McKillop Legal

No Will – dying intestate

If you were to pass away without leaving no Will, then your estate will not necessarily pass to the people that you may wish to benefit.

Dying without a Will in place is called dying “intestate” and the ultimate beneficiaries of your estate will miss out on important and valuable benefits that could have been provided had you put in place a Will such as asset protection and tax minimisation opportunities like those in Testamentary Trusts.

Making an application to the Supreme Court to deal with the estate of a person who dies intestate is similar to seeking a grant of Probate but it is called applying for “Letters of Administration”. If a Will is left but fails to appoint an executor, it is “Letters of Administration with the Will Annexed” but at least then the Will would explain who you want to benefit following your death.

In addition to the Summons, Inventory of property and Affidavit of Administrator, things that need to be provided to the Court include: proof of enquiry into the existence and whereabouts of any Will; the identity of the deceased’s eligible relatives (death, birth and marriage certificates); proof of notification of the application to interested persons; an affidavit regarding the relationship status of the deceased; and possibly provision of an administration bond.

The reason for this evidence of a spouse/domestic partner is that the law provides for a formula as to how an intestate estate is to be divided and a lot depends on the marital relationship of the deceased.

Chapter 4 (sections 101-140) of the Succession Act 2006 (NSW) provide that the statutory order of inheritance in relation to an intestacy is:

RELATIVES LEFT

​ENTITLEMENT

A spouse and no children

The spouse is entitled to the whole of the estate.

A spouse and child(ren) from that relationship

The spouse is entitled to the whole of the estate.

A spouse and child(ren) from a that (or a previous) relations​​hip

The spouse is entitled to receive:

  • the personal effects of the deceased;
  • a statutory legacy of $350 000;* and
  • half of the residue of the estate.

The spouse also has a ‘right to elect’ to acquire property from the estate.

All of the deceased’s children, including children^ from previous relationships and from the current spouse (whether they are from a previous relationship or from the spouse) are entitled to equal shares of the other half of the residue.

Multiple spouses

The spouses are entitled to equal shares of the estate (unless varied by Order or agreement between them). There may be more than one spouse if the deceased was married and had one or more domestic relationships/de facto spouses. Children get nothing in this case.

Children only (no spouse)

The children are entitled to equal shares of the estate. If a child of the deceased has already died leaving children (ie, the deceased’s grandchildren), the grandchildren are entitled to their parent’s share in equal shares.

No spouse or children

The deceased’s parents are entitled to equal shares of the estate.

No spouse, children or parents

The deceased’s full and half blood brothers and sisters are entitled to equal shares of the estate.

No spouse, children, parents, brothers or sisters

The deceased’s grandparents are entitled to equal shares of the estate.

No spouse, children, parents, brothers, sisters or grandparents

The deceased’s full and half blood aunts and uncles are entitled to equal shares of the estate.

No spouse, children, parents, brothers, sisters, grandparents, aunts or uncles

The deceased’s first cousins are entitled to equal shares of the estate.

No spouse, children, parents, brothers, sisters, grandparents, aunts, uncles or cousins

The State government is entitled to the whole of the estate.

* Adjusted by CPI. If this amount is not paid within 1 year from the date of death, the spouse is also entitled to receive interest on this amount.

^ Children who are not legally the children of the deceased (eg, step children) are not included. Adoptive children are included.

Special rules also apply in relation to indigenous persons.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to probate, letters of administration, estate planning or business succession, contact Craig Pryor on (02) 9521 2455 or email craig@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. Stay up to date – LinkedIn Facebook Twitter

Entering into electronic contracts

Increasingly, business is being done and people are entering into electronic contracts online, via smartphone platforms or email. Even conveyancing in relation to real property is now done online.

Generally, a contract is in place and valid if the following conditions are met:

  1. The parties are legally competent
  2. There is an offer
  3. There is acceptance of that offer
  4. The consideration or price is agreed

A written signature is not necessarily required for a valid contract to exist. The terms of the agreement also can be agreed verbally. Contracts can be signed electronically since the introduction almost 20 years ago of Electronic Transactions Act 2000 (NSW) and corresponding legislation in Australia’s other States and Territories.

