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Tuesday, 18 April 2017


What happens in a conveyance when one party needs an extension?

Times and dates in Australian contracts are very important. Missing a deadline can have serious implications. The standard REIQ contract, and most other types of contracts entered into in Australia for that matter, will contain a phrase to the effect of:

Time is of the essence”.

Those words carry greater significance than most people know. The legal effect of those words is that if, for any reason, something ought to be done by a specific date and/or time, and that thing is not done before that date/time, then the party who fails to do the thing is in breach of the contract.

We see this in conveyances most typically where settlement must occur on a certain date. As a common, practical example: if one party is late to settlement and arrives after this time then the other party may be entitled to terminate the contract.

This doesn’t just apply to the date and time for settlement but includes all dates and times in the contract such as; finance conditions, building and pest, sunset clauses, and so on.
In order to avoid breaching the contract parties will often seek an extension. An extension is a variation of the contract and therefore as a rule of law it must be in writing and signed by the parties (or their solicitors).

Neither party is entitled to an extension. Requests for extensions can, and often are, refused.

It is common for the party from whom an extension is sought to place conditions on their agreement to extend, for example, that the other party pay their additional legal costs, pay default interest, or forfeit certain rights under the contract. 

Sunday, 2 April 2017

Tenants with Pets; Discrimination, Extra Bond and Extra Rental

Can a landlord demand an additional bond from a pet-owning tenant?

We have been asked recently about seeking from tenants additional bonds under the guise of ‘pet bonds’, ‘sureties’, or ‘guarantees’.  Apparently the thinking is that these types of bonds can be taken in addition to the four weeks rent that is ordinarily taken by landlords.  Landlords must ensure that they do not charge tenants a bond over the maximum permitted under the Residential Tenancies and Rooming Accommodation Act (RTRA), regardless of how that bond is described.

A rental bond is an amount paid by the tenant for the financial protection of the lessor against the tenant breaching the agreement.[1] In determining whether an amount is a rental bond, it does not matter how it is described in the agreement or arrangement.[2]

The RTRA[3] specifies the maximum rental that is payable for securing the tenant’s obligation under the lease agreement and that maximum is 4 weeks rent.[4]

Therefore, if a landlord asks a tenant for a ‘pet bond’ then the amount will be considered a part of the total bond payable, which must not exceed the statutory maximum of 4 weeks rent.

In Queensland the penalty for landlords asking for or receiving greater than the maximum rental is $2,438.

Can a landlord charge a tenant additional rent from a pet-owning tenant?

Imposing special tenancy terms and conditions is not discrimination. Landlords can ban pets from the premises in the rental agreement. Alternatively a landlord can insert special terms that govern whether the animal must be kept outside or inside. Also, a landlord can seek damages from a tenant whose pet causes loss or damage to the landlord’s property.  Rental can be increased regarding pets.

In Queensland the anti-discrimination legislation makes it unlawful to discriminate against someone on several bases such as gender, race, age, religion, and so on. However it is not unlawful to discriminate on the basis of pet ownership. This means that landlords can charge pet-owning tenants more rent than tenants without pets.

[1] Residential Tenancies and Rooming Accommodation Act 2008 (Qld), s 111(1).
[2] As above, s 111(3).
[3] Residential Tenancies and Rooming Accommodation Act 2008 (Qld).
[4] As above, s112(1)(b).

Thursday, 16 March 2017

Liability of Company Directors

Director Guarantees and Company Administration

When clients come to us and ask us to set up their new business, the first step is to advise on which type of business structure best suits their needs. One option we advise is incorporating a company to run their business. The benefit of running a business through a company is that companies have separate legal identity, much like individuals. The result of having separate legal identity is that the company and it’s obligations, liabilities, and debts are separate from the people who own and/or run the company (shareholders and directors). This forms a layer of protection for the directors, who run the company, from having to meet the company’s debts out of their own pocket.

Banks and other lenders will rarely lend money to a new company without some sort of guarantee that they’ll be paid in the event of default. The way the banks minimise their risk of not being repaid by the company is to require the directors of the company to personally guarantee the company’s debts. This is very common for new companies which don’t have enough credit history or income to acquire loans and overdrafts.

In the event a company is struggling or verging on insolvency, the directors may place the company into external administration. This involves a third party Administrator taking control of the company. While under external administration, directors are protected from having a lender (or anyone else) call in their guarantees.[1]

The amnesty only applies if the creditor (the bank, company or person who gets the benefit of the guarantee) hasn’t taken action to enforce the guarantee before the director places the company into external administration.[2]

Guarantees are an example of how the Corporations Law can leave directors personally vulnerable, despite the directors usually incorporating a company for their own protection. If you are unsure of your rights or obligations as a director or shareholder, or you need assistance protecting yourself from claims against you personally, make an appointment with one of our experts.

[1] Section 440J Corporations Act 2001 (Cth)
[2] Mizuho Bank Ltd v Mark Anthony Ackroyd [2016] NSWSC 1148.

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