securities and Investments Commission Act 2001 (“the ASIC Act”) affords protection to “unfair” behaviours in business dealings, rather than unfair contract terms. It should also be noted that the existing legislative protection is only available to consumers.

From 12 November 2016, the Treasury Legislation Amendment (Small Businesses and Unfair Contract Terms) Act 2015 (Cth) (“the Act”) will come in to effect, extending the current consumer unfair contract term protections in the ASIC Act and the Competition and Consumer Act 2010 (previously known as the Trade Practices Act 1974).

What small business contracts will the Act apply to?

The Act will extend the existing consumer protections for unfair contract terms to small business contracts that are for the supply of goods or services, or for the sale or grant of an interest in land.

Under the new legislation, a contract will be deemed to be a “small business contract” if the following applies:

• The contract is in a standard form contract; and
• at least one party to the contract is a business that employs fewer than 20 persons (casual employees exempt); and
• either the price payable under the contract does not exceed $300,000, or if the contract has a duration of more than 12 months, the upfront price payable under the contract does not exceed $1 million.

The new legislation allows for the Court to make a declaration that a term of a small business contract is unfair and void. If this occurs, the legislation provides for the rest of the contract to survive and operate without the unfair term, and for the contract to continue to bind third parties. [1]

What is an unfair contract term?

Under the ASIC Act, an unfair contract term is one that:

1. would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and
2. the contract term is not necessary to protect the legitimate interest of the party who would be advantages by the term, and
3. it would cause detriment (financial or otherwise) to a party if it were to be applied or relied upon.[2]

The court, in deciding whether a contract term is “unfair” will also take in to consideration the extent to which the term is transparent, and the contract as a whole. Under the ASIC Act, a term is transparent if it is expressed in plain language, is legible, presented clearly and is readily available to any party affected by the term.[i]

Section 12BH of the ASIC Act also provides a number of useful examples of what will constitute an unfair term. Some of these examples include:

• a term that permits one party (but not another party) to avoid or limit performance of the contract;
• a term that permits one party (but not another party) to terminate, vary the terms of, or renew the contract;
• a term that permits one party unilaterally to decide whether the contract has been breached; and
• a term that limits one party’s right to sue another party.

Other considerations

It is envisaged that the new legislation will give businesses more confidence to negotiate contract terms and to agree to contracts, allowing them to take full advantage of market opportunities.

To prepare for the enactment of the new legislation, it is recommended that businesses review their existing standard form contracts and ensure that they are free from unfair contract terms and compliant with the Act.

If you also require assistance in negotiating contract terms that will benefit your business dealing, or if you require legal advice with respect to reviewing a business contract, including due diligence enquiries, please don’t hesitate to contact our office.

[1] Memorandum to Treasury Legislation Amendment (Small Business and Unfair Contract Terms) Bill 2015

[2] Section 12BG Australian Securities and Investments Commission Act 2001

[i] Ibid.

BY NATALIE SMYTH

On 25 February 2016 the Tax and Superannuation Laws Amendment (2015 Measures No.6) Act 2016 was passed by parliament and received Royal Assent, introducing the new Foreign Resident Capital Gains Tax (CGT) Withholding Regime. A new measure, which is designed to assist the Commissioner of Taxation with the collection of foreign resident capital gains tax liabilities.

The new regime, which will take effect from 1 July 2016, imposes a position obligation on purchasers of certain Australian assets to withhold 10% of the first element cost base of the asset (usually the purchase price) when acquired from a “foreign resident” vendor, and pay it directly to the Australian Taxation Office (ATO) prior to or upon settlement.

The withholding regime will apply unless the vendor is able to supply the purchaser with sufficient proof of their Australian tax residency, in the form of a clearance certificate or declaration.

If you are a prospective purchaser and the new regime applies to your purchase, it is important that you have an understanding of your withholding obligations under the new law, and that you have considered the practical implications that the regime will have on the process and timing of the transaction.

Which assets and transactions will the new regime apply to?

The new regime applies to transactions for the acquisition of certain Australian assets, with a market value of or over $2 million, including:

• Taxable Australian Real Property (TARP) – land, buildings, residential and commercial property;
• Lease premiums paid for the grant of a lease over real property in Australia;
• Mining, quarrying or prospective rights;
• Indirect Australian real property interests (interests in Australian entities whose majority assets consist of the above such property interests); and
• Options or rights to acquire property.

Which assets and transactions are excluded?

