Commercial Property Sales & Leasing

Greg Mohen joins Williams + Hughes

Williams + Hughes are delighted to announce that Greg Mohen has joined our commercial law team.

Greg has over 40 years’ expertise in a range of commercial and private client matters.

In his commercial legal practice he has represented a variety of clients including Local Governments, property development, building, mining services, power infrastructure, accountancy, pharmacy, real estate, settlement, and financial advisory businesses.

Greg also has a strong association with the provision of community legal services. For 8 years between 1992 and 2001 he worked with the Law Society of Western Australia to manage the Law Society’s community legal services, including establishing the Law Access pro bono referral service and overseeing the management of other community projects such as the Litigation Assistance Fund, Law Week and the Francis Burt Law Education Centre.

Greg regularly provides probono legal assistance to individuals and organisations including Australian Red Cross, Cancer Council, the Salvation Army and the Francis Burt Law Education Centre.

Greg was formerly a Partner at Kott Gunning and Civic Legal.

Williams + Hughes Earns Recertification in Meritas, the Leading Global Alliance of Independent Business Law Firms

Williams + Hughes is pleased to announce that it has been awarded recertification in Meritas, a global alliance of independent business law firms. Williams + Hughes joined Meritas in 2014 and, as a condition of its membership, is required to successfully complete recertification every three years. 

Meritas is the only law firm alliance with an established and comprehensive means of monitoring the quality of its member firms, a process that saves clients’ time validating law firm credentials and experience. Meritas membership is selective and by invitation only. Firms are regularly assessed and recertified for the breadth of their practice expertise, client satisfaction and high standards of cybersecurity to keep legal information safe. Meritas’ extensive due diligence process ensures that only firms meeting the tenets of Meritas’ unique Quality Assurance Program are allowed to maintain membership. The measurement of the firm’s performance, based on input from clients, is reflected in a Satisfaction Index score, which is available online on the Meritas website.

“Our values of quality service and client satisfaction align with the Meritas mission to provide a safe and responsive global offering to clients,” said Damian Quail, Director. “We’ve successfully collaborated with colleagues in many jurisdictions around the world to solve client issues and help them seize opportunities outside of this market. We look forward to keeping those vital connections through membership in Meritas.”

The recertification process Williams + Hughes completed to maintain its membership status included exacting self-assessment, peer review by other law firms and client feedback.  

“Businesses trust the Meritas alliance of law firms for top-tier quality, convenience, consistency and value,” said Sona Pancholy, president of Meritas. “Williams + Hughes has demonstrated its commitment to world-class legal standards, and therefore has successfully earned its recertification in Meritas.”

For more information about our our membership in Meritas, please see here

About Meritas 

Meritas’ global alliance of independent, market-leading law firms provides borderless legal services to companies looking to effectively capture opportunities and solve issues anywhere in the world. Companies benefit from local knowledge, collective strength and new efficiencies when they work with Meritas law firms. The personal attention and care they experience is part of Meritas’ industry-first commitment to the utmost in quality of service and putting client priorities above all else. Founded in 1990, Meritas has member firms in 259 markets worldwide with more than 7,500 dedicated, collaborative lawyers. To locate a Meritas resource for a specific need or in a certain market, visit Meritas.org or call +1-612-339-8680

Meritas Welcomes DMAW Lawyers, Adelaide, to the Membership

Leading Adelaide commercial Firm, DMAW Lawyers has been selected to be South Australia’s representative firm for Meritas, the premier global alliance of independent law firms.

DMAW Lawyers will become an integral part of the Australia & New Zealand network of firms as well as the worldwide network of 191 law firms located across 96 countries.

This alliance will enhance DMAW Lawyers’ ability to support South Australian business interests both nationally and internationally.

DMAW’s Lawyer’s Managing Director, Mr Leo Walsh said “One of most attractive benefits of belonging to this network was the opportunity for our lawyers to participate in national and global conversations on business and legal issues. Not only does this expand our thinking, and add to our technical skills, but it help our lawyers build trusted, reliable relationships with lawyers in the regions that matter to our clients. Already we’ve participated in meetings with Insolvency experts across the country and with Senior Partners in Shanghai and Tokyo.”

Mr Mike Worsnop, Partner with Martelli McKegg in New Zealand and Co-Chair of Meritas ANZ: “We are delighted to have DMAW Lawyers join our group. Not only was their quality apparent but they’ve been very easy and responsive to deal with during our discussions.  They clearly demonstrated the type of service clients look for when using a firm in a different market.”

“DMAW Lawyers had to meet the rigorous requirements to become members of Meritas, the only law firm alliance with a Quality Assurance Program that ensures clients receive the same high-quality legal work and service from every Meritas firm.”

Meritas membership is extended by invitation only, and firms are regularly assessed for the breadth of their practice expertise and client satisfaction.

