Unregistered Lease interest and the sale of a property

Posted on September 27th, 2018

Unregistered Lease interest and the sale of propertyWhen an owner sells a property that is subject to existing tenancies, it is always preferable to have the relevant leases to the tenants registered on title. This ensures that the lease automatically, by virtue of the Real Property Act (NSW) transfers to the purchaser on settlement and the tenant’s leasehold interest is preserved in the subject property.

However, it is not uncommon for a lease not to be registered on title. Usually, this arises in circumstances when the term of the lease (and any option to renew) does not exceed three (3) years. Read the rest of this entry »

Can lease obligations operate ‘prior’ to the commencement date of the Lease?

Posted on June 25th, 2018

Can lease obligations operate 'prior' to the commencement date of the Lease?Will a Court enforce provisions of a lease against a party in respect of a period of time prior to the commencement date of the lease? This was one of the questions raised in Bonafair Holdings Pty Ltd v Hungry Jacks Pty Ltd.

His Honour, Sackville AJA, concluded that the language used by the parties in the relevant clauses will be determinative on the issue. “It is of course possible for a lease to contain provisions attaching consequences to events or conduct pre-dating commencement of the lease… However, in the absence of any language evincing a contrary intention, provisions in a lease for a term of years ordinarily create rights and obligations between the lessor and the lessee as and from the date the term of the lease commences“. Read the rest of this entry »

Real improvement in real estate transactions using technology

Posted on June 18th, 2018

Real improvement in real estate transactions using technologyHave you noticed that a feature of electronic technology is the ability to collaborate?  A person in Adelaide and a person in Tea Gardens can now share information in a mouse click.  A new electronic system of conveyancing allows government agencies, financial lenders and lawyers to connect with each other online and to provide up to date information to each other.

The electronic platform where the collaboration takes place is known as the Property Exchange Australia Limited or PEXA.  Mullane & Lindsay now use it.  For clients, PEXA will improve the processing time for changing title to property and the release of sale funds.  If you are selling a property, cleared funds arrive in your account on the date of completion of the sale. Read the rest of this entry »

Jones v Dunkel – the problem of not calling a witness at a hearing

Posted on April 4th, 2018

Most lawyers know the case Jones v Dunkel: in general terms, it is authority for the proposition that if a party does not call a witness who can apparently give evidence about a matter in dispute, the failure to call them allows the Court infer that the evidence of that person would not assist the party. This is one of the reasons why witnesses are often required to give evidence, even though they may not be of particular assistance to a litigant – to avoid an unfavourable inference if they are not called.

A recent Supreme Court decision, dealing with an insurance policy dispute, led to a discussion of the so called “Jones v Dunkel inference”.  The plaintiff made a decision not to call a number of witnesses at trial; and the defendant asked the Court to make a Jones v Dunkel inference. In dealing with that argument, the Court summarised the principles or considerations that are at play in deciding whether such an inference should be drawn. In particular, the Court suggested that it is the person asking for the inference to be drawn (that is, the opponent of the litigant who did not call the witness) who must prove two fundamental things namely:- Read the rest of this entry »

Who’s liable for unsafe rental premises?

Posted on January 11th, 2018

The N.S.W. Court of Appeal recently considered the respective liabilities of a landlord, managing agent and tenant arising out of the collapse of a balcony at a rental property at Collaroy, on the Northern Beaches of Sydney (Libra Collaroy Pty Limited v Bhide).

In 2005, the landlord engaged a real estate agent to manage their residential rental property pursuant to a Management Agreement. During the tenancy, the tenant raised numerous issues concerning the state of repair of the upstairs balcony. The managing agent obtained quotes for repairs and forwarded these to the landlord however these were not acted on.

In 2012, the balcony collapsed injuring 4 people, including the tenant’s daughter. The 4 injured persons commenced proceedings against the landlord and the managing agent for their injuries and the tenant also commenced proceedings against the landlord and the managing agent for psychological injury. The landlord and managing agent issued cross claims against each other and also against the tenant. Read the rest of this entry »

You need to amend your trust deed

Posted on December 15th, 2017

Recent amendments to transfer duty and land tax legislation may affect every Family/Discretionary Trust that either purchases or holds land in New South Wales.

A Family/Discretionary Trust is often used as an asset protection structure as the trustee normally has wide discretionary powers to distribute income and capital to wide classes of beneficiaries under the trust.

However, this wide discretionary power may cause a Family/Discretionary Trust to fall foul of the legislative amendments in 2016 targeted at “foreign persons” acquiring and holding land in NSW. Foreign persons are now subject to a 4% surcharge purchaser duty when acquiring residential land and a 0.75% surcharge on land tax where a foreign person holds residential land in NSW.   Read the rest of this entry »

When is a deposit refundable under a business sale agreement?

Posted on July 10th, 2017

The case of Sarker Trading Pty Ltd v Vanage Pty Limited [2016] NSWDC 250 recently addressed the issue of deposits and whether or not a deposit can be forfeited under a Business Sale Agreement where the Agreement is rescinded.

