December 2, 2019 in Commercial Law
From 2 December 2019 transferees of state leasehold property in Queensland may be exempt from the requirement to apply for the chief executive’s approval before lodging their Transfer Form 1 to transfer their property.
The Department of Natural Resources, Mines and Energy (DNRME) has today recorded administrative advices on eligible titles pursuant to section 322AA of the Land Title Act 1994. This exemption applies to the majority of residential, commercial and primary production leases. The change could save landowners potentially hundreds of dollars in application fees and well as save time in waiting for consent to be obtained.
The exemption will however not apply where the transferring party in a transaction is a mortgagee in possession, a mortgagee exercising a power of sale, or an appointed receiver/manager must still obtain approval for a transfer. These transferees will still need to follow the current process of seeking chief executive approval prior to lodging your Transfer Form 1.
How can you find out if your property is exempt?
You will need to conduct a current title search on your property to determine whether the relevant administrative advice has been recorded. If an administrative advice has not been recorded you will need to follow the existing lease transfer process.
Please contact our commercial and property team here at Creevey Russell Lawyers to discuss if you are unsure how this change affects you or your property transaction.
Ph: 07 3009 6555
Ph: 07 4617 8777
December 2, 2019 in Commercial Law
Too often we see businesses get embroiled in costly disputes in circumstances where a shareholders agreement could have prevented these unnecessary legal costs. Most successful businesses we deal with have well drafted shareholders agreements in place.
When entering into a business arrangement, whether it is with a colleague, family member, friend or strictly business partner, it is imperative that the nature of the relationship and terms and conditions of the arrangement are documented to protect the interests of all parties.
What is a shareholders agreement?
A shareholders agreement is an agreement that will formalise the arrangement that you intend to enter into, or have entered into, with your business partners and set out how the business will run. It should cover a range of matters some of which are set out below. The below is not an exhaustive list of clauses that should be covered off on in your shareholders agreement, however it should give you a brief idea of the number of matters that need to be considered and covered off on within the shareholders agreement.
When should you get one?
We suggest entering into a Shareholders Agreement as soon as possible and before your new idea is launched or before any of the parties involved have made any financial or other contribution. As you will read below the Shareholders Agreement should cover a number of critical aspects to the business operations, rules and regulations and it is therefore prudent that these matters are agreed between business partners at the outset of the arrangement.
What does the shareholders agreement cover?
The following are examples of clauses your Shareholders Agreement should cover to best protect the interests of the parties and the business:
a. Sale of Shares
A Shareholders Agreement should outline the process involved with sale or sale of shares. Generally this will include drag-along and tag-along rights, pre-emptive rights and what happens in the event that a shareholder is totally and permanently disabled. These clauses provide both minority and majority shareholders with protections with respect to the transfer of shares.
b. How the Business is to be Managed
In addition to information regarding sale of shares, a shareholders agreement should include all other required policies and procedures including general management of the company, how and when decisions can be made, how what happens in the event that a director defaults under the shareholders agreement and when the shareholders agreement can or will be terminated, how dividends are calculated and paid. These policies and procedures are included in the shareholders agreement to clarify from the outset how important decisions will be made for the business in the further.
c. Dispute Resolution
This clause will typically require one shareholder to issue the other shareholder/s with a notice of dispute then require the parties to explore other options to resolve the dispute (for example by way of informal dispute resolution techniques such as negotiation, mediation or independent expert appraisal). The Shareholders Agreement may set out the order of these informal disputes resolution options (typically from least formal to most formal) and may also require certain steps to be taken within a particular timeframe to avoid having disputes drag out unnecessarily.
Things to watch out for:
a. Restraint of Trade
Shareholders Agreements will more than likely include provisions regarding restraint of trade that will apply in the event you or your business partner leaves the business. This clause will generally include definitions of the restricted activity (being the activities the relevant person is restricted from carrying out), the restraint area (where the relevant person will be restricted from carrying out the restricted activity), and the restraint term (being the period of time the relevant person is restricted from carrying out the restricted activity within the restraint area). The parties must ensure that each of the restricted activity, restraint area and restraint term are not too onerous but still provide the requisite protection for the reaming partners and business. This clause should be reviewed and advised upon from both an exiting and a remaining shareholders perspective.
