Effect of Willmott Growers Group v Willmott Forests
In Willmott Growers Group v Willmott Forests (“the Willmott case”) the High Court has confirmed that a liquidator can disclaim a lease if a landlord company is liquidated.
Facts of the case
Willmott Group (“Willmott”) leased land to a tenant for a period of 25 years.
Willmott subsequently became insolvent and was wound up.
Willmott’s liquidators disclaimed the lease in accordance with the Corporations Act (“the Act”).
Result
The High Court found that the liquidator was entitled to disclaim the lease.
The tenant lost its rights in regards to the land and was left only with a claim as an unsecured creditor in the liquidation.
Effect of Willmott on tenants
Tenants may be disadvantaged if their landlord enters into liquidation;
Banks may be reluctant to hold leases as security due to the potential for leases to be disclaimed, resulting in it being more difficult for a tenant to obtain finance;
Tenants may lose the benefit of certain assets brought onto leased land if such assets cannot be relocated when a lease comes to an abrupt end (i.e. the Willmott case involved the planting of trees on the leased land which the tenant lost the benefit of when the lease was disclaimed).
Possible Solutions for tenants
Unfortunately, there is nothing tenants can do to prevent their landlord from being wound up and, should this occur, a liquidator can disclaim a lease. With that said, it may be beneficial to creditors for a liquidator to keep a tenant in place.
Some possible safeguards available to tenants include:-
Negotiating a condition of the lease by which the landlord grants a registerable mortgage over the land to the tenant to secure payment of damages if the lease is ever disclaimed. This would ensure that tenants have priority as secured creditors in a liquidation scenario.
Including a clause in the lease to the effect that title in any property, fixtures or fittings bought on to the land by the tenant will not pass until the landlord has paid the tenant the market value for such property, fixtures or fittings. Registration of a security interest on the Personal Property Securities Register may also be necessary.
Obtaining personal guarantees from the director/s of the landlord company.
It is worth noting that section 568B(3) of the Act allows the Court to set aside a disclaimer of lease “if satisfied that the disclaimer would cause, to persons who have… interests in the property, prejudice that is grossly out of proportion to the prejudice that setting aside the disclaimer would cause to the company’s creditors.” This section was not argued in the Willmott case but is an avenue available to be utilised by tenants in future cases.
For assistance in relation to your leasing issue, please contact the experienced team at Everingham Solomons, because Helping You Is Our Business.
It is a well-known principle in New South Wales conveyancing law that there is no binding agreement for the sale & purchase of real estate until formal written contracts are exchanged.
A recent case concerning sale of farmland between neighbours sought to challenge this principle.
The case involved the sale of approximately 200 acres of grazing land by Ms N, to her neighbour, Mr H. Ms N offered the land to Mr H in a letter by way of a private sale without involving a real estate agent.
Mr H wrote to Ms N by email indicating he was interested in purchasing the 200 acres adjoining his property. Emails back and forth between the parties saw the price and other details of the sale negotiated.
Ms N then instructed her solicitor to prepare a formal Contract for the Sale of Land to formalise the arrangement. Mr H retained a solicitor to review the Contract on his behalf.
After undertaking the necessary pre-purchase enquiries in relation to the rural land, Mr H instructed his solicitor to send the Contract to Ms N’s solicitor with a cheque for the deposit to initiate exchange of contracts.
Unbeknownst to Mr H, Ms N had been speaking to another party in relation to selling the whole of her property (including the 200 acres adjoining Mr H’s farm). At the “eleventh hour” Ms N decided to sell the whole farm to the other party and instructed her solicitor to return Mr H’s deposit cheque.
Mr H brought a case against Ms N claiming that a binding contract for the purchase of the 200 acres had been formed through the email communications with Ms N.
The court considered the emails and other correspondence between the parties, and ultimately decided that the wording in the emails & letters had not intended to bind the parties and both Ms N & Mr H were working towards a formal exchange of Contracts to “seal the deal”.
This case serves as a good reminder that vendors and purchasers are unlikely to be held to “handshake deal” when it comes to the sale & purchase of real estate – it is essential that formal Contracts for the Sale of Land are exchanged to lock all parties into the agreement.
To ensure you are not caught out in a conveyancing transaction, contact the experienced property team at Everingham Solomons where Helping You is Our Business.
Click here for more information on Rebecca Greenland.
Buying off the plan involves an element of mystery and a high degree of uncertainty particularly for the unwary. Buying off the plan differs from when you buy an existing property. The main difference is that buying off the plan requires you to imagine the finished product, a building that is yet to be constructed and often exists only in the form of plans and artists impressions, whereas buying an existing property is much more certain insofar as what you see and inspect is what you get.
Just as each development differs so to does the contract for an off the plan purchase. Normally the contract for sale of land will contain a draft strata plan, a copy of any by-laws, a copy of preliminary plans submitted to Council, the type and standard of finishes to be used in the building and inclusions.
All off the plan contracts afford the developer varying degrees of flexibility to change the property. Part of this can be explained by the developer wanting to retain some discretion but more importantly the developer needs to retain flexibility to make changes when they are required for example where council or engineering requirements dictate a change must be made to the development. This is usually balanced by provision in the contract for a purchaser to be able to pull out if the change significantly affects the property to the detriment of the purchaser.
