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Disputes are often time-consuming, costly and stressful and can have far reaching consequences for the parties concerned. We aim to resolve disputes as swiftly and efficiently as possible by managing potential risks and implementing pragmatic and effective solutions while bearing our clients’ business objectives at the core of our services.

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Dispute Resolution & Litigation

Considering buying off-the-plan? Purchasers beware.

H & H Lawyers successfully defends a vendor developer against claims brought by the purchaser of an off-the-plan property in the Supreme Court of NSW.   While the benefits of buying an off-the-plan property are often highlighted to a purchaser, the decision in Xu v Lindsay Bennelong Developments Pty Limited & Ors [2020] NSWSC 1692 confirmed the importance of having any terms that are “non-negotiable” for the purchaser to be clearly expressed in writing in the contract for sale of land.   Facts In this case, the plaintiff was a purchaser of an off-the-plan property. During the handover inspection of the completed property, the purchaser discovered that there was only one car space attached to her property despite the representation being made prior to entering the contract for sale of land that there would be two car spaces. Subsequently, the purchaser brought a claim against the former vendors of the subject property and the substituted vendor, to whom the contract for sale was novated to, after exchange of contracts. Other relevant facts include: 1.   prior to purchasing the property, the agent made representations to the purchaser that there would be two car spaces attached to the property; 2.   prior to purchasing the property, the purchaser’s solicitor inquired and the former developer confirmed in writing that the property had two car spaces; 3.   the front page of the contract of sale of land did not specify how many car spaces were attached to or formed part of the property; 4.   the draft floor plan and draft strata plan of the property which were attached to the contract of sale marked that there are two car spaces allocated to the property; 5.   there was no other mention of there being two car spaces attached to the property in the special conditions to the contract or anywhere else in the contract; and 6.   it was a special condition to the contract for sale that the purchaser acknowledges and agrees that the vender may make alterations, from time to time, and vary the building floor plan or the draft strata plan, as it sees necessary or desirable. The plaintiff claimed that the defendants breached the fundamental term and purposes, or alternatively, an implied term of the contract, by only transferring one car space with the property instead of two car spaces. The plaintiff also claimed that, in doing so, the defendants engaged in misleading and deceptive conduct or false representation under sections 18 and 30(1)(e) of the Australian Consumer Law (“ACL”) and sought specific performance for the defendants to transfer one more car park under sections 237 and 243 of the ACL. The then Chief Judge in Equity, Ward CJ dismissed the plaintiff’s arguments and held that:  1.   the contract was for the sale of a unit with a single tandem car space. However transferring two car spaces was neither a fundamental term nor an essential implied term of the contract; and  2.   the representations that the plan would include a space for two cars were clearly made. Nonetheless, such representation does not amount to misleading or deceptive conduct in circumstances where the developer had reasonable grounds to make such representation at the time and the plaintiff suffered no loss by relying on the promise.   Key takeaways While this case is not to be generally applied to all circumstances in relation to off-the-plan purchases, a purchaser of an off-the-plan property should be mindful of standard special conditions attached to contracts for sale of off-the-plan properties which are designed to allow a vendor developer to make changes (to a degree) to a draft floor plan or draft strata plan. As in this case, even if the court finds that the draft plan which formed part of the contract was varied, such variation may not constitute a breach of a fundamental or essential term of contract. Thus, a purchaser of an off-the-plan property must scrutinise the terms and conditions before entering into the contract for sale. Further, if the purchaser seeks to rely on any representations made by an agent or vendor prior to entering into the contract, such representation should be expressly and unequivocally included in writing in the contract to make sure the vendor makes good on the promise. The purchaser should also be mindful that the contract would generally provide a limited time to seek rescission. A vendor should also consider the litigation risks associated with the sale of off-the-plan properties. Even if the vendor is successful such as in this case, being involved in court proceedings is costly and time-consuming, and may impact its reputation as a developer as well as open the gate for other purchasers to bring a similar claim against the developer.     Disclaimer: The contents of this publication are general in nature and do not constitute legal advice. The information may have been obtained from external sources and we do not guarantee the accuracy or currency of the information at the date of publication or in the future. Please obtain legal advice specific to your circumstances before taking any action on matters discussed in this publication.  


