McKillop Legal Blog

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What is an Injunction?

An injunction is a Court order directing a person or entity to do a specific thing or not to do a something.

Most injunctions are temporary and are often made pending the outcome of a full hearing (known as an “interlocutory injunction“). An example may be to restrain a former employee from doing work for former clients where they have agreed to post-employment restraints pending a hearing on whether the restraint is lawful or to prohibit the publication of a potentially defamatory article in a newspaper or television program.

A Court will not grant an interlocutory injunction unless:

  • the Plaintiff has made out a “prima facie” case – a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial – or established that there is a serious question to be heard;
  • the balance of convenience favours the granting of the injunction; and
  • the Plaintiff provides “the usual undertaking as to damages” (that they will pay any damages the restrained party suffers if at a final hearing the Court determines that the injunction wasn’t justified).

A Court has discretion as to whether to make such an order and will consider thongs like whether or not you have asked the other party to do/not do the relevant thing, whether damages would be an appropriate remedy, if you have waited too long to seek the order etc.

Where an injunction is sought from a Court without the affected party being notified, this is known as an “ex-parte injunction” as it is made in the absence of a party. They are for that reason only temporary and the Court requires the applicant to disclose all relevant facts to the case, including those that may lead to refusal of the application, not just those in favour of the injunction as there is no respondent in Court to oppose it. Examples can be “freezing orders” that stop the sale of assets or to freeze a bank account to preserve them pending the Court’s further orders.

Mandatory injunctions can be obtained where for example a party to a contract refuses to comply with their lawful obligations under it. An example of this is a party to a Contract for the Sale of Land that unlawfully refuses to sign a Transfer in registrable form. Such an injunction imposes a positive obligation on the affected party to do something, not just stopping them from doing something.

FURTHER INFORMATION

For further information in relation to business succession, estate planning, litigation and dispute resolution or any 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 commercial law needs.

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in Business / Commercial Law / Debt Recovery / Dispute Resolution / Employment / General / Insolvency & Bankruptcy / Intellectual Property / Litigation / Property  by 01 Jun 2025 0 comments

Why have a Will?

WHAT IS A WILL?

A Will is a legal document that outlines how you wish to have your assets distributed on your death. You get to choose who administers your estate for you and who and how your beneficiaries are to receive your assets.

Generally, to make a Will, you must be over 18, have proper mental capacity and sign a document in the presence of 2 independent witnesses.

If you pass away without having a valid will in place (called ‘dying intestate’) then the provisions of the Succession Act 2006 (NSW) will apply and your estate will be divided up without regard to your wishes.

Take control of who controls your estate and who inherits by putting in place a will today.

EXECUTORS

An executor is the person you appoint in your Will to deal with your estate on your death and to ensure that your wishes are carried out.  Often, people appoint 2 executors or provide for an alternate executor so that if one person is not willing (for example, due to age or infirmity) or able (for example, if they are dead or incapacitated) to act, then the other/alternate executor can act.

WHAT CAN A WILL INCLUDE?

Any asset that you own can be deal with in your will, whether bank accounts, motor vehicles, boats, jewellery or any other item. Particular items can be left to particular people, the whole of your estate can be left to one person or to several people in various fractions or percentages and conditions of gift can be imposed, such as paying out encumbrances such as mortgages.

Real property (houses and land) that is owned as ‘joint tenants’ (as is often the case for married couples) cannot be left by Will because when one joint owner dies, it automatically passes to the surviving owner. Where land is owned as tenants in common, it can be transmitted by Will. There can be good reasons for holding property in either way.

Life insurance and superannuation benefits are not able to be dealt with by a Will where specific beneficiaries have been nominated by policy owner. If the estate is nominated as beneficiary, a nomination has lapsed (they often lapse after 3 years) or no nomination has been made, the proceeds will usually be paid to the estate and distributed under the Will however, the trustee or the insurer may have discretion as to who to pay the benefit to. Your financial advisor would be able to advise you in relation to any superannuation death benefit nominations.

Often, wishes are expressed in Wills such as those relating to cremation or burial and directions regarding guardianship of infant children.