A confidentiality clause will generally cover:
- the information or type of information that is deemed to be confidential for the purposes of the Shareholders Agreement
- who a party is able to disclose confidential information to
- requirements when disclosing confidential information (the relevant third party may be required to enter into a confidentiality agreement)
- what happens in the event that the confidentiality provisions are breached by a party
Again, this clause needs to be considered and drafted carefully. If confidential information is leaked it could have detrimental effects on the business and in turn the shareholders. You will also need to consider your confidential information must continue to be kept confidential after termination of the shareholders agreement or if/when the business ceases to operate.
c. Rights and Obligations
Shareholders will have certain rights and obligations under their shareholders agreement and it is important that these rights and obligations are fully reviewed to ensure that they are fair in the circumstances and each shareholder must fully understand their rights and obligations so that they are carry out what is required of them. For example, certain shareholders may be entitled to appoint a director in the company. This could be based on classes of shares or any other factor set out under the shareholders agreement. If you are not a director, or do not have the right to appoint a director your rights may be limited with respect to receiving company information, or making decisions or entering into documents/agreements on behalf of the company.
The above are not exhaustive lists of what your shareholders agreement should cover or what things you need to watch out for when your shareholders agreement is being prepared. Shareholders agreements are complicated documents that require a unique understanding of the current or proposed business operations and individual shareholders concerns in order for them to be drafted correctly.
If you require any assistance preparing or negotiating your shareholders agreement or with any other commercial legal issue, please do not hesitate to contact our dedicated commercial team.
Ph: 07 3009 6555
Ph: 07 4617 8777
November 20, 2019 in Commercial Law
The sale of a business is a complicated process with many moving pieces and numerous critical deadlines which must be met. The process of a business sale can sometimes take months to finalise. If you are thinking about selling your business it is important to understand the process and the different stages of the transaction to ensure matters run as smooth as possible.
We have summarised the business sale process into 5 key stages below.
- PRE-CONTRACTUAL STAGE
As the first stage in contract negotiation the seller and buyer may choose to enter into a heads of agreement which will set out the key terms and conditions which will ultimately be the basis of the contract of sale. These could include:
- The purchase price
- What the sale includes (i.e. Plant and equipment, stock-in-trade, etc.)
- Any deposit payable
- Whether the contract will be subject to the buyer obtaining satisfactory finance
Once the heads of agreement document has been agreed and entered into the parties’ solicitors can begin to prepare a contract of sale. The contract of sale may still be subject to some minor negotiations however as most of the key terms and conditions have been agreed under the heads of agreement only minor matters should be left to be addressed.
We highly recommend that sellers seek advice from their accountant prior to entering into a contract so that the tax consequences of the sale can be determined before the parties enter into a binding agreement.
Once the contract has been agreed and finalised the buyer should execute the contract of sale first and the seller second. The Contract is dated on the day that the last person executes the contract.
CONDITIONAL CONTRACT STAGE
Once signed the clock will start ticking on any conditions that your business sale contract is subject to. These conditions may include:
- Due diligence;
- Review of and satisfaction of lease and other third party agreements.
Your business sale contract may be subject to the buyer completing a ‘trail period’ whereby they will be permitted to trial the business for a set period in order to verify its trading performance.
The above conditions are typically for the benefit of the buyer and must be either satisfied or waived by the buyer on or before the date each condition falls due.
If you are selling a franchise business it is likely to be condition of the sale that you obtain the franchisor’s consent prior to the transfer taking place (read our article on How to Sell a Franchise Business by following the link).
UNCONDITIONAL CONTRACT STAGE
Once all conditions of the contract have been ‘satisfied’ by the required party the contract becomes ‘unconditional’ meaning that settlement must proceed.
A number of matters need to be actioned between the time that the business sale contract becomes unconditional and settlement.
- Stock-in-Trade – if the purchase price under your business sale contract is stated to include stock-in-trade and work-in-progress. If these are not included in the purchase price the value of the stock-in-trade and work-in-progress must be determined and the relevant values must be added to the purchase price.
- Employees – the buyer must, prior to settlement, notify you of the names of the employees they propose to employ following settlement and need to make an offer of employment to each relevant employee. The business sale contract will specify who is responsible for payment of the leave entitlements of the employees. Adjustments should be made to the purchase price for these amounts.