Dispute Resolution & Litigation

High Court Clarifies Definition of Casual Employee

As one of the most significant decisions by the High Court in 2021, the High Court has determined the meaning of a casual employee in Workpac Pty Ltd v Rossato [2021] HCA 23.  Mr Rossato was employed as a production worker by Workpac’s labour-hire company under a series of six contracts, or assignments, to perform work for one of Workpac’s clients. While Mr Rossato was required to work regular and full-time hours according to a fixed pattern of work, Workpac treated Mr Rossato as a casual employee, such that Mr Rossato was not paid the leave or public holiday entitlements under the Fair Work Act 2009 (Cth) (the Act) and the enterprise agreement.   The Court confirmed that the question of whether a person is a casual employee is to be determined by considering the express terms of a written employment contract, and not on the basis of any subsequent conduct of either party. To this extent, the court held any such commitment to further work must be contained in an enforceable agreement to be recognised.  The High Court held that a casual employee is an employee who has no “firm advance commitment as to the duration of the employee’s employment or the days (or hours) the employee will work” and provides no reciprocal commitment to the employer. In considering the nature of the commitment, the court held that ‘the existence or otherwise of a “firm advanced commitment” must be for enforceable terms’, and should not be held to exist from expectations or understandings borne from the manner in which the parties have performed their agreement. The High Court held that a mere expectation of continuing employment on a regular and systematic basis is not sufficient for the purposes of the Act. Mr Rossato’s employment was expressly on an “assignment by assignment basis”. Mr Rossato was entitled to accept or reject any offer of an assignment, and at the completion of each assignment Workpac was under no obligation to offer further assignments. The High Court also held that it was not the role of the courts to “moderate a perceived unfairness resulting from a disparity in bargaining power between the parties”.  In relation to the employment relationship, it should be noted that the High Court held in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 that: 1. while mutual undertakings may not always be express, where there are express terms of the contract between the parties, they must be given effect unless they are contrary to statute; 2. if the mutual undertakings are said to be implied in what has been agreed, they cannot be inconsistent with the express terms of the contract; and 3. if the mutual undertakings are to be inferred from the conduct, then they may take effect as contractual variations. This decision by the High Court in Workpac v Rossato is important for both employers and employees as it reinforces the importance of specifying the terms of the contract in writing, taking into account the key features of the High Court’s decision. It is also important that casual contract terms and employer’s policies are carefully reviewed to ensure that they do not create any unintentional implied mutual obligations or variations inferred from the conduct.  It is also worth noting that a new provision of s 66B of the Act has been introduced which requires employers to offer casual employees to become permanent employees if they have been employed for 12 months and have worked regular and systematic patterns in the last six months.   Disclaimer: The contents of this publication are general in nature and do not constitute legal advice. The information may have been obtained from external sources and we do not guarantee the accuracy or currency of the information at the date of publication or in the future. Please obtain legal advice specific to your circumstances before taking any action on matters discussed in this publication.  


Dispute Resolution & Litigation

Freedom of Contract: Can parties contract out a statutory limitation period? The High Court says yes.

