Newsflash – Important PPS Law Changes

Do you hire out equipment? Read on – changes are here!

If you are hiring out or giving away possession of goods or equipment to a third party, then be aware that the Personal Property Securities laws have changed!

McKays considers that these amendments are a win for small businesses in reducing administrative and financial burden particularly for short-term hire and rental businesses.

Legislation was passed on Friday which has changed the definition of “PPS Lease”.

Previously, in a nutshell, all hires or bailments for longer than one (1) year, or for an indefinite period, needed to be registered on the Personal Property Securities Register (“PPSR”).

Now, for all leases or bailments of goods entered into after 20 May, 2017, the requirement to register on the PPSR is only where the lease term (and its options):

  1. exceeds 2 years; or
  2. for an indefinite provided and runs for a period greater than 2 years.

Of course, you can still register your interests in equipment you lease or bail as a safety measure, however, for hires that will not exceed two (2) years, there is no longer a requirement to do so.

Ownership is no longer king! To protect your personal property if hiring or giving possession of it to someone else, you may need to take certain steps, including registering your interest on the PPSR. If you fail to do so and the hirer enters liquidation, then even though you are the owner of the assets, you could lose them to the hirer’s creditors.

If you are hiring or bailing goods and the term is indefinite or you believe it may run for over 2 years, then you should immediately ensure you have the arrangement documented in writing and register on the PPSR within the correct timeframes and classes. Failing to do so would mean after the 2 year period that you may be placing your assets at risk if the hirer has other security registered over its assets or enters a form of insolvency.

What about your hire arrangements before the 20th May, 2017? They will still be governed by the pre-amendment provisions under the PPSA – meaning the one year hire term applies.

The Personal Property Securities regime and the registration process is very complicated and we recommend you obtain advice from a solicitor experienced in this area.

For more information talk to Kristy Dobson, Senior Solicitor on 0749630888.

http://www.mckayslaw.com

Was your fence damaged by Tropical Cyclone Debbie?

If Cyclone Debbie huffed, and she puffed and she blew your fence down…or at least caused damage, you may be wondering who has to foot the bill….you or the neighbour?

Fences built on a common boundary between residential properties are known as “dividing fences”.

Generally, adjoining owners are each liable to contribute equally to the construction, replacement, removal, repair or maintenance of the whole or part of a dividing fence. However, if one neighbour wants a fence built to a greater standard than is required for a sufficient dividing fence, then that neighbour will be liable for the extra costs (ie. over and above what would be required for a sufficient dividing fence).

A fence will be a ‘sufficient dividing fence’ for residential properties if it is between 0.5m and 1.8m tall and consists substantially of wood, chain wire, metal panels or rods, bricks, rendered cement, concrete blocks, hedge or other vegetative barrier. If there is already a fence constructed and it is simply a matter of repairing damage, then it would be restoring it to the same standard as the existing structure (reasonably taking into account though, impacts of the cyclone).

Because of the wide definition of what constitutes a ‘sufficient dividing fence’, neighbours often end up in dispute over what type of fence is to be constructed. Obviously, using certain materials and constructing to a certain height will can alter the cost. Further, neighbours may have different requirements for their fence, such as needing to contain animals.

In the spirit of “love thy neighbour”, it is always best to firstly try to reach agreement with your neighbour as to the fencing work to be undertaken and how the cost will be split. The formal process is to provide your neighbour with a “Notice to Contribute” under the Neighbourhood Disputes (Dividing Fences and Trees) Act 2011 (Qld) and get the agreement in writing. Even if you reach a handshake over the fence, having it in writing assists to avoid any misunderstandings or arguments later.

If agreement cannot be reached, then you should seek legal advice. You and your neighbour may need to undertake mediation in an attempt to try to settle the dispute.

However, failing all that, as a last resort you may need to apply to the Queensland Civil and Administrative Tribunal (QCAT) for a legally enforceable decision on the matter.

Different rules apply for other types of fences, such as pool fences or fences built entirely on your property.

Suzanne Brown is a Principal of McKays and Mackay’s only QLS Business Law Accredited Specialist. She can be contacted on 4963 0820 or sbrown@mckayslaw.com.

