Road rules: Not the infallible shield you think

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Many of us as drivers like to believe that if we are involved in an accident as a result of someone else entering an intersection without stopping at a stop sign or give way sign, the law is on our side. It is important to note that this is not strictly the case. Case law tells us that even if the other driver breaks the law, we may find ourselves, even if just in part, liable for the accident.

Motorists should be aware of the potential for liability and what is required of us to satisfy the fault. A review of the recent decision of Schimkev Clements v Suncorp Metway Insurance Limited and a general discussion of driver obligations is important to put us squarely in the picture of responsibility.

In that case two drivers in opposite directions were approaching a single lane bridge one party approaching the bridge had a give way sign the other party approaching the bridge was travelling in excess of the speed limit. The driver faced with the give way sign past straight through it without stopping and entered the single lane bridge before the other vehicle reached it.  At the trial the speeding driver stated his belief that the other vehicle would stop at the give way sign and therefore believed it would be safe to enter the bridge.

Upon seeing the “give way” car enter the bridge the speeding vehicle applied his breaks causing a trailer he was dragging to jack knife across the breadth of the bridge which the “give way” driver collided with, causing his death.

In this decision the Judge stated that the “give way” driver had seen the speeding vehicle approaching the bridge and believing that he would reach the bridge first elected to drive through the give way sign without stopping and as such was negligent in not stopping at the give way sign. The Court however did condemn the driving of the speeding driver, in quoting the decision of Sibley v Kais for the speeding drivers excessive speed and lack of control of his vehicle in entering a fairly dangerous situation.

The Court in its decision found contributor negligence on both drivers part and apportioned the damage and liability as 35% to the speeding vehicle and 65% to the give way driver.

Schimkev is a specific example of the downfall that results from assuming a car will give way at a give way sign, but long established principals go even further to requiring motorist to ensure all care is taken on the roads.

A High Court of Australia Decision of Sibley v Kais defined what is required to satisfy ‘reasonable care’ each driver must display when approaching an intersection:

“What amounts to “reasonable care” is, of course, a question of fact to our mind, generally speaking, reasonable care requires each driver as he approaches the intersection to have his vehicle so far in hand that he can bring his vehicle to a halt or otherwise avoid an impact should he find another vehicle approaching from his right or from his left in such a fashion that, both vehicle continue, a collision may reasonably be expected.”

This means that regardless of signage at an intersection it is a requirement of all drivers approaching any intersection, to take reasonable care and control their vehicle in such a way that even if another driver disobeys a traffic sign they are capable of bringing their vehicle to a halt or steering it in such a manner as to avoid the collision.

This tells us as motorists that simply hiding behind the shield of “But they ran the red light!” or “They failed to give way!” is absolutely not a total defence in the event of an accident.

As noted from the case of Schimkev courts can apportion 35% and upwards of liability for an accident to driver who does not control his vehicle in a way that ensures he is ready for anything from other motorists.

This principal has serious implications for each motorist and their insurance, keeping in mind that your insurer will be forced to wear a percentage of the damages in the event you are found to be in part liable and this can have very serious consequences for your premiums, as well as overheads for the insurers.

We must let go of the assumption “That everyone is going to obey all road rules, driving carefully at all times”, only to be disappointed when they don’t. Rather we must always “assume that all drivers WILL break the rules, run red lights, cruise through a give way sign and thrash their machines to beat the yellow light”, and simply be grateful when they don’t.

It is important to keep in mind that every time we get behind the wheel of a car, we take control of a 1 tonne wrecking ball and it is our responsibility to ensure we are in full control of that tonne of steel and combustion and be ready for any and all eventualities on the road.

For further information contact our Litigation team on 07 3232 5700 or litigation@whd.com.au

Directors’ personal liability for company debts

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The 2011 Budget introduced proposed changes to strengthen the operation of penalising directors’ personally for actions in respect of their corporate entities.   These changes were intended to protect worker’s entitlements to compulsory superannuation contributions and to address the situation where directors emerge in “phoenix” companies after having previous corporate entities liquidated.