There are a number of ways an electronic contract can be “executed” provided that it is clear that the intention is to be legally bound:

  • by an exchange of emails or text messages
  • clicking an ‘accept’ button to accept terms (or even a hyperlink to terms) on a webpage
  • ticking a box to acknowledge and agree in an App
  • typing ‘yes’ or ‘I agree’ into an online form
  • ‘signing’ with your finger a stylus/digital pen or your finger such as when receiving goods
  • using an electronic signature facility to sign a document

The Act stipulates that that if a person consents to a method of electronic signature and intends that signature to be their consent to the contract, then it will be as binding as a written “wet ink” signature on paper. Act also requires that to be valid, the signatory must be reliably identified.

Some transactions are not able to be completed electronically for obvious, such as:

Deeds (which previously at common law had to be signed, sealed and delivered) or other documents that need to be ‘witnessed’ were unable to be signed electronically in NSW until 22 November 2018 when the insertion of section 38A into the Conveyancing Act 1919 (NSW), which specifically allowed it, was assented to. Witnessing requires physical presence at the time of signing, so it cannot be done by FaceTime, Skype, WhatsApp etc.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to any contractual, business-related or commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@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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Who owns the content you post on social media?

With the recent resurgence of the popularity of  FaceApp on social media feeds and considering the Facebook-Cambridge Analytica scandal, it is timely to consider some of the concerns being raised over data security and privacy in relation to the use of common smartphone applications.

Most social media apps, including Facebook, Instagram, SnapChat and Twitter, require users to agree to an extremely broad set of Terms and Conditions of Use that allow them access to your data.

This data, which can be used and sold to third parties, is in reality the price for your use of the otherwise “free” app. As it’s often said, “If you’re not paying for it, you’re not the customer; you’re actually the product being sold.”

That said, what is the legal effect of the Terms of Service that we have each agreed to when using social media Apps and who owns the content you post on social media?

  • FaceApp’s Terms can be found here
  • Snapchat’s Terms can be found here
  • Twitter’s Terms can be found here
  • Facebook’s Terms can be found here and includes:

“…when you share, post, or upload content that is covered by intellectual property rights (like photos or videos) on or in connection with our Products, you grant us a non-exclusive, transferable, sub-licensable, royalty-free, and worldwide license to host, use, distribute, modify, run, copy, publicly perform or display, translate, and create derivative works of your content (consistent with your privacy and application settings). This means, for example, that if you share a photo on Facebook, you give us permission to store, copy, and share it with others (again, consistent with your settings) such as service providers that support our service or other Facebook Products you use…”

  • Instagram’s Terms can be found here (Note – Instagram is one of Facebook’s Products).

They are all quite similar in effect as regards the ownership and use of your content – although generally you continue to own your content, they are able to use it as and when they see fit, forever, for free.

Did you know that you can request a copy of the data that Facebook has and it can be downloaded as a .zip file? To access the download your information tool, click here. You will probably be surprised at the depth of information that is held about you

Some people are shocked to find out that it has access to things like all the contacts on their phone to a record of messages sent or received, payment details and location information… it can be quite unnerving!

Reading the T&Cs is so boring… but an agreement is an agreement and you are agreeing to their Terms of Service when you use the App so you can’t complain. What you may not know is that each App will usually have its own privacy and data related settings which can be adjusted modify the type and amount of information obtained and stored (and seen by others) so you can modify them to help protect your own content.

You have to expect however that with any social type of App, there always be a level of information kept about you, sometimes for good reasons (eg, to feed you more content you may be interested in) but also sometimes for bad. It is up to you to decide how much data you want kept or shared and how that affects your user experience

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal.

For further information in relation to terms and conditions, consumer rights or any business or commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@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. Stay up to date – LinkedIn Facebook Twitter

Can you just put a caveat on someone’s house?

If you are owed a substantial sum of money by someone, whether because you have loaned them funds or if you have a bill that hasn’t been paid, you would generally like to secure those funds. This way, if the borrower or debtor ends up being a bankrupt or insolvent, you may be in a better position as a secured creditor to those that are unsecured and hopefully you can get paid.

So how does security work? Security is effectively giving notice to the world that you have a claim on that person’s estate or assets so that subsequent people or businesses dealing with the same person are aware that you are to be paid in property, ie before them.

Security can be given in several ways, including:

  • handing over physical possession of certain assets;
  • the granting of  a Security Interest over assets registered on the Personal Property Securities Register (or “PPSR”); or
  • perhaps granting a Mortgage over real property owned by the person owing the money.