The future of Mackay Sugar

This morning at an exclusive briefing for solicitors, accountants and financiers, Chairman of Mackay Sugar, Andrew Cappello and CEO, Jason Lowry, outlined Mackay Sugar’s plan of action to get the organisation back on track. They wanted to inform professionals about their proactive plan and dispel some of the myths circulating in the community.

It was reassuring to learn that the company is only 45-48% geared and there is no current defaults on bank loans, or even pressure from financiers to reduce current debt levels. There is no doubt that there are challenges after a number of bad years, but the Board wants to implement a plan to provide for sustainable financial management so that Mackay Sugar can stay “grower owned” and “is not dictated to by banks”.

We were told there is “no silver bullet”! – but the Board is looking at all options and taking advice to, over the next few years, get Mackay Sugar into a better position. They outlined the strategy for this is 3 fold:

1. Asset Sales to reduce debt and kickstart capital spend   

The obvious assets available for sale include Mossman Mill, Sugar Australia and the Co Gen Plant. The Board is currently negotiating with growers in Mossman to buy the Mill. The sale of Mackay Sugar’s interest in Sugar Australia is challenging, as they are a minority shareholder only holding 25%. The other 75% is held by Wilmar. Not many people want to buy a piece of the pie which gives them no real control.

There is varied and positive interest in the Co Gen plant. One option is to sell the income stream and keep the asset, but Mackay Sugar is exploring all alternatives. Advisory firm, Kidder Williams estimates that Mackay Sugar could realise $100-140M from the sale.

Whilst these assets sales should get Mackay Sugar in a better position, “it is still not enough”!

2. Internal cost reductions and revenue enhancement for cashflow

The CEO spoke at length about Mackay Sugar’s plans to cut costs by driving efficiencies in the mill and cane supply. They are aiming for a $10M saving this year. He talked about an emphasis on better training across the organisation to streamline processes, make the right decisions at the right time and reduce downtime.

The further discretionary costs that could be cut are maintenance, but the Board does not want to do this as it will have adverse, longer term impacts. Even with what the organisation is currently spending on maintenance, it is still not enough to improve performance and reliability – it is just keeping things ticking.

Again, this step will help, but is a drop in the ocean of what is needed.

3. Grower contribution for cashflow and ongoing capital needs

Now we come to the grower contribution. The CEO explained that the growers are essentially suppliers to the business, however the challenge is that most of them are also shareholders. Kidder Williams initially proposed a grower contribution of $3 per tonne, which would see a turnaround in 5 years. However, the Mackay Sugar board decided the $3 per tonne contribution would put a lot of growers under significant financial hardship, which they did not want to do. The Board therefore has assessed the market and decided that a more comfortable level is $2 per tonne which sees a turnaround in 7 years (adding an extra 2 years to the process) – which could be more comfortably accommodated by the majority (acknowledging though that it will still hurt).

Think about the mining downturn – the big mining houses put the squeeze on suppliers, forcing them to be more competitive and shave their prices. This scenario is no different, except for the fact that it is hard to swallow because the grower suppliers are in fact the shareholders in this scenario.

So that’s the plan!

Everyone will likely have an opinion, and we can understand why there would be concern in the community. The reality is though that drastic action does need to occur and whether or not this is the right way forward (time will tell), it is good to know that the Board is working tirelessly, seeking advice and being proactive in devising and implementing a plan.

In question time, Mackay Sugar was pleased to inform that it sustained minimal structural damage at the mills during the cyclone but there was quite a lot of damaged rail infrastructure, especially at Eton, Marian-Hampton Road and to the north. The CEO said it isn’t anything which cannot be fixed though.

Further, Andrew Cappello said that Mackay Sugar was committed to assisting farmers (partly through partnering and contributing to other organisations such as MAPS) in upskilling on new farming practices, technology and discussed sensitivities of new cane varieties in terms of the challenges of growing. He also talked about how Mackay Sugar are trying to drive volume and with an aging farming base, support younger, enthusiastic growers to lease land through subsidy support.

Thank you Mackay Sugar for taking the time to inform us as to your plan and we hope you succeed in your goals.

