PPSR: Your registrations may be expiring soon!
The Personal Properties Securities Register (PPSR) is a vital risk minimisation tool for both businesses and consumers in buying, selling, leasing, renting and hiring transactions. However, over 120,000 registrations are set to expire on 31 January 2019! It is imperative that you ensure any lapsing registrations are extended to protect your interests.
Why you should renew
Registration on the PPSR solidifies your position as a secured creditor, ultimately allowing you to recover property when a customer becomes insolvent or defaults on a payment. However once your registration expires, you will be unable to extend or renew it, and will thus risk losing priority to another secured party when you attempt to re-register.
What you need to do
- Review the status of your existing registrations and take note of any which are due for renewal
- Ensure that you update any changes to your original registrations, such as party details, new contracts or property upgrades
- Extend you registrations to continue to secure your interest.
We are here to help
We understand that navigating a PPSR expiry can be a stressful and challenging time. We have assisted numerous clients through the process and are here to ensure your experience is not a stressful one. If you want to ensure that your property and interests are protected, please do not hesitate to call us.
Buyer Beware: Real Estate Agent Not Liable for Misleading Statement
In the matter of Hyder v McGrath Sales Pty Ltd [2018] NSWCA 223, the court was required to consider whether McGrath, in their capacity as a real estate agent, had engaged in misleading or deceptive conduct by making representations to a property purchaser about parking availability.
The proceedings commenced after Amy Hyder purchased a Sydney property for $9.4 million in February 2015, with her husband conducting the purchase negotiations and ultimately making the decision to proceed with the sale.
Acting on behalf of the property's seller, McGrath published printed and online advertising material which described the property as having 'plentiful parking' and highlighted that the property featured a "double garage plus private off-street and driveway parking.'
Both the online and printed material featured the following disclaimer:
"Scale in meters. Indicative only. Dimensions are approximate. All information contained herein is gathered from sources we believe to be reliable. However we cannot guarantee its accuracy and interested persons should rely on their enquiries."
Having inspected the property on at least four occasions, the Hyder's understood that it featured a double garage. There was also space in front of the garage for two more cars, however parking here would block access to the garage. Public parking was not permitted on the street.
The lot also included a strip of land which gave two other lots access to their homes, with these lots having right of way over the strip. However, prior to the Hyder's purchase, this space had been treated as parking for the property owners and at the time of purchase it featured two signs which read 'Private Parking Space 24'. '24' represented the street number of the relevant property.
Upon inspecting the property, the Hyder's had been informed by McGrath that the property owners had exclusive use of the 'private parking' area. The promotional material also included a detailed site plan showing images of three cars parked in this strip.
After agreeing to a purchase price of $9.4 million, Mrs Hyder signed a standard form contract of sale, which was accompanied by attachments including:
- copies of a title search that noted the relevant rights of way;
- the relevant deposited plan; and
- the memoranda of transfer creating the rights of way.
The contract also included special conditions which indicated that the purchaser had not relied on any statements, inducements or representations made by or on behalf of the vendor (including by any estate agent acting on their behalf).
Despite this, Mrs Hyder commenced proceedings against McGrath in April 2016, alleging that the agent's pre-sale representations about parking availability contravened s18 of Australian Consumer Law. In doing so, Mrs Hyder contended that she had suffered a loss as a result of McGrath's misleading and deceptive conduct, stating that she would not have purchased the property at the price of $9.4 million had the representation not been made.
At first instance the primary judge dismissed the appellant's claim, finding that although McGrath had engaged in misleading and deceptive conduct, Mrs Hyder had not suffered loss as a result.
On appeal, the court was required to consider whether the primary judge erred in finding that Mrs Hyder would have proceeded with the purchase.
Ultimately, the court dismissed the appeal, finding that McGrath had not engaged in misleading or deceptive conduct. In doing so, it held that the parking information was not endorsed by McGrath, but rather information which it expressly or impliedly disclaimed responsibility for. Moreover, it held that Mrs Hyder had failed to establish that she suffered loss as a result of the conduct. The appeal was dismissed with costs.
