The law is constantly changing and these newsletters
describe developments which may be relevant to you. If you are in any doubt
about these or any other aspects of the law, please contact us at mail@lavulolawyers.com
or telephone Lavulo Lawyers on( 612 ) 9701
0800 for further information.
In a recent case following a sale on
eBay, the judge ordered that an auction for a Wirraway Warbird aircraft for the
reserve price of $150,000 was binding on the vendor. The vendor had also
offered the aircraft via the eBay ‘Buy now’ button for $275,000.
The aircraft had attracted no bids
until 20 seconds before the end of the auction period, when a bid for $150,000
was made.
The prospective purchaser wanted to
go ahead with the transaction, but the vendor was not happy with it and the
matter ended up in court.
The vendor said he had had another
expression of interest for $220,000 and argued that the eBay auction was no
more than an invitation to treat. He also argued that any agreements which
might have existed were between each party and eBay, not between the vendor and
purchaser directly.
The vendor was clearly trying to
get the best price he could for his rare aircraft from several avenues. The
problem for him was that one of them was eBay and he had conducted an online
auction.
The judge said the auction was an
ordinary auction, albeit without an auctioneer (eBay claims not to be one) or a
gavel. It had a method of ending the auction and it created a binding
agreement, although in a non-traditional fashion.
Culture Of Copying …‘Almost Identical’ Design Infringes Copyright
In a decision with particular
implications for the building industry, but with ramifications that extend to
many others, a court has found that a home building company has infringed
another’s intellectual property rights in copying its original house design.
The company with the original
designs contended that its design plans for a special section comprising a
kitchen, meal area, rumpus room and outdoor space under a single roof-line had
been copied.
The court agreed that the house
plans satisfied the originality requirement for copyright protection.The judge described the similarity between
the original and copied designs as “striking”, and “almost identical”.He also noted that the infringing company had
“a corporate culture which accepted the copying of competitor’s designs”.
As well as finding that the company
had infringed the original company’s designs, the managing director and product
development manager of the infringing company were also found personally liable
for authorising the conduct.
Made In China…Getting
What You Paid For
Australian and Chinese legal
systems are fundamentally different. In Chinese law there is no binding effect
of previous Chinese legal decisions, but there is an increasing trend in the
courts for later tribunals to carefully examine reported cases with similar
factual scenarios. In practice, a concept of ‘persuasive authority’ is building
within Chinese law.
In 2004 a US buyer took his case
against a Chinese seller of stocks of ginger to the Chinese People’s Courts.
The ginger which had been delivered
in New York was wet and rotten and did not
accord with applicable US
standards. The buyer got rid of the ginger and incurred other costs, such as
inspection and waste collection fees, in the process.
The Chinese People’s Court found
that the UN Convention on contracts for the international sale of goods and
Chinese law should be applied in resolving the dispute. It found that the
seller had a “quality conformity obligation” which was “the most important
contractual obligation that a seller must perform”.
The time limit for the buyer to
make a claim was hotly disputed, as the UN Convention states the buyer must
give the seller notice within two years of receipt of the goods. Chinese law
allows four years to respond. The court acknowledged that the question of the
time limit for claims under international sale of goods contracts was a highly
controversial issue in the Chinese legal community. Here, it found it
reasonable to interpret the two-year time limit rule as a “specific quality
deficiency time limit”.
It is important to properly
identify international commercial disputes and respond quickly and assertively.Those who import goods from China would do
well to review their China-sourcing contracts, take prompt action to address
contractual risks and implement timely mechanisms for identifying sale-of-goods
problems and for making claims against defaulting parties.
Responsibility To Employers …Employment Agency’s Duty Of Care
In a recent case the courts decided
unanimously that the Commonwealth Employment Service had breached its duty of
care to a prospective employer by referring to him a man with a criminal record
who subsequently shot him four times.
On-hire arrangements are
proliferating in the workplace and throwing up interesting legal questions.
In labour-hire arrangements
individuals are employed by a labour-hire agency which directs an employee to
complete work at the ‘host’ sites of third parties. Employment referral
agencies, on the other hand, do not employ individuals but instead refer them
to employers who then decide whether to employ the individual or not.
