McKillop Legal

What is a lien?

A lien is the right of a person or business to hold or retain possession of an item as security for performance of an obligation owed by another, such as the payment of monies owed.

Liens only apply to physically transferable items of personal property and effectively act as an informal or unregistered form of security for payment.

Liens only arise if the item was given to the lien holder with the express or implied authority of the owner (such as the owner or driver of a vehicle) and generally won’t arise over stolen property.

A lien does not arise simply by simply performing work.  There must be a basis for a lien to arise such as a contractual right, a piece of legislation or operation of the law.

There are 4 types of liens, each of which we discuss briefly below:

  1. statutory;
  2. contractual;
  3. common law (or possessory); and
  4. equitable.

In all but the latter of the categories, maintaining actual possession of the property in question is crucial as the rights afforded to the lien holder are only applicable while the lien holder is in possession of such property.

Statutory liens

Statutory liens arise through the operation of specific pieces of legislation such as those in Part 5 of the Sale of Goods Act 1923 (NSW), the Storer’s Liens Act 1935 (NSW) etc.

The relevant Acts describe the terms of the liens created by those statutes.

Contractual liens

If the terms of agreement, terms and conditions of trade or similar document that governs the rights and obligations of the parties to a contract provide for a lien, then such a lien is a ‘contractual lien’.

The operation of the lien is the same however – there must be money or some obligation owed and an item of the other party held pending payment or performance of that obligation.

Common law liens

At common law, liens can either be ‘particular’ or ‘general’ (also known as ‘specific’) and arise by implication of law.

A ‘specific lien’ secures obligations that are incurred in respect of the particular goods that are held.  A common example of a specific lien is the ‘mechanic’s lien’ – the right to hold your car until you have paid for the work performed or a repairer’s lien for payment in respect of improvement work done on a chattel.

A ‘general lien’ however is more favourable, although far less common and more difficult to establish. A general lien allows a person to retain possession of any goods held (but not sell or otherwise deal with that property) until all sums payable by the owner of the goods are satisfied, not just the amount payable in respect of work performed on the specific goods held hostage.

General liens must be established by strict proof of custom or usage such as a ‘solicitors’ lien’ or an ‘accountant’s lien’ which allows a solicitor or accountant to assert a lien over and thus retain a client’s documents (or the fruits of a court action) until payment of all debts owed by the client. It is effectively an implied term of the relevant contract.

Equitable liens

Equitable liens are created on a case by case basis by the law of equity as determined by the Courts. Judges may declare such liens so as to uphold or preserve fairness or justice to a situation having regard to the parties’ dealings and conduct.

An example is where a party spends money improving the item for another where there was either express or implied agreement that the performing party should have an interest in the enhanced property. The party who performed the work and is owed the debt may then acquire an equitable interest in the property proportionate to the value of the enhancement.

Unlike the other types of liens, ‘equitable liens’ do not require actual possession of the article in question. Such liens can be voided by the express or implied agreement of the parties.

Consideration often needs to be given to the value of the lien compared to the substantial time and monetary cost of seeking judicial intervention.

How does a lien end?

Any right to assert a lien (other than an equitable lien) expires upon performance of the outstanding obligation (such as payment) or upon release if the item over which the lien is maintained as without possession, there is no lien.

How does the PPSA affect a lien?

Statutory liens and common law liens can be exempted from the operation of the Personal Properties Securities Act 2009 (Cth) (PPSA).

In some circumstanced, the party asserting the lien can have priority over any security interests registered on the Personal Property Securities Register (PPSR) held by other creditors of owner of the item if:

  • the materials/services were provided in the ordinary course of business by the person asserting the lien;
  • no other Act prevents the lien from having priority; and
  • the holder of the lien did not have knowledge of any security agreement under the PPSR relating to those goods (that prohibited the creation of the lien).

Security interests registered on the PPSR under the PPSA will usually defeat any contractual lien.

FURTHER INFORMATION

For more information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au to discuss your needs.

This information is general only and is not a substitute for proper legal advice.

