Apr 29, 2020 | COVID-19, Property Law
Coronavirus has undoubtedly had a substantial impact on the Australian economy. This unfortunately means that some residential tenants are struggling to keep up with their rental payments, due to increased unemployment or standing downs. However, the NSW government is introducing measures to support landlords and tenants and encourage them to work together through this difficult time. In this article, we explore some of these measures to help you understand landlord and tenants obligations under these new initiatives.
New Measures:
The new measures include an interim 60 day stop on landlords issuing termination notices or applying for a NSW Civil and Administrative Tribunal eviction order due to rental arrears, where tenants are financially disadvantaged by COVID-19. This will be followed by limitations for 6 months for rental arrears evictions for tenants financially disadvantaged by COVID-19.
For Tenants:
To meet the requirements for the 60 day stop on evictions, residential tenants needs to demonstrate that they are impacted by COVID-19. A household is impacted by COVID-19 if:
- one or more rent-paying members of a household have lost employment or income (or had a reduction in employment or income) due to COVID-19 business closures or stand-downs, or
- one or more rent-paying members of a household have had to stop working or reduce work hours due to illness with COVID-19 or due to COVID-19 carer responsibilities for household or family members, and
- the above factors result in a household income (inclusive of any government assistance) that is reduced by 25% or more.
What are the obligations for a tenant?
- To be honest and act in ‘good faith’ in negotiations with their landlord
- Provide the landlord with relevant information and proof regarding their situation if they have been impacted by COVID-19
- Tenants should have regard to the landlord’s financial situation, including whether they rely on the income to cover expenses such as mortgages
- Tenants must work towards achieving a mutually satisfactory outcome.
All tenants who are not impacted by COVID-19 are expected to honour their existing tenancy agreements and continue to pay all rent and charges in full.
For Landlords:
It is important for landlords to have regard to the tenant’s situation and be considerate of the financial burdens they are facing due to COVID-19. However, this must be weighed against the landlord’s personal financial situation and how a rental reduction may impact their income.
What are the obligations for a landlord?
- To negotiate a rent reduction if their tenant has been impacted by COVID-19
- Landlords can only seek to give a termination notice or apply for an eviction after the interim 60-day stop if it is fair and reasonable in the context of the specific case
- Only after negotiations have failed can a landlord seek to terminate the agreement. The NSW Civil and Administrative Tribunal (NCAT) will have discretion to assess whether it is fair and reasonable to evict in the circumstances of each case
- To be honest and act in ‘good faith’ in negotiations with their tenant
- Landlords should be honest and frank about their financial situation, including whether they rely on the income from the tenant to cover expenses such as mortgages
- They must work towards achieving a mutually satisfactory outcome with the tenant.
Fair Trading will also be able to assist landlords and tenants trying to reach an agreement if needed.
Further Information
It is important to be fully aware of your obligations under your residential lease agreement. If you would like more information on how we can assist you with your matter, do not hesitate to contact us on 9963 9800 or via our contact form. Check out our blog here for further more information and analysis on the restrictions and rules in place during COVID-19.
Apr 24, 2020 | Business Law, COVID-19, Employment Law
COVID-19 continues to disrupt the operation of businesses globally, presenting new challenges to company directors on how to continue to carry out their duties and obligations. While many directors are focused on the immediate practical implications of operating in these challenging times, directors must ensure they keep in mind their broader obligations to stakeholders under the Corporations Act 2001 (Cth). In this article, we address the potential issues facing directors in the context of the current pandemic.
Directors’ Duties
There are numerous statutory obligations directors must adhere to. Directors must continue their duty to act in good faith and in the best interests of the corporation. Given the uncertainties surrounding the COVID-19 pandemic it may be challenging for directors to determine how their immediate actions may impact the long-term success of the company and its various stakeholders.
While directors must of course focus on the immediate implications of operating in these uncertain times, they must ensure that they continue to act in good faith and in a reasonable manner and make decisions based on the most reliable and up-to-date information in front of them. Continue to place priority on protecting the health and welfare of staff, and consider enacting contingency plans to avoid exposing the company to outside risks.
Financial Reporting and Annual General Meetings
The coronavirus has temporarily impacted companies’ abilities to hold annual general meetings (AGMs). For listed and unlisted public companies required to hold an AGM by 31st May 2020, ASIC has confirmed that it would take no action if AGMs are postponed up to the end of July or if AGMs are held virtually in compliance with s 249S of the Corporations Act. The holding of virtual AGMs is permitted under the Corporations Act, however entities must check whether their constitution restricts meetings being held in this way and seek legal advice on section 1322 of the Corporations Act.
