Author: baron + associates

Congratulations to Pacific Bondi Beach apartments which last month was named the development of the year by Urban Taskforce. The site which was home to the former Swiss Grand Hotel and Resort, won for the way it fused together the beachside setting with a modern take on art deco. The 2016 Development Excellence Award judges also noted that the way the site integrated and added value to the local community was key to its success.

The New South Wales government has abolished a series of duties coinciding with the start of the new financial year. The duties affected by the new taxation scheme are Mortgage Duty, Business Assets Duty and Marketable Securities Duty.

New mortgages will not be liable to any duty with exemptions including all advances and refinancing on all old mortgages. For those that have already applied for advances or refinancing an old mortgage a duty of $5 will be payable, or an exemption applied for with the Land Property Information Office, respectively. Caveats will also not be liable to duty if on a mortgage executed from 1 July, or liable to $50 duty for mortgages executed prior to 1 July. In line with these changes is that no stamping nor marking will be required before registering any mortgage.

Duty will also not apply to certain business assets such as sale of business (excluding land), goodwill, intellectual property, licensing agreements with the Commonwealth or NSW, and gaming machine entitlements, if utilised within NSW. Duties will still apply to business interest in land and certain goods.

Marketable securities including shares in a NSW company or kept within the NSW register, and units in a unit trust scheme will not be liable to duty tax, however landholder duty may still apply to companies owning over $2 million in real property.

New Commonwealth tax requirements mean the NSW Office of State (“OSR”) revenue is now required to collect information in regards to transfer of freehold and leasehold realty and supply it to the Australian Taxation Office (“ATO”).

The OSR must supply transactional reports including land title information, transfer prices, settlement dates, identity of parties involved including their resident status. The submission of such details is intended to aid the enforcement of foreign resident property investment taxes, and with use in relation to the National Register of Foreign Ownership of Land Titles. However, will also be used in wider information-matching and compliance checking procedures by the ATO.

Current obligations by vendors and purchasers will remain the same, as the OSR will supply all information directly to the ATO.

Where subdivision of land occurs, easements as with any interest for the benefit of the land will be maintained between both new lots created. When amalgamating part of a block of land with another block, the easement will generally remain with the original lot, meaning the easement will not usually extend to the original lot that prior to the subdivision did not enjoy the benefit of such easement.

In Moreton Bay Regional Council v Mekpine Pty Ltd [2016] HCA 7, the High Court has restated the way easements apply to amalgamated blocks and under what circumstances it would be possible to extend an easement to an amalgamated block. The Court held that when amalgamation occurs, generally an easement would not extend to the larger amalgamated block, but rather remain with the original block, unless the sale specifically referenced the transfer or extension of an easement. The Court also held that an easement would only extend if it was required for the good use of the land, noting that the grounds for such extension would be unlikely to occur.

The Biodiversity Conservation Bill 2016 (NSW) (‘the Bill’) has been presented to the public for comment and will replace the Threatened Species Act 1995(NSW) and Native Vegetation Act 2003 (NSW). The Bill will introduce a new biodiversity offset scheme that will be mandatory where a development is “likely to have an impact on biodiversity.” This includes changing the vegetation to a degree where it is not at a “near natural state.”

The offset scheme will introduce credits. Credits will be created when developers take out specified steps in relation to sustainable management of land. Subsequent to the creation of these credits they can be sold to other developers and used in relation to developments that may have a negative impact on the land.

A consent authority will be inaugurated to oversee the offset scheme and will have additional discretion to enforce the scheme on developments that do not meet the threshold of “likely having an impact on biodiversity.” The Minister will also have the discretion to allow certain developments to make payment to the Biodiversity Conservation Fund instead of using credits.

The legislation will also introduce mandatory biodiversity assessments reports from an accredited assessor. As most developments are “likely to have an impact on biodiversity” it is probable that such reports will be required for all developments.

Within the coming months a new bill amending the Retail Leases Act 1994 (NSW) could be introduced to parliament. Discussions surrounding proposed amendments to the Act have increased recently, especially in relation to recommendations made in a 2013 report.

These amendments may include a good faith element being implied into all retail leases unless the duty is expressly excluded by the parties in a contract. This will mean lawyers must ensure their clients are acting fairly and disclosing all relevant information.

The courts in NSW have already implied a contractual duty of good faith in Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234. The proposed amendments would therefore bring statute in line with the common law by requiring parties in leasing agreements:

• not act unfairly including undermining bargaining;
• disclose all relevant information in a timely manner;
• make timely responses to proposals;
• act reasonably in attending and participating in meetings;
• genuinely consider the other party’s proposals;
• be honest, exercise discretion fairly by not acting arbitrarily;
• exercise powers reasonably, having regard to the interests of the other party.

In a recent case questions arose regarding whether a postdated cheque was legally a cheque and, whether the use of a postdated cheque would provide grounds for termination as though it was a breach of an essential term?

In MA and Another v Adams [2015] NSWSC 1452, the plaintiffs had purchased land by auction. However, upon handing over the cheque, the purchasers requested that the agent wait a few days before the cheque was banked. The cheque was also postdated, which the agent did not realise. Before the cheque was deposited and honoured the vendor terminated the contract.

The purchasers commenced proceedings on the basis that the vendor had no cause to terminate the contract. The vendor argued that the postdated cheque was a breach of an essential term and would provide grounds for termination.

The Court ruled in favour of the vendor finding that under the definitions within the standard form contract for sale of land that a “cheque” is not a cheque if it is postdated or stale. Under clause 2.5 of the standard form contract the Court held that because no cheque was provided and deposit never received the postdated cheque, not being a legal form of a deposit, was a breach of an essential term and therefore, grounds to terminate. Furthermore, the arguments for the defendant were strengthened by the fact that the agent had no authority to accept a postdated cheque there was no acceptance by the vendor.