ByLawyers News and Updates

Conveyancing – GST withholding – Letter to client

by

GST withholding obligations for purchasers of new residential properties and some vacant land commenced on 1 July 2018.

The commentaries in all By Lawyers Conveyancing Guides – Sale and Purchase, for each state, have previously been amended to deal with the new GST withholding requirements. See the commentaries for details of when the new provisions apply.

Now included in the precedents for both Sale and Purchase is a new ‘Letter to client regarding GST withholding payment’ which explains to clients the new requirements and outlines for them the procedures involved in complying, whether they are a vendor or a purchaser.

This helpful precedent allows you to quickly and correctly advise the client on this important new development in conveyancing procedure, where applicable.

 

County Court VIC – Commentary update

by

Commentary update for new Practice Note PNCLD 2-2018

The commentary in the By Lawyers County Court Guide have been updated by our author, barrister Nawaar Hassan, to reflect the changes in practice and procedure in the Common Law Division, with the introduction of the new Practice Note PNCLD 2-2018 which commenced on 1 August 2018.

Key points of the Commentary update

Notably, the new practice note:

  • Disbands the Civil Directions Group, with directions and orders now being managed by the Commercial and Common Law Registries;
  • Introduces an obligation on the plaintiff to file a ‘Mediation Results Order’ where proceedings are settled at or after mediation; and
  • Covers the practice and procedure in relation to eCourtbooks, which must be provided in addition to a hard copy Court Book from 1 August 2018.

Relax!

By Lawyers always keep you up to date with developments in practice and procedure in the courts covered by our Guides.

Formatting of By Lawyers deeds and agreements

by

Over the next month or so you will notice a minor change to the formatting of the By Lawyers precedent deeds and agreements.

By Lawyers has received and responded to feedback that the line under headings in deeds and agreements can be troublesome when users are customising precedents. The line under headings is currently a ‘top border’ applied to the 1st paragraph of the clause. We are swapping that line to a ‘bottom boarder’ of the heading paragraph, which is a more intuitive – and hopefully a less troublesome – place for the line formatting to be applied.

We all know formatting can be tricky. If you are having trouble please see our Tips and tricks for working with By Lawyers precedents, found in every publication, at the end of folder A. ‘Getting the matter underway’ on the matter plan. If you are still stuck – don’t hesitate to call or email us; our team is here to help you!

 

Sheriff – Enforcement procedure

by

By Russell Cocks, Solicitor

First published in the Law Institute Journal

The Sheriff for the State of Victoria performs an important function within the Court system, providing an ultimate enforcement procedure for judgments obtain in the Courts.

The Sheriff has been around for a long time. Fans of Robin Hood generally disparage his work but without an ultimate enforcer, Court judgments risk becoming pyrrhic. As an arm of the judicial process, the Sheriff has considerable power to influence the lives of citizens and is liable to review by the Courts. It would be fair to say that the traditional sale process adopted by the Sheriff gave the impression of a preference to the rights of the judgment creditor over the rights of the judgment debtor and appeared to be based on a policy of realising the judgment debtor’s property at all costs, indeed often at great cost to the judgment debtor.

Cases in 2011 and 2012 in the Supreme Court critically analysed the role of the Sheriff and promoted a more proactive role for the Sheriff in analysing the sale process to ensure a fairer outcome for the judgment creditor. This, on at least one occasion, led to the Sheriff’s auction being conducted on-site, rather than at the Sheriff’s Office and an enthusiastic crowd making multiple bids. (see LIJ columns in September 2011 & June 2013) Reform of the sales process had been called for as long ago as 1982, recognising a need for the process to become more transparent by adopting a more commercial focus and perhaps contracting out the auctions to a panel of licenced estate agents.