Insolvency and ‘COVID-19 safe harbour’ provisions
The Coronavirus Economic Response Package Omnibus Act 2020 included, among other measures, a new section 588GAAA into the Corporations Act granting temporary relief for financially distressed businesses. The amendments provide a ‘safe harbour’ to grant relief for directors from potential personal liability for insolvent trading.
In order to be able to rely on these measure, the debt leading to insolvency must have been incurred in the ordinary course of the company’s business, during the six month period commencing from the 25 March 2020 (or longer as prescribed in another regulation), and before any appointment of an administrator or liquidator during that period.
In relation to insolvent trading, directors should seek advice early from a qualified and independent advisor about the company’s financial affairs and the options available to manage the disruption caused by COVID-19.
Check out our blog here for further more information and analysis on the restrictions and rules in place during COVID-19.
Further Information
It is important to be fully aware of your duties and obligations as a director during this rapidly evolving and challenging environment during COVID-19. If you would like more information on how we can assist you, do not hesitate to contact us on 9963 9800 or at law@etheringtons.com.au.
Apr 24, 2020 | COVID-19, Employment Law
The Fair Work Commission (FWC) announced on 1 April 2020, that it intends to temporarily amend 103 modern awards in response to the COVID-19 pandemic. This amendment is set to operate until 30 June 2020. The FWC has confirmed that this initiative is intended to provide protection from dismissals for employees. This amendment is intended to provide employers and employees with additional flexibility amid COVID-19. In this article, we outline the temporary variations and what they mean for the impacted awards.
What are the temporary variations?
The FWC has proposed to temporarily vary 103 modern awards to:
- provide employees that are affected by COVID-19 (including full-time, part-time and casual employees) with an option to take 2 weeks unpaid pandemic leave; and
- Offer for employees, through agreement with their employer, to take twice as much annual leave at half the rate of pay.
Some examples of the impacted modern awards are the Aged Care Award 2010, Banking, Finance and Insurance Award 2010 and the Educational Services (Teachers) Award 2010.
A full list of the 103 awards can be found here on the FWC Statement, page 28.
Unpaid Pandemic Leave
The first proposed amendment would allow employees to elect to take up to 2 weeks unpaid leave. This is only available if the employee is “required, by government or medical authorities or acting on medical advice, to self-isolate or is otherwise prevented from working by measures taken by government or medical authorities in response to the COVID-19 pandemic in circumstances where the employee is required to work at premises operated by an employer.”
Employees do not have to use any paid leave before accessing the unpaid pandemic leave, however they must provide reasonable evidence of the need to take unpaid pandemic leave.
Annual leave at Half the Rate
The proposed amendment also provides that an employer and employee may come to an agreement where the employee can elect to take up to twice as much annual leave at half the rate of usual pay. Additionally, the deduction from an employee’s leave loading balance must only be what would have been subtracted for half the period at full pay. For example, if an employee takes two weeks leave at half pay, only one week’s leave is to be deducted from their leave loading balance. It isimportant to note that any agreement between an employee and employer in relation to this scheme should be properly recorded in writing and retained on the employee’s record.
Further Information
With so many changes happening in the legal sector at the moment due to COVID-19 it is important to be fully aware of your rights and obligations as an employee or an employer. If you would like more information on how we can assist you with your matter, do not hesitate to contact us on 9963 9800 or at law@etheringtons.com.au.
Check out our blog here for further information and analysis on the restrictions and rules in place during COVID-19.
Apr 21, 2020 | COVID-19, Property Law
Falling asset prices, changed court procedures and a pessimistic future economic outlook are valid factors which may negatively impact the outcome of your property settlement. Within the context of the COVID-19 pandemic, you should consider whether it is possible to put your property settlement on hold. If you decide to continue with a property settlement, be aware of the risks in relation to asset valuations, and consider the following three points.
1. Use percentages for the division of your assets
The financial crisis caused by the pandemic has resulted in a sharp drop in the value of shares, property, interest rates and superannuation. There is a way that you can still obtain a fair division of the assets that are included in a property settlement by using percentage division instead of predetermined dollar value.
In the case of property, there is a risk that the sale price does not reach the expected value due to the current limitations on open houses and the cautious buyer sentiment. For example, if orders were drafted so that the sale proceeds of the family home were split where one party receives the first $150,000 and the other receives the remaining sale price, the parties would be disadvantaged if the house sold for less than expected.
The better alternative in times of economic uncertainty is to divide the sale proceeds between the parties by way of a percentage split. In the previous example, one could allocate 65% to one party and 35% to the other party. This is a more realistic approach and enables both parties to bear the risk of an unsettled economy. However, you should still seek financial advice from a professional as to whether it is the best time to liquidate your assets or sell your property.
