Author: baron + associates

A disclaimer is a contractual clause that seeks to limit the application of some of the terms of a contract or is otherwise a denial of a party’s right or liability under a contract. While they may sound good, a disclaimer is not necessarily enough to defeat a claim in all circumstances, particularly if a party has provided incorrect information or engaged in misleading and deceptive conduct, as was found in Havyn Pty Ltd v Webster [2005] NSWCA 182.

Disclaimers can act as a mitigating factor, but it will only be one of the many factors that the court will consider when determining any liability for misrepresentation including the nature of transaction, sophistication of the parties, the nature of the representation and the expertise of the person providing the representation.

A recent decision in the Land and Environment Court has provided an important reminder to developers that an order for an easement of necessity, such as the right of carriageway when a lot is potentially landlocked, will not always be granted. In Acorp Developments Pty Ltd v HWR Pty Limited [2018] NSWLEC 68 the court refused to grant an easement of necessity for a 6m wide right of carriageway, and instead held it was not reasonably necessary for the effective use or development of the site.

In coming to this decision the court held that access was directly available from the site’s street front, and also considered the fact that the owner of the lot in question had plans for his own development of the land. The court came to this decision despite the fact that a Commissioner of the Court granted consent to development based on the right of carriageway being available.

A recent case in the NSW Supreme Court has highlighted the importance of clarifying what is a gift and what is an investment when it comes to family property purchases. In Dunphy v Russell [2018] NSWSC 721 a daughter disputed whether a $200,000 payment by her father towards her first house constituted a gift or was made with the intention to create a trust.

While the daughter insisted that the money was a gift given because of the father’s guilt over his absence from her life, the court ultimately held that the father’s contribution to the purchase of a $562,000 home was given in return for a one third interest in the property, and that the interest was held by her on trust.

The NSW Supreme Court recently held in the case of Ku-ring-gai Council v Ichor Constructions Pty Ltd [2018] NSWSC 610 that where an arbitrator wants to take on the role of mediator, they must carefully follow the law or risk the arbitration be invalid. The Commercial Arbitration Act 2010 allows arbitrators to act as mediators under s27D(1), as long as all parties in the arbitration have given their written consent. In this case the arbitrator was given this consent and proposed that both parties withdraw their claims and bear their own costs – this was quickly rejected and the mediator proposed to continue with the arbitration.

However under s27D(6) this switch back to arbitration also needs the written consent of both the parties, and this was not sought. After a further four days of arbitration, Ichor Constructions protested and it was ultimately held that because of the lack of written consent the arbitration could not continue.

The Australian Consumer Law extended its unfair contract terms to small businesses in 2016, which may have since affected the way builders and head contractors use standard form contracts to engage subcontractors or independent contractors. Some recurring terms in standard construction contracts that might be deemed unfair when contracting with a small subcontractor could include:

• Indemnity clauses that excessively extend liability to the subcontractor beyond what would reasonably be necessary to protect the head contractor against loss or damage.
• Liability clauses that exclude or disproportionately limit the liability of the main contractor even if they are partially at fault.
• Termination clauses allowing for the head contractor to cancel the agreement at any time ‘for convenience’
• Time bars that may give onerous time frames and notification procedures for subcontractors to make claims for any time variations

Emails can result in a binding contract, so long as there is enough dialogue between the parties and the terms within the emails are sufficiently certain. In Universal Music Australia Pty Limited v Pavlovic [2015] NSWSC 791 the court held that an email from a lawyer stating that the client would sign a settlement deed, when combined with other communication and conduct, was enough to constitute a binding agreement.

If parties choose to negotiate via email but don’t want the exchange to constitute a binding contract, it must clearly state in the emails that ‘no binding agreement is formed unless and until a formal contract has been executed.’ If this is omitted, a court could find the correspondence is binding.

The Senate Legal and Constitutional Affairs Legislation Committee has endorsed the passing of the Bankruptcy Amendment (Enterprise Incentives) Bill 2017 that would reduce the current period of bankruptcy from three years down to one. This would bring Australia’s bankruptcy period in line with that of the United Kingdom.

In the digital era there is much uncertainty about whether documents executed electronically are valid, yet the practice is well established in many industries. Documents signed through cloud-based platforms will generally satisfy the legal requirements for signing and writing not only when electronic transactions law is applied but under general law as well.

E-Signatures have been gaining traction in recent years, especially since the American tech firm DocuSign entered the Australian market. The program simplifies the signing and execution of a wide range of documents, including rental agreements, work orders, subcontractor agreements and other contracts. While the validity of DocuSign is yet to be tested in Australian courts, it has withstood seven challenges in the United States with each case successfully upholding the agreements. However e-signatures would not be appropriate in some cases, such as wills requiring signature or leases longer than three years that must be lodged at the Land Registry.

A recent case in the Supreme Court has given an important warning to prospective home builders when it comes to home designs. In Milankov Designs & Project Management Pty Ltd v Di Latte [2018] WASC 14, the court found the Di Latte’s breached the copyright of Milankov Designs when they used his designs to build their house without permission.

Usually when an architect or design consultant prepares designs for a fee, there is an implied licence for their client to use the designs for the purpose for which it was sought. However in the Milankov case, the court held that an implied licence will not apply where it would be inconsistent with the terms of a written contract. The contract itself was only for the first stage of the building, and so there could be no implied licence that the Di Latte’s could use the designs to complete the building.

The NSW Government’s new e-conveyancing program will commence on 1 July 2018, aiming to increase the proportion of electronically lodged documents. By the 1/7/2018, all stand-alone transfers, caveats and mortgages must be lodged electronically and paper titles will begin to be phased out. The change will be facilitated by the network Property Exchange Australia (PEXA), and the Office of the Registrar General is holding workshops to help with the transition to the new system.

The NSW Government has committed to e-conveyancing for the State by July 2019, as it eliminates much of the human risks of error such as misplaced or incorrectly signed documents, immediately transmits settlement funds and saves time for lawyers and conveyancers.