Author: baron + associates

States across Australia are planning to phase out paper and utilise e-conveyancing transactions. In NSW by 1 July 2018, all standalone caveats, standalone transfers, standalone mortgages and refinances must be lodged online. From 1 July 2019 all mainstream property transactions including Certificates of Title are to be lodged electronically. All paper Certificates of Title will be cancelled. All conveyancing from 1 July 2019 will be completely digital utilising the online platform Property Exchange Australia (PEXA). Read more

In Maxcon Constructions v Vadasz [2018] HCA 5, Maxcon entered into a subcontract with Mr Vadasz in relation to piling works. A clause in the contract stated that Maxcon could retain a sum corresponding to 5% of the contract sum that would only be repaid when a certificate of occupancy and other requirements were obtained by the head contractor. The High Court held that this provision constituted a “pay when paid” provision, since it made the release of the retention dependent upon the head contractor obtaining the certificate. The Court stated that a paid when paid provision makes the liability of money owing or the due date to pay money contingent on the operation of another contract. Accordingly, the Court held that the clause was void. Read more

In Papantoniou v Stonewall Hotel Pty Ltd [2018] NSWCA 85, the lessee served a notice to exercise an option to extend the lease on a solicitor whom they believed acted as an agent on behalf of the lessor. The lessor argued that the service was inadequate because the solicitor had no authority to receive the notice on their behalf.

The Court stated that whether an alleged agent has the authority to receive notice depends on the terms of the lease and the role of the agent. The lease did not define landlord to include or exclude agents of the lessor. Also, the solicitor had previously acted for the lessor over several years by dealing with other solicitors, sending correspondence and  receiving the previous option to extend the lease. The Court held that over several years, the solicitor held a general retainer to act on behalf of the lessor on whatever legal matters arose concerning the property. Hence the option to renew the lease was validly served. Read more

In RIHSF v Bhullar Steel Distribution [2018] NSWDC 72 the defendant leased a steel factory and was under a make good and repair obligation under the lease which required the defendant to make repairs to the premises and maintain it in a tidy condition. The plaintiff argued that at the expiry of the lease the defendant had not met this obligation.

The Court found that upon the defendant ceasing possession the premises were left in a damaged state and contained rubbish and discarded materials. The Court took into consideration the context of the site as a steel factory, and not an office. Despite this, the factory was not in a standard of repair and cleanliness. The defendant also argued that the make good and repair obligations were not incorporated into their current lease which was their second lease. However the Court held that under the continuation of lease agreement, the obligations were incorporated into the second lease. The parties did not objectively intend for these obligations to cease. Read more

The federal government has introduced new insolvency legislation (Treasury Laws Amendment (2017 Enterprise Incentives No 2) Bill 2017) that prohibits the enforcement of ipso facto clauses. These clauses are often contained in leases and permit a landlord to terminate a lease if the tenant becomes insolvent. Under the new legislation, ipso facto clauses cannot be enforced against a tenant if the tenant enters into voluntary administration, if administrators or receivers are appointed, or if the tenant enters into a scheme to avoid being wound up in insolvency. These amendments will apply to contracts entered into after 1 July 2018.

In Kennedy v Locker [2018] NSWDC 56 the plaintiff lent $300,000 to the defendant which was to be repaid with interest. The oral agreement was recorded in a document signed by the defendant. Following a failure to repay the full amount, the defendant argued that he lacked capacity to enter into the contract due to his habit of binge drinking. He stated he had no memory of signing the document, and that if he did sign it he must have been drunk at the time.

The Court held that for lack of capacity to arise, the defendant would need to have been so drunk that he lacked capacity both when the oral agreement was made and when the document was signed. Also, the drunken condition must have been known by the other party at the time. There was no evidence that the defendant was drunk at the time or that the plaintiff was aware of any drunkenness, especially since the defendant typed the document and the plaintiff regularly told him only to speak when he was sober. The defendant’s inability to recall signing the document was not evidence that he was drunk. He likely just had no memory of it due to his binge drinking. The Court ordered the defendant to pay the amount owing. Read full case.

In Cooney v Chief Commissioner of State Revenue [2017] NSWCATAD 375, Mr Cooney and Ms Grant owned and lived together in a residence (No. 25) and purchased an adjoining block (No. 27). There was a residential building on No. 27, however they had not lived in it for many years. The owners claimed that the two blocks should be regarded as a single parcel of land as their place of residence and thus exempt from land tax assessment under Schedule 1A of the Land Tax Management Act 1956.

The Court applied the ‘four unities’ test which states that continuous blocks of land comprise a single parcel if they are undivided by physical separation, use, occupation and title. The lots were physically undivided and there was unity of title and occupation of the blocks. Both blocks were used as part of their surrounding environs of their home and for storage. The clause 13 restriction that tax exemptions are not permitted for dwellings capable of separate occupation did not apply since the dwelling on No. 27 was dilapidated and not capable of occupation. The Court ordered that the land tax assessments for 2015 – 2016 be revoked. Read full case.

In Sun v Randwick City Council [2017] NSWLEC 188, Randwick City Council issued Mr Sun an infringement notice for contravening s76A(1)(a) of the Environmental Planning and Assessment Act 1979 by carrying out development of a dwelling without development consent. The Court had to consider whether the premises was a boarding house as alleged by the Council or a dwelling in the form a share house as alleged by Mr Sun.

The Court held that the development was a boarding house. The building was wholly leased to lodgers who had their own rooms with communal facilities. The relationship between Mr Sun and the renters was consistent with that of a boarding house manager and lodger. He organised maintenance of the building, put in place rules, paid utility bills and found new renters. Mr Sun’s control of the functioning of the house and the minimal independence of the renters meant that the house was in fact a boarding house. The Court upheld the decision of the Council. Read full case

In ACN 116 746 859 v Lunapas Pty Ltd & Anor [2017] NSWSC 1583, Lunapas leased to Palermo retail premises from which Palermo operated a seafood restaurant. Lunapas wrongfully terminated the lease and re-entered the premises. After the lockout, Lunapas re-opened the premises as a new seafood restaurant and used the stock, machines and equipment belonging to Palermo.

Palermo sought damages against Lunapas for alleged wrongful conversion of the equipment which remained on the premises. The Court held that conversion was made out both at the moment of lockout and in the period after in respect of all goods. The Court rejected the defenced raised by Lunapas that conversion could not be made out because Palermo lost actual possession at the time of lockout and subsequently either abandoned or disclaimed its right to possession. The Court awarded Palermo $250,000 representing the market value of the equipment and stock converted. Read full case.