by Mark Johnson | Feb 23, 2013 | Business
In April 2011, the founder of a substantial property development group was convicted of dishonestly using his position as a director of companies in the group to obtain an advantage for himself to the tune of about $2.8million. He was sentenced to a term of imprisonment of three and a half years. Last year, the NSW Court of Criminal Appeal affirmed the conviction.
The director in question used his position as a director to sign some cheques from one company in the group to another, which then paid him personally an amount, which was wrongly characterized in the books as “commission and management fee” for introducing two properties to the group that were available for acquisition. The truth of the matter was that the director had made no such introduction. The truth was that the payments were distributions to the director of unrealised capital profits thought by the director to have accrued but not the subject of any formal valuation or accounting entries.
At the time that the payments were made, the group was profitable, the companies were solvent, and the payments had the approval of the sole shareholder (the director) and had been disclosed to the chief financial officer. Moreover, the payments did not directly disadvantage any third party and the director had obtained advice from Price Waterhouse Coopers in relation to the payments and how they should be recorded in the books of the company.
The director said that he had been engaged on a full time basis with the group for over two years. He had made an initial investment of about $750,000 and had raised a considerable amount of money. He had not received any return nor paid himself any wages. He said that the payments, which were made to him were “fair” in those circumstances.
None of that was an answer to the prosecution’s case. All that was important was that the manner of payment to a related party of the group’s funds was not truthfully recorded in the group’s books of account.
So, it is of critical importance that directors of companies discharge their duties as directors with complete honesty. If you need help with matters of corporate governance, the commercial law team at Everingham Solomons would be happy to help because Helping You is Our Business.
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by Mark Johnson | Feb 16, 2013 | Criminal
The law is that a person who causes the death of another by an illegal and dangerous act or by criminal negligence is guilty of manslaughter.
On 9 February 2007, David Hay died in Belmore, Sydney after taking methadone supplied to him by a woman called Natalie Burns. She or her husband or both may have helped him inject. A few hours before, Mr Hay had taken olanzapine and cannabis. Methadone is very dangerous when taken with other drugs. Mr Hay showed signs of an adverse reaction to the methadone shortly after taking it and Mrs Burns, rather than helping him in any way, told her husband to throw him out of her flat. Her husband told Mr Hay that it was time to go. Mr Hay, although not at all well, got up and left. He was found dead in a nearby toilet block the next day.
Mrs Burns was charged with, and stood her trial for manslaughter in the District Court. She was convicted. She appealed. The NSW Court of Criminal Appeal upheld her conviction. Right result? Wrong. In September last year, the High Court quashed the conviction. The Court found that the act of supplying the methadone, whilst illegal, was not dangerous. The risk of injury arose when the drug was consumed. The cause of death was the consumption of the drug not the supply. Further, the Court said that a failure to help where help would have saved the life of another can be manslaughter but only within confined categories requiring particular kinds of relationship. The relationship of drug dealer and customer is not one of those relationships.
Mrs Burns walked free although His Honour Justice Heydon, in the minority on the point, said that she should be sent for a new trial to determine whether she helped Mr Hay inject, which, in His Honour’s opinion, might constitute the dangerous act causing death.
What a piece of work is the needle? Drug addiction rendered Mrs Burns’ soul as dead as Hamlet’s father and her heart as empty as a scarecrow’s pockets.
If you have a case for the High Court or any other Court, the litigation team at Everingham Solomons can help you because Helping You is Our Business.
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by Mark Johnson | Dec 8, 2012 | Employment
The Australian managing Director of Rio Tinto, David Peever says that the Fair Work Act is the elephant in the room when it comes to the productivity debate in Australia.
Heather Ridout, who used to be the head of the Australian Industry Group and is now on the Reseve Bank board said on a recent Q & A programme that the “Fair Work Act gives 120 new rights to unions and nothing to employers”. On the same programme, Judith Sloan, an economist and commentator suggested that it was ironic that the Act assumes that the right of unions is paramount when it comes to work place contracts but only 13% of the private work sector belong to unions.
Calls by industry leaders for a more flexible, productive and fair work place relations system are becoming more strident.
Perhaps the Government has heard the calls. There are amendments proposed to the Fair Work Act involving an overhaul of the costs provisions. Under the proposed changes, Fair Work Australia will have new powers to make cost orders against Applicants who bring “unreasonable claims”.
At the moment, it is most unlikely that, if an applicant fails in Fair Work Australia, he or she will have to pay the employer’s costs. This is because the employer must make application for costs swiftly and, more importantly, must demonstrate that the applicant’s proceedings were manifestly untenable or brought vexatiously.