But Sheriff’s auctions labour under some unique difficulties:

  • the Sheriff has no right to access the property during the sales process to allow for inspection;
  • indeed, the Sheriff has no right to access the property on the day of the auction and cannot guarantee possession to the purchaser after the auction;

Additionally, the Sheriff only sells the interest of the judgment debtor, meaning that the purchaser takes the property subject to any encumbrances, and the Sheriff is not obliged to hand over the duplicate Certificate of Title (or its electronic equivalent). Given that the purchaser must secure registration of the Transfer from the Sheriff before the writ for possession expires, it can be seen that a purchaser from the Sheriff takes a considerable risk and the Sheriff has developed a formula to take account of this risk.

Hoskin v Griffin (The Sheriff) [2018] VSC 216 revealed that the Sheriff’s process involves a 25% discount being applied to the value of the subject property to take account of these difficulties. The problem with that case is that the starting point, the valuation obtained by the Sheriff, was too low to begin with and the application of the 25% discount to this low value meant that the sale was defective.

The judgment debt arose as a result of failure to repay a mortgage of $165,000 in 2015. By the time the judgment debtor had unsuccessfully sought to contest the judgment, costs and interest had more than doubled the debt to $380,000 in 2017. The Sheriff had obtained a valuation from the Valuer-General in 2015 of $450,000 and a fresh valuation in 2017 of $475,000. The Sheriff then calculated the reserve for the auction by applying the 25% discount, to achieve a figure of $340,000, but increased it to $380,000 in view of the judgment debt. The purchaser at the Sheriff’s auction, held in the Sheriff’s Office, made one bid, equal to the reserve and purchased the property. Evidence before the Court established that the true value of the property was at least $700,000. This meant that the purchaser had acquired the judgment debtor’s equity of around $300,000 for free. The Court concluded that the sale process had failed to obtain a fair price and was therefore in breach of the Sheriff’s duty to the judgment debtor. Unravelling the consequences of that finding was left to another day.

There is little doubt that the judgment debtor made some poor decisions during this unhappy episode. A simple debt more than doubled, opportunities to resolve the dispute were ignored and multiple representatives were engaged. The Sheriff faces a difficult task of balancing the rights of the debtor and creditor and it appears that in this case he was dealt a bad hand by the valuation. But if the Sheriff had have accepted the judgment debtor’s valuation of $700,000, the 25% discount would have resulted in a reserve of $525,000 and it is likely that a prospective purchaser, facing all the problems associated with buying from the Sheriff, would have been reluctant to take the risk. This would have resulted in a second Sheriff’s auction without reserve, an evil criticised in the 2011 & 2012 cases.

The call for meaningful reform, now 35 years unanswered, remains.

Tip Box

•Sheriff’s sales are a necessary evil

•Sheriff’s sales involve risks for purchasers

•Reform is overdue

Wills and powers of attorney – Costing & Storage

by

Costing wills and powers can be difficult. It is often not clear at the outset the extent of work which will be required. While many wills are ‘simple’, the complexity of a client’s financial position or their family arrangements can mean hours of time spent taking and confirming instructions and sometimes reviewing documents such as their self managed superannuation fund deed, or a family trust deed. The intended uses for a power of attorney are many and varied and may involve detailed advice. Any issues of capacity may also add significant time and expense.

Is a flat fee for a ‘simple’ will or a ‘standard’ power appropriate, or should an hourly rate apply?

Are there any scale costs that can be used as a guide? What costs disclosures must be made to the client?

What arrangements should be made for the storage of original wills?

How should copies of documents be managed?

These practical questions are dealt with in new sections of commentary on Costs and Storage in our NSW, Vic, Qld, SA, ACT, Tas and WA wills and powers publications.

All of these publications include the By Lawyers wills and powers Costs Agreements and example invoices, which meet costs disclosure requirements and include disbursements, billing and payment arrangements, client rights notice and solicitor’s lien provisions, among others.

Superannuation and downsizing

by

The By Lawyers Self Managed Superannuation Guide has been updated to provide greater detail about contributions to superannuation as a result of residential downsizing.