WASCA clarifies the law of set-off in insolvency
In the recent matter of Hammersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liq) (receivers and managers appointed) [2018] WASCA 163 the Court of Appeal of the Supreme Court of Western Australia held that the attachment of a security interest under the Personal Property Securities Act 2009 does not preclude set-off in insolvency pursuant to section 553C of the Corporations Act 2001 or at general law.
Background
In 2012, Hammersley Iron Pty Ltd (Hammersley) engaged Forge Group Power Pty Ltd (Forge) to undertake building works with respect to the construction of power stations at West Angelas and Cape Lambert in Western Australia.
In 2013, Forge obtained finance from a bank and in exchange, granted the bank security over its personal property. Accordingly, the bank registered the security on the Personal Property Security Register (PPSR) in July 2013 pursuant to the Personal Property Securities Act 2009 (PPSA).
The bank appointed receivers and managers to Forge in 2014 and Forge subsequently went into liquidation.
Proceeding below
Relying upon contractual rights, equitable set-off and set-off in insolvency pursuant to s553C of the Corporations Act 2001 (CA), Hammersley argued that its claims against Forge exceeded those that Forge had against it, and that it was entitled to rely upon the set-off described above and to prove for the balance in the liquidation of Forge.
In response, the receivers of Forge contended that:
- section 553C of the CA provided a code governing set-off in insolvency;
- set-off under section 553C did not apply because there was no mutuality as a result of the equitable interest in Forge’s claims against Hammersley subsisting in the bank because of the operation of the PPSA; namely, that the attachment of the security interest in the collateral pursuant to section 19 of the PPSA conferred on the bank a proprietary interest in the collateral at the time of attachment
- the ‘Securities Claims’ of Forge against Hammersley were not ‘accounts’ within the meaning of section 10 of the PPSA because they were not “claims for identifiable monetary sums due by ascertainable dates arising from disposing of property or the granting of rights in the ordinary course of business”. The primary judge upheld that contention, finding that the Securities Claims “were ‘claims that arose after the receivers were appointed by reason of the alleged wrongful draw down by Hammersley of securities provided by Forge’”; and
- as a result, Hammersley was required to pay what it was due to pay to Forge (for the benefit of the bank) and was left to prove in the winding up of Forge for its own claims pari passu with other creditors.
Tottle J upheld contentions of Forge (by its receivers) in the proceeding below.
The decision on appeal
On appeal, the Court of Appeal of the Supreme Court of Western Australia upheld Hammersley’s appeal.
In a lengthy judgment which incorporated a detailed analysis of the relevant principles and their background, the Court of Appeal delivered a single judgment, finding that:
1. Even assuming that the effect of the attachment of the security interest in the collateral pursuant to section 19 of the PPSA conferred on a secured creditor a proprietary interest in the collateral at the time of attachment, that did not of itself operate to destroy the mutuality required for a set-off to apply.
Rather, an analysis of the terms of the relevant security instrument, together with the relevant terms of the PPSA, is required in order to determine whether mutuality is destroyed on a case-by-case basis.
Here, an analysis of the relevant General Security Agreement, when read with the PPSA, indicated that at the relevant date, Forge retained the right to apply payments received from Hammersley for its own benefit by paying down its indebtedness to the bank and to trade creditors and was not available to the bank. Accordingly, there were mutual dealings between Hammersley and Forge within the meaning of s553C of the CA sufficient to enliven the operation of the set-off pursuant to that section.
2. Section 553C of the Act was not a code governing all applicable circumstances of set-off in insolvency. Rather, the Court held that “there is nothing in s553C or its purpose or policy which would relieve the chargee of any equities which would otherwise apply to the charged debt.”
As a result, if statutory set-off pursuant to section 553C is not available, then the result is not that the chargee takes its interest in the claims of Forge free of any equities otherwise available under the general law or imposed by other statutory provisions, such as s80(1) of the PPSA. Rather, any rights taken by a chargee such as the Bank are taken subject to the terms of the contracts between Hammersley and Forge “and any equity, defence, remedy or claim arising in relation to” those contracts. The foregoing may include the right of set-off.