2. Take advantage of alternative dispute resolution
Due to health concerns and social distancing, the courts have delayed hearing non-urgent matters, which may result in the prolonged delay of hearing your settlement matter. However, alternative dispute resolution options remain open, including mediation and settlement conferences. The options of negotiation and mediation settlements have opened more time and cost effective pathways to resolving property settlements during this time.
There are a variety of technological tools available to facilitate alternative dispute resolution including Zoom, Skype and telephone conferences. Ultimately, this means that parties in property settlement matters, including their legal representatives, are able to participate in mediations without putting themselves and the health of others at risk.
Once you come to an agreement, this can be finalised by way of consent orders filed in court. Currently, consent orders may be filed online with the court electronically. Most courts are not allowing in-person attendances due to the COVID-19 restrictions.
3. Wait to value your business
In light of the economic turndown and closure of many non-essential businesses, it may be best to place potential valuations of businesses on hold until the economy recovers. Even if you have experienced profitability in the previous years, it is likely, due to the pandemic, that losses have resulted from reduced demand, office closures, staff being let go or stood down (see our article on standing down employees here) and affected supply chains. Some industries have experienced profit during this time, and if this is the case of your business it could be the perfect time to seek a valuation. We advise that you seek financial advice as to whether this is the best option for you.
Further Information
We know that a fast and cost-effective resolution is the most desirable in the circumstances. If you would like more information on how we can assist you with your property settlement matter or any other family law matters, do not hesitate to contact us on 9963 9800 or at law@etheringtons.com.au.
Apr 20, 2020 | COVID-19, Property Law
There has been a lot of dialogue in the media regarding the Federal Government’s initiatives to combat the impact of COVID-19 on Australian businesses. It can be confusing to understand what exactly your responsibilities are as a tenant or landlord in the circumstances.
In this article, we break down these initiatives for you and explain your responsibilities as either a landlord or tenant during these uncertain times.
Tenancies
The Mandatory Code of Conduct (the Code) applies to commercial tenancies, including properties which are:
For Tenants
The Federal Government announced the introduction of the Mandatory Code of Conduct (the Code) which will apply to commercial leases for eligible small to medium enterprise (SME) tenants.
How do I know if I qualify?
The Code will apply to SMEs that:
- are suffering ‘financial stress or hardship’; and this means that you must demonstrate the ‘company’s inability to generate sufficient revenue as a direct result of the COVID-19 pandemic that causes the tenant to be unable to meet its financial and/or
contractual commitments’
- are eligible for the JobKeeper program; and
- have an annual turnover of up to $50 million.
What are my obligations under the Code?
- You must remain committed to the terms of your lease (subject to any changes to the rental agreement as a result of negotiations with your landlord due to the Code).
- Any failure to not properly abide by the terms of your lease will mean you forego any protections provided to you as a tenant under the Code.
- You must negotiate in good faith.
- This means to act in a sincere and fair way to ensure your interests as well as your landlord’s interests are considered.
- Provide accurate information.
- It is your responsibility to provide truthful financial information for the purposes of negotiation with your landlord. For example, you must provide evidence of your financial position such as accurate turnover figures and other relevant financial statements.
- You must have regard to your landlord’s financial situation and ability to provide additional waivers and deferrals of rent.
- Pay back your rental deferrals.
- Payment of rental deferrals by the tenant must be paid in instalments or transferred over the balance of the lease term and for a period of no less than 24 months.
- Consider your insurance policy.
- Contact your insurance provider to find out whether your insurance policy will apply in the current conditions.
- You must work towards achieving a mutually satisfactory outcome with your landlord.
For Landlords
Once the Code takes effect, ‘eligible’ tenants may be able to receive rent reductions, either in the form or waivers or deferrals by their landlords. A “waiver” means the liability no longer exists, whereas a “deferral” means the liability remains but is paid later.
What are my obligations under the Code?
- You must offer tenants proportionate reductions in rent payable in the form of waivers and deferrals of up to 100% of the amount ordinarily payable, based on the decrease in the tenant’s trade and profit during the COVID-19 pandemic period.
- Rental waivers must constitute no less than 50% of the total reduction in rent payable.
- Tenants may decide to waive the requirement for a 50% minimum waiver by an agreement with you.
- You must not terminate your lease with your tenants due to non-payment of rent during the COVID-19 pandemic period.
- You should provide to the tenant an opportunity to extend their lease for an equivalent period of the rent waiver and/or deferral period.
- This is intended to provide the tenant additional time to trade, on existing lease terms, during the recovery period after the COVID-19 pandemic concludes.
- You must discuss relevant issues to the tenancy, negotiate appropriate provisional leasing arrangements, and work towards attaining a mutually satisfactory outcome for you and your tenant.
