By Alvin Lim & Anna-Nikol Vladimirova

The Great Australian Dream of home ownership is usually realised in one of two ways. The first is to purchase a ready-made home, while the other route requires you to build one from scratch. Among many other benefits, choosing to build a home enables the owner to maximise the property’s functionality for their specific needs and may be more affordable. Nevertheless, our firm has recently encountered a surge in building disputes, transforming the pursuit of a dream home into a distressing ordeal.

In many of these cases, the central issues are a lack of knowledge and understanding of the building contract. A building contract is an agreement between the owner and the builder which outlines the rights and responsibilities of each party. Most building and developing companies use standard form building contracts for this purpose. Each contract can be amended (through special conditions) to alter the rights and obligations of the parties. It is the failure to understand these special conditions that may lead to delays, breach of contract and financial loss for the owner.

The following acronym BUILD lists some aspects of the standard building contracts which you should be aware of.

Building Period

It is important to know the duration for which the building period is expected to last. A standard building contract would typically provide for 180 days of building. A special condition may modify the event that triggers the commencement of the building period. For instance, the contract may state that the building period commences once the pouring of the concrete slab is complete, as opposed to the standard position which is that the building period commences after the builder obtains a building permit.

It is important to be aware of these specifications as it will provide you with an accurate timeline for completion of your project.

Understand your responsibilities

Many owners wrongfully assume that their involvement in the building project is only limited to financing each stage of the build. This is incorrect as the contract may require the owner to complete certain tasks which are necessary to progress to the next stage. For example, the contract may place the responsibility of obtaining a planning permit on the owner. Failure to do so within the specified deadline may result in delays or notice of breach of contract.

The contract may also impose deadlines for submitting a response to a notice given by the builder. In such cases, failure to respond may be taken as acceptance of the notice. For example, if the owner does not respond to a notice of extension of the building period, then the right to object to the extension may automatically be waived. As an owner, you must ensure that they are aware of the responsibilities you undertake by signing the contract.

Information about your rights

If a breach of contract occurs, it is necessary to react according to the process outlined in the contract. Some owners may attempt to take matters into their own hands by leveraging the final payment against the builder. This is a risky approach and may cause the issue to escalate unnecessarily. Obtaining legal advice would better position you to accurately assess your rights and provide for the appropriate means to gain compensation.

Lower risk

Engaging a lawyer to review your contract would ensure that you are protected against any harsh or unfavourable clauses. This review would protect your legal and financial interests so that you can enter the contract with confidence. Given the inherent risks and uncertainties associated with construction projects, it becomes crucial to meticulously assess and address all legal risks. Being attuned to potential risks will empower you to make well-informed decisions.

Dealing with Defects

Once the builder completes the project, the contract typically allows the owner to inspect the property and provide the builder with a list of defects or unfinished work. The builder would then be required to rectify the defects. However, this phase may be difficult to navigate if the owner is not satisfied with the rectification. Some owners may try to negotiate with the builder to reduce the final price. This may result in the owner incurring penalty interest if they do not adhere to the strict deadlines and procedures imposed by contract. As such, withholding final payment may be counterproductive and costly in the long run. If you find yourself in this situation, contact us to discuss an appropriate avenue that would lead to a prompt resolution.

The complexities of the building process make it vital that you are a proactive and prudent party to the Building Contact. Engaging legal assistance in the beginning stages of your building journey will ensure that you can sleep at night knowing that you will not have to wake up from the Australian Dream.

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

By Andrew Faulkner

Ladies and gentlemen, fasten your seatbelts as we delve into the tempest of fiscal change that the 2023 Victorian state budget has unleashed upon us.

The 2023 Victorian state budget has introduced significant changes to taxes, including land tax, payroll tax, and stamp duty.

The government aims to address the state’s accumulated debt of $31.5 billion from 2019-20 to 2022-23 through a “COVID debt levy”. The budget includes new measures to raise revenue, aiming to collect $8.6 billion over the next four years, with $4.74 billion expected to be raised in the 2024 fiscal year alone.

These changes will affect various aspects of taxation and will impact many Victorians and businesses. It’s crucial for business owners to seek advice on managing these changes and minimizing tax-related risks, especially when considering real estate investments, developments, and divestments.

One major change revolves around land tax. The tax-free threshold for general land tax rates will be reduced from $300,000 to $50,000 starting from 1 January 2024. This will impact many previous exempt apartments in the CBD.