One of the basic principles of Australian contract law is freedom of contract: parties are free to enter into an agreement on whatever terms they choose. With that principle, a question always arises as to what extent parties can limit or exclude the operation or effect of statutes. In Price v Spoor [2021] HCA 20, the High Court of Australia concluded that a statutory limitation period under the Limitation of Actions Act 1974 (Qld) can be contracted out by an agreement between parties as it is not contrary to public policy. This case made a clear authority in dealing with the boundary of the freedom of contract to the extent of the statutory limitation period. However, caution should be taken in applying it.   Background In 1998, Price as a mortgagor and Spoor as a mortgagee entered into two mortgage agreements, but a loan of $320,000 and interest were not repaid to Spoor when due and payable in July 2000. In 2017, Spoor brought proceedings in the Supreme Court of Queensland against Price to recover the principal sum and interest as well as for possession of the land secured under the mortgages.  Price by way of defence and counterclaim argued that Spoor was statute-barred from bringing the action pursuant to the Limitation of Actions Act 1974 (Qld) (Limitation Act). In response, Spoor asserted that pursuant to clause 24 of the mortgage agreements, Price agreed not to plea a defence of limitation period.  The Limitation Act relevantly provides that an action for breach of contract and that for the recovery of land shall not be brought after the expiration of 6 years and 12 years respectively. In the present case, Spoor brought the proceedings around 17 years after the repayment due date under the mortgages. Clause 24 of the two mortgages provides that: "The Mortgagor covenants with the Mortgage[e] that the provisions of all statutes now or hereafter in force whereby or in consequence whereof any o[r] all of the powers rights and remedies of the Mortgagee and the obligations of the Mortgagor hereunder may be curtailed, suspended, postponed, defeated or extinguished shall not apply hereto and are expressly excluded insofar as this can lawfully be done." Then, the main question before the High Court was, among others, whether the parties can effectively agree in a contract that either party would not rely on the statutory limitation defence. In other words, the question is whether parties can ‘contract out’ the statutory limitation period.    The High Court’s Decision Earlier High Court cases already dealt with the effect of statutory limitation, discussed in Price v Spoor. In The Commonwealth v Mewett (1997) 191 CLR 471, Gummow and Kirby JJ said that a statutory bar in the case of a statute of limitations does not go to the jurisdiction of the court to entertain the claim but rather to the remedy available, and therefore to the defences which may be pleaded.  In Westfield Management Ltd v AMP Capital Property Nominees Ltd (2012) 247 CLR 129, it was held that a person can waive or renounce its right conferred by a statute unless it would be contrary to the statute to do so. The High Court further went on to say that a contract will be ineffective or void where it operates to defeat or circumvent a statutory purpose or policy according to which statutory rights are conferred in the public interest. Accordingly, the above can be summarised as the following principles: 1. a limitation period is a right conferred on a party seeking to enforce the defence; and  2. a person is allowed to agree to abandon a statutory right conferred on them if that statute does not prohibit them from doing so or if that is not contrary to public policy.  The High Court first found that there is no express prohibition against ‘contracting out’ of a statutory defence in the Limitation Act. Then, it went on to decide that while a statutory purpose of imposing a limitation period in the Limitation Act is to promote the finality in litigation, i.e. speedy resolution of disputes, the right conferred is rather an individual benefit which can be elected to utilise as a defence, and it does not intend to remove jurisdiction of the court even if a limitation period has ended. Further, the High Court found that clause 24 of the mortgage agreements effectively gave up the benefit provided by the Limitation Act, on the grounds that the parties intended that clause 24 has wide operation including provisions in the Limitation Act by making reference to its text, context and purpose as well as to the understanding of a reasonable businessperson.  Steward J agreed with Kiefel CJ and Edelman J’s reasons but further emphasised that the inclusion of clause 24 is a legitimate adjustment of the private statutory rights by exercising their freedom of contract and noted an important attribute of contract law stated in Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656: “Exceptions from that freedom of contract require good reason to attract judicial intervention to set aside the bargains upon which parties of full capacity have agreed."   Implications It is important to note that the High Court in Price v Spoor clearly rendered the decision that the parties can contract out the statutory limitation defence under the Limitation Act as such conduct is not contrary to the public policy.  While bearing in mind this precedent, due regard should also be given to applying this to cases arising in different circumstances. The High Court in reaching its conclusion in Price v Spoor indeed considered the interpretation and the purpose of the Limitation of Actions Act 1974 (Qld) as well as the interpretation of a relevant clause in the contract. Each state in Australia has its own legislation governing statutory limitation period, and the policy reasoning behind each legislation may differ from state to state. Further, whether or not the parties effectively agree to contract out the statutory limitation period is ultimately dependent upon the construction of contract clauses. Therefore, it is worthwhile to note that parties intending to contract out or vary the statutory limitation period in their contract must obtain prior legal advice so as to ensure that such intention is effectively incorporated and enforceable against a breaching party. Finally, it should be noted that a term that purports to waive rights under a statute which serves a public purpose will not be enforceable. For example, an employment contract that purports to waive or renounce employee’s rights such as minimum terms and conditions under the Fair Work Act 2009 (Cth) will be unenforceable.   Disclaimer: The contents of this publication are general in nature and do not constitute legal advice. The information may have been obtained from external sources and we do not guarantee the accuracy or currency of the information at the date of publication or in the future. Please obtain legal advice specific to your circumstances before taking any action on matters discussed in this publication.  


