Up to the late middle ages, business was pretty steady – one family owned a cow, another some cabbages, there was mutual jealousy and so they swapped. In time, money was used to facilitate more complex exchanges but, all in all, relatively few people were involved and there wasn’t a huge need for capital.
Around the 1600s though, people started exploring the world. Trade followed exploration and trade was very profitable so naturally the great families of the era liked to keep it to themselves. Notwithstanding, there were two major problems:
firstly, intercontinental explorers were thin on the ground and trade required the wealthy to give some brash upstart a great deal of money and send him to some remote corner of the globe; and
secondly, trade exploration required tonnes of capital, and given the risks, often more capital than one family was willing to contribute on their own, so there was a need for joint investment from unrelated parties.
A system was needed to record who was trustworthy and who had whose money and because everyone knew they could trust their King, the monarch assumed the right to allow these early joint stock companies to operate.
One of the earlier companies to receive a Royal Charter was the British East India Company. Regrettably, it developed a reputation for oppressing and pillaging India over a few centuries, so they changed their name to the Honourable East India Company and, obviously, that cleared things right up.
Through the colonial period, trade increased Gross Domestic Products which even royal families saw as a good thing, so seizing the opportunity to do less and get more, the regulation of companies was lowered and stock certificates came to be traded amongst progressively more common people.
The industrial revolution increased business size and technicality to unprecedented levels and the essential problems were heightened:
investors didn’t have the foggiest understanding of Carnegie’s Steel or Rockefeller’s oil, and while they didn’t like these risks, they didn’t want to forgo their profits either; and
companies had become so big, that they required continual diversified funding from a large number of investors to continue expansion and operation.
Thus emerged the concept of limited liability. To get people to invest it was necessary to create a law that separated the shareholders from the company itself, and limited their liability for the company’s risks up to the amount they had paid for the share capital.
That remains the essence of a limited liability company today and explains why a right to sue a company does not include a right to sue its directors or shareholders. Without the rule, which sometimes seems harsh, our economy could not have developed as it has.
If you have any commercial law enquiries, contact Everingham Solomons because Helping You is Our Business.
With the recent and unfortunate resurgence of retail lockdowns it’s timely to revisit landlord and tenant obligations in the retail leasing landscape.
On 13 July 2021, the Covid Retail and Other Commercial Leases (Covid 19) Regulation 2021 enacted.
In its original form, it did not require that tenants and landlords renegotiate rent as they were required to through 2020, but instead provided simply that landlords could not take ‘prescribed action’ against tenants unless they had first attempted mediation.
That situation was altered, however, on 13 August 2021 as lockdowns continued and became more widespread across the state. From that date, sections 6C & 6D were added to the regulation which, in effect re-instated the obligation of landlords to renegotiate leases under the National Code of Conduct.
The code of conduct remains unchanged from 2020 and essentially provides that the leasing parties should negotiate rental reductions proportionate to the lessee’s downturn in revenue, with half of the reduction to be effected as a waiver and the remaining half as a deferral.
The most obvious difference between the 2020 and 2021 versions of the retail leasing relief is in the qualifying criteria. Under the 2021 regulation, a tenant will only qualify as an ‘impacted lessee’ if they are in receipt of either the Microbusiness Grant, Business Grant or JobSaver payments and have an annual turnover of less than $50m.
The current regulation runs to 13 January 2022, but does not apply to leases entered into after 26 June 2021.
If you have any inquiries in respect of retail leasing, please contact Everingham Solomons because Helping You is Our Business.
The 2020 Sir Adrian Solomons Memorial Law Bursary was awarded to Riley Bomford of Calrossy Anglican School.
Riley obtained a NSW ATAR of 97.5 and band sixes in five Higher School Certificate subjects. Riley was the Calrossy boys’ school captain for 2020 and involved in charitable and community based activities too numerous to particularise in full. Riley plays rugby and cricket as well as holding refereeing and executive positions in those fields. For 2021, Riley is studying law at the University of New England whilst working full time as a court officer at the Armidale Court House.