- Security Interests – you may have registered security interests (for example with the Personal Property Security Register) over your stock-in-trade or business equipment. These will need to be released and any partial releases handed to the buyer at settlement so that the buyer has clear title of the business as will be required under your business sale contract.
Congratulations! You’ve reached your settlement date! Your solicitor will likely book your settlement to occur sometime in the early afternoon. All parties will attend a physical settlement where cheques, original documents and keys are handed over.
POST SETTLEMENT STAGE
Although settlement has been completed for all intents and purposes, the following matters will still need to be dealt with post-settlement:
- Transfer of business name;
- Completion of transfer of lease and registration of documents with titles office as required; and
- Transfer of trade marks, websites, domain names, trademarks, email addresses and other contacts for the business, social media accounts.
Your business sale contract may also be subject to a ‘seller’s assistance’ period. If this is a condition of the business sale contract you, or a nominee of yours who is familiar with the business, must attend the business for the specified period following settlement to give assistance to the buyer in relation to the conduct of the business.
This is not an exhaustive list of matters which need to be dealt with following completion of your business sale and you solicitor will advise you of any matters which you need to action following settlement.
OTHER MATTERS TO CONSIDER
We highly recommend that all seller’s undertake a ‘Seller’s Due Diligence’ prior to entering into any negotiations with another party in order to prepare your business for sale. (Contact our office to find out more about our Seller’s Due Diligence).
If you are thinking about selling your business and require any assistance with the business sale process, or any other commercial legal issue, please do not hesitate to contact our dedicated commercial team.
Ph: 07 3009 6555
Ph: 07 4617 8777
October 1, 2019 in Commercial Law
From today, 1 October 2019, paper Certificates of Title will no longer have any legal effect and will not be required to be deposited with the Titles Registry when dealing with property. A paper Certificate of Title will simply now become an item of historic or sentimental value. Any existing paper Certificate will not need to be destroyed or deposited with the Titles Registry, nor will they need to be dispensed with for a transaction to proceed.
If you hold a paper certificate of title as security for a debt you might consider registering a mortgage against a debtors property as a new form of security. You should seek further legal advice in relation to protecting your interests.
If you have any questions or concerns about these changes feel free to contact our Property team on (07) 4617 8777 or (07) 3009 6555.
Leading Queensland legal firm Creevey Russell Lawyers is proud to be a corporate supporter of the 2019 Longreach Cup, the biggest racing event in outback Queensland.
Creevey Russell Principal Dan Creevey said the big race day on Saturday, September 29, was an exciting event for the region and a great chance for a community that has endured tough times to enjoy country racing at its finest.
“Creevey Russell Lawyers is delighted to be involved as a sponsor of the Longreach Cup and we are looking forward to being present on the day and mixing with members of a wonderful community,” Winton-raised Mr Creevey said.
“We take great pride in the fact that Creevey Russell Lawyers is a rural and regional firm and we are always looking to give back to those communities.
“It is no secret that many of the state’s regional communities have been doing it tough for many years due to a wide range of economic and environmental factors.”
Mr Creevey said he maintained close regional ties having grown up in Winton where his father Noel was a local policeman and grandfather Jim Gaffney managed the power station.
“I go back home regularly and our firm has many clients in the region so it’s great to be able show our support on the big race day,” he said.
“It’s important to stay closely connected to the people in these communities and listen to their concerns, including about any legal issues they are experiencing which can include problems with vegetation and stock routes, dog baiting, rural transactions and criminal matters.
“Creevey Russell Lawyers has always had its finger on the pulse of rural Queensland and our agribusiness team members have broad experience in issues of concern to landholders.”
Criticism of a controversial ‘mistake of fact’ law in Queensland is misinformed and there needs to be greater community awareness about how the law operates, says leading legal firm Creevey Russell Lawyers.
Section 24 of the Criminal Code Act 1899 (Qld) contains the defence that a person is not criminally responsible for an act such as a sex offence if the person held an honest and reasonable, but mistaken, belief there was consent involved.
The Queensland government has called for the law to be reviewed by the Queensland Law Reform Commission, with a recommendation expected in early 2020.