The registration of securities grants priority in order of registration, so it is important not to delay in registering any securities granted.

Ordinarily, you would have put in place a Loan Agreement or had Terms of Trade in place to govern your business relationship so that you have the express written consent to do such things to secure the debt, but if these documents are not in place before the financial obligation arises, people often take the step of lodging a caveat on title to property owned by the debtor.

A Caveat registered on title to a property has the effect (subject to the specific wording of the caveat of course) of preventing the owner or registered proprietor of that land from dealing with that land without the consent of the person who lodged the Caveat (the “caveator”). Dealings that can be prevented include lodging other Mortgages, lodging Transfers and the like.

Can you just put a caveat on someone’s house? If only things were that simple!

Many people have taken the step of lodging a Caveat on title to a debtor’s property only to have been unsuccessful in protecting their debt. Why? Well, in order to lodge a caveat (or even a Mortgage or PPSR Security Interest for that matter), you need to have the relevant asset “charged” in your favour with payment of the relevant debt. Creating a “charge” over an asset creates an interest in that asset that allows you to lodge a Caveat to notify and protect that interest.

A Caveat is not a document that gives you priority over previously registered interests, but it does give you some control over the asset such that you can prevent refinancing or a sale of an asset unless satisfactory arrangements for you to be paid have been made as part of that process  Properly drafted documents in relation to the lending of funds or business agreements where credit is extended should include things such as Mortgages, General Security Deeds or other things that create an interest in the asset sufficient to lodge a Mortgage, on title (to land), a Security Interest (on the PPSR in relation to assets etc) or at a minimum a Caveat over land.

Without such an interest being created, the caveator runs the risk that the owner can’t sell or refinance and suffers financially, then pursues the caveator for damages flowing from the caveator’s wrongful act, putting the caveator in an even worse position than they were before!

These things should not be done without proper advice, so take the time to review your current situation and documents now before a problem arises and have the documents updated to best protect you or your business.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to debt recovery, loan agreements, estate planning, any business-related matter or if you have a Caveat lodged on your property without your consent, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

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

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New Consumer Laws for services apply from 9 June 2019

In our April 2018 blogpost, we provided a brief summary of some of the key requirements under the Australian Consumer Law (ACL) that apply to goods and services and the requirements of any warranties as to defects over and above the consumer guarantees created by the ACL. New consumer laws for services apply from 9 June 2019… 

A “warranty as to defects” is a statement made to a consumer made at or around the time of supply to rectify defects or to compensate the consumer, with a “consumer” being a person or business acquiring goods or services either:
 
  • costing less than $40,000; or
  • costing more than that amount but being ordinarily acquired for domestic, household or personal use or consumption; or
  • if the goods are a vehicle or trailer.

The mandatory text for any warranties as to defects in relation to the supply of goods only remains unchanged:

“Our goods come with guarantees that cannot be excluded under the Australian Consumer Law. You are entitled to a replacement or refund for a major failure and compensation for any other reasonably foreseeable loss or damage. You are also entitled to have the goods repaired or replaced if the goods fail to be of acceptable quality and the failure does not amount to a major failure.”

From 9 June 2019 however, there are new mandatory text requirements for warranties against defects when supplying services or when supplying goods with services.

Businesses that do not comply risk fines of up to $50,000 for companies and $10,000 for individuals per breach.

Any document evidencing any warranty against defects in relation to the supply of services only must state:

“Our services come with guarantees that cannot be excluded under the Australian Consumer Law. For major failures with the service, you are entitled:
  • to cancel your service contract with us; and
  • to a refund for the unused portion, or to compensation for its reduced value.

You are also entitled to be compensated for any other reasonably foreseeable loss or damage.

If the failure does not amount to a major failure, you are entitled to have problems with the service rectified in a reasonable time and, if this is not done, to cancel your contract and obtain a refund for the unused portion of the contract.”

and the mandatory text for the supply of goods and services is:

“Our goods and services come with guarantees that cannot be excluded under the Australian Consumer Law. For major failures with the service, you are entitled
  • to cancel your service contract with us; and
  • to a refund for the unused portion, or to compensation for its reduced value
You are also entitled to choose a refund or replacement for major failures with goods. If a failure with the goods or a service does not amount to a major failure, you are entitled to have the failure rectified in a reasonable time. If this is not done you are entitled to a refund for the goods and to cancel the contract for the service and obtain a refund of any unused portion. You are also entitled to be compensated for any other reasonably foreseeable loss or damage from a failure in the goods or service.”