Additionally, a “COVID-19 debt temporary surcharge” will be added to existing land taxes. This surcharge will include a flat fee of $500 for taxable landholdings between $50,000 and $100,000, and a fixed fee of $975 for holdings between $100,000 and $300,000. For landholdings exceeding $300,000, a fixed surcharge of $975 and an increased land tax rate of 0.10% of the land’s value will apply. Trusts with a value above $250,000 will also face a $975 fee and an increased land tax rate.

These changes are projected to generate $4.74 billion over four years. Smaller landholders will be particularly affected by the lowered threshold.

From 1 January 2024, the State Revenue Commissioner can extend land tax exemptions by two years for principal residences undergoing construction or renovation.

A breakdown of tax brackets is provided, detailing the tax rates for various income levels. These rates range from no tax for unimproved property values up to $50,000, to a maximum tax of $31,650 plus 2.65% of the amount over $3,000,000.

Navigating the Tax Torrent: As the storm gathers momentum, business owners find themselves in the crosshairs of fiscal change. Seeking counsel is no longer an option but a necessity, for strategic advice becomes the ship’s compass in these treacherous waters. The implications for investments, developments, and divestments cannot be underestimated. In this labyrinth of fiscal complexity, the 2023 Victorian state budget leaves none untouched. It’s a tale of thresholds lowered, surcharges intensified and exemptions shielded. Amidst the fiscal turbulence, we stand, bracing for the impact and navigating the land tax changes to the Victorian landscape.

Business owners are advised to seek expert advice to navigate these changes, as they have far-reaching implications for investments and developments.

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

By Morgan Collens

With the overall cost of living on the rise, it is understandable that many people will opt for the cheaper option of a DIY Will kit, which can be purchased at your local post office.

However, whilst well intentioned, DIY Wills may be more risky and more costly than you think.

Here are some common risks associated with preparing a DIY Will:

1. Confusion During Probate:

When you pass away, the first job for your executor is to apply for Probate, which will allow them to access and distribute your assets as you intended. Probate requires the Supreme Court to prove that the Will meets formal legal requirements, including confirming that it was signed and witnessed correctly to show that the correct person created and signed the document.

Unfortunately, it is common for DIY Wills to fail to fulfil the requirements of a legally binding Will, meaning the Court must determine the Will’s validity and how it is to be interpreted. In the case of an invalid or unclear Will, it may mean that your wishes are not adhered to, and your executor will be faced with the additional time and financial costs of proving your intentions.

2. Undue Influence:

Allegations involving a deceitful relative or a person in a position of trust pressuring you into making a will, or not comprehending your genuine desires, have the potential to create tension in relationships, regardless of the validity of these suspicions.

Moreover, it’s essential that the individual creating a will was fully aware of and in agreement with the details within it. This encompasses a clear understanding of how their choices will impact the outcome, thus guaranteeing the alignment of the will with their authentic intentions.

3. Confusion About Assets:

DIY Wills may lead to ambiguity regarding the assets that can be addressed through the will itself and those that require supplementary documentation for handling. This includes assets like superannuation, jointly owned properties, and assets held within family trusts.

4. Lost or Misplaced Wills:

Will documents created personally are frequently kept within one’s residence and are susceptible to being inadvertently lost, misplaced, or intentionally damaged by individuals who object to the provisions or stand to gain from the estate under intestacy regulations.

Creating your Will with Nevile & Co. brings the additional benefit of secure document storage in our deed packet facility, so you can rest assured that your Will is safe for when your loved ones need to access it. Additionally, your Will is only provided to those who are able to prove their identity and reason for requiring the Will, so only relevant people will be granted access.

To create a valid Will today, contact Nevile & Co at nevileco@nevile.com.au

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

By Meng Cheong & Grace Convey

We frequently hear discussions of the imbalance between employers and employees, but there are a number of changes to Australian employment law being made under the Secure Jobs Better Pay initiative which have recently come into force increasing employee entitlements, some of which can also streamline obligations for employers.

Changes to federal law

The National Minimum Wage is now $23.23 an hour or $882.80 per week (an increase of 5.75%), effective 1 July 2023 under the Fair Work Act 2009.  In addition, Superannuation has now increased for the financial year ending 2024 (up to 11% contribution by employers from 10.5% last year).

