Supreme Court Success
Supreme Court Decision – Jaykoo Kim v Hoju Jobs & Ors
Praxis Lawyers recently acted for a client, Mr Jaykoo Kim, in proceedings brought at the Supreme Court of New South Wales.
On 26 March 2021, Her Honour Justice Williams made orders in favour of Mr Kim. A copy of Her Honour’s decision can be found here: https://www.caselaw.nsw.gov.au/decision/1786cd3641bc7d775d5de661
A summary of the case, and the decision, will be provided in a future blog.
We are pleased for Mr Kim, and glad that we were able to assist him in achieving a positive outcome.
Creditors Statutory Demands - What You Need to Know
For many of us, bills and invoices are not necessarily at the top of our “to do” pile; and can easily be lost in a tower of paperwork. This will often result in a polite reminder notice being sent. No harm done, right?
Not true for companies, who are not always entitled to such an indulgence. This is particularly true if included in that pile is a Creditor’s Statutory Demand. In fact, failure to deal with a demand of this type can have very serious consequences for your company.
What is a Statutory Demand?
A Statutory Demand is essentially a formal demand for payment of a debt. More importantly, it is also the first step in the potential winding up of your business.
Once the Statutory Demand has been served, you have 21 days to respond to it. If you fail to respond within that crucial time frame, the company will be presumed insolvent. This means that your creditor can apply to the Court to have the company wound up, and you will be burdened with proving you are solvent in Court. The process of proving solvency is not always simple and can often cost tens of thousands of dollars.
What are the Consequences of a Statutory Demand?
If your company is wound up a liquidator will be appointed, and you will lose control of the company’s assets and affairs. It could also lead to public examinations and claims against any directors or associates of the company.
Addressing these issues in Court is costly, and could be avoided by responding to the Statutory Demand within that initial 21-day period. The sooner you are able to address a Statutory Demand the better, as your leverage to resolve the dispute will typically diminish the closer you get to the 21st day after service.
What should you do if you receive a Statutory Demand?
Considering the implications of not responding or not knowing how to respond to a Statutory Demand when you receive one, it is essential that you speak to your lawyer as soon as possible to ensure the issue is dealt with properly, before any lasting damage is done. You should take the service of a Creditor’s Statutory Demand very seriously.
It is also important that you take note of the day the Statutory Demand was served. This could be different to the day it was received. Any proof you can find confirming the day that it actually turned up in your mailbox could become very important. A daily ledger recording all mail you receive might assist with this.
Any agreement to resolve the debt attached to the Statutory Demand must be reached before the 21-day period expires. The only way you can extend the timeframe for compliance of a Statutory Demand is through the Courts.
Praxis Lawyers have experience in not only issuing Statutory Demands, but also in acting for companies that resist them. We can help you through the process; but please be mindful that the sooner you contact us the better.
Settling a Debt
It is not uncommon for parties to settle small debts amongst themselves. We are generally very supportive of this, as it can mean that you save costs and time. However, you should be careful when committing a settlement to writing, especially with larger debts.
We have had clients come to us after reaching what they thought was an agreement, only to end up in Court because they did not properly protect themselves, or secure their debts.
For example, have you considered exactly what a contract is? There are many elements to any offer you may wish to make that you might not have even considered. The existence of an agreement, generally, requires three essential elements:
1. An Offer- which is typically an indication by one party to another of his or her willingness to be legally bound or enter into a contract with that other person, on certain terms.
2. Acceptance – being the unqualified agreement to the terms of an offer.
3. Consideration – the payment being made; something must be given in return for a promise in order to make it binding.
So, when might an offer not be an offer?
These elements may seem straightforward enough. However, a situation might arise where you think you have made an offer, but you have just invited the other party to make an offer or enter into negotiations. The court may decide that you instead made an “invitation to treat” for example, and that you never had reached an agreement.
This can sometimes have dire consequences for client, who may think they have settled a debt and even paid what they thought to be the “agreed” amount, only to have their creditor continue to recover against them for the balance.
Be careful when making or accepting offers. Praxis Lawyers is able to provide you with advice and assistance when entering into negotiations, feel free to call us if this is something you require help with.
What are “Without Prejudice” Offers?
Without Prejudice correspondence is a relatively technical area of the law, which we will address in a later blog.
Marking correspondence “without prejudice” provides some protection to the sender of the correspondence, such that it cannot be used by the receiver in Court. It typically only applies in circumstances where the sender is making genuine attempts to settle a dispute.
You should be careful when making a without prejudice offer. You will often hear people say that such correspondence cannot ever be relied upon in Court; which is broadly true, with some caveats.
There are circumstances where without prejudice correspondence can be relied on it Court, even if they are made in the interests of resolving a dispute.
What is a Deed of Release?
You may be asked, as part of a settlement arrangement, to sign a deed of release.
A deed is different to a contract, in that it does not require consideration for it to be binding. It does have some formal requirements however before it can be deemed to be effective; including the requirement that the parties’ signatures are witnessed.
Many deeds are complicated and technical documents. They will also often include requirements for indemnities, and sometimes even securities (such as mortgages or charges over company property).
Given the technical nature of a deed, and the likelihood that rights and obligations in a deed will be of a serious nature; we strongly recommend that legal advice is obtained before any deed is signed.
Praxis Lawyers are experienced in the areas of litigation and commercial advice. We can assist with any settlement you may be involved in, including negotiations and mediations. We also have a library of commercial documents at our disposal (including deeds of release) which allow us to provide our services efficiently and practically.
Is stamp duty abolished?
Stamp duty – sometimes referred to as transfer duty – is a one-off tax that is imposed by the State government when property is purchased. It is calculated based on the purchase price of a property, on a sliding scale. There are some exemptions to stamp duty, such as where the purchaser is a first home owner, or where the transfer is between husband and wife.
Is Stamp Duty being Abolished?
Not quite.
There is talk of ‘property tax’ being used in lieu of stamp duty. The idea being that a tax will be payable periodically to every home owner in the State, rather than one large sum when a property is purchased.
The proposed reforms involve the tax being fixed at a set amount plus a rate applied to the unimproved land values of an individual property.
Buyers will still have the choice of paying stamp duty, however, once a property is subject to the property tax, subsequent owners must pay that property tax.
The annual property tax may be levied at the following rates – subject to feedback from the public and government officials:
- owner-occupied residential property – $500 + 0.3 per cent of the unimproved land value
- investment, residential property – $1,500 + 1 per cent of the unimproved land value
- primary production land (farmland) – 0.3 per cent of the unimproved land value
- commercial property – 2.6 per cent of the unimproved land value.
What does this mean for Homebuyers?
The ability to be able to pay stamp duty is one of the biggest barriers to home ownership. In most cases the time it takes for the average worker to save up enough money to cover the stamp duty tax is upwards of 2 years according to NSW Treasury. If this proposal is implemented, the removal of Stamp Duty could remove this financial barrier and make the process of buying a home easier for families looking to upgrade.
The biggest issue with this proposed reform is when the property tax will be introduced and what it will entail.
What does this mean for Home Owners, who have already paid Stamp Duty?
The consultation paper suggests that there will be a period of time, calculated from a date prior to the date you purchased your property, that you can opt-in to property tax and be provided a refund of their stamp duty.
This might suggest that if you have already paid stamp duty, you need not “opt-in” to land tax as an option, thereby avoiding any risk of being effectively taxed twice for owning your property.
This is not Advice
This article is not to be taken as advice on the issue, particularly given that the proposal is still in its early stages and subject to change.
What you should do, however, is keep in touch with any changes to stamp duty, as they might affect your plans for future purchases.