(02) 9525 8688

(02) 9525 8688

Commercial Litigation

Wed, 02/06/2013 - 15:49 -- alexr

Building and Construction Issues

When entering into a building or construction agreement, it is often difficult to anticipate some of the problems or difficulties that may arise in the future.

We have experience acting for individuals, businesses, joint venturers and builders in relation to building and construction issues including those relating to Payment Claims, Payment Schedules and Adjudications under the Building & Construction Industry Security of Payment Act.

As these disputes can often be complex, it is important to act promptly and obtain advice so that any issues can be resolved before further costs and problems arise.

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Debt Collection

Debt collection is a necessary business activity where creditors and collectors are able to take reasonable steps to secure payment from customers who are legally bound to pay or to repay money they owe.

Businesses that want to continue to work for current debtors should treat them fairly, with respect and courtesy. You should never harass or coerce them, treat them unconscionably or mislead them as to the nature of their debt, their legal obligations or any possible outcomes if the debt is not paid. You should also not pursue a person for a debt unless you have reasonable grounds for believing the person is liable for the debt.

Communications with the debtor must always be for a reasonable purpose and should only occur to the extent necessary. It may be necessary and reasonable for you to contact a debtor to:

  • give information about the debtor’s account;
  • convey a demand for payment;
  • accurately explain the consequences of non-payment, including any legal remedies available to the collector/creditor, and any goods/service restrictions that may apply;
  • make arrangements for repayment of a debt;
  • put a settlement proposal or alternative payment arrangement to the debtor;
  • review existing arrangements after an agreed period;
  • ascertain why earlier attempts to contact the debtor have not been responded to within a reasonable period, if this is the case;
  • ascertain why an agreed repayment arrangement has not been complied with, if this is the case;
  • investigate whether the debtor has changed their location without informing you, when there are grounds for believing this has occurred; and
  • sight, inspect or recover a security interest.

However, it is not reasonable or acceptable to contact a debtor to:

  • frighten or intimidate the debtor;
  • demoralise or exhaust the debtor; or
  • embarrass the debtor in front of other people.

The Australian Consumer Law, contains 3 general prohibitions that may be relevant to debt collection activity:

  • Prohibition of the use of physical force, undue harassment and coercion to support a demand for payment for goods or services/financial services is deemed unacceptable and is prohibited. These provisions are not limited to conduct directed at a debtor. They also apply to the collector’s conduct towards a third party (for instance, a family member);
  • Prohibition of misleading and deceptive conduct.Collectors are prohibited from making any statement or engaging in any other conduct (for example, impersonating someone, or using a false letterhead or document) that is misleading or deceptive or is likely to mislead or deceive. Collectors may breach this prohibition even though they do not intend to mislead - it is enough that the misrepresentation is likely to have this effect on the type or class of person to whom the conduct is directed. In some circumstances, a collector may need to positively disclose information to avoid creating a misleading impression; and
  • Prohibition of unconscionable conduct.Collectors risk breaching this prohibition particularly when they exert undue influence or pressure on, or unfair tactics against, a debtor who is specially disadvantaged or vulnerable.

If you require assistance in recovering money that is due to you, or you have received a demand from a creditor or a collection agency, we can provide you with advice that is specific to your situation.

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Consumer Protection

The NSW Department of Fair Trading (Fair Trading) provides some free information on your rights or responsibilities in regard to consumer laws, and using their services can be a cost effective way to resolve your consumer disputes. There are however, certain circumstances where you may require the services of a lawyer, such as:

  • where the goods are not covered by Consumer Protection laws;
  • where you require legal assistance as to the drafting of a claim; or
  • where you require advice in regard to proceedings (whether in the Consumer, Trader & Tenancy Tribunal or in another Court or Tribunal).

If you are a consumer, the steps below may help you resolve a problem.

Contact the seller or service provider to explain the problem and the outcome you want. In many cases, a simple phone call or visit can fix the problem. It can be a good idea to formally put your concerns in writing - that way, the seller is clearly aware of the problem and what you want and you also have a record of your contact. A letter or email of complaint may:

  • explain the problem;
  • explain the outcome you want;
  • outline the steps you may take if you and the seller cannot resolve the problem; and
  • ask for a response within a reasonable time - for example 2 weeks or 10 business days.

Contact Fair Trading, the Australian Competition and Consumer Commission (ACCC) or another third party. Fair Trading and the ACCC can give you information about your consumer rights and obligations and suggest possible courses of action you might take. They can also investigate and take action on behalf of affected consumers when a seller or manufacturer fails to meet obligations under certain consumer guarantees.

Take legal action. You may be entitled to take your complaint to a small claims court or tribunal. For disputes involving larger sums of money, you may want to discuss the claim with a lawyer before commencing a legal action.

If a complaint is made against your business, it is important you do not ignore it. Fair Trading or ACCC may contact you about the complaint and investigate it. It is wise to ascertain the facts of what happened, especially if the incident or situation does not directly involve you but a member of your staff, before making any statement. If you have actually broken the law, you should be prepared to offer compensation and ensure that the conduct isn't repeated by making any necessary changes to your operations and/or procedures however, no admission should be made in this regard without first obtaining legal advice as the liability may be great and your insurance cover can be adversely affected.

