Safe Harbour granted to proactive Directors of an insolvent company who are not merely ‘living in hope’

Amendments to the Corporations Act 2001 (Cth) (Corps Act) introducing the safe harbour insolvency provisions come into effect on 1 July 2018.   Under section 588G of the Corps Act a director of a company may be personally liable for debts incurred by the company if at the time the debt is incurred there are reasonable grounds to suspect the company is insolvent.  The section 588GA safe harbour provisions aim to encourage directors to remain in control of a business in financial difficulty and to take reasonable steps, outside of a formal insolvency process, to restructure and / or allow it to trade out of its difficulties in anticipation that such action will achieve a better outcome for the company than immediately appointing an administrator or liquidator.  The provisions encourage directors to closely monitor the financial position of the business, engage early with financial distress and then actively take steps to either restructure the business or, if that is not possible, to move quickly to formal insolvency.   [Read more…]

Implications of non-compliance with the Building and Construction Commission Act (QLD) 1991

At common law there is no requirement for an enforceable contract to be in writing or for it to be accepted in the same way.  It is not uncommon for a contract to be wholly oral, or even partly written and partly oral.  Similarly, acceptance or entry into a contract (be it written, oral, or partly written and partly oral) does not have to be in writing but can be by conduct which evidences acceptance of the contractual offer made.

A simple example is a request for a quote to supply “widgets”, the supplier says they can supply the widgets but requires a 10% deposit and the buyer pays the deposit.  The buyer may not have spoken words to the effect that the quoted price has been accepted, but the conduct in paying the deposit evidences acceptance.  [Read more…]

Quantification of losses for breach of contract

A breach of contract can broadly be described as the failure to comply with any term of an agreement; some examples include a refusal to perform, incomplete performance, delay or unlawful termination.  Once it has been determined that a breach of contract has in fact occurred, the next question is how to determine the resulting loss and whether it can be recovered from the responsible party.  Whilst there is no hard and fast rule when attempting to quantify losses, there are certain principles which form part of the process of  assessing damages caused by a breach of contract.

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Legal issues of making financial forecasts in business

When a business is seeking to raise capital or advertise as being for sale financial forecasts are often made in a way so as to appeal to the target audience – investors or potential buyers.  In some cases however, the forecasts made do not translate into reality giving rise to potential legal consequences.  As forecasts are indicators often relied used by investors to make decisions on whether or not to invest, statements that are incorrect may amount to misleading and deceptive conduct under the Australian Consumer Law (ACL) (being Schedule 2 to the Competition and Consumer Act 2010 (Cth)) and have potentially serious legal consequences. [Read more…]

Enforcing overseas judgments in Australian Courts

Globalisation and the advent of the internet has meant that it is becoming more common for businesses to contract with entities in different countries or jurisdictions.  In this article we consider the circumstances where parties to a cross-border contract are involved in litigation overseas, and the prevailing party seeks to enforce the judgement in Australia. [Read more…]

Interlocutory injunctions in patent disputes

An injunction is a Court order directing a person or entity to do a specific thing or refrain from doing something.  Whilst an injunction in itself can amount to final relief in litigious matters, it can also be sought on an interlocutory or temporary basis (Interlocutory Injunction).  This applies where a temporary remedy is sought to maintain the status quo until the larger legal issues can be heard at trial.

In matters relating to the infringement of a patent, an injunction may be sought by the patent owner (Applicant) to stop a defendant (Respondent) from doing the acts the patent owner alleges infringe the patent, until the Court has had the opportunity to determine whether or not the patent has been infringed.  In this article we consider Interlocutory Injunctions in patent matters and how the tests differ from non-patent matters. [Read more…]

Directors personal liability – misleading & deceptive conduct

Despite the corporate veil, there are many ways in which a director can be personally liable for activities the company which they direct.   One such ground is misleading and deceptive conduct pursuant to section 18 of the Australian Consumer Law (Cth)(ACL).  This question of personal liability is of concern to conservative and risk averse directors who attempt to strike the delicate balance between governance and entrepreneurialism.  Misleading and deceptive conduct can occur in a variety of circumstances in business dealings.  From misleading advertising, inaccurate projections to contractual dealings between parties.  It could be as simple as making misstatement regarding a profit forecast or embellishing the outcome of a contract. [Read more…]

What is security for costs?

The reality of any litigious proceedings is that they cost money (sometimes, lots of money).  Where a party is successful in the proceeding; whether that be successfully proving the claim (Plaintiff) or defending it (Defendant), that party will generally be entitled to their ‘costs’.  Costs refers to the legal expenses incurred by the successful party in prosecuting or defending the claim (as the case may be).  Where a Defendant successfully defends a claim, they may be placed in the frustrating circumstance of facing a Plaintiff who does not have sufficient money to pay the Defendant’s costs.  In this article we consider a Court order designed to alleviate this problem – a security for costs order. [Read more…]

Counterclaiming in legal proceedings in Queensland

It is not uncommon for parties to a dispute to each believe that an action lies against the other arising from the same facts.  Where this occurs, and one party (Plaintiff) has commenced proceedings against the other party (Defendant) in Queensland, the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) allows the Defendant to commence their own proceeding against the Plaintiff within the original proceeding, rather than requiring the Defendant to commence a separate legal action.  This is known as a counterclaim.   In this article we consider the nature of a counterclaim and the rules and circumstances that govern its use in proceedings in Queensland Courts. [Read more…]

Offers to settle: Federal Court Rules c.f. Calderbank offers

In litigation, an offer to settle is an offer by one party to the other to settle the dispute out of Court.  There are numerous advantages to settling a matter out of Court, including reduced legal fees, finality of proceedings and confidentiality of result.  A key issue for litigants when making or receiving an offer to settle is to understand the potential legal costs consequences of rejecting the offer.  In this article, we consider offers to settle in the Federal Court of Australia under both the common law and the Federal Court Rules 2011 (Cth) (Rules).

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