It appears that these changes extend further than originally anticipated and create an increased liability risk personally for all directors.

These changes may expose directors to personal liability where a company has under-reported PAYG or SG withholding amounts due to it adopting a course of engaging a person as a contractor as opposed to being an employee.

Significant Aspects of the Changes

  • Directors are now to be personally liable for their company’s unpaid SG amounts (which will be in addition to PAYG withholding amounts);
  • The ATO will be allowed to immediately commence recovery action if the company’s liability remains unpaid and unreported 3 months after the due date;
  • Should a company’s liability remain unpaid and unreported for more than 3 months, then a director’s personal liability can only be extinguished by payment of the debt or penalty (i.e. placing the company into liquidation will not be      sufficient);
  • The ATO will have the discretion to prevent directors and their associates from      accessing the PAYG withholding credits on their own salaries if the company has an outstanding PAYG liability;
  • In addition, a new director can become personally liable for the company’s outstanding PAYG and SG liabilities after 14 days from the time they commence as a director of the company; and
  • Directors will be personally liable for their company’s unpaid SG amounts (which will be in addition to PAYG withholding amounts).

Recovery Process for Directors Penalties

Based on these changes it is likely that the ATO would commence recovery and impose penalties on a director where an unpaid liability remains unreported 3 months after the due date.

It would appear that once the 3 months has lapsed the ATO would no longer be required to provide 21 days notice to the director before initiating proceedings and the directors liability can only be extinguished by in fact paying the penalty and therefore extinguishing the underlying liability.

Implications for Directors

Whilst these changes were initially drafted to target “Phoenix” companies it is likely that the provisions will extend further. Directors need to be fully aware of their company’s employee and contractor taxation obligations and the status of any outstanding debts with the ATO. We would recommend that directors review their company’s superannuation obligations in respect of contractors and employees.

Additionally, if you are looking to join a company as a director it would be essential to ascertain the current liability of the company to PAYG and SG liabilities before signing the Consent to act as a director.

For further information about this and other corporate issues, contact Steven Morris via email stevenm@whd.com.au or phone 07 3232 5700.

Changes to Queensland stamp duty explained

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On 1 August 2011 changes were made to the Duties Act 2001 (Qld) which effectively eliminated the previous ‘Home Concession’ scheme.

What is transfer duty and when does it apply?

‘Transfer duty’ is what was previously referred to as stamp duty. Transfer duty is a dollar amount that must be paid on all dutiable property transactions in Queensland[1]. Both parties to a transaction are liable to pay transfer duty, however contractually in just about most situations it is paid by the Buyer. If transfer duty has not been paid by the due date by the Buyer, the Office of State Revenue may in fact bring legal proceedings against the Seller to recover the outstanding debt.

What was the Home Concession scheme and who could claim?

The Home Concession scheme essentially provided some relief, in the form of lower transfer duty, for qualifying home-buyers. The occupancy requirements that were needed in order to claim were as follows:

  • Claimant was a person who was buying a home to live in;
  • Claimant needed to move into the property, as his/her principal place of residence, within one year of the transfer date;
  • Claimant could not rent out the property before moving in;
    • Exception: The Seller or Seller’s existing tenant may remain in possession for up to 6 months after the transfer date;
  • Claimant could not rent out the property after moving in (no exceptions);
  • Claimant must live in the property for 12 months after moving in and must not dispose of part or all of the property (e.g. by renting or selling) within that time frame.

Practical effect of the removal of section 91 Duties Act 2001 (Qld)

The following table compares the transfer duty payable before the amendments to the Duties Act 2001 (Qld) to the amounts payable on or after 1/08/2011 for a property of equal value. The difference is clearly substantial. The table was formed using the Office of State Revenue’s Transfer Duty Calculator.