Tips for compliance:

  • Make sure you and your staff are fully aware of your rights and responsibilities under the Australian Consumer Law;
  • Try to resolve any complaints quickly and fairly;
  • Make sure to assess these complaints and put actions in place to remedy a repeat of any such situation. We find that many clients benefit from us reviewing and their Terms of Trade or their Conditions of Sale to overcome problems that they may have experienced with customers so they are less likely to occur again.

The ACCC can take legal action and impose fines against a business or its officers where the Consumer Law has been breached. We can also negotiate settlements to prevent any adverse determinations or penalties.

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Insurance Claims

We regularly advise in relation to the terms of cover, exclusions, limitations and other matters of importance in relation to insurance policies.

Such policies may cover general insurance policies for cars, boats, your home and contents, but also cover business expense insurance, life insurance, income protection insurance and other personal insurances. We can suggest appropriate experts to get insurance from or to update or change your policies or levels of cover.

We can also assist you to pursue a claim, deal with any issues where an insurer has denied your claim and advise in relation to liability were you do not have any insurance cover.

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Taxation Appeals

Taxation Appeals are made to the Federal Court and require a written application which sets out brief details of the objection. Usually, the taxpayer must also serve a sealed copy of the application on the Commissioner for Taxation, as Respondent, at the Office of the Australian Government Solicitor in the state or territory in which the application was filed.

Ordinarily, within 28 days of serving a sealed copy of the application on the Commissioner, the Australian Taxation Office (ATO) will provide the taxpayer with a Notice of Appearance, a copy of the documents filed with the Federal Court and a statement of the facts, issues and contentions regarded by the Commissioner as relevant to the appeal.

The Federal Court will then call a Directions Hearing, usually at least 5 weeks after the taxpayer’s application was filed.

Once the Federal Court is satisfied that the Commissioner has provided all relevant documents, appeals are then set down for hearing. The taxpayer usually is required to pay a setting down fee when a date is fixed for the hearing of the appeal. There is also a daily hearing fee that must be paid.

The Federal Court is able to overturn a decision of the Commissioner. However, the Federal Court cannot interfere with any discretion exercised by the Commissioner. It can only refer the matter back to the Commissioner for further assessment.

The Federal Court is able to award costs either against the Commissioner if the taxpayer is successful, or against the taxpayer if the Commissioner is successful. In either case, the proportion of costs awarded will generally be between 60% and 70% of the actual costs incurred by the successful party. However, if the Federal Court were to conclude that the behaviour of either the taxpayer or the Commissioner warranted sanction because of the way in which the case had been brought or conducted, a higher proportion of costs may be awarded.

If you are unhappy with a decision, we can provide you with advice as to the choice of whether to seek review in the Administrative Appeals Tribunal (AAT) or appeal in the Federal Court. Whilst the Federal Court is the more appropriate forum for objections which are highly technical or which involve complex propositions of taxation law, the court costs can be quite high. Taxpayers generally have their lawyers retain barristers to conduct their appeals.

The AAT is comparatively cheaper to commence and pursue reviews and places an emphasis upon consensual resolution of disputes. However, AAT members may be less experienced than Federal Court judges in hearing highly complex disputes which involve difficult propositions of taxation law or in managing pre-trial processes to ensure a speedy hearing.

Finally, taxpayers should note that the ATO will impose a General Interest Charge (GIC) on all outstanding taxation assessments from the date that the assessment was made. The lodging of a review at the AAT or appeal to the Federal Court does not stop this GIC from accumulating.

Taxpayers should seek legal advice as to whether to pay either the whole or a part of the disputed taxation notwithstanding commencing the review or appeal. While this will have financial consequences on the taxpayer, the payment will prevent further GIC from accruing. The cost of funding the payment may be less than the GIC. If the taxpayer is successful in the review or appeal, and the amount of the assessment has already been paid, the Commissioner may be obliged to refund interest on the refunded taxation payments.

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Shareholders, Director or Partnership Disputes

Shareholder, Director or Partnership disputes can be similar to family disputes as there is often an emotional element involved. In addition to this, the parties have often invested a great deal of time and money into the business, potentially making it more difficult to resolve any conflicts that may arise.

Whilst it is beneficial, at the commencement of a business, to have an agreement in place which outlines the rights and obligations of the parties, these are often overlooked as everyone is caught up in the excitement of the new venture and money is often directed into other projects with the parties hoping that they will never get in dispute.

These agreements do not necessarily have to be complicated however, they usually take the form of a Partnership Agreement, Shareholders Agreement, Unitholders Agreement or Joint Venture Agreement as may be required in the circumstances (or more than one where multiple entities are involved).

Obviously it is preferable to have the agreement in place before a dispute arises, regardless of whether or not there is a written agreement in place, we can provide you with advice on your rights, obligations and entitlements and assist you in the resolution of these disputes and how the law will operate in the absence of such an agreement.