From 1 July 2018, superannuation fund members aged 65 and over who downsize by selling their principal place of residence are able to contribute up to $300,000 from the proceeds of sale into their superannuation fund as a non-concessional contribution. Both members of a couple can take advantage of the concession for the same family home, allowing up to $600,000 per couple to be paid into superannuation from the sale proceeds of the family home.

Downsizing contributions are exempt from inclusion in the $1.6 million total superannuation balance cap. Instead, the contribution is included when the total superannuation balance is recalculated at the start of the new financial year.

This measure is available to superannuation fund members who have held their principal place of residence for 10 years or more, for contracts that are exchanged after 1 July 2018. The contribution must be made to the fund within 90 days of settlement of the sale.

Importantly, despite the term ‘downsizing’, there is in fact no requirement to purchase another home.

For more information about superannuation contributions, see the By Lawyers Self Managed Superannuation Funds Guide.

Client Details and Verification of Identity certificate

by

We have added a new Client Details and VOI precedent to every one of our publications. This handy document is designed to be used at the first point of contact with a client.

The front page is for the client’s general contact information and identification. The second page includes the formal Verification of Identity Certificate.

The Client Details page can be completed by the client while they are waiting to meet with the solicitor, saving time for the client and the practitioner in the process.

Having the Client Details and VOI as a separate document leaves the Retainer Instructions for collecting the matter-specific information.

We have placed the new precedent immediately before the Retainer Instructions on each matter plan.

We think this will simplify and improve the client engagement process. We would love to hear any feedback from firms as they use the new document.

Purchase – VIC – Additional foreign purchaser land transfer duty exemption

by

Information on this new exemption has been added to the Purchase commentary and 1001 Conveyancing Answers (VIC).

From 1 July 2018 additional duty will only apply to a contract or transaction for residential property for a foreign transferee where the following exemption criteria is not met:

  • The purchase of the residential property is completed jointly with a spouse or domestic partner who is an Australian citizen, permanent resident, or New Zealand citizen who holds a special category visa; and
  • The property will be used as their principal place of residence for a continuous period of 12 months, starting within 12 months of them becoming entitled to possession of the property.

This exemption is available for transfers from 14 June 2018.

 

By Lawyers Alerts – reducing stress

by

To reinforce the currency of our publications, we have extended our Alerts system.

At By Lawyers we are committed to reducing stress for small law firms and ensuring practitioners have what they need, when they need it. Our matter plans provide you with the precedents you are looking for and our commentaries give you as much  – or as little – support as required.

Most importantly, our publications always include the latest in legislative and procedural changes.

Alerts have always been posted in our publications as a way of letting you know, at a glance, of any recent updates to the law and advising you when our precedents and commentaries have been updated. However, sometimes there simply aren’t any changes that you need to know about – and we think you need to know that, too.

From now on, where there are no changes current, our publications will display the reassuring flag ‘Alerts – Nil’.

‘Alerts – Nil’ at the top of a matter plan indicates that there have not been any recent changes in that area of law.

At By Lawyers all members of our editorial team have dedicated areas of law to follow, with state-based cross-checks, ensuring no legislative changes escape our attention. Notifications from legislative, courts and law society sources, to name only a few, are checked and cross-checked daily. When we need to update anything, the digital nature of our publications means that we can post updates – and issue an alert – immediately.

We will always inform you when there is something you need to know. Otherwise, you have no need to worry!

Conveyancing – GST withholding – Supplier notification

by

Where a purchaser is required to make a GST withholding payment, the vendor (supplier) is required to provide the purchaser with a written notice, called a Supplier notification, containing information to help the purchaser comply with their GST withholding obligations.

The notice must be provided to the purchaser on or before the supply. This notice can be incorporated into the contract for sale, or provided separately.

To make compliance easy, we have added a Supplier notification precedent in all of the By Lawyers Conveyancing Sale Guides, under the heading ‘The contract’.

Further information on the new GST withholding requirements for residential properties – and related precedents – can be found in all By Lawyers Sale and Purchase Guides.

Don’t worry, By Lawyers always keep you up to date!

Connect with us