Author: baron + associates

The NSW Government has introduced further reforms to Security of Payment laws in the Building and Construction Security of Payment Act that will ensure prompter payments of subcontractors in the construction industry. The changes include a reduction of the time a head contractor has to pay a subcontractor from 30 to 20 business days, increased enforcement powers for Fair Trading and a payment structure that will allow sub-contractors to make a claim at least once per month for completed work.

Local Councils have a range of powers to issue notices to residents in their area regarding their property, but in the recent case of Cmunt v Snowy Monaro Regional Council [2018] NSWCA 237 these powers were challenged. The appellants in this case argued that the Council did not have the power to issue notices telling them to remove structures that had been constructed without development consent, including a laser fence and poles carrying CCTV cameras. As they were self-represented, Mr and Mrs Cmunt argued that such notices could not be made without a contract between themselves and the Council, and that the Council had no authority to demand they remove the structures. However this argument conveys a misunderstanding of the Councils powers, as under s121B of the Environmental Planning and Assessment Act 1979 a Council may give to the owner of a building an order to demolish or remove a building if the building is erected without prior consent.

As online retailers continue to rise in popularity among consumers, so do the prevalence of ‘click-wrap’ agreements online that ask users to click ‘I agree’ to the terms and conditions on the website. While these agreements are rarely read thoroughly, they can contain unfair terms that affect consumers. While this specific issue is yet to be dealt with in Australian courts, there have been a number of interesting claims in the USA regarding click-wrap agreements.

In Meyer v Kalanick, an Uber passenger sued Travis Kalanick, the founder of Uber, for antitrust behaviour. When Uber sought to refer to an arbitration clause in their terms and conditions, Meyer argued that the contract was invalid. As the contract was formed by a passenger filling out their payment details and forming an account on a phone, the terms and conditions were only referenced under the ‘register’ button in links to the extensive terms. The court said the key question was how conspicuous the terms were to consumers, noting that the links on a small iPhone screen were not particularly noticeable.  However the court ultimately decided that the terms were enforceable in the contract because they were ‘standard,’ meaning no special attention had to be drawn to them.

The NSW Court of Appeal has set aside a transfer of property agreement after deeming it unjust in the recent case of Hanna v Raoul [2018] NSWCA 201. Mr Raoul was an elderly, ‘suggestible’ widower who defaulted on his mortgage. After speaking with his nephew, Mr Hanna, Raoul agreed that he would transfer the property to Hanna if he discharged the mortgage, subject to the condition that he could remain living in the property until his death. Mr Hanna’s solicitor prepared a deed of arrangement and a memorandum of transfer, but advised that Raoul should meet with another solicitor in order to have the terms explained.

However, the deed contained terms that significantly disadvantaged Mr Raoul, including the fact he would have no access to capital if he needed it as he aged, it subjected him to the discretionary decisions of Mr Hanna as to the management of the land and there was nothing in place to protect Mr Raoul in the event that Mr Hanna sold the property or died. The court found that Raoul’s solicitor appropriately explained the purpose of the agreement, but did not properly explain the aforementioned consequences. It was ultimately held that it was an invalid unconscionable agreement as there was no reasonable degree of equality between the parties; Hanna knew of Raoul’s desperation to discharge the mortgage as well as his frailty, and still sought to retain any benefit he could.

In the recent case of Carr v Miller [2018] NSWSC 1424 the court found a property developer liable for deliberate deceit regarding a residential development around Middle Harbour. In this case, the developer was not a licensed builder, but nevertheless oversaw the work of various tradespeople in the construction process who produced mostly defective work. Concerned about the quality of the house, Mrs Carr inserted a condition into the contract of sale that required Home Warranty Insurance certificates to be provided in respects of any works completed in the six years before the sale. The developer was only able to get these certificates by entering into back-dated fake contracts with a licensed builder who falsely claimed that the building works were completed by him.