Everingham Solomons is very proud to be associated with such a well-rounded, hard-working and community conscious individual.
If you would like more information on the Law Bursary, please contact Everingham Solomons because, Helping You is Our Business.
Riley is pictured here with Everingham Solomons Director, Clint Coles.
Libby was recently awarded the prestigious title of ‘Young Employee of the Year’ at the 2019 Tamworth Quality Business Awards.
Libby is a Tamworth local who obtained her undergraduate degrees in Arts and Law at the University of New England, Armidale.
While attending university, Libby was involved in a number of community incentives including Backtrack Youth Works, a not-for-profit organisation that assists troubled youth involved in legal proceedings. Around this time Libby was also selected to complete an internship with Magistrate Stafford at the Armidale Local Court. These two experiences particularly afforded Libby a very immediate view of the judicial system, even before she was qualified to practice in it.
In 2015 Libby returned to Tamworth, initially working as a paralegal while completing her Diploma of Legal Practice through the College of Law, Sydney.
Libby was admitted as a solicitor of the Supreme Court of NSW in 2017 and commenced employment as a solicitor with Everingham Solomons shortly thereafter.
Libby practices primarily in personal injury law, employment law and commercial litigation. On a day to day basis Libby acts for both employers and employees in workers compensation and employment disputes. Libby also takes instructions from various parties in a wide range of commercial disputes.
Additionally, Libby is also undertaking the very demanding task of studying a Masters in Business Law while working full-time.
Outside of the office, Libby is a successful netballer, has an interest in a New England cattle property and is a member of the NSW Young Farmers.
At Everingham Solomons, we are very proud to have someone as likable, smart, and dedicated as Libby on our team and think of it as only fitting that Libby be recognised as Tamworth’s Young Employee of the Year.
If Libby can be of any assistance to you, please contact Everingham Solomons because Helping You is Our Business.
Its my great pleasure to introduce Ya Zhang, who recently joined the team at Everingham Solomons with a most impressive and unique experience.
Ya completed her undergraduate qualifications in law in China. She was then admitted to practice as a lawyer in 2007.
For many years she worked from the Beijing and Shanghai offices of one of world’s largest law firms, primarily in their corporate and commercial law teams.
Ya then moved to the US where she obtained a masters degree in law from the Cornell Law School and shortly thereafter fulfilled the rigorous requirements entitling her to practice at the prestigious New York Bar.
Ya moved to Australia with her family in 2014 and is currently undertaking the Juris Doctor program through the University of Southern Queensland. Prior to coming to Tamworth, Ya worked in a specialist commercial law firm on the Gold Coast.
Ya speaks English and Mandarin and is excited by the opportunities of working in a vibrant regional centre.
Ya is a most welcome addition to the business law team at Everingham Solomons and brings to it an enormous amount of experience in very complex corporate and commercial dealings. Ya has a special interest in foreign investment, migration, corporate governance, restructuring, tax and business mergers.
If you require assistance with any commercial law enquiries, please contact Everingham Solomons because Helping You is Our Business.
A company is its own legal entity. While it doesn’t have a pulse, just like a person, a company can enter into contracts, incur debts, sue and be sued in its own name.
The directors of a company however must be living, breathing people. They are the people that control the company. Although the company is able to do things in its own name, it does so at the will of the directors.
Because a company is a separate entity from the directors that guide it, normally a company’s debts are repaid only from the company’s assets. The company’s creditors do not have access to the directors’ personal assets to repay the company’s debts. Understandably, this causes frustration for the creditors where the company is broke but its directors appear wealthy.
One of the few exceptions to this rule comes from section 588G of the Corporations Act which makes it unlawful for a director to causes a company to incur a debt knowing that the company cannot repay it.
If a director causes or allows the company to trade whilst insolvent , the creditor, the company liquidator, or ASIC can sue the director personally to have the director repay the debt either to the creditor or the company.
