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A tax payer has lost a claim for repayment of erroneous land tax payments made to the Commissioner of State Revenue. The Victorian Court of Appeal initially ordered the repayment of sums that represented a double land tax payment for the period 1990-2012.

Upon appeal, however, the High Court of Australia held that that under the Land Tax Act 2005 (Vic), the three year limit on recovery of tax paid operates such that once an assessment is made by the Commissioner, this amount would become a debt payable on the date specified in the assessment. Regardless of whether an assessment would be challenged or that an objection was pending, the tax assessed could be recovered.

This is a harsh outcome, as the court acknowledged that the mistake could not have been discovered by a reasonably diligent tax payer as it was not disclosed on the face of the notice.

Where a landlord leases a premises which includes fittings for the tenant to use, these items may give rise to a security interest in favour of the tenant. Registration of a security interest under the Personal Property Securities Register provides notice of the lessor’s interest in the property whilst it is in the possession of the tenant. Personal property covered by the Personal Property Securities Act (‘PPSA’) includes general property other than real estate and fixtures.

In the recent case of Power Rental Op Co Australia LLC v Forge Group Power Pty Ltd (in liq) (receivers and managers appointed), the New South Wales Court of Appeal determined that the test for determining what is a ‘fixture’ under the PPSA incorporated the established common law principles and did not create a new, distinct test.

Under the common law, whether an object has become a fixture depends on the ‘objective intention with which the item was put in place, having regard to the degree of annexation’.

In determining the purpose of annexation, the Court should have regard to:

• whether the attachment was for the better enjoyment of the property generally or for the better enjoyment of the land and/or buildings to which it was attached;
• the nature of the property the subject of affixation;
• whether the item was to be in position either permanently or temporarily; and
• the function to be served by the annexation of the item – e.g. if it is secured in order for ease of operation of the item.

In assessing the degree of annexation, factors to consider are:

• whether removal would cause damage to the land or buildings to which the item is attached;
• the mode and structure of annexation;
• whether removal would destroy or damage the attached item of property; and
• whether the cost of renewal would exceed the value of the attached property.

Landlords should seek advice in determining whether personal property should be registered, as the consequences for failing to do so can be serious, particularly in situations where the tenant is placed in administration.

 

In the case of Kazacos v Shuangling International Development Pty Limited, the vendor, Kazacos, sought to recover the $850k balance of the ‘deposit’ remaining on the sale of a $17m Sydney property. The deposit was stated as $1.7m with a special condition in the contract providing that the first payment of $850k, equating to 5% of the sale price, was to be paid on exchange and the remaining 5% due on the completion date of the contract or the date when the purchaser defaulted under the contract. The purchaser failed to complete the contract and the vendor later sold the property at the higher price of $18m.

The initial 5% was found by the Supreme Court of New South Wales to hold the essential character of a deposit, in that it was “an earnest of the bargain or its performance” and therefore forfeited by the purchaser. The 5% due upon default was not related to binding the purchaser to the bargain as it would be due even when the purchaser had demonstrated it was unable to complete the contract, nor was it a genuine pre-estimate of the damages caused by the breach. This amount was found to be a penalty and not recoverable by the vendor.

A similar ruling has previously been made by the New South Wales Court of Appeal in the case of Luong Dinh Luu v Sovereign Developments Pty Ltd where the front page of the contract of sale stated the deposit payable was less than 10%, however a clause within the contract stated that the full 10% would become payable in the event of default. This was held to amount to a penalty and was therefore unenforceable.

Whilst contracts of sale for which the vendor accepts less than the standard 10% may be drafted with the intention that later payments will constitute an instalment of the initial deposit, there is a risk of similar actions arising where the contract of sale does not proceed to completion and the payment is instead viewed by the courts as a penalty.

A land tax surcharge of 0.75% of the taxable value of residential land owned by a foreign person has commenced on 31 December, 2017. This is in addition to the 4% stamp duty surcharge that has applied to foreign investors in the residential property market since 21 June, 2016.

A number of amendments have been proposed to the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) to improve the current NSW planning system. The legislative updates will aim to ensure that 90% of housing approvals are processed within 40 days for local development for which the council is the planning authority. This will be achieved by encouraging early consultation with neighbours, improving efficiency and transparency of the approval process through a new electronic system on the NSW Planning Portal and preventing the modification of a consent where works have already been carried out.

The Act will be amended to prevent planning authorities and courts from approving a modification where the works have already been completed, except for limited circumstances such as to correct a minor error or miscalculation. Unauthorised works may be subject to enforcement action such as demolition, or require a new building certificate.

Changes to the NSW strata laws will commence on 30 November, 2016 prior to the commencement of the Building Defects Bond Scheme on 1 July, 2017. Significant changes under the Strata Schemes Management Act 2015 and the Strata Schemes Development Act 2015 include:

1. Decisions to renew or terminate a strata scheme will now require only 75% of lot owners to agree. This is intended to allow strata owners to make efficient decisions as the building ages with safeguards included to protect dissenting owners and ensure that ‘just terms compensation’ is offered to lot owners.
2. Buildings with over 50% of registered renters will be able to elect a tenants’ representative to attend meetings of the Owners Corporation, however they will not be able to vote and can be prevented from certain discussions of a sensitive or financial nature.
3. A developer of a strata scheme, or a person connected with the developer cannot be appointed as the managing agent of the strata scheme for 10 years after the registration of the strata plan.
4. Meetings will be more flexible with the Owners Corporation able to elect (by ordinary resolution) to conduct meetings via teleconference and voting may take place electronically.
5. The number of proxy votes that one person may hold will be limited to avoid ‘proxy farming’.

There are approximately a further 90 changes that have been made in an attempt to modernise the existing strata laws.

A new law directed at addressing unfair terms in standard-form contracts where a small business is a signatory has commenced on 12 November, 2016 and applies to contracts between businesses which have been formed, renewed or varied after this date. If a particular term is found to be unfair it will be void and the small business will not be required to comply with the term. The agreement will remain valid to the extent that is possible without the unfair term.

The ACCC has reviewed standard form contracts including those for retail leasing and franchising to identify terms that may be deemed unfair under the new laws. Common problems identified included terms allowing the contract provider to unilaterally vary all terms in an unconstrained manner, an unreasonable ability to cancel or end an agreement and terms imposing broad indemnities or excessive limitations of liability allowing for unreasonable powers to protect against loss or damage at the expense of the small business.

Terms that exceed the measures reasonably necessary to protect a business’s legitimate interests are likely to raise concerns under the new law. For example, a term allowing the landlord to terminate a retail lease for any breach without notice, regardless of the trivial nature which does not include an opportunity for the tenant to remedy the breach would be viewed as concerning to the ACCC.

As of 15 August 2016, real estate agents must record details of certain property reports if they are aware of them or can reasonably find out about them, allowing home buyers to access pre-purchase property inspection reports in an easier and more cost effective manner. Agents are only required to make a once off disclosure at the time when a prospective buyer asks for a copy of the sale contract. There is no obligation to provide the information if no sale contract is requested, or if reports are created subsequent to providing the sale contract.

The reports included under this requirement are: