Issue 61 - March 2009

• Changes to first home buyers' benefits
• Succession Act amended
• Assessing insolvency
• Misrepresented property values entitle purchasers to rescind contract
• The Verdict

First home buyer alert Changes to first home buyer' benefits

If you are considering buying your first home you should keep a note of the following dates to ensure that you do not miss out on the first home buyers benefits:

20 April 2009 – All first buyers who apply for an exemption or concession in stamp duty must provide proof of identity (similar to the proof of identity required when making application for the first home owners grant.)

1 July 2009 – The first home owners boost scheme for the additional $7,000 for established homes and $14,000 for buying or building new homes will cease.

1 July 2009 – Subject to Federal Government approval the first home owners grant will be capped to properties valued up to $750,000

11 November 2009 – The additional new home buyers supplement of $3,000 will cease.

There are other criteria you must meet to be eligible for the additional new home buyers supplement and additional first home owners boost scheme for new homes and you should discuss these with us prior to entering into a contract, particularly if you are relying on the grant to form part of your settlement money.

If you require any specific information in relation to your particular circumstances please do not hesitate to contact Rebecca Flynn or Gina Haramis or email rebecca@wmdlaw.com.au or gina@wmdlaw.com.au.

 New era in Family Provision Act claims Succession Act amended

As of 1 March 2009, the Family Provision Act 1982 (NSW) was repealed and was replaced by Chapter 3 of the Succession Act 2006 (NSW).

Although the principles of the previous Family Provision Act, which provided for eligible people to make claims for provision from a deceased person’s estate are largely repeated in the new legislation, there are several significant changes, including the following:

A person who is in a domestic relationship (including opposite sex and same-sex couples) with the deceased person at the time of their death is entitled to apply as a right for a family provision order.
The limitation period for applications to be commenced has been reduced from 18 months to 12 months from the date of death of the deceased person, however the Court retains the power to extend time upon sufficient cause being shown.
Mediation has been formalised as a procedure under the Act, whereas it was previously only a matter of Court practice that mediation orders were made.
If we can assist you in any way in relation to making or defending a claim for provision in respect of a deceased persons estate or to discuss your estate planning requirements to seek to avoid such claims, please contact Craig Pryor or email craig@wmdlaw.com.au.
 

Hard times ahead Assessing insolvency

The risk of companies becoming insolvent is becoming more and more real as the effects of the global economic crisis are being felt by business in Australia. The number of court ordered company liquidations increased by 25% nationally during the quarter ended December 2008, 58% of such liquidations being in New South Wales alone.

The downturn in trade following decreases in consumer and business confidence has resulted in some companies finding it increasingly difficult to meet their debt obligations.

This unpredictability also makes it more difficult for companies to determine at any point in time whether they will be able to pay their debts as they fall due, that is, whether they are and will remain solvent.

Directors are obliged by the provisions of the Corporations Act 2001 to ensure that a company does not continue to trade and incur further debt if a company is insolvent. The breach of which can result in penalties of up to $200,000.

There are a number of factors that a court would take into consideration when determining whether a company is or is not solvent, including access to cash, the ability to sell assets and the like.

A director breaches the duty imposed by section 588G of the Act where at the time the person was a director:

the company was insolvent when the debt was incurred or became insolvent because it incurred that debt (or debts that including that debt);
there were reasonable grounds for suspecting that the company was insolvent or would become insolvent;
that person was aware at the time that there were such grounds for so suspecting or a reasonable person in a like position in the company's circumstances would have been so aware; and
the person failed to prevent the company incurring the debt.
The economic downturn has increased the risk of insolvency for companies and placed greater pressure on directors to comply with the Corporations Act as regards the insolvent trading provisions. In addition to the available defences under the Act, the unpredictability of the present economy may be an increasingly relevant factor for the Courts to consider in determining whether a director should have been aware of a company’s looming insolvency.

If wish to discuss the insolvency or potential insolvency of your company or if you require any assistance in relation to any corporation related matter, please contact Craig Pryor or email craig@wmdlaw.com.au.

Agents and vendors need to take care Misrepresented property values entitle purchasers to rescind contract

A purchaser of land may be entitled to escape from a contract on the basis that the real estate agent misrepresented the future value of property.  In a recent decision by the Supreme Court of New South Wales, a real estate company was ordered to repay the deposit to the purchaser when the contract was not completed.

In that case, the purchaser claimed that they were induced to enter the contract on the basis of a representation by the agent that the value of the property would double within 5 years.  The representation was made in a newspaper advertisement published by the agency.  At the time of the sale, the purchasers could not afford the purchase but were assured that they would be able to on-sell the property for a profit prior settlement.  During the period between exchange of contracts and settlement, the market fell substantially and the purchasers were not able to sell the property prior to settlement.  As a result, they failed to complete the contact and lost their 10% deposit. 

The Court found that the advertisements published by the agency materially contributed to the purchasers’ belief that the value of the property would increase in value prior to completion and that there were no reasonable grounds for the representations to be made. The Court granted relief for the purchasers by ordering that the contract be rescinded and damages paid.  This was despite acknowledging that the purchasers were inexperienced to deal with such a speculative investment.

The case should sound a warning to real estate agents to use caution if making representations about the future value of a property.  This is especially significant in the current economic climate.

If you require further advice in relation to a contract for the sale or purchase of property, please contact Rebecca Flynn or email rebecca@wmdlaw.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 melissa@wmdlaw.com.au.

I have a friend who lost their licence because they accumulated too many demerit points (or incurred demerit points while on a good behaviour licence). Can they appeal this decision?

A decision by the RTA to suspend an unrestricted driver’s licence due to loss of demerit points (or for demerit points being received while on a good behaviour licence) cannot be appealed however, depending on the offences which have lead to the demerit points being accrued and the timing of those offences, there may be steps you can take to avoid or drastically minimise the disqualification period imposed. You should immediately seek legal advice before paying fines which may be disputed.

There are a number of appeals which can be made to the Local or District Court in relation to licence disqualification including:

a decision by the RTA to suspend your licence for excessive speeding (whether 30Km/hr or 45Km/hr over the limit);
a decision by police to issue a suspension notice;
a decision by the Local Court to suspend or disqualify you from driving.
In most cases you may retain your licence after lodging the appeal until such time as your appeal is heard.  A licence appeal to the Local Court or an appeal to the District Court against a decision of the Local Court has a time limit of 28 days so prompt attention is vital.

A separate appeal can be made to any Local Court, at any time, to quash or reduce a declaration that a person is an habitual offender. There are very compelling reasons to give close consideration to the timing of such an application.

For advice in relation to all driving offences please contact Kevin Dwyer or email kevin@wmdlaw.com.au.
 

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