In a surprise ruling, the Full Court of the Federal Court has in Badenoch Integrated Logging Pty Ltd v Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) [2021] FCAFC 64 (Badenoch v Bryant) stated that the “peak indebtedness” rule was abolished with the introduction of section 588FA of the Act.
Under section 588FA(3) of the Corporations Act 2001 (the Act), where preference payments are claimed against a creditor that had a running account with a company, any supply by the creditor to the debtor company is required to be taken into account and the whole of the transactions (both debits and credits) such that the net result at the conclusion of the running account is the amount of the preference.
A long line of cases have approved the peak indebtedness rule, which says that a liquidator is entitled to nominate the date from which a claim by the liquidator with the result that the liquidator nominates when the “running account” starts for the purposes of 588FA(3). The rule has its genesis in comments made in Rees v Bank of New South Wales (1964) 111 CLR 210 and the effect of the rule is that liquidators have been able to choose the date during the relation back period when the debt owing to the creditor is at its peak, allowing the liquidator to claim the difference between this peak debt amount and when the continuing business relationship ended (typically the closing balance of the account).
At first instance in the Federal Court Badenoch argued that the liquidator should not be entitled to nominate the date from which the running account starts, and instead the whole of the business relationship referred to in section 588FA(3) of the Act should be factored into the calculation for the purposes of section 588FA(3). The liquidators argued that they should be entitled to nominate the point of peak indebtedness.
However, on appeal Full Court of the Federal Court held that there was nothing in the statute that indicated that a liquidator was permitted to nominate the peak indebtedness, and instead the whole of the continuing business relationship was required to be taken into account for the purposes of section 588FA(3). The Full Court agreed with the New Zealand Court of Appeal’s decision in Timberworld Ltd v Levin (2015) 3 NZLR 365 concerning the equivalent New Zealand statutory provision, that the words in the Act require the whole of the continuing business relationship.
This decision is a significant win for those creditors who receive unfair preference as part of a continuing business relationship. Claims made by liquidators against those creditors will now often be significantly reduced or unavailable to a liquidator.
If you have any questions or concerns please contact Chamberlains and speak with one of our insolvency lawyers today.
Last year we wrote about a recent decision handed down by the Federal Court of Australia (WorkPac Pty Ltd v Rossato [2020]) in which the Court heavily scrutinised the common law tests surrounding the definition of a “casual employee”.
Given the uncertainty that arose in that case in defining casual employment, on 27 March 2021 the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recoveries) Act 2021 (Amendment Act) was enacted to provide greater certainty and protection to both employees and employers.
The Amendment Act significantly amends the Fair Work Act 2009 (Cth) (FWA) by introducing a new definition of “casual employee”. The changes greatly impact both employers and employees alike.
What is the new definition of “casual employee”?
Under the new section 15A of the FWA, a person will be a casual employee if they:
The definition focuses on the terms upon which employment is offered and accepted, rather than the conduct of the parties. This means that a determination as to whether a person is a casual employee is made at the time the offer and acceptance of employment occurs.
As such, the statutory definition of a casual employee overturns the common law principles established in WorkPac Pty Ltd v Rossato [2020] which looked at the parties conduct during employment to determine whether the employment was casual in nature.
Whether there is “no firm advance commitment to continuing and indefinite work”
To determine whether an offer was made on the basis that there is “no firm advance commitment to continuing and indefinite work” regard must be had to whether the:
Prohibition against “double dipping”
In addition to the new statutory definition of a casual employee, the Amendment Act also introduces a new section 545A in the FWA which provides a statutory offset rule whereby the entitlements owing to an employee who has been misclassified as a causal employee can be offset against any casual loading already paid to the employee.
New Casual Employment Information Statement
Moving forward, employers will be required to provide all new casual employees with a Casual Employment Information Statement (CEIS), in addition to the Fair Work Information Statement, prior to the commencement of the casual employee’s employment.