The proceedings against the company director are not only compensatory. They can be criminal in nature as well. ASIC has the power to prosecute directors for insolvent trading with the penalties including fines up to $220,000 and imprisonment for 5 years. The director can also be disqualified from acting as a director in the future.
A word of warning however: Insolvent trading cases are relatively rare. They are legally complex and expensive to pursue. Very few company liquidations result in insolvent trading prosecutions.
The practicality of dealing with companies is that creditors should be diligent in investigating the company’s creditworthiness and should often take written guarantees from the directors or shareholders behind the company.
If you have any commercial litigation enquiries, contact Everingham Solomons because Helping You is Our Business.
Undertaking work before being paid is a part of business. If you’ve been in business for a while you’ll know the difficulties that can arise in getting paid after the fact.
This is a situation where prevention is much better than cure. There are a number of steps that a business can take to greatly reduce the likelihood of payment problems arising.
Although it seems simple, the first is often overlooked. It is important to properly identify who your business is dealing with and to make an assessment of the creditworthiness of the entity you are contracting with. People and companies can enter into contracts, but nobody else. Identification troubles arise particularly when businesses purport to contract with business names, trusts and partnerships. The identity of companies and the people behind it can be verified by a search with ASIC.
Secondly, a business needs to have enforceable written contracts. Often these contracts can be generic documents suitable for adaptation to many different jobs, but, it is important that they clearly state the scope of the work and the payment terms. For the supply of goods, they may include retention of title clauses which provide the supplier with a form of security. The use and effect of such clauses is controlled by the Personal Property Securities Act.
When dealing with smaller companies particularly, the lines can be blurred as to whether the company owns any assets capable of satisfying its financial obligations or whether the assets are really owned by the people behind the company. In these situations it is always prudent to have the people behind the company guarantee the company’s performance of the contract. That is, if the company doesn’t pay, the people that stand behind it must.
In some cases, it may also be appropriate for a business to consider taking some form of security for the money they are to be paid. The mortgage is a form of security that most people are familiar with – if you don’t pay the bank as you promised, they take your house – but there are a great many other forms of security available to businesses. It’s possible to take security over assets other than land or to have a third party offer some form of security on behalf of the contracting party.
If you want to improve your business’s financial security, contact Everingham Solomons because Helping You is Our Business.
Everingham Solomons is proud to announce the successful bursar for 2018 is Claire Annis-Brown. Claire is an extremely well rounded student of McCarthy Catholic College having achieved excellent academic results in a range of subjects through her HSC. She is both liked and admired by her teachers and peers alike.
Claire is an accomplished sportswoman, particularly in Hockey where she has captained Tamworth representative teams for a number of years. She has also been involved in a range of local charitable endeavours over a long period of time.
Claire is enrolled to study law at the University of Newcastle in 2019 and Everingham Solomons wishes Claire the very best in that endeavour.
As the successful bursar, Claire has received a monetary award to assist with her study and the invitation for clerkship at Everingham Solomons during University breaks.
Claire’s school, McCarthy Catholic College, has also received a donation from the firm.
Everingham Solomons is committed to the growth of the region and the success of its youth and has for many years offered a bursary to Year 12 students wishing to pursue university qualifications in law.
The bursary was named in honour of one of the firm’s founders, Sir Adrian Solomons. Sir Adrian completed his secondary education at Tamworth High School before commencing university studies in law in 1940 at the University of New England and later at Sydney University. Sir Adrian returned to Tamworth after his admission as a legal practitioner in 1949 to become a respected solicitor and founding partner of Everingham Solomons.
Sir Adrian was knighted by Her Majesty Queen Elizabeth II at Buckingham Palace in 1982 for services to law and government having for many years been a member of the NSW Parliament and remained a consultant to the firm until 1989.
If you would like more information on the Law Bursary, please contact Everingham Solomons because, Helping You is Our Business.
