Updating your Will if you have Separated from a Spouse/ Keeping your Will up to date

Sometimes issues arise in circumstances where a person has separated from a partner, but failed to update their Will following the break-up. Whether a person is in a married or de facto relationship, divorced or separated, their Will should reflect their current circumstances.  

In particular, marriage revokes a Will, so if a person has separated from their married spouse without divorce, then the spouse is still entitled to the property gifted to them in a previously established last Will. The consequences may be unfavourable if the person is in a new de facto relationship, or if they have children from a previous relationship whom they want to provide for. Moreover, separation of assets and property after the break-up of a marriage has no legal effect on a Will.

Similarly, if a former partner or spouse has been appointed their Enduring Power of Attorney, then it might be worthwhile updating that Power of Attorney document because, if, for any reason the person lost capacity, then the former partner would be entitled to make decisions regarding the person’s financial and lifestyle choices.

The best protection against the costly and stressful issues of Will’s is through reviewing your estate planning arrangements every time your personal or financial circumstances change.

Recent Dispute in Relation to an Estate

The recent case of Colbourne v Colbourne [2020] involved two applications in proceedings brought pursuant to s 59 of the Succession Act 2006 (NSW). The Plaintiff was an 89-year-old man with dementia, who required substantial and ongoing care in an aged care facility. He was also widower, and shortly before his late wife’s death, she updated her will and left her estate to their two children. Adam Colbourne, one of the executors, who renounced his role as executor, and Sarah Colbourne, the other executor was the Defendant in the proceedings.

The first application was made jointly by the Plaintiff and Defendant for approval of a proposed settlement of the proceedings, to enable to Plaintiff to receive the whole of the distributable proceeds of his wife’s estate.  The second application comprised a notice of motion by the Official Trustee in Bankruptcy as the Trustee of the bankrupt estate of Adam Colbourne – to be heard in opposition to the proposed settlement. The Official Trustee submitted that the plaintiff had sufficient funds to satisfy his care needs, and that approval of the settlement should be withheld because the Official Trustee wished to participate in the distribution of the deceased’s estate in equal shares with the Defendant.

Ultimately, the Court held that the deceased had a moral obligation to adequately provide for the Plaintiff in her will, as the mutual care provided by their marriage did not cease when the Plaintiff entered a nursing home. The Court rejected the Official Trustee’s submission, because it would be inconsistent with the Plaintiff’s reasonable expectations following the 58 year marriage of mutual support and approved the settlement.

Occupation Certificates and the Changes to Legislation

If you are in the business of developing, designing, or building residential apartments in NSW, then it is important to be aware of the multiple new regulations for construction activity. These include the Home Building Act (NSW), the Strata Schemes Management Act 2015 (NSW), the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 No.9 (NSW), which came into force on 1 September 2020, and the Design and Building Practitioners Act 2020 (NSW), parts of which came into effect on 11 June 2020, with the balance coming into effect on 1 July 2021.

Under the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 No.9, an occupation certificate is necessary for permitting use of the constructed building and for achieving practical completion under the relevant construction contract. From 1 March, the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 No.9 will impose a strict regime upon developers wishing to obtain this certificate, in addition to those already applicable under the Environmental Planning and Assessment Act 1979. A ‘developer’ is understood in its traditional meaning, as well as meaning a Principal under a head contract, the owner of land on which the construction takes place, or the head contractor under the Regulation.

When applying for the occupation certificate, one must give a written notice to the Secretary of the Department on the date on which an application for an occupation certificate is expected to be made. The consequences for non-compliance with these procedures include financial penalties, and relevantly, the Secretary could make an order prohibiting the issue of the certificate, and the registration of the strata plan.

Consideration of the ‘Local Character’

The NSW department of planning has drafted a ‘Local Character Clause’ which is proposed to be included in the Standard Instrument Local Environment Plan. The clause will allow a council to adopt a map overlay and a local character statement. The objective of the provision is to enable councils to develop tailored and creative planning responses that acknowledge the distinctive character of an area, especially in response to the challenges of population growth.

The local character statements will describe an area’s existing character and detail its desired future character, and will be developed in accordance with the Local Character and Place Guideline. Councils will consult with the Department of Planning in the formulation of the map layer, and will need to ensure that the planning proposal includes the draft local character statement, the number and type of lots impacted by the local character area, the alignment to strategic planning including the LSPS and local housing strategy, and show evidence of community and industry consultation. Submissions regarding the approach for introducing character overlays are currently being reviewed. 

Damages for Breach of Contract

The case of Merost Pty Ltd v CPT Custodian Pty Ltd involved a conveyancing transaction in which the applicant, Merost, purchased a shopping centre from the respondent, CPT Custodian Pty Ltd (‘Centro’). Prior to the sale, a memorandum was distributed to all prospective purchasers which included details of the shopping centre, and specified the base rent and percentage rent for Kmart (the major tenant) as contained in the lease, but the breakeven figure recorded was erroneous. The contracts for the purchase of the shopping centre were exchanged before the director of Merost learned of the variation of the lease. Merost claimed that Centro had engaged in misleading and deceptive conduct under s 18(1) of the Australian Consumer Law. Centro denied this, and claimed that Merost did not rely on that representation in its decision to purchase the shopping centre.

