Covid-19 Support: Landlords, Tenants & Small Business

The effects of Covid-19 are being felt worldwide by individuals, small businesses, large corporations and government bodies. With it, comes a lot of new and unfamiliar territory, the likes of which the world has never seen.

For individuals and small business, the financial effect can be significant and could continue for the coming months and years. Putting strategies and business plans in place now for the months that lie ahead could mean that your small business can weather the harsh times and still be operating once the dust has settled. This is the hope for us, and for your small business too.

We have received a lot of enquiries from our small business clients in relation to their Lease obligations and the financial impact sustained as a result of a loss of income. This article outlines the recent government advice and packages regarding:

  • commercial tenancies;
  • JobKeeper payments;
  • PAYG withholding cash boost;
  • Queensland Government support including electricity rebates, payroll tax refunds and deferrals;
  • childcare education and relief package;
  • early superannuation access; and
  • changes to bankruptcy law.

  [Read more…]

Termination of Contract

Termination of ContractThe High Court’s decision in Koompahtoo v Sanpine spelled out the circumstances which can give you a right, under the common law, to terminate a contract. You’ll have a right to seek termination of a contract if:

  1. an essential term of the contract was breached; or
  2. a non-essential term of the contract, causing substantial loss, was breached; or
  3. repudiation of the contract took place.

What Is An Essential Term Of A Contract?

Essential terms are also known as conditions; they are distinct from warranties. A term is said to be essential when it is of such importance to the party receiving a contractual promise “that he would not have entered into the contract unless he had been assured of a strict or a substantial performance of the promise” and the other party knows or ought know of this.

A breach of an essential term will give the innocent party a right to terminate a contract and seek to recover damages for the loss of contract.

A breach of a warranty, on the other hand, will not give you a right to terminate a contract. The available remedy is to seek recovery of damages caused by a breach of warranty (Sale of Goods Act 1896 (Qld)).

It should be noted that even though most contracts use specific language to differentiate between essential and non–essential terms, for example, by using words like ‘conditions’ and ‘warranties’, such usage is not compulsory and the meaning of terms will be determined by the Court, including the meaning of ‘conditions’ if such words were used (Wickman Machine Tool Sales Ltd. v L. Schuler A.G. [1974] AC 235, [1973] 2 All ER 39).

What is a non-essential term of a contract?

A non-essential term is a term occupying a place somewhere between a condition and a warranty (Ankar Pty Ltd v National Westminster Finance (Australia) Ltd [1987] HCA 15 at 561-2), which is why it’s often referred to as an intermediate term in common law. An intermediate, or non-essential term is classified as a term of lesser importance than an essential term because its breach doesn’t give you a right to terminate a contract but its legal value is higher than that of a warranty—a breach of warranty only gives you a right to damages caused by a warranty breach (Sanpine Pty Ltd v Koompahtoo Local Aboriginal Land Council & Ors [2006] NSWCA 291 at 176).

A contract can be terminated, however, if a breach of an intermediate term is sufficiently serious. To determine if a sufficiently serious breach of an intermediate term took place, the courts will consider:

  1. if the whole of the contract was affected by the breach so that its fulfilment is seen substantially different from that originally intended by the parties, as a result of the breach;
  2. the seriousness of the breach will depend on the consequences of the breach, both actual and foreseeable, for the innocent party;
  3. the onus of proof is on the innocent party to show the seriousness of the consequences of the breach which will be assessed by the court.

What is a repudiation of a contract?

In common law, repudiation may refer to conduct which indicates an unwillingness or an inability of a party to perform a substantial part of the contract. It can demonstrate itself in a form of an intention to no longer be bound by the contract or “to fulfil it only in a manner substantially inconsistent with the party’s obligations.”

In Freeth v Burr ((1874), L.R. 9 C.P. 208 at p. 214), Justice Keating said : “It is not a mere refusal or omission of one of the contracting parties to do something which he ought to do, that will justify the other in repudiating the contract; but there must be an absolute refusal to perform his part of the contract.”

This is an important point to keep in mind—a party does not necessarily repudiates a contract when it acts on misinterpreted terms of it (although repudiation may arise if the party persists on wrongful interpretation after the terms have been clarified and brought to their attention). If a party to a contract misinterprets its terms but the other party, instead of trying to clarify the terms, attempts to terminate the contract for repudiation, it may find itself being a repudiating party, giving the party that was acting wrongfully in the first place an opportunity to terminate the contract.

Unexpected twists like that highlight the importance of professional legal advice in the area of commercial law.