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Enforcing judgments overseas (and vice versa)

The success of enforcing judgments overseas will largely depend on the laws of country where the judgment is sought to be enforced. Sometimes the common law or a treaty allows enforcement but often it relies on a statutory arrangement.

Australia has reciprocal arrangements with various countries but as a general rule, to be enforceable in another jurisdiction, the judgment must be:

  • for a fixed sum;
  • consistent with the laws or public policies of the relevant country; and
  • final and conclusive, and

you must provide a verified copy of the original Australian judgment, a translation of the judgment into the relevant language, an affidavit or similar providing at least details of the Australian proceedings, the relevant debt, details of the overseas debtor. There may be some other local matters to tend to as well.

Enforcing a foreign judgment in Australia

The Foreign Judgments Act 1991 (Cth) provides for the recognition and enforcement of foreign judgments in Australia.

To be enforceable, the foreign judgment must generally:

  • be less than 6 years old;
  • require the payment of money;
  • be final and conclusive (even if subject to or likely subject to an appeal); and
  • not have already been satisfied in the foreign jurisdiction.

Which countries have reciprocal arrangements?

The statutory schemes only apply to countries that have entered into reciprocal arrangements with Australia for the enforcement of each other’s judgments (See Schedule to Foreign Judgments Regulation 1992).

This includes British Virgin Islands, Cayman Islands, Fiji, France, Germany, Italy, Israel, Korea, Japan, Korea, Papua New Guinea, Singapore, Sri Lanka, Switzerland and the United Kingdom.

It does not include China (although technically Hong Kong is included), India, Russia or the United States of America.

New Zealand has special arrangements as set out below.

New Zealand arrangements

Part 7 of the Trans-Tasman Proceedings Act 2010 (Cth) allows New Zealand judgments of a broader nature to be enforced in Australia including some judgments that don’t solely relate to the payment of money.

This excludes things like probate, guardianship, and the welfare of minors.

Enforcement

Registration of the foreign judgment can be as simple as filing  an application in a Supreme Court, where a judge will process the application (assuming it meets the requirements) in chambers in the absence of the other party and register it as a judgment in that court. The judgment debtor must be served with notice of the registration when the judgment is registered.

The registered foreign judgment can then be enforced like any other judgment such as by way of:

FURTHER INFORMATION

For further information in relation to enforcing a judgement, debt recovery, litigation or any other commercial law matter, contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Merry Christmas from McKillop Legal

Our office will be closed from 1pm on 23 December 2020 and will re-open on in late January 2021.

We wish our clients, referrers, friends and family a very merry Christmas and a happy, prosperous (and hopefully COVID free) New Year ahead in 2021.

Do you have any Unclaimed Money?

In New South Wales, any unclaimed money is generally held by the Revenue NSW.

Unclaimed money is generally any amount in excess of $100 held for at least 6 years without any activity on an account. This may be because the owner moved, changed their name or simply forgot about it.

Types of unclaimed money held by Revenue NSW include dividends, unpresented cheques, distributions, sale proceeds, commissions, royalties and the like.

Generally, enterprises that operate in NSW and hold unclaimed money as at 30 June in any year must submit the money to Revenue NSW by 31 October of that year, after having made reasonable attempts to contact the rightful owner and return the money to them.

Other thresholds and timeframes apply to specific industries such as real estate agents, law firms and trustee companies that operate trust accounts.

You can search for money held by Revenue NSW here.

Unpaid wages

Sometimes an employer owes wages to an employee who has left their business or where wages have found to be underpaid following a workplace audit.

Where the employee can’t be contacted, the unpaid wages are generally held by the Fair Work Ombudsman and can be searched for here.

Superannuation

Superannuation funds that cannot locate beneficiaries of superannuation monies place the details on the Superannuation Lost Members Register, which can be searched through the MyGov portal via Australian Taxation Office’s website here.

Banks and life insurers

Banks, credit unions and life insurance companies also have unclaimed money issues where a bank account is inactive (has no deposits or withdrawals) for 7 years or where the proceeds of a life insurance policy is unclaimed for 7 years after the policy matures.

Where they can’t locate an owner of funds held, they must lodge their unclaimed monies with the Australian Securities & Investments Commission.