‘Reasonable care’ would ordinarily
entail disclosure of a potential employee’s criminal history to the prospective
employer (or host if a referral from a labour-hire company), or not sending the
individual at all.
If someone fails to take due care
to look after their own interests and is thus guilty of contributory
negligence, the court can reduce the damages payable by up to 100 per cent. In
this case the courts found that the employer would not reasonably have foreseen
that an individual referred by a referral service had a criminal record such as
would put him at risk of the injury he suffered. And although he might have
inquired about what the employee had been doing in the periods he was not
exercising the skills relevant to the new position, it found it unlikely that
an employer would have asked questions that might have led to them discovering
that an employee had been in jail. As such, the employer was not guilty of contributory
negligence and was awarded almost $240,000 damages plus interest; his wife was
awarded $50,000.
Although the case concerned the
liability of a government employee referral agency, it is likely the decision
will also apply to commercial employee referral agencies, as well as
labour-hire companies.
Internet Lawsuit….Blogging The
Enemy
A lawsuit has been filed against
one of Australia’s
largest online forums, where some messages posted were allegedly critical of
products and services of a software company.
The company claimed that the
comments had caused “a severe downturn in monthly sales” of approximately
$150,000 per month.
The lawsuit, for the common-law
tort of ‘injurious falsehood”, could have far-reaching implications for both
firms and operators of internet forums and discussion sites.
Buying Assets ….Structuring For Capital Gains Tax
Exposure to capital gains tax may
depend on how the acquisition of an investment or business is structured,
whether bought individually, through a partnership or via a trust or company.
While commercial factors might dictate the choice, all structures have
different income tax and capital gains tax consequences.
Individual purchase is the simplest
in buying an asset as it has no adverse capital gains tax consequences.
Individuals are entitled to the general 50 per cent capital gains tax discount
if they owned an asset for more than a year, as well as various small business
concessions.However, because it
provides no protection against liabilities, this alternative is often
commercially unacceptable.
Further, direct purchase is
normally unacceptable for tax purposes. In particular, it will not allow
deferment of tax or the splitting of income/gains.
Conceptually, partnerships are no
different to individual ownership of assets. They can be used within a family
group to facilitate the splitting of income/gains. They also share unlimited
liability disadvantages. Where they become more complex is in the choice of
partners. Partners are not restricted to individuals – a popular structure
involves partnerships of a number of discretionary trusts. What this means is
that when working out whether capital gains tax concessions are available or
not, one looks at the partners, not the partnership.
A company is not the best structure
when it is hoped that an asset might be sold for a capital gain. This is
because the general 50 per cent capital gains tax discount is not available to
companies. However, some companies are required for commercial reasons, or you
might have acquired a business by acquiring the company.
Small business capital gains tax
relief is available when an asset being sold is an ‘active’ asset, meaning
being used in a business, and where the net value of the taxpayer’s business
assets do not exceed $6 million. How you can plan to get the value down below
$6 million is another issue.
Foreign Land ….Who Will Get Your Estate?
If you have property abroad, you
might find your wishes about what will happen to it after your death frustrated
by laws overseas.
Distribution of all or part of an
estate according to a formula set by law may be a requirement in the foreign
country. In both Spain and
the UK,
for example, the law requires a particular distribution of all or part of the
estate which can frustrate your own wishes as expressed in your will.
Contact your solicitor for
information about wills.
LET THE DOGS IN…DISABILITY LAWS PROTECTS RIGHT TO BRING ASSISTANCE
ANIMALS
Last year the Federal Court found
that a health service had unlawfully discriminated against someone by refusing
entry to two of its premises when the person was accompanied by an assistance
dog.
On six occasions the person had
been refused entry to non-sterile areas of a hospital and a community health
care centre and denied health services when he was accompanied by one or both
of his dogs. Security guards intercepted him and escorted him from the premises
or denied him entry outright, advising him that the administration had issued a
notice not to allow him in with his dogs.
