ByLawyers News and Updates

Conveyancing – GST withholding – Letter to client

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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

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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

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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

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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

NSW – Estates – Can a beneficiary be evicted?

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In the recent case of Kennedy v Kennedy [2018] NSWSC 1087 Davies J struck out a defence and granted liberty for the executors to obtain default judgement and issue a writ of possession where one of five adult beneficiaries had been residing in the deceased’s house for about two years since the date of death, despite being requested by the executors to vacate. His Honour observed that:

[7] In my opinion the defences filed by the defendant do not disclose any defence to the claim by the executors. Where there is no lease in place, except if a claim was made in the nature of some form of constructive trust, it is doubtful if there could be any defence to the right of the executors to get in all of the estate property including by obtaining possession of the land.

It is the duty of the executor or administrator to get in the estate. If necessary the executor or administrator can apply to the court for a declaration and/or a writ of possession.

This applies where a beneficiary is in occupation of real property owned by the estate without permission and refuses to vacate.

This case has been added to the Estates chapter of By Lawyers 101 Succession Answers (NSW).

Wills and powers of attorney – Costing & Storage

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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.

Employment Law – Domestic violence leave

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From 1 August 2018 all employees under modern awards – full-time, part-time and casual – have an entitlement to 5 days unpaid leave to deal with family or domestic violence issues.

The Fair Work Commission decided in their four-yearly review to add a new model term into all modern awards. The Full Bench concluded that:

…retaining employment is an important pathway out of violent relationships. Conversely, a lack of financial security has an adverse impact on the ability to recover from family and domestic violence. Absent an entitlement to unpaid family and domestic violence leave, employees will be reliant on the goodwill of their employer to obtain the leave necessary to deal with the various issues arising from family and domestic violence while remaining in employment.

The model clause will allow unpaid leave for family or domestic violence reasons which are defined as… violent, threatening or other abusive behaviour by a family member that seeks to coerce or control the employee and that causes them harm or to be fearful.

The unpaid leave may be taken for such reasons as to make safety arrangements for the employee or a family member, to attend court, or to access police services.

Employees are not required to access paid holiday or sick leave first before taking the unpaid domestic violence leave.

The leave is available in full at the start of each 12-month period of the employee’s employment, does not accrue and is available to full-time, part-time and casual employees.

Our Employment Law guide has been updated.

Superannuation and downsizing

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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.

TAS – transfer duty concessions

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New commentary and forms have been added to the Purchase of real property (TAS) Guide in relation to the availability of new transfer duty concessions for first home owners purchasing an established home and also pensioners downsizing to an established home.

First home transfer duty concessions – Established home

A 50% discount is available on transfer duty for first home buyers of established homes which have a dutiable value of $400,000 or less. The discount is available for purchases of established homes that settle within the period 7 February 2018 and 6 February 2019. The eligibility requirements are set out in full in our commentary. A link to the SRO form Section 46E Concession from duty -Transfer to first home buyers of an established home has been added to the matter plan.

Transfer duty concessions for pensioners downsizing

This concession provides a 50% discount on transfer duty for eligible pensioners who sell their existing home and downsize to another home (not vacant land) with a dutiable value of $400 000 or less (and also less than that of the former home). Both homes must be in Tasmania and the new home must be an established property.

The concession is available where:

  • the sale of the former home settles within the period 10 February 2018 and 9 February 2019; and
  • the purchase of the new home settles within six months before or after the transfer of the former home.

The eligibility requirements are set out in full in our commentary.

A link to the SRO form Sections 46N & 46O Concession from duty -Transfer to pensioner/s downsizing home has been added to the matter plan.

Client Details and Verification of Identity certificate

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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.

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