The Amendment Act also requires that small business employers provide their existing casual employees with a copy of the CEIS as soon as possible. All other employers have until 27 September 2021 to provide existing casual employees with the CEIS.
Casual conversion
The Amendment Act also introduces a new regime for casual conversion in the National Employment Standards. This obligation requires all employers (to the exclusion of small business employers) to offer all eligible casual employees the opportunity to convert their employment to full time or part time in circumstances where the casual employee:
The Amendment Act also provides a list of reasonable grounds for an employer to not offer casual conversion, including, but not limited to:
All employers (to the exclusion of small business employers) will have until 27 September 2021 to:
Key takeaways
The Amendment Act gives rise to substantial changes affecting all employers. Employers should:
If you have any questions about the Amendment Act and how it affects you as an employee or employer, please contact our Workplace Law team.
Findings of abuse of young gymnasts at Gymnastics Australia – Chamberlains seeking witnesses!
On 3 May 2021, the Australian Human Rights Commission released a report exposing a toxic culture in Gymnastics Australia that enabled the sexual, physical and other abuse of young gymnasts.
For decades, sexual misconduct and serious physical abuse took place against young gymnasts during training sessions all across the country by the people who were supposed to protect them.
We are working on these claims. If you or someone you know would like to discuss a claim or has any questions please contact Alison McNamara on alison.mcnamara@chamberlains.com.au or Jon May jon.may@chamberlains.com.au from Chamberlains injury compensation team to see how we can help.
Article in Canberra Weekly
Article in Bucket Orange
See the below article for more information about the Gymnastics Australia report: https://www.abc.net.au/news/2021-05-03/gymnastics-australia-report-human-rights-commission-culture/100111962
Chamberlains seeking witnesses!
On 3 May 2021, the Australian Human Rights Commission released a report exposing a toxic culture in Gymnastics Australia that enabled the sexual, physical and other abuse of young gymnasts.
For decades, sexual misconduct and serious physical abuse took place against young gymnasts during training sessions all across the country by the people who were supposed to protect them.
We are working on these claims. If you or someone you know would like to discuss a claim or has any questions please contact Alison McNamara on alison.mcnamara@chamberlains.com.au or Jon May jon.may@chamberlains.com.au from Chamberlains injury compensation team to see how we can help.
See the below article for more information about the Gymnastics Australia report: https://www.abc.net.au/news/2021-05-03/gymnastics-australia-report-human-rights-commission-culture/100111962
We can proudly announce that Chamberlains Law Firm is a finalist in the 2021 Australasian Law Awards for Law Firm of the Year (1-100 lawyers).
We can also announce that our Managing Director, Stipe Vuleta, is in the run for Law Firm Leader of the Year (<200 lawyers).
We are incredibly honored to receive two finalist spots in the 2021 awards, continuing to be recognised for our expertise, commitment to our clients, and innovation through online legal services.
We would like to thank our staff, friends, family and importantly our clients who put their trust in us each day.
Winners will be announced in a series of breaking news stories from June 15 – June 17 by Australasian Lawyer.
Last month, the Civil Liability Amendment (Child Abuse) Bill was introduced in NSW. If passed, this piece of legislation will provide a clear pathway for survivors of child abuse to be fairly compensated for the pain and suffering they have endured.
The Bill builds on 2016 and 2018 reforms which emerged in response to Royal Commission into Institutional Responses to Child Sexual Abuse. It aims to remove barriers to survivors accessing justice.
How so?
Survivors who were coerced into inadequate settlements, or pressured by impending limitation periods, will now be able to apply to have the previous settlement agreement set aside.
Courts will be able to overturn settlement agreements where it is ‘just and reasonable to do so’. A court will consider factors including the amount paid to the survivor under the agreement and the bargaining position and conduct of the parties. Importantly, a court can also consider any other matter which it considers relevant.
If the court decides to overturn an agreement, it may also set aside other things that give effect to the agreement; including a contract, deed or judgment of the court or of a lower court.