Under the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, employees can now be awarded an increased cap of up to $100,000.00 (previously $20,000.00) through small claims court proceedings. This will assist workers in recovering significant unpaid entitlements, as they may appear in Small Claims Court without a lawyer in a move that empowers employees and frees up cases which may have otherwise gone through higher-level jurisdictions.  The high-income threshold for unfair dismissal claims has also increased to $167,500 – should your income exceed this cap and not be covered by a modern award or an enterprise agreement, you will not be eligible to bring an unfair dismissal claim from 1 July.

Limitations on enterprise agreements

Starting from the 6^th of June 2023 there are new limitations imposed on enterprise agreements.  Commissioners examining new agreements must consider a Statement of Principles when deciding the validity of agreements, as well being able to amend agreements post-lodgement under the Better Off Overall Test (BOOT).  They may also take other factors into consideration and must now make a global assessment about the reasonable foreseeability of an employee benefiting more from the enterprise agreement than the modern award. Additionally, there are now three types of multi-enterprise agreements:

• Cooperative workplaces agreements
• Single interest employer agreements
• Supported bargaining agreements.

Migrant worker entitlements

Migrant workers can breathe a sigh of relief as an adjustment to the Fair Work Act made by The Protecting Worker Entitlements Act allows employment contracts to remain valid despite breaches of the Migration Act 1958 for the purposes of the Fair Work Act.  This is designed to prevent employee’s status as a visa-holder from being exploited and offer more safety to migrant workers who often complain of being forced into unsafe or unstable work to retain their visa status.

Parental Leave Allowances

Parental leave has also seen changes – ‘flexible unpaid parental leave’ is now offered for a period of 100 days at any time within 24 months of a child’s birth or adoption (more than tripling the allowance).  Pregnant employees may be required to commence their unpaid parental leave up to six weeks prior to the expected birth of the child if their employer requests a medical certificate and it states that they are unfit for work.  Both parents can be home at once, as the unpaid parental leave may now be taken by both partners concurrently, the 8-week maximum having been removed from the Act.  New parents will now be able to enjoy more of the first years of family time together.

Victorian legislative changes

It is not only the federal Acts which have seen an update for the 2023-2024 financial year – there have been changes made to several of our state laws too:

Those looking to employ children under the age of 15 under the Child Employment (Amendment) Act 2022 will now be able to access a streamlined licensing system, allowing them to employ multiple young staff under the one license.  Existing permits will remain in place until their expiry, reducing the pressure on businesses to immediately seek new licencing.  The new system has increased monitoring from the Wage Inspectorate and is backed by the changes to supervision requirements.  All employees must be supervised by someone over the age of 18, and supervisor records are to be retained by employers for five years, with additional requirements for children working in the entertainment industry.  Additionally, not-for-profit organisations are no longer exempt from the requirements and must now comply with the Act.

Employers in Victoria are also now obliged to dispose of their COVID-19 vaccination records unless permitted by any other state or federal law to retain them, following the revocation of the Occupational Health and Safety Amendment (COVID-19 Vaccination Information) Regulations.

If you would like to know how these changes might affect you or how you might be able to better protect yourself against any issues which may arise from these changes, please contact us today at nevileco@nevile.com.au.

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

by Morgan Collens

The Law Council of Australia has recently released it’s updated best practice guide for legal practitioners in relation to elder abuse. The guidelines provide an outline of what may constitute financial abuse, and how legal practitioners can assist in preventing instances of this behaviour.

In outlining what may be considered an act of financial abuse, the Australian Law Reform Commission has provided the following non-exhaustive list:

1. Incurring bills for which an older person is responsible;
2. Stealing money or goods;
3. Abusing Power of Attorney arrangements;
4. Refusing to repay a loan;
5. Living with someone without helping to pay for expenses;
6. Failing to care for someone after agreeing to do so in exchange for money or property; and
7. Forcing someone to sign a Will, contract, or Power of Attorney document.

Examples 3 and 7 above are of particular concern to legal practitioners, who may face serious disciplinary action if it is found that they neglected to adequately check for undue influence or lack of capacity. As held in Ryan v Dalton; Estate of Ryan [2017] NSWSC 1007, a solicitor should always consider capacity and the possibility of undue influence, even if only to dismiss any suspicion. With this requirement in mind, there are certain circumstances the Law Council of Australia suggests should raise immediate red flags for a legal practitioner, such as:

1. The client appearing to lack an understanding about the legal work the practitioner is being asked to perform, or about the practitioner-client relationship;
2. Questions regarding the client’s mental capacity, particularly any doubt as to their ability to understand and make decisions about the transaction when it is explained to them, noting, however, that mental incapacity alone does not necessarily indicate elder abuse;
3. Any indications that another person may be exerting undue influence over the client in relation to changes made to a Will, particularly changes to beneficiaries or specific gifts left as part of the Will; or
4. Any indications that the client has a special disadvantage, such as illness, poverty or need of any kind, or lack of education or understanding, that may be exploited by a person of influence in the client’s life.

