Litigation

Serving documents on companies

Section 109X of the Corporations Act 2001 (Cth) provides that a document may be served on a company by means including:

(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 of the company.

Documents that may need to be served may be a Summons, Statement of Claim or even a Creditor’s Statutory Demand.

Companies are obliged to register a change of registered address within 28 days of at changing. Directors are also required to ensure their address details on the register are maintained.

Where service of a document not properly effected or there is a dispute about its, there is a risk that the Court may determine that service wasn’t effected, set it aside altogether and there could be consequences such as costs orders.

Service by post

Service by post is cheap and easy.

If posted to a company’s registered address, a document is presumed under s.160 of the Evidence Act 1995 (Cth) to have been received at that address on the 7th working day after being posted.

A problem with service by post however, is that the recipient could argue that it was never received or a dispute could arise as to timing of service.

Personal service

Arguably, personal service by a process server of a document on a director of a corporation is the best way to effect service.

These professionals are in the business of doing this and provide an Affidavit of service which can be used in evidence to prove service to a Court and as they are a third party service provider, there is often no dispute raised as to service and when so there is no “he said”/”she said” type argument as there may be if the parties themselves effected service.

Leaving it

An alternative to posting it or serving it on an officer of a company is leaving it at the company’s registered office.

Again, this is best done by a licensed process server who can swear or affirm what they did and when.

Informal service

The Courts are increasingly allowing alternative methods of service where parties are evading service or any of the above methods do not result in effective service such as through third parties, email, text messages, social media accounts etc.

FURTHER INFORMATION

For further information in relation to Corporations Act issue, legal proceedings, serving documents on companies or any business or 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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What is copyright?

There are various types of intellectual property (the general name given to the laws covering trade marks, patents, designs, circuit layouts, plant breeder’s rights and copyright), but the simplest (at least in terms of how and when it is created at least) is copyright.

What is copyright?

Copyright exists in a ‘work’ as soon as that work is created.

People spend time, money and talent in creating ‘original’ works and their efforts are protected by copyright.

Works include:

  • literary works - texts, books, poems, screenplays, song lyrics, letters, computer programs etc
  • artistic works - drawings, paintings, maps, plans, sculptures, photographs etc
  • dramatic works - plays, screenplays and choreography etc
  • musical works – musical scores (but not the recording of the music itself)

Protection is also given to ‘subject matter other than works‘, being sound recordings/broadcasts, films/movies, published editions of works etc.

Unlike a patent for example, copyright does not protect ideas or information as such but only the original expression of ideas or information. If it is not original, there is no copyright.

Two people could independently come up with a similar work at the same time. Both would hold copyright on their own works.

Copyright is free and automatic in Australia – there is no need (and indeed no place in which) to register it.

What rights does copyright give?

The Copyright Act 1968 (Cth) and the Regulations made under that Act set out the law in Australia regarding copyright.

Copyright protects the original expression of ideas or information – the work itself. The owner of the copyright owns copyright in the text in a book even though the owner of (an authorised) physical copy of a book owns the physical book itself.

Copyright entitles the holder the exclusive right to publish, reproduce (copy) and otherwise use that work (and to make money from doing so). Using a substantial part of a work without the copyright holder’s permission is an infringement upon that right and the holder can commence a legal action for an injunction to restrain such use, damages or accounting for any profits made from such use etc.

There are exceptions to copyright including ‘personal use’ and use (known as fair dealing) including:

  • research or study
  • reporting of news
  • giving of professional advice
  • satire/parody

as well as certain ‘special purposes‘ such as making accessible format copies for persons with disabilities, for educational instruction etc

Overseas copyright is enforced in Australia and reciprocal arrangements exist overseas to protect Australian copyright abroad due to various international conventions. There are treaties in place in some countries only however.

How long does copyright last?

Copyright generally lasts for as long as the person that owns it is alive, plus 70 years (but some shorter timeframes apply to certain works).

Once copyright ends, the work is said to be in the ‘public domain’ – and can be used by anyone.

How to help enforce copyright in a work

If your work is written or able to be viewed such as online or on a screen, you can use the copyright symbol © or (c) on the work, with the author’s name and the date it was created. This symbol serves as notice to the world that you assert copyright in that work and from when.

Using the © symbol is not a requirement to establish or assert copyright however, just a good practice.

Songwriters can register their works through licensing agencies, so fees can be collected and paid for using their songs.