A team of experienced solicitors at Hollingworth & Spencer is available to assist your business in matters of commercial law should you require any advice.

Work Health & Safety Due Diligence

WORK HEALTH AND SAFETY DUE DILIGENCE FOR COMPANY DIRECTORS AND OFFICERS OF ORGANISATIONS

Have you really met this new set of obligations?

A new uniform Work Health and Safety regime has been adopted in Queensland, New South Wales, the ACT, the Northern Territory and the Commonwealth since 1 January 2012.

The new laws comprise the model Work Health and Safety Act 2011 (model Act), the model Work Health and Safety Regulations 2011 (model Regulations), model Codes of Practice, as well as a National Compliance and Enforcement Policy.

1. Are you caught?

The safety obligations under this regime, which we explain below, bind not only company directors, but also “officers” of companies, partnerships and government departments.

The term “officer” includes:

  • de facto directors (i.e., persons acting in the position of directors who gives instruction or guidance);
  • shadow directors;
  • company secretaries;
  • persons who make decisions that affect a substantial part, if not the whole, of an organisation’s business;
  • a person who is able to significantly affect the organisation’s financial standing;
  • a trustee who administers a compromise or an arrangement of the organisation;
  • project managers;
  • lawyers involved in decisions affecting a substantial part of the organisation’s business;
  • receivers;
  • administrators or liquidators of companies; and
  • officers of the Crown.

2. What does “due diligence” mean in the real world?

All “officers” of companies, partnerships and government departments are obliged, under the new regime, to exercise due diligence in order that the organisation that they head or significantly affect complies with the safety duties that are imposed by the new regime.

“Officers” cannot delegate this duty to anybody else.  Moreover, an “officer” can be found to be in breach of that duty even if their organisation has not breached its safety obligations under this new regime.  This means that, if the organisation has been lucky enough to avoid a safety incident, its “officers” could still be in breach of their due diligence duty if they do not have appropriate safety systems in place, etc. Practically, this means that even though you may specifically employ someone or task someone with a role, something like “safety officer” or similar, you still have to check to see that systems are in place to meet the potential safety risks in the workplace.

3. How do I meet these standards?

An “officer’s” exercise of due diligence comprises the following obligations:

  1. Acquiring and maintaining up to date knowledge of Work Health and Safety matters, both in terms of familiarisation with the current law and also in terms of acquiring internal organisation reports regarding safety performance and workplace health and safety regulationsany issues of concern.
  2. Familiarisation with the nature of the organisation’s operations and the hazards and risks associated with these.
  3. Provision of appropriate resources and processes to enable the identification of hazards and their elimination from the organisation.  At a minimum, this requires recruiting appropriate staff members with relevant safety expertise as well as training personnel to ensure that safety is taken into account in decision-making processes.
  4. Reporting and analyzing safety performance so the organisation can promptly respond to hazards.
  5. Ensuring that the organisation implements processes for complying with its safety obligations.  This includes not only reporting hazards, but also consulting with personnel, ensuring compliance with notices issued under the new legislation, and ensuring the training of personnel with regard to Work Health and Safety issues.
  6. Conduct of safety audits and officers’ personal verification that the organisation’s systems ensure compliance with safety obligations.

Overall, the due diligence duty on “officers” requires personal vigilance to ensure that their organisation complies with its safety obligations.

4. What if I am too busy or don’t get around to it?

Penalties apply.

The following penalties are the maximum penalties:

1. Category 1 offence:
The officer without reasonable excuse and with recklessness exposing an individual to a risk of death or serious injury or illness – $600,000 fine or 5 years imprisonment or both.

2. Category 2 offence:
Failure by an officer (without recklessness) exposing an individual to a risk of death or serious injury or illness – $300,000 fine.

3. Category 3 offence:
Officer’s failure to exercise due diligence, but there is no exposure of an individual to a risk of death or serious injury or illness – $100,000 fine.

5. Is there some way to limit my personal exposure?

Although “officers” cannot delegate their due diligence duty to any other person, they should, ensure that appropriate clauses are included in their Employment Contracts to provide for support with the payment of legal advice and costs so they can understand their legal position and respond to any enquiries made by the authorities.  It is also appropriate for organisations and “officers” to ensure that insurance policies maintained by the company provide this style of cover to “officers”.

If you have any further questions, please contact Adam Robinson of our office on (07) 3123 5700.

Due to the impact of specific facts on any given case please treat this information as a general guide and not as legal advice. If you require advice on how to adequately protect your security rights please contact Adam Robinson on 07 3123 5700.