While the implications of undue influence and unconscionable conduct are serious and wide ranging, there are a number of relatively simple steps that legal practitioners are encouraged to undertake to assist in preventing elder financial abuse. This may include visiting the client at their home to ensure they are in a familiar and comfortable location without any distraction, ensuring that they meet with the client alone and without another person within sight or earshot of the meeting, and making sure that a certified interpreter with no personal interest in the discussion is present to assist those with limited English capabilities.

If you are concerned about whether a Will or Power of Attorney has been created under conditions of undue influence, you can contact Nevile & Co. to discuss your options today at nevileco@nevile.com.au

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

by Alvin Lim

If your vehicle suffered damage due to a collision, we have you covered! Here is what you can do to get compensation or cover the costs of repair.

At the site of the accident

When your vehicle is involved in an accident, you can do the following things to make the rest of the process as smooth as possible. You should do these things even if you believe the accident was not your fault.

1. Details, details, details!

• Essentials: make sure to get the driver’s name and licence details, make and model of the other party’s vehicle.
• Insurance information: Ask the other party if they are insured and get the details of their insurance.
• Accident site: make a note of what both parties were doing, their estimated speeds, and how you thought the accident occurred. Also note the name of the road, nearby landmarks, traffic lights, distance from crossings and kerbs etc.
• Witnesses: If you see any people around who may have seen the accident, try to obtain their names and contact details as they could be witnesses.
• Damage and costs: If you and/or the other party has suffered damage to the car, make a note of that damage. If you had to incur additional costs like using a towing service, keep receipts of these costs.
• Police reports: If a police report was made at the scene or later, ensure you have a copy or report number.

2. Photos are your friend

Wherever possible, back the details up with photographs. It is crucial to take photographs of the damage to the vehicles, licence plates, street signs and the accident site.

3. Claiming costs

There are normally three ways you could proceed if your vehicle has been damaged. You could either make a claim for repair costs through your insurer, pay for the repair directly yourself, or you could sue the other party for costs you incurred. This option is particularly effective if your vehicle was not insured.

Going to court

No one said going to court was easy. It can be complicated and time consuming. Getting professional legal representation ensures you have the best chance of success! If you decide to sue the other driver or their insurance provider to recover the expenses you incurred, we can guide you through the process.

1. Confirm the details

Before you start legal proceedings, you would have to convey the details of the accident to your lawyer so they can advise you on the best course of action. The details and photographs you collect at the time of the accident will come in handy.

2. Assess the damage

You would then engage vehicle assessors to estimate the damage to your car, how much repairs would cost, and the market value of your car.

If the cost of repairing the car is greater than the car’s market value, you could write it off and sell it to a salvage yard.

3. What amount can you claim?

If you decide to repair your car, you could claim the costs of repair. If you decide to write off the car, you could claim the market value minus the salvage value. In both cases, any reasonable costs you incurred as a result of the damage may be recoverable (e.g. towing, storage, hiring another car, using a taxi service etc.).

4. Reach out to the other party

Once you have decided the amount you wish to recover, your lawyer will reach out to the other party and inform them of the claim you plan to make, usually in the form of a demand letter.

5. Litigation or settlement?

Depending on the other party’s response, you may opt to negotiate an out-of-court settlement or decide to proceed with litigation in court. A settlement offers a guaranteed amount paid to you while keeping legal costs down. Your lawyer would advise you on which course of action is best for your case.

During these stages, there would be some back-and-forth communication between your lawyer and the other party as they discuss and negotiate the details of your claim.

6. Sign a release document

If both parties reach an agreement to resolve the matter, you will most likely sign a Deed of Settlement containing key terms like the amount the other party has agreed to pay, how and when they are supposed to pay etc.

Upon execution of this Deed and fulfilment of each parties’ obligation within the agreed time frame, the matter will be at an end.

If the parties are unable to reach agreement, you may have to consider escalating the matter to court.