The health service had refused to
allow access because it considered the dogs ill-behaved and badly controlled
with inadequate evidence of proper assistance-dog training. The person had
trained the dogs himself over a number of years to help alleviate the effects
of a psychiatric disability.
While the judge expressed concerns
about the possible consequences of a broad interpretation of the disability
discrimination laws in this area – pointing out that a Shetland pony, for
example, could be an assistance animal – his decision has implications for all
service providers.
Hospitals, dentists, surgeries,
taxis, trains, airlines, restaurants and shops need to consider whether they
have in place a fair, meaningful, objectively assessable and publicly available
policy and procedure for all animals seeking entry to their premises. Staff
customer- service training and induction material should cover situations where
customers may be accompanied by assistance animals. An internal
complaint-handling process should be set up for cases where a person is refused
a service because accompanied by an assistance animal, and contact made with
established assistance animal organisations for access to timely expertise.
Policy change may not be enough; a genuine attitudinal shift is likely to be just
as important.
LIQUIDATIONS …YOU CAN’T HIDE THE ASSETS
Running down the assets of a
company in advance of a likely bankruptcy can be invalidated by the courts, if
it is seen as an attempt to defraud creditors.
Two companies had set up a joint
venture. Company A, a civil engineering company, carried out development,
contracting and subdivision works; Company B laid stormwater and sewerage pipes
in subdivisions. Company A approached Company B proposing a joint venture to
contract for and carry out earth-moving and pipeline laying, with the profits
to be divided. Company B would do the field work and Company A the paperwork.
Following a falling out between the
two, Company A commenced court action against Company B to recover its
investment in the project, but before the hearing Company A started a voluntary
wind up and a liquidator was appointed.
After reviewing Company A’s assets,
the liquidator found insufficient funds to pay all creditors. Company B claimed
that Company A had been running down its assets.
Searches established that Company A
owned five acres of land which it was in the process of transferring through
another complicated joint venture agreement. To Company B this was a clear case
of Company A trying to defeat its creditors.
The court decided that Company A
was not able to transfer the land out of its ownership, and highlighted some
disturbing elements, including a falsely dated document and false documents
presented to the liquidator. The stop gave the liquidator around $1.3 million
for the benefit of all creditors, but since the proceeds must be shared it
remains to be seen how much will go to company B.
Misleading The Customer…Online Search Engines Taken To Task
A company that recommends health
insurance policies via an online search engine on its website and a call centre
has been taken to task for engaging in misleading conduct in contravention of
the Trade Practices Act.
The company can arrange for
consumers to purchase a policy which it recommends, and it receives a
commission from insurance companies on the sale.
Australia’s consumer watchdog, the
ACCC, was concerned that the company misrepresented the range of insurance
policies it compared when recommending a policy to consumers. In particular, it
was concerned that the company misrepresented that it compared all the health
insurance covers available for consumers and could find the best-suited policy
for a consumer’s needs at the lowest price.
Following ACCC action, the company
has now made court-enforceable undertakings that for a period of three years
it will not make such representations in specified circumstances where they may
be misleading. It will also inform certain customers for whom it arranges the
purchase of a health insurance policy of the range of policies it compared for
them. It will also maintain a trade practices compliance program.
The ACCC has also instituted legal
proceedings against Google and Trading Post for alleged misleading and
deceptive conduct in relation to sponsored links on the Google website.
The case revolves around ‘dynamic
keyword insertion’, a Google tool that automatically inserts an advertiser’s
chosen keywords into its ads. It has international implications for search
engines as well as for all businesses, large and small, who make use of them to
reach customers.
Self-Managed Super ….Be Wary Of Financial Pitfall
A trustee or investment manager of
a regulated super fund must not lend fund money to a member or their relative
or give them any other financial assistance using fund resources.
A couple planned that when they
retired they would leave their farm to their daughter and sell off a block of
land they had that wasn’t attached to the main farming area. They decided to
sell the block to their self-managed super fund, leasing it back to their
farming partnership. They liked the idea of still being able to use the land in
their business and leasing it back, forcing themselves to save for their
retirement.
