In Victoria, a caveat is used to record on the land’s title a person’s interest in that land that would not otherwise be reflected on the title, or are awaiting subsequent lodgement of documents to formally record that interest.
This article addresses the following questions, in an overview:
- what is the purpose of a caveat?
- when should a caveat be lodged?
- how should a caveat be lodged?
- what are the damages that can be awarded because of wrongly lodged caveat?
What is the purpose of a Caveat?
In Victoria, section 89 of the Transfer of Land Act 1958 authorises the Registrar or Titles (“Registrar”) to register caveats against the title of the land on the application of a person. It is important to note that the role of the Registrar is not to assess the legitimacy of the application or the underlying interest in the land asserted.
The predominant or primary purpose of lodging a caveat is: 
- to warn the relevant Registrar of Titles of a claim; and
- to ensure that the caveator is given notice to oppose any dealing with the title of that land before that dealing can be registered.
There are many ways that a caveatable interest in land can arise. The most common interests, include:
- a purchaser’s interest acquired pursuant to a contract of sale with the vendor;
- equitable interest through a trust;
- an interest as an unregistered mortgagee;
- an interest pursuant to a charge (often created via their credit application forms);
- a family law interest in matrimonial assets; and
- the interest of a trustee in bankruptcy where land has vested in the trustee.
When should I lodge a Caveat?
Your caveat should be lodged as soon as your interest in the land arises, or as soon as practicable thereafter. This is to ensure that others are put on notice as to your interest, thereby avoiding the possibility of someone else obtaining a competing interest (such as a lender securing a loan against the property), which would result in a priority dispute with that person who subsequently acquires an interest in the land.
If you are found to have unreasonably delayed the registration of your caveat, you might find that a later created interest in the land takes priority over yours.
How do I lodge a Caveat?
Caveats are now lodged predominantly through an electronic subscription service called PEXA. Given the implications of recording a caveat incorrectly, which can include significant financial damages and court costs, you should consult a solicitor that can advise you whether or not to lodge a caveat on your behalf. They can then do so through their PEXA subscription.
It is important for the caveat to accurately reflect your interest in the land, including identifying appropriate prohibitions on further dealings with the land. If your caveat is contested, it may only be amended in exceptional circumstances.
How can a Caveat be removed?
The most common way that caveats are removed is withdrawal by consent. This usually occurs when the land subject to your caveat is being sold, or the interest you were claiming becomes registered more formally (e.g. a mortgage). If your caveat secures an amount of money you are owed, the land owner should invite to withdraw your caveat when they have found a purchaser and are seeking to settle, in return for a share of the proceeds of sale that your interest entitles you to.
There are also procedures for dealing with ‘contentious’ or ‘hostile’ caveats, where the underlying interest in the land protected by the caveat is disputed.
There are two main methods for dealing with a hostile caveat:
- the first method is to request that the Registrar issue a lapsing notice;  or
- the second method is to issue proceedings in the Supreme Court for the removal of the caveat. 
The two methods, lapsing notices, and issuing of proceedings, are examined more closely below:
1. How does lapsing notices affect Caveats?
A lapsing notice received from the Registrar will inform you that your caveat will be removed from the title of the land on a given day (being not less than thirty (30) days from the date of the notice) unless, before that day, you institute proceedings to maintain your caveat and notify the Registrar of Titles that such proceedings are on foot.
Accordingly, it is imperative to bring a lapsing notice to your solicitor as soon as possible if you wish to ‘defend’ your caveat.
2. How does the issuance of proceedings affect Caveats?
Alternatively, the owner of the land or another interested party can initiate proceedings to have your caveat removed from the title of the land. This will involve an examination by the Court of the underlying interest that you have in the land that is protected by your caveat and consideration of the balance of convenience.
The onus will be on you, as the caveat holder, to justify your underlying interest in the land.
Where the land is to be sold imminently, it is common (and practical) for the parties to agree for the caveat to be withdrawn so that the sale can proceed, with monies that are subject to the competing interests being retained (either paid into Court or quarantined in a solicitor’s trust account) from the sale pending the Court’s determination of your interest in the land.
What are the damages that can be awarded when lodging a Caveat?
The Court can order payment of compensation to a person who suffers loss and damage because of a caveat having been lodged ‘without reasonable cause’.
To be awarded compensation, a plaintiff must first demonstrate that there was no interest in the land as asserted in the caveat, and that the person lodging the caveat did not have an honest and reasonable reason to claim that it had that interest.
Damages suffered can include:
- loss of value of land caused by a caveat’s impact on a land owner’s opportunity to sell the property according to a contract.
- Interest and costs payed by a vendor due to a delayed settlement of a property sale.
How Can DSA Law Help?
 E.g. LTDC Pty Ltd v Cashflow Finance Australia Pty Ltd  NSWSC 150. Counter-reference the decision of the WA Supreme Court in Bunnings Group Pty Ltd v Hanson Construction Materials Pty Ltd & Anor  WASC 132.
As of midnight 1 March 2020, the State Revenue Office drew a line in the sand, imposing a mandatory 8% duty surcharge on the purchase of residential land by foreign discretionary trusts.
This mandate has the potential to impact most discretionary trusts, given the commonly broad classes of beneficiaries prevalent in discretionary trusts.