Although the legal process may seem complicated, your lawyer will guide you at each step to ensure the best possible outcome for you.

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

by Meng Cheong

Death and taxes are the only two certainties in life. Buying off-the-plan is one way to avoid the latter – under certain circumstances, including residency and a price threshold, you only pay stamp duty based on the purchase price minus the developer’s cost of construction.

The main risk of buying off-the-plan is that construction hasn’t started – you can’t see what you’re buying. You’re relying on promises made by the developer, including that the property will be constructed according to the design blueprints, artist renderings and advertising material. Purchasers may also be influenced by representations made by the vendor and their agents.  It is therefore important to understand the potential risks before making an off-the-plan purchase. The main ones are outlined below.

Failure to Meet Expectations

While the advertising brochures may be spectacular, the final product could fall short of your expectations. In serious cases where the discrepancies between expectation and reality have caused the financial harm or loss to the purchaser, then the vendor and sales agent may be liable for misleading and deceptive conduct.

This requires you to prove that a false representation has been made; and that you relied on that representation when buying. To obtain compensation, you must prove that it was your reliance that caused you to suffer financial harm or loss, and that the person presenting the statement knew, or ought to have known, that it was false.

To determine who is liable for the misleading and deceptive representations, it is important to consider each case individually. Sometimes an agent isn’t liable for false statements if he/she was acting merely to carry information from the vendor to the purchaser, without endorsing or disputing its accuracy (Butcher v Lachlan Elder Realty Pty Ltd (2002) 55 NSWLR 558).

Development does not proceed

Another risk is that the developer cancels the project if it is no longer viable. While this typically results in a full refund of your deposit, it doesn’t compensate you for your time and expense.

Construction Delays

Delays mean you are unable to move into the property as planned and will be required to arrange temporary accommodation or continue renting. Alternatively, investors may be unable to rent the property according to their original schedule and forego valuable rental income.

Most of the off-the-plan contracts include a sunset clause. If the property is not completed by a certain time, the contract becomes voidable. You can elect to exit the contract and receive your deposit back.

Risk mitigation for off-the-plan buyers

Buying a property off the plan can be a good decision for those who are aware of the risks. Prior to entering a contract, a diligent and prudent purchaser should:

• Evaluate the credibility of the developer – we recommend one with a good reputation and long history of completing projects as planned and on time.
• Consider the impact of changes in local property markets and economic conditions on the value of the property.
• Ensure that your financial circumstances will allow you to settle on the settlement date, particularly if you are relying heavily on a lender.
• Obtain independent legal advice.
• Understand the rights and obligations attached to community living (including owner’s corporation fees).

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

In our previous article (Understanding the Distinctions: Voluntary Administration and Liquidation) we considered two avenues available to businesses that are experiencing financial difficulties and verging on insolvency. While administration and liquidation have been the traditional means of dealing with financially distressed businesses, the 1 January 2021 saw the introduction of the Small Business Restructuring process.

The main policy reason behind this initiative is to allow company directors to retain control of the business, property and affairs while working with a restructuring practitioner to develop a restructuring plan that is to be entered into with creditors.

Eligibility:

Companies are generally eligible for restructuring if:

• the total liabilities of the company do not exceed $1 million;
• no company director has been a director of a company who has undergone restructuring in the last 7 years; and
• the company has not undergone restructuring or simplified liquidation process within the last 7 years.

Restructuring Process:

1. Appointing a restructuring practitioner

Where the company meets the eligibility criteria and the directors have resolved that the company is (or is likely to be) insolvent, then they may appoint a restructuring practitioner by writing. The practitioner must be a registered ASIC liquidator and the appointment cannot be revoked by either the company directors or its creditors.

2. Restructuring plan and restructuring proposal

A restructuring plan is created and executed by the company directors with the assistance of a restructuring practitioner. The plan identifies relevant company property and specifies how it is to be dealt with.  The directors must also prepare a restructuring proposal statement that includes a Schedule of Debts and Claims.

3. Restructuring proposal period

The company executes the restructuring proposal typically within 20 business days from the date that the restructuring began. After its execution, the restructuring practitioner provides the company’s creditors with a company of the plan and the proposal statement. The creditors must then decide whether to accept the restructuring plan.

4. Acceptance of the plan

Once accepted, the plan is binding on all parties. Until termination, a person bound by the plan cannot make (or proceed with) an application for the winding up of the company. No other enforcement process can be taken against the company in relation to its property for the recovery of a debt or claim.