It is understood that, under the costs regime proposed, an employer will be able to recover its costs if the applicant’s claim is unreasonable. This is still not the way things work in other litigation concerning breach of contract or statutory obligation, where costs follow the event unless the circumstances are exceptional.
The commentators suggest that the proposed changes to the costs regime will provide some relief for small business. It is hoped that it will enable litigation in Fair Work Australia to be conducted more efficiently and drive early resolution.
Costs aside, the best way for a small business to protect itself from unmeritorious claims is to implement fair and compliant dismissal processes. The employment team at Everingham Solomons can help with dismissal issues because at Everingham Solomons Helping You is Our Business.
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by Mark Johnson | Nov 10, 2012 | Property
No, not the winner of the 1985 Melbourne Cup but invasions of a person’s interest in the beneficial use and enjoyment of his land.
Nuisance is a branch of the law, which defines obligations of neighbourliness.
The nuisances with which farmers are probably most familiar are fire and noxious weeds.
The risk of fire at harvest time is well known to farmers. A fire that gets away during a harvest on wheat country can destroy hundreds of acres of crops. Losses can run to the hundreds of thousands of dollars. If the owner of the land where the fire started had not properly assessed the risk of the fire and taken reasonable steps to protect against it then he will be liable for the loss of his neighbour’s crops. If those crops are insured against fire then it will be a tussle between insurance companies. If not, then it can get very messy.
St John’s Wort is a dreadful weed. Farmers have a statutory obligation to suppress and destroy it on a continual basis. A farmer who does not take reasonable steps to protect his neighbour from the spread of the weed will be liable for the harm that it causes. Such harm includes the cost incurred by the neighbour to check the spread of the weed on to his property, being a cost that he would not be put to but for the nuisance emanating from his neighbour. On large holdings with common boundaries of several kilometres, that cost can amount to tens of thousands of dollars per year. There is an effect on land value as well.
Farmers, more so than any other group, because of the challenges they face, deal with their neighbours in a reasonable and fair-minded way but there are some rogues about, of whom it might be said: “what a nuisance” but are likely referred to in far more colourful language. The litigation team at Everingham Solomons can help you with nuisance questions because Helping You is Our Business.
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by Mark Johnson | Aug 18, 2012 | Wills & Estates
There’s usually a relative, sometimes one who is hurt and sad because he or she has been left out of the Will or otherwise treated unfairly.
The hurt can be undone. Under the Succession Act 2006 (NSW), the Supreme Court can rewrite an unfair Will on the application of wives, husbands, de factos, children, former wives or husbands, dependents, grandchildren or members of the household of, or those living in a close personal relationship with the deceased.
An applicant for relief must show a need by reference to his or her age, health, financial situation, earning capacity and the like. An applicant must be “deserving” that is to say to have had such a relationship with the deceased that it might be expected that he or she would benefit under the Will. The applicant must show that the relief sought is reasonable given the size of the estate, and weighing the claims of the applicant against the claims of other people for whom the deceased person was under a moral obligation to make provision.
There is a time limit on applications. The proceedings must be commenced not later than 12 months after the date of death. Time can be extended on sufficient cause being shown.
A Will may be unfair because the deceased did not have sufficient mental capacity at the time that he or she made it. In this case, the Court can strike down the Will, which will revive the most recent former Will made by the deceased at a time that he or she had sufficient capacity The test of capacity centres on the deceased’s understanding of what constitutes his or her estate and who is entitled to benefit from such estate and why.
A Will may be unfair because it was made under undue influence. There are all sorts of unseemly relationships, which involve undue influence by one person over another. The Court has power to strike down a Will which is the product of undue influence.
Where there’s a Will there’s usually also a lawyer. At Everingham Solomons we have lawyers able to give expert advice in relation to claims arising out of unfair Wills and your first consultation with us will be free and absolutely confidential because Helping You is Our Business.
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by Mark Johnson | Jul 7, 2012 | Business
In a judgment handed down on 20 April 2012 in Roadshow Films v iiNet, the High Court unanimously found that iiNet did not breach copyright when its customers carried out illegal downloading via their iiNet accounts because, while iiNet may have known of the illegal downloading, it did not “authorize” that conduct by its customers. Well, of course it didn’t and the Court, which, with great respect, is made up of eminently sensible men and women with better than room temperature IQs was not fooled for a moment by the tortured arguments advanced by the copyright owners.
