Unpacking the Family Court Structural Reforms

Unpacking the Family Court Structural Reforms

The government has introduced the Federal Circuit and Family Court of Australia Bill 2019 in order to structurally reform the Federal Circuit Court and Family Court of Australia, both of which currently have responsibility for family law matters. This merger has been proposed to help reduce delays and increasing backlogs in the family law courts leading to greater efficiency in the way family law matters are dealt with in Australia. This hotly debated reform passed the lower house late last year (December 2020) despite much opposition. In this blog, we review the proposed court merger and other changes under this bill.

The Court Merger

The Federal Circuit and Family Court of Australia Bill 2019 aims to bring the Federal Circuit Court of Australia and the Family Court of Australia together into an overarching, unified administrative structure to be known as the Federal Circuit and Family Court of Australia (FCFC). These structural reforms facilitated by the Bill purport to create a framework in the Federal Circuit and Family Court of Australia for common leadership, common management and a comprehensive and consistent internal case management approach.

There is a clear emphasis on efficiency, evident under section 5 of the Bill which states that the object of this legislative instrument is:

(a)  to ensure that justice is delivered by federal courts effectively and efficiently; and

(b)  to provide for just outcomes, in particular, in family law or child support proceedings; and

(c)  to provide a framework to facilitate cooperation between the Federal Circuit and Family Court of Australia (Division 1) and the Federal Circuit and Family Court of Australia (Division 2) with the aim of ensuring:

(i)  common rules of court and forms; and

(ii)  common practices and procedures; and

(iii)  common approaches to case management.

In a Media Release from the office of the Attorney-General, Christian Porter has said that ‘bringing the courts together under one amalgamated structure creates a single point of entry for families who will no longer be bounced around between different courts – an issue that occurs too often in the current system and can lead to lengthy delays for families because matters have to begin again.’ However, it is worth noting that some legal experts, while acknowledging the difficulties presented by a duplicate court system, worry that the merger will be an abolition of the specialist Family Court of Australia.

Other Changes

The legislation also requires that judges hearing family law matters in either Division will need to satisfy additional appointment criteria to guarantee they are suitable to dealing with family law matters, including family violence. This is due to the fact that many matters that come before the family court tend to have elements of family violence, therefore family law judges will also need to have a strong understanding of family violence and its implications for the safety of women and children.

In a further Media Release from the office of the Attorney-General, it was noted that the Government has provided $4 million in funding to the federal courts to review court rules and assist with implementing the reforms as well as a $3.7 million boost to court resources.

Get Legal Advice

Navigating the family law system can be a confusing and emotionally exhausting task. Our dedicated family law solicitors are ready and willing to assist you with your parenting or family law concerns. If you would like further information, please do not hesitate to contact one of our experienced solicitors on 9963 9800 or via our contact form. For more articles on family and other areas of law, see our blog here.

Understanding Family Law Financial Settlement Documents

Understanding Family Law Financial Settlement Documents

When ex-partners come to an understanding in terms of settling financial matters upon separation, there are two key ways to finalise this agreement in a legally binding way. These are ‘consent orders’ and a ‘financial agreement’. Not many people are aware that it is important to finalise family law financial matters in a legally binding way, as informal agreements can easily collapse and a court application can come at any time and many years following the breakdown of the relationship. In this blog, we review the two most common ways of finalising family law financial agreements and considerations you should take into account when deciding which avenue is most appropriate for you.

Consent orders

A consent order is a written agreement that is approved by a court. It can cover many family law matters, such as parenting arrangements for children as well as financial arrangements such as property and maintenance. Consent orders are lodged with the Family Court and officially stamped as a court order. The Court must be satisfied that the consent orders are just and equitable and/or in the best interests of the child/children (if applicable) before they make a consent order.

In order to obtain the stamped court order, two documents are required to be filed. These are the Application for Consent Orders and the proposed orders. The Application will contain important details of the parties, such as assets, liabilities, income and super. The proposed orders should set out the orders that the parties have agreed on and are asking the Court to make.

Financial agreements

A financial agreement is not lodged with a court and is rather a private contract agreed on between the parties. In order to ensure the agreement is legally binding and enforceable, both parties are required to receive independent legal advice from different legal professionals about the consequences of signing the agreement.

Considerations when deciding which agreement is best for you

When deciding which avenue is more appropriate for your circumstances, there are a variety of considerations to take into account. Some of these include:

  • Consent orders can cover matters pertaining to spousal maintenance, however a financial agreement may be a safer option to guard against any applications to prolong or increase maintenance. It is important to keep in mind that you are not confined to either option to settle your financial arrangements and a hybrid model could allow you to finalise your property settlement while a financial agreement could settle your spousal maintenance.
  • A financial agreement is not subject to judicial scrutiny and is a private agreement. However, for a court to approve consent orders, it must agree that the orders are just and equitable. For financial agreements, any deal can be struck no matter how unfair it may be perceived.
  • Often consent orders can take a long period of time to be approved, however financial agreements come into effect essentially upon the signing of the agreement by each party.
  • If you are seeking property orders, you should read and consider sections 75 factors outlined in the Family Law Act 1975. To learn more about section 75 factors, see our blog here. Some of these factors include:
    • How the length of the marriage affected the earning capacity of the party seeking maintenance
    • The age of any children of the marriage/relationship
    • The age and state of health of each of the parties
    • The income, property, finances and ability to earn an income of each party

Get Legal Advice

An experienced family law professional will be able to assist you with determining which family law settlement document is most appropriate for you and your circumstances. If you would like further information, please do not hesitate to contact one of our experienced solicitors on 9963 9800 or via our contact form. For more articles on family and other areas of law, see our blog here.

Tribunal’s ruling welcome relief to small business prevented from JobKeeper

Tribunal’s ruling welcome relief to small business prevented from JobKeeper

Covid-19 continues to disrupt business operations, creating an uncertain environment for business owners to trade within. In response to the drastic impact of Covid-19 on the Australian economy, the Federal Government introduced the JobKeeper scheme to support small businesses and combat unemployment. Whilst many businesses have benefited greatly from the scheme, some were excluded from Commonwealth support as they failed to meet the eligibility criteria. The recent case of Apted v Commissioner of Taxation considered the requirement for businesses to have an active Australian Business Number (ABN) when applying for the JobKeeper package; the Tribunal finding that the purpose of the scheme was to support businesses and arbitrary eligibility requirements were contrary to this objective.

