GUARANTEES: Security for lenders

Published by Law Society of New South Wales

In a recent case, the court of appeal considered a case where a mortgage was varied, lengthening the term, increasing the principal and raising the interest rate, after the guarantors had resigned as directors of the company which had taken out the mortgage. The lender, who suffered a shortfall on the sale of the security, sought to recover from the guarantors.

The court concluded that the variations altered the nature of the guarantors’ obligations. By reason of the increase, the guarantors would have been exposed to a potentially greater risk of being called upon to meet a default by the company of its obligations under the mortgage, “even if their liability was limited to the original sum lent to the  company ($240,000) plus interest”.

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CLASS ACTIONS: Things to know

Published by Law Society of New South Wales

In the current economic climate it is not surprising that investor class actions are receiving increased attention.

There is some suspicion and confusion about class actions. Some people have an enduring belief that they must be taking on an unacceptable level of risk if they get involved. Equally, some may just have an aversion to continuing in a claim commenced without their express consent, despite the fact that it could benefit them financially to do so.

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DE FACTO RELATIONSHIPS: Am I entitled to a property settlement?

Published by Law Society of New South Wales

If you were in a de facto relationship which has broken down since 1 March 2009, you can make a claim for a property adjustment under the Family Law Act. However, you usually need to show that you have lived together for at least two years.

If your relationship has lasted less than two years, you may claim if there is a child of the relationship; or you are caring for a child of the other party, and the failure to make an order would result in serious injustice to you; or you made substantial contributions (financial or personal) for which you will not receive adequate compensation if the court does not make a property order, and the failure to make an order would result in serious injustice to you.

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Landholder Duty: Tax base expands

Published by Law Society of New South Wales

New state revenue laws create a new model for imposing duty on land.

Since 1987, NSW has had a tax system which imposes duty on the acquisition of interests in private companies and unit trusts that hold land in NSW.

Prior to 1 July, the rules applied where a “relevant acquisition” was made of a “land-rich” landholder. A private company or trust was considered land-rich if 60 per cent or more of its total assets comprised land or interests in land in all places, and $2 million worth of it or more, needed to be in NSW.

Under the new system, provided the entity holds land worth $2 million or more in NSW, it is irrelevant what proportion of its value is in land.

This expands the tax base to acquisitions of many non landfocused entities, such as in the manufacturing and service sectors. Duty at a top rate of 5.5 per cent must now be calculated not only on the unencumbered value of NSW land, but goods in NSW held by the entity as well.

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Property Settlement: What is a de facto relationship?

A de facto relationship is a relationship that two people who are not married or related by family have as a couple living together on a ‘genuine domestic basis’. It can exist between 2 people of the opposite sex, or between 2 people of the same sex.

All the circumstances of the relationship will determine whether a couple have a de facto relationship.

These include:

• the duration of their relationship 
• the nature and extent of their common residence 
• whether a sexual relationship exists 
• the degree of financial dependence or interdependence, and any arrangements for financial support, between them 
• the ownership, use and acquisition of their property 
• their degree of mutual commitment to a shared life 
• whether the relationship has been registered, in a State or Territory with laws for the registration of relationships 
• the care and support of children, and 
• the reputation and public aspects of their relationship.

If you have a problem and require the assistance of an experienced Newcastle Family Lawyer’s, Mullane & Lindsay’s family Law team of Mark Sullivan, Vivien Carty, Ashleigh John and Kristy Davis at can assist you.

The Duty of Banks to Protect Borrowers

It is not widely understood that although banks and other lenders are entitled to advance their own commercial interests in making loans; they also have obligations to borrowers which, if breached, might result in a loan agreement being declared void.

A recent NSW Supreme Court case of Satchithanantham illustrates one aspect of the duty owed to borrowers.

The case was factually complex but, in essence, the borrower, Mrs S, was prevailed upon by her (bankrupt) husband to take out a loan, secured by mortgage on the family home. The Court held that when the loan application was signed, the bank officer involved did not make adequate enquiry about the stated purpose of the loan or as to Mrs S’s capacity to repay the loan.

As it happened, the Court also held that Mrs S had been deceived (by her husband) into believing the loan was an ‘ordinary’ home loan for a specific amount - in fact it was a line of credit for a substantially greater amount and which could be cancelled at any time whether or not repayments were in default.

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Property Law - Compulsorily Acquired Land Claiming Loss of Profits

This Property Law article has been reproduced with permission from the Law Society of New South Wales.

Claims for compensation are often made not only by landowners but also by businesses which operate on acquired land.

Many state authorities have the power to compulsorily acquire land for public purposes. The law ensures that compensation is paid for the market value of the acquired land and for ‘disturbance’ to the dispossessed owner.

An ‘owner’, for the purposes of the law, means any person who has an “interest in the land”, which would include, in most cases, any business operating from the land with a lease or similar arrangement. Some public works may also have a short-term impact on a business’ profits.

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Removal of same sex discrimation federally

The Federal Attorney General has announced that legislation to remove same-sex discrimination from a wide range of Commonwealth laws will be introduced in the Winter Sittings of Parliament. This reform follows the report of HREOC, Same-Sex: Same Entitlements, which focused on financial and work-related legislation.

Areas where discrimination will be removed include:

• Tax
• Superannuation
• Social security
• Health
• Aged care
• Veterans’ entitlements
• Workers’ compensation
• Employment entitlements
• Other areas of Commonwealth administration

The Government has begun introducing legislation in the Winter Sittings of Parliament. In areas such as social security, tax and veterans’ affairs, the reforms are expected to be phased in - to allow time for couples to adjust their finances, and for administrative arrangements to be implemented.

All of the changes are expected to be implemented by mid-2009.

If you have any queries relating to Family or Relationships law please do not hesitate to contact any of our Family and Relationships Law Team at Mullane and Lindsay: Mark Sullivan, Vivien Carty, Kristy Davis and Ashleigh John. Kristy Davis is present at our Tea Gardens office on Wednesday afternoons by appointment. (Tel: 4928 7300).

Fixtures from sale of a property

Source: Law Society of New South Wales 

What can I take from home? 

All ‘fixtures’ are included in the sale of a property without having to be mentioned specifically.

A fixture is something attached to the land or building that cannot be either simply lifted up and taken away, or unscrewed and taken away without doing any damage. For example, most electric stoves are wired in, so they are fixtures, but most refrigerators are plugged in, so they are not fixtures. 

For both buyer and seller, the safest course is to ask your solicitor to specifically include or exclude in the contract any items about which there can be room for doubt.

COMPULSORILY ACQUIRED LAND Claiming loss of profits

Claims for compensation are often made not only by landowners but also by businesses which operate on acquired land.

Many state authorities have the power to compulsorily acquire land for public purposes. The law ensures that compensation is paid for the market value of the acquired land and for ‘disturbance’ to the dispossessed owner.

An ‘owner’, for the purposes of the law, means any person who has an “interest in the land“, which would include, in most cases, any business operating from the land with a lease or similar arrangement. Some public works may also have a short-term impact on a business’s profits.

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