Since they had owned the land from
before September 1985, they thought no capital gains tax would be payable when
they sold the land to the super fund.
However, financial hardship through
the drought resulted in them not making the lease and interest payments,
thinking they could pay later. Unfortunately, by not paying rent and continuing
to use the land now owned by the super fund, they are receiving financial
assistance from it. The breach could result in a fine of up to $220,000 or
imprisonment for up to five years. It could also result in them being banned
from being trustees of a super fund and their fund losing its concessionally
taxed status.
The only way to avoid this would
have been to keep paying the rent.
Newsletter No 4 of 2007:Inthisissue:
Buying A Property…Protect Against New Trap Between Exchange And
Completion
Practical steps can be taken to
protect purchasers during the time between exchange and completion of
purchasing a property.
In a recent case, purchasers
entered into a contract to buy a rural property, but the day before settlement
was scheduled a firm of accountants obtained a writ on the property of the
vendor for unsatisfied creditors.The
writ was registered a little before settlement. In the following days the
purchasers attempted to register the transfer of the property but were advised
that the Registrar-General had declined the registration because of the prior
registration of the writ. The sheriff of NSW was then empowered to take
possession of the property and to sell it to cover the judgment debt owed to
the creditors.
Practical steps which can be taken
to protect purchasers during the time between exchange and completion of a
contract for sale are lodging a caveat (a legal notice that no step is be taken
that affects the contract without informing the purchaser) and completing a
final search of the Land and Property Information (LPI) register at the time of
settlement, or as close to the time of settlement as possible.
Discrimination…Laws Apply To Decisions Made Outside The Country
A blind man who is a third dan
black belt was denied entry to a judo world tournament being held in Queensland.The man won a gold medal at the Atlanta
Paralympics, was awarded the Australian sports medal, and hopes to be
considered for the Australian judo team for both the Olympics and Paralympic
Games in Beijing.
The judo organisation held that he
couldn’t enter the tournament because of his disability.
The organisation is registered in New Zealand, though some of its executive live
in Australia.
The organisation argued that Australian courts were not in a position to hear the
case as the decision was made by the organisation outside of Australia.
However, the court decided that
where the decision was made did not prevent it from examining whether the
action was unlawful under the Disability Discrimination Act, because the consequences
of the decision were felt in Australia,
and that if the Act’s powers were to be limited in this way, then its impact
could be avoided by making decisions offshore.
Damages Claims…Limits On Liability For Injury
A hotel patron assaulted by a bouncer
may be entitled to common law damages against the bouncer, but in what
circumstances would a claim against the hotel fail? This is an important issue
whenever someone who inflicted an injury cannot meet a substantial damages
claim and the victim wants to bring a claim against a third party with deeper
pockets.
Recent cases and some legal changes
have made it clear that a damages claim against a third party liable for the
intentional damage of another falls outside the Civil Liability Act, but a
claim against the third party in negligence will fall within it. This is
consistent with the overall objectives of the Act.
These developments highlight the
importance your solicitor will place on distinguishing the different bases on
which an intentional injury claim might be brought against a third party, and
focus attention on the ill-defined boundaries of the law of vicarious liability
for intentional injury.
There will be cases where the
result reached is arbitrary and arguably unjust. The employer of a bouncer,
with an otherwise impeccable record, who uses excessive force in ejecting a
rowdy patron would be liable for the assault and exposed to common law damages.
However, if a bouncer with a known
record of unprovoked assaults on patrons commits a violent and groundless
assault on a well-behaved patron, in circumstances found to be outside the
course of employment, the employer’s liability for negligence in employing the
bouncer would be limited under the Civil Liability Act.
Psychiatric Illness …When Is An Employer Negligent?
A doctor working for a major
industrial company claimed his employers had failed to take reasonable care to
prevent him being exposed to risk of harm at work.
The doctor had attended a
leadership course where, he alleged, he was exposed to significant emotional
distress prior to, during and after the course, which caused severe psychiatric
injuries.
He argued that the company had
breached its duty of care in that a colleague had subjected him to abusive,
sarcastic words and aggressive, humiliating conduct. In addition, certain
events during the leadership course, he felt, had caused him psychiatric harm.