Overview

Mr Adept was the sole trader of a small business where he worked as an expert valuer in rental disputes up until July 2018 at which point he retired. As such, he cancelled his GST and ABN registration effective June 2018. However, after he decided retirement wasn’t for him, in September of 2019 Mr Apted was engaged to provide services for the odd client. He mistakenly assumed that he was not required to reactivate his ABN as he did not anticipate to make more than $75 000 per year and did not think he needed to be registered for GST or an ABN.

At the end of March 2020, Mr Apted applied to have his ABN reactivated, which was reinstated by the Registrar with a date of effect of 31 March 2020. He then subsequently applied for a JobKeeper payment in April 2020, but his application was rejected as he was deemed ineligible due to his inactive ABN at the 12 March 2020 cut-off date. Mr Apted then contacted the Registry and had his ABN retrospectively backdated to be effective from July 2019 after which he appealed the decision with the Commissioner. His claim again failed on the basis of ineligibility and Mr Apted subsequently escalated the decision of the Commissioner to the Administrative Appeals Tribunal of Australia.

Eligibility Requirements for JobKeeper

There are several requirements set out in the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (Cth) that must be met in order for a business to qualify for JobKeeper payments. These include:

  • At 1 March 2020, the entity was an active business; not for profit operating primarily in Australia; or a deductible gift recipient.
  • The entity employed at least one eligible employee during the JobKeeper fortnight being applied for.
  • The entity satisfies the original decline in turnover test: which is generally satisfied when an entity’s projected GST turnover for the test period falls short of current GST turnover for the relevant comparison period by the specified percentage (normally 30%). There are alternative tests for businesses started in 2020 before March 1.
  • The entity satisfies the actual decline in turnover test: which is generally satisfied when an entity’s actual GST turnover for the test period falls short of the relevant comparison period, by specified short fall percentage (normally 30%).
  • The entity satisfies the integrity rules: have an ABN that was active on 12 March 2020; and an amount was included in the entity’s assessable income for 2018-19 income in relation to the business or the entity made a taxable supply in a tax period between July 2018-12 March 2020.

Decision of the Administrative Appeals Tribunal of Australia

In its decision, the Tribunal considered the purpose of the JopKeeper scheme as a mechanism for providing necessary and accessible support to small business owners. The Tribunal found that the Integrity Rule containing the requirement for an active ABN at 12 March 2020 was contemplated by the government as putting trust in the Registrar and the ABN process, rather than a fixed deadline. As a result, where the Registrar decides to use its discretion to retrospectively date an ABN, this does not vitiate the integrity of the ABN for the purposes of JobKeeper eligibility. The Tribunal found in favour of Mr Apted, and reiterated the need for JobKeeper to remain a streamlined and attainable scheme for Australian businesses.

It is worth noting that that the ATO has confirmed that they have lodged an appeal against the decision in the Federal Court of Australia and the possible future implications of this decision remain unclear. However, the ATO maintains the AAT’s decision has not changed the need to satisfy all of the other eligibility conditions.

Other Recent JobKeeper Updates

From the 28th of September 2020, businesses and non-for-profits seeking to claim JobKeeper payments to March 2021 must reassess their eligibility with reference to their actual turnover in the December quarter and demonstrate the required decline turnover test has been met. Further, from January 4th the payment amount has decreased to $1,000 per fortnight for eligible employees and business participants working for 20 hours or more a week on, and $650 per fortnight for employees and business participants who were working for less than 20 hours a week.

How do I check the status of my ABN?

An Australian Business Number is a unique identifier that enables your business to identify itself, avoid PAYG tax, and claim GST credits. It is important as the owner of a small business that you are able to check the status of your ABN and reactivate it before expiry. You can apply or reapply online for an ABN through the Australian Business Register website, and once your application is successful your details will be added to the Australian Business Register. The Register contains the status of all ABN’s including their expiration date. Once you have obtained an ABN it is important you keep your details up to date in the Register, as this is how you will be contacted when your ABN is due for renewal. If you do not receive a notice of renewal, or unsure about the status of your ABN you may need to seek out further assistance.

Further Information

Matters such as these highlight the importance of seeking expert legal and taxation advice when conducting a small business. Mr Adept himself acknowledged his misunderstanding of ABN requirements was because he failed to obtain proper advice. If you are the owner of a small business, and want to understand more about your eligibility for JobKeeper payments or about the implications of an ABN for your business, do not hesitate to contact us on 9963 9800 or via our contact form.

The New Industrial Relations Reforms for Casual Workers

The New Industrial Relations Reforms for Casual Workers

The Federal Government is set to introduce a highly anticipated reform of industrial relations laws following a recent case that is now set to appear before the High Court of Australia. The new reforms include arrangements in relation to casual employees that are aimed at circumventing the ‘double dipping’ concern following the case of WorkPac Pty Ltd v Rossato. In this blog, we review the changes to the industrial relations laws and outline the case that lead to this controversial decision.

What’s changing?

On 9 December 2020, the federal Government announced the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill 2020. The reforms include an arrangement for casual workers that could bestow upon them stronger rights for ongoing employment. However, it also limits the liability of employers for paying casual leave loadings as well as paying other benefits such as annual leave.

One key change is the introduction of a legal definition of ‘casual work’ under the Fair Work Act. It is worth noting that no definition currently exists in the Act and this definition could help clear up much ambiguity regarding the implication of casual working arrangements.

The Act will define a casual employee as a person who:

(a) is made an offer of employment by the employer on the basis that the employer makes no firm advance commitment to continuing and indefinite work according to an agreed pattern of work; and

(b) the person accepts the offer on that basis.