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Intellectual Property

Intellectual property infringement is the infringement or violation of an intellectual property right. There are several types of intellectual property rights, such as copyrights, patents, trademarks, and designs. There are also actions available for "passing off" whereby an entity passes itself off as having some association with an entity that has a name, brand or other intellectual property rights.

Each of these rights/claims are outlined below:

Copyright infringement– this is the unauthorised or prohibited use of works under copyright, infringing the copyright holder's exclusive rights, such as the right to reproduce or perform the copyrighted work, or to make derivative works (it can extend to music, movies, books etc);

Patent infringement - is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a licence (paying a license fee or royalty). The definition of patent infringement may vary by jurisdiction, but it typically includes using or selling the patented invention. In many countries, a use is required to be commercial (or to have a commercial purpose) to constitute patent infringement;

Trademark infringement - is a violation of the exclusive rights attaching to a trademark without the authorization of the trademark owner or any licensees (provided that such authorization was within the scope of the license). Infringement may occur when one party uses a trademark which is identical or confusingly similar to a trademark owned by another party, in relation to products or services which are identical or similar to the products or services which the registration covers. An owner of a trademark may commence legal proceedings against a party which infringes its registration; or

Passing Off – is an action that can be taken to enforce unregistered trademark rights. Passing Off occurs where a trader makes a misrepresentation (written or verbally) that their goods or services are those of, or associated with, another trader, who as a result suffers damage to his goodwill. An action may also be commenced where a product looks similar to that of a well known brand, so as to cause confusion for consumers.

We can advise in relation to infringements, assist with business name registrations and advise on intellectual property issues generally. We can also direct you to appropriate trademark and patent attorneys to assist you to properly register your intellectual property rights so you have the best possible protection.

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Bankruptcy, Insolvency & Reconstruction

Once you become a Bankrupt, a trustee will be appointed to your estate. In order to pay your creditors, this trustee will:

  • sell your assets (although you will be able to keep certain types of assets),
  • mandate contributions from your income once you earn over a certain amount, and
  • investigate your financial affairs and may recover property or money that you have transferred to someone else for inadequate consideration

The duties of a trustee are specified in legislation such as the Bankruptcy Act 1966 (Cth) and trustees have to adhere to certain standardswhile administering your estate. You can choose to appoint a registered trusteeby obtaining and providing their consent when you lodge your petition to become bankrupt. If you do not choose a trustee, the a trustee at the Insolvency & Trustee Service of Australia (ITSA) is initially appointed to administer your estate. Your creditors may choose to change the trustee at any time.

In addition to seeking to declare bankruptcy yourself, any of your creditors may serve a Bankruptcy Notice on you (where you owe a judgment debt in excess of $5,000) and if that notice is not complied with, you will have committed an "act of bankruptcy" entitling the creditor to present a Creditor's Petition to the Court for an order for your bankruptcy (a sequestration order). The effect is the same – a trustee in bankruptcy is appointed.

The duties of the Trustee of the estate of a bankrupt are detailed in section 19 of the Bankruptcy Act and include the following:

  • notifying the bankrupt's creditors of the bankruptcy;
  • determining whether the estate includes property that can be realised to pay a dividend to creditors;
  • reporting to creditors on the likelihood of creditors receiving a dividend before the end of the bankruptcy;
  • providing information about the administration of the estate to a creditor who reasonably requests it;
  • determining whether the bankrupt has made a transfer of property that is void against the Trustee;
  • taking appropriate steps to recover property for the benefit of the estate;
  • taking whatever action is practicable to try to ensure that the bankrupt discharges all of the his/her duties under Bankruptcy Act;
  • considering whether the bankrupt has committed an offence under the Bankruptcy Act;
  • referring to relevant law enforcement authorities any evidence of an offence by the bankrupt pursuant to the Bankruptcy Act;
  • administering the estate efficiently and effectively to avoid unnecessary expense;
  • exercising powers and performing functions in a commercially sound way.

A Trustee in bankruptcy has very strong and broad powers under the Bankruptcy Act to enable him/her to fulfil his/her duties. Some of the more relevant powers are to:

  • investigate the bankrupt's conduct and examinable affairs (examinable affairs extend to associated companies, trusts, partnerships and natural persons such as professional advisors and relatives);
  • take possession of and realise the bankrupt's divisible property;
  • obtain books and records relating to the bankrupt's examinable affairs from the bankrupt, entities holding records of the bankrupt (such as solicitors or accountants) and associated entities of the bankrupt;
  • require the bankrupt to attend upon the Trustee;
  • obtain information from the bankrupt about his/her conduct and examinable affairs;
  • require a bankrupt to attend a meeting of creditors;
  • require a bankrupt to execute such documents as the Trustee or the Court orders;
  • obtain access to premises and books of other persons;
  • conduct public examinations before a Registrar or appointed Deputies in the Federal Court of Australia or Federal Magistrates Court of Australia;
  • conduct examinations and obtain records and information from persons (including bankrupts) under oath pursuant to a notice obtained from the Official Receiver;
  • request that the Official Receiver issue an offshore information notice to a person residing outside Australia, if it is believed that the person's information or books or copies of books are relevant to the examinable affairs of the bankrupt.

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