Why is this significant?
This Bill would bring NSW in line with other states and territories to empower survivors of institutional child abuse to pursue fairer compensation. With no concrete opposition in Parliament, the Bill seems likely to pass.
Once it does, the injury compensation lawyers at Chamberlains will be ready to guide survivors through the process of re-settling a claim. We are committed to helping our clients feel heard, understood, and in control of their situation, in order to achieve the compensation they deserve.
Assisted by: Elisabeth Henke
1. How can I protect myself when I sell a horse?
There are many things you can do to protect yourself during the sale process. As most sale/purchase disputes boil down to allegations of misrepresentation, sellers may reduce the risk of such a dispute by the way the sale is conducted. For example:
2. If I purchase a horse and it turns out to have behavioural or soundness issues, can I return the horse?
This will depend on many factors and is one of the main reasons that we recommend a proper sale contract be drafted and executed by the parties, so that everyone is ‘on the same page’ as to if/or when a return may be possible. A detailed inspection and PPE will also assist in establishing whether there are any areas of concern prior to purchase.
Purchasers should keep all advertisements, videos and written communications about the horse. They should ensure that they know the details of the actual person or entity who is selling the horse as the type of owner (private owner, company, sole trader business etc) and your ability to locate that person may affect your ability to return the horse or otherwise resolve the dispute – another reason to have a properly drafted contract!
Purchasers should be upfront and honest about their level of experience, the environment and management practices the horse would experience in that purchaser’s care, and what they wish to do with the horse so that the seller is aware of these factors, and have this conversation in writing.
3. If I have sold a horse and the owner is now unhappy and wants to return it, what do I do?
Purchasers may or may not have a right to return the horse. This will depend on the terms of the contract and who the seller is – for example, it is important to know whether consumer law may apply to you as the seller.
It is best to be very clear about the terms of a sale, especially if you wish to avoid accepting the horse for return. It is important to deal with this in the contract, and to also understand where you may not be able to avoid dealing with an unhappy purchaser due to consumer law restrictions. It is important to seek advice so that you understand what your rights and obligations are.
It is also important to consider the sale in the wider context – for example, if you are a breeder, you do not want dissatisfied professional customers who will not purchase youngstock from you as your reputation and business may suffer. In some situations, it may make more commercial sense to accept the return rather than be involved in a huge dispute – every situation is unique and you should consider your options. If you have a relationship with a lawyer who has drafted your contracts and knows your business, it’s so much easier to know where to turn if a dispute pops up.
4. I’m starting a teaching business but I only have a few students. Do I really need to do anything to set this up?
The short answer is yes, as one accident leading to a large claim could devastate you financially as well as damage your business and personal reputation. The type of business structure, insurance, waivers, contracts, signage, work health and safety requirements, tax considerations etc that you will need may vary depending on the jurisdiction you are teaching in, as well as where you are teaching (your own facility versus travelling to clients) and your own unique circumstances and risk factors. You should reach out to our office for assistance in setting up your business.
If you have any legal questions about equine law, reach out to our specialists at Chamberlains Law Firm!
If a company is in the process of being wound up by a liquidator, a creditor or member (shareholder) may make an application to a court to terminate the winding up under section 482 of the Corporations Act 2001.
Such an application may be made for various reasons, but it often arises from a desire to preserve accumulated tax losses or to avoid regulatory consequences that can result from a liquidation (for example, the cancellation of a building licence).
To persuade a court to exercise its discretion to terminate a winding up, an applicant will typically need to show that the company’s creditors and liquidator’s fees and expenses have been or will be paid in full.
However, a court will not rubber-stamp a termination order simply by an applicant showing that all debts will be paid.
An example of a recent unsuccessful termination application is the case of In the matter of Kele Group Holdings Pty Ltd [2021] NSWSC 412 (Kele Group).
The sole director and shareholder of the company, Ms Hilda Elias, made an application to terminate the company’s winding up.
