Property Law & Strata

Tenants who are seeking protection from competition, by excluding new competitors from the same retail space with the aid of Retail Shop Lease Legislation, will be disappointed to know that several states including New South Wales, South Australia, Western Australia and Queensland have reached a uniform decision that relevant state legislation does not provide for the prevention of competition from leasing within a neighboring shop.

Despite section 38 subsection (1)(d) of the Retail and Commercial leases Act 1995 (SA), which outlines: if a landlord “fails to take all reasonable steps to prevent or put a stop to anything attributable to causes within the lessor’s control that causes significant disruption of, or which has a significant adverse effect on, trading in the shop”, the court upheld that the above provision was intended to protect the lessee from physical disruptions as opposed to trading potential. [...]  READ MORE →

CITYROSE TRADING PTY LTD V BOOTH [2013] VSC 504

Victorian Supreme Court

In this case, the parties as well as the court could not comprehend to who was liable for GST on the sale of the land as a condition in the contract was “so obscure and incapable of any definite or precise meaning” as to label which party was to pay the tax.

The court ultimately held that the GST clause was not conditional on the operation of the contract. This means that the parties were not relying on the GST clause when the money switched hands. As a result the GST clause itself was removed from the contract by the court and the vendor was liable for the GST. [...]  READ MORE →

FABCOT PTY LTD V PORT MACQUARIE-HASTINGS COUNCIL [2010] NSWSC 726

NSW Supreme Court

The above case has shown that sellers must be cautious of failing to disclose competing offers. This case involving a dispute between Woolworths and a Local Council for failing to disclose a competing offer with Coles for the sale of a property has highlighted the importance of sellers using caution when considering and accepting offers.

The court recognised that in the circumstances, the seller had a ‘back-up’ option which the main front-runner in the negotiations was unaware of. When the seller diverted to the back-up purchaser and proceeded through a deal, the prior front-runner sued for non-disclosure. [...]  READ MORE →

A consistent change in the way that legislation is adopted by the courts has provided many tenants who choose to assign a lease relief from the obligations of the assignee. In the past there have been many agreements which have provided tenants an ability to assign a lease with the landlord’s consent. Traditionally such agreements would impose conditions on the tenant, such as covering the rental cost of the assignee should they fail to meet them.

Courts in many jurisdictions have sought to sever any clauses which contain provisions upon the tenant. In the UK, the Landlord and Tenant Act 1995 provides that an agreement will be considered void if it attempts to exclude, modify or frustrate the Act’s purpose. [...]  READ MORE →

MACKINLAY V DERRY DEW PTY LTD [2014] WASCA 24

Western Australia Supreme Court of Appeal

A limitation has been placed on the ability to remove options from a deed of assignment through severance. The Western Australian case of Mackinlay v Derry Dew Pty Ltd has provided a much more restricted scope to severing an option.

In this instance, a lease was granted for 20 years. While there was existing legislation that prohibits a lease to exceed 10 years, this only applied to leases of part-only lots, or 21 years in the instance of a lease for a building. The tenant of the lot conducted a business which was held in a building only taking up a small part of the property. The tenant later sold the business and assigned the portion of the property to which the business was located to the new owner. The assignment contained the right to extend the lease for two additional terms of five years. This was considered important to the assignee at the time. [...]  READ MORE →

The Australian Taxation Office has issued a warning to property developers using a complex loophole in trust activities to misaligned long-term investment strategies for short term profits.

There has been notice from the ATO on 28 July, 2014, that there will be increased auditing for arrangements that exhibit the following characteristics:

• developments that are advertised before completion or is sold in a short time-frame following;
• the trustee claims the 50% capital gains tax discount;
• documents prepared for the property provide a different intention as to the stated objective of the property developer; or
• the developer uses a trust when acquiring the property.