Value of entire property

Transfer duty payable

before
1/08/2011

Transfer duty payable

on or after
1/08/2011

$300,000

$3,000

$8,325

$400,000

$5,250

$11,825

$500,000

$8,750

$15,525

$600,000

$12,850

$20,025

Source: http://www.mymoneycalculator.com.au/guides/stamp-duty-grants/comparison-of-stamp-duty-rates-in-queensland-qld-australia/

Land -V- Existing House

The other issue that many would-be buyers in the housing overlook, is the benefits of actually buying vacant land and building a new house.  The stamp duty on the vacant land – because it is a lot less expensive - results in a far lower amount of transfer duty.  There is no stamp duty on a building contract for the new house.  In addition, the State Government will provide a $10,000 grant to the buyer towards the cost of having a new house constructed. With the lower transfer duty payable on the vacant land and the $10,000 grant being paid, a buyer in these circumstances is considerably better off financially.

For further information please contact our Property team via email: property@whd.com.au, visit our website or call us on 07 3232 5700.

[1] Office of State Revenue, QLD Government, ‘Transfer Duty’, Accessed 13/9/2011,
http://www.osr.qld.gov.au/duties/transfer-duty/index.shtml

Changes to overhanging trees and dividing fences legislation

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Please note: For the most up-to-date information on the Neighbourhood Disputes Resolution Act 2011, please see the more recent post, posted to the Queensland Law Blog on 25/11/11.

The Neighbourhood Disputes Resolution Act 2011 (the ‘NDR Act’) was assented on the 9th August 2011 and will replace the previous legislation covering disputes between neighbours, the Dividing Fences Act 1953 (Qld) (the ‘DF Act 1953’). The NDR Act will commence on a date to be fixed by proclamation (s2). The NDR Act deals with disputes arising between neighbours, particularly in relation to fences and trees.

Objects and reasons of the NDR Act

The objects of the Act are:

  • to provide rules about each neighbour’s responsibility for dividing fences and for trees so that neighbours are generally able to resolve issues about fences or trees without a dispute arising; and
  • to facilitate the resolution of any disputes about dividing fences or trees that do arise between neighbours.

The NDR Act aims to modernise the old dividing fences legislation, change the common
law of abatement in relation to overhanging tree branches and introduce a simplified, low-cost remedial path to neighbourly disputes, in large by conferring jurisdiction on the Queensland Civil and Administrative Tribunal (QCAT) in relation to these matters.

Reasons for the introduction of the NDR Act

The main reasons for the introduction of the Act (which are outlined in more detail in the
Explanatory Notes to the NDR Bill 2010) are as follows:

  • Despite neighbour disputes mostly being minor matters, these types of disputes can (and do) potentially develop into very serious and distressing situations for
    neighbours.
  • Studies/surveys found that the overwhelming community consensus was that the DF Act (1953) needed to be replaced with more contemporary legislation that reflected the wants and needs of the community and that was drafted in a more comprehensible, clear manner.

Major changes to this area of law

The NDR Act has substantially modified the DF Act (1953) regarding two key areas;
fences and trees. The NDR Act has also conferred jurisdiction on the QCAT to hear disputes between neighbours in order to provide a practical and low-cost form of effective relief.

Fences: The NDR Act clarifies the meanings of a fence (s 11), dividing fences (s 12), sufficient dividing fences (s 13), retaining walls (sch 2) and destruction or alteration of a fence by a neighbour (s 28).

Trees: The main change resulting from the NDR Act with regards to tree legislation is that
the onus is placed on the tree keeper(s) to give proper care to and keep up maintenance of his/her trees (s 52). Also, s 54(2) of the NDR Act stipulates that a neighbour who exercises their common law right of abatement by removing part of a tree (e.g. an overhanging branch containing fruit) may, but is not required to, return the removed part to the tree-keeper.

According to Paul Lucas MP, “one of the key elements of the new laws is provisions to help people recover the cost of tree branch removal if a neighbour would not remove them”. Mr. Lucas is here referring to an aggrieved neighbour’s right to apply to the QCAT (schedule 2 NDR Act) for an amount up to $300 for the tree removal (s 58(4) NDR Act).