Dispute Resolution & Litigation

When quorum cannot be constituted at shareholders’ meetings

In a dispute between shareholder and director or joint venture partners, particularly of a small proprietary company, or when company affairs are in deadlock, a common method of opposition by a shareholder is to refuse to attend a shareholders’ meeting so the necessary quorum is not present and the resolutions cannot be passed. In such circumstances, court may intervene to convene a meeting and prescribe a quorum.  Section 249G of the Corporations Act 2001 (Cth) (Corporations Act) provides that: "249G – Calling of Meetings of Members by the Court 1. The Court may order a meeting of the company's members to be called if it is impracticable to call the meeting in any other way. 2. The Court may make the order on application by: (a) any director; or (b) any member who would be entitled to vote at the meeting. Note: For the directions the Court may give for calling, holding or conducting a meeting it has ordered be called, see section 1319." If a director or member of the company can establish that it is impracticable to convene a meeting in any other way for whatever reason, any director or member who would be entitled to vote at the meeting can make an application seeking order that a meeting to be convened, held and conducted in such matter as the court thinks fit, and may give such ancillary or consequential directions as it thinks fit under s 1319.  In general, impracticability will cover a wide range of circumstances including from where only directors and shareholders have been deceased to situations where it is extremely inconvenient or impracticable for a meeting to be ‘called’ (Jenashare Pty Ltd v Lemrib Pty Ltd (1993) 11 ACSR 345). However, if the company’s constitution or the Corporations Act offers a procedure for meetings to be called in the ordinary course of events, then the court ordinarily will not order that a meeting of the company’s members to be called unless there are exceptional circumstances with strong evidence. Once impracticability is established, the court has the ultimate discretion to make or refuse the order. In Beck v Tuckey Pty Ltd (2004) 22 ACLC 633; 49 ACSR 555; [2004] NSWSC 357, Austin J referred to the following relevant considerations: • whether the company had failed to comply with its statutory requirements; • whether the company’s management was deadlocked; and • whether the inconvenience was caused by the applicant. It should be noted that: • the court’s discretion under section 249G of the Corporations Act can be used to enable the appointment of an effective board of directors (Re Sticky Fingers Restaurant Ltd (1991) 10 ACLC 3011); • however, section 249G does not allow the court a general power to give directions as to the conduct of a meeting; • quorum requirements are not relevant to one member company. A company with only one member may pass a resolution by the member recording and signing the record (section 249B of the Corporations Act); • for companies which elect to have replaceable rules apply as opposed to specific provisions in the constitutions, section 249T applies which provides that the quorum for a meeting of a company’s members is two members and the quorum must be present at all times during the meeting.  As demonstrated above, where there is a deadlock between shareholders which prevents the formation of a quorum at a general meeting, an application under section 249G can be made seeking the court’s intervention to call a meeting. Further, it is highly advisable to draft shareholders or joint venture agreements to manage the risk of a member bypassing the quorum requirement or the procedure and limitations where the quorum cannot be attained at a general meeting as a result of a member not attending.      Written by Victoria Cha Written on 27 Oct 2021 Disclaimer: The contents of this publication are general in nature and do not constitute legal advice. The information may have been obtained from external sources and we do not guarantee the accuracy or currency of the information at the date of publication or in the future. Please obtain legal advice specific to your circumstances before taking any action on matters discussed in this publication.  