This provides the company with some breathing room to continue operating and discharge its obligations without the pressure of looming court proceedings.

5. Termination

The company’s restructuring plan terminates when either:

• the company discharges its obligations under the plan;
• the court orders for its termination
• a contravention has not been rectified within 30 business days of its occurrence
• a voluntary administrator or liquidator is appointed.

Role of Restructuring Practitioner

Unlike administrators and liquidators, restructuring practitioners do not seize complete control over the daily operation and financial affairs of the company. Instead, the practitioner occupies an advisory position and assists the directors in preparing a restructuring plan. The practitioner must also make certain declaration to the company creditors about whether they believe the company is able to discharge its obligations under the plan.

During restructuring, the directors must obtain the restructuring practitioner’s consent if they wish to enter into transactions that are outside the ordinary course of the company’s business. These include transactions for satisfying debts or claims, the sale or transfer of any part of the business and transactions that relate to the payment of a dividend.

Role of Directors

Under a Small Business Restructure, the directors can retain control and decision-making power over the company’s ordinary business activities. This means that directors continue to be involved in dealing with the company’s assets and do not surrender all their rights to the practitioner. Since the restructuring practitioner acts as the company’s agent, it is the directors who continue to have control over the company’s business, property and affairs during restructuring.

With the advice and assistance from the practitioner, the directors must also develop the restructuring plan and the restructuring proposal statement and execute these within the proposal period.

In summary, corporate insolvency may compel a company to elect to enter liquidation, voluntary administration, or small business restructuring. The biggest difference amongst the three avenues is the amount of control that the directors retain over the affairs of the company during the insolvency process. Small Business Restructuring provides directors the greatest degree of control. In addition to voluntary administration, it provides companies with the opportunity to recover from their financial difficulties whereas liquidation results in the ultimate winding up of the company.

We understand that you may be under increasing pressure if your business is experiencing financial distress. We can therefore use our expertise and experience to help you navigate your business through a path that achieves your desired outcome.

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

When a business in Victoria faces financial distress, voluntary administration and liquidation are two common processes that come readily to mind. While both processes are designed to address financial difficulties, they differ significantly in their objectives, procedures, and outcomes. This article explores the differences between voluntary administration and liquidation, shedding light on their distinct purposes and the implications they hold for your businesses.

Voluntary Administration:

Voluntary administration is an insolvency process designed to give struggling companies a chance to rehabilitate and restructure their operations. It allows a financially distressed business to continue trading while an independent administrator takes control of its affairs. The primary goal of voluntary administration is to maximize the chances of the company’s survival and, ultimately, its return to solvency. It provides a breathing space by imposing a moratorium on legal actions against the company, allowing time for a comprehensive assessment of the business and potential restructuring options.

Key features of voluntary administration in Victoria include:

• Independent administrator: An external administrator, appointed by the company’s directors or secured creditors, assumes control over the company’s operations, investigating its financial position, and proposing a strategy for its future.
• Moratorium: Once voluntary administration commences, creditors are prevented from taking legal action against the company, giving it temporary protection from debt enforcement.
• Deed of Company Arrangement (DOCA): If a viable plan emerges during voluntary administration, a DOCA may be proposed to the company’s creditors. If approved, it binds all parties to its terms, potentially enabling the company to continue trading while meeting its obligations.

Liquidation

Liquidation, also known as winding up, is a process that involves the closure and dissolution of a company. Unlike voluntary administration, which aims to rescue a business, liquidation is typically pursued when there is no reasonable prospect of the company returning to solvency. It involves the realisation of the company’s assets, payment of its outstanding debts, and the final distribution of remaining funds to shareholders.

Key features of liquidation in Victoria include:

• Appointment of a liquidator: A liquidator, who is often a registered insolvency practitioner, takes control of the company’s assets and oversees the winding-up process, acting in the best interests of the creditors.
• Realisation of assets: The liquidator identifies, collects, and sells the company’s assets to generate funds for repayment to creditors. The proceeds are distributed according to the priority of claims specified under the law.
• Dissolution: Once all assets are realised, debts are paid, the company is formally dissolved, ceasing to exist as a legal entity.

In Victoria, understanding the differences between voluntary administration and liquidation is crucial for businesses facing financial difficulties. Voluntary administration offers an opportunity for rehabilitation and restructuring, aiming to save the company and protect the interests of creditors. On the other hand, liquidation represents the winding-up of a company when no viable path to solvency exists. Both processes serve distinct purposes and have unique implications for businesses, individual director, creditors, and stakeholders.