Suzanne Brown
Principal
Queensland Law Society Accredited Specialist Business Law
(0749630820 / sbrown@mckayslaw.com / http://www.mckayslaw.com)

Misty Di-Filippo
Associate
(0749685430 / mdi-filippo@mckayslaw.com / http://www.mckayslaw.com)

 

The latest privacy legislation changes do affect your business …you are not exempt…

On 12 March 2014 the manner in which businesses across Australia can legally deal with their customers’ personal information, like taking a customer’s details when responding to a quote enquiry, has dramatically changed.

The reforms to the Privacy Act 1988 (Cth) (‘Privacy Act’) significantly impact even the most basic practices in your business.

If your business fails to comply with these changes, you may face penalties of up to $1.7 million.

What are the changes?

The reforms introduced thirteen Australian Privacy Principles (‘APPs’) which cover the management, use, quality, access and correction of personal information. The APPs replace the former National Privacy Principles.

Each and every day, you will no doubt have contact with a customers’ personal information such as their name, phone number, residential address and email address. The reforms now impose greater restrictions on when and how you may collect, use disclose and store this information.

If your terms of payment are more than seven (7) days, you may also be caught by the revised credit reporting provisions. These provisions impose extra requirements on how you must deal with your customers’ account information.

In addition, if you provide credit card facilities, you will need to comply with the Payment Card Industry Data Security Standard. This is another ‘can of worms,’ so to speak, in relation to which we shall provide an update shortly.

How will the changes affect my business?

The reforms which are likely to apply to your business are as follows:

  1. You must now have both a privacy policy and a credit information management policy. These documents must be readily available or free of charge to your customers. The policies must set out how and why you collect an individual’s personal information, how it is used once collected, whether any of this information will be disclosed to overseas recipients (such as a cloud based data storage facility) and whether you will disclose an individual’s personal or account information to a credit reporting body, such as Veda. These policies must also outline your complaints handling process.
  2. Your business is also required to take proactive steps to implement practices and procedures to appropriately manage personal information you collect. This involves training your staff on the terms of the privacy and credit information management policies and establishing internal procedures to manage privacy risks. For example when you collect personal information from a customer (such as when taking their details over the phone), your staff are required to advise them of certain matters, including why you are collecting their information, whether the collection is required or authorized by law and where they can access your privacy and credit information management policies.
  3. You are only permitted to collect information from a customer that is reasonably necessary for you to provide them with your services. For example, you may not require a person’s date of birth to carry out work for them. Asking for this information may therefore constitute a breach of the Privacy Act. In contrast, it may be necessary to collect the person’s email address to provide them with a quote and this collection will therefore be permitted.
  4. Once you have collected personal information from an individual, you may only use the information for the purpose for which it was collected. For example, the information you have collected from a customer to provide them with a written quote may only be used to do that, unless you have the customer’s consent.
  5. Direct marketing is prohibited unless you satisfy an exception.
  6. Another significant change relates to disclosing information to overseas recipients. If, through cloud software, email backing up or any other means, you will disclose personal information to an overseas entity, you are required to make sure the overseas recipient, such as the cloud backup, does not breach the Privacy Principles. If the overseas entity does breach the Principles, your business may be responsible for their breach.

Please contact us on 1800 922 609.

http://www.mckayslaw.com

Does the Goods and Services Tax (GST) apply to the sale of a business?

The obligation to pay GST depends on whether the seller is registered (or required to be registered) for GST purposes. If the seller is not registered and not required to be registered, then generally no GST will be payable on the contract. If the seller is registered they are obliged to pay the GST to the Australian Tax Office, unless some special exemptions apply.

If the buyer is registered for GST, they can claim the GST component in their next business activity statement. This can cause a cash flow problem for the buyer in having to fund the GST even if only for a short period. Stamp duty is also increased because it is payable on the purchase price inclusive of the GST.

A “GST-free” concession may apply to the business contract. If the seller supplies to the buyer all the things that are necessary for the continued operation of an enterprise and the seller carries on the enterprise until the date of completion, and the parties agree in the contract to claim the “going concern concession”, then this concession may apply.