Although this article focuses on the foreign purchaser duty surcharge in the context of Victorian law, it is worthwhile noting that similar provisions are in force in New South Wales and Queensland (where, in addition to a duty surcharge, they have also introduced a 2% land tax surcharge for foreign owners of residential land).
What Constitutes a Foreign Trust?
The Duties Act 2000 (Vic) (“Act”) defines a foreign trust to mean any trust in which a foreign corporation or natural person holds a substantial interest in the trust estate.
rules under the Act apply for determining the substantial interest threshold
for discretionary trusts, because under a discretionary trust there can be
times when no person has a beneficial interest. The Act provides that if, under the terms of a trust, a trustee has
the power or discretion to distribute the capital of the trust to
a person or a member of a class of persons, any
such person is taken to have a beneficial interest in the
maximum percentage of the capital of the trust.
What Does this mean for your Discretionary Trust?
Most, if not all, discretionary trusts have a broad class of beneficiaries (e.g. any spouse, child, grandchild or grandparent of the primary beneficiary or the spouse of such child, grandchild or grandparent).
A single person from amongst this wide-ranging class of beneficiaries who satisfies the Act’s definition of a foreign person, regardless of whether they have received any distributions from the trust or are likely to in the future, will cause the entire discretionary trust to be deemed foreign.
This means that in the case of most discretionary trusts, any future purchase of residential land (or indeed purchased from 1 March 2020) will incur an additional duty surcharge, which, depending on the value of land, could be upwards of several hundred thousand dollars in additional stamp duty.
How Can You Avoid Additional Surcharge Duty?
Most trust deeds provide a mechanism for the provisions of the deed to be amended. The terms of your trust deed may be varied by a simple deed of amendment to exclude foreign beneficiaries from being eligible to receive allocations of income and advancements of capital from the trust. Such an amendment to the trust would limit the class of beneficiaries and the trust would no longer trigger the foreign beneficiary surcharge duty provisions of the Act.
If you would like to have your Trust Deed reviewed to establish whether the updated provisions of the Act apply to you, or wish to discuss the above further, please feel free to contact Mr Zaid Mohseni or Mr Mitchell Hickey of our office.
 Duties Act 2000 (Vic), s 3.
 Duties Act 2000 (Vic), s 3B.
COVID-19 has had a major effect on everyday life, complicating even simple transactions like paying for groceries in a store. With so many restrictions, it is natural to ask the question – what happens if I cannot do something, I have previously agreed to do because of COVID-19? In short, a contract or agreement is thought to be frustrated if, through no fault of either party, it can no longer be performed due to “circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract”.
Put in another way, if, through no fault of either party, an event has caused a contract to be unable to be performed without changing the essence of what was agreed, a contract will be considered “frustrated”. For example, if you book to stay in a certain house and the week before you are due to stay there, there is a major storm that floods the house, then the contract would likely be frustrated.
Once frustrated, the contract is terminated and any obligations due to be performed following the event are discharged and do not need to be complied with. Therefore, this article will outline:
- what events may frustrate a contract; and
- what events may not frustrate a contract.
First, what events may frustrate a contract?
Any change in law that makes performance illegal will likely frustrate that contract. This is particularly relevant given the number of new laws passed due to COVID-19, which may not have been contemplated at the time the contract was first entered into.
Where the contract involves something specific, like the above example in relation to the rental property, and that specified item (or service) becomes unavailable due to factors outside the parties’ control, then that contract will likely be considered frustrated. If the contract was either not specific enough or is able to be substituted for something similar, then it is unlikely to be considered frustrated.
For example, if you book a room in a hotel, even if part of the hotel in which you thought you were staying becomes unserviceable due to some unforeseen event, there are likely other rooms available that make it possible for the hotel to fulfil their obligations unless the particular room was specified and the hotel’s terms and conditions don’t provide them discretion to move you after booking. 
Second, what events may not frustrate a contract?
Unless an unforeseen event caused significant delay or meant that the contract was not able to be completed by a specified deadline, then delay will not likely frustrate an contract. While timing is important in all contracts, it is more prominent in some and therefore more prone to frustration.
For example, a dinner booking made on 27 March 2020 for 6 April 2020 with a ‘non-refundable’ deposit, would have been frustrated by the government banning ‘dining in’ shortly after the booking was made. The deposit should be refundable as the ‘contract’ has been frustrated through no fault of the diner. Contrast that with the purchase of a restaurant gift card, which obliges the restaurant to honour credit for an amount paid to it but COVID-19 bans won’t frustrate that so long as the gift card doesn’t expire before the restaurant re-opens.
Unforeseen financial hardship by one of the parties will not cause frustration. This includes circumstances where the contract is no longer profitable for one party.
For example, a Major Domestic Building Contract fixes the price a builder must deliver the build for, give or take limited variation capabilities. If the builder can’t meet their costings and is facing financial ruin, the obligations aren’t frustrated, and the builder is merely in breach. This also applies if the owner cannot afford to pay the builder’s invoices due to losing their job due to COVID-19 and the bank pulling the funding.
Some written contracts contain clauses listing various events that will allow one or more parties to cease complying with its terms, often allowing them to suspend or even terminate the contract should one of those events occur through no fault of that party.
Typically, the types of events listed directly overlap, or are similar to, events that would cause the frustration of the contract. As these usually unforeseeable events were in the minds of the parties at the time the contract was entered into, force majeure clauses generally make the principle of frustration redundant by providing an express contractual right for the parties to terminate the contract where it can no longer be complied with.