Creevey Russell Principal Dan Creevey said the suggestion that the mistake of fact defence allows an offender to walk free in sexual offence type matters is “simply wrong”.
“Creevey Russell Lawyers believes the criticisms of the section 24 defence are misinformed and there needs to be greater community awareness as to how the law operates,” Mr Creevey said.
“The mere fact that the defence may be raised does not dictate that a jury will accept the defence is applicable in any given matter. That is because section 24 contains both a subjective and objective component. A defendant cannot just raise section 24 and expect to be let off – juries apply their common sense, and the subjective component of the test provides that safeguard.”
Creevey Russell Senior Associate Trent Jones said subjectively, an accused person may hold an honest and mistaken belief regarding the existence of anything, such as the fact a person is consenting to sexual intercourse.
“Objectively, however, it is a matter – most commonly reserved for juries – to determine whether or not that mistaken belief held by a defendant was reasonable having regard to all the circumstances of a case,” he said.
“Trials involving sexual offences are most often run before a jury. The role of a jury in a criminal trial is to determine whether or not an accused person is guilty or not guilty of the alleged offence. A jury reaches their verdict by adopting the role of the sole judge of the fact, receiving guidance and direction regarding the application of the law by the presiding judge.
“A mere mistake of a defendant is simply not enough to enliven a section 24 defence. For a section 24 defence to be successful, a jury must form the view that the honest, but mistaken, belief held by the defendant, in their particular circumstances, was held on reasonable grounds.
“The section 24 defence is not a matter whereby an accused person can simply state that they honestly believed a complainant was consenting and automatically expect to be acquitted. If that were the case, there would certainly be significant issues with the justice system, but that is not the way the section 24 defence is designed to operate.
“Juries have accepted the existence of a mistake of fact defence and acquitted accused people previously, but, similarly, there have been instances where juries have rejected a mistake of fact defence and convicted a defendant.”
Ph: 07 4617 8777
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Drug related offending has become increasingly prevalent in recent times. In 2017-18 illicit drug offences were the most common offence type totalling 78,167 offenders nationally.
Drug offences have been flooding the Magistrate and District Courts, leading to increased prison populations and a revolving door of recidivism.
Given this current national drug crisis, the court system has been required to adapt to the new challenges it faces by the overwhelmingly large amount of drug offences being heard each day.
To address these needs within the community, the government re-implemented the Drug and Alcohol Court in Brisbane in January 2018 to alleviate the high caseload pressure of the Brisbane Magistrates Court.
The Drug and Alcohol Court is now legislated under the Penalties and Sentences (Drug and Alcohol Treatment Orders) and Other Legislation Amendment Act 2017 (the Act) that was passed on October 2017. The Act now enables a Drug and Alcohol Treatment Order to be included under Queensland’s sentencing regime.
Drug and Alcohol Court was trialled in Queensland in 2013, however was abolished by the Liberal National party to save costs. It was estimated that they saved $35.7 million dollars over a four-year period by scrapping the Queensland Drug and Alcohol Court and Murri Court. Since then both courts have re-established.
Magistrates refer eligible members of the community to the Drug and Alcohol Court where they are subject to Treatment Order requirements. This was implemented after a Drug and Specialist Court Review identified it to be “an evidence-based and cost-effective approach reflecting modern best-practice”,
As Brisbane’s Drug and Alcohol Court is relatively new, it will take several years to clearly ascertain if there is a long term reduction in reoffending rates and drug offending trends processing through the court system.
The flow on effects of its implementation however can largely and quickly assist the wider community with crowding issues that our Queensland prisons are facing. Quantitative studies show a consistent trend with the number of people being held in custody on the rise. This leads to less effective outcomes and lower chances of rehabilitation for the prisoners.
By sentencing eligible individuals to a Drug and Alcohol Court Treatment Order, it means they are not entering the prison system but are given an opportunity to rehabilitate in an evidence-based, intervention program that has been designed to reduce recidivism.
