Newsletter

Thursday, September 21, 2017

1. I am a director of a company - what can I be liable for?

Most directors understand that if they allow their company to incur a debt at a time when there are reasonable grounds for suspecting that the company is insolvent or is likely to become insolvent by incurring that debt then they may be personally liable.

The court may order that a director personally meet the obligations incurred while a company is insolvent. Most directors would not understand however that they may be personally liable when the Commissioner of Taxation issues a Section 222 AOE Notice to a company's directors under the Income Tax Assessment Act. A Notice pursuant to this section will be issued when the Commissioner believes that a director has not remitted amounts payable by a company to the ATO. Once the notice issues there is a very strict procedure that must be followed within 14 days of receiving the notice otherwise they will be liable.

It is not just individuals who appear on the company search as directors who may be liable for insolvent trading or to the Commissioner of Taxation. The Corporations Law provides that any person who, in effect, acts a director by controlling the company, or exercising influence over the affairs and operation of the company whether or not they appear on the company search as a director may be held to be a director. All of the directors' duties pursuant to the Corporations Act are then cast upon that person.

There are many situations where accountants or other individuals in effect control a company's affairs for a variety of reasons but are not officially recorded as directors with ASIC. Individuals acting in these circumstances must be extremely cautious in relation to their personal position as they may be held liable for that company's debts when all they are doing is performing a service for an agreed fee without any share of profits.

2. When I have important conversations with people in business do I need to keep notes?

Everybody in the building and construction industry knows that in the helter skelter environmental of a building site requests for variations are often made verbally and then they are denied later on and there is an attempt to rely on the terms of a written contract that may conflict with the verbal instructions.

It is imperative for all of you in the building and construction industry that whenever a variation is made no matter how small, written instructions are obtained from the person authorising the variations. While the written authorisation is being awaited you must sit down and make a file note of the date and time of the verbal variation, who said what and then sign and date the piece of paper.

Taking this simple precaution has proved extremely valuable in the past when I have represented clients trying to prove that oral instructions were given when they are later denied by the other side. If a dispute as to what was said comes before any Judge, the party with the contemporaneous file note of a conversation has a tremendous advantage in court.

In all cases it is rare for people in business to take proper file notes of conversations. Some people maintain a meticulous diary which can serve to assist them in the case of a dispute. If the file note or diary is made contemporaneously, that is at the time of the conversation, then it is evidence of a highly persuasive nature. Diaries are often admitted into evidence.

3. Defamation by Email and the Internet

Perth defamation lawyers have recently experienced a surge of instructions arising out of defamatory conduct via the internet.

Over the last few years Australian defamation lawyers have seen the focus of their work shift to defamation via email and by the downloading of defamatory material from websites. The Gutnick decision in Victoria , affirmed by the High Court of Australia is now binding authority in relation to the downloading of material from the internet.

In summary, wherever defamatory material is downloaded defamation occurs. In the Gutnick case the defamatory material in question was downloaded in Victoria and the High Court of Australia has found that the appropriate jurisdiction for hearing a defamation case was Victoria and the Victorian Supreme Court.

If a defamatory statement is contained in a website and that material is downloaded in every state of Australia than, feasibly, legal proceedings could be instituted in the Supreme Courts in every state of Australia. Australian defamation solicitors have seen a preponderance of defamation by email in recent years. When sending emails people tend to type them as if they were speaking directly to a person on a telephone. They press the send button in the blink of an eye failing to understand or acknowledge the risk that the email be forwarded and then on forwarded to many unintended recipients.

When a written letter is sent that contains a defamatory statement it is rarely photocopied and forwarded to unintended recipients. The reason for that is obvious. To photocopy the document and mail it to other people takes time and effort. To forward an email to other people takes seconds and clicks of the keyboard. What this means is that many unintended recipients will receive the defamatory material leading to an increase in potential damages awards and an increased likelihood of discovery of the offending material by the person who is being defamed.

Perth defamation solicitors have seen an increase of instructions in recent years. Cyberspace defamation is the new burgeoning area of work for West Australian defamation lawyers.

For advice on Australian Defamation law and in particular West Australian Defamation law email Aherns Lawyers Perth and Fremantle.

Defamation Article

Cullen v White [2003] West Australian Supreme Court 153

4.  Can i place a caveat on the property of someone who owes me money?

A Caveat can only be placed on the property of a debtor if there is an interest claimed in the property pursuant to the terms of a contract.

5.  If I sue somebody can I recover all of my legal fees?

If you sure pursuant to the terms of a written contract in which costs are recoverable on a solicitor/client or an indemnity basis then you may be able to recover all of your legal fees. If you do not have such a clause in your contract and you are successful in the case then costs are normally awarded to you but on the basis that they are assessed accordingly to the relevant court scale. This may lead to you only being compensated for one half to two thirds of your legal costs in some cases.

6.  If I supply goods to somebody who does not pay me can I repossess them?

The goods can only be repossessed if you have in your contract a retention of title clause.

Liability limited by a scheme approved under Professional Standards Legislation.

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