How can DSA Law help?
When experiencing difficulties regarding when a contract may potentially be frustrated, or if you are currently unable to meet your obligations under a contract and would like to speak to someone, please Contact Us or one of our Commercial Lawyers at DSA Law on (03) 8595 9580.
 For more information regarding frustration and retail leases, read our article, “How does the Coronavirus (COVID-19) affect Retail Leases?”
 For more information regarding variation of articles, read our article, “Can a builder make changes to a domestic building contract?”
When implementing measures and policies to protect the health and wellbeing of employees as they return to the workplace, employers may consider requiring their employees to have a flu shot. But can an employer lawfully force an employee to get a flu shot?
As we head into the flu season, with the COVID-19 pandemic still a reality, there is an increased push for Australians to get vaccinated against influenza. In certain circumstances, it will almost certainly be lawful for an employer to require an employee to get a flu shot. This includes the following situations.
1.Where the employee is required by law to have a flu shot.
There are currently restrictions on persons entering residential aged care facilities. In Victoria, the Deputy Chief Health Officer has made a Direction which requires any person attending a residential aged care facility to have an up to date vaccination against influenza.
Therefore, if you are an employee either of:
- a residential aged care facility; or
- with duties requiring you to attend such facilities,
then, your employer can lawfully require you to have the necessary vaccination.
2. Where it is a condition of employment.
If it is a term of your contract of employment that you have an up to date vaccination against influenza, the employer can require you to be vaccinated.
It may be more common in certain industries and professions to make vaccination a condition of employment, such as in: 
- health services sector;
- residential aged care; and
- child care.
If an employer wishes to make vaccination against influenza a condition of employment (for which noncompliance amounts to dismissible conduct), the term in the contract should clearly justify/explain the purpose behind the requirement.
3. Is requiring an employee to get a flu shot, a lawful and reasonable direction?
Where it is not a condition of employment, or required by law, it is less clear whether the employer can make you get the flu shot.
Is the direction, lawful?
Employers can give lawful and reasonable directions to their employees, and employees are under a duty to obey such directions. A failure to obey such a direction may amount to misconduct, which can be grounds for termination.
It is clearly lawful for an employer to make a policy requiring employees get vaccinated against influenza. Whether such a policy is reasonable:
- requires further investigation on a case-by-case basis; and
- will largely depend on the particular job in question.
Is the direction, reasonable?
It may be reasonable for an employer to require its employees to get a flu shot if an employer deems it necessary to: 
- comply with its obligations in relation to providing a safe working environment; and
- to protect the health and wellbeing of employees.
This is especially the case in the current COVID-19 pandemic, as employees who contract both influenza and COVID-19 are at an increased risk of:
- serious illness; or
For the same reason, it may also be reasonable for employers to direct employees to get a flu shot, if the employer owes a duty of care to protect the health and wellbeing of others (such as patients and clients).
However, if an employee is at a low risk of contracting influenza and/or COVID-19, and is unlikely to come into contact with other persons to whom the employer owes a duty of care, it may not be reasonable to give a direction to get a flu shot.
An obvious example would be if an employee is:
- working from home; and
- not come into contact with any other employees or customers of the employer.
4. Can I refuse the direction because of personal beliefs or religion?
If vaccinations are not required by law, then employers must be mindful of the implications a flu shot policy may have in relation to discrimination.
If an employer makes a policy requiring employees to get a flu shot, for which noncompliance leads to dismissal, the policy could amount to unlawful discrimination. This will be the case if the employees who are disadvantaged by the policy, are those who cannot be vaccinated because of their religious beliefs. This is referred to as indirect discrimination.
Though, not all forms of discrimination are unlawful.
Again, consider the above example. If an employer can demonstrate that the policy is reasonable (e.g. to protect the health and wellbeing of employees and patients), then the indirect discrimination will not be unlawful.
Furthermore, holding a particular belief or opinion (which does not amount to a religious belief), such as anti-vaccination, is not a protected attribute and any policy which disadvantages persons with such a belief or opinion will not amount to unlawful discrimination.
5. Advice to Employers and Employees
Therefore, if you are an employer and considering implementing a policy for influenza vaccination, we suggest you first seek legal advice from one of our qualified practitioners to get advice on how best to implement such a policy.
If you are an employee who is refusing to get vaccinated, and your employment has been impacted by your refusal, we likewise suggest you contact us to discuss your options.
How can DSA Law help?
 Greg Hunt, Record 16.5 million flu vaccines to protect Australian (19 April 2020) Department of Health <https://www.health.gov.au/ministers/the-hon-greg-hunt-mp/media/record-165-million-flu-vaccines-to-protect-australians>.
 Department of Health, FAQs – Restriction on entry into and visitors to aged care facilities (1 April 2020) Department of Health <https://www.health.gov.au/sites/default/files/documents/2020/04/coronavirus-covid-19-restrictions-on-entry-into-and-visitors-to-aged-care-facilities_1.pdf>.
 Annaliese van Diemen, Care Facilities Directions (No 4) (31 May 2020) Department of Health and Human Services <https://www.dhhs.vic.gov.au/sites/default/files/documents/202005/direction-care-facilities-no-3-signed-2020-05-11.pdf>
 Department of Health, Immunisation for work (1 May 2019) Department of Health <https://www.health.gov.au/health-topics/immunisation/immunisation-throughout-life/immunisation-for-work>.