WHEN IS A NEW WILL REQUIRED?

If you get married or if you get separated or divorced from your spouse or partner or if your family circumstances change (for example, through a birth or a death or if you have a significant change to your finances, like an inheritance, bankruptcy, changes in business structure etc), you should make a new Will.

Your Will should be regularly reviewed (every few years at least) to ensure it still reflects your current wishes.

TESTAMENTARY TRUSTS

Consider whether your beneficiaries would benefit from having Wills with Testamentary Trusts as they can offer significant and ongoing benefits, including:

  • asset protection from creditors, and
  • taxation advantages such as income splitting.

This is particularly useful where your beneficiaries are in business and have their own asset protection measures in place, if they are ‘at risk’ or where you have income producing assets. Speak to us about how testamentary trusts can benefit your family.

FURTHER INFORMATION

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

in Estate Planning / Probate / Tax Planning  by 01 May 2025 0 comments

Why updating ASIC records is critical

Under the Corporations Act 2001 (Cth), among other methods, any document may be served on a company by:

(a) leaving it at, or posting it to, the company’s registered office; or

(b) delivering a copy of the document personally to a director.

This means that ASIC, the ATO, other government authorities or any other creditor can serve important papers on a company at its former place of business (where that address has not been updated at ASIC) even if they have since moved.

Documents that could be served on a company can include:

  • Court proceedings such as an Originating Process / Statement of Claim / Summons

As these important documents can be served on a company even though they may not actually come to the attention of the company or its directors, demonstrates why updating ASIC records is critical.

Similarly, if the ATO was to serve a Director Penalty Notice (DPN) on a director, note that:

  • DPNs are sent via ordinary mail to the Director’s last recorded residential address on ASIC’s database
  • notice is given on the day the DPN is issued, not when it is or is likely to have been received
  • actual non-receipt of a DPN is not a defence.

FURTHER INFORMATION

For further information, 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.

in Business / Commercial Law / Dispute Resolution / General / Insolvency & Bankruptcy / Litigation / Risk management  by 01 May 2025 0 comments

Order for Security for Costs

An Order for security for costs is to help ensure that unsuccessful proceedings commenced by a Plaintiff do not disadvantage the Defendant. Such applications are more usually made in relation to an appeal rather than an original matter.

A security for costs order generally requires a Plaintiff to pay a certain amount of money into Court (or a solicitor’s trust account) before their proceedings can continue – that is the proceedings are in effect stayed pending the security being provided.

The Court has several sources of power to make an order for security for costs, including:

  • the Court’s inherent power to stay proceedings to ensure the proper and effective administration of justice
  • the relevant Court rules (eg, Rule 42.21 of the Uniform Civil Procedure Rules 2005);
  • s.1335 of the Corporations Act 2001 (Cth).

Due to the weight an order for security for costs may carry, Courts must weigh the rights and interests of all parties to the proceedings. The Court has a broad discretion as to whether to grant such an order and will usually look to factors including (in no specific order):

  • the inherent legal right of a Plaintiff to bring legal proceedings;
  • the strengths and bona fides of the Plaintiff’s case
  • where the Plaintiff ordinarily is resident;
  • the financial standing and asset position of the Plaintiff in the jurisdiction in which the claim has been commenced (including where the Plaintiff may have divested itself of assets);
  • whether there is reason to believe that the Plaintiff can satisfy an order for costs not only from its own resources, but from other resources including those who will benefit from the litigation; the public importance of the case;
  • delay of bringing the application for the order;
  • if the Plaintiff hasn’t disclosed an address or has moved and not updated it, particularly if there is reason to believe that it was done to to avoid the consequences of the proceedings;
  • whether such an order will frustrate the litigation;
  • the justice of the case.

It is uncommon for such an order to be made against an individual Plaintiff (as opposed to a company, partnership or trustee) but not impossible, depending in the circumstances of the particular case and Plaintiff.