3. Forge’s ‘Securities Claims’, namely, claims that Hammersley had wrongfully drawn down against securities provided by Forge after the appointment of receivers, were ‘accounts’ within the meaning of section 10 of the PPSA. That was significant because if the Securities Claims were not accounts (the finding by the primary judge), then they were not capable of set-off because they would not be taken to have existed at the time of the appointment of the receivers. The Court determined that the Securities Claims were ‘accounts’ because they arose from the maintenance of bank guarantees which Forge provided to Hammersley pursuant to terms of the relevant contracts which was an aspect of Forge’s usual business of providing building services.
Conclusion
The decision is of significance because it confirms that attachment of collateral in a security interest in a secured creditor pursuant to section 19 of the PPSA does not, of itself, act to destroy mutuality sufficient to permit set-off to occur in insolvency.
Also significant is the finding that section 553C of the CA is not a code that applies in respect of set-off in insolvency to the exclusion of general law principles.
New Laws Introduce GST Withholding Obligations for Residential Property Purchasers
Next week the Treasury Laws Amendment Act (2018 Measures No.1) 2018 (Cth) will come into effect, imposing new GST withholding obligations on purchasers of certain residential real property. The new measures have been designed to prevent property developers from intentionally avoiding their GST obligations, after a spate of incidents in recent times.
From July 1, purchasers of new residential premises or potential residential land will be required to remit the GST payable on the supply directly to the Australian Taxation Office (ATO). The payment will be due on or before the day on which any part of the consideration for the supply is provided, with this usually occurring at settlement. Relevantly, suppliers of residential land or potential residential land will be required to notify purchasers in writing if they are required to withhold an amount, what that amount is and when it is due to be paid. Failure to do so is a strict liability offence. Individuals who fail to provide the required notice may be fined 100 penalty units (currently $21 000), whilst corporations will be liable to a maximum of 500 penalty units (currently $105 000).
Generally, where a vendor makes a taxable supply of new residential premises or potential residential land, the purchaser will be required to withhold 1/11th of the price and pay it directly to the ATO.
However, there are some situations in which the amount to be withheld must be calculated differently.
Margin Scheme Sales
Where a property is sold under a margin scheme, the purchaser will be required to pay 7% of the contract price or price.
Mixed Supply Sales
Where a property is a mixed-supply, that is partly GST-free and partly taxable, a purchaser must pay the ATO 10% of the GST exclusive market value of the supply.
Sales with low or no consideration
The amount payable will be reduced and calculated using a reasonable apportionment of the contract price or price multiplied by the applicable rate.
Sales involving multiple purchasers
Where a sale involves multiple purchasers, who are not joint tenants, the amount to be paid will be; 7% as in the case of margin schemes, 1/11th of the contract price, or the price for their percentage of interest in the property purchased.
Exploring the Rise of Australia's Paperless Property Market
In our increasingly digitalised world, technological advances are having an unprecedented impact on almost every facet of modern business. Most recently, the digital revolution has converged on the real estate industry following the establishment of PEXA and the paperless property market.
PEXA (Property Exchange Australia) was first developed in 2010 in conjunction with ANZ, Westpac, CBA, NAB, Macquarie Bank and the state governments of Queensland, New South Wales, Victoria and Western Australia. It followed a 2008 Council of Australian Governments (COAG) meeting which sought to modernise the paper-based property settlement process.
PEXA fosters Australia's transition to e-conveyancing by reducing the manual processing and paperwork associated with traditional conveyancing transactions. It allows lawyers, conveyancers and financial institutions to lodge documents and arrange financial settlements digitally, ensuring a faster and more convenient conveyancing process.
PEXA group executive Mike Cameron claims the move to e-conveyancing has had a resounding impact on the efficiency of Australia's property system. Unlike the traditional system, in which 20% of settlements are delayed a median of seven days, PEXA facilitates immediate settlement and payment.
Consequently, the model is tipped to resolve a class of 'irreconcilable legal decisions' associated with the priority of multiple unregistered interests. Since money is electronically transferred almost instantaneously post-settlement, PEXA reduces the gap between settlement and registration that is inherent in traditional conveyancing. Accordingly, PEXA's digital capabilities reduce the risk of a secondary interest being created in the property before registration is finalised.