 Darling Island Stevedoring & Lighterage Co (1938) 60 CLR 601.
 Occupational Health and Safety Act 2004 (Vic) s 21.
DSA Law continues to invest in talent, paying attention to client needs by bringing in a new Special Counsel.
“Thanks to our committed, and responsive team, we have continued to work closely with our clients to understand their priorities, and align our firm’s design and operation so that we can meet demand, in spite of COVID-19,” said Kimble Stynes.
Mr Stynes welcomed Zaid Mohseni and said, “he will bring additional senior specialist skills, to boost capacity, and support our clients”.
Zaid is a former Partner, and Head of the Commercial Department, of Wilmoth Field Warne lawyers, and has substantial experience in corporate and commercial law.
He advises private, corporate and government clients on a wide range of transactions, including corporate restructuring, fundraising, M&A, media, intellectual property, and technology.
Specialising in complex commercial transactions, Zaid has over 25 years of commercial legal experience in Australia and overseas, with previous roles as the CEO of Broadcast Middle East FZ-LLC, Group COO of Moby Group, and most recently, the CEO of Alef Technology.
If you require legal advice about your rights as an employer or employee regarding casual employment, please Contact Us or one of the Employment Lawyers at DSA Law on (03) 8595 9580 so we can assist you.
The Full Bench of the Federal Court, in the recent case of WorkPac Pty Ltd v Rossato  FCAFC 84, confirmed its earlier decision in WorkPac Pty Ltd v Skene  FCCA 3035, holding that, if a casual employee’s hours of work are regular and systematic, the employee is entitled to payment of permanent employee entitlements.
However, this decision goes much further than the Skene decision, finding that, if an employee has been paid casual loading (usually an additional 25% above the ordinary hourly rate of pay), the employer is not automatically entitled to claw that casual loading back, should the employee be deemed a permanent employee.
This decision has wide ranging implications for employers and employees alike, as it allows casual employees to ‘double dip’ in some circumstances i.e. to receive payment of casual loading, plus payment of permanent employee entitlements, such as annual leave and personal leave.
Background to WorkPac Pty Ltd v Rossato
This case centered on Mr Rossato’s employment with WorkPac. Mr Rossato was an employee of WorkPac from July 2014 through to April 2018.
Mr Rossato’s contract of employment with WorkPac described Mr Rossato as a casual employee. Accordingly, Mr Rossato was paid casual loading at the ordinary rate of 25%, in lieu of receiving permanent employee entitlements, such as annual leave and personal leave.
Following the conclusion of his employment, Mr Rossato sent correspondence to WorkPac in which he claimed to have been a permanent employee and therefore entitled to permanent employee entitlements. In response, WorkPac claimed Mr Rossato was a casual employee and that, if he were truly a permanent employee, WorkPac would be entitled to:
- set off the 25% casual loading against any permanent employee entitlements; or
- seek restitution for the 25% leave loading that was mistakenly paid to Mr Rossato.
The Easy Part: Was Mr Rossato a casual or permanent employee?
In reaching its decision, the Federal Court did not hesitate in declaring Mr Rossato was a permanent employee, rather than a casual. This conclusion was largely based on the Court’s determination that Mr Rossato’s hours of work were too regular and systematic for him to have been anything but a permanent employee, noting Mr Rossato worked:
- Every shift he was rostered on to work;
- 7 days on, 7 days off; and
- Pursuant to a shift roster that was sometimes set 7 months in advance.
In reaching this conclusion, the Court followed its previous decision in Skene, focusing on whether there was, amongst other things, a ‘firm advance commitment’ with respect to Mr Rossato’s engagement.
The Hard Part: Can Mr Rossato ‘double dip’?
The Court’s primary focus was on the question of ‘double dipping’. That is, if Mr Rossato was not a casual employee, is it just and fair for him to retain the casual loading that he was paid due to his incorrect categorization as a casual employee, as well as receive payment of permanent employee entitlements?
As expected, WorkPac argued strongly against ‘double dipping’, submitting that casual loading was paid under the mistaken assumption that Mr Rossato was a casual. As such, WorkPac was entitled to be repaid (a remedy known as restitution), or to set off, the casual loading against those permanent employee entitlements Mr Rossato was entitled to as a permanent employee.
Unfortunately for WorkPac, the Court was not convinced.
Regarding, the supposed mistake of WorkPac in paying Mr Rossato casual loading, the Court found that casual loading was not a severable portion of payment for which restitution could be sought.
Casual Loading Offset
Regarding WorkPac’s desire to offset the casual loading amounts against permanent employee entitlements, the Court found this was not permissible as Mr Rossato’s written contract of employment did not allow or provide for a right to such a set off.
Accordingly, Mr Rossato was allowed to keep the casual loading he was paid and also awarded those permanent employee entitlements he ought to have been paid.
What employers should know?
This decision, along with the Federal Court’s previous Skene decision, shows that employers must pay very close attention to the substance of their employee’s working arrangements, rather than how they are simply described in a contract of employment.
An employee whose hours of work are:
- regular; and
is not a casual employee because their contract of employment describes that. Importantly, this means employers need to closely monitor the shifts and work patterns of their casual workforce to ensure their hours of work are sufficiently irregular. Otherwise, the employer risks having their casual employee claim additional entitlements.
What can employers do?
