Building Laws

NSW Court of Appeal revisits compulsory acquisition law

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On 6 September 2018, the NSW Court of Appeal (Bathurst CJ, Ward JA and Payne JA) delivered judgment in the case of Roads and Maritime Services v Desane Properties Pty Ltd [2018] NSWCA 196.

The case concerned the validity of a Proposed Acquisition Notice (PAN) that had been issued by the RMS for the compulsory acquisition of a property owned by Desane at Rozelle. The property was required as part of the proposed Rozelle Interchange associated with the Westconnex road project in Sydney.

The Court of Appeal (in a unanimous judgment) overturned the decision of the primary judge and found that the PAN was valid. Accordingly, the RMS was able to proceed with the acquisition of the property.

In its judgment, the Court of Appeal gave useful guidance as to the circumstances in which a PAN will be legally defective. The Court held that:

  • PANs are not required to strictly comply with the Approved Form under the Land Acquistion (Just Terms Compensation) Act 1991 (the Act) and that “substantial compliance” is sufficient;

  • similarly, PANs do not need to precisely adopt the language of the Act at the time of issue;

  • there is no requirement for a PAN to state the public purpose for the acquisition;

  • there was no improper purpose on the part of the RMS in relation to the acquisition of the property. The Court found that the critical time for assessing purpose is not when the PAN is issued, but at the time of acquisition. The Court overruled the finding of the trial judge that the RMS intended to acquire the property as open space and parkland - as this would only arise once construction of the underground interchange was complete. The Court adopted a liberal approach to the necessary “purpose” and found that that there was no need to identify the specific purpose with precision at the time the PAN was issued.

Lessons from the Case

The case provides important appellant guidance as to the circumstances in which a PAN may be legally invalid.

The overriding theme of the case is that Courts should adopt a measure of flexibility when the validity of a PAN is challenged. That said, Councils and government agencies still need to exercise great care in the preparation of PANs and the surrounding process to avoid subsequent legal challenges to a compulsory acquisition.

For further information please don’t hesitate to contact:

Justin Conomy
Special Counsel
justin@couttslegal.com.au
1300 268 887

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

Practical Considerations: Challenging a creditors statutory demand

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On 21 March 2019, Justice Black considered an application to set aside a statutory demand: In the matter of Skylane Worldwide Enterprises Pty Ltd [2019] NSWSC 707.

The Court has power to set aside a creditor’s statutory demand under s 459H(1)(a) of the Corporations Act 2001 (Cth) where there is a genuine dispute between a company receiving a demand and the issuer of the demand, about the existence or amount of the debt to which the demand relates.

That threshold has been held to be rather low. It is nonetheless real.

The facts in the matter before Justice Black were of no interest to anyone other than the parties, and will not be rehashed, but Justice Black considered the standard authorities on the low threshold which are worth reviewing:

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Justice Black also referred to two of his own decisions: Re Wollongong Coal Pty Ltd [2015] NSWSC 1680; (2015) 110 ACSR 134 at [9]–[22] and Re Erma Properties Pty Ltd [2017] NSWSC 1748. 

In then setting aside the demand in question, Justice Black concluded that the plaintiff (recipient of the demand) had:

“not established a genuine dispute, involving more than mere bluster or assertion, being a dispute that has sufficient objective existence or prima facie plausibility to warrant further investigation and to require [the defendant] to proceed by way of contested proceedings, rather than by the issue of a creditor’s statutory demand which, if not complied with, will give rise to a presumption of insolvency.”

The case was dismissed with costs.

Lessons from the Case

The case highlights the need for:

  • A creditor, before issuing a demand, to make an objective assessment of whether there are grounds upon which the debtor may rely to assert a dispute or off-setting claim – if so, then suing for the debt may be the preferred option.

  • A debtor, upon receiving a demand, to make a proper assessment as to whether there are plausible grounds on which to seek to set it aside.

Whilst the threshold for raising a dispute is rather low, it is nonetheless real, and it will not be reached where the plaintiff does not rise above mere bluster or assertion.

Coutts can assist clients with advising clients as to both of the above steps, and represent clients in hearings on these matters, without needing to brief counsel to argue such cases.

For further information please don’t hesitate to contact:

Justin Conomy
Special Counsel
justin@couttslegal.com.au
1300 268 887

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

Important changes to the laws in relation to construction payments

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Overview

The NSW parliament has recently passed the Building and Construction Industry Security of Payment Amendment Act 2018  which makes some substantial amendments to the Building and Construction Industry Security of Payment Act 1999 (the Act).  The Act sets out the legal framework for building contractors to recover instalment payments for the performance of construction work.

The changes will become effective later in 2019 once the drafting of the applicable regulations are finalised.