Another feature of the off the plan purchase is a delayed settlement date. Where an existing property can be completed within a 6 week period, an off the plan purchase can take many months if not years to complete. Normally contracts will contain a ‘sunset clause’ that allows a developer to extend beyond that date to accommodate unforeseen events. However it is important to document in the contract some final date after which the purchaser knows that if the plan is not registered by that date, the purchaser can pull out and be refunded their deposit.
Buying off the plan can be advantageous for both buyers and sellers. It is essential that legal advice is obtained before an off the plan purchase contract is signed because the contract can contain pitfalls for the unwary. At Everingham Solomons we have the expertise and experience to assist you in all aspects of buying and selling because Helping You is Our Business.
Click here for more information on Lesley McDonnell
Both companies and individuals need to be prepared for the end of the PPSA Transitional Period which is rapidly approaching.
What is the PPSA?
The Personal Property Security Act (PPSA) came into effect on 30 January 2012, aiming to regulate interests in ‘personal property’. That is, property other than real estate.
Who does the PPSA Apply to?
Essentially, the PPSA may apply to any of the following parties:-
sellers or buyers of personal property;
lessors or lessees of personal property;
persons supplying goods on retention of title terms (e.g. hire arrangements); or
financiers taking security over personal property.
What is the PPSA Transitional Period?
When the PPSA came into effect, any person with an existing security interest in personal property was granted a two year transitional period in which to register his or her interest on the newly established Personal Property Security Register (PPSR).
During the two year transitional period, the interests of secured parties were deemed to be “temporarily perfected”. Essentially, this meant that their interest took priority over competing interests in the same property.
What do I need to do?
From 31 January 2014 onwards, any unregistered security interest will loose its status as “perfected” and secured parties will be at risk of loosing their priority and ultimately, the title to their property.
Now is the time to perfect your security interest and protect your personal property. Depending on the nature of your property, perfection can be achieved by either registration, possession, or (when applicable), control.
For advice on how to perfect your security interest and for assistance in registering on the PPSR, please contact the experienced team at Everingham Solomons, because Helping You is Our Business.
Click here for more information on Abbey Huckstep.
The Home Building Act 1989 gives protection to home owners after their houses are built.
Home building refers to anything from building a new home down to renovation of a kitchen or installation of a pool.
Section 18B of the Home Building Act incorporates into legislation warranties for all residential work. The builder warrants that the work will be carried out in a proper and workmanlike manner, all materials will be good and suitable to purpose, building work will comply with any laws, the work will be done with due diligence, and must be fit for occupation.
If these warranties are not complied with then the builder can be sued for breach of the contract.
The first point of call, for those with complaints, is the Consumer Trader & Tendency Tribunal. The Consumer Trader & Tenancy Tribunal can hear and determine matters up to the value of $500,000.
Disputes lodged with the Consumer Trader & Tenancy Tribunal generally concern building works not carried out as agreed, building work that is defective, dispute about insurance or non-payment.
Applications must be lodged within three years or within six years for structural defects.
If you should have any issues in respect to home building disputes, please ensure that you contact us at Everingham Solomons because Helping You is Our Business.
As we usher in the new year, those of us involved in property and conveyancing transactions are awaiting roll out of electronic conveyancing in 2014.
E-Conveyancing, as it is to be known, will involve electronic settlement of sales and purchases in an online workspace.
The early stages of a sale or purchase will remain the same, with solicitors preparing the contract for sale of land and submitting same to the legal representative of the purchaser. Once the contract has been reviewed, and the purchaser has obtained all necessary pre-purchase inspections (such as pest & building reports, survey and finance approval), the contracts will be exchanged and both parties locked into the deal.
From there, the paper process of arranging settlement will be done away with for most standard conveyancing transactions. At this stage, not all real estate will fall under the new system, however that is the goal. E-Conveyancing will also bring a standardised system into play across most Australian states and territories, which will make moving or buying/selling interstate a much simpler process.
Essentially, E-Conveyancing will mean faster lodgement of title deeds with NSW Land & Property Information which will ensure less room for human error (including postal delays). The days of drawing bank cheques for settlement will soon be a thing of the past, as financiers will liaise with vendor & purchaser (together with their respective solicitors) to book settlement of the transaction and funds will be provided electronically. For vendors, this means direct deposit of funds following settlement, and for purchasers no more waiting in line at the bank for cheques to be drawn!
Obviously time will tell as to whether the time and cost saving benefits of E-Conveyancing will be realised, however we look forward to coming online with the new system in mid-late 2014 because Helping You is Our Business.
Click here for more information on Rebecca Greenland.
It is very common in society for two or more people to buy a property jointly.
When it comes to real property, that is land and buildings, there are essentially two types of co-ownership.
The first is joint tenancy. The other common form of co-ownership is called in tenants in common.
Joint tenants are often married. Tenants in common are often business partners.
Regardless of the manner in which property is owned, often it becomes the case that one of the co-owners no longer wishes to hold on to the property.