Should a trust be subjected to an audit the ATO will consider whether the documents produced under the purchase and development of the property are consistent with an intention to acquire a long term investment as opposed to a short term profit. [...]  READ MORE →

APF Properties Pty Ltd v Robinson Investment Capital Pty Ltd [2013] TASSC 59

Supreme Court of Tasmania

Tenants who are late in exercising their option to renew are usually unable to seek remedy in continuing the lease. However, in an unusual case a tenant was able to use the Australian Consumer Law to succeed in the renewal of the lease, despite exercising their option to renew late.

Facts

A vendor sold a large property with a family home situated on the land. The intention was to sell the property as a whole and within the contract was a directive to sub-divide and sell the family home back to the vendor at a set price. After the sale, the parties were unable to sub-divide the land as the planning authority did not allow so. The purchaser agreed to allow the vendor to lease the land under a 9 year lease with 10 options to renew (each for a period of 9 years) with an up-front payment of the price stated in the contract and a rent of $1 per year. [...]  READ MORE →

When two people decide to invest in property together they may choose to do so as either joint tenants or tenants in common. The choice may be dependent on several reasons, not limited to:

• their relationship, as business partners or family;
• their wishes, to leave the property to family, or to the other joint-owner/s; and
• tax obligations.

Should the owners decide to become tenants in common, this usually occurs as a result of each owner holding an interest in the property in proportions equal to their contributions. Tenancy in common may also exist where the co-owners occupy separate parts of the land for separate purposes. This was seen in the decision ofMalayan Credit Ltd v Jack Chia-MPH Ltd where the two owners each ran two separate businesses on two halves of the land. Tenancy in common is usually established where there is some sort of ‘division’ among the property. [...]  READ MORE →

Payne v Dwyer [2013] WASC 271

Supreme Court of Western Australia

In most cases adverse possession allows a party to take sole ownership of a property given that the party maintains exclusive possession for a given time frame. This case, however, shows instances where exclusive possession of the property over which an additional mineral interest was formed, was not sufficient to provide adverse possession over the mineral interest itself.

Facts

This case has quite a narrow scope for application as the facts and the resulting decision are sufficiently unfamiliar with the usual facts of adverse possession cases. In this case, the two parties were co-owners of an interest over minerals on a property – of which one party had an interest over the land. The party who had freehold interest over the land excavated the minerals and extracted them alone for a significant number of years and therefore claimed that there was adverse possession to hold exclusive interest over the minerals. [...]  READ MORE →

Bendigo & Adelaide Bank Ltd v Karamihos [2014] NSWCA 17

New South Wales Court of Appeal

Under section 7(1) of the Contracts Review Act 1980 (NSW), the court, if it finds a contract to be unjust, may make orders to overturn the contract. The above case provides some consideration to the circumstances that would not be equivalent to an unjust contract and that may be taken into account when determining so.

Facts

A couple in their late 60s/ early 70s borrowed $1.2 million in 2007 to refinance an existing debt over a commercial property, to finance their take-away food restaurant and a $100,000 gift to their daughter. The commercial property was worth $2 million, estimated by the borrowers at the time. The borrowers defaulted on their loan with the bank seeking possession over the property. The couple claimed that the contract was “unjust” as the bank had provided the funds in circumstances where substantial hardship would occur to meet the repayments. [...]  READ MORE →

ATO will now have more powers to impose penalties against trustees of self managed super funds who breach superannuation law

Effective 1 July 2014, the ATO will have new powers that will allow it to apply a wider spectrum of penalties against trustees of SMSFs who contravene superannuation law. Briefly, the ATO will have three new powers available to it.  These powers have been introduced to allow the ATO to address non-compliance issues with superannuation law.

The new powers will apply to directors of corporate trustees in the same manner in which they apply to individual trustees.  Currently the ATO has a limited capacity to deal with an address contravention of superannuation law.  The new penalty powers include graduated penalties that will allow the ATO to provide a measured response to a contravention of superannuation law. [...]  READ MORE →