If casual employers are working regular and systematic hours, employers should:
- consider offering those employees part-time or full-time contracts;
- consider any casual conversion requests that may be made; or
- insofar as contracts of employment are concerned, review these to ensure that casual loading can be set off against annual leave entitlements, in the event a legal claim is made.
What employees should know?
If you are a casual employee and you believe your work patterns are regular and systematic, the law may consider you to be a permanent employee and therefore entitled to payment of permanent employee entitlements.
Whether or not your work patterns are regular and systematic is a question of fact, determinable on a case by case basis.
Factors that may indicate your work pattern is regular and systematic is:
- consistency in shifts (i.e. you work Wednesday, Thursday and Friday every week and have done so for some time); and
- how far in advance your shifts are set or rostered.
There are, of course, various other factors to be considered, so we recommend you seek legal advice prior to claiming permanent employee entitlements.
How can DSA Law help?
If you require legal advice about your rights as an employer or employee regarding casual employment, please Contact Us or one of the Employment Lawyers at DSA Law on (03) 8595 9580 so we can assist you.
Any change to building plans are usually described as ‘variations’. In Victoria, the Domestic Building Contracts Act 1995 (Vic) sets out procedures that should be followed to allow a variation to any plan or specifications set out in, or attached to, a major domestic building contract.
What is a major domestic building contract?
Simply put, a contract for the carrying out of domestic building work in which the contract price is more than $10,000.00 (or any higher amount fixed by the regulations).
Can a builder request a variation to the plans?
Yes. The owner of the building, the builder, and/or the surveyor (or any other authorised person under the Building Act 1993 (Vic)) can all prepare and give notice to vary any plans or specifications set out in the contract.
How can plans be varied in a major domestic building contract?
To vary plans set out in a major domestic building contract, a builder must provide to the owner a Notice or Variation Notice, which must:
- describe the variation the builder wishes to make; and
- state why the builder wishes to make the variation; and
- state what effect the variation will have on the works, as a whole, that are being carried out under the contract and whether a variation to any permit will be required; and
- if the variation will result in any delays and their reasonable estimate as to how long these delays will be; and
- state the effect the cost of the variation will have on the contract price.
Is consent to a variation needed from the owner?
A builder cannot proceed with any variation without written consent from the owner, which must be attached to the Variation Notice described above.
However, a builder may bypass the need for written consent from the owner, if:
- a building surveyor (or other authorised person) requires the variations to be made by way of a Building Notice or Building Order pursuant to the Building Act 1993 (Vic); and
- a copy of that Building Notice or Building Order was attached to the Variation Notice provided to the owner by the builder; and
- there are circumstances beyond the builder’s control; and
- the building’s owner does not advise the builder in writing within five (5) business days of receiving the Variation Notice that they wish to dispute the Building Notice or Building Order.
Can a builder claim payment for the variation?
A builder cannot claim or recover any money from an owner in respect of a variation unless they: 
- complied with the above requirements; and
- can establish the variation was made necessary by circumstances that could not have been reasonably foreseeable by the builder at the time the contract was entered into.
Alternatively, a builder can apply for an order from the Victorian Civil and Administrative Tribunal that the building’s owner pay for the variation, but the Tribunal must be satisfied that:
- there are either exceptional circumstances or that the builder would have suffered significant hardship if he had to comply with the above requirements; and
- that it would not otherwise be unfair to the owner.
The builder is otherwise entitled to recover the cost of carrying out the variation as well as a reasonable profit.
What can’t be sought by a variation notice?
Prime cost items, being items that either have not been selected or whose price is unknown at the time of entering into the contract, including fixtures or fittings. Instead the builder should include a reasonable allowance for these items in the contract.
Provisional sum items, being any additional work that might be required, that the builder should also allow a reasonable allowance for in the contract.
How can DSA Law help?
For a summary, Consumer Affairs Victoria provides a quick checklist for what variations can be made to a domestic building contract: Consumer Affairs Victoria, Changing a major domestic building contract – checklist (22 April 2020) Consumer Affairs Victoria <https://www.consumer.vic.gov.au/housing/building-and-renovating/checklists/changing-a-major-domestic-building-contract>.
The Federal Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (“Omnibus Act”) has introduced various measures designed to assist people and businesses in dealing with the consequences of the COVID-19 outbreak and social distancing measures put in place for our protection.
One of the aims of the Omnibus Act is to prevent unnecessary insolvencies and assist businesses with managing debts. To do this, the Omnibus Act introduces temporary amendments to the Corporations Act 2001 (Cth) (“Corporations Act”) and Bankruptcy Act 1966 (Cth) in respect of insolvent trading.
What is insolvency?
For the purposes of the Corporations Act, a person (which covers all manner of structures but particularly the common “private company”) is insolvent if they are unable to pay their debts as and when those debts fall due.
What is insolvent trading?
Section 588G(2) of the Corporations Act imposes a duty on a director of a company to prevent that company from incurring debts whilst insolvent i.e. to stop incurring debts when the company is insolvent or not to incur a debt that would render the company insolvent.
Directors can be held personally liable to repay any debts of the company that were incurred whilst the company was insolvent. Such actions may be pursued by a liquidator or by creditors to whom those debts were incurred and remain unpaid (but is generally done by the liquidator, who is better equipped to investigate such matters).
There are defences to insolvent trading found in section 588H of the Corporations Act, which continue to apply in respect of insolvent trading. Those defences are generally inconsistent with someone actively seeking to rely on ‘the safe harbour’ regime.
