Air Conditioning in Rented Premises

In our climate, effective air conditioning is usually very important to any lease of retail or office space. A recent Victorian Civil & Administrative Tribunal case highlighted the legal importance of properly documenting and then complying with air conditioning arrangements.

In this case the tenant operated a Pilates studio from a retail premises in Melbourne. When the lease commenced the parties agreed to insert a special condition to the effect that –

  • the landlord would install new air conditioning;
  • thereafter it would be the tenant’s responsibility to maintain the air conditioning; but
  • the landlord remained responsible for any capital repair costs.
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Landlord and Tenant – What’s the best form of security? – Ken Sorrenson

KJSbwI’m often asked by Landlords what’s the best form of security to take from a tenant?

The usual forms of security are one or more of the following: –

  • Personal guarantee from directors or shareholders of a corporate tenant,
  • Cash bond; or
  • Bank guarantee

I generally recommend a bank guarantee.

A personal guarantee requires either a voluntary payment by the guarantors or for a landlord to sue the guarantors. Frequently, a personal guarantee proves to be ineffective because if the tenant can’t pay the rent there’s a good chance that the guarantor’s financial position may not be much better.

A cash bond involves the tenant actually paying an agreed amount of money as security for payment of the rent.… Read More

Debtor Control – A Key to Business Survival

MJEvery business relies on cash flow to survive. It matters not whether you have the best prices, products and/or customer service: if you don’t learn how to properly maintain cash flow, your business will eventually fail. By taking a proactive approach to debtor control you can improve your business’s cash flow and enhance its profitability.

Preventing Bad Debts

Ensure you manage the risk of bad debts by implementing a clear payment and credit policy. Consider:

  1. Performing a credit check on potential debtors:-
    1. Consider having them sign a credit application form or credit agreement
    2. Conduct a pre-credit data check or/and ask for trade references
  2. Setting clear payment terms:-
    1. e.g.
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Do Directors Duties Continue After Retirement? – Ken Sorrenson

KJSbwBusiness relationships are like marriages. Some stand the test of time, others do not.

A company in which two or more unrelated parties are directors and shareholders is a very common structure. The parties involved usually know each other well and learn to accommodate each other’s idiosyncrasies for the good of the ongoing business.  That frequently changes when business operators age or die bringing new people into the business.

The recent case of Advanced Fuels Technology v Blythe arose in that factual situation.

The company Advanced Fuel Technology (AFT) had operated for many years under the equal control and management of Mr Blythe and Mr Thompson.… Read More

Do directors need an indemnity from the corporation they represent? – Terry Robinson

TLRbwWhilst a company structure generally protects directors from being personally liable to pay the company’s debts, this is not always the case. Further Directors may be fined personally by ASIC, or may have to pay the companies taxation liabilities such as PAYG or employee superannuation payments.

So, yes it is a good idea to have what is called a Deed of Access and Indemnity.

The deed is a contract between each director and the Company.

It gives the Directors access to the company’s records, payment of legal costs, and requires the company to affect directors and officers insurance, both during the director’s appointment and for a period of years thereafter.… Read More

TO AIRBNB OR NOT TO AIRBNB – Ken Sorrenson

KJSbwAirbnb and other similar types of short-term accommodation are now very widely used in NSW.

This has been controversial particularly in strata title developments. The perception of “permanent” strata residents has been that short term occupancies are disruptive and sometimes actually damaging to strata property. This has led many strata developments to pass bylaws intended to prohibit short-term lettings which in many cases have been ignored by owners seeking to maximise rental returns from their properties. The issue has become whether strata developments can legally restrict short-term letting?

The NSW Department of Fair Trading view is/was that-

“Strata laws prevent an owner’s corporation restricting an owner from letting their lot, including short-term letting.… Read More

The Christmas Break – George Hoddle

GRHThe heat has arrived in the North West and the countdown to Christmas is here. This is an opportunity for employers to review how their business deals with one of the biggest liabilities that sits on their books. It is of course annual leave.

The January period in the region for many industries and sectors is often the quietest month which in turn may or may not require a fully staffed workplace.

Under the National Employment Standards (NES) workers in full time employment are guaranteed a minimum four weeks annual leave per year or for some shift workers 5 weeks. If those minimum weeks of annual leave are not taken during the calendar year the residual leave not taken accumulates.… Read More

A historical look at the Company – Clint Coles

CCUp to the late middle ages, business was pretty steady. One family owned a cow, another owned a goat, there was mutual jealousy and so they were swapped. In time, money was used to facilitate more complex exchanges.  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.

However, there were two essential problems:

  1. firstly, intercontinental explorers were thin on the ground and trade required the wealthy to give some bold upstart a great deal of money and send him to some remote corner of the world; and
  2. secondly, trade exploration required a lot of capital and given the risks, often more than one family was willing to contribute on their own, so there was a need for joint investment from unrelated parties.
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“Safe Harbour” for Company Directors. – Ken Sorrenson

KJSbwCompany directors may be personally liable for a debt incurred by the company if –

  • They are directors at the time the company incurs the debt;
  • The company is insolvent at the time or becomes insolvent by incurring that debt; and
  • At that time, there are reasonable grounds for suspecting that the company is insolvent or would become insolvent.

Essentially, these are creditor protection provisions which actually don’t work all that well in practical terms. From the creditor’s perspective, successful action against directors is very rare and from the company’s perspective the provisions are a disincentive to “trade on” with a view to business recovery due to the potential risks to directors of doing that.… Read More

Surcharge Land Tax & Stamp Duty – Ken Sorrenson

KJSbwLast year, the New South Wales Government introduced surcharge land tax and stamp duty upon land purchases and land holdings by foreign persons. The surcharges are payable in addition to land tax and stamp duty normally payable and they are significant –

  • The land tax surcharge is 0.75% for the 2017 year increasing to 2% for 2018 onwards; and
  • The stamp duty surcharge from 1 July 2017 is a massive 8%.

Both surcharges relate to residential land only and were intended to put a brake on the level of foreign investment which was seen as driving escalating home prices particularly in the Sydney market.… Read More