Contractual arrangements regarding copyright and its use can also impose rights and obligations on the parties to it. Copyright can be assigned, licensed or even borrowed against.

Titles, business names and slogans are not protected by copyright (as they are usually too small/unoriginal to be protected by copyright), but they can in some cased be protected by trade mark.

What are moral rights?

Moral rights are the right of integrity of authorship, the right of attribution of authorship and the right against false attribution of authorship. They are non-economic rights that are personal to the creator of a work, so if a work is commissioned by a business, the business would require the person creating the work (and getting paid for it, whether as an employee or a contractor) to assign their moral rights or permanently consent to alterations to it that may otherwise infringe them.

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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What is a trade mark?

Trade marks are a form of intellectual property right. A  trade mark can be used to protect a business name, tag line/phrase or word  (a word mark) and/or logo (a figurative mark), but less commonly, it can also be used to protect a letter, colour, sound, scent, picture, movement, aspect of packaging or any combination of these.

Protecting a brand can add to its value as an asset so it is a very important business consideration, particularly if you ever intend to sell your business in the future.

Why have a trade mark?

A registered trade mark provides the holder the exclusive right to use that trade mark in Australia in respect of specified goods and/or services. This means that the holder of such an intellectual property can legally prevent others from using the trade mark for similar goods and services.

The holder of a trade mark can sell the mark to a third party or allow others to use that mark, for example for a fee, such as through a licensing arrangement. Often a franchise agreement also includes a license to use the trade mark of the franchised business.

Many business owners mistakenly believe that registering a business name or domain name gives them some sort of ownership of that name - this is not the case.

What requirements are there to register a trade mark?

The Trade Marks Act 1995 (Cth) and the Regulations under that Act govern trade marks in Australia.

In order to be registered, a trade mark must be able to distinguish the goods and services of the holder from other traders. It can’t be an everyday word or phrase, a geographical name or be descriptive of the goods or services (as other traders may need to use those words to describe their wares). Further, some signs and names are prohibited from registration.

When seeking registration, certain categories of goods and/or services must be chosen. The protection of the trademark is only in that category (or categories) chosen and only for the types of goods/services described in the application.

A trademark lasts for 10 years but can be renewed for successive periods.

How to help protect your trade mark

Having a registered trade mark gives the owner the right to place the ® symbol next to the trade mark so as to let others know it is registered and to help deter them from using it (without permission).

When a trade mark is not yet registered but an application is pending, the TM symbol can be applied to the mark. There is no requirement to use the ® or TM symbols however. use of the ® symbol in connection with a mark that is unregistered in Australia is an offence under the Act.

Trade marks must be used as registered. Failing to use a trade mark can render it liable to being removed from the register for non-use.

Registration of a logo that includes a trading name does not necessarily protect the trading name, just the logo. This is why the name often needs to be separately registered. Care needs to be taken to consider what is to be registered and how it will be used. Separate registrations are often advised for a name and for a logo.

If you have a trade mark and become aware of someone infringing it (such as by using a very similar name or logo without your consent or indicating they have some association with your business or products when they do not), you should get advice from a lawyer on sending an appropriately worded cease and desist letter asking them to stop using it.

What if your trade mark isn’t registered?

Registration of a trade mark is not essential. Unregistered trade marks can possibly be protected under the common law, such as through the tort of ‘passing off‘ and claiming misrepresentation such as under the Australian Consumer Law however, registration if recommended.

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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What is a Deed Poll?

In a previous article, we explained the difference between Deeds and Agreements however, there is a special type of Deed that does not require more than one party to sign it to make it legally binding (although it can also be made by more than one party, jointly).

That document is the Deed Poll. As soon as it is signed by the party that executes it, it becomes immediately operative and binding.

Deed Polls are solemn declarations, so they are commonly witnessed by lawyers, Justices of the Peace and notaries (but they requirements as to who can be witnesses and whether you need one can differ between States and Territories).

Deed Polls are used for various purposes such as:

  • part of the process of changing your name or gender
  • affirming your identity (such as where you may use more than one name)
  • declaring:
    • a promise to do not not to do something (including keeping information confidential)
    • the validity of a document or right
    • a fact or intention
  • releasing rights

The unilateral obligation/s created by a Deed Poll can be enforced by any person with whom the covenant in the document was made as against the party making it, so they ought not to be entered into lightly.

