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Tougher Penalties under the Australian Consumer Law

The Treasury Laws Amendment (2018 Measures No. 3) Act 2018 (Cth) has introduced new tougher penalties for companies and individuals who breach certain provisions of the Australian Consumer Law (ACL).

What are the new penalties for companies?

The new maximum penalty for companies is the greater of:

  • $10 million; or
  • 3 times the value of the benefit directly or indirectly obtained by the company (and any related companies) which is reasonably attributable to the offence; or
  • if the value of the benefit cannot be determined, 10% of the annual turnover of the company (and any related companies) for the 12 month period leading up to the commission of the offence.

Previously, the maximum penalty for companies was $1.1 million.

What are the new penalties for individuals?

The new maximum penalty for individuals is $500,000 (up from the previous maximum of $220,000).

Multiple Penalties

The maximum penalties will apply to each contravention, so companies and individuals could potentially face massive fines if they commit multiple contraventions of the ACL.
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Directors: Beware of relying on the advice of others!

In the exercise of their duties, company directors often rely on both internal and external sources of advice.  However, directors may be liable if their reliance on the advice of others is “unreasonable”.

What does the Corporations Act say?

Section 189 of the Corporations Act states that a director may rely on information, or professional or expert advice, given or prepared by:

  • an employee of the company whom the director believes on reasonable grounds to be reliable and competent in relation to the matters concerned
  • a professional adviser or expert in relation to matters that the director believes on reasonable grounds to be within the person’s professional or expert competence
  • another director or officer in relation to matters within the director’s or officer’s authority
  • a committee of directors on which the director did not serve in relation to matters within the committee’s authority

provided that:

  • the reliance was made in good faith and after making an independent assessment of the information or advice, having regard to the director’s knowledge of the company and the complexity of the structure and operations of the company
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Double Whammy! When cost orders become a further debt

By Hayley Hitch a Solicitor of Matthews Folbigg Lawyers in our Insolvency, Restructuring and Debt Recovery Group

In one of our recent matters, proceedings were commenced against a debtor, and the relevant guarantor, in the Local Court of NSW for recovery of a debt, being non-payment of services rendered by our client to the debtor.

Local Court proceedings

The defendants were at all times self-represented in those proceedings and took steps to file defences, out of time (and without leave) and also failed to appear in Court on several occasions. This ultimately led to:

  1. the defences being struck out;
  2. cost orders being made against the defendants; and
  3. Judgment being entered in favour of our client in the vicinity of $40,000.

Multiple attempts were then made by one of the defendants to set aside the default judgment and the various cost orders.

The last of these applications was held by the Local Court to be an abuse of process and the Court strongly urged the defendant to obtain legal advice before taking any further action.
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Debt Collection – How not to

By Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group

Credit Managers and anyone responsible for debt collection or credit control in a business organisation should be aware of the right and wrong ways to collect a debt.

In a recent decision of the Federal Court of Australia in Australian Competition and Consumer Commission v ACM Group Limited (No 2) [2018] FCA 1115 the Court was critical of the actions by a collection agency in the pursuit of a debt.  By example, the Court held that the agency was relentless in telephoning a care facility on over 40 occasions to attempt to speak with a stroke victim patient whose telecommunications debt was unpaid, saying that high-pressure debt recovery techniques are inappropriate.

The Court was also critical of letters of demand that over capitalised statements such as “NOTICE OF INTENTION TO COMMENCE LEGAL PROCEEDINGS”.  It said that the continued dispatch to a customer of letters that use of the words “intention” and “may” to threaten legal action was conduct that was misleading and deceptive within the meaning of the Australian Consumer Law and unconscionable.
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Choose your words carefully – the consequences of non-payment of debts

Whether you own your own business, or are responsible for credit control in a large company, you must be careful what representations you make to debtors about the consequences of non-payment.

While you are allowed to accurately explain the consequences of non-payment, it can be tempting to overstate or even misrepresent those consequences. If you do, you may breach laws against unconscionable conduct. This can result in a Court ordering any payments made to be repaid to the debtor.

Examples of statements that have been found to constitute unconscionable conduct include:

  1. That the debt is recoverable, when in fact recovery was statute barred by the passage of time (see more here http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VSC/2004/49.html)
  2. That the debt has been, or will soon be, referred to lawyers for the commencement of proceedings (see more here http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2012/1164.html)
  3. That if a default is listed with a credit reporting agency, the debtor will not be able to obtain credit or will not get credit at a reasonable rate (see more here http://www2.austlii.edu.au/privacy/Privacy_Act_1988/index-Part-5.html)
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Record Keeping for a SMSF

Record Keeping for SMSF’s

Introduction (SMSF)
Most SMSF trustees are aware that record keeping is important to ensure their fund remains compliant and eligible for tax concessions, but few trustees understand the actual ramifications of what happens when you don’t keep the right records.

Record Keeping Requirements
The ATO website contains a great deal of helpful information for SMSF trustees including the records a fund must keep. See https://www.ato.gov.au/super/self-managed-super-funds/administering-and-reporting/record-keeping-requirements/

For example, copies of annual returns must be retained for at least 5 years but records of changes of trustees and minutes recording investment decisions must be kept for at least 10 years.

Wrong Turns – Real Life Examples

1. Maintaining the Chain of Deeds
A and B set up the AB Super Fund in 1987.  They are the trustees of the fund in their own capacity.

In 1990 and again in 1998 they updated the provisions of their SMSF trust deed.  Their accountant arranges this for them.

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Workers Compensation

Workers compensation claims time limits?

If you are injured at work, you should notify your employer as soon as possible after your injury, so the incident can be recorded and your rights to workers compensation are protected.
If time is needed to be off work because of the injury, you should see your general practitioner and any other doctor as soon as possible. The doctor can complete a certificate of capacity and this certificate can be given to the employer.
A workers compensation claim should be made as soon as possible and certainly within 6 months of the date of accident. Otherwise, there will be an explanation needed for the delay.
If you are thinking of making a workers compensation claim, please call us to arrange a Telephone Conference to discuss your compensation entitlements with one of our experts. Call 1300 773 529 or email a Personal Injury lawyer at info@matthewsfolbigg.com.au.
Our Personal Injury Lawyers can provide practical solutions and exceptional results in relation to your worders compensation claim on a No Win, No Fee basis.

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Important GST Withholding Legislation

On 1 July 2018, a new regime of GST withholding obligations comes into effect and is set to create considerable change to property transactions which property lawyers should be aware of.

Where a supplier (the vendor) makes a taxable supply of new residential premises or a subdivision of potential residential land by way of sale or long term lease, the recipient of the supply (the purchaser) is required to withhold an amount from the contract price and remit it to the Australian Taxation Office on or before settlement.

As a result, new vendor disclosure obligations apply to all Contracts for Sale of Land. This means property lawyers will need to revise the Contract for Sale to ensure vendors are not in breach of legislation. Failure to provide disclosure will result in penalties.

The amended legislation includes a transitional arrangement that excludes sale contracts entered into before 1 July 2018 as long as the property transaction settles before 1 July 2020. This will provide certainty for sale contracts that have already been signed.
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