Unclaimed money received by ASIC is transferred to the Commonwealth of Australia Consolidated Revenue Fund and it is available to be claimed at any time by the rightful owner and there is no time limit on claims. ASIC’s unclaimed money search is located at ASIC’s MoneySmart website here.

FURTHER INFORMATION

For further information in relation to unclaimed money or any business related legal issues, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Does marriage, separation or divorce affect my Will?

This blogpost is limited to New South Wales as the laws in each State and Territory differ in relation to these matters.

Marriage

If you get married after you sign a Will, the Will is revoked unless it is specifically stated to have been made in contemplation of that particular marriage taking place.

Marriage will not affect a gift to the person who is your spouse at your date of death or their appointment as your executor.

Entering into a defacto relationship does not have the same impact on a Will as a marriage, but this can give rise to other rights as regards the property of the relationship whilst the parties are alive (and claims in relation to the division of the estate on their deaths).

Divorce

Subject to the contrary intention being expressed in a Will, if you divorce after you make your Will, it only revokes or cancels any gift to a former spouse and their appointment as executor.

It will not however cancel their appointment as trustee of property left on trust for beneficiaries that include children of both you and your former spouse.

Separation

If you don’t update your Will after you separate, your spouse may inherit any property you left to them and they can still be the executor of your estate if named as such in theWill.

The take away

If any time your circumstances change (such as a birth or death in the family, a marriage, separation or divorce or a material change in finances for the better or the worse) you should consider whether your estate planning documents require any updates. It may be that no change is necessary, but it at least should be considered.

FURTHER INFORMATION

For further information in relation to Wills and estate planning, contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Am I entitled to a copy of a Will?

At a very emotional time, often there is confusion as to what rights and obligations exist in relation to obtaining a copy of someone’s Will.

Many clients ask us “Am I entitled to a copy of a Will?” or “Do I really need to give them a copy of the Will?

It should go without saying that no-one is entitled to see the Will of a person who is still alive! After death however, the Succession Act 2006 (NSW) provides that any person who has possession or control of a Will of a deceased person must allow any one or more of the following persons to inspect or to be given copies of the will (at their own expense):

“(a) any person named or referred to in the Will, whether as a beneficiary or not,
(b) any person named or referred to in an earlier Will as a beneficiary of the deceased person,
(c) the surviving spouse, de facto partner or issue of the deceased person,
(d) a parent or guardian of the deceased person,
(e) any person who would be entitled to a share of the estate of the deceased person if the deceased person had died intestate,
(f) any parent or guardian of a minor referred to in the Will or who would be entitled to a share of the estate of the testator if the testator had died intestate,
(g) any person (including a creditor) who has or may have a claim at law or in equity against the estate of the deceased person,
(h) any person committed with the management of the deceased person’s estate under the NSW Trustee and Guardian Act 2009 immediately before the death of the deceased person,
(i) any attorney under an enduring power of attorney made by the deceased person,
(j) any person belonging to a class of persons prescribed by the Regulations.”

As you can see:

  • there are a number of persons that have a right to a inspect or to be given a copy of the Will; and
  • the executor or person with possession or control of a Will (which could include a lawyer or firm that holds it in safe custody) have an obligation to provide a copy on request.

Of course, there needs to be proof provided that the person who made the Will has in fact died – ie, provide the death certificate (which usually happens via the executor or next of kin).

The purpose of this access to the Will is partly to allow an persons with a claim on a deceased estate to know if they have been provided for in the Will, that it is the deceased person’s latest Will and who the executor is.

There is sometimes also confusion as to the effect of clauses in Wills that provide for the appointment of a particular person or firm as the estate’s lawyers for the purposes of obtaining probate. The executor is free to choose whichever lawyer or firm they wish to act for them in obtaining probate and assisting with the administration of a deceased estate.

The Probate and Administration Act 1898 provides that the Will of the deceased, once admitted to probate, is a public document and that anybody is entitled to apply for a copy of it from the Supreme Court of New South Wales  (and paying the relevant fee) however, it is generally best to contact the person in possession of the document for a copy, before approaching the Supreme Court.