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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Non-contestable Will

We often get asked “can you draft a non-contestable Will ?

You can draft a Will to state who you want to be your executor and how to divide and distribute your assets once you pass away. Even with a valid Will stating your wishes and even if it has been admitted to Probate (or even if you die intestate), the distribution of your estate can be altered by the Court order under the Succession Act 2006 (NSW) (Act).

Put simply, there is no way to draft a Will prevent such a claim on your estate (and no, you can’t make a gift dependent on not making a claim), but there are things that can be done to help prevent (or minimise) a claim, including:

  • not having an estate at all
  • carefully drafting your Will and drafting evidence to help oppose a likely claim
  • obtaining a release under the Act

A Will can only deal with assets that you have as at the date of your death. One of the best ways of preventing a claim on your estate is therefore to not have any estate in the first place!  This is easier said than done and often means that benefits such as the principal place of residence exemption for capital gains tax (CGT) may not be available and other benefits cannot be accessed, but with the use of trusts and other structures, you can avoid having any personal assets to be distributed on your death. This is an extreme option that not many opt for given the many downsides and potential benefits that need to be forgone.

Where people have not set up their affairs so as to have no actual estate, but later seek to do so (such as by gifting assets, severing a joint tenancy or selling assets to others for less than full valuable consideration), they need to be aware of the provisions in the Act relating to “notional estate“. Notional estate rules in NSW effectively operate such that any assets disposed of in the period of 3 years prior to your death may be notionally brought back into your estate and available for division by the making of a family provision order in favour of an eligible person under the Act. As with most decisions, there are also potential negative consequences such as stamp duty, CGT and loss of social security entitlements from gifting rules.

Most people do not consider it advantageous to them during their life or their intended beneficiaries to have no estate at all for reasons such as those relating to CGT etc. For those, one way to help prevent or minimise the risk of a claim for a family provision order is to ensure that they have a carefully prepared Will and accompany that Will by a (usually contemporaneous) Statement explaining why a person did not get a benefit in the Will or is to receive less than they may have expected. This is known as a Statement of Wishes or a Statement of Testamentary Intention and is often prepared in for formal form of an Affidavit so it can be use in evidence. Such documents may be updated as required and care must be taken to ensure that they are factually correct as defects can undermine their force, particularly as you won’t be around to give evidence to correct any errors.

One way to prevent a claim for a family provision order is to apply to the Court for an order under s.95 of the Act releasing an estate from claims under the Act. This can be done either before or after your death, such as part of a family settlement of another dispute or claim on an estate and aims at achieving finality regarding family disputes. The Court may only approve such a release and make an order after considering all of the relevant circumstances, so this will involve preparation of appropriate initialing proceedings and affidavit evidence.

As with any estate, each person’s circumstances, assets and relationships with potential beneficiaries and claimants are different and care needs to be taken to consider all information available so as to make the right decisions regarding your estate. This will involve weighing up the pros and the cons of each decision and bearing the consequences and risks of doing so.

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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What is independent legal advice?

If you are:

  • borrowing money from a bank or someone else, like a parent,
  • have some special vulnerability in relation to a borrowing arrangement (such as due to age, inability to speak English well etc),
  • borrowing in relation to a self managed superannuation fund’s limited recourse borrowing arrangement, or
  • perhaps going guarantor on a loan for a company or a family member for their loan,

then chances are you will be asked to get “independent legal advice” from a solicitor in relation to the loan and the security for the borrowing or guarantee.

The document evidencing the loan is usually a:

  • Loan Agreement,
  • Letter of Offer or similar

and may have accompanying terms and conditions etc.

Security for a loan arrangement usually takes the form of a:

  • Mortgage,
  • Caveat or
  • Security Interest registered on the PPSR.

Independent advice us usually required by the lender so that it cannot (easily) be argued later that the borrower or guarantor didn’t understand the gravity of the arrangements being put in place – so although you get the advice, it is really for the lender’s protection.

In order to give independent legal advice, the lawyer will read the loan and security documents provided, advise you as to the meaning and effect of them and discuss any risks.

You will then be required to sign a document called a Declaration under oath confirming that you obtained independent legal advice before you freely and voluntarily signed the loan/guarantee/security documents.

Often the lender will also require the borrower or guarantor to obtain “independent financial advice” from a financial advisor, accountant or other appropriately qualified person. Lawyers, simply by virtue of their profession, possess no special skill to give financial (as distinct from legal) advice.

