Unfair preferences – the Doctrine of Ultimate Effect

Under section 588FA of the Corporations Act 2001 (Cth), an unfair preference is defined as a transaction, such as payment of an outstanding debt, between a company and a unsecured creditor which results in that unsecured creditor receiving more than it would have received if it had to prove in the winding up of the debtor company.  It is unfair because the payment the debt results in the net value of the assets of the debtor company being reduced, to the detriment of the body of unsecured creditors as a whole. [Read more…]

Workplace Bullying by a Body Corporate

Section 789FA of the Fair Work Act 2009 (the FWA) enables a worker who has been bullied at work to apply to the Fair Work Commission (FWC) for an order to stop the bullying.  For the purposes of the FWA, reasonable management action taken in a reasonable way will not constitute workplace bullying.

A body corporate rarely directly employs workers.  Usually, an onsite care-taking service contractor is engaged (typically a company) to perform on-site duties such as grounds maintenance and the like, those duties normally being discharged by the company’s directors or employees engaged by the company. [Read more…]

Security for legal costs in cross-claims for patent invalidity

The usual position in relation to security for costs in disputes before the Federal Court of Australia is that a respondent (including a cross-respondent) may make an application for security for its legal costs to insulate itself if it is successful in defending the allegations made by an applicant against it.  What is the situation regarding security for costs where a respondent ‘cross-claims’ for revocation of a patent because it alleges that it is invalid and should never have been granted in the first place? [Read more…]

Unfair preferences and unperfected security interests

Take the scenario where your company has supplied a customer with goods on credit.  The standard terms and conditions of supply grant your company security over the goods supplied until they are paid for.  In order for that security to be perfected, the interest granted needed to be registered on the Personal Property Security Register (PPSR).  If for example, the interest was not registered or if it was, it was invalid for technical reasons then your company may be at risk. [Read more…]

Is your patent being infringed?

A patent grants the owner (Patentee) exclusive rights to exploit the patented invention (as defined in the Patents Act 1990 (Cth) (Patents Act)) within Australia.  If another party uses the patent without the authorisation of the Patentee, they will infringe.  In this article we consider the high level issues to consider when attempting to determine whether a patent has been infringed. [Read more…]

Top ways to avoid a building dispute in Queensland

From a property owner’s point of view, the vision for the project is finally coming to fruition. From a builder’s point of view, another profit-making job is about to commence……

It is not uncommon for the seeds of a building dispute to already have been sown before a shovel even breaks ground.  Observing the following simple pieces of advice can go a long way towards avoiding a building dispute in the first place. [Read more…]

A director’s duty to act in the best interests of the company: MG Corrosion Consultants Pty Ltd v Gilmour

The case of MG Corrosion Consultants Pty Ltd v Gilmour [2014] FCA 990 involved allegations of a director authorising unnecessary and excessive payments that caused detriment to a company and its shareholders.  This case serves as a reminder to directors of the importance of adhering to their duties under the Corporations Act 2001 (Cth) (Corporations Act).

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The ‘good faith’ defence to an unfair preference claim

This is the third article in our series on Unfair Preference payments.    The scenario that is common is that a business does the work or delivers the goods, invoices its customer and is eventually paid.   Three months later the business owner receives a letter from a liquidator demanding under threat of legal action that they be paid the money received on the basis the payment received was an unfair preference (Unfair Preference).  [Read more…]

Director Identification Numbers – more red tape?

The Exposure Draft of the Treasury Laws Amendment (Registries Modernisation and Other Measures) Bill 2018 (Exposure Draft) was released on 1 October 2018.   If enacted, the provisions contained in the Exposure Draft would amend the Corporations Act 2001 (Cth) and implement a regime including an identification number for directors and a single business register.  The Exposure Draft stems from the announcement made by the Federal Government in the 2018-2019 budget to “target organised crime and tax evasion” by implementing new measures.  Those measures include a new regime to “modernise the business registers program” and merge the Australian Business Register (ABR) with the Australian Securities and Investments Commission (ASIC) Register to make one platform administered by the ABR within the Australian Taxation Office (ATO).[1]  Within this new register, company directors will be required to have an identification number (Director Identification Number or DIN). [Read more…]

What’s an unfair preference claim?

You have done the work, the client is happy, you’ve invoiced them and are awaiting payment.  You have had a long-standing relationship with the client.   They contact you and asks, despite your usual credit terms, if they can pay the invoice off over time.  It’s not the first time it has made this request, but they have always come good with payment.  You agree and the invoice is eventually paid.  Three months later you receive a letter from a liquidator demanding (under threat of legal action) that you pay to them the money you received because the payment was an unfair preference (Unfair Preference)! [Read more…]

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