FURTHER INFORMATION

For further information in relation to Wills, Probate, estate planning or even International Wills, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Unpaid interns

Typically, unpaid internships offer a taste of what is usually involved in a job or industry, as well as the chance to network and to add practical experience to their resume.

Many businesses however seek to avoid paying lawful entitlements to employees by labelling them an “intern” or calling it a “vocational placement” or similar. In law firms (yes, they do it too), it’s a “law clerk”.

The fact is that if they are performing productive work for your business, they are an employee and are therefore legally entitled to be paid.

Before engaging an unpaid intern, business owners need to genuinely consider if the placement is providing them with work experience, a career opportunity and take steps to avoid the arrangement being considered exploitation. That is, are they really an unpaid employee?

To determine whether the arrangement is ‘employment’ ask yourself these questions about the proposed intern:

  1. Will they have actual responsibilities (as opposed to just observing)?
  2. Will their workload be similar to a paid employee?
  3. Will the intern replace a paid employee?
  4. Will the intern have administration duties?
  5. Will the intern collect coffee orders?
  6. Does your business rely on interns for ongoing duties?

If you answered “yes” to any of the above, they are assisting your business, not learning, so it is likely that your unpaid interns will actually be employees and hence entitled to minimum Award rates.

Even if you will genuinely have unpaid interns at your workplace, they should have a contract (although not an employment contract) covering that fact and requiring them to maintain standards such as confidentiality, returning company property at the completion of the placement etc.

FURTHER INFORMATION

For further information in relation to any employment related issue or any business/commercial law matter, contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au 

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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Is your business using the correct form of Fair Work Information Statement?

On 13 August 2020, the High Court of Australia handed down a decision about the method of accruing and taking paid personal/carer’s leave under the National Employment Standards.

The case was Mondolez Australia Pty Ltd v AMWU, which overturned a decision made by the Full Federal Court in August 2019 that could have resulted in significant claims for backpay and contraventions of the Fair Work Act 2009 (Cth) as its effect included that part-time employees are entitled to 10 days’ paid personal leave per year (the same as a full time employee), regardless of the number of days actually worked.

The High Court found that the entitlement to 10 days of personal/carer’s leave is calculated based on an employee’s hours worked, not days when interpreting s.96(1) of the Act such that a ‘day’ refers to a notional day, consisting of 1/10th of an employee’s ordinary hours of work in a 2 week period. Accordingly, 10 days of personal leave can be calculated as 1/26 of an employee’s ordinary hours of work in a year.

The Fair Work Ombudsman has updated the form of Fair Work Information Statement (FWIS) as a result.

Employees need to ensure they provide the correct form of FWIS to all new employees. Is your business using the correct form of Fair Work Information Statement?

FURTHER INFORMATION

For more information, please contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au to discuss your needs.

This information is general only and is not a substitute for proper legal advice.

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Recording a private conversation without consent

Technology today is amazing. We have smartphones almost immediately available – they are light, portable and small are often used to record events… but how does that ease and regularity of use sit with an individual’s right to privacy?

In New South Wales, the Surveillance Devices Act 2007 regulates the use of listening devices.  That Act also covers the use of data surveillance, optical surveillance devices and tracking devices. Breaches of the Act can lead to criminal charges.

What is a listening device?

The Act defines a listening device as:

any device capable of being used to overhear, record, monitor or listen to a conversation or words spoken to or by any person in conversation, but does not include a hearing aid or similar device used by a person with impaired hearing to overcome the impairment and permit that person to hear only sounds ordinarily audible to the human ear

so it clearly includes mobile phones, GoPros and video cameras.

It is an offence under s.7 to knowingly install, use or cause to be used or maintain a listening device to overhear, record, monitor or listen to a private conversation to which the person is not a party or to record a private conversation to which the person is a party.

There are some exceptions to this however, such as if:

  • all principal parties to the private conversation expressly or impliedly consent to its use, or
  • you are a principal party to the private conversation and:
    • it is reasonably necessary to protect your lawful interests; or
    • you do not intend to communicate or publish what was recorded or a report of it to anyone who was not party to the private conversation

The onus of proof for establishing an exception lies on the party seeking to establish the exception, and that onus is on the balance of probabilities.