The facts of the case are:

  • Sarker, as purchaser, entered into a Business Sale Agreement with Vanage for the purchase of a Subway Franchise in Forestway NSW for $95,000.00 (“the Agreement“).
  • The Agreement provided that it was a condition precedent to completion that Sarker be approved as a Franchisee of Subway.
  • Sarker paid an initial deposit of $10,000 (10.5%) and a further “Security Deposit” of $75,000.00.
  • Sarker failed the relevant “Skills Test” performed by Subway required to be approved as a Franchise.
  • Sarker sought to rescind the Agreement for an inability to satisfy a condition precedent to completion.
  • Vanage asserted it was entitled to retain the deposit and the Security Deposit.

Read the rest of this entry »

Damage claims for repairs when leasing – Part Two

Posted on June 28th, 2017

The NSW Court of Appeal case, Ellis’s Town House Pty Ltd v Botan Pty Ltd [2017] NSWCA 20, is a particularly interesting case as it addresses two separate but interesting issues, being:

  1. What is the correct method of assessment of damages under a Lease for a breach of painting and repairing covenants? and
  2. When a party may make an application to appeal from a Judgment of the District Court for amounts under $100,000.00.

The facts of the case together with the measure of damages have been discussed in Part 1 of this series of articles.  Read the rest of this entry »

Damage claims for repairs when leasing – Part One

Posted on June 28th, 2017

The NSW Court of Appeal case, Ellis’s Town House Pty Ltd v Botan Pty Ltd [2017] NSWCA 20, is a particularly interesting case, as it addresses two separate but interesting issues, being:

  1. What is the correct method of assessment of damages under a Lease for a breach of painting and repairing covenants? and
  2. When a party may make an application to appeal from a Judgment of the District Court for amounts under $100,000.00.

We will address these two issues in two parts over two separate articles. Read the rest of this entry »

Are you ready for the changes to retail leasing?

Posted on April 4th, 2017

Despite the fact that Retail Leases Act 1994 NSW (“the Act“) has been in operation for some 23 years, compliance with the Act is often rare. 

Just as Practitioners appear to be wrapping their heads around the operation of the Act, the Retail Leases Amendment (Review) Bill 2017 NSW (“the Bill“) was passed by the NSW Parliament on 21 February 2017. The Bill amends the Act in a number of areas. To assist you with understanding the changes as early as possible this time, I have set out the following “Cheat Sheet” warning of the major changes to the ActRead the rest of this entry »

Assignment of contracts – pre-existing knowledge

Posted on March 27th, 2017

Where contractual rights are assigned; can the recipient’s pre-existing knowledge invalidate those rights?

In Walker Group Constructions Pty Limited v Tzaneros Investments Pty Limited [2017] NSWCA 27 just such an issue arose.

The case is both factually and legally complex but the relevant parts can be summarised as follows. Walker constructed some concrete pavements at the Port Botany Container Terminal. The construction contract included warranties to make good any defects in the construction. At the time of the construction, the relevant land was leased by P&O. The lease was later transferred to Tzaneros as was the benefit of the warranties to Tzaneros.
Read the rest of this entry »

Land tax – a win for property developers

Posted on February 20th, 2017

In a win for property developers, on 10 February 2017 the NSW Court of Appeal upheld a previous decision of the Supreme Court allowing a property developer the benefit of the primary production exemption from land tax (Chief Commissioner of State Revenue v Metricon Qld Pty Ltd).

Metricon had acquired a substantial land holding for approximately $60 million, which had been rezoned ‘Urban Expansion’ allowing for residential development. During the relevant period, Metricon sought development approval and paid approximately $2.2 million in consultant’s fees in preparing plans and reports in support of the development. Metricon also during this period agisted the land for cattle grazing for a rental of approximately $30,000.00 per annum. Read the rest of this entry »

Residential tenants – do you sub-lease to roommates?

Posted on January 20th, 2017

Are you a tenant in a share house and the only person on the Lease? If the answer to this question is yes, it is likely that you are actually subleasing the property for the purposes of the Residential Tenancies Act 2010. There are a number of important considerations you should be aware of if you are subleasing a residential property, including:


Read the rest of this entry »

Self-managed superannuation funds (SMSF) & enduring power of attorneys (EPOA)

Posted on December 21st, 2016

The following example from a draft tax ruling illustrates some of the issues in respect to Self-Managed Superannuation Funds (SMSF’s) and Enduring Power of Attorneys (EPOA).  If this prompts a query from you, give us a call:

EXAMPLE:  Clare is the sole member of a SMSF.  The SMSF trustee is Clear Pty Ltd and Clare is its sole director. The responsibilities of being director of the trustee company of the SMSF have become too difficult and time consuming for Clare. Read the rest of this entry »

Paying deposits by installments – vendors beware

Posted on December 19th, 2016

It is increasingly common in contracts for the sale of land, for vendors to accept less than the traditional 10% deposit. Commonly, contracts contain clauses to the effect that, although the deposit remains 10%, a smaller sum is payable on the exchange of contracts and the balance of the 10% remains payable – typically at the time of settlement.

