Category Archives: Business Services

Website Infringement

Posted on by

by Steven Morris, Walsh Halligan Douglas

Many clients have had competitors or at times unrelated parties place something on their website which is in fact owned by you. More often than not it is a photograph, an article in whole or part or indeed your or your company’s name. The first step to remedy this situation is of course to request them to remove the offending material or photographs. Often such requests are ignored. What then?

The best and most effective remedy is to have the host of the offending website switch it off until the offending photographs, material or other items are removed by the website owner.

Our suggestion is for a three phase plan to be activated to achieve this:

  1. Have your IT people find out who is the host of the offending site. If you are IT savvy then you need to search the owner of the domain name and internet service provider (ISP).
  2. Send the host a Take Down Notice. This is a request which identifies the infringing photograph material or other content and requests that it be removed. It is the duty of the host to take down the website expeditiously (generally 48 hours) after receiving a Take Down Notice or the host can become liable themselves for the infringing copyright.
  3. Send a copy of the Take Down Notice to the offending site itself. Generally by this stage the site owner will realise that you mean business and usually will decide to remove the infringing item rather than risk the site being taken down unexpectedly.

If these steps do not achieve the desired result then there is always the legal approach and we can assist in protecting your rights.

Understanding pharmacy business ownership rules across Australia

Posted on by

Pharmacy ownership rules vary from state to state.

In 2008 the Council of Australian Governments signed an Intergovernmental Agreement (IGA) requiring the states, territories and the Commonwealth to establish a single national registration and accreditation scheme (the national scheme) for health professionals, including pharmacists.

However, the national scheme, which commenced on 1 July 2010, does not address pharmacy ownership rules. These rules continue to be the responsibility of individual states and territories.

Answers to questions such as:

  • What constitutes an interest in or ownership of a pharmacy business?
  • Can non pharmacists have an interest in a pharmacy business?
  • How many pharmacy businesses can an entity have an interest in or own?

are found in each state and territory’s pharmacy ownership legislation[1] and there are variances from state to state. This is where the potential for misinterpretation and costly mistakes becomes a very real issue for pharmacy owners or would-be owners.

Excerpt from an article written by Maurice Hannan and Anthony Purcell for the April issue of the Australian Journal of Pharmacy. To read the full article, click here.

[1] Pharmacy Business Ownership Act 2001 (QLD); Health Practitioner Regulation National Law (NSW) No 86a; Health Professions Registration Act 2005 (VIC); Health Act 1993 (ACT); Health Practitioner Regulation National Law(South Australia) Act 2010 (SA); Pharmacy Act 2010 (WA); Pharmacists Registration Act 2001 (TAS) Health Practitioners Act 2007 (NT)

National Business Names Register to commence on 28 May

Posted on by

The new National Business Names Register will eliminate the need to register business names across multiple states.

There is a new National Business Names Registration System to commence on 28 May 2012.

While the date is mooted to start on that day, it is subject to passing of the relevant legislation in all States and Territories.

Currently, business names are registered in each State or Territory where the business is located. The National Business Names Register will totally replace the State and territories Registers. The main purpose of the change is to afford protection to consumers, by allowing them to identify the people or companies behind the business or trading name.

From 28 May 2012, the Australian Securities & Investments Commission (ASIC) will take over the responsibility for the new National Business Names Register.

Advantages

Many advantages will be available to Queensland businesses as a result of the National Business Names Register, being:

  • The elimination of the need for businesses which trade across State borders to register in multiple States;
  • Businesses will be able to register and renew their national business name on line;
  • Business name registration will be combined into a single online transaction with the registration of an Australian Business Number (ABN); and
  • It is anticipated that there will be a reduction in the current Queensland business name registration fees.

Transition to the New Register

As an existing business name holder in Queensland, you will not have to do anything in particular during the transition. As and from 28 May, existing Queensland business names will automatically transition to the new National Register. All the existing details will transition to the National Register including existing expiry date. If your current business name expires after 28 May, this is the date that ASIC will record as the expiry date on the new National Business Names Register.

Duplicate Names

Obviously there will be many situations where there will be multiple names across the various jurisdictions. All these names will be transitioned to the National Business Names Register. If you own multiple business names in each State, you will have the ability to deregister or cancel those other names at no cost.

If there is a similar business name to one you are currently conducting, it will be differentiated by the word “Queensland” or the respective State beside the name. This will not form part of the business name so if your business was trading as “ABC Smash Repairs”, it will continue to trade as that name in the future.