For further information about the new legislation or for assistance with property law matters email us at property@whd.com.au or call 07 3232 5700.

Final cost of Hale St Bridge still to be determined

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Today the Queensland Court of Appeal set aside an earlier decision of the Land Court regarding the valuation of land compulsorily acquired to make way for the Hale Street Bridge.

In 2007, the council compulsorily acquired 5,643m2 of land for the purpose of constructing the new river crossing.

A dispute arose as to the value of the land which came before the Land Court for an assessment of compensation in 2009.  The Land Court determined that the pre-acquisition value of the land be $25,600,000.

The owner and the mortgagee of the land appealed the assessment which was successful in November 2010.  Whilst no monetary value was given by the judges in the Land Appeal Court decision, the land owner and the mortgagee (who is now in liquidation) argued that the valuation was in the order of $40,000,000.

The Land Appeal Court held that the earlier decision had wrongly disregarded a planning proposal published subsequently to the date of resumption in consideration of the size of the development which a prudent vendor and purchaser would have expected to have been approved.

Today the Queensland Court of Appeal allowed the Brisbane City Council’s Appeal, and returned the assessment to the Lower Court for a redetermination of the value of land.  However it also urged the parties to agree on an amount without the need for further costs of a further hearing.

Walsh Halligan Douglas were the Queensland solicitors assisting the interstate liquidators’ lawyers, Griffins Lawyers of Adelaide, in this matter.

For further information, contact us at litigation@whd.com.au.

Threshold for damages for gratuitous care provided to an injured person

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The most significant head of damage awarded to an injured person is almost always economic loss. However, the next “big ticket item” in many personal injuries case can be the damages awarded for gratuitous care.

Within the legal profession, damages for gratuitous care and assistance are known as Griffiths v Kerkemeyer damages, named after the case of the same name. The Civil Liability Act 2003 (QLD) (“the CLA”) however provides minimum thresholds to be met for an injured person to be awarded Griffiths v Kerkemeyer damages (See section 59 of the CLA). The CLA was enacted by the Queensland Government in response to the “insurance crisis” and the “Ipp Report” of September 2002.

The thresholds specify that damages should only be awarded to an injured person for gratuitous services provided, which are:

  1. Necessary;
  2. Arise solely out of the injury in relation to which damages are awarded; and
  3. Are provided, or are to be provided for at least six hours per week and for at least six months.

Section 59 of the CLA has not yet been tested in any Court within Queensland.  The generally accepted interpretation is that both limbs of point 3 above must be met before any award for gratuitous services can be given.  As such, gratuitous services must be provided for at least six hours per week and for at least six months. Whilst the section is clear about the requirement of 6 hours per week, the requirement for six months does not state whether this period is cumulative or continuous. There are differing views on this point, although the generally accepted practice is that the period must be continuous. The exception to the rule would appear to be if the injured person has been required to spend time in hospital, or a like facility, which has temporarily severed the continuous period of six months.

For future Griffiths v Kerkemeyer damages to be awarded, the threshold tests must be met. This view was upheld in Kriz v King & Anor [2006] QCA 351 which is authority for the proposition that once the threshold in section 59 of the CLA is met, Griffiths v Kerkemeyer damages can be awarded even if the services thereafter are provided, or are to be provided, for less than six hours per week.

Of interest is the New South Wales case of Harrison v Melham [2008] NSWCA 67.  It considered the interpretation of section 15 of the Civil Liability Act 2005 (NSW). The section provided that no damages were to be awarded where gratuitous care services were provided for less than six hours per week and for less than six months.  The Court determined that an injured person would only have to show that the services were provided for a significant period of time per week or over a long period of time (six months) to be able to claim damages for gratuitous care.  Justice Mason observed that in order to meet the six month threshold, it was necessary for the six months to accumulate consecutively. Section 15 was subsequently amended and is now constructed in a similar manner to section 59 of the CLA.