FURTHER INFORMATION

For further information, 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.

in Asset Protection / Business / Commercial Law / Debt Recovery / Dispute Resolution / General / Insolvency & Bankruptcy / Litigation / Risk management  by 01 Apr 2025 0 comments

New statutory tort – Serious Invasion of Privacy

Following the passage of the Privacy and Other Legislation Amendment Bill 2024 by the Commonwealth Parliament on 29 November 2024, which amended the Privacy Act 1988 (Cth) and other Acts, a new statutory tort for a serious invasion of privacy will soon enter Australian law.

This new tort will commence on 10 June 2025 and confers on an individual a cause of action for serious invasions of privacy.

Elements to be proven

The tort allows individuals to take action against those:

  • who invade their privacy, either by:
    • intruding upon their seclusion; or
    • misusing their information;
  • in circumstances where the individual had a reasonable expectation of privacy;
  • where the invasion is serious and either:
    • intentional; or
    • reckless; and
  • where the public interest in the plaintiff’s privacy outweighs any countervailing public interest.

The public interest considerations include the freedom of expression, freedom of the media, the proper administration of government, open justice, public health and safety, national security and the prevention of crime.

Remedies

The tort is actionable without proof of damage however, where the elements are established, a Court will be able to award damages to the plaintiff, as well as other remedies (such as injunctions, apologies, destruction or delivery of materials, accounting for profits etc) if appropriate.

Damages are capped at the greater of:

  • $478,550; or
  • the maximum award for general damages in defamation,

but there are no aggravated damages available.

Exemptions

There are exemptions for invasions of privacy by a State Authority or its staff if the invasion of privacy occurs in good faith, in the performance or purported performance of a function or exercise of power of the Authority, or in the exercise or purported exercise of a power of the authority and for law enforcement bodies and intelligence agencies. Persons under 18 are also exempt.

Limitation periods

The cause of action must be actioned within 1 year of the person first becoming aware of the invasion of privacy however if the plaintiff is unaware of the invasion, 3 years from the day the invasion occurred or if the plaintiff was under 18 when it occurred, before the plaintiff turns 21.

The introduction of this new tort marks a significant change in Australian law because until now, there has been no generally recognized right to privacy.

New crimes

Note that the Criminal Code was also amended to create new crimes for “doxxing” in sections 474.17C (criminalizing the release of personal data using a carriage service (ie, internet or telecommunications services) in a manner that a ‘reasonable person’ would regard as menacing or harassing) and section 474.17D (which focuses on such dissemination targeting individuals or groups based on their protected attributes, such as race, religion, sex, sexual orientation, gender identity, intersex status, disability, nationality, or ethnic origin).

These new offences maximum sentences of 6 and 7 years imprisonment respectively.

FURTHER INFORMATION

For further information, 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.

in Criminal Law / General / Litigation / Risk management  by 04 Mar 2025 0 comments

Why you should have a Shareholders Agreement

CONSIDER THESE COMMON ISSUES

What would happen to your company if you or your business partner became so ill that one of you could no longer work – or worse still, died?

Would you still be paying dividends or making distributions of profit to that person even through he or she is not around, or to their spouse or family?

If they died and left their spouse everything in their Will (including their shares in your company), would you want to be in business with his or her spouse?

What if your business partner sold his or her shares in your company to a complete stranger or a competitor following an argument?

How are your shares to be valued and over what period will the purchase payments be made to your family? Or is there an insurance policy to fund the payment in a lump sum?

HOW CAN A SHAREHOLDERS AGREEMENT HELP?

A Shareholders Agreement can cover these not uncommon scenarios and tailor the rights and obligations of the shareholders of a company to fit your personal circumstances and your particular business to help avoid some of these potential problems for everyone’s ultimate benefit.

You may have a Will, but you may not have certainty in relation to what will happen to your family or your business in the event of your death or serious illness unless these matters are clearly dealt with in a Shareholders Agreement.

FURTHER INFORMATION

For further information in relation to business succession, estate planning, litigation and dispute resolution or any 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 commercial law needs.

Stay up to date – LinkedIn | Facebook | Instagram

in Business / Commercial Law / Dispute Resolution / General / Risk management  by 10 Feb 2025 0 comments

Advantages of Testamentary Trusts

WHAT IS A TESTAMENTARY TRUST?