Renewals

If your business name is due to be renewed after 28 May, ASIC will send you the renewal form to renew on the National Register.

If your business name is due for renewal before 28 May, you will need to renew in Queensland with the Office of Fair Trading and pay the Queensland registration fee.

Warning – PPSR (Personal Properties Securities Register): Implications for all businesses

Posted on by

The PPSR is a national register of “security interests” over assets and it has now commenced operation as from 31 January 2012.

It has been introduced to replace more than 70 pieces of legislation across Australia affecting consumer interests in assets.

It has taken a long time in the drafting.  Its intention is to be a one-stop shop for consumers to search for any “security interests” in an asset.  It replaces the Australian Securities & Investments Commission (ASIC) Register of Company Charges and also the Queensland Government Register of Encumbered Vehicles (“REVS”).

The new Act is very broad in its application and can have adverse ramifications for many businesses unknowingly caught up in its operation.

It now applies to many assets that were not previously required to be registered under any previous law.  The concept of “title” now becomes less relevant and possession and control of assets becomes far more important.

The PPSR can apply to:

  • Charges, mortgages and pledges;
  • Conditional sale agreements (including an agreement to sell, subject to a retention of title);
  • Consignments;
  • Hire purchase agreements;
  • Leases of goods; and
  • Flawed asset arrangements.

In certain cases, the PPSR adopts a “form over substance” approach and deems some transactions, even though they do not secure anything, to be security interests.  These include:

  • Transfers of accounts (receivables for goods and services);
  • Documentation governing certain monetary obligations and security interests and goods or intellectual property – lease or hire purchase agreements;
  • A consignor’s interest in commercial consignment; and
  • A lessor or bailor’s interest in goods under a PPS lease.

A PPS lease is a lease or bailment of goods for more than one year or an indefinite term.  A PPS lease covers many operating leases as well as finance leases and would include arrangements under which the equipment or goods, (for example scaffolding, mining equipment or the like) are provided as part of the service and the customer obtains possession of the equipment.

Registration

Registration is now paramount to preserve the security interests in the event of insolvency or receivership of the party in possession.  It occurs when there is one of:

  • registration of the security interest;
  • possession of the collateral by the secured party; or
  • in the case of certain financial assets, controlled by the secured party.

Most logically and usually, parties will perfect their security interest by ensuring it is in writing and having it registered.

Impacts of Insolvency

Perfection of the security interest is paramount in the event of insolvency because on appointment of a liquidator, bankruptcy trustee or voluntary administrator, unperfected security interests are lost.  The secured creditor loses its security and becomes unsecured.

Reservation of title clauses in contracts do not necessarily have any application.  The results can be quite severe.

A similar system was introduced in New Zealand a decade ago. Experience there illustrates many of the dangers.  In one particular case, Portacom leased portable toilets to NDG Pine but did not register its lease.  Unbeknown to Portacom, NDG Pine also borrowed money from HSBC who secured a fixed and floating charge which was registered on the PPSR.  When NDG Pine then became insolvent and a receiver was appointed, the courts decided that the receiver was entitled to sell the Portacom toilets and pay the proceeds to HSBC even though everyone involved acknowledged that Portacom was the legal owner of the assets.  A very unfortunate and unfair result.

Examples that may impact upon clients

  1. An equipment leasing business owns a generator worth upwards of $100,000.  It leases the equipment to GenX under a contract for 12 months, with the usual retention of title clauses inserted into the leasing contract. It does not register its interest in the generator on the PPSR.  Subsequently GenX goes into receivership whilst still in possession of the generator. The receiver of GenX gathers all assets including the generator to realise surplus funds to repay creditors. The leasing company, because it has not registered the interest under the PPSR will be unlikely to rely upon the retention of title clauses to stop a receiver from selling the generator.  The leasing company will then be in the normal unsecured creditor’s position along with each and every other unsecured creditor.
  2. Fosters sells wine and spirits to a bottle shop.  Fosters has previously used a retention of title clause in its invoices to enable it to secure stock should the bottle shop fail to pay its invoices or be placed into receivership.  Under the new PPSR provisions, retention of title clauses by themselves will be of no benefit to Fosters.  It will have to register its interest in the stock held by the bottle shop on the PPSR and will need to implement other documentation as well.