To be eligible for Drug and Alcohol Court an offender must be an adult, plead guilty to charges at a Magistrates court, live within the Brisbane district and have a substantial substance abuse issue. The drug and alcohol court staff complete a suitability assessment while the matter is adjourned if they are deemed eligible. The treatment order can then begin which assists the individuals with rehabilitation, employment, mental health etc. to ultimately break the cycle of drug-related offending. The drug and alcohol court takes a holistic approach to rehabilitation focusing on several aspects of the person’s life.
The drug and alcohol epidemic is prevalent nationally, leading to other states enforcing more specific sentencing options to address this issue. Victoria and New South Wales have also included drug and alcohol courts into their sentencing systems.
The Brisbane Drug and Alcohol Court is run by a team of employees who manage the offenders while on their treatment orders. A number of staff are employed by Queensland Corrective Services who supervise them during this period. The team also includes legal representatives, Prosecutors and Department of Justice and Attorney General court officers. This multi-disciplinary team supports offenders once again taking a holistic approach to more than one aspect of their lives.
Queensland’s Drug and Alcohol Court is a space to watch with the ever-growing numbers of drug related offending. Long term, this court has the ability to have serious effects on the community and Queensland as a whole given its powers under the Act.
Creevey Russell Lawyers are experts in the area of crime and misconduct. With our dedicated team of experienced lawyers, we provide around the clock legal services for any criminal related matters. We represent clients in all jurisdictions from individuals, to companies and businesses.
Having an office in Brisbane Central allows our lawyers to access and utilise Brisbane’s Drug and Alcohol Court. Our lawyers have expert knowledge and extensive experience with regards to drug and alcohol related offending. For further information on the services provided by Creevey Russell Lawyers, please visit our website at www.creeveyrussell.com.au.
For more information regarding Brisbane’s Drug and Alcohol Court, visit https://www.courts.qld.gov.au/courts/drug-court.
 “4519.0 – Recorded Crime – Offenders, 2017-18”, Abs.Gov.Au (Webpage, 2019) <https://www.abs.gov.au/ausstats/[email protected]/Lookup/by%20Subject/4519.0~2017-18~Main%20Features~Offenders,%20Australia~3>.
 Penalties and Sentences (Drug and Alcohol Treatment Orders) and Other Legislation Amendment Act 2017.
 Felicity Caldwell, “Four Years After It Was Scrapped, Drug Court Will Return To Queensland”, Brisbane Times (Webpage, 2019) <https://www.brisbanetimes.com.au/politics/queensland/four-years-after-it-was-scrapped-drug-court-will-return-to-queensland-20171024-p4ywmk.html>.
 Queensland Drug And Alcohol Court”, Courts.Qld.Gov.Au (Webpage, 2019) <https://www.courts.qld.gov.au/courts/drug-court>.
 Queensland Government, Annual Report 2017-2018 (Queensland Corrective Services, 2018) https://www.publications.qld.gov.au/dataset/e18fd278-6c07-4c63-bb0d-258948ccca71/resource/0397087a-5ea9-4c2e-82a1-625c137d3284/download/qcs-annual-report-2017-181.pdf 13.
 Queensland Drug And Alcohol Court”, Courts.Qld.Gov.Au (Webpage, 2019) <https://www.courts.qld.gov.au/courts/drug-court>.
 Penalties and Sentences (Drug and Alcohol Treatment Orders) and Other Legislation Amendment Act 2017.
Ph: 07 4617 8777
August 26, 2019 in Commercial Law
From 1 October 2019, the Queensland Government will abolish Paper Certificates of Title. The change in legislation was passed in parliament in March 2019 to amend the Land Titles Act 1994. The amendments mean that from 1 October 2019, paper Certificates of Title will no longer have any legal effect.
The electronic title held in the Titles Registry will be the sole record for the ownership and the recording of interest in land in Queensland. The paper Certificate of Title will no longer be required to be presented at the Titles Registry when recording a transaction involving land.
However, in the past, the physical Certificate of Title was held as a form of security over a particular interest in land. From 1 October 2019, unless there is a mortgage recorded on the title then the holding of a paper certificate of title as security will have no effect.
If you hold a paper certificate of title as security, then you should review this by 1 October 2019. You might need to register a mortgage or arrange a security interest and/or personal guarantees.
Please contact our commercial team here at Creevey Russell Lawyers to discuss your options to protect your interests.