Moreover, the changes also mandate that an employer must make a permanent part-time or full-time job offer to a casual employee with a regular pattern of hours if:

(a) the employee has been employed by the employer for a  period of 12 months from the day the employment started; and

(b) during at least the last 6 months of that period, the employee has worked a regular pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to work as a permanent full-time or part-time employee (as the case may be).

However, the employer is not required to make this offer if (based on facts that are known or reasonably foreseeable at the time) they have reasonable grounds not to make the offer.

These proposed amendments will not be voted on until 2021.

WorkPac Pty Ltd v Rossato

The changes introduced by the Federal Government come after much concern for the financial welfare of Australian businesses following a recent decision by the Full Federal Court in the case of WorkPac Pty Ltd v Rossato. To read more about this case, read our article linked here.

The High Court of Australia has allowed WorkPac Pty Ltd special leave to appeal the decision of the Full Federal Court. The decision is not set to be handed down until mid-2021.

The Federal Government has said that the proposed amendments will address the ‘double- dipping problem created by the Rossato decision’, so casual workers will not be entitled to both the 25% casual loading as well as the permanent benefits package (comprising annual leave, personal leave, notice of termination or redundancy pay).

Get legal advice

With many ambiguous changes to employment law set to be introduced in the coming year, it is important to seek legal advice if you are unsure about your employment contract or concerned about your potential liability as an employer. You can contact the highly skilled employment law team at Etheringtons solicitors via our contact form or call 02 9963 9800 for a no-obligation discussion.

Debt Collection Basics For Business

Debt Collection Basics For Business

If you are owed money for goods or services, the first step in attempting to recover it is generally to send a Letter of Demand to the other party. This letter should set out the amount of money outstanding, a cut-off time to respond by, and if no response is received by you that you will take legal action with no further notice to the recipient.

Letter of Demand

The Letter of Demand is sent by you (or your lawyer) if you are owed the money (the creditor) and it warns the person owing the money (the debtor) that if they don’t pay the debt within a certain time period (such as seven days) they will be sued in court to recover the debt.

A Letter of Demand should be the last letter a creditor sends before issuing court proceedings. While Letters of Demand are not court documents they are often an effective means of forcing the debtor to take action.

It is a good idea to contact us first to ascertain whether it is prudent to proceed with court proceedings and this will usually depend on the size of the debt. Naturally, if the sum owed is small it may not be economically viable to pursue the debt by engaging a lawyer(NB: if they’re doing it themselves it usually won’t cost anything to send the letter). You must ensure however that, in enforcing your rights to recover the debt, you act within the law.

Principles of Debt Collection Fairness

When sending a Letter of Demand, you should be careful not to harass the debtor or send a letter which is designed to look like a court document.

You must not pursue a person for a debt unless you have reasonable grounds for believing the person is liable for the debt.

Time Limits

A creditor has a limited period of time to sue for a debt. In most instances, for debts owed, this will be 6 years.

If the debtor has made no payments towards the debt or has not acknowledged in writing that they owe the debt for a period of 6 years from when the debt arose, then the debt may no longer be recoverable.

Disputed Debts

The debtor has the right to dispute a debt and may do so on the grounds if:

  • it is not their debt;
  • they have already paid the money;
  • they disagree with the amount of the debt; or
  • it is an old debt and they haven’t made a payment for at least 6 years, no court judgment has been entered against them and they haven’t admitted in writing that they owe the debt in that time.

If the debt is disputed, then you, as the creditor, may have no alternative but to commence legal proceedings or to seek to negotiate a compromise with the debtor.

When Your Lawyer Becomes Involved

If you, as the creditor, are not willing to negotiate or wait for payment, you may wish to contact us to assist with pursuing the debt.

If you know the debt is due and payable, and you want to commence legal proceedings, it is prudent to have a lawyer assist you and represent you in court to recover the debt. If your lawyer advises that the size of the debt make their engagement not economically viable, then we may still be able to help you to negotiate a payment plan that is manageable to the debtor and acceptable to you.

It is not in the debtor’s interest to ignore your claim and risk the additional costs of the legal fees and interest on top of the original debt. By following the correct process we can help obtain a satisfactory result for you.

New Customer – Credit Application Process

Before you take on a new customer, you should have the correct systems in place to ensure that you are able to assess the customer’s credit position.

Do you have a credit application process for your new customers?

Your Credit Application and Terms of Trade should provide you with security over the goods which you have sold to the customer and, if the customer is a corporate entity, ensure that the directors of the company provide you with their personal guarantees. You must, however, ensure that you register any security over goods on the Personal Property Securities Register and we recommend that you speak with a lawyer to assist you with this process to ensure that the registration is not void.

If you do not have a system in place, contact us and we will help you put a system in place to protect you and provide you with security for money owed to you. It is important that you have the correct systems and documentation in place before you do or provide credit to any new customers.

Conclusion

You should contact us to discuss your legal rights and obligations if you are owed money or if you owe money to someone else who is threatening court action.

If you would like more information or require assistance or advice on how to proceed in debt recovery matters please contact us on (02) 9963 9800 or via our contact form.

Accessing Digital Assets – Estate Planning Essentials

Accessing Digital Assets – Estate Planning Essentials

The recent death of Gerald Cotten, former Chief Executive Officer of Canadian cryptocurrency exchange company, Quadriga CX, emphasises the importance of planning your electronic after-life.

Mr Cotton’s death in India at the age of 30, has not only raised suspicion as to its authenticity (and allegations of an exit scam), but reiterated the chaos that can be created if digital assets have not been considered in an Estate plan.

Mr Cotton was the sole custodian of encrypted passwords protecting over $200 million (USD?) worth of cryptocurrency (virtual currency created and stored electronically such as Bitcoin, Litecoin and Ethereum). His untimely death has left numerous Quadriga customers unable to access their assets. Mr Cotton’s widow states that she played no role in the running of Quadriga and, despite her efforts, has been unable to unlock the laptop used by Mr Cotton nor access any of his accounts.

Regardless of how the Quadriga saga unfolds, it is a timely reminder of how important it is to consider what should happen to our digital assets when we die.

What are digital assets?