Ultimately, by reducing the window of opportunity for multiple unregistered interests to be created, PEXA is set to alleviate pressure from the court system - which currently resolves such matters on a case by case basis.
The move to e-conveyancing and the potential afforded by PEXA offers exciting prospects for Australia's expanding property industry, and with PEXA having facilitated more than $100 billion worth of property transfers, it is clear Australia supports the move.
Couple save home in battle against Macquarie Bank
In proceedings in the Supreme Court of Queensland in 2005, James Conomos Lawyers acted for a couple, Mr and Mrs Lin, who took on one of Australia's biggest banks and won.
In 1999 and 2000, Macquarie Bank lent money to a property developer for the construction of units and houses on land near Coolum Beach on the Sunshine Coast. Mr and Mrs Lin's son, Konrad, was introduced to the project by Macquarie and subsequently became a director of the property development company. A family trustee company, of which he and his parents were directors, took a 25% shareholding in the company.
Not long into the project the developer ran into financial difficulties and Macquarie went into possession of the site. Macquarie ended up completing the first stage of the project but the development company still owed the bank more than $9 million.
Konrad was the registered owner of the house Mr and Mrs Lin were living in at the time, and the bank relied on this when it accepted his personal guarantee and agreed to finance the development. Macquarie brought proceedings to enforce the guarantee.
James Conomos Lawyers instituted separate proceedings for Mr and Mrs Lin with a view to protecting their home from Macquarie's claim against their son. Mr Conomos successfully argued they were the beneficial owners of the property even though it was registered in Konrad's name. Further, Mr and Mrs Lin had provided all of the money used to purchase the house in 1994 and that Konrad in fact held the house on trust for them. James Conomos Lawyers sought a declaration from the Supreme Court to that effect.
Macquarie contested Mr and Mrs Lin's assertions, arguing they had not provided the purchase monies and that they had intended Konrad to be the beneficial owner, not a trustee.
The Supreme Court ordered Konrad pay Macquarie almost $9.5 million. However, in a victory for Mr and Mrs Lin, Justice McMurdo accepted their lawyer's submission and found they were the owners of the property, which Konrad held on trust for them. Again, James Conomos Lawyers was able to protect the rights of individuals in extraordinary circumstances.
All roads lead to High Court in landmark compulsory acquisition case
Marshall v Director General, Department of Transport, 205 CLR 603
It is well known that the government has the power to compulsorily acquire land. If a person's land is next to, for example, a road that needs to be widened, the government has the right to require that person to cede their land to the government.
The law, of course, provides for compensation for the landowner in such circumstances. This compensation can provide redress not only for the loss of the land, but also any resulting damage to land not resumed. This damage is known as "injurious affection".
In 2001, James Conomos Lawyers was involved in an important injurious affection case before the High Court of Australia. Our client, Mr Marshall, owned land next to the Bruce Highway in Queensland. Part of this land was resumed so the highway could be widened. Mr Marshall became concerned at increased flooding on his remaining land following the opening of the new carriageway. He brought a claim for compensation for injurious affection.
The claim failed both in the Land Court of Queensland and on appeal to the Queensland Court of Appeal. Both courts ruled that the claim could not succeed because the new highway was not actually located on the land acquired from Mr Marshall.
But before the High Court of Australia, James Conomos Lawyers successfully argued that it was not necessary for the new highway to be located on the resumed land in order for Mr Marshall to claim compensation for injurious affection. To establish an impact from the works was sufficient. The High Court agreed with this argument and ruled that Mr Marshall was entitled to compensation. This result flowed from the Court's construction of statute law and Justice Gaudron noted that the Court's approach was particularly appropriate where "to do otherwise would limit or impair individual rights, particularly property rights."
Mr Marshall's case has proven to be a key decision in the development of the law and the case continues to be cited as an important authority by courts all around Australia to this day. James Conomos Lawyers is proud of our involvement in this pivotal case.