The company’s sole business activity was owning and renting out residential property.
The company had incurred large tax losses over a significant period totalling approximately $1.9 million.
The sole unrelated creditor was the ATO, which was owed about $60,000 at the time of the termination application.
While related creditors were owed substantial sums, those creditors agreed to convert that debt into shares in the company.
Ms Elias had funds available to pay the ATO and the liquidators’ fees and expenses in full.
Accordingly, Ms Elias showed that the company would be solvent immediately after the termination order.
Despite this evidence, the court refused to terminate the winding up for the following reasons:
The critical factor that counted against the termination was probably the company’s failure to lodge its tax returns over a significant period of time. While these seemed to have been brought up to date by the time the application came on, there was no explanation of the prior failures, suggesting the company may have operated contrary to “commercial morality”.
In our previous article, we discussed the case of In the matter of Rainbow Carlingford One Pty Limited (in liquidation) ACN 604 122 054 [2019] NSWSC 971. In that case, the application for termination of a winding up failed because the court was not satisfied that all debts would be paid in full and in a timely manner.
The case of Kele Group is an important reminder that if a termination application needs to be made, you should not assume the court will wave it through simply by all debts being paid. Any previous irregularities, including how the company ended up in liquidation, will need to be properly explained. Evidence of the company’s future plans, and evidence as to why the company will not end up in liquidation again will need to be provided. If the evidence on these issues is lacking and lingering questions are left unanswered, you can expect the court to refuse your application as it did in Kele Group.
If you have any questions or concerns please contact Chamberlains and talk to one of our insolvency lawyers today.
Interested in learning more on Insolvency & Reconstruction?
Click our recent articles below to find out more:
Broad Powers and Blurred Lines: The Court’s Power to Approve Invalidly Appointed Liquidators
Bankruptcy 101: Voidable Transactions
A sophisticated email scam is targeting law firms and their clients. Read more here.
If you have received a request to deposit money into a Chamberlains Law Firm account please call us on 02 6188 3600 to confirm the details.
Red flags to be aware of:
What is institutional abuse?
Institutional abuse is the mistreatment of a person from an authority or system of power. This more than often involves children or elderly. The maltreatment can range from abuse in the home, such as physical and sexual abuse, neglect, and huger to continuous harsh reprimands to modify your behaviour.
How can Chamberlains assist me?
Being the victim of institutional abuse is a traumatic experience not many people will ever be able to understand. It can make you feel traumatized, baffled and powerless. A lawyer can help you by standing with you throughout the claims process.
At Chamberlains, we offer a supportive and understanding environment to help you feel in charge of the situation, and we will assist you in finding a suitable compensation for your traumatic experience.
Most of the time compensation usually involves money, but can also be an apology or admission of guilt. The latter being something that usually helps providing closure to victims in a way money just cannot.
What is Medical Negligence?
Doctors do not always get it right, and when they get it wrong it can have permanent and expensive consequences. Even a simple check-up when performed inadequately could leave you in a position where you are entitled to compensation.
When a doctor’s treatment of a patient falls below the expected level of reasonable care, skill and diligence, this amounts to medical negligence. Examples of this is failing to:
How can Chamberlains assist me?
The world of medical negligence is complex, time consuming, and can seem daunting to the untrained eye. That is why we at Chamberlains tailor our strategy to suit your individual needs, to help deliver the best results as quickly as possible.
Have you been injured at work?
The right to a healthy and safe work environment is a statutory right that all Australian workers have. Unfortunately, despite this right, thousands of workers are injured on the job every year due to poor site conditions or dangerous practices.
If you’ve been injured at work, you could be entitled to benefits under the Workers Compensation Scheme. There are strict deadlines that need to be complied with so acting quickly is essential.
How can Chamberlains assist me?
At Chamberlains, our injury compensation team can guide you through the entire process. From advising on your prospects, to lodging a claim, to handling disputes with your employer or insurer, we can get the job done.