Purchasers will be exempt from withholding obligations in the following situations:

• Transactions involving direct and indirect Taxable Australian Real Property interests, valued less than $2 million;
• Transactions conducted through a stock exchange or brokerage system;
• Certain arrangements that are subject to pre-existing withholding obligations;
• Securities lending arrangements; and
• Transactions involving vendors who are under external administration or subject to formal insolvency/bankruptcy proceedings.

What are the practical implications of the new regime?

For direct land transactions, Australian resident vendors will now need to obtain a clearance certificate from the ATO, which will need to be provided to the seller prior to Settlement. The ATO have indicated that requests for clearance certificates can take up to 28 days to process. It is therefore important that both purchasers and vendors factor this requirement when calculating settlement dates. [1]

For transactions involving sales of interests in landholding entities, or grants of options or rights, vendors may provide purchasers with a written declaration stating that they are an Australian resident. Declarations are valid for 6 months from the date they are declared.

Residency of the vendor

The withholding obligations apply to purchasers of certain Australian assets from foreign resident vendors only. Often purchasers will have limited information about vendors, however, it is up to the purchaser to determine whether or not the vendor is a foreign resident for tax purposes.

Importantly, withholding obligations apply in situations where, at the time of entering in to the transaction:

1. The purchaser reasonably believes that the vendor is a foreign resident, or;
2. The purchaser does not reasonably believe that the vendor is an Australian resident, and either:
3. the vendor has an address outside of Australia according to any record that is in the purchaser’s possession, or
4. the purchaser is asked to provide a related financial benefit to the vendor to a place outside of Australia. [2]

Purchasers who are provided with a false declaration from vendors for purchases of other assets other than TARP assets are not subject to the withholding obligation, provided that they are not aware that the declaration is false.

Penalties and repercussions for non-compliance

Purchasers who fail to pay the withholding amount to the ATO on or before the date of settlement will face a penalty equal to the amount that was required to be withheld, and may also be required to pay additional interest on that amount to the ATO.

Important things for purchasers to look out for:

• Withholding obligations will apply in situations where clearance certificates are over 12 months old, and are therefore invalid.
• Withholding obligations will apply in the existence of any discrepancies between the name of the vendor on the clearance certificate and the relevant contract;
• Contracts entered into for the acquisition of certain Australian assets before 1 July 2016, will be subject to the new laws, if they are due to settle on or after 1 July 2016.
• Both purchasers and vendors will now need to factor in the time required in obtaining clearance certificates when calculating settlement time frames.

Other implications:

The Queensland Law Society in conjunction with REIQ have amended the standard REIQ contracts for residential and commercial sales to reflect the new tax withholding regime. For contracts entered into on and from 1 July 2016, the new editions will need to be used.

If you have any questions with respect to the new foreign resident CGT regime, or if you are unsure as to whether the withholding obligations apply to your purchase, please don’t hesitate to give our friendly staff a call at either our Kelvin Grove or Wilston Offices.

[1] https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-businesses/Foreign-resident-capital-gains-withholding-payments/

[2] Explanatory Memorandum Tax and Superannuation Laws Amendment (2015 Measures No. 6) Bill 2015

All developers and other land users in Queensland have a duty of care to take “all reasonable and practicable measures” to ensure their activities do not harm Indigenous cultural heritage located in the relevant area. This broad-reaching duty applies across all land tenures, including freehold, and to cultural heritage regardless of whether or not it has been identified or recorded.

Significant penalties (up to $1,178,000 for corporations and $117,800 for individuals) apply for harming, excavating, relocating or taking away what a person knows or ought to know is Indigenous cultural heritage.

In fact, a person who is found to have harmed cultural heritage recorded on the Aboriginal and Torres Strait Islander cultural heritage register can be imprisoned for up to two years. Equally damaging are stop orders and injunctions that temporarily or permanently restrain persons from undertaking activities reasonably suspected of causing harm to cultural heritage. These and investigations into reported breaches can and have in our experience cause delay and cost blowouts to projects, both big and small.

So with all these duties and penalties, what can development proponents and/or contractors do to manage the risks of non-compliance?

Our solicitors, who have a wealth of knowledge gained from decades of experience in this specialised jurisdiction, suggest taking the following practical steps to ensure compliance with relevant statutory requirements:-

• consider cultural heritage compliance at the planning and development approval stage, not just before major earthworks and other high-risk activities are undertaken;
• undertake a search of the cultural heritage database and register (this can be done online) to see if there is any known cultural heritage in or close by the area proposed for development;
• determine whether the proposed activity can proceed in compliance with the “gazetted cultural heritage duty of care guidelines” (see below); and if not
• consider whether a voluntary or mandatory Cultural Heritage Management Plan or either a native title agreement or “another agreement” with an Aboriginal or Torres Strait Islander party is the best way to addresses cultural heritage compliance requirements.