Whilst only of persuasive value, this case is an example of the uncertainty of the interpretation of section 59 of the CLA, should it be brought before the Queensland Courts for determination.

It is for this reason that it is imperative that injured people keep a detailed record of any gratuitous services provided to them by family or friends that were not provided to them prior to sustaining their injuries, and were required as a result of the injuries.

If you would like further information please contact us via our website or email info@whd.com.au

Before signing on the dotted line … buying and selling a pharmacy

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In this month’s edition of the Australian Journal of Pharmacy, Walsh Halligan Douglas’s Maurice Hannan and Anthony Purcell outline five crucial steps that should be followed before signing on the dotted line to buy or sell a pharmacy.

Key points in the article include:

  • Thorough planning before signing the contract will protect the interests of both parties.
  • Be aware of the intricacies of a pharmacy transaction. If you’re not, get good advice.
  • Effective due diligence will help to satisfy the incoming pharmacist that their purchase represents value and gives them an opportunity to familiarise themselves with the day-to-day intricacies of a pharmacy.

The full article can be downloaded from our website.

For enquiries relating to the purchase or sale of a  pharmacy or a business in general, please contact our Property Team on 07 3232 5700 or email property@whd.com.au.

What are caveats and how can they be used?

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This week we look at caveats – what they are, who can lodge one, the implications and what happens after lodgement.

What is a caveat?

A Caveat is formal notice registered on property which has the effect of stopping any person including the legal owner from dealing with the property by preventing the registration of further instruments on that property.

For example, while current, it will prevent the transfer of legal title from a seller of the property to a buyer.

Who can lodge a caveat?

To lodge a caveat you must have a legal or an equitable interest in the relevant land. Examples include, but are not limited to, a(n):

  • purchaser under an unconditional contract of sale;
  • builder or the like who has improved the land and not been paid;
  • the purchaser who has paid the purchase price but is not as yet the registered
    owner;
  • tenant under an unregistered lease;
  • someone who has a right of access to the land under an easement;
  • former spouse during property settlement negotiations under the Family Law Act;
  • mortgagee; and
  • owner of a profit a prendre or licence.

Essentially you must have a real and not perceived interest in the property itself.

Implications of a caveat

In addition to preventing dealings with the property a caveat gives notice to others of the existence of an unregistered interest in the property. Therefore after the caveat is registered the caveat will protect your interest in the land and people are assumed to deal with the property at their own risk and subject to the caveat.

After lodgement

The Caveat, if registered, will lapse after three months.  And you can only lodge a caveat
once.  Therefore you must commence legal proceedings to protect your interest in the land within three months, otherwise the caveat will lapse.  In some cases a person can lodge a non lapsing caveat which will stay registered until a party objects to the notice or Court proceedings are commenced.

In most cases, this is an Application for specific performance under a contract. For example a buyer under an unconditional contract of sale registers a caveat to prevent the transfer of the property to a third party by the seller.

If another party objects to your caveat then they can give you formal notice under the Land Title Act requiring you to commence lega-l proceedings within 14 days to
establish a Claim.  If you fail to comply within that time limit the caveat will lapse and can be removed from the registry.

Also, a Caveator (the person who the Caveat was lodged against) may apply to the Court to have the caveat removed. Further it should be noted that if it is established that the caveat was lodged without reasonable grounds compensation can be payable.

Legal advice is important when dealing with a caveat as is an understanding of the implications after registration. A caveat can be an effective mechanism to protect your interest in land and in a lot of cases used as a bargaining tool without the need for formal legal proceedings.

Further information

For further information about lodging a caveat, contact the Walsh Halligan Douglas Property Team on property@whd.com.au or call 07 3232 5700.

Greater protection from body corporate increases

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The new Body Corporate and Community Management and Other Legislation Amendment Act 2010 (Qld) (BCCM) was given Royal Assent on 14 April 2011. This legislation changes the way body corporate fees are proportioned between lot owners and can be amended.