So, the copyright owners continue in a terrible flap about illegal downloading. That’s perfectly understandable. Copyright is a monopoly and monopoly is the keystone of capitalism. And, work which is the product of great creative effort should not be able to be pirated as easily as it is.
The difficulty for the copyright owners is that dissemination of intellectual property in the digital world is out of control and the copyright owners are hysterical and very heavy handed about the whole thing. They continue to lobby the Australian Government. They propose one of two models. First, the Chinese model, by which websites providing information on torrent files will be completely blocked in Australia in much the same way as China blocks Facebook and Google searches of “Tiananmen Square massacre”. The other is the Stasi model under which ISPs must inform on their pirate customers as every second citizen of the old East Germany informed to Stasi on his or her neighbour.
The Government seems reluctant to do anything much in the way of legislation in response to the onslaught of lobbying from the copyright owners. It says that it wants an “industry led solution”, which is Government speak for “don’t ask us; it is all too complicated”.
The copyright owners are not making much headway in Australia nor in the USA, where the proposed SOPA legislation would have put illegal downloader’s in goal for anything up to five years. This caused a great backlash. Wikipedia went down for 24 hours and politicians and journalists starting talking about “the vibe of the thing”, gibberish really but SOPA has stalled.
Sweden is a place where one can get into terrible trouble for illegal downloading but that’s not surprising given that that country’s rape laws are as difficult as putting together a piece of IKEA furniture; something Julian Assange found recently, to his absolute horror.
If you need advice on copyright or other intellectual property, we can help because Helping You is Our Business.
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by Mark Johnson | Jun 9, 2012 | Business
The starting point is that restraint of trade clauses are prima facie invalid because they infringe public policy, which holds, quite understandably, that a person should not be able to stand in the way of another person earning a living.
However, under the Restraints of Trade Act 1976 (NSW), a restraint clause will not be invalid if it was reasonable in all the circumstances at the time that it was made.
When deciding the validity of a restraint clause, the Court will ask whether the person seeking to impose the restraint (usually an employer or the incoming purchaser of a business) has a legitimate interest to protect and whether the restraint amounts to reasonable protection of that interest.
Legitimate interests include confidential information, client lists, secret operating procedures, formulae and the like. Legitimate interests are valuable. They can include an employer’s connection with his clients.
In a recent Victorian case, an employee had been seconded to one of his employer’s key clients. After a period, he resigned and took up a job with the client. The employer commenced proceedings to enforce the restraint clause, which prevented the employee from providing services to any former client for a period of 12 months after leaving his employment. The employer argued that its legitimate interest was the investment in their employee’s training and that the purpose of the restraint clause was to ensure that its employees did not use secondments as an opportunity to gain alternative employment. The Court found that the employer’s customer connection was capable of protection but such protection was only afforded where employees had achieved a position such that they had the practical ability to control their employer’s customers as if those customers were their own. The Court did not consider that the seconded employee fell into this category.
In determining whether restraint clauses are reasonable, the Court will consider various matters including the negotiation process, the bargaining position of the parties, the nature of the employer’s business, whether consideration was given for the restraint and the duration of the restraint and geographical area.
Legal proceedings should never be commenced without a great deal of analysis and consideration. In the case of restraint clauses, analysis of the legitimacy of the interest being protected and the reasonableness of the restraint will be critical. The employment team at Everingham Solomons can help with that analysis because Helping You is Our Business.
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by Mark Johnson | Mar 3, 2012 | Property
The strictness of the law relating to the sale of real estate in NSW can have devastating consequences for a successful purchaser at an auction.
It is possible for a purchaser to be the highest bidder after the reserve has been reached or the auctioneer announces that the property is on the market, have it knocked down to him or her and then end up with nothing. It is terrible because the purchaser will have gone to great trouble and spent money on preparing for the auction but, more than this, it is terrible because the joy of being the winning bidder is snatched away so quickly. At one moment, the purchaser is as happy as a butterfly and the next, as sad as a flute.
It happens when, after the auction, the vendor refuses to sign the contract for sale and forbids the auctioneer from signing it on his or her behalf.
It does not happen often but when it happens, it is because the effect of a particular section of the Conveyancing Act 1919 is that no legal proceedings can be brought to enforce the sale of land without a memorandum or note of the contract for such sale signed by the party against whom enforcement action is to be taken.
The signed writing does not have to be the contract for sale on display at the auction. Courts have accepted letters to third parties, receipts, drafts and correspondence (even correspondence denying liability under the contract) to be sufficient. The writing can comprise several different documents, provided there is sufficient connection between them and they are signed. Even an email can be said to be signed.