Problems arise when people cannot agree how to end to their joint ownership in assets, like land, which is not divisible.
The relief that is available to a joint owner in these circumstances comes from section 66G of the Conveyancing Act. That Act gives the court power to order the sale of the land and to bring about the end of the joint ownership.
In the usual course, the court will appoint a trustee to hold the property for sale and to forward the proceeds to the owners.
Because the law realises that a joint owner should be able to realise the interest held in their property, the court will only refuse such an application if there are special reasons for doing so.
The relevant application is complex and is required to be heard in the Supreme Court of NSW. The proceedings and any negotiated resolution of the matter can be lengthy.
If you have any questions concerning the termination of co-tenancy please don’t hesitate to contact Everingham Solomons, because Helping You is Our Business.
Most media, focuses on the interests of the home owners being exploited by builders.
Builders however, have legitimate interests and as the contract proceeds, the builder will become vulnerable by investing a significant part of his working capital in the building project. In doing so, the builder is trusting the owners will pay him the agreed price for the contracted work.
Unfortunately, there are owners who will try to avoid paying the full price of their building contracts. The builder should protect his right to payment by:
fully documenting the building contract including all plans, specifications inclusions and PC items. The contract should
contain all essential conditions and be signed by all parties.
fully documenting all variations and their likely costs in writing and having that document signed by the parties before any work is performed on the variation. This will clarify any confusion before the work is commenced;
making claims in writing for all properly available extensions of the contract term, immediately they occur. The general practice of seeking to catch up the time at the end of the project should not be adopted;
keeping a project day diary of events, worked carried out and conversations; and
immediately suspending the contract works, the moment the owners stop paying or start underpaying progress claims.
By doing these simple things will potentially save a builder or contractor much grief as it severely limits the owner’s opportunities for mischief at a later time.
At Everingham Solomons we have the expertise to guide you with all of your legal matters because Helping You is Our Business.
Land tax is imposed annually on the total land value of all taxable land owned in NSW. However, land that is used for primary production is exempt.
Qualifying for the primary production exemption is not a straight forward process. The Office of State Revenue (OSR) has implemented increasingly strict guidelines surrounding what land qualifies.
Under the Land Tax Management Act 1956 (NSW), land that is zoned rural and is used for primary production qualifies for the exemption. However, land that is not zoned rural must pass a stricter test. Not only must non-rural land be used for primaryproduction, it must also:
have a significant and substantial commercial purpose or character; and
be engaged in for the purpose of profit on a continuous or repetitive basis.
Determining whether an operation has a “significant and substantial commercial purpose or character” may take into account:-
The size of the herd;
productivity of the operation;
attempts made to improve the land/operation; and
time spent conducting the operation.
The requirement that the primary production “be engaged in for the purpose of profit” does not mean the operation must in fact be profitable, however, it has been suggested that a lack of profit can be used as evidence of a lack of a profitable purpose.
The starting point in demonstrating that land qualifies for the primary production exemption is to keep thorough records for the land. This may include detailed trading records, buy/sell records etc. Historical records detailing past use of the land are also useful in demonstrating that the primary production use has been engaged in “on a continuous or repetitive basis.”
At Everingham Solomons we have the expertise to assist land owners with in dealing with land tax issues as well as with any other dealings with the OSR.
If you have any questions regarding the primary production land tax exemption, please do not hesitate to contact the experienced team at Everingham Solomons because Helping You is Our Business.
Click here for more information on Abbey Huckstep.
A recent decision in the Land and Environment Court should be reviewed by landlords who rent their property for short-term stays to ensure the use of the property is not in breach of the Local Environmental Plan for the area.
The case of Dobrohotoff v. Bennic determined that the renting of a house to party goers for short-term stays was not a permitted residential dwelling use in the Gosford local government area.
The house, located in a beachside residential suburb, was usually rented out for weekends and week long stays. The neighbour brought the claim against the owner of the property after the neighbour’s complaints about late night parties and loud events such as buck’s & hen’s nights were ignored.
The neighbour’s case was brought on the basis that the house was not being used as a dwelling house as the short-term occupation by temporary tenants was inconsistent with the concept of a “dwelling”. The neighbour argued that the use was more akin to tourist accommodation, which was not permitted in the residential zone.
The owner of the house submitted that they had rented the property for short-term stays for a number of years, as had the previous owner.
The court determined that whilst renting of a property to a family or group as a genuine holiday house for periods of over one week would be permitted within the zoning, the use of the property for parties and functions was not a valid use of a dwelling house.
The decision is a timely warning, as we approach the holiday season, for landlords to check their local council zoning restrictions to ensure their rental properties are being utilized for an approved purpose. It is also important to note that the responsibility for complying with council zonings lies with the landlord, and not their real estate agent.
If you are considering purchasing an investment property, it is important that you advise your solicitor if you are intending to rent the property for short-term stays so that the necessary enquiries can be made of council before committing to the purchase. The Property Team at Everingham Solomons is well equipped to assist you with these zoning issues becauseHelping You is Our Business.
Click here for more information on Rebecca Greenland.
Effect of Willmott Growers Group v Willmott Forests