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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Properly executing documents

When it comes to properly executing documents, depending on the type of document and the parties executing it, there are different requirements for it to be valid.

The manner of execution depends on matters such as:

  • Party – whether a party is an individual, a partnership, the Government, an association or a corporation (and whether those signatories are parties in their own right or as a trustee of a trust or a superannuation fund;
  • Document – whether it is a Deed or just a contract or an Agreement; and
  • Physical/Electronic – whether it to be signed online or in person, or a combination of both.

PARTY TYPE

Individuals

An individual may execute a document by simply signing it with their signature witnessed by a person who is not party to it.

Partnerships

For a partnership to be bound by a document or a deed, either all partners to the partnership or an individual authorised by all the partners (whether or not the individual is a partner) should execute the document or deed.

Often, documents will be executed by a partner on behalf of a partnership. This authority may be set out in the partnership deed or a power of attorney. If you cannot obtain a copy of the relevant authority, you should consider obtaining a warranty from the individual in the relevant execution clause that they have authority of the partnership to so execute the document.

Companies

Section 127 of the Corporations Act (Corporations Act) sets out the ways in which a document may be executed by a company. If a company executes a document in this way, anyone will be able to rely on the protection in other sections of the Corporations Act for dealings in relation to that company. A company may execute documents under seal or choose not to have a company seal and even if the company has a seal, it need not apply it.

A company may execute a document with or without a seal if the document is signed by:

  • 2 directors; or
  • a director and a company secretary o; or
  • a sole director (there is no requirement for a private company to have a secretary).

Companies can also sign via an agent under s.126 of the Corporations Act.

For more information on how companies can becomes bound by the actions of its agents and employees, click here.

Associations

Usually an incorporated association signs documents by having 2 committee members sign it but often the Rules of Association need to be examined to confirm this.

An unincorporated association is not a legal entity and so cannot contract in its own right so be careful entering into any contract of value with them.

Trusts

A trust is not a legal entity and as such, it cannot contract in its own right so all acts relating to a trust must be undertaken by its trustee or trustees.

The type execution clause that should be used will depend on what type of entity the trustee is (eg a company  or one or more individuals) execution clause should be used if the trustee is a company).

Although a trust is not a legal entity, it may be a tax entity so may have its own ABN. You should therefore confirm that the ABN being used is the ABN of the trust and not the ABN of the trustee. An ABN is a great identifier.

If you are unable to confirm that the trustee has the power to enter into the arrangement (which can usually be ascertained by examining the trust deed), you should consider obtaining a representation and warranty from the trustee that it has the power to execute the document or deed on behalf of the trust.

DOCUMENT TYPE

There are various reasons for choosing between the different types of document. such as greater (often double the length) limitation periods for enforcing obligations in deeds compared to just agreements. Sometimes legislation requires transactions by deed, but oftentimes deeds are used as they are the most solemn act a person can perform in relation to an item of property or any other right.

Agreement / Contract

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

  1. Intention to create legal relations
  2. An offer
  3. Consideration (price) being agreed
  4. Acceptance

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 (even with the click of a mouse) since the Electronic Transactions Act 2000 (NSW) (ET Act) and corresponding legislation in Australia’s other States and Territories.

Deed

Traditionally, to be a valid, as a deed the document had to be “signed, sealed and delivered” and thus it had to be:

  • written (on paper or parchment);
  • signed and the parties’ seal/s applied); and
  • delivered (physically to the other party),

however now, there is no requirement for a seal (where it is described as a deed or expresses that is is ‘sealed’ and it is witnessed appropriately), the parties are presumed to have ‘delivered‘ it on execution and the parchment requirement has also been dispensed with given the ET Act, amendments to the Conveyancing Act 1919 (NSW) and, in relation to companies, the passing of the  Corporations Amendment (Meetings and Documents) Act 2022, which from 01 April 2022 (after the temporary COVID-19 pandemic measures ended on 30 March 2022), amended the Corporations Act to permanently allow things such as:

  • director or member meetings virtually, such as through Zoom or Teams meetings etc (regardless of the requirements under their constitutions); and
  • documents, including deeds, to be executed electronically.

As Deeds do not require consideration like a contract, often it can be sensible to include a nominal item (such as $10) as consideration just in case the document isn’t valid as a deed – as it can still be relied on as a contract, possibly even if not signed by the other party but part performed.