August 8, 2019 in Commercial Law
If you are a landholder of land with underground resources such as coal, minerals, petroleum, or coal seam gas present on it you may be lucky (or unlucky enough) to be approached by a resource company (such as Origin Energy or QGC) (tenement holder) who wants to gain access to your land to extract these resources in return for compensation to enter into a conduct and compensation agreement.
WHAT IS A CONDUCT AND COMPENSATION AGREEMENT?
A conduct and compensation agreement is an agreement which sets out the activities that will be undertaken on your land, the compensation you will receive for the losses you suffer as a result of those activities (as required under the relevant legislation), and the terms and conditions that will govern the tenement holder’s access to your property and the manner in which they carry out their activities.
Under the relevant legislation tenement holders are required to enter into a conduct and compensation agreement with the landholder before accessing their property. The access terms and conditions and compensation terms that are covered in the conduct and compensation agreement are governed by the legislation, any environmental authorities issued in relation to the activities and the land access code.
As part of the land access negotiation process tenement holders will provide you with their standard form conduct and compensation agreement.
WHAT DO LANDHOLDERS NEED TO BE AWARE OF?
Although the tenement holder will tell you that this is their ‘standard document’ there are some important things to note:
- Firstly, the document provided by the tenement holders will almost certainly be weighted in their favour. These conduct and compensation agreements can last anywhere between 30 days and 30 years and, as they attach to your land title they will bind future owners of the land so it is crucial that they are thoroughly reviewed before you sign them by a solicitor with experience in negotiating agreements of this nature. It is important that you are provided with advice making you fully aware of your obligations under the agreement during its term.
- Secondly, the document as originally proposed is not property, business or lifestyle specific and should be reviewed and amended to reflect your specific needs and requirements. Many landholders are not aware that conditions can be drafted into the agreement addressing issues such as water, specific access conditions or specific land management practices that reflect your personal and business needs.
WHAT TERMS AND CONDITIONS TO WATCH OUT FOR?
It is important that you fully understand you rights and obligations under the conduct and compensation agreement as it will govern the conduct of the parties for the years to come. There are a number of conditions in a conduct and compensation agreement that you should be aware of and fully understand before executing your conduct and compensation agreement.
- Waiver of entry notice – The Mineral and Energy Resources (Common Provisions) Act 2014 (the Act) requires tenement holders to provide landholders with at least ten (10) business days’ notice prior to entering their property for a continuous period of time (i.e. to undertake a particular activity that is part of their programme which may take 3-5 consecutive business days). Tenement Holders often include a ‘waiver of entry notice’ within their draft conduct and compensation agreements meaning they are then no longer required to comply with the statutory notice requirement within the Act. It is possible to agree to include a similar provision but to nominate an alternative entry notice timeframe that is more convenient to both parties (say five (5) business days).
- Alternative arrangement for noise – Tenement holders must comply with their environmental authority (this an authority granted by the government for environmentally relevant activities, which resource activities are). When undertaking the activities under a conduct and compensation agreement. You may have rights to take action against the tenement holder if the noise impacts caused by their activities exceed what is authorised under their environmental authority.
Tenement Holders include ‘alternative arrangements for noise’ within their conduct and compensation agreements whereby landholders are required to acknowledge that they are already being compensated for the noise impacts and they relinquish their rights to make any further claim in respect of these impacts. Although this is now considered a standard provision of a conduct and compensation agreement it is important that you fully understand what rights you have and what rights the tenement holder has with respect to noise impacts – your solicitor will explain this to you when providing their advice.
- Access generally – The draft conduct and compensation agreement presented by tenement holders may allow them to access your property on any day, at any time, using any access track they deem necessary. This can make it extremely difficult and stressful for you to continue to operate your business or enjoy your property as you could be unaware of who is on your property at any time. It is important therefore to set reasonable parameters to this right of access as set out below.
Broadly drafted, unclear or heavily biased conditions can result in disputes and poor working relationships between landholders and tenement holders. It is therefore important that clauses are carefully and accurately drafted to reflect each parties’ concerns in order to ensure a smooth and painless co-existence on your land in the future.
WHAT ELSE SHOULD YOU CONSIDER?