Ultimately the three defendants (the developer, a trades person and the licensed builder) were each liable for various claims including a breach of statutory warranty and deceit.  Mrs Carr was owed both the difference between the price paid for the property and its true value, as well as further damages for the deceit.

A string of recent decisions in the District Court have undermined the court’s jurisdiction, with three cases this year holding that the District Court does not have the power to determine ‘commercial matters’. This finding is based on the meaning of rule 14.2 of the Supreme Court Rules (1970), that states the Supreme Court’s Commercial Division is to hear matters arising out of commercial transactions or those in which there is an issue that has an importance in trade or commerce. The importance of ‘or’ in the rules has previously been overlooked, but in Nova 96.9 v Natvia [2018] NSWSC 1288 the court ruled these are two separate types of proceedings the Supreme Court has jurisdiction over. This is of serious concern, as it could mean all proceedings currently in the District Court regarding commercial matters will need to be transferred to the Supreme Court and any previous decisions could be appealed.

When retail leases near their expiry, the lessor has certain obligations under s44 of the Retail Leases Act 1994 to give the lessee notice of their intention to either renew or terminate the lease upon its expiration. Under the Act, the lessor must give written notice of their intentions to the lessee no less than six months before the expiry of the lease.

In the case of Anka (Civic Centre) Pty Ltd v Sahyoun (2014) NSWSC 17 the court discussed the consequences of failing to comply with s44, and held that as per s44(3) of the Act failure to give notice will result in the lease being extended until six months after the proper notice is given. Notably, the court held that the notice required does not have to expressly refer to s44, as long as it manifests the lessor’s intention.

A South Australian court has held that a subcontractor was liable in negligence for damaging a power cable while excavating a trench in the case of D&V Services Pty Ltd v SA Power Networks [2018] SASCFC 92. The consequences of cases such as these can be serious, as the damage may not only affect the owner of the cable, but also end-users such as businesses who lose profits due to a power outage.

In this case, D&V had been given a copy of a ‘Dial before You Dig’ plan put together by SA Power that gave a rough indication of the location of power cables. However, this copy did not have the accompanying disclaimer and header sheet that stated the plan was only indicative and that contractors should contact SA Power if they planned to dig within 5 metres of a cable to obtain its exact location. D&V did not dispute that they owed a duty of care to SA Power, but argued that they had not breached this duty. However, the court held that D&V had not taken reasonable precautions to reduce the risk of damage, as the relatively easy task of contacting SA Power was not completed prior to excavation. Therefore, D&V had breached their duty of care and were liable for SA Power’s loss.

The New South Wales Parliament has passed a number of reforms to residential leases including mandatory fees for breaking a fixed term lease, minimum standards, and limiting rent increases. The Residential Tenancies Amendment (Review) Bill 2018 states that all rented properties will have to meet seven minimum standards in order to be deemed habitable, namely that it is structurally sound, there is adequate natural or artificial light in each room, there is adequate ventilation, the property is supplied with electricity or gas for lighting, heating and appliances, there is adequate plumbing and drainage, the property is connected to a water supply service, and it contains bathroom facilities that allows for user privacy.

In addition, rent increases will be limited to once every 12 months and mandatory set fees for breaking a lease early will be measured by the proportion of the lease left at the time of the breach. There have also been protections implemented for tenants who break a lease due to domestic violence within the property, by allowing victims to terminate the tenancy without penalty and ensure they are not held accountable for property damage that occurred during a domestic violence incident.

The NSW Parliament has passed an amendment to the Strata Schemes Management Act 2015 that will affect the way developers lodge bonds for strata schemes. The Strata Schemes Management Amendment (Building Defects Scheme) Bill 2018 will now require developers to lodge their bond before applying for an occupation certificate and agree with the owner’s corporation on the amount to be released for rectifying any defects within the building. In addition, there are increased penalties for failing to lodge a building bond and proposed offences for developers that give misleading information about the amount required for the bond.