Seeking professional advice from insolvency practitioners or legal experts is vital to navigate these complex proceedings effectively and make informed decisions about the future of a troubled business.

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.

Estate planning and creating a Will can often be difficult conversations for anyone to consider. Contemplating what needs to happen with your Estate once you have passed on can be confronting for many people, however it is an important conversation to have with your loved ones (and your lawyer) to ensure that your assets are distributed according to your wishes, and you leave a legacy you can be proud of.

There are several reasons that Wills and estate planning may not be seen as relevant or accessible for the LGBTQ+ community, including assumptions about complexity, concerns about judgment from the drafting lawyer, and an assumed focus on traditional family structures. We’re here to put your mind at ease and tell you why Wills are important, perhaps even more important, for the LGBTQ+ community.

Here are some assumptions that may cause LGBTQ+ individuals to avoid consulting a lawyer to discuss estate planning:

Estrangement from biological family:

Unfortunately, many LGBTQ+ individuals still face strained relationships with their biological families as a result of their identity. Individuals who choose to distance themselves from their biological family and prioritize their chosen family or close friends instead may assume that their chosen family will naturally inherit their assets or be involved in end-of-life decisions, without the need for a will.

If you die without a Will, you are said to have died intestate, and your estate will therefore be distributed according to the rules of intestacy. While chosen family and the importance of these relationships are well and truly understood within the LGBTQ+ community, the rules of intestacy rarely acknowledge these relationships, focusing instead on marital or biological connections when distributing your estate. If you have no spouse, registered partner, or children, your estate will be divided as follows:

1. Parents
2. Siblings
3. Grandparents
4. Aunts and uncles

Relevance for non-traditional families:

Some people hold the understandable belief that Wills are primarily designed for traditional family structures and may not be applicable to non-traditional or chosen families. Traditionally, Wills have been marketed as leaving everything to your partner, and if your partner predeceases you, then everything goes to your children. However, as outlined above, a Will is crucial for anyone who wants to ensure that their assets are distributed according to their wishes, regardless of their family structure or composition, and especially under circumstances where biological family members are being excluded.

Non-traditional family structures may require more complex financial arrangements, guardianship arrangements for minor children, or declarations outlining why a particular family member has been excluded from the Will. None of these wishes can be taken into account if you die without leaving a valid Will.

Wills are only for the elderly or the wealthy:

Another stereotype, both within and outside of the LGBTQ+ community, is that Wills are something to consider only in old age. Another is that Wills are only necessary for individuals with substantial wealth or valuable assets. Both assumptions are indicative of a misunderstanding regarding the purpose of Wills, and the process of administering your estate. Regarding age, younger individuals, while they may feel invincible, are not at a reduced risk of unexpected events or premature death. Life is unpredictable, and anyone, regardless of age, should have a will in place to ensure their wishes are followed if something were to happen.

The stereotype regarding wealth implies that those with fewer assets or limited financial means do not need to bother with creating a Will. However, a Will is essential for everyone, regardless of their financial situation, as it allows individuals to express their wishes regarding the distribution of their assets and the care of their dependents. Banks can be particularly challenging during the administration process and usually ask for a copy of the Will or a grant of representation to discuss closure of your accounts and distribution of the remaining funds.

Level of personal detail discussed:

Finally, discussing your Will and how you want your estate to be distributed can be an incredibly personal discussion. Understandably, this can lead to discomfort when there are concerns that the lawyer drafting your Will may not align with your personal values. It is important to do your research before engaging with a new lawyer. Consider looking for a firm’s social media, reading their Google reviews, or even use a local LGBTQ+ business directory which may be able to assist in recommending suitable lawyers or law firms.

Perhaps most importantly, consider reaching out to your network, including friends, colleagues, or members of advocacy organizations related to your values, for recommendations. They may have had positive experiences with lawyers who share your values and can provide valuable insights or referrals.

When you’re ready to take the plunge and arrange your Will, the Wills & Estates Team at Nevile & Co. would be delighted to assist. Contact us today at nevileco@nevile.com.au

Disclaimer: This publication contains comments of a general and introductory nature only and is provided as an information service. It is not intended to be relied upon as, nor is it a substitute for specific professional legal advice. You should always speak to us and obtain legal advice before taking any action relating to matters raised in this publication.