A person’s digital affairs may encompass a range of online transactions, activities and accounts such as:

  • cryptocurrency;
  • financial assets including online bank accounts and shares;
  • intellectual property attached to domain names or online literary works;
  • online sporting and gaming accounts;
  • loyalty programs such as Flybuys Rewards and Frequent Flyers;
  • online shopping accounts such as eBay and Amazon;
  • Personal/business social media accounts such as email, Facebook, Linked-In.

All should be considered, and included, in an effective estate plan.

Issues unique to certain digital assets

Traditional cash-based assets such as money deposited in a bank, shares or other paper-based investments are held by title to the owner and can be transferred to the beneficiary with the relevant documentation. Ownership of digital assets like Bitcoin, however, is anonymous with owners accessing their cryptocurrency with private keys which are used to unlock and deal with the assets. This information may be held on a computer device (via a digital wallet), on a USB, or printed separately. These assets can easily be overlooked or ‘keys’ misplaced, representing unique challenges when it comes to administering an estate.

Many digital assets are also held globally and may therefore raise jurisdictional issues from an Estate planning perspective. In most instances, there is no uniform legislation governing access to a deceased person’s online accounts, so it is imperative that these matters are dealt with specifically in an Estate plan.

There are some simple steps you can take to ensure your online life is appropriately dealt with when you are gone.

1. Identify your digital assets

You should start by making a list of your digital assets (including online accounts) and determining what you would like to happen to them when you die.

Keep records of your online accounts and subscriptions including user names and passwords and store this information in a secure place.

Remember your online accounts and login details are likely to change frequently and your list should be maintained accordingly.

2. Understand your online accounts

Understanding how various accounts are dealt with by service providers will help to determine the type of action you would like taken when you die.

For example, Facebook account holders can advise in advance whether their account is to be deleted or memorialised. A memorialised account can provide a place for family and friends to share memories after a person dies on the deceased’s profile, and any content shared by the deceased person remains visible to those with whom it was shared. Nobody can log into a memorialised account.

Some loyalty programs such as Frequent Flyers may not be transferrable or redeemable after a person dies, so it may be wise to keep tabs on these types of accounts to utilise benefits regularly.

3. Include digital assets in your Will and appoint a technology custodian

Your Will should define and identify important digital assets and provide executors and trustees with appropriate directions and powers to deal with them.

Assign your executor, or other trusted person who is familiar with technology, the role of managing your online life after you die and ensure this direction is included in your Will.

Record your after-life technology instructions with respect to each account separately and ensure these instructions are secure, but accessible to your technology custodian. Never disclose passwords in your Will.

4. Online maintenance

Online accounts contain personal information which should be protected. Technology presents a real risk of identity fraud and unmonitored accounts can be particularly vulnerable. Regular monitoring and unsubscribing or deleting unused accounts can help minimise risk and keep your technology life tidy.

Regularly downloading photos and videos from your mobile to a storage device can ensure that memories are accessible to your family when you die.

5. Consider incapacity

It is also important to consider what happens to your online life in the event that you are incapacitated. Appointing a trusted person to manage your online affairs and including specific instructions in an enduring power of attorney is a logical step to ensure the appropriate management of your digital wealth if you are incapacitated.

The instrument making the appointment should be specific to the jurisdiction in which the assets are held, and in this respect, more than one document may be required.

6. Consider trusts

It may also be beneficial to hold substantial digital assets through a trust structure, if possible, for greater protection and better taxation outcomes. In doing so, the trust must be considered and dealt with under the Will, which should nominate beneficiaries of the trust or shares in the trustee company and include provisions to ensure the trust can achieve the desired objectives.

Conclusion

It has become increasingly difficult for executors, lawyers and family members to ascertain and access online assets after a person dies, with many financial and other institutions operating in a ‘paperless’ environment. Certain digital assets such as cryptocurrency can present additional problems for a deceased’s family.

Inaccessible online accounts make it difficult to identify assets, and leaving online accounts open indefinitely raises concerns of potential identity theft.

Good online management and ensuring your digital assets are included in your estate plan will help your executors and family manage your online life after you are gone.

If you or someone you know wants more information or needs help or advice, please contact us on (02) 9963 9800 or via our contact form.

Inheritances and Family Law

Inheritances and Family Law

Families and money can sometimes be a volatile combination. This can be complicated especially in circumstances where a divorce or separation occurs and a new Will isn’t drafted to reflect the change of circumstances. In this blog, we review what it means to have an inheritance included in the asset pool of a separating couple.

Why is inheritance an asset?

When a separating couple needs to divide their assets, they must first work out the pool of net assets available for distribution. The pool includes all the assets and liabilities in each person’s name and in the parties’ joint names, as well as each person’s share of an asset owned jointly with another person.

If one person received an inheritance before or during the relationship, that inheritance would normally form part of the pool of assets available for distribution.

Does that mean my partner gets half my inheritance?

No, not necessarily. Just because an asset is included in the pool of assets available for distribution does not mean that the asset or the whole pool will be divided 50/50. Each matter is considered on a case-by-case basis.

Importantly, once the parties have identified what is in the pool of net assets, they must then consider what contributions they each made, and their respective future needs, in order to determine their respective entitlements and percentage split of the net assets they will each receive.

What are contributions?

When working out which party made what contribution, the Family Court considers the parties’ financial contributions – i.e., who earned what, the lump sums expended during the relationship, who bought what and who paid for what – and also non-financial contributions – such as being a homemaker and parent, physically renovating a home or landscaping a garden, managing the parties’ financial affairs, etc.

After a long relationship where there haven’t been any significant inheritances or other financial windfalls, a court usually finds that financial and non-financial contributions during the relationship are roughly equal, unless special circumstances apply.

An inheritance received by one party before the commencement of the relationship would be treated as an initial financial contribution by that person – i.e., money or assets that person brought into the relationship. Similarly, an inheritance received by one partner during the relationship is usually considered to be a financial contribution by that person.

In these circumstances, depending on factors such as the size of the inheritance, when it was received, what it was used for and the parties’ other contributions, this would generally mean that the person who received the inheritance would be treated as having made greater contributions during the relationship.

What about an inheritance received after separation?