Dispute Resolution & Litigation

2020 ACICA Arbitration Report and the new 2021 ACICA Rules – Arbitration ‘thriving’ in Australia

On 9 March 2021, the Australian Centre for International Commercial Arbitration (ACICA) in conjunction with FTI Consulting released the inaugural Australian Arbitration Report (Report). The Report was produced based on the survey conducted on 111 arbitration professionals as well as arbitration data for 223 cases conducted between 2016 and 2019. Overall, this Report confirms that arbitration in Australia is ‘thriving’, and an increasing number of corporates and lawyers are choosing arbitration as a means of resolving disputes. The key findings of the Report are as below: •   Australia’s opportunities Dispute resolution practice has been transformed by the effects of the COVID-19 pandemic, resulting in a rise of online hearings and virtual platforms. Because of that, Australia’s distant geographical location has receded. Further, within the Asia-Pacific region, Australia, among the arbitration seats and venues, stands out as a stable liberal democracy with an independent and supportive judiciary, which can no longer be taken for granted in modern society. •   Value in dispute The total value in dispute for the arbitration reported exceeded AU$35 billion, of that, international arbitration took up around 75%. The average value in dispute for the international arbitration was around AU$250 million, whereas that for domestic arbitration was AU$75 million. •   Rules of arbitration The Report indicated that the Singapore International Arbitration Centre (SIAC) rule and the International Court of Arbitration (ICC) rule are the most preferred rules for international arbitration. Also, the most popular seat of arbitration was Singapore, followed by Hong Kong and London. •   Disputes by industry While the vast majority of international arbitration occurred in relation to construction, engineering and infrastructure (43%), there has been a significant use of other industries such as oil and gas (20%), mining and resources (13%), and transport (4%) industries. •   Efficiency in arbitration The Report provided that a key complaint made by the respondents is that efficiency in arbitration is hindered by the use of rigid and formal procedures. Practitioners dealing with arbitration should bear in mind not to conduct arbitration like litigation called “judicialisation” of arbitration. •   Satisfaction with the arbitration process More than 80% of the respondents indicated their satisfaction with the arbitration process. Particularly, it was highlighted that the perceived benefits of arbitration are enforceability, confidentiality and flexibility. However, the respondents reported that speed and costs for arbitration still are the most common weakness. The Report provided the following suggestions to improve the arbitration process:  º more ‘robust’ case management.  º early agreement of the issues by the parties.  º separation of liability and quantum.  º use of joint expert reports.  º joint expert testimony. •   Diversity The Report includes questions related to diversity in arbitration. Regretfully, less than 10% of arbitrators appointed were women. While there has been an increase in the appointment of female arbitrators, that has been mostly driven by the increased appointments by institutions, not by the parties. Further, nationality of arbitrators was mostly from Australia and the United Kingdom.   On 1 April 2021, the 2021 ACICA Arbitration Rules and Expedited Arbitration Rules came into effect enhancing the arbitration procedure in light of the COVID-19 pandemic, such as the virtual hearings and electronic filing and execution, and reflecting developments in international best practice. The key amendments and additions to the Rules include:   •   Rules facilitating virtual hearings, e-filing and electronic execution of documents;   •   the scope and procedure for consolidation and multi-party contract arbitrations;   •   effective case management provisions including the possibility of using mediation or other forms of ADR;   •   disclosure of third-party funding arrangements;   •   enhanced oversight of costs provisions including non-independent experts and third-party funding costs; and   •   early dismissal procedure.   As can be seen from the Report, there have been considerable activities in the arbitration practice in Australia, particularly with the construction and energy sectors, and more companies are including an ACICA arbitration clause in commercial contracts. The new ACICA Rules provide the parties with the greater flexibility, control, efficiency, transparency and certainty in the arbitral process.    Written on 1 October 2021 Disclaimer: The contents of this publication are general in nature and do not constitute legal advice. The information may have been obtained from external sources and we do not guarantee the accuracy or currency of the information at the date of publication or in the future. Please obtain legal advice specific to your circumstances before taking any action on matters discussed in this publication.


Dispute Resolution & Litigation

Property Settlement - Loan or Gift from Parents

When buying a home after marriage, there are many cases in which the purchase is made with the support of parents. If the marriage breaks down in such a situation, how does the court treat the funds received from the parents in the distribution of property? If there is any evidence such as a loan agreement that states that a fund is required to be repaid under certain conditions, a security deed or a record of a discussion between the parties that identifies the loan, the fund received from the parent is considered as a loan. If the money received is a gift from the parent, there is no obligation to repay it, and therefore, it is very likely that the money given to a couple in the long-term marriage will be regarded as a part of the common property. Considering whether the parent's funding was a loan or a gift, when calculating the total value of the parties' shared assets and determining their respective share, the court takes into account various factors stipulated in the Family Law Act.  In many cases, it is not clear whether the parent's funding was a loan or a gift, and it often gives rise to a major problem during a divorce proceeding. For example, if a couple purchased a house for $800,000 with $400,000 in funding paid by their parents and has already paid out the loan, whether $400,000 was a loan or a gift is an important point in determining the total amount of common property. This becomes a more important issue if the amount of funding received by their parents accounts for a larger proportion in the total value. Accordingly, when considering funding a child, it is necessary to hire a lawyer in advance and to make the intent of the funding clear. Otherwise, the parents may be called upon their child’s divorce proceeding as a witness or required to submit an affidavit, which causes severe stress over a long period of time. Further, such proceedings will give rise to significant legal costs. In order not to spend too much money on legal fees during a divorce proceeding, it is recommended that parties start appropriate negotiations at an early stage for the settlement, so that things do not progress to the court due to property distribution issues.