One of his colleagues had been asked to create a human sculpture, placing
co-workers in positions that reflected their worth to him, and he had been
placed in a position that showed his lack of importance to the colleague.
Further, the colleague had told him he was the cause of all his problems.
Finally, the doctor said that
because the company had failed to provide immediate or ongoing medical
assistance, he suffered severe psychiatric injury which continued to cause him
loss.
The court pointed out that
attendance at the course was voluntary, and reiterated the principle that if
an employee contractually consents to performing particular tasks it will be
harder to prove negligence.
The court also found that it was
significant whether or not the employee showed any signs of susceptibility that
ought to have put the employer on notice that it was possible its act or
omissions might create a risk of psychiatric harm. This, and not the employee’s
subjective feelings and perceptions, were significant to the issue of
negligence. It is then that an employer would have to take reasonable steps to
prevent that risk from eventuating.
It appears that these indicators
have to be more than mere signs of anxiety and stress, especially when the
person behaves normally otherwise. The signs must of themselves demonstrate an
onset of mental illness.
The courts found that the employer
had not breached its duty to provide a safe system of work and the employee’s
appeal was dismissed.
First Home Buyer Relief …Trustee Parent Seen As Guardian
A parent concerned to provide a
permanent residence for an adult child suffering from a mental illness has been
able to use the first home buyer’s entitlement and stamp duty relief.The child had not previously held any
interest in real estate and the purchase price was below the stamp duty
threshold. The trustee parent was held to be a guardian for the purposes of the
grant.
Long Service Leave …FederalAgreementOverridesState Entitlement
The courts have found that where
state legislation conferred benefits to employees not provided under the
federal legislation, the federal agreement prevailed. As a result, the casual
employees in question in the case could not receive long service leave
entitlements.
The Australian Constitution states
that where there is inconsistency between Commonwealth and state law,
Commonwealth law will prevail. In the area of employment, inconsistencies
between federal and state legislation, awards and agreements are important for
employers and employees.
Mr X had been employed continuously
as a casual employee for over 16 years. A federal agreement did not provide
casual employees with long service leave entitlement s, while state legislation
did.
The basic question in the case was
whether or not the federal agreement intended to cover the relevant field of
employment entitlements, thereby excluding any state legislation purporting to
enlarge them. This is answered by the test of whether or not the state
legislation or instrument alters, impairs or detracts from the operation of the
federal agreement.
In this case the federal agreement
covered all employees, casual and non-casual. As such, although casuals were
not entitled to long service leave, it was clear that the agreement-makers had
considered whether or not they should be given these entitlements. This meant
that it was covered by the federal instrument and consequently, the state law
was inoperative to the extent of the inconsistency.
Land Tax …Avoid Costly And Complex Disputes
Disputing a land tax assessment can
be a complex and expensive business, and costs can be disproportionate to the
amount in dispute.
Undaunted, a taxpayer might want to
dispute the basis of a land tax assessment, or the underlying valuation of the
land on which an assessment is based. If the former, an objection can be lodged
with the Office of State Revenue; if the latter, with the Valuer General.
More often than not, land tax
disputes involve taxpayers seeking to exempt land from land tax because of the
principal place of residence exemption. Examples that have gone to court
include whether a married couple could claim two principal residence
exemptions, whether adjacent strata title lots owned by the one taxpayer were
both exempt from land tax, and the significance of absence from a principal
place of residence.
The allowance of the primary
production exemption is another problem. For example, land used for training
polo ponies was held to be exempt, though in some instances such an activity
might be viewed as a hobby.
Objection against a land tax
assessment must state grounds of objection and be lodged within 60 days of
service of the assessment, or such later time as the Chief Commissioner allows.
If disallowed, the taxpayer may appeal within further time limits.
Land owners or rate-paying lessees
can lodge objections to a notice of valuation with the Valuer General. Broadly
speaking, the grounds upon which objections can be made are limited to the
value of the land, faulty descriptions of the area or its dimensions,
apportionment of values between people holding different interests or a claim
that the person named in a notice is not the owner or lessee of the land.