This situation is less clear cut. A court usually considers an inheritance by one party as a sole contribution by that person. Generally, this will usually mean that the other party did not contribute to the post-separation inheritance and it should not be included in the pool of assets to be divided. However, each matter is dealt with on a case-by-case basis and while this may be a potential result, it is always dependent on the facts of the case and the circumstances of the lead up to the inheritance.

For example, if the post-separation inheritance had been received from the husband’s mother and the wife had a close relationship with her mother-in-law and had cared for her during an illness, a court might find that both parties had contributed to the receipt of the inheritance and therefore both parties will be entitled to a share of the inheritance.

Future needs

After working out financial and non-financial contributions, the future needs of the parties are assessed  before determining a split of the net assets and whether any adjustments should be made in favour of the party in need. Future needs include things like income, earning capacity, financial resources, ongoing care of children, age, health, etc.

An inheritance, even one received after separation, may be taken into account in this final step. The reason for this is the recipient of the inheritance would have greater financial resources and may be receiving income from an inherited investment which may well mean that person’s future financial circumstances may significantly outweigh the other person.  In such a case, a court may rebalance the division of the net asset pool in favour of the other partner by way of an adjustment which is derived from section 75(2) of the Family Law Act (Cth).

Summary

An inheritance received before or during a relationship will almost always be treated as an asset available for distribution between separating parties, whereas an inheritance received after separation will usually be found not to fall into the main pool of assets but may be treated in a separate pool. However, that does not necessarily mean that the other person is entitled to half the inheritance.

The receipt of a large inheritance will almost always have a significant impact towards the determination of contribution of the parties. In addition, an inheritance, including one received after separation, could have an impact on the determination of future needs of the parties and whether any adjustments ought to be made.

Finally, once the parties have been assessed as to the net assets, what contributions were made, whether there are future needs, a court is then required to determine whether the proposed split of net assets is just and equitable.

Contact us

The Family Law team at Etheringtons Solicitors are skilled at handling all matters relating to inheritances and are able to assist with complex cases in the event of a relationship breakdown. If you need assistance with any area of Family Law, do not hesitate to contact us on 9963 9800 or via our contact form here.

Family Law and Schools

Family Law and Schools

Family law issues such as managing separated families and their complex family law arrangements can be difficult for schools to navigate at the best of times, however, these issues become increasingly intricate with the addition of COVID-19 regulations around distancing and limiting travel. This blog will explore some of the common family law questions and then explain the obligations that schools have in common situations where issues arise.

Common Questions About Family Law and Schools

What are the Rights and Responsibilities given to Parents and the School?

Parents often contact the school to assert their ‘rights’ to access their child or request the school to take the steps that they want. The Family Law Act (1975) Cth does not confer parents with any ‘rights’ and instead the obligation is to act in accordance with the best interests of the child when determining what and how much time each parent is able to spend with their child. This notion is consistent with the school’s duty of care to the students, rather than to the parents. When considering the best interests of the child, the court encourages meaningful relationships between the parent and the child and it protects that child from harm or from being exposed to family violence.

What is Equal Shared Parental Responsibility?

The Family Law Act (1975) Cth provides that there is a presumption of equal shared parental responsibility. Under this shared responsibility, it is important that both parents are given all information concerning the child. This can include school reports, newsletters and information about school functions. Due to equal shared parental responsibility, if there is a significant long-term issue regarding the child and their education, parents are required to consult with each other and make a genuine effort to come to a resolution. Furthermore, it is not the school’s job to ‘police’ the parenting arrangements. The parents have an onus to provide the school with updated orders and if they provide conflicting instructions the school can require that the parents deal with the conflicting instructions themselves and then report back.

What are Intervention Orders?

Intervention orders are becoming increasingly frequent in family law matters. An intervention order, previously and commonly known as a restraining order, is an order that prevents a person from behaving in a particular way towards another person or persons. The interaction between family law orders and intervention orders is often complex. Although a family law order will usually prevail over intervention orders in the event of an inconsistency, it is important for a school to understand their obligations in these circumstances, especially in instances of family violence. In circumstances where the school is concerned for the safety of the child, or there is an emergency situation, the safety of the child comes first.

What are Subpoenas?

A subpoena is a document issued by the court that requires either documents to be produced or for attendance of a staff member at a hearing to give evidence. It is common for parents who are before the court to request access to confidential documents to give evidence of the status of the child’s wellbeing. If the school responds to the subpoena it is important to seek independent legal advice in order to safeguard against any breaches of privacy for staff or students. There are circumstances where schools may object to a subpoena, for example, if a subpoena will have an adverse impact on the child or is too broad. However, if no objection to the subpoena is raised the school must comply in full or there is a risk of being in contempt of court.

Common Situations Where Issues Arise:

School Pick Up

In general, Court Orders will make note of the time that the child spends with each parent. This typically includes who will pick up the child on particular days. It is important to note that step-parents are allowed to have time with their step-child during their spouse’s time with the child, hence requests made by parents to prevent step-parents from collecting the child from school are often not granted.

Lack of Court Orders for Pick Up

If the parents do not have a formal agreement or court orders the school is able to request a parenting plan or a written agreement from the parents that details who collects the child on specific days.

Enrolment

In general, parents are to both sign the enrolment agreement at a school and are to be jointly and severally liable for the payment of school fees. In circumstances where one parent wishes to cease payment due to separation, there is no obligation for the school to change the payment arrangements. Changes may be made if the school so chooses, or they may be needed if there have been interim orders made or further evidence has been provided as to the parents’ agreement to change fee payment.

Withdrawal of Enrolment

Due to the equal shared parental responsibility of parents there needs to be consultation between the parents before decisions are made regarding long term issues, including changing the enrolment of the child.

Contact Us

Family law matters can be complex and stressful. Our experienced family law team at Etheringtons Solicitors are ready and willing to assist you with your matter. If you need any assistance please don’t hesitate to get in contact with one of our lawyers via our contact form or call us on 02 9963 9800 for a no-obligation discussion.

Understanding a Commercial Lease

Understanding a Commercial Lease

When renting a property from which you intend to run a business, it is important for both Landlords and Tenants to understand the relationship they are entering into and the rights and obligations that they each have. The document that governs this relationship is usually a Commercial Lease.