The duty of care guidelines are a statutory assessment and compliance tool to enable land users to meet their duty of care. They recognise some activities are less likely to harm cultural heritage than others, having regard to the proposed activity and the nature/extent of past land uses. For example, resurfacing an existing car park in most cases is unlikely to require specific compliance measures to be taken and can proceed under the guidelines. Re-developing an urban block is also unlikely to require particular measures. However, care should be taken where the nature and extent of past land uses mean that cultural heritage may be present on site. This is especially important in rural, semi-rural and areas on the suburban fringe that are earmarked for development.

And, of course, if you have any questions or concerns about cultural heritage compliance just give Colin or Ted from our office a call …… they’ll get you through the system!

BY SAM RYALL

Whether you are planning that ‘dream’ overseas holiday, have a loved one who is losing capacity to make decisions on their own or you are in need of your own ‘peace of mind’, it is important you consider the benefits of obtaining a valid and correctly executed power of attorney.

A power of attorney is a legally binding document in which a person (‘the principal’) appoints another person(s) (‘the attorney(s)’) to act on their behalf in making decisions with third parties. The decisions an attorney can make can be either personal (i.e. relating to the care and well-being of the principal such as medical treatment, living arrangements etc) or financial (i.e. selling property, paying bills or administering the principal’s income/bank accounts).

In Queensland, powers of attorney are governed by the provisions of the Powers of Attorney Act 1998 (Qld), specifically Chapter 2 and Chapter 3. Broadly speaking, there are two types of power of attorney: a ‘general power of attorney‘ or an ‘enduring power of attorney’.

• A ‘general power of attorney’ involves the principal appointing an attorney to make financial/personal decisions for a specific time frame (i.e. the principal can elect for the power of attorney to commence immediately or on a certain date/occasion). A common example of where a general power of attorney would be applicable is where the principal may be travelling overseas for a short period and need the attorney to sell property on their behalf, sign legal documentation (such as the Contract of Sale or transfer documentation) and (or) pay any rates/water/electricity or other outstanding accounts. The power of attorney is valid whilst the principal has capacity (a formal term for the ability to make decisions of your own violation) and ceases upon that principal losing capacity.
• An ‘enduring power of attorney’ follows the same procedure as a general power of attorney but has a key difference. With an enduring power of attorney, the principal can appoint an attorney to make financial decisions (either immediately or upon a certain event such as the principal losing capacity) and personal decisions (commencing on the person losing capacity). However, unlike a general power of attorney, these decision making powers ‘endure’ or continue beyond the principal losing capacity.

So you may ask, why register a power of attorney?

Whilst there is no obligation to register a power of attorney, you will be required to register the document with the Department of Natural Resources and Mines (‘DNRM’) should it be used to make decisions about land transactions involving the principal (such as selling, leasing, assigning or transferring property).

A general power of attorney can be registered on the Powers of Attorney Register provided it complies with Section 161 and Section 162 of the Land Title Act 1994 (Qld) (in relation to execution and witnessing of documentation) and does not explicitly exclude the attorney from dealing with the principal’s property. An enduring power of attorney can also be registered on the Power of Attorney Register if it provides for the attorney to make financial decisions on the principal’s behalf and also does not explicitly exclude the attorney from dealing with the principal’s property.

The registration process is relatively straightforward and can be completed ‘over the counter’.  The process involves the following steps:

1. A person (can be the principal, attorney or the solicitor acting for the principal or attorney) lodging the original and fully executed power of attorney with DNRM; and
2. The drafting of a request to register a power of attorney on the power of attorney register (‘Form 16’). This form is to accompany the lodgement of the power of attorney and is to be signed by the person making the request such as the attorney, the principal or the solicitor for the principal or attorney; and
3. Making payment of the sum of $169.00 as the prescribed registration fee (which may be subject to change annually); and
4. Ensuring the power of attorney is adhered with an official DNRM sticker indicating a 9 digit ‘dealing number’.