- You must act in an open, honest and transparent manner.
- You must provide adequate and correct information within the context of negotiations.
- You must communicate and pass on any reduction in charges (e.g. land tax, council rates). This is important if the lease obliges the tenant to contribute to “outgoings”.
- You should, where appropriate, attempt to waive recovery of any other expense (or outgoing payable) by a tenant, under lease terms, during any period in which the tenant is not able to trade.
- You must agree to a freeze on rent increases for the duration of the COVID-19 pandemic (except for retail leases based on turnover rent).
A copy of the Mandatory Code of Conduct can be found here.
Further Information
It is important to be fully aware of your obligations under your commercial lease agreement. If you would like more information on how we can assist you with your matter, do not hesitate to contact us on 9963 9800 or at law@etheringtons.com.au. Check out our blog here for further more information and analysis on the restrictions and rules in place during COVID-19.
Etheringtons Solicitors extends our deepest sympathies to those experiencing hardship or health concerns during this difficult time. Further information about COVID-19 can be found at: www.health.gov.au.
Apr 8, 2020 | COVID-19
Since 31 March 2020, residents of New South Wales (NSW) have been subject to strict COVID-19 lockdown rules and restrictions. Residents have been ordered to stay at home unless they have a ‘reasonable excuse’ for leaving. In the Public Health Order, the NSW government described ‘reasonable excuses’ as:
- obtaining food or other goods and services
- travelling to work or for education purposes, only where the person cannot do it at home
- exercise
- medical or caring reasons
- the full list of reasonable excuses provided by the NSW Government can be found here
Further to the above, a person must not participate in a gathering in a public place of more than 2 persons. Exceptions to this include:
- gatherings of household members; and
- gatherings which are essential for work or education.
These orders are in addition to the pre-existing ‘social distancing rules’ whereby if a person leaves their home, they must stay at least 1.5 metres away from others.
What you can and cannot do in NSW
Due to the broad nature of the COVID-19 lockdown rules and restrictions, the nation has been subject to profound confusion as to what you can and cannot do. To add to the confusion, individual states and territories have varying rules and infringements.
To put your mind at ease, we have compiled a general list summarising what you can do (as long as social distancing measures are complied with) and what you cannot do in NSW.
| What you can do | What you cannot do |
| Visit a “romantic partner” | Have a social catch-up with family or friends that are not household members |
| As a learner driver, learn to drive and get hours logged | Gather in a public place with more than two people |
| Children across two households can continue to switch between houses | Go for a drive, unless it is for a ‘reasonable excuse’ |
| Go to the supermarket/grocer to obtain food | Take a holiday in a regional area |
| Obtain takeaway from a café/restaurant | Go camping |
| Go to the pharmacist/shops to obtain medical products | Attend a pub, registered club, casino, micro-brewery or distillery or gaming lounge |
| Exercise indoors or outdoors | Dine in at a food and/or drink premises |
| Travel a short distance for exercise purposes e.g. to go surfing at an open beach | Attend entertainment facilities or amusement centres |
| Take your dog for a walk | Attend places of public worship, except for a wedding (5 people or less) or a funeral (10 people or less) |
| Go fishing for work or passive exercise | Go swimming in a public pool |
| Attend work, where you cannot work from home | Attend any public playgrounds, outdoor gymnasium or skate parks |
| Attend your education provider, where you cannot be educated from home | Receive services from a spa, nail salon, beauty salon, waxing salon, tanning salon, tattoo parlours or massage parlours |
| Attend a wedding with five or less people | Attend a house auction, open house inspection or betting agency |
| Attend a funeral with ten or less people (including the person conducting the service) | Play a team sport |
| Move house | Host at premises which does not provide 4 square meters of space for each person on the premises |
| Provide care or assistance to a vulnerable person | |
| Provide emergency assistance | |
| Donate blood | |
| Fulfil a legal obligation (e.g. attend court or tribunal) | |
| Go to the dentist, for dental emergencies | |
| Take your pet to the vet | |
| Travel for any of the above purposes | |
What happens if you break the rules?
- Generally, enforcement is up to the discretion of police officers.
- Police have the power to give on the spot fines of $1,000 for persons, plus an additional $5,500 fine each day the offence continues.
- Corporations who ignore COVID-19 restrictions can be fined $5,000.
- If the matter goes to court, courts can impose a maximum penalty of $11,000 and six months jail time against individuals. For corporations, the maximum penalty is $55,000.
Further information
If you would like further information or assistance in relation to any legal matters, please do not hesitate to contact one of our experienced solicitors on 9963 9800 or via email at law@etheringtons.com.au