What are safe harbour laws?
The legislature was concerned that, commonly, directors were too quick to conclude a company suffering financial distress was a ‘lost cause’ and place it into external administration. Directors would do this to avoid being held personally liable for insolvent trading, rather than try to save the company.
Accordingly, in September 2017, additional provisions were introduced into section 588GA of the Corporations Act. The amendments provided protection from insolvent trading for directors that are making legitimate efforts to turn around a struggling company. That protection is generally referred to as the ‘safe harbour’.
To avail themselves of the safe harbour protection from insolvent trading, directors who come to suspect that their company is or may become insolvent must develop a course of action (a recovery plan) that is reasonably likely to result in a better outcome for the company (and its creditors) than if the company was placed into external administration, and to implement that recovery plan.
In commencing that plan, directors must ensure all employee entitlements are paid up to date and substantial compliance is maintained as to the company’s tax reporting obligations.
Debts incurred by the company directly or indirectly in connection with the recovery plan will not attract personal liability to the director for insolvent trading, even if the company was insolvent, but it is the director who will bear the onus of establishing that he or she is in the safe harbour. We therefore recommend that a director seeking to rely on the safe harbour provisions in section 588GA should seek appropriate expert advice and diligently document the recovery plan, the basis for its feasibility and its implementation on an ongoing basis.
Safe harbour protection can be lost, if:
- the recovery plan is not followed;
- it subsequently becomes apparent that following the recovery plan would not be reasonably likely to lead to a better outcome; or
- during the period in which the director seeks protection, the company fails to continue paying all employee entitlements or fails to adhere to financial reporting obligations to the ATO on time.
What are the enhanced safe harbour provisions arising from COVID-19?
The Omnibus Act introduces a new section 588GAAA into the Corporations Act. This section provides a further and enhanced safe harbour to directors from insolvent trading. This enhanced safe harbour is only temporary and has been put in place to try and keep businesses trading wherever possible (in combination with other measures).
Accordingly, from 26 March 2020 until 25 September 2020, company directors are protected from liability for insolvent trading for debts that the company incurs during this period provided that those debts are incurred in the ordinary course of business.
The phrase in the ordinary course of business takes its plain meaning (i.e. there is no definition in the Corporations Act) and is seemingly wide enough to cover all but extraordinary debt.
The explanatory memorandum provides a little guidance as to what in the ordinary course of business means by suggesting that the phrase includes debts incurred by a company to facilitate the continuation of the business during the six month period, such as a loan to cover the expenses of moving the business operations of the company online.
Unless extended, the safe harbour protection will end on 25 September 2020. If, prior to this date, a director considers that the company will be insolvent when the temporary safe harbour ends, then the director should either:
- put in place a recovery plan under section 588GA to remain in the safe harbour; or
- appoint an external administrator.
How can DSA Law help?
 See our summary of the changes regarding statutory demands, How Coronavirus (COVID-19) affects Defaults and Statutory Demands.
If an employee is made redundant, and that employee is dismissed as a result of the redundancy, the employee cannot sue their employer for unfair dismissal if the redundancy was a “genuine redundancy”.
There are a number of reasons a job within a business may become redundant. This may include:
- a downturn in work (for example, there is not sufficient work to justify the position); or
- a restructuring of the business (for example, the position is outsourced as a cost-saving measure).
What is Genuine Redundancy?
A genuine redundancy is one which meets the following criteria: 
1.The employer no longer requires the employee’s job to be performed by anyone because of changes in the operational requirements of the employer’s business. 
First, a distinction is generally drawn between an employee’s job and an employee’s duties.
Generally, an employee’s job constitutes the collection of duties that they perform. However, the fact that the employee’s duties are still required to be performed, either by:
- other employees of the business; or
- outsourced to independent contractors,
does not mean that the employer still requires the employee’s job to be performed.
2.If a Modern Award or Enterprise Agreement applies to the employment, the employer must have complied with any obligations to consult about the redundancy. 
Most Modern Awards contain obligations in relation to consultation about major workplace changes.
Generally, an employer is required to:
- give notice of changes to employees;
- discuss the changes with employees; and
- provide written information to the employees about these changes.
These consultation obligations are relevant if the employer determines to make redundancies (especially where redundancies will lead to termination of employment).
3. It was not reasonable in all the circumstances for the employee to be redeployed within the employer’s business, or the business of an associated entity of the employer.
In determining the reasonableness of redeployment, things to consider, include:
- the nature of other work available;
- whether the employee has the requisite qualifications; and
- whether the position is appropriate for the employee’s skills and experience.
How are Genuine Redundancies and JobKeeper Payment affected during the COVID-19 pandemic?
The current pandemic has a significant impact on the Australian economy, as governments force businesses to close their doors and people’s spending habits change. Most businesses affected by the economic impact of COVID-19 would have considered whether to make redundancies.
The principles applying to genuine redundancies remain.
Employers should, however, ensure they thoroughly consider whether redeployment is suitable, especially in circumstances where the employer is eligible to receive JobKeeper subsidies.
The JobKeeper Payment scheme is intended to support Australian businesses and employees affected by the significant economic impact caused by COVID-19, by subsidising employee wages. Further, if an employer is eligible to receive subsidies under the scheme, new provisions of the Fair Work Act 2009 apply, include:
- enable employers to give employees directions in relation to standing down an employee;
- reduce their hours or days of work;
- change that employee’s usual duties; and
- change their location of work.