Whilst the entire process can be completed without legal advice, there is always the possibility of error, such as incorrect witnessing/execution or drafting ambiguity as to when the power of attorney is to commence. For convenience and ensuring your power of attorney is correctly drafted (and/or registered) we strongly recommend you obtain legal advice from one of our friendly solicitors at our Kelvin Grove or Wilston office. We would be more than happy to advise you of your rights and obligations in respect of your power of attorney.

BY REMY FORSTER

When it comes to selling or buying property, the settlement date is what everyone looks forward to. Sellers get to pay out their mortgage, dream of what they will spend their extra money on and the excitement of what they will be moving onto next, and buyers get to move into their dream property, or begin a new investment opportunity that will hopefully do well for them in the future.

It’s pretty standard practice when you’re buying or selling a residential property that the settlement date will be along the lines of “on or before 30 days from the contract date.” In Queensland, this is the most standard thing to see on a contract mostly because 30 day settlements have become the norm – but 30 days is not always enough time for the Seller and Buyer to be ready to settle, and it is important to know when you are signing a contract if you are in the position to need a longer settlement period than most.

As a Seller, there are a few main reasons that you may need a longer settlement than 30 days:

1. If the mortgage on the house you are selling is linked to a business loan or other property loans, some lenders require a full 20 business days to be ready for settlement. This is definitely not most lenders, but it is best for you to check with your lender if they will need this long.

2. If you are experiencing financial hardship and have fallen behind on your mortgage repayments, or are in arrears. The process lenders have to go through when you are selling a property in these circumstances is much more complicated than a normal mortgage discharge, and most Sellers in this position end up requiring an extension of the settlement date when they only have 30 days.

3. If you have an original Certificate of Title (a physical title deed) for the property but cannot locate the Title. Original Titles are required for settlement if they exist, and the process for having the Title cancelled can take up to two or three months, and possibly longer depending on how the Title was misplaced.

4. If you need to find another property to purchase, and want them to settle on the same date. You will usually need 30 days from the time you find another property to buy to be able to settle on that property, so unless you find a property immediately you won’t have enough time.

5. If you will be going on holidays either overseas, or to a place where you won’t be contactable (eg. if you are a FIFO worker) for most of the 30 days. There are important documents you have to sign as a Seller that your solicitor will need the originals of, and these are hard to do if you will be overseas or in a regional location.

6. If you are currently engaged in a dispute with a third party who has lodged a caveat on the property. As a Seller, you are required to be able to remove any mortgages, caveats or notices on the title and disputes over caveats can last a very long time.

7. If you are selling the property as personal representative, or on behalf of an estate, due to someone’s passing. When someone passes, their name has to be removed from the title to any property they own before you can have settlement – this process is simple in most cases, but it’s best to check with your estate lawyer how long they need to have this process completed.

Of course, yourself and the Buyer can agree on whichever settlement date is best for the both of you no matter the circumstances! For some, longer settlement periods are preferable so that they don’t have to rush through the 30 day process and some ‘cash’ contracts (where the Buyer is not borrowing any money) can have settlements as short as 14 days. In some cases it may also be easier for you to write a specific date on the contract rather than have a period of time – for example, you may know that you want settlement to happen on 2 June 2016 because you are moving overseas on 9 June 2016.

If you’re unsure about how long you will need for settlement, it is always best to have chat to your solicitor about the circumstances of the sale before you sign a contract to sell so they can assist you in choosing a date.

Below is a checklist of tips to assist you with purchasing at an Auction:-

Do your homework

• Prior to the auction the first step is to talk to Just Us Lawyers regarding pre-contract advice. Our experienced team of Conveyancers and Solicitors will be able to advise you of the contents of the draft Contract.
• Investigate and undertake as many property searches which you think would be relevant for the property. Searches to consider would be Council Building Approvals, Qld Building and Construction Commission, Flood Enquiry, Main Roads, Planning and Development, QCAT Tree Register, Transport Noise Corridor and Contaminated Land just to name a few.
• Organise a building and pest inspection with a licensed building and pest inspector to check that the property is structurally sound and is free of termites.
• Be sure to attend the property viewing prior to the auction and compare the property against similar ones in the surrounding area.
• Express your interest to the agent if you are prepared to bid on the property and request to be notified of any offers made prior to the auction.
• Before the auction it is important that you establish a bidding limit for yourself. You should consult your banker or mortgage broker prior to attending the auction to discuss your financial situation. It is important that you do not get carried away on the day and bid beyond your means.

With this forward-planning and assistance from the Conveyancing team at Just Us Lawyers you’ll be well on your way to success at your next auction.