So, what is a Commercial Lease?

A lease is a legally binding contract that gives you certain rights to a property for a set term. A commercial lease is used when leasing property that is used primarily for a business.

You should never sign a lease without understanding all of its terms and conditions. If you don’t understand what you are agreeing to you could experience serious financial and legal problems.

It’s important to properly investigate the property and lease document before you sign. It is a good idea to ask your lawyer to explain each clause of the lease to you. Your lawyer can give you legal advice, draft new clauses and help you negotiate the terms and conditions to suit you.

Important issues to consider when entering into a lease

A commercial lease will usually contain terms dealing with items such as:

Rent: How much is the rent and when is it due? The amount of the rent will usually be calculated based on the area of the premises. This may not always be as simple as it sounds. For example, if the shape of the property is irregular or the area includes a lift, more than one floor, outdoor area or interior walls.

Rent Increases: Rent will usually increase annually during the term of the lease, with increases determined by a fixed percentage, market based values or tied to the CPI. It is common for CPI or fixed reviews to occur during the term of a lease and for a market review to occur at the expiry of the initial term and each option period.

Security Deposit: The landlord will usually ask for some form of security from the tenant in case the tenant defaults on their obligations (eg. not paying rent). The security is usually for an amount equal to 3-6months’ rent and is by way of bank guarantee or security deposit. If the tenant is a company then personal guarantees from the company’s directors may also be required. The lease should also specify the terms regarding its return.

Term of the lease: The lease should set out the length of the lease and any options to renew the lease and any terms relating to the renewal. A landlord will generally want a longer initial lease term (typically 3, 5 or 10 years) whereas the tenant is likely to want a shorter period (1-3 years).

Option to Renew: An option allows the tenant to continue leasing the property on similar terms at the end of the period of the lease for a further defined period and rent (subject to any review). An option gives the landlord potential greater security of income and the tenant the ability to make longer term plans for their business.

Knowing the procedure for exercising the option, especially when the option can be exercised, is critically important

Improvements: A lease should address what improvements or modifications can be made to the property, who will pay for the improvements and whether the tenant is responsible for returning the property to its original condition at the end of the lease.

Description of the property: The lease should clearly describe all of the property being leased, including bathrooms, common areas, kitchen area and parking spots. A plan of the property should also be included.

Signage: Any restrictions on putting up signs, say that are visible from the street, will be included in the lease. Also, check local zoning regulations to determine what other limitations may apply.

Use of the property: Most leases will include a clause defining what the tenant can do on the property (eg. What type of business). A tenant should ask for a broad usage clause just in case the business expands into other activities. Ask your local council if your business can operate in your desired location. Also consider the council’s development plans for the area.

Outgoings: The lease will set out who is responsible for costs like utilities, property rates & taxes, insurance, and repairs.

Insurance: You should contact your insurance company and discuss the clauses referring to insurance so you fully understand what is covered by the lease.

Exclusivity clause: This is an important clause for retail businesses renting space in a commercial complex. An exclusivity clause will prevent a landlord from renting space to a competitor.

Assignment and subletting: A tenant should maintain the right to assign the lease or sublet the space to another tenant. Usually the tenant is still ultimately responsible for paying the rent if the business fails or relocates, but with an assignment or sublet clause in place, the business can find someone else to cover the rent.

Maintenance & Repair: The lease should clearly set out who is responsible for maintaining or repairing the property and the fixtures and fittings during the term of the lease.

Make Good: A tenant should carefully review the make good obligations in the lease.  Often these can be onerous and involve considerable expense on the tenant having to reinstate the premises to their original condition when the lease commenced.

Termination: The circumstances under which the lease will be terminated should be set out in detail in the lease.

Costs: The landlord may want the tenant to pay the costs of preparing the lease, this should be clearly set out in the lease.

Retail lease or general commercial lease?

The Retail Leases Act 1994 has specific legislation relating to retail leases. This legislation is designed to promote fair leasing arrangements, improve communication and provide access to low cost dispute resolution for the retail industry.

For a new retail lease the landlord is legally required to give the tenant:

  • a written lease with matters agreed to and signed off by both parties.
  • a disclosure statement.
  • the NSW Retail Tenants Guide, which gives notice of some of the tenants’ rights and obligations and some commercial matters that the tenant should be aware of.

The disclosure statement outlines important information about the lease, it must be in the prescribed form and contain a statement notifying the tenant that independent legal advice should be obtained. It would also normally include details about:

  • the term of the lease
  • whether there are options for further terms
  • the occupancy costs for leasing the premises (including rent and any outgoings)
  • specific information for shopping centre leases
  • tenant’s fit out requirements
  • if there are any relocation or demolition clauses

Conclusion

Although many of the terms of a commercial lease are fairly standard it is important that you fully understand your rights and obligations, especially the provisions which relate to retail leasing.

It is a good idea to ask your lawyer to explain what each clause in the lease means and to get their assistance in negotiating the terms and conditions that suit you.

If you or someone you know wants more information or needs help or advice, please contact us on (02) 9963 9800 or via our contact form here.

The financial risk in giving personal guarantees in leases

The financial risk in giving personal guarantees in leases

If you are a director of a company entering a commercial or retail lease, a landlord will likely require you to give a personal guarantee for the company’s obligations under the lease. In such cases, directors should fully comprehend the extent of the guarantee they are providing and obtain appropriate legal advice to minimise financial exposure.

There are two court cases that are dire reminders of the risk that a director takes when guaranteeing the performance of a company’s obligations.

In Lin v Solomon [2017] NSWCA 328 the landlords were entitled to recover personally from the guarantor, after the lessee company defaulted under the lease. The landlords, who owned the CircaRetail Shopping Centre at Bella Vista, were awarded damages comprising unpaid rent, outgoings, contributions to the retail centre’s promotional levy and GST.

The guarantor claimed that he was ‘induced to enter into the guarantee of the lease by misleading and deceptive representations’ made by the leasing agent. The alleged misrepresentations were that the leased premises, comprising a newsagency, would soon attract increased foot traffic due to the predicted employment of some 1,500 people at a nearby site.

