Issue 40 - May 2007

• The business judgment rule for sale of assets by external administrators
• Superannuation assets and your will
• Some frustration is necessary!
• Jeffrey M Jones solicitor part of the Warren McKeon Dickson Practice Group
• Global Corporate Challenge
• The Verdict

Administrators and liquidators are not required to obtain the best possible price The business judgment rule for sale of assets by external administrators

Administrators and liquidators do not owe a duty to obtain the best possible price for a company's assets sold during the course of the external administration. Rather, they are entitled to rely upon the business judgment rule and proceed in a prudent way in relation to the sale of assets.

In 2006, in the New South Wales Supreme Court decision of Hausmann & Stunniberg v Smith, the shareholders and creditors of a company brought an interlocutory application against the company's administrators to prevent them from making or completing any contract for the sale of the company’s assets, arguing that the administrators were in breach of their duties by failing to obtain the “best possible price” for the company's business.

In dismissing the application, Justice Barrett held that there was no such duty to secure the highest price for the company's assets and although administrators and liquidators, as fiduciaries and by statute, owe duties of care, diligence and good faith, they are entitled to take into account a wide range of considerations. On no view can the duties be said to include a duty to sell only at the “best possible price”.

For further information regarding liquidations, administrations or other company related issues, please contact Craig Pryor or email craig@wmdlaw.com.au.

Where will your super end up when you die? Superannuation assets and your will

Many people acting on financial advice are transferring retirement savings and assets into their superannuation fund before changes to superannuation laws take effect on 1 July 2007. It is important to know that in most circumstances, assets held by your superannuation fund will not form part of your estate when you die. The trustee of your superannuation fund will decide what to do with your hard earned savings on your death.

You may be able to put in place a binding death benefit nomination specifying how you would like your superannuation death benefits to be paid. You can nominate certain beneficiaries or you can state that your death benefits are to be paid to your legal personal representative. Your legal personal representative (that is, the executor of your will) can then distribute those assets in accordance with your will. Where those assets are transferred to a testamentary trust there can be significant tax savings for your beneficiaries.

A binding death benefit nomination and a testamentary trust are often the best way to ensure your chosen beneficiaries get the most from your superannuation savings. We can work with you and your accountant or financial planner to ensure your superannuation and estate assets are distributed in the most tax effective manner.

If you would like us to review your estate planning needs in more detail please contact Jayne Humpreys or Craig Pryor or email jayne@wmdlaw.com.au or craig@wmdlaw.com.au.

Parenting considerations from a child development expert Some frustration is necessary!

Gary Direnfeld is an expert in child development, parent-child relations, marital and family therapy, custody and access recommendations and social work. In his article ‘Some Frustration is Necessary!’ Gary discusses the importance of a child’s ability to delay gratification and tolerate frustration and how essential these life skills are to a child’s development.

Children who can delay gratification and tolerate frustration learn that the world does not revolve around them and that their needs and wants may need to be met in the context of other people and competing demands. On the other hand, children who continually get their desired outcome through tantrums or through over-attentive caregivers grow up to become self-centred and demanding.

These problems can intensify in adult life, threatening to undermine both personal relationships and work life by giving rise to uncompromising, abusive and even narcissistic behaviour.

Reversing these traits can be extremely difficult says Direnfeld, which is why it is vital for parents to appreciate the need for their children to develop frustration tolerance and learn to delay gratification. This of course does not mean to say we neglect children’s needs. Rather, parents should meet their children’s needs with the view that no harm comes from not always getting their own way.

According to Direnfeld, children who learn to delay gratification and tolerate frustration tend to be more patient, are able to set longer-term goals and are more in tune to the needs of others. All of these are necessary skills for success in school, work, love and life.

If you require any further information concerning parenting issues or family law in general please contact Greg Dickson or email greg@wmdlaw.com.au.

For a full version of Gary Direnfield's article please visit http://www.yoursocialworker.com/p-articles/frustration.htm

New Wollongong Practice Jeffrey M Jones solicitor part of the Warren McKeon Dickson Group

We are pleased to announce that the practice of Jeffrey M Jones solicitor of Suite 4, 52 Burelli Street, Wollongong has joined with our firm effective 1 May 2007. Jeff has agreed to accept a position as a senior consultant with the firm and his long term assistant, Shelley Barakat, has also agreed to remain with the practice which will continue to operate from Wollongong. The telephone number for our Wollongong office is (02) 4225 2303.

The decision to join the firm coincides with Jeff’s plans to wind down his activity as a lawyer and to begin to enjoy a well deserved retirement.

We welcome all the clients of Jeff Jones and look forward to strengthening our ability to provide legal assistance in the Wollongong and surrounding areas. The establishment of a Wollongong base assists in our plans to expand our legal services throughout Sydney and the South Coast of New South Wales where we already have a substantial presence through the branch office we operate in Batemans Bay known as Ennis Smith & Bradbury Lawyers.

Join WMD in their walk around the world! Global Corporate Challenge

The global corporate challenge (GCC) is a corporate health initiative designed to encourage corporate and business people to maintain a healthy lifestyle and keep active. The challenge begins 24 May 2007 and runs for 125 days. Teams of 7 from within a workplace undertake a virtual walk around the world. Participants wear a pedometer to record their daily steps and keep a log of them on the GCC website. Teams can track and compare their progress against other teams within their business as well as those from around the world.

WMD has 3 teams participating and would also like to encourage other local businesses to take up the challenge.

For more information or registration details please visit the GCC Website.

Your questions answered The Verdict

In this section, we answer your general questions in relation to any area of law. Obviously in this forum, we are not able to provide specific legal advice or advice in relation to a current legal matter. If you have a question you would like us to answer, please submit it by email to rebecca@wmdlaw.com.au

Why do lawyers do what lawyers do?

We often receive questions from our clients on why we, as lawyers, do things the way we do. From time to time we will include in the newsletter some information regarding these things to try to answer some frequently asked questions.

Why are there often several drafts of my affidavit?

Questions are often raised particularly in relation to drafting client affidavits and other court documents. Drafting is a progressive process and a finished product is usually not generated in one draft. When a draft is provided to the client, it is an opportunity to clarify their instructions and ambiguous points. To settle these documents, further refining and polishing is often required, which can involve numerous drafts, to ensure the document accurately represents the client's case and their instructions.

Why do I get sent copies of letters sent to the other side?

Clients who do not engage the services of a solicitor regularly often feel inundated with letters and information. Lawyers provide letters of regular updates to clients, as well as copies of important correspondence and documents in order to keep the client abreast of how their matter is progressing and the work being under taken on their behalf. The rationale for this is that as lawyers, we owe a duty to the client to serve them competently and diligently and in so doing, we are to give them the benefit of all information relevant to their affairs.

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