If your business supplies services or goods and services, then it is likely that you need to update the mandatory text into your Terms and Conditions or your Contracts with your customers.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal.

For further information in relation to these new consumer laws, consumer rights or any business or commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@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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New Drink Driving Laws

From 20 May 2019, a streamlined process that delivers swift penalties will apply to NSW drivers who commit a first-time, lower-range drink-driving offence.

Drivers in New South Wales who commit a lower-range drink-driving offence for the first time will have their licence suspended immediately, effective for 3 months, in addition to receiving a significant fine (which is currently $561).

Similar changes are also being implemented in relation to first-time offences involving drugs and driving.

Drink driving is a serous offence and is reported to be a factor in roughly one in 7 crashes in NSW.

Police breath tests

Police conduct about 5 million breath tests each year in NSW. In NSW, police have the power to:

  • stop drivers at random to test for alcohol
  • arrest drivers who test over the legal limit
  • require a driver to take a sobriety test in certain circumstances
  • breath test any driver or supervising driver involved in a crash

It is an offence to refuse to take a breath test.

It is illegal for you to drink alcohol while you are driving, even if your blood alcohol concentration stays below your legal limit.

What is the legal limit?

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NSW has 3 blood alcohol concentration (BAC) limits: zero, under 0.02 and under 0.05. The BAC limit that applies to you depends on the category of your licence and the type of vehicle you are driving.

Your BAC measures the amount of alcohol you have in your system in grams of alcohol per 100 millilitres of blood. A BAC of 0.05 means you have 0.05 grams (50 milligrams) of alcohol in every 100 millilitres of blood.

It goes without saying, don’t drink and drive.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal.

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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Commercial Leases

A commercial lease, simply put is the agreement between the owner of business premises (the lessor) to the tenant that is to occupy those premises (the lessee).

The terms of each commercial lease can and usually do differ depending on the nature of the property, the location and the use to which the premises are to be put. There are however many terms that are common to all leases, even if they may be drafted differently in each lease document.

Sometimes confusion arises as to whether a lease is of commercial premises as opposed to retail premises. Retail leases are covered by the Retail Leases Act and there are many additional obligations on the Lessor in relation to retail premises such as the provision of a Disclosure Statement, minimum lease term etc

Prior to entering into a lease, it is a good idea to obtain a condition report or at least take photos or video to show the condition of the premises as at the commencement date and to show what fixtures and fittings were in place.

Some key considerations in relation to a business or commercial lease include:

  • Development consent for the intended use of the premises
  • Term
  • Options to renew or buy
  • Rent
  • The process for and timing of rent reviews (CPI, market, fixed increase etc)
  • Outgoings
  • Security bonds
  • Director guarantees
  • Costs
  • Insurances
  • Repair and maintenance obligations
  • Lessee’s make good and refurbishment obligations on termination
  • Any pre-lease works/promises made
  • Assignment and sub-letting/licensing

It is not uncommon for the parties to enter into a Heads of Agreement or similar document whereby some or all of the above matters and more are documented briefly, such that the key terms are signed off as agreed, but it is usually important to ensure that this document itself doesn’t create a lease and is in fact subject to the parties negotiating and signing a formal written Commercial Lease.

Leasing can be complicated so it pays to seek the advice of a lawyer before entering into a Commercial Lease, an Agreement for Lease or a Heads of Agreement.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to the leasing or licensing of business premises, commercial law or business related matters, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

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

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Drive safely this Easter Long Weekend

Remember DOUBLE DEMERITS this Easter long weekend – Thursday, 18 April to Monday, 22 April inclusive.

Also DOUBLE DEMERITS apply over the ANZAC Day period – Wednesday, 24 April to Sunday, 28 April 2019 inclusive.

 

Are you hiring an Employee or a Contractor?

Are you hiring an employee or a contractor? This is an important question often overlooked by business owners.

What is the difference between an employee and a contractor?

The difference between an employee and an independent contractor is based on many different factors. No single factor determines whether someone is an employee or a contractor. Instead, the Courts will look at each case and make a decision based on the totality of the relationship between the parties when determining the status of an engagement.