The Court found the misrepresentations as pleaded were not established and, in any event, there would have been no reliance on such representations as the guarantor was an experienced newsagent. In fact, apart from paying a deposit and providing a bank guarantee, the lessee company failed to make any lease payments or outgoings under the five-year lease which commenced in May 2009 and was terminated by re-entry by the lessors in December 2012.

The primary decision was upheld on appeal and the guarantor was ordered to pay the respondents the sum of $602,178.35 plus interest and costs

Incidental to the issue of the misrepresentation, but significant to the appeal, was the appellant’s allegations that the primary judge had not been impartial and should be recused from the case. The appellant was also unsuccessful on this point.

In NB2 Pty Ltd v P.T. Ltd [2018] NSWCA 10 the lessee / appellant challenged the primary judge’s decision to award payment of damages to the landlord / respondent after the lessee company breached the lease.

The lessee had entered a ten-year lease for a fruit and vegetable shop at Westfield Shopping Centre, Miranda. After defaulting in paying rent, the lease was terminated by the landlord which then sued the lessee company and the guarantors under the lease.

In the primary hearing, the appellant claimed that it had been misled by the landlord during negotiations after expiry of its previous lease, when it promised the lessee exclusivity as the ‘sole independent speciality fruit and vegetable retailer’ within a defined area at the centre. Subsequently, nearby Franklins re-opened its refurbished premises selling fresh fruit and vegetables, which detrimentally affected the lessee’s turnover.

The alleged misrepresentations were not made out. The Court considered that the expression ‘sole independent fruit and vegetable retailer’ did not constitute retailers such as Franklins as it was not a ‘specialty retailer’.

The primary judge entered judgment in favour of the landlords for $3,537,040.50 against the two directors of the lessee company. This was upheld on appeal and the appellants were ordered to pay the respondent’s costs.

Joint and several liability

As many companies have more than one director, both or all directors are usually required to guarantee the company’s performance of a contract with a third party. In such cases, it is important to understand that the third party will be able to call upon either one or all of the joint guarantors for the outstanding liabilities of the company.

The third party need not exhaust all options to recover the debt against the company and will usually pursue the director/s in the most favourable financial position.

Directors who give guarantees should seek legal advice regarding appropriate asset management to safeguard personal assets.

Conclusion

A guarantor is at considerable risk of personal exposure if the company is unable to meet its responsibilities under a contract, and in such cases may face financial disaster.

Personal guarantees for lessee companies can seldom be avoided. However, the risk for guarantors may be minimised by paying a higher bond or arranging a bank guarantee in exchange for limiting the guarantor’s financial exposure.

Companies and their directors are advised to obtain legal assistance before entering a leasing arrangement and independent advice regarding the extent of their personal obligations under a guarantee arrangement.

It’s easy to let the prospect of a new venture curtail a comprehensive review of the terms of a lease, however these cases provide thoughtful insight into the importance of treading carefully when it comes to guarantees.

If you or someone you know wants more information or needs help or advice, please contact us on (02) 9963 9800 or via our contact form here.

Does your privacy policy comply with the privacy laws?

Does your privacy policy comply with the privacy laws?

Privacy laws in Australia are governed by the Privacy Act 1988 (Cth) (the ‘Act’) and the Australian Privacy Principles which affect the handling of personal information.

The principles were introduced in 2014 to bring Australia’s privacy laws (first introduced in 2001) in line with advancing technology trends and to provide more transparency around the capture and use of personal information.

The principles make it difficult for businesses to collect information about consumers without their knowledge and prescribes how businesses handle, use and store personal information and engage in direct marketing.

These principles have been further strengthened by the Privacy Amendment (Notifiable Data Breaches) Act 2017 (Cth) which imposes mandatory reporting requirements on entities subject to existing obligations under the Act, for an ‘eligible data breach’.

If your business is affected, you may need to update your privacy policies and your procedures and systems to comply with the law.

Which businesses are affected by the privacy laws?

The Act applies to Australian Government agencies, businesses with an annual turnover of $3 million or greater, credit reporting bodies, and smaller entities ‘trading in personal information’.

What does ‘trading in personal information’ mean?

Personal information is information that identifies, or could reasonably identify, an individual. This includes names, addresses, dates of birth and bank account details.

Trading in personal information includes collecting or providing personal information to a third party for a benefit, service or advantage. If you collect personal information and then provide it to a business to manage your direct marketing, you may be trading in personal information.

What are the key obligations?

Businesses subject to the Act must:

  • Ensure they have a privacy policy that addresses specific topics;
  • Have procedures and systems in place to ensure they comply with the Act and the privacy principles;
  • Understand what an ‘eligible data breach’ is and implement policies to deal with such breaches.

Entities affected by the Act may face significant fines for serious or repeated breaches.

How do I ensure my business complies?

Businesses affected by the Act should review and identify how they deal with personal information. The following elements need to be addressed:

Privacy Notice

When you collect personal information, inform individuals of your organisation’s name, contact details, the purpose of collection and to whom it will be disclosed.

Privacy Policy

Your privacy policy must address the required topics. These include:

  • What personal information you collect.
  • How you collect the personal information.
  • The purposes for which you use and disclose it.
  • If you provide personal information to parties overseas you need to disclose that and, if practicable, specify the countries where those parties are located.
  • Setting out how you secure and store personal information.

Systems

Establish a system to ensure that:

  • Staff who handle personal information comply with the new privacy laws.
  • Individuals can access their personal information and correct out of date or incorrect information.
  • You have a process to deal with complaints about your compliance with the laws.
  • Enables recipients of direct marketing material to unsubscribe.

Understanding eligible data breaches

An eligible data breach happens if:

  • There is unauthorised access to, unauthorised disclosure of, or loss of, personal information held by an entity; and
  • The access, disclosure or loss is likely to result in serious harm to any of the individuals to whom the information relates.

An entity must give notification of an eligible data breach:

  • If it has reasonable grounds to believe that a breach has occurred; or
  • If information has been lost and unauthorised access or disclosure of that information is likely to occur;

and, in either case,

  • The breach would likely result in serious harm to the individuals to whom the information relates.

