What rights does a Vendor have to reclaim goods sold after delivery where the Purchaser becomes insolvent and is unable to pay?
In a recent Supreme Court decision of Gilgandra Marketing Co-Operative Limited v Australian Commodities and Merchandise Pty Limited and Others the parties entered into Contracts for the sale of a large quantity of wheat which was supplied from the Narrabri area to the Sydney container terminal and then shipped to Bangladesh.
At the time of litigation, the wheat was at the port in Bangladesh but the purchaser had not taken physical delivery.
The seller instituted proceedings seeking among other things a right to take possession of the wheat based on a claim that the title to the goods had not passed to the Purchaser because the Purchaser had not taken actual delivery of the wheat from the carrier.
The Judge held that under the specific Contract terms, title in the wheat passed to the purchaser on the delivery of the wheat to the Sydney terminal and that was deemed to be delivery to the Buyer at that time.
The Vendor also argued that under Section 42(1)(b) and (c) of the Sale of Goods Act (NSW) that where the Purchaser becomes insolvent, the unpaid vendor has a right of stopping the goods in transit even if the title in the goods may have passed to the purchaser.
The Court agreed with this argument and the Vendor was entitled to re-take possession of the goods because they were still in the course of transit.
It is always worth seeking legal advice regarding your circumstances, you might be surprised..
At Everingham Solomons we have the experience to help you because Helping You is Our Business.
Under recent changes to the law, sub-contractors can now claim against the principal or head contactor for payments due to them from the person that contracted them to carry out the work.
Before the amendments, if you were owed money by a contractor you had to obtain a judgment in a Court or an adjudication certificate, whilst at the same time not knowing whether the contractor who owed you the money had the funds. The consequent delay in that process sometimes allowed the contractor to “do a runner”.
The changes effectively enable a sub-contractor to earmark and secure money owed to a contractor by the principal contractor. It has the potential to minimise the risk of non-payment due to a contractors insolvency or dishonesty.
The legislation effectively freezes money in the hands of the principal contractor before it is paid to the person or entity who owes the sub-contractor the money.
A sub-contractor must first lodge and serve an adjudication application on the contractor and then serve on the principal contractor a “payment withholding request”.
The principal contractors’ obligation is to withhold an amount equal to the amount specified until either the contractor pays the sub-contractor or there is an adjudication certificate in your favour.
If an adjudication certificate is served on the principal contractor, the principal contractor must pay the sub-contractor the amount withheld.
If the principal contractor does not comply with the request, it becomes liable for the debt owed to the sub-contractor.
In effect the new amendments allow a sub-contractor to use money owed to the contractor by the principal contractor as security for the sub-contractors entitlements to payment under the sub-contract.
The process is very much paper and time driven and needs to be carefully managed to ensure the documentation is correct and the time limits observed.
If you require assistance in recovering your debts, Everingham Solomons have the experience, because Helping You is Our Business.
In an earlier article I spoke about the rules that govern a corporation. These can be either a specifically designed set of rules called a “Constitution” or a set of standard rules call “Replaceable Rules” set out in the Corporations Act 2001.
The question arises which is better?
In my view using a specially designed Constitution has many advantages over being governed by the Replaceable Rules set out in the Act including:
A Constitution enables you to have several classes of shares with different voting rights, dividend rights and rights to capital upon winding up which can be useful in achieving objectives like income splitting, dividend streaming and selective control. This is not available under the Replaceable Rules.
The Constitution normally contains comprehensive rules regarding the calling and holding of meetings, passing of resolutions, whereas these provisions are not contained in the Replaceable Rules.
A Constitution can contain comprehensively drafted guidelines on the day to day management of the company as compared to the brief provisions in the Replaceable Rules.
The Replaceable Rules are not applicable to proprietary companies with the same person as the sole director and shareholder.
The Replaceable Rule provisions regarding the appointment of directors can allow one group of shareholders to take control of a directors meeting in the absence of the usual directors which can be undesirable.
The Constitution provides a comprehensive published document which is easily assessable by its members and available to the company’s bankers and other parties.
The Replaceable Rules cannot be used for special purpose companies such as superannuation trustee companies.
A company’s Constitution can be modified and amended in accordance with the wishes of its members by the calling and passing of a special resolution.
Simply put, a Constitution give it’s shareholders flexibility and greater certainty.
If you have questions regarding the operation of a corporation please contact our business law team at Everingham Solomons where Helping You is Our Business.
Companies formed after 1 July 1998 can have a simple set of rules known as “a Constitution” in place of what was previously called “Memorandum and Articles of Association”.
If a proprietary company does not adopt a Constitution, they will be automatically governed by the Replaceable Rules as outlined in the Corporations Act 2001.
Most companies have a Constitution which is drawn up prior to the registration of the company. The Constitution has the effect of a contract between:
the company and each shareholder;
the company and each director;
the company and the company’s secretary;
a shareholder and each other shareholder.
A company adopts a Constitution on registration of the company provided each person who agrees to become a shareholder agrees in writing to the terms of the Constitution.
A company may modify or repeal its Constitution, or a provision of its Constitution by passing a special resolution. A special resolution requires at least 21 days notice and the agreement of a 75% majority of votes cast.
Special purpose companies such as a superannuation trustee are required to have a Constitution designed for that company.
A corporation can however take advantage of the Replaceable Rules set out in the Corporations Act to govern its internal management, however in our view a company should have a modern constitution that takes account of changes in the law and our changing world. It is not difficult to update a company’s constitution.
It is important to note however that the Replaceable Rules do not apply where the same person is the sole director and shareholder. These companies must use a Constitution.
If you have any enquiries regarding the operation of corporations, then please contact our business law team at Everingham Solomons where Helping You is Our Business.
In a recent full Federal Court decision, a New South Wales property developer purchased a single story house, intending to develop it into units for use other than for residential accommodation. At the time of settlement the home was occupied by a tenant. The developer adopted the view that the sale was a taxable supply because it was his intention to develop the land into commercial units and consequently claimed a tax credit from the ATO.
The ATO took a different view.
The GST legislation provides that the supply of property is not subject to GST if the premises are to be used predominantly for residential accommodation. The issue was whether the property was to be used predominantly for residential accommodation.
The developer contended that the question as to whether the premises were to be used predominantly for residential accommodation is to be determined by reference to the subjective intentions of the developer. The developer asserted that it intended to develop the property at the end of the tenancy period for uses which were not predominantly for residential accommodation.
The full Federal Court dismissed the developer’s submissions and determined that the test as to whether residential premises are to be used predominantly for residential accommodation should be determined objectively by reference to the physical characteristics of the property as at the date of acquisition and that the intentions of the future owner are irrelevant.
The implications of GST must be considered in every property transaction. It is still an area which is fraught with uncertainty.
At Everingham Solomons we have the expertise to assist you with all of your property and development matters because Helping You is Our Business.
What rights does a Vendor have to reclaim goods sold after delivery where the Purchaser becomes insolvent and is unable to pay?