Problems can arise when the contract does not settle due to default by a purchaser. The vendor has not received (and cannot retain) the full 10% deposit. Claims to recover the outstanding part of the deposit are often defended on the basis that ordering payment of the balance of the deposit would be a “penalty” and is therefore impermissible.  Read the rest of this entry »

Rights between joint guarantors

Posted on December 19th, 2016

The NSW Supreme Court recently dealt with a claim for contribution between multiple guarantors.  In simplified form a company “OD” loaned money to an incorporated legal practice.  The loan was guaranteed by three individuals and a further company Trout Hall “Trout”.  The loan was not repaid.  Two of the three individual guarantors became insolvent.  The lender sued the remaining individual guarantor, Mr Robert Clancy, and he cross claimed against Trout. joint guarantors rights

Prior to final hearing Mr Clancy paid an amount to the lender to settle the claim against him.  Ultimately, the Court held that Mr Clancy had paid more than required. Trout argued in its defence that because of the payment by Mr Clancy no amount remained owing from it to the lender.  It seems the lender accepted that argument because the claim between the lender and Trout also resolved. Read the rest of this entry »

Who bears costs when a case is settled?

Posted on November 21st, 2016

Tony Cavanagh is a Director at Mullane & Lindsay in Newcastle and specialises in commercial dispute resolution & litigation, and employment law.

The NSW Court of Appeal recently had to consider whether costs should be awarded, in circumstances where a plaintiff accepted a settlement offer from a defendant which had been made prior to a hearing; but which was not accepted until after the hearing and when the Court’s judgment was reserved. The defendant’s offer was explicitly said to be “exclusive of costs”.  who bears costs settlement

The defendants later made an application that they be awarded the costs of proceeding, and the plaintiff contended that was a breach of the agreement, that entitled the plaintiff to damages. In this context it must be remembered that an agreement to settle litigation is a form of contract, and that usual contractual remedies are available for any breach of it. The Court rejected the plaintiff’s claim that the words “exclusive of costs” meant that it was an implied term of the contract that each party would bear their own costs.  Rather, consistent with decisions made in relation to formal Offers of Compromise, the phrase meant the settlement agreement did not deal with costs at all. The issue had to be dealt with under the general law rather than under the terms of a settlement contract.   Read the rest of this entry »

Dealing with Defects? Don’t Delay!

Posted on November 15th, 2016

Katie Thompson is a Solicitor at Mullane & Lindsay in Newcastle and specialises in commercial dispute resolution & litigation.

Your guide to home warranty insurance time limits.

The Home Building Act 1989 (The Act) requires builders and tradespeople to be licensed for the work that they do, and to have insurance and proper contracts in place for most jobs. Most residential building works must have home warranty insurance. Home warranty insurance provides insurance cover in respect of loss only if a claim is made to the insurer during the period of insurance. The period of cover depends on the type of loss that occurs. 

For non-completion of work, the Act requires insurance cover for a period of a least 12 months after the failure to commence, or cessation of the work. This means that the insurer must be notified within 12 months for a claim based on non-completion.

Read the rest of this entry »

Contractual Penalties – a change in landscape

Posted on October 26th, 2016

contractual-penalties-a-change-in-landscapeTony Cavanagh is a Director at Mullane & Lindsay in Newcastle and specialises in commercial dispute resolution & litigation, and employment law.

The concept of a “penalty” in Australian law is relatively easy to state, but often difficult to apply in practice. In essence, where a contractual provision (or some collateral arrangement) imposes an obligation for breach of contract, that is disproportionate to the actual cost or loss resulting from the breach, it can be set aside as a “penalty”.

Take a simple example of a contract to purchase a car for $10,000.00. It has a condition that if the purchasers do not complete the purchase on a specified date they must pay $1,000.00 per day, in addition to the price, until settlement occurs. That additional sum is obviously disproportionate to the vendor’s actual cost of delaying settlement. By contrast, a provision that is a genuine pre estimate of the injured party’s costs or losses will not be a “penalty”. Using the ‘sale of a car’ scenario above, if the ‘price’ for a delayed settlement was set by reference to the vendor’s actual holding costs (for example if the vendor’s loan repayment was $10 per day and the ‘price’ of delay was also $10 per day) it can readily be seen that the additional payment is a genuine pre-estimate of loss. Read the rest of this entry »

Selling with a swimming pool – beware

Posted on October 20th, 2016

selling-with-a-swimming-pool-bewareRobert Lindsay is a Director at Mullane & Lindsay in Newcastle and leads our Commercial & Property Law team.

If Contracts exchange for the sale of a property with a swimming pool, after 29 April 2016, the Vendor must attach one of the following prescribed documents to the Contract:

  • A valid Certificate of Compliance issued by either the municipal council, or an accredited certifier; or
  • A relevant Occupation Certificate and evidence that the swimming pool is registered; or
  • A Certificate of Non-Compliance.

If one of the above documents is not attached to the Contract at the time of exchange, then the purchaser has a right to rescind the Contract within 14 days after exchange of Contracts. If the purchaser rescinds, the Contract will be at an end and the deposit paid by the purchaser at the time of exchange of Contracts must be refunded to the purchaser. Read the rest of this entry »