Issue 44 - September 2007

• Bankruptcy notices – non compliance can cost you
• Can I make changes to the contract after exchange?
• Valuing the closely held business in family law settlements
• Kids Break Free Charity
• The Verdict

Don't delay in seeking advice Bankruptcy notices – non compliance can cost you

Bankruptcy Notices can be an efficient tool to enforce a judgment debt however, many people do not understand the effect of such a notice and don’t seek legal advice if served with one.

The Bankruptcy Act provides that if a judgment debtor (a person who owes money under a judgment of a court) does not take any steps within the 21 day period after being served to either;
apply to have the notice set aside;
pay to the judgment creditor (the person to whom the money is owed) the amount of the debt; or
make an arrangement to the judgment creditor's satisfaction for settlement of the debt,
then the creditor may commence proceedings in the Federal Magistrates Court or the Federal Court of Australia seeking an order to have the debtor declared a bankrupt.

If you are ever served with a Bankruptcy Notice, you ought to immediately seek advice from us in relation to your rights as failure to comply with the notice or to have it set aside (for which there are very limited grounds) in that small window of time could result in you being declared a bankrupt.

Bankruptcy can have a devastating effect on your family and your finances as a trustee is appointed to sell off your assets to pay your debts (including the creditor’s costs of the proceedings to declare you bankrupt and the trustee’s costs even if it is a mere oversight that you failed to comply with the notice) and you will find many restrictions on your ability to borrow money, obtain employment or even be a company director.

Even if you have sufficient assets to meet your debts and seek to have the bankruptcy annulled, failing to adhere to the 21 day timeframe to pay the debt(s) will put you to considerable expense.

If you wish to discuss any debt or bankruptcy related matter, please contact Craig Pryor or email craig@wmdlaw.com.au.

Amendments to the contract for the sale of land Can I make changes to the contract after exchange?

People often ask “I have exchanged contracts, with a cooling off period, can I now make amendments to the terms of the contract?” The contract, as exchanged, is a binding contract and sets out the terms on which the parties have agreed to sell/purchase the property.

Purchasers must be aware that when entering into any contract, whether with a cooling off period or not, that the terms of the contract reflect the agreement reached between the parties at the time of exchange. The vendor is under no obligation to agree to amendments to the contract after exchange of contracts.

However, if agreement is reached between the parties to amend the terms of the contract, this agreement can only be affected by:

a separate deed evidencing the changes to the terms of the contract, signed by both parties; or
alternatively, the contracts can be rescinded and a new contract can be entered into.
We are sometimes asked by the lawyer acting for the other party to simply amend the contract which has already been signed but this is not permitted. This type of amendments has been described as "trying to remove the egg after the cake has been baked".

It is imperative that you seek proper legal advice prior to executing a contract. This is the case even if the contract contains a cooling off period, as it is always best to negotiate any amendments to the contract prior to exchange of contracts. It is important to note that a contract entered into when a property is purchased at auction, or on the day that a property is offered for sale by public auction, will not contain a cooling off period.

If you would any further information or assistance with the sale or purchase of a property, please contact Rebecca Flynn or Gina Haramis or email rebecca@wmdlaw.com.au or gina@wmdlaw.com.au.

You need an objective valuation Valuing the closely held business in family law settlements

In many Family Law Act and Property Relationships Act settlement cases, the value of a business controlled by the husband or the wife will be an important component of the total assets available for distribution. Often, the suggestion that a business which is a small concern should be valued is met with the retort that the business cannot be sold and is only the vehicle for the husband or the wife to earn income. In other words, it has no value and is only the job of the husband or the wife.

In assessing the value of the assets to be distributed, the Court will very often have regard to the value that the business has in the hands of the controlling party even if evidence is available that it cannot readily be sold to a third party. The Court takes the view that the income producing capability of that business has a value of its own in the hands of the husband or the wife and that this must be represented as part of the overall assets to be divided.

If you are involved in discussions concerning the division of assets, bear in mind that even a small business concern, if it is capable of producing sustained income, may have a value greater than you expect. An appropriate independent valuation by a forensic accountant is essential to properly identify the assets available for both parties.

If you would like any further information property settlements involving a business or family law related matters, please contact Greg Dickson or email greg@wmdlaw.com.au.

Helping local kids Kids Break Free Charity

As you are probably aware, the “Kids Break Free Charity” is a locally developed charity to raise funds to operate programs educating young people on the harm associated with the abuse and misuse of alcohol and other drugs.  Kids Break Free will be conducting a dinner on Thursday, 27 September 2007 from 6.45pm at Bluefin Restaurant at Cronulla Sharks, 461 Captain Cook Drive, Cronulla.

The keynote speaker for the dinner will be Paul Featherstone, the “legendary” ambulance paramedic, who is probably most famous for his bravery and skilful rescue work concerning the rescue of Stuart Diver in the Thredbo Disaster. Paul has also been involved in the recent Beaconsfield Mine Disaster and was also involved in the rescues arising from the Granville Rail Bridge Collapse.

To book your seats please contact Jennifer Palmer of Sullivan Dewing by email, Jennifer@sullivandewing.com.au.

Your questions answered The Verdict

In this section, we answer your general questions in relation to any area of law. Obviously, 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

When and why should I make a Will?

If a person dies without making a will then that person is said to have died intestate and then their estate will be distributed according to a statutory chain of inheritance contained in the Wills, Probate & Administration Act 1898 (NSW). This assumes that the deceased person would have intended to benefit their next of kin and does not provide for specific items to be given to a particular person, or for circumstances such as where the deceased person would have wanted to give a larger share to one relative or did not wish to make a gift to a certain relative at all.

A person must make a new will if they marry, as marriage revokes a will, unless the will is stated to be in contemplation of that marriage. A new will should also be made if the testator divorces or experiences a major change in circumstances which would make the provisions of a previous will no longer suitable.

A testamentary trust is a trust established by a will. A testamentary trust can be optional (the beneficiary can choose whether or not to use it), discretionary (the beneficiary decides who will benefit) or fixed or a combination of these. The use of a testamentary trust in a will provides beneficiaries with maximum flexibility in dealing with their inheritance. The use of testamentary trusts gives your executors and beneficiaries the most flexibility to deal with the assets of the estate in the most tax effective manner.

To ensure that your property is inherited by the people of your choice, you should take the time to make a will and it is a good idea once you have made a will to revise it on a regular basis.

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