Many readers will be members of Self-Managed Superannuation Funds (SMSFs) and will understand in general terms the limits imposed on SMSFs with respect to the types of investments they can make.
Superannuation legislation prevents s SMSFs from investments in a related party. This is called the ‘in-house asset test’. There are some notable exceptions including that a SMSF can often purchase land and buildings (including farms) upon which the SMSF’s members can conduct their business.
Another prohibition insures that SMSFs cannot use retirement savings accumulated at favourable tax rates to acquire property, for example holiday houses or fast cars, that can be used beneficially by the SMSFs members or family before retirement. This is called the ‘sole purpose test’.
‘Aussiegolfa’ is a horribly aspirational name for the trustee of a SMSF that tested the limits of the sole purpose test in the Federal Court and on appeal.
Aussiegolfa as trustee of the SMSF purchased units in a widely held managed investment scheme called DomaCom. DomaCom purchased various property including student accommodation at Burwood.
Aussiegolfa then acquired a particular class of units in DomaCom, known as the Burwood sub-fund, which were specifically associated with the Burwood accommodation. Other parties related to Aussiegolfa acquired the balance of the majority interest in the Burwood sub-fund.
DomaCom rented out the Burwood accommodation firstly to two tenants unrelated to Aussiegolfa, but then to the daughter of Aussiegolfa’s members. Importantly the daughter paid market rates of rent on the Burwood accommodation, equal to the previous two unrelated tenants.
The primary judge and the Court of Appeal both found that the sub-fund was a distinct trust controlled by Aussiegolfa and its related parties in breach of the in-house asset test.
On appeal the Full Court found that as: the property had previously been tenanted to non-related parties; market rent had been paid by the member’s daughter; and the property was managed by an unrelated entity, the sole purpose test had not been infringed. Any benefit enjoyed by the member’s daughter was merely incidental.
Although it’s unlikely to be an approach widely adopted by advisors, Aussiegolfa supports the proposition that the sole purpose test can be met where a related party has the use of SMSFs assets when market rent is paid.
If you have any commercial law enquiries, contact Everingham Solomons because Helping You is Our Business.
Everingham Solomons are still accepting applications from Tamworth, Quirindi, Gunnedah or Manilla students for the Sir Adrian Solomons Memorial Law Bursary.
The Sir Adrian Solomons Memorial Law Bursary has long provided financial assistance for the successful applicant during their first year of university as well as an opportunity to gain valuable paid work experience in our offices periodically throughout the duration of their studies.
This year, for the first time Everingham Solomons will also be making a cash donation to the school of the successful applicant to assist in maintaining the excellent educational standards that our region can offer.
All Principals of local High Schools have been contacted and advised of the details. Interested students should liaise with the Principal or Careers Advisor of their school, who will assist them in making a formal application for this Bursary. Alternatively interested students can contact Monica Brooks for an information pack.
We emphasise that the selection process does not depend solely on academic merit. We appreciate that students come from a variety of backgrounds and accordingly the selection process concentrates on the attributes of the student as a whole, rather than solely academic achievement.
The Bursary has gained widespread interest since its inception and continues to provide a valuable opportunity for current Year 12 students wishing to pursue a legal career. The Bursary is also open to students currently undertaking a gap year who will be commencing university study in 2019.
Everingham Solomons view the Bursary as a continuing commitment to young people in the communities of Tamworth, Quirindi, Manilla and Gunnedah and we encourage interested students to apply. Applications will be accepted until 28 October 2018.
Up to the late middle ages, business was pretty steady – one family owned a cow, another some cabbages, there was mutual jealousy and so they swapped. In time, money was used to facilitate more complex exchanges but, all in all, relatively few people were involved and there wasn’t a huge need for capital.
Everingham Solomons is proud to announce the successful bursar for 2018 is Claire Annis-Brown. Claire is an extremely well rounded student of McCarthy Catholic College having achieved excellent academic results in a range of subjects through her HSC. She is both liked and admired by her teachers and peers alike.