Law enforcement officials can use listening devices in a range of circumstances including where they have a warrant from a Judge or Magistrate; if they don’t have a warrant but there is a serious or urgent matter requiring its use but not enough time to get a warrant; or where a police officer wearing a visible body worn video device etc.

Even if in Court proceedings, the exception to the rule is not found to apply, it might still (but in certain circumstances only) be possible to have the recording, or evidence based on it such as a transcript of what was said, admitted into evidence under the improperly obtained evidence rules in s.138 of the Evidence Act 1995 (NSW).

What is a private conversation?

A private conversation is conversation where it can be reasonably assumed that those involved in the conversation do not want the conversation to be overheard by others, that is, it is more informal or not public. A private conversation is not private if the people in the conversation can reasonably expect the conversation to be overheard by others.

Penalties

The best course is generally not to record a private conversation without consent unless it is absolutely necessary.

The penalty for individuals for a serious breach of the Act is an $11,000 fine or up to 5 years in prison.

A person who intentionally or recklessly communicates or publishes the contents of a private conversation which could endanger the health or safety of someone, or prejudice an investigation, faces a maximum penalty of 7 years in prison.

For corporations, offences under the Act attract a maximum fine of up to $55,000.

FURTHER INFORMATION

This information is general only and is not a substitute for proper legal advice.

For more information, please contact Craig Pryor at McKillop Legal on (02) 9521 2455 or email craig@mckilloplegal.com.au to discuss your needs.

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Coronavirus: Insolvency and Bankruptcy Changes

The financial effects of the COVID-19 pandemic are starting to be felt by many businesses with debts remaining unpaid for longer and those that may have limped through until now starting to have liquidity or cashflow problems.

If you or your business are considering options for debt recovery from customers, note that during the pandemic period (24 March – 25 September 2020 or any longer period prescribed by Regulations*), the laws regarding insolvency and bankruptcy in Australia have been varied by Schedule 12 to the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) such that when enforcing debts, the following have changed from the usual arrangements:

Bankruptcy Notices

The temporary measures to the operation of the Bankruptcy Act 1966 (Cth) and its Regulations introduced by the federal government include:

  • the minimum amount of a judgment debt required for the issue of a Bankruptcy Notice has increased from $5,000 to $20,000; and
  • the recipient individual’s time to pay or respond has increased from 21 days to 6 months.

Once a Bankruptcy Notice expires without being met an “act of bankruptcy” will have occurred and, as usual, the creditor that issued it can commence court proceedings to seek a sequestration order to bankrupt the individual.

Other changes include those in relation to the moratorium period for those that submit a declaration of intention to present a debtors petition for their own bankruptcy

Creditor’s Statutory Demands

The temporary changes affecting the Corporations Act 2001 (Cth) and its Regulations in relation to corporate debts include:

  • the threshold amount of debt/s required for the service of a Creditor’s Statutory Demand has increased from $2,000 to $20,000; and
  • the recipient company’s time to pay or respond has increased from 21 days to 6 months.

Once a statutory demand expires without the debt being paid or an arrangement for the payment of the debt being agreed, the creditor can commence court proceedings to wind up the debtor company.

Director liability for insolvent trading

Similar changes have also been made to laws regarding director liability for insolvent trading where the debts are incurred in the ordinary course of business (temporarily supplementing existing “safe harbour“provisions).

The above changes do not affect other enforcement measures such as: winding up companies on the ‘just and equitable‘ ground; garnishee orders; or writs for the levy of property.

The Schedule 12 changes relate only to those Bankruptcy Notices issued in the relevant period and those Creditor’s Statutory Demands served in the relevant period, not those issued or served (as the case may be) prior to 24 March 2020.

(*Note on 07 September 2020, the Federal Government extended these measures until 31 December 2020).

FURTHER INFORMATION

For further information in relation to debt recovery, bankruptcy, insolvency or any other commercial law matter, contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au.

This information is general only and is not a substitute for proper legal advice. Please contact McKillop Legal to discuss your needs.

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