This is all very well but arguing in court about whether there is sufficient writing to enforce a contract for sale of land is time consuming, expensive and uncertain. Better that the problem with auctions be fixed by legislation. It is a State matter, a job for Premier Barry O’Farrell’s Government.
In the meantime, if you are selling or leasing real estate of any kind, the property group at Everingham Solomons will be happy to assist you because Helping You is Our Business.
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by Mark Johnson | Jan 7, 2012 | Criminal
There is a great deal of illegal downloading of copyright material via the internet worldwide. It has been going on for years. The copyright owners are in a terrific flap about it. They call it “theft”. There will be a great deal less of it, in Australia at least, if the copyright owners are successful in their appeal to the High Court in the case of Roadshow Films Pty Limited v iiNet Limited.
Films and other works the subject of copyright can be downloaded through unauthorised file sharing on the BIT Torrent system, the operation of which is pretty technical but the effect of which is that anyone with a computer and access to the internet can download and enjoy all manner of copyright protected works without paying a cent other than the subscription fee to the internet service provider.
Copyright owners are extremely unhappy about illegal downloading. This is understandable. Hollywood production houses pay millions of dollars for the rights to eg the latest Harry Potter and millions more to turn those rights into a film and bring it to the screen only to lose what countless 14 year olds would have paid to watch the movie at the cinema if they had not downloaded it illegally and watched it at home on their parents’ flat screen, possibly with surround sound, while eating popcorn and a packet of Jaffas.
In Roadshow Films, the Australian Federation Against Copyright Theft argued that iiNet was liable for the copyright infringement by its customers when they illegally downloaded films because iiNet had authorised the infringement. The complicated fortress of copyright and related legislation prohibits authorising infringement. iiNet knew its services were being used for downloading and did nothing to stop it by terminating accounts that had been identified to it. iiNet argued that it did not give express authority or invite its customers to do acts in breach of copyright. iiNet’s argument has been successful so far but the case has gone on appeal from the full bench of the Federal Court to the High Court. Plainly, there is a lot of money at stake for the copyright owners.
If the High Court makes internet service providers liable for illegal downloading, it will come to a crashing halt. If not, rumour has it that pirate hunters for the copyright owners can use the aptly named “bot crawler” to sneak through the back doors of illegal downloaders’ computers to catch them at it. Some may think it unacceptable to commit a crime to detect a crime. Watch this space because Helping You is Our Business.
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by Mark Johnson | Oct 22, 2011 | Family
There is a lot of it going around and it can have a lethal affect on one’s financial health.
The Australian Law Reform Commission defined “sexual transmitted debt” as:
“the transfer of responsibility for a debt incurred by a party to his/her partner in circumstances in which the fact of the relationship, as distinct from an appreciation of the reality of the responsibility of the debt, is the predominant factor in the partner accepting liability”.
Probably, the most common way of catching sexually transmitted debt is by signing a guarantee at the request of one’s partner without thinking about it or taking advice. Standard form finance company (including trade financiers) and bank guarantees are usually unlimited and contain an “all monies” clause which makes the guarantor liable for ever dollar that the lender advances to the partner/customer. The guarantor is also liable for all interest and charges and the lender’s legal costs on a full indemnity basis.
As well as containing an “all monies” clause, standard form guarantees usually contain a clause by which the guarantor charges all of his or her property, including real estate, with payment of the debt of the borrower/partner. This amounts to an agreement to grant a mortgage over the guarantor’s real estate, which gives the lender the right, after taking some legal steps, to sell the family home or any other real property owned by the guarantor.
Not only that, standard form guarantees usually provide that the lender can take action against the guarantor without first bothering to try to recover the debt from the defaulting borrower/partner
The law provides considerable protection to the vulnerable from the consequences of sexually transmitted debt. That protection comes from the principles of equity, including a special wives’ equity, the Contracts Review Act, the Competition and Consumer Act and the Australian Securities and Investments Commission Act. However, court cases are extremely expensive, time consuming and stressful. Court cases are best left to those whom for such cases are just business e.g. banks, finance companies, insurance companies and the like. They are certainly not for guarantors fighting a rear guard action trying to save their home.
So, guarantees are extremely dangerous to one’s financial health. One’s first response to a request for a signature on a guarantee should be: “Sweetie, if you want a guarantee, buy a toaster.” The second response should be to take legal and financial advice.
At Everingham Solomons we have the experience and expertise to assist you because Helping You is Our Business.
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