Contract Review

Many businesses that have assets that may potentially be affected, including where assets become or are placed in the possession of others, may need to review their contracts and ensure they register a relevant interest in an asset providing secured goods to their client. Registration is not compulsory but should be strongly considered.

How to Register Security Interest

Registration is to occur online and has been indicated to involve only a nominal cost.   Similarly, searching the Register can be conducted online and will be available instantly.

It is anticipated that many banks and finance organisations which provide funding to affected businesses, will ensure that their security interests are registered. The result would be that many businesses may receive notices from these organisations in relation to existing assets or arrangements.

Group Entities and Arrangements

It would also be necessary for businesses that have multiple group entities where inter-company loans have been made, to consider arrangements between those entities to ensure their interests are suitably protected in the event of one entity being placed into receivership.

All businesses must now consider their standard terms of trade and credit terms, to ensure their operations affected by the PPSR are covered.

Summary

In many situations it will be time consuming and difficult for many businesses to work
out what PPSR means, for them and whether the PPSR applies to their operations.

Walsh Halligan Douglas can assist in undertaking an evaluation for your business of its standard contract terms and conditions to determine what, if any, priority interests may need to be addressed and, if necessary, registered.

For further information contact us at business@whd.com.au, 07 3232 5700 or visit our website.

Business Partners: Are they holding up their end of the bargain?

Posted on by

It is not uncommon when starting or purchasing a business to want to share responsibilities and the risks of the venture. Different structures can achieve this, eg. incorporated companies, trusts and partnerships.

Each structure carries its own list of pros and cons.

One common structure is where several individuals elect to buy or take over a business together, and govern their conduct by way of a partnership agreement. Partnerships do not carry the same tax benefits as incorporated companies, but they can avoid the rigid organisation and rules provided by a company constitution and/or contained within the Corporations Act.

It is therefore important, if going into business with a partner, that the partnership deed is as comprehensive as possible – taking into account as many contingencies as can be foreseen – and that it fully addresses both the rights and obligations of all partners. An exit strategy, if the worst should happen, is also important.

It is all too common, however, for parties to dive in to a venture with gusto and enthusiasm without fully considering what may happen down the track. Often, partnership deeds are rushed or simply do not cover all the possible (likely or unlikely) scenarios that might affect the partnership venture.

When things go wrong with partnerships, and it is sad that it happens all too frequently, there is still hope even in circumstances where partnership deeds simply do not measure up.

The safety net lies in the nature of the partnership relationship. Justice Dixon in Birtchnell v Equity Trustees, Executors and Agency Co Limited (1929) 42 CLR 384, explained that the relationship between partners is a fiduciary one. The mutual confidence of partners, he said, was the lifeblood of the concern and it is only through trust between the partners that the business may go on.

Dixon J outlined a number of fiduciary duties that partners owe to each other. Firstly and primarily is that the parties must act in ‘good faith’ and honesty. This is a broad duty, and often encompasses a range of ill deeds perpetrated by less than scrupulous partners.

Next is the duty to provide full accounts of all information and assets in a partner’s possession or control that are material to the partnership business. No one partner can seize control of all the books and records of a business and seek to exclude the other partners from gaining access. To allow this, invites all manner of underhanded deeds.

Partners must also avoid conflicts of interest. By this, the Courts mean that a partner cannot set up a business under a partnership agreement and then simply turn around and set up a business in conflict or assist a business in conflict with that partnership business. When partners enter a business venture, it has been determined that they must, in furtherance of the trust between the parties, pour all reasonable focus and effort into that business.

Partners must avoid making personal profit from partnership opportunities and information, and must account for personal benefits obtained from the partnership business. A partnership venture is one of mutual gain or mutual loss, not necessarily in equal proportions but certainly to the same ends. For one partner to derive a benefit, without disclosing it to his fellow partners, is a direct breach of the implied duty of full disclosure within the partnership.

In cases where breaches of these duties occur, one partner may look to the Courts to determine the future of the partnership. If dispute in the partnership venture cannot be resolved between the parties, then a receiver can be appointed to wind up the business and send the parties, possibly sadder and wiser, on their way.

In short, while implied business obligations cover a wide range of behaviour, it is simply more practical, cost efficient and safe to take the time and legal fees at the start of the venture to ensure you have a proper, comprehensive and fully structured partnership agreement in place before rushing head first into the ‘next big thing’.

For further information contact business@whd.com.au or call 07 3232 5700.