There are a number of matters/clauses which landholders often do not consider, or they are simply not aware that they are able to negotiate into conduct and compensation agreements. Some key terms and conditions that can be negotiated by your solicitor on your behalf may include:
- Better access terms – your conduct and compensation agreement can include restrictions on when, where and how a tenement holder can access your property. For example you may permit them only to access your property on business days only, between the hours of 9:00am and 5:00pm via pre-agreed access tracks. Inclusion of a provision such as this will give you certainty as to who is on your property and when.
- Exclusion Zones – you may wish to include exclusion zones around various locations on your property. For example, landholders with families and young children may wish to prohibit access within a certain radius from their homestead.
- Business activities – clauses can be included in your conduct and compensation agreement to mitigate the impacts a tenement holder’s activities may have on your business operations and to ensure you are being compensated for any additional costs incurred by you due to their activities. For example, terms can be negotiated around the de-stocking of livestock during certain phases of the tenement holder’s activities to avoid injury to livestock while heavy vehicles and machinery are accessing the property. Alternatively, you may require temporary stock proof fencing to be installed during these phases (at the cost of the tenement holder).
- Weeds and pathogens – we find that one of our client’s biggest concerns is the risk of declared weeds and/or pathogens being introduced to properties by tenement holders traversing between neighbouring properties and/or not complying with wash-down procedures. Clauses need to be included in conduct and compensation agreements allowing landholders to inspect vehicles proposing to enter a property and giving landholders the right to refuse access if they reasonably believe a vehicle contains traces of declared weeds.
These are just some examples of the types of clauses that can be included in your conduct and compensation agreement to provide further protections for your land, business and family.
Successful negotiations of a conduct and compensation agreement require an in depth understanding of your property, your business and your requirements. These unique features can be negotiated on your behalf to ensure that your needs, wants and concerns are represented in the final agreement. The good news is that tenement holders are required under the Act to pay your reasonably and necessarily incurred legal costs so that you are not out of pocket for the costs of your solicitor reviewing, advising on and negotiating a conduct and compensation agreement on your behalf.
If you require any assistance with negotiating your conduct and compensation agreement or with any other commercial legal issue, please do not hesitate to contact our dedicated commercial team.
Ph: 07 3009 6555
Ph: 07 4617 8777
August 6, 2019 in Commercial Law
It is an unfortunate truth, but when it comes to Australian farmers, extreme weather conditions are a harbinger of tough economic times. As a firm proud to represent regional Queensland, it is always a sobering experience to have to advise a fifth-generation farmer on insolvency problems and the end of the family business.
Like many other States, Queensland has recognised the great wealth tied up in the regions, and the peaks and troughs that the climate can present to industries heavily reliant on near perfect weather conditions – enter the Farm Business Debt Mediation Act 2017 (Qld).
This Act sets up a program to force, wherever possible, disputes between the banks and farmers into alternative dispute resolution. This opportunity to mediate is important and revolutionary, as it forces the banks to face up (literally, face to face across a mediation table) to the human cost of their decision making on enforcement of farm debt loans.
In this article, we will look at some of the basic features of the scheme and how it all works in practice.
What is Farm Debt?
Farm debt (or, as it is called in the Act, farm business debt) is a loan that is taken out by a farmer for the purpose of running a farm, and where that loan is secured over the farm (typically by way of a mortgage).
As to what is included in the definition of running a farm, the net is cast wide: any agricultural, apicultural, dairy farming, horticultural, land-based aquacultural, pastoral, poultry keeping, viticultural or any other business that includes cultivating the soil, gathering crops or rearing livestock (this includes timber cutting).
In addition, the farm property that the debt can be secured against is reasonably wide-ranging: land on which the farm is run, any water allocation under the Water Act 2000 (Qld) that is used to run the farm or any vehicle, machine, tool or other equipment that is used to run the farm.
Does the Bank have to Mediate?
The Act applies unless the farmer is bankrupt, has had a creditors petition (the first step of making someone bankrupt) presented against them by someone other than the Bank, or is an “externally-administered body corporate” under the Corporations Act 2001 (Cth). Also, if you have resolved the dispute at mediation previously, then you can’t go back to mediation if you default on the resolution (in other words, if you go to mediation, settle with the Bank and then don’t carry out your side of the deal, then you don’t get a second go).