There are some common factors that may contribute to determining whether a person is an ‘employee’ or an ‘independent contractor’ (or ‘contractor’ or ‘sub-contractor‘):

Employees

Employees generally:

  • do not operate independently of the business engaging them
  • are directed in how and when to perform their work
  • cannot delegate their work to someone else or pay someone else to do it
  • are paid per hour, project or a commission
  • are provided with all tools and equipment required to perform their work or gets an allowance to provide these things
  • take no commercial risks – the business is responsible for the work performed or fixing any issues with it
  • have an expectation of continuing work (except casuals)
  • are generally not employed by other businesses at the same time (at least for most full time employees)

Contractors

Contractors on the other hand:

  • do operate independently of the business engaging them
  • have freedom as to how and when to perform work, subject to the terms of the arrangement
  • may delegate or further subcontract out their work, subject to the terms of the agreement (Services Agreement or Contractor Agreement etc)
  • are paid for a result or outcome, even if this is on an hourly rate basis, a commission arrangement or per project
  • supply most of their own tools and equipment
  • are liable for the work performed and are liable to remedy or pay the costs of fixing any defects
  • are responsible for their own employees and sub-contractors
  • are usually engaged for a specific task or purpose
  • may accept or seek work from other businesses

Other differences in their rights and the obligations or the employer or principal include:

  • Independent contractors issue invoices (or tax invoices if registered for GST) whereas employees are paid regularly (weekly, fortnightly or monthly).
  • Employees are entitled to the benefit of the rights under the Fair Work Act 2009 (Cth) (FW Act) and any relevant Award or industrial agreement (including for things such as leave, overtime etc) as well as having the compulsory superannuation contribution paid to their superannuation fund.
  • Employees have tax withheld and paid on their behalf to the Australian Taxation Office where as an independent contractor will pay their own tax to the ATO (and GST if registered for GST).

What if you get it wrong?

If you pay someone as a contractor when they are really an employee, the employee may miss out on important benefits such as leave entitlements and superannuation. Although you may have paid the agreed rates or price and any applicable GST, the employee may be able to pursue the business that engaged them for those unpaid entitlements and the employer may be prosecuted. Also, if the “contractor” doesn’t pay tax, the employer may be liable for the tax that ought to have been withheld.

Many businesses that deliberately arrange in “sham contracting” (where a person ought to be an employee but they are engaged and remunerated as a contractor) are penalized by the Fair Work Ombudsman under the FW Act.

Another unexpected consequence can be that where those engaged as independent contractors are not actually independent at all (for example where they do not provide services to any other businesses) or are really employees can be the issue of payroll tax payable to Revenue NSW under Payroll Tax Act 2007 (NSW). Contractors can be deemed employees for the purpose of payroll tax if they don’t offer their services to the general public, working only for one business.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to any employment related issue or any business/commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@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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Power of appointment

You may have a family trust or a discretionary trust that your accountant prepared for you.

Perhaps you are the trustee or that trust, or one of several trustees such as your spouse or partner or perhaps you are a director of a company that is the trustee.

There are a number of terms used in trust deeds that are not commonly understood, such as the “settlor”,vesting date” or the “excluded class”.

One of the things that is often:

  • not properly considered at the time of establishing the trust; and /or
  • overlooked at the time estate planning documents are being drafted

is the “power of appointment”.

The power of appointment is a power granted to the “appointor” named in the trust deed to decide who should be the trustee of the trust.

This power of appointment is the most important power in a trust deed as it generally affords the appointor the power to remove and replace the trustee as the appointor thinks fit (subject of course to any provisions of the trust deed).

Often the trust deed will provide for how that power is to be transferred, such as on the death of the appointor, and allows the appointor to give that power in their Will.

If you have a trust deed and you either:

  • don’t know who holds the power of appointment;
  • want to amend the trust deed to change who holds that power of appointment or
  • want to ensure that the power is appropriately transferred on your death

then speak to your lawyer about this without delay.

FURTHER INFORMATION

Craig Pryor is principal solicitor at McKillop Legal. For further information in relation to trusts, estate planning, business succession or any other commercial law matter, contact Craig Pryor on (02) 9521 2455 or email craig@mckilloplegal.com.au.

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