Changes to Payment Claims

The new sections of the Act provide that:

  • a payment claim may be served on and from the last day of the month in which the construction work was first carried out and on and from the last day of each subsequent named month (new section 13(1A) of the Act). This change is significant as it means that an entitlement to issue a payment claim will no longer be dependent on a “reference date” in the construction contract having been met;

  • if the construction contract makes provision for an earlier date for the service of a payment claim, the claim can be served on and from that earlier date (new section 13 (1B) of the Act);

  • the time period for a subcontractor to receive payment under a payment claim will reduce from a maximum of 30 business days to 20 business days;

  • payment claims, to be valid, must specifically state that they are made under the Act (this was an original requirement in the Act before the amendments in 2014);

  • in the case of a construction contract that has been terminated, a final payment claim can be served on and from the date of termination (new section 13(1C) of the Act). This overcomes the result in the recent case of Southern Han Breakfast Point Pty Limited (in liq) v Lewence Construction Pty Limited;

  • allowing the claimant to serve a single payment claim in respect of more than one progress payment or including an amount the subject of a prior payment claim.

 

Changes to Adjudication applications and procedures

The changes made to adjudication applications are not as extensive and include:

  • clarifying that an adjudication application can be withdrawn at any time prior to the appointment of an adjudicator. A withdrawal can also occur post appointment - but if the other party objects then the withdrawal will not be effective if the adjudicator is of the opinion that it is in the interests of justice to uphold the other party’s objection;

  • allowing an adjudicator 10 business days from the date on which the respondent lodges a response or, if a response is not lodged, the end of the period within which the response was required to be lodged, to determine the adjudication application. This change gives the adjudicator further time than the existing requirement of having to provide an adjudication determination within 10 business days from the date on which the adjudicator notifies the parties of his/her acceptance of the appointment;

  • allowing the Supreme Court to sever a discrete part of an adjudication determination that is subject to jurisdictional error - while confirming the validity of the balance of the adjudication determination.

Companies in liquidation

The changes will stop any company in liquidation from serving a payment claim or taking any action to enforce a payment claim or taking any further steps in relation to the making of an adjudication determination.

Increased fines for Companies

The new laws introduce substantial increases in the maximum penalties for companies serving non-compliant payment claims, including payment claims which include false or misleading statements (a five fold increase for companies in the maximum penalties per breach from $22,000 to $110,000 per breach). 

Personal liability of directors

Directors and corporate officers can also now be held personally liable as accessories to companies who have breached the Act.

New investigation and enforcement powers

A much stronger investigative regime has been introduced to ensure compliance with the provisions of the BCISP Act including search and seizure and information gathering powers.

 

Key Take-Aways from the changes

The changes to the Act include some significant wins for construction contractors. Contractors will no longer be hamstrung by requirements in construction contracts which delay the dates on which they can issue payment claims. Subcontractors will also enjoy a shorter time period for payment once payment claims are issued. It is important that all construction industry participants are aware of these changes when they commence and make the necessary adjustments to their contractual documentation and procedures.  This area of law is highly technical and it is important that expert legal advice is obtained at the outset to avoid the potential for non-compliance with the new laws.

For further information please don’t hesitate to contact:

Justin Conomy
Special Counsel
justin@couttslegal.com.au
1300 268 887

This blog is merely general and non specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

When does a Development Consent Lapse in NSW?

What is a development consent?

Development consent is permission from a Council to carry out development on land.

When does a development consent lapse?

A development consent lapses five years after the date from which it operates (s95(1) of the Environmental Planning and Assessment Act 1979)(EPAA). This doesn’t mean that the whole development covered by the development consent needs to be finished in the five year period to prevent the development consent from lapsing.

Are there any cases where my development consent won’t lapse?

Section 95(4) and (5) of the EPAA provides that development consent for the erection of a building or the subdivision of land or the carrying out of work does not lapse if building, engineering or construction work relating to the building, subdivision or work is physically commenced on the land before the date on which the consent would otherwise lapse.

What is physical development?

Physical development is all activities that involve relevant work necessary for the building, engineering or construction of the approved development; including survey work and geotechnical investigation work.

The test for what constitutes physical commencement was set by the Court of Appeal in the matter of Hunter Development Brokerage v Cessnock City Council; Tovedale Pty Ltd v Shoalhaven City Council [2005] NSWCA 169. These appeals were separately instituted but were heard together because of the common issues of law being raised, to do with physical commencement. In these cases the Court of Appeal held that survey work and geotechnical investigation work performed by the Applicants amounted to ‘engineering’ work for the purposes of the EPAA and accordingly held that the development consents had not lapsed.

How do I know if my development consent has lapsed?

There are three questions to be answered when determining if development consent has lapsed:

  1. Was the work relied on building, engineering or construction work? If so,

  2. Did it relate to the approved development? If so,

  3. Was it physically commenced on the land to which the consent applied prior to the relevant lapsing date?

What work is classed as physical commencement will vary from development to development. The requirement that the relevant work related to the approved development requires a real nexus and must truly be work relating in a real sense to that which has been approved. For work to be ‘physically commenced’ there must be physical activity which involves an appearance of reality and which is not merely a sham.

Can I extend my development consent?

If your development consent has been granted for a period of less than five years Council may grant an extension of one year if you can show ‘good cause’ as to why the extension should be granted.

Implications

Each matter is different and that is why it is so important to obtain legal advice as to whether the work being undertaken for your development is capable of being classed as ‘physical commencement’.

For any further advice or legal assistance on this issue, please contact us at Coutts on 1300 268 887