The Court considered the surrounding circumstances of the transaction, and decided that the representation was misleading and deceptive because the erroneous statement of the break-even figure was provided in the information memorandum and in a document contained in an electronic data room. However, the Court accepted that Merost was contributorily negligent because it did not personal review the relevant title search which would have revealed the variation. Thus, the damages payable by Centro were reduced by 20%. This case demonstrates the importance for vendors to ensure that information disclosed to prospective purchasers are accurate, to preclude claims of misleading and deceptive conduct from arising against them.

When Will Owners of Adjoining Blocks be Exempt from Land Tax?

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.

NSW Consumer Disclosure Requirements

New Laws introduced by the NSW Fair Trading Act 1987  that commenced on 1 January 2021 ensure that NSW businesses must disclose whether a term or condition of their contract substantially prejudices the interests of the consumer; the business is sending or selling consumers information to a third party; or if the business receives a commission or benefit when recommending the consumer buys a good or service from a third party. Additionally, a business which sells consumer goods or services must take reasonable steps to ensure that the consumer is aware of the effect of any term or condition which could prejudice the consumer’s interests.

The new laws respond to the rise in concerns from regulators and consumers that businesses are not adequately protecting consumer’s information, and importantly, they impose a positive obligation on businesses to bring terms against the consumer’s interest to their attention.

Individuals who breach the law will be liable to pay a fine of $22,000, and corporations will be liable to pay $110,000. Businesses that supply goods or services should review whether their consumer contracts have any one-sided terms, assess whether they are selling or providing consumer information to a third party and identify whether they have a financial incentive for referring customers to another supplier of goods and services. Above all, they must disclose these facts.

COVID-19 Commercial Leasing Regulations Extended

The Retail and other Commercial Leases (COVID-19) Regulation (No 3) 2020 was announced on the 18th of December 2021 and commenced on 1 Jan 2021. It extends the prescribed period of the previous regulation to now end on 28 March 2021.

The changes confirmed in the new regulation remain largely identical to the second COVID-19 regulation that commenced on 24 October 2020. Briefly, the regulation prohibits lessors from terminating leases for non-payment of rent, prohibits lessors from drawing on the lesees’ security for the non-payment of rent and prohibits an increase in rent during the prescribed period.  However, as the eligibility for the Jobkeeper scheme changed on 4 January 2021, these requirements apply from the commencement of the Third COVID Regulation and the impacted tenant must qualify for Jobkeeper. Another key change is that an impacted lessee must have had an annual turnover of less than $5 million in the 2018-2019 financial year – not the $50 million that was allowed in the 2 previous versions of the COVID-19 Regulations.

How to Issue Valid Invoices Under the Building and Construction Industry Security of Payments Act

The Security of Payments Act serves as an alternative to traditional litigation for the recovery of unpaid invoices and payment claims in the construction industry. It provides for a faster dispute resolution method, but with the caveat of requiring strict protocols when issuing invoices and payment claims.

For payment claims to be valid under the Act, they must contain specific information requested by the construction contract, and identify the construction work or related goods and services which the payment claim claims for. They must also identify the amount of the payment to be made under the payment claim and must state that the claim is made under the Act.

There are specific circumstances which determine when a particular payment claim or invoice becomes due. Firstly, if the building contract specifies a due date for payment of payment claims and invoices, it will be that date. Or secondly, if the building contract does not specify a clear due date, then it will be 10 business days after the payment claim or invoice is made.

If an invalid invoice or payment claim is submitted, it may bar any enforcement or action on the invoice, and it is likely that the payment claim or invoice will need to be treated as a general commercial payment claim or invoice. It is thus advantageous for construction companies and their advisors to be conscious of the entitlements, rights and obligations surrounding Security of Payments Act payment claims and invoices.

Design and Building Practitioners Regulation Act 2020

The NSW Design and Building Practitioners Regulation Act 2020 (DBP Act) was introduced in June last year, which intends to restore public confidence in the NSW building industry by regulating the activities of Design Practitioners, Principal Design practitioners, Building Practitioners and Professional Engineers.  

Part of the DBP Act has already commenced, but regulations are still needed to give effect to other parts of the Act. A draft Design and Building Practitioners Regulation was released for public comment until 11 January 2021.

The DBP Act imposes a statutory duty of care on any person who carries out construction work. This requires practitioners involved in building design, work, manufacturing or supplying building materials, and those in supervisory roles to exercise reasonable care to avoid economic loss which could be caused by defects relating to or arising from construction work. This duty is owed to current and subsequent owners of the land upon which the construction work is carried out. A breach of this duty will entitle the property owner to damages.