The Valuer General requires valid
supporting evidence with any objection, though this is not legally required.
However, it is obviously in a taxpayer’s interest to provide the best possible
information to try to have an objection allowed.
In practice this is not easy.
Normally, objecting to a land valuation is pointless unless the land owner is
prepared to commission an independent one. The Valuer General always seems to
distinguish the valuation from any information a taxpayer might provide, such
as comparable sales.
A decision can be appealed to the
Land and Environment Court.
If you have a land tax problem, contact your solicitor about how to resolve the
dispute in the most cost-effective manner.
Tree Trouble..New Law Lets
You Go To Court
New laws are designed to provide a
simple, inexpensive and accessible process for re solving disputes between
neighbours over trees in metropolitan areas. They give the Land and Environment Court
the ability to make orders to remedy, restrain or prevent damage to property or
injury to anyone from a tree on adjoining land.
Historically, it could be claimed
that someone committed a private nuisance if their tree’s roots invaded someone
else’s land. Money could be claimed for actual damage suffered, and an
aggrieved occupier could cut away roots and branches that projected into their
land without notice to the owner of the tree, unless they needed to enter the
owner’s land to effect such cutting.
The right to lop off branches
didn’t carry with it the right to pick and appropriate any fruit, however.
Fruit, branches and roots removed had to be returned to the neighbour.
It was thought that this law had
the potential to escalate disputes, and there was growing dissatisfaction with
the operation of the common law in neighbours’ disputes about overhanging
branches and encroaching tree roots.
A user-friendly section on the new
laws on the Land and Environment
Court’s website has the information needed to
pursue a claim, including a Tree Act information sheet. An applicant must
complete and file an application form and one or more supplementary forms
covering compensation claims, damage to property and risk of injury to people.
The whole process is very swift so
applicants and their solicitors must be ready to go when filing the
application. The court conducts preliminary Tree Act conferences monthly to try
to help parties reach agreement, specialist part-time commissioners who are
professional arborists assist the court, and from go to whoa the process takes
just over two months.
Once the court makes an order there
is no need to seek further permission from the council or the heritage council
to carry out work ordered by the court, so avoiding double handling.
Contractors …Who Is Held Liable When Someone Gets Hurt?
A customer in a convenience store
was injured when she opened a refrigerator to purchase a carton of milk. Its
door came off, hitting her on the head, and she suffered injuries to her head,
neck and hand. She went to court, arguing negligence.
There is a distinction in law
between employees, for whose conduct an employer is generally liable, and
independent contractors, where the person engaging them will generally not be.
When it first went to court, the
action against the store’s owners and operators failed, but it succeeded
against the firm which “maintained or distributed” the refrigerator. The
maintenance firm was held liable for the negligence of a mechanic it had sent
to service the refrigerator in response to a complaint that the door was not
closing properly.
However, the maintenance firm’s
solicitors appealed this decision and won. The court concluded that the
mechanic was not an employee of the firm but an independent contractor who
conducted his own business. He was engaged from time to time as a contractor to
perform maintenance work for the firm, invoicing it for the work he did and any
spare parts he used. The firm did not provide him with a uniform, tools or
equipment, or any vehicle in which to transport them.
Further, he was not presented to
the public as coming from the firm. His mechanic’s van was marked with a name
derived from the name of a company of which he was a director.
When determining whether a person
may be liable for the acts of another it is vital to determine the law which
underpins the relationship.
WILLS ….Can I Write My Own?
You can make a will yourself if you
wish; printed will forms are available from stationers. There is no requirement
that a solicitor draft a will. However, it is not in your best interests to
draft your will yourself.
There have been very many cases
where home-made wills were unclear, not properly drawn up or caused an unwanted
tax liability.
Many of these cases end up in the
courts and they can carry on for years, causing distress and perhaps hardship
to the family of the deceased.
In general, solicitors do not
charge a large fee for making a will, and since it is one of the most important
legal documents you will ever make, it is false economy to try to do it without
skilled professional advice.