Dealing with eligible data breaches

If a breach occurs, an entity must notify any affected individual and the Office of the Australian Information Commissioner (OAIC).

If an entity suspects a breach has occurred, it must investigate the circumstances of the possible breach within 30 days of becoming aware of it, to determine whether it is an eligible data breach.

Notification must include:

  • The entity’s identity;
  • Details of the data breach – i.e. how the breach occurred;
  • The information that is the subject of the breach;
  • The recommended actions that individuals should take in response to the breach.

Notification is not required if an entity is able to quickly remedy a data breach so that it is unlikely to result in serious harm.

Entities that fail to carry out the investigation and notification processes prescribed by the reforms will breach their obligations under the Act and may face civil penalties.

Conclusion

Business entities that handle personal information must understand and comply with privacy laws. Staff should be trained, and policies implemented on how to collect, store and manage personal information. Policies should identify systemic problems when collecting and handling information and set out appropriate solutions.

Staying one step ahead of your privacy obligations, and minimising the potential for data breaches to occur, is essential to safeguard against fines and loss of reputation.

If you need more information or if you need assistance or advice on how to proceed please call us on (02) 9963 9800 or via our contact form, here.

Illegal interview questions you can’t ask a prospective employee

Illegal interview questions you can’t ask a prospective employee

An employer’s potential liability for workplace discrimination arises before the first interview and exists whether or not a decision is made to hire a person.

A job interview is integral to the recruitment process and provides an opportunity for the employer to ask questions, check credentials and determine a prospective employee’s suitability for a position. It also provides reciprocal opportunities for candidates to find out more about the role and the organisation and to assess their interest in the position.

Naturally, both parties want to find the ‘right fit’ however the employer is largely in control of the interview process and may go about finding the right person in the wrong manner.

By asking a candidate certain ‘illegal’ questions during the interview process, employers risk breaching Commonwealth and / or State laws aimed to protect individuals against discrimination in the workplace.

So, what are illegal interview questions?

When interviewing a candidate for a position, the primary focus of the questions asked should be to assess the applicant’s inherent ability to perform the key functions of the role.

Employers should avoid asking questions about certain unlawful factors for which a candidate’s answer could be construed as determinative to the success, or otherwise, of his or her application. These include questions about age, gender, sexual preference, ethnicity, physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion, political opinion or social origin. Essentially, these matters are considered irrelevant in determining a person’s capacity to perform the role.

Even the most innocent questions (such as those that might be asked during the course of social conversation) could be considered unlawful during a formal interview. The following are some examples:

  • How do you manage work with three children?
  • How old are you?
  • Does your disability prevent you from carrying out your job?

These questions have something in common – they are questions that might be asked of a particular category of applicants (those with children, over 50 years of age or with a disability) that would not necessarily be asked of other applicants.

Other questions that may result in a discrimination complaint include:

  • What is your religion?
  • Where were you born?
  • Are you working at the moment?
  • Have you had a workers’ compensation claim?

These questions are unnecessary when determining an applicant’s ability to carry out the duties required of the role and should be avoided. Deciding that an applicant is unsuited for the position based on an answer to one or more of these questions may result in discrimination action.

Asking the right questions

Potential claims for discrimination can be minimised by re-thinking your approach to how questions are asked and having a detailed job description to refer to during the interview process. This helps keep the interview on track and ensures only the essential requirements of the position are addressed.

Organisations are encouraged to implement a set of standard interview questions that focus on the key skills and requirements of the position. This may include asking applicants to demonstrate how their skills and personal qualities make them an ideal choice for the role. An effective way to achieve this is to ask for examples of how the applicant has achieved certain outcomes or reacted to particular situations in previous roles. For example, you might ask, ‘please explain how you managed an irate customer during your time as service representative with XYZ’.

Following are some examples of discriminatory questions, together with an alternative approach that can be used to obtain the necessary information from a candidate.

Injuries / physical disabilities

It may be necessary to discuss an applicant’s injuries or physical condition to determine objectively whether he or she would be able to safely perform, without personal risk or risk to others, the duties required.

Rather than asking directly about his or her condition, the interviewer should go through each element of the job and, where relevant, discuss what adjustments to the workplace might be required to assist the applicant perform these duties. Appropriate questions may include:

‘Are there any reasons why you may not safely be able to lift 5 kg?’

‘Are there any specific adjustments we would need to make so you could carry out the duties required?’

This demonstrates that the employer has genuinely considered the applicant who may be an ideal fit, with a few minor modifications to the workplace.

Age

Asking an applicant his or her age is unlawful particularly if the employer is assuming that the person, due to age, lacks the energy, drive or technical ability to carry out the role. Basing questions on the applicant’s skills, experience and inherent ability to perform these tasks, rather than querying their age will help minimise a discrimination complaint. An appropriate question would be:

‘Tell me about your computer experience…what types of programs have you used?’

Family commitments

It is unlawful to discriminate against a candidate based on his or her family circumstances. Rather than asking applicants if they have children or family commitments, simply ask whether they are able to commit to the hours / days required of the position. For example:

‘The job will occasionally require you to work evenings and weekends – would this conflict with other commitments?’

Religion or Race

It is unlawful to rule out an applicant whom you assume will be unable to work weekends due to religion, race or culture. If the job requires weekend work, simply point out the required days and ask the applicant whether he or she would have any issues working these days.

Currently working

Asking an applicant if he or she is currently working could be perceived as discrimination on the grounds of employment, unemployment or receiving a pension. Instead, ask when the applicant would be available to start work.

Conclusion

Avoiding workplace discrimination starts before the recruitment process and continues throughout the employment relationship (including opportunities for career progression), during workplace investigations and termination processes.

Framing questions appropriately to minimise potential action for unfair discrimination and to give candidates an opportunity to demonstrate whether they can perform the job requires sound procedures and ensuring those involved in the recruitment process are aware of their obligations.

If you or someone you know wants more information or needs help or advice, please contact us on (02) 9963 9800 or via our contact form here.