WET INK OR ELECTRONIC?

Documents now can either be signed:

  • in physical form with ‘wet ink‘ signatures;
  • electronically; or
  • a combination of both.

Either way, the method of signing must clearly and reliably identify the part and indicates the party’s intention in respect of the information recorded in the document.

Obviously, special care needs to be taken with parties that are not Australian residents and to consider the governing law and jurisdiction of the arrangement.

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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Liquidation

Liquidation is the process of winding up a company’s financial affairs and ultimately results in the existence of the company ending and being deregistered at ASIC.

An insolvent company can be wound up by the Court either by voluntary resolutions of the company’s directors and the company’s shareholders or by application by a creditor.

A solvent company can also be wound up through a members voluntary winding up if the company is no longer needed.

A Court will make an order for the winding up of a company if it can be shown that the company is:

(a)    actually insolvent – it cannot pay its debts as and when they fall due (even if the company has surplus assets but cannot convert them to cash them quickly); or

(b)    is deemed to be insolvent (such as through a Creditor’s Statutory Demand having been served but not complied with).

The Court can order winding up for other reasons also.

Unlike during a company’s administration, personal guarantees are unaffected by liquidation – they are personal arrangements.

Secured creditors are also unaffected by the process of liquidation.

In a liquidation, after sale of the company assets etc, the liquidator will distribute as dividends any surplus in accordance with the order of priority set out in s.556 of the Corporations Act 2001 (Cth).

A liquidation lasts for as long as it takes but ends on the company being struck off ASIC’s register or by Court order – either dissolving the company or staying or setting aside the winding up.

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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Deed of Company Arrangement

A Deed of Company Arrangement (DOCA) is a proposal put forward by stakeholders, usually the directors, whilst the company is in administration so as to give a return to creditors better than they may receive in a winding up.

Importantly, a DOCA avoids the need to place the company into liquidation and allows the company to continue to trade with control of the company ultimately going back to the directors.

DOCA arrangements are flexible in that they can provide for may forms of payment from a lump sum or a payment by instalments of a fixed amount of based on net profit.

A Deed of Company Arrangement and must be signed within 15 business days of the 2nd creditors meeting (unless this time is extended by the Court), otherwise the company must be placed into liquidation, with the administrator becoming the liquidator.

Prior to execution, a DOCA must be approved by at least 50% of creditors by number and in value of amounts owed. Once signed, DOCAs are binding agreements between the company and its creditors and the administrator is in control of the company.

If entered into, a DOCA subsists for as long as its terms provide, until the obligations in the DOCA have all been met or until Court order.

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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Limitation periods

There are limitation periods that apply to various legal cause of action.

The effect of a limitation period in relation to a legal cause of action is that claims become time-barred, and therefore unable to proceed, where the relevant period of time has elapsed without a claim being brought through the relevant Court or Tribunal.

There is no “Statute of Limitations” in New South Wales as such but there is the Limitations Act 1969 (NSW) which has a default limitation period regime where there is no specific timeframe set out in the relevant Act (such as the Succession Act 2006 (NSW), Home Building Act 1989 (NSW), Defamation Act 2005 (NSW), Fair Trading Act 1987 (NSW), Fair Work Act 2009 (Cth), Criminal Procedure Act 1986 (NSW) etc).

The Limitation Act (or the relevant specific Act) describe the types of legal actions and the limitation periods that apply to them such as the following civil claims:

Cause of action Limitation period
Contractual claims 6 years from the date on which the cause of action accrued
Negligence 6 years from the date on which the cause of action accrued
Family provision 12 months from date of death
Cause of action founded on a deed 12 years from the date on which the cause of action first accrues
Enforcing a judgment 12 years from the date on which the judgment first becomes enforceable
Defamation 1 year from date of publication
Unfair dismissal 21 days from the date of dismissal of employee

NOTE – this is a general guide only – you should get specific advice as to the limitation periods that apply to your specific circumstances

Different limitation periods apply to causes of action in different jurisdictions, such as the Commonwealth or those of each State and Territory. Limitation periods can also apply to some criminal matters but serious crimes generally do not have such limitation periods.

In some very limited circumstances, the relevant limitation period may be able to be extended.

FURTHER INFORMATION

For further information on litigation and dispute resolution, 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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