New disclosure obligations for sellers

Sellers will now need to provide additional disclosure when entering into a contract for the sale of both existing and proposed community titled properties to which the BCCM
applies.

Failure to provide this additional disclosure before the buyer signs the contract, may give the buyer a right to terminate the contract at any time prior to settlement.

For an existing lot, a copy of the Community Management Statement (CMS) must now be given with the disclosure statement before the buyer signs the contract.

Contracts already given to a buyer but not yet signed by both parties

When a contract for a community titled lot is given to a proposed buyer but has not been signed by both parties, before the buyer signs the contract the seller must provide the
buyer with:

  • a new disclosure statement incorporating the four new statements (listed above) and a copy of the CMS; or
  • if a disclosure statement has already been provided to the buyer, a written notice that includes the four new statements and a copy of the CMS.

 For more information on the new  body corporate law please contact our Property Team on property@whd.com.au or visit http://www.whd.com.au/p10/property-commercial.html

How do I retain ownership of goods supplied on credit?

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In this edition of The Queensland Law Blog, we will look at how suppliers can ensure they retain ownership of goods supplied to customers on credit, until those goods are paid for in full.

What is retention of title?

A Retention of Title clause in a contract for the supply of goods, either in a Credit application or Terms and Conditions of Sale, allows a supplier to retain ownership of the goods you supply, to your customer until such times as the goods are paid for in full.

What does it mean to you?

The effect of this is that the title to the goods remain with you, the supplier, and in the event that your customer goes into liquidation, or becomes bankrupt, you may recover the goods supplied if they have not been paid for.  A properly drafted contract should
allow you the right to have the goods returned by the liquidator rather than being
sold by the liquidator because the goods have been deemed to be the property of
the liquidated company, not you, the supplier.

It can also mean that you as a supplier can collect the goods if your customer simply refuses to pay, saving the need to commence legal proceedings for unpaid invoices.

The Australian Courts have upheld the enforceability of such clauses in supply contracts.  However the clauses must be clear and  specifically worded.

How can you protect your interests?

Your supply contract does not need to be a long legalistic document.  In certain circumstances, such clauses can be inserted onto invoices or attached to invoices as Terms and Conditions of Sale.  However, if you have customers for whom you supply on credit and in volume, then a full Credit Application with a specific Retention of Title clause should be sought.  Personal guarantees of the directors of your customer companies should also be obtained.

To achieve this, you may need to review your contract procedures.  A separate agreement covering all sales could be made with each major customer.  If the Retention of Title clause is in a standard form “Terms and Conditions of Sale” or other document, steps must be taken to ensure that this standard form becomes part of each contract made.

A Retention of Title clause is essential to prevent your customer from becoming the owner of the goods until such time as the full price for the goods is paid, even if you had delivered the goods prior to settlement.  The clause can provide for your customer to store the goods so that they remain easily identifiable as your goods and easy to trace.  Provision is also usually made for the buyer to sell the goods in the ordinary course of business as agent,
for you the supplier.

What if your customer sells the goods and you still don’t get paid?

A difficult issue arises with Retention of Title clauses when goods supplied are on-sold.  The clause must be drafted correctly to allow you as a supplier to claim the proceeds of that sale or to claim the goods manufactured with your goods.  In such a case, the danger is that a court will interpret the clause as creating a charge and a charge requires
registration under the Corporations Act.

However, the Australian High Court has suggested that the concepts of a Trust can be used to give you as a supplier an interest in those proceeds.  Again, the clause must be carefully drafted and other safeguards should be put in place.

If you would like to consider obtaining, or updating your Credit Applications, Terms and Conditions of Sale and other Sale Contracts or require assistance with your business  legal
needs generally,  please contact Matthew McCormick at matthewm@whd.com.au.  We can assess your current supply agreements to ensure that they comply with current law.