This means that no GST is payable and the seller is obliged to provide all things to enable the buyer to continue the business. In most businesses, this will include supplying a fixed term lease of the premises, although in certain businesses such as a pie van, a lease of the business premises need not necessarily be required to enable the business to continue to trade.

It is vital that you take advice from your accountant over the GST implications before signing the contract.

Please contact us on 1800 922 609.

http://www.mckayslaw.com

Porn in the workplace is not an automatic sacking offence

Fair Work Australia has ruled in favour of three Victorian postal workers who made unfair dismissal claims, after being sacked for sending explicit material at work.

The workers were caught using the Australia Post email system to distribute sexually explicit material around their workplace. Fair Work considered the 3 terminations to be unfair, because the Dandenong Postal Centre hadn’t taken any action to deal with inappropriate workplace behaviour that had developed over many years.

Fair Work is expected to hold a hearing behind closed doors later this week to decide if the three should get their jobs back.

What does this mean for employers?

The case is a wakeup call to all employers, including contractors, to have a set of behaviour standards in place, properly convey them to their workers, and enforce them consistently across the workforce. A contractor cannot ignore behaviour such as this for years, and then suddenly sack particular workers as a warning or deterrent to the rest of the workforce.

In response to this decision, workplaces should consider tightening their policies about the use of their business email systems. Solid ground rules should be set, stating that the sending of such material is serious misconduct and repeated offences could lead to dismissal.

Although this specific case involved the office email system, the same principles could be applied to the situation of workers sending sexually explicit material to each other via their smart-phones during work time. Policies involving the use of mobile phones, laptops and other such equipment during working hours, should also be scrutinised by employers, and then consistently enforced across a workplace.

Sexual harassment consequences

In particular, employers and contractors should be vigilant about workers sending explicit material to their colleagues because some workers could consider it sexual harassment. There is then the possibility of an employee who feels harassed making a claim against both their work colleague who sent the email, and the employer for not managing the said behaviour. What might be harmless to one person could be highly objectionable to another.

No “green-light” to porn in the workplace

Employees shouldn’t regard Fair Work’s ruling as a “green light” for sharing this type of material in the office email system. Rather, the distribution of explicit material doesn’t seem to be regarded as unacceptable to the social norms, in the way theft from the workplace is usually regarded as an automatic sacking offence.

If you’re unsure about whether your workplace policies adequately address the above issue, or any other workplace matters, contact McKays Solicitors for advice and assistance to steer your business in the right direction.

Brisbane Office – Ian Heathwood / Louise Nicol
Mackay Office – Cyndel Muscat
Gold Coast Office – Scott McSwan

Contact us on 1800 922 609.

http://www.mckayslaw.com

I have set up a company to own and operate my business – so why do I need to worry about asset protection?

Having set up a company to operate the business is often a great first step to limit your personal liability (although it may not produce the best tax result with respect to capital gains down the track) – but even with a company you are still at risk.

Personal negligence – You are personally liable to compensate anyone who has suffered loss as a result of your personal negligence. This applies even if you have set up a company to carry on the business and you are merely an employee or working director of the company.

Personal guarantees – Even if you set up a company to operate your business to limit your personal liability we all know that banks, landlords, trade suppliers and others will not deal with you unless you, the director, sign a personal guarantee. If the business fails then you are still liable for any liability you have guaranteed.

Insolvent trading by a company – If you allow your company to trade when it cannot pay its debts then, as a director, you may be personally liable to the creditors even if you haven’t personally guaranteed them.

Alleged breaches of Work Health and Safety Regulations – There is a tendency for the authorities to take the view that if an accident occurs then someone must be at fault. The directors of a company can often face large punitive fines – even if the injury occurs, not to an employee of the company, but a visitor to the workplace.

Directors of corporate trustees – There has been a recent court decision which found that the directors of a company that is trustee of a trust are personally liable for the liabilities of the trust so that, if there are insufficient trust assets, a director’s own assets may be used to meet the debt.

Unpaid PAYG tax, unpaid company tax, unpaid superannuation – These can result in personal liability for the directors.

For more information call us on 1800 922 609.

http://www.mckayslaw.com