A Testamentary Trust in simple terms is a trust that is established by a person’s Will (and Testament), as opposed to a trust created during someone’s lifetime, like a family trust, discretionary trust, units etc.

Unlike with a “basic” Will – pursuant to which where beneficiaries receive the benefit of any gift personally – with a Testamentary Trust, the beneficiaries receive the benefit of the gift, but rather than having it legally owned by them personally, a trustee holds the relevant asset in trust for them.

Wills with Testamentary Trusts are recommended by many lawyers, accountants and financial advisers for various reasons but the advantages of Testamentary Trusts include asset protection and taxation advantages.

ASSET PROTECTION POSSIBILITY

Because of the legal ownership differs from the beneficial interest, Testamentary Trusts can offer beneficiaries significant and important advantages such as asset protection. As the trustee of the Testamentary Trust owns the asset (not the primary beneficiary personally), creditors and trustees in bankruptcy of the relevant beneficiary cannot gain access to the asset, so it can remain for the benefit of the intended beneficiary and their family etc.

Often, beneficiaries that are in business for themselves have implemented asset protection measures so as to keep their assets safe from claims by third parties. The last thing that such a beneficiary may want is to receive an inheritance in their personal name, effectively undoing all of their efforts to safeguard their assets!

Testamentary trusts can offer beneficiaries significant taxation advantages and a level of asset protection.

Testamentary Trusts can be drafted so as to have the beneficiary effectively control the trust and for that control to be relinquished on the occurrence of certain events, such as bankruptcy or divorce/marital separation, with a nominated person or persons to act in the role of trustee whilst such incapacity remains.

POTENTIAL TAXATION BENEFITS

Rather than taking a gift in a personal capacity as would usually be the case with a more “simple” Will, with a Will incorporating Testamentary Trusts, beneficiaries may have the ability to split income earned amongst other people in their family such as spouses, children, grandchildren or any other company or trust in which they have an interest.

Where a deceased estate has income producing assets (such as an investment property or a share portfolio), under a more simplistic will, the beneficiary personally receiving that gift would have the income earned from such asset/s added on top of the income they receive from their employment or their own investments. This could mean that they go into the next marginal tax bracket and pay significantly more tax.

A Testamentary Trust allows the income earned in the trust to be split amongst the various family members, many of whom are likely to either not be working (so the tax-free thresholds become available) or earn lower incomes (and are therefore in lower taxation brackets).

Children under 18 years of age that receive income from a Testamentary Trust are taxed at marginal rates as if they are adults (as opposed to the how income from standard discretionary / family trusts, where can be taxed at unearned income penalty tax rates) so for a family with a non-working spouse and several children, significant income can be received by the family whilst very little or no tax may be payable on the testamentary trust income.

FURTHER INFORMATION

For further information in relation to estate planning, business succession or any other commercial law matter, contact McKillop Legal on (02) 9521 2455 or email help@mckilloplegal.com.au.

in Asset Protection / Business / Estate Planning / General / Insolvency & Bankruptcy / Probate / Risk management / Tax Planning / Trusts  by 05 Jan 2025 0 comments

General Security Deeds

A General Security Deed (GSD) or a General Security Agreement is effectively a legal document used to secure the repayment of a loan or some other legal obligation.

GSDs are often used by lenders such as banks where there is no real property security available to place a Mortgage or Caveat over, so in addition to signing a Loan Agreement or Letter of Offer, a borrower will likely also be asked to sign a GSD.

Prior to the creation of the Personal Property Securities Register (PPSR), a GSD used to be known as a ‘fixed and floating charge‘ which was registered over companies at ASIC. A GSD however, can be registered on the PPSR against any legal entity including a trustee of a trust, a partnership or sole trader and can cover any form of personal property.

Personal property is basically anything other than land and can include motor vehicles, intellectual property, shares in companies, units in unit trusts, stock and business equipment.

Under the GSD, the borrower is known as the ‘Grantor’ and the lender is called the ‘Secured Party‘ and the terms of the GSD can be complicated but basically provide that the Secured Party can take, hold and sell the secured personal property to repay the debt or until the obligation the GSD is securing has been met – this is known as a ‘Security Interest’.