Employers who are eligible under the JobKeeper Payment scheme may redeploy their employees and minimise the cost of maintaining a workforce, without the need to make redundancies. It would be reasonable to expect an eligible employer to redeploy an employee rather than dismiss that employee.
However, in some instances, the dismissal of an eligible employee by an eligible employer may not amount to a case of genuine redundancy.
How can DSA Law help?
If you require legal advice about
redundancies and your rights as an employer or employee under the JobKeeper
Payment scheme, please Contact
Us or one of the Employment
Lawyers at DSA Law on
(03) 8595 9580 so we can assist you.
If you and your ex-partner cannot reach an agreement relating to the division of your property post separation, then you can apply to the court for financial orders. The court can award orders covering financial orders, orders relating to the division of property and payment of spouse or de factor partner maintenance.
There is no set formula to divide property following a separation. The decision is made by the court after all the evidence is heard and the judicial officer determines what is just and equitable based on the unique facts of the situation.
Property can include most items of value, such as: 
- property owned jointly or independently;
- business interests;
- trust interests;
- assets acquired through inheritance; and
The general principles the court considers when deciding financial disputes after a breakdown of a marriage is set out in the Family Law Act 1975 (Cth). The general principles apply to individuals who were in a marriage or in a de facto relationship, and are based on:
- working out what you’ve got and what you owe, that is your assets and debts and what they are worth;
- looking at the direct financial contributions by each party to the marriage or de facto relationship such as wage and salary earnings;
- looking at indirect financial contributions by each party such as gifts and inheritances from families;
- looking at the non-financial contributions to the marriage or de facto relationship such as caring for children and homemaking; and
- future requirements – a court will take into account things like age, health, financial resources, care of children and ability to earn.
The way your assets and debts will be shared between you and your ex-partner will depend on the individual circumstances of your family/relationship. Your settlement will generally vary from others you may have heard about.
However, time limits also apply:
- if you were married, applications for property related orders must be made within 12 months of your divorce becoming final;
- if you were in a de facto relationship, the application for property orders must be made within 2 years of the breakdown of the de facto relationship; and
- if you do not apply within these time limits, you will need to seek permission of the court, which may not always be granted.
How can DSA Law help?
There are many scenarios which may arise during this difficult time and the process of dealing with separation and divorce. DSA Law has the skills and expertise to help you navigate this ever changing landscape.
The novel Coronavirus (COVID-19) has had a profound impact on the Australian economy and local Australian businesses. Even though we are wading through unprecedented times, businesses are still trading, and businesses need to generate cash flow in order to keep doing so.
Our article explores how you may maintain cash flow by looking into approaches for debt recovery and preserving assets from creditors during the COVID-19 pandemic in Australia.
How can I get my debtors to pay?
Ordinarily, if your debtor is not paying within ordinary business terms, you could turn to us, as your lawyers, to commence the legal recovery process. Whilst letters of demand are often effective, it is fair to say that they may not be the best tool to use during these unprecedented times. These letters are blunt, devoid of understanding, and always threaten legal action. We expect many debtors will simply see such an approach as the last straw and the actions of a business that does not wish to assist the recovery of their business in the interests of a future relationship. If they can pay you in due course, they might, but it won’t likely be as a priority.
The key to recovering debts during this time of uncertainty is to be flexible and, if possible, sympathetic. If you are willing to be flexible, solutions can be designed. For example, this may include, reaching out to your debtors by sending a special letter, which does not demand money, nor does it threaten legal action. The letter will touch on the unprecedented times we are all facing, the need for us all to support each other, and will invite your debtors to get in contact to negotiate a settlement or payment plan.
Many debtors may avoid you for fear that you will not accept any payment but the debt that is owed, in full. If debtors know that you are open to negotiation and alternative payment arrangements, it may open the lines of communication and could ultimately result in the debt being paid in a manner that suits you, your business needs and those of your debtors.
However, if you have exhausted the options available to you, then legal action may be necessary. With the various COVID-19 protocols giving debtors more time to pay, you don’t want to be last in line either.
Do you need help paying your creditors?
If you find that your business has been left with a list of creditors, and you are struggling to pay them, you are not alone. We understand that times are tough and that you need to not only pay your creditors, but also your staff.
For our clients in this situation, we have found ourselves crafting letters, to be sent to our client’s creditors. The idea behind such a letter is to redirect their focus away from you so that you can focus on alternative income streams/cash flow and/or recovery of your income streams/cash flow, and grant you extra time to pay your debts. If your creditors demand money, effective procedures can be created to negotiate settlements on your behalf so that in the end, you save money.
How can DSA Law help?
Please do not hesitate to get in touch with one of our friendly staff to discuss your debtors and/or creditors. Alternatively, please feel free to contact our office on 03 8595 9580 or by going on our Website.
As is the case nationwide, the Victorian government has directed all Victorians to stay at home where possible to limit the spread of the coronavirus (COVID-19). The laws that govern these restrictions in Victoria are contained within state legislation, chiefly the Public Health and Wellbeing Act 2008 (Vic) (the Act)and the accompanying Public Health and Wellbeing Regulations 2019 (the Regulations), which support the operation of the Act and provide a framework for business, councils, the Department of Health and Human Services as well as individuals to adhere to. The Regulations cover a range of measures for the purpose of preventing and responding to the spread of infectious diseases generally, such as COVID-19.