Otherwise, if the Act applies, then the Bank cannot enforce the mortgage without mediating, or seeking the permission of the Queensland Rural and Industry Development Authority (QRIDA).
The first step a Bank has to take under the Act is to give the farmer an enforcement action notice. This notice tells the farmer what the Bank is proposing to do, and gives the farmer an opportunity to ask for mediation – the time in which the farmer might ask for mediation must not be less than 20 business days after the farmer receives the enforcement action notice.
Once the farmer asks for mediation (called a request for mediation notice), the Bank has the opportunity to agree to, or refuse, mediation.
If the Bank agrees to mediation, the farmer has the right to request documents from the Bank related to the debt – these documents must be provided within 30 days of being requested.
At the same time, the farmer must give to the bank: the most recent Tax Return lodged with / prepared for the Australian Taxation Office; a listing of the farmer’s assets and liabilities; and the farmer’s cash flow projections for the coming year.
If either the Bank or the farmer refuses to, or fails to, provide the documents that are requested/required to be disclosed, that party has failed to undertake mediation in good faith.
QRIDA maintains a list of approved mediators for the parties to choose from – that list can be accessed at http://www.qrida.qld.gov.au/fbdm/finding-a-mediator.
Once the documents are exchanged and the mediator is appointed, then the mediation can proceed.
If agreement is reached at mediation, then the mediator will assist the parties to prepare a heads of agreement, which details what the outcome is, and what party is responsible for bringing it about. The heads of agreement is subject to a cooling off period of ten business days (or a longer/shorter period if the parties agree), where the farmer can pull out of the deal – if the farmer withdraws, then the bank is entitled to compensation for any steps that they had already undertaken under the agreement.
After mediation ends, the mediator has to give the parties a summary of the mediation, which, as it suggests, summarises what happened at mediation. This must be given within ten (10) business days of mediation finishing.
It is important that the parties remember that whatever happens at, or is said at, mediation is confidential – meaning it cannot be used in Court.
What happens if the Bank refuses?
If the Bank refuses to mediate, then one (1) of two (2) things can happen: either the Bank can apply to QRIDA for exemption from mediation before enforcing their security, or the farmer can apply to QRIDA to stop enforcement for a period of six (6) months.
QRIDA’s decision is reviewable, and the application must be made to the Chief Executive of QRIDA within 20 business days of notice of the decision being given.
Curiously, notwithstanding that the Act provides that the decision must comply with the Queensland Civil and Administrative Tribunal Act 2009 (Qld), the Act does not provide for review of decisions by farmers or Banks to the Tribunal. The Supreme Court has recently held that decisions of QRIDA are susceptible to judicial review (see Scriven v Queensland Rural and Industry Development Authority  QSC 176), however it must be kept firmly in mind the difference between judicial review in the Supreme Court, and review before the Tribunal – the Supreme Court does not look to the merits of the decision, merely the process by which the decision was reached. If the decision is wrong not because the decision maker made a misstep, then the Court cannot set the decision aside, not matter how wrong on the facts it is.
How much does it cost?
Each party is responsible for their own costs of mediating, and half of the costs of the mediator. Of the (at the time of writing) 26 registered mediators, the average hourly rate is $370 plus GST, with the average daily rate being $3,000 plus GST. That would mean that each party would be responsible for $185 plus GST per hour, or $1,500 plus GST per day.
As to what each party’s individual costs would be, that would depend on what assistance they required from their professional advisors as to the mediation.
What can I do to protect myself?
Experience tells us that there are two things that typically bring people unstuck in these situations: putting their head in the sand, or not keeping their financial/taxation affairs in order.
Bad news does not improve with time – that is a fact. The sooner you recognise that you are perhaps heading towards trouble with the bank, it is important that you take early advice from a solicitor and an accountant. Perhaps that way, the problem can be avoided before it arises.
As we said above, there are certain obligations on farmers applying for protection under the Act, including the disclosure of current financial documents. If you do not have these ready to go, it can easily prejudice your ability to protect yourself.
If you would like to discuss how the Act might assist you, or issues you are having with your financier more generally, you should contact our Dispute Resolution Team on 07 3009 6555 or 07 4617 8777.
Ph: +61 7 3009 6555