GSDs have priority in the order in which they are registered so there is often a real benefit to registering them on the PPSR (known as ‘perfection’) as soon as possible.

General Security Deeds are complicated and important documents, so before you sign one, you ought to take appropriate advice as to their meaning and effect.

FURTHER INFORMATION

For further information, 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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in Business / Commercial Law / General / Insolvency & Bankruptcy / Property  by 01 Dec 2024 0 comments

Statement of Testamentary Intention

Section 100(2) of the Succession Act 2006 (NSW) provides that a written statement made by a deceased person during their lifetime which may explain or justify the provisions of a will is admissible in evidence.

This means that a Court can have regard to the Deceased’s wishes and intentions as expressed in such statements, often called a “Statement of Testamentary Intention“, in making a decision regarding the distribution of their estates such as where a Family Provision Order has been sought (an order which effectively alters the division and distribution of a deceased person’s estate, deviating from that stated in their Will to which Probate has been granted).

Where a person makes a Will that they think may ultimately be contested (such as where an estranged child is left out of the Will), then a Statement of Testamentary Intention can be executed at the same time, whereby the person making the Will sets out their reasons for excluding that person as a beneficiary.  A Statement of Testamentary Intention is often made in the form of an Affidavit or Statutory Declaration, but it can even include an audio-visual recording of the person making the Will made with their consent, statements made orally to another person or even a contemporaneous email, but a written and sworn statement is usually the best if time permits.

The risk in making a Statement of Testamentary Intention is that if for example:

  • it is not documented properly;
  • was not made contemporaneously with the Will; or
  • where a significant period had elapsed between the making of the s.100 Statement and the time of the Deceased’s passing (that is, it is not up to date – as the reasons may have been eroded by later interactions and events etc, such as where a relationship has been repaired)

then it can lack evidentiary weight and can even act to benefit the excluded person, such as:

  • if it notes matters that would ordinarily be considered ‘hearsay’ (such that it can be objected to being admitted into evidence);
  • where unsubstantiated opinions or slurs are used; or
  • where there are factual statements or reasons given that can be shown to be incorrect

as they can undermine the basis of the will-maker’s decision to exclude a person and bolster the plaintiff’s case against the estate.

Usually the reasons for excluding a beneficiary from a Will should not be stated in the Will itself, but if they are to be documented, should be set out separately in the s.100 Statement so that the Executor can decide whether or not to use it in evidence.

FURTHER INFORMATION

For further information, 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.

Stay up to date – LinkedIn | Facebook | Instagram

in Dispute Resolution / Estate Planning / General / Litigation / Probate / Risk management  by 01 Nov 2024 0 comments

Partnership Agreements

A partnership is defined in the Partnership Act 1892 (NSW) as “the relation which exists between persons carrying on a business in common with a view of profit”.

Advantages of having a partnership, in addition to having additional business owner/s to bounce ideas off and share the workload, can include the fact that there is virtually no cost to establish it, little external regulation and very little paperwork involved.

Disadvantages include unlimited joint and several liability, a maximum of 20 business owners, liability for the acts and omissions of partners and risk of disagreement between partners.

Although the Act does govern some aspects of the partnership relationship, a Partnership Agreement can be invaluable when there is a difference of opinion or the relationship between partners breaks down as often happens.

Similar to a Shareholder Agreement, a Partnership Agreement can cover:

  • the business name the partners will trade under
  • the agreed business activities of the partnership
  • how the partnership will be managed (regular meetings, duties and responsibilities)
  • contributions to the partnership  and the agreed partnership percentage/split (and hence how profits and losses are shared)
  • how the respective interests in the partnership are valued
  • retirement, death and expulsion of partners (and if and how new partners can be introduced)
  • whether any post-partnership restraints apply
  • agreed dispute resolution mechanisms

Partnership Agreements can be simply drafted to cover common situations or be specifically tailored to your specific your business.

FURTHER INFORMATION

For further information, 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.

Stay up to date – LinkedIn | Facebook | Instagram

in Business / Commercial Law / Dispute Resolution / General / Risk management  by 01 Oct 2024 0 comments