The Act contains provisions which concern public health emergencies arising out of situations like the present outbreak of COVID-19, including providing for the appointment of the Chief Health Officer (currently Professor Brett Sutton) who can exercise various powers conferred by the Act during such emergencies.
Victoria’s Minister for Health, Jenny Mikakos, exercised her power under the Act to declare a State of Emergency in Victoria from 16 March 2020 until 11 May 2020 to manage the COVID-19, which has consequently granted the Chief Health Officer with additional emergency powers to help contain the spread of the virus. Pursuant to the Act, the Chief Health Officer is empowered to give directions such as the mandatory directions, which have forced the closure of business and other premises, as well as the implementation of social distancing measures – the “Stay at home” laws.
These “Stay at home” laws are contained within the Stay at Home Directions (No 4) given by Dr Annaliese van Diemen, Deputy Chief Health Officer (Communicable Disease) pursuant to section 200(1)(b) and (d) of the Act (the Directions).
In our article, we discuss how everyday Australians in Victoria may be affected by those Directions to date.
Permitted Reasons for Leaving Premises
The Directions provide under Clause 5, Part 2, that a person must not leave the premises at which they ordinarily reside, other than for one of the reasons specified in:
- clause 6 (necessary goods or services);
- clause 7 (care or other compassionate reasons);
- clause 8 (work and education);
- clause 9 (exercise);
- clause 10 (other specified reasons).
These clauses provide specifically as below:
Clause 6 – Necessary Goods or Services
A person may leave their premises to obtain food or drink, goods and services for health or medical purposes as well as other necessary goods or services including (without limitation) those provided by:
- a financial institution;
- a government body or agency;
- a post office;
- a pharmacy;
- a hardware store;
- a petrol station;
- a pet store or veterinary clinic;
- a retail facility that is not prohibited from operating by the Restricted Activity Directions.
Consequently, any retail facility which sells or provides “necessary goods or services”, other than those which are explicitly prohibited from operating, is ostensibly still permitted to trade and have customers attend in person.
Other than the examples above, “necessary goods or services” are not specifically defined.
Clause 7 – Leaving premises for care and other compassionate reasons
A person is allowed to leave their premises:
- for a range of specified reasons in connection with the general care and support of children (where the person is a parent or guardian), including meeting shared parenting arrangements or to take the child to be minded so that the person can leave the premises for work or to obtain essential goods or services;
- to provide care and support for elderly or infirm relatives,
- to attend a funeral or wedding;
- to donate blood;
- to escape harm or the risk of harm, including family violence;
- to visit a person with whom they are in an intimate personal relationship;
Clause 8 – Leaving premises to attend work or education
A person is permitted to leave their premises to:
- attend work, or
- attend an educational institution; or
- do anything reasonably necessary to attend either of the above (such as taking a child to childcare, school or another person’s premises to be minded)
provided that it is not reasonably practicable for the person to work or obtain the educational services provided by the educational institution, from home.
Clause 9 – Leaving premises for exercise
A person may leave the premises to exercise, subject to maintaining a distance of 1.5 metres from all other persons and complying with the restrictions on gatherings in clause 11 (ie. a person can only exercise with 1 other person, unless the other people live at the same premises).
Clause 10 – leaving premises for other reasons
A person may leave their premises for other specified purposes, including:
- emergency purposes;
required by law, including without limitation, attending:
- a police station; or
- a court or other premises for purposes relating to the justice or law enforcement system;
- if the premises in which they ordinarily live are no longer available or suitable for them to live in;
- for the purpose of moving to new premises;
- to leave the state, if the person lives outside Victoria;
- if the person usually resides at more than one premises, to move between them;
- for the purposes of national security.
Clause 11 under Part 4 of the Directions specifically details the restrictions on gatherings, in addition to weddings and funerals.
Police have strong powers to enforce these directions and are able to issue ‘on the spot’ fines for contraventions, including up to $1,652 for individuals and up to $9,913 for businesses.
Deputy Police Commissioner Shane Patton has however recently stated at a press conference that he would personally review every single fine issued for contraventions of the Chief Health Officer’s directives and indicated that if they were not “properly issued or they don’t pass that common sense test, they will be withdrawn.”
How can DSA Law help?
 Dr Annaliese van Diemen, Directions from Deputy Chief Health officer (Communicable Disease) in accordance with emergency powers arising from declared state of emergency – Stay at Home Directions (No 4) (13 April 2020) Department of Health and Human Services Victoria <https://www.dhhs.vic.gov.au/sites/default/files/documents/202004/b4%20-%20stay%20at%20home%20direction%20%28no%204%29%20%28signed%29.pdf>
 A person is however permitted to freely move between ordinary places of residence if they have more than one, pursuant to subclause 5 of clause 5 and clause 10(1)(g).
 As defined in the Restricted Activity Directions (No 4), as “any facility that is used wholly or predominantly for the sale or hire of goods by retail; or the retail provision of services“.
 Subject to the requirements of Clause 11 of the Directions.
 “Security” being as defined by the Australian Security Intelligence Organisation Act 1979 (Cth).
 ABC News, Victoria expands coronavirus testing criteria to be ‘widest in Australia’ (14 April 2020)ABC News <https://www.abc.net.au/news/2020-04-14/victoria-expands-coronavirus-testing-criteria/12146166>.