Ms Sona Pancholy, Meritas CEO: “In today’s environment having a commitment to a reliable network is more important than ever. Independent law firms, Corporate Counsel, Business Owners and their Commercial Advisors, all choose their portfolio of trusted legal relationships to match the issues and the markets they want to navigate. For 30 years, Meritas has cultivated a group of the best firms for this purpose.”

About DMAW Lawyers

DMAW Lawyers was established in Adelaide in 2002. The firm has ten Principals and a team of 50 staff. DMAW Lawyers focus on three areas of specialization being Corporate, Transactions, and Disputes for Business Clients.

Website: DMAW Lawyers

About Meritas

Founded in 1990, Meritas is the premier global alliance of independent law firms. As an invitation-only alliance, Meritas firms must adhere to uncompromising service standards to retain membership status. With 192 top-ranking law firms spanning 96 countries, Meritas delivers exceptional legal knowledge, personal attention and proven value to clients worldwide.  

Website:  Meritas 

In Australia and New Zealand, Meritas is represented by leading independent commercial law firms in each of these six major capital cities:

In Australia

Adelaide DMAW Lawyers

Brisbane Bennett & Philp

Melbourne Madgwicks Lawyers

Perth Williams+Hughes

Sydney Swaab  

In New Zealand

Auckland Martelli McKegg

COVID-19: Temporary relief for financially distressed individuals, companies and directors

The Australian Federal Government has announced temporary amendments to insolvency and bankruptcy laws, effective from 25 March 2020, to lessen the economic impacts of COVID-19 on individuals and businesses and to allow for business continuity. The legislation passed is called the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (the COVID-19 Legislation).

The new measures are intended to avoid unnecessary bankruptcies and insolvencies by providing:

• a safety net to help businesses to continue to operate during a temporary period of illiquidity, rather than entering voluntary administration or liquidation;  and
• a safety net to individuals to assist them with managing debt and avoiding bankruptcy.

The temporary amendments that will apply for 6 months from 25 March 2020 until 24 September 2020 include:

• increasing the threshold at which creditors can issue a statutory demand against companies from $2,000 to $20,000, and the time for responding to a statutory demand from 21 days to 6 months;
• relief for directors and holding companies from personal liability for new debts incurred during the period the company trades while insolvent (provided that the debt is incurred in the ordinary course of the company’s business);
• providing targeted relief for companies from provisions of the Corporations Act 2001 (Cth) (the Act) to deal with unforeseen events that arise as a result of the COVID-19 health crisis; and 
• a temporary increase in the threshold for a creditor to initiate bankruptcy proceedings from $5,000 to $20,000, and an increase in the time period for debtors to respond to a bankruptcy notice, as well as extending the period of protection a debtor receives after making a declaration of intention to present a debtor’s position (both of which are extended from 21 days to 6 months).

Statutory Demands (companies)

A failure to respond to a statutory demand creates a presumption of insolvency under the Act, and the company may be placed into liquidation.  The Government has temporarily increased the timeframe for a company to respond to a statutory demand from 21 days to 6 months, thereby lessening the threat of actions that could push a business into insolvency.

The amendments will not prevent the right of creditors to enforce debts against companies or individuals through the courts.  However, creditors will not be able to rely upon a failure to pay to commence winding up proceedings until the expiration of the 6 month period, if the statutory demand is served on or after 25 March 2020. 

Insolvent Trading (companies)

The introduction of a new section 588GAAA into the Act provides temporary relief to directors from personal liability for insolvent trading in respect of debts that are incurred by their company if the debt is incurred:

• during the 6 month period from 25 March 2020;
• in the ordinary course of the company’s business;  and
• before any appointment of an administrator or liquidator over the company (during the 6 month period).

According to the Explanatory Memorandum to the COVID-19 Legislation, a director is taken to incur a debt in the “ordinary course of the company’s business” if it is necessary to facilitate the continuation of the business during the 6 month period.  This could include a director taking out a loan to move some of the business operations online or incurring the debt to pay employees during the COVID-19 pandemic.

While the new provision of the Act provides protection during the 6 month period, a person wishing to rely on the temporary safe harbour in a court proceeding in which unlawful insolvent trading is alleged will bear an evidential burden in relation to that matter.  This means producing evidence to support their reliance on the temporary safe harbour.   

A holding company may also rely on the temporary safe harbour provisions for insolvent trading by its subsidiary if it takes reasonable steps to ensure the temporary safe harbour applies to each of the directors of the subsidiary, and to the debt, and if the temporary safe harbour does in fact apply as a matter of law.  The holding company must establish this by producing evidence to support their reliance on the temporary safe harbour.

Bankruptcy Proceedings (Individuals)

To assist individuals, the Government has made a number of changes to the personal insolvency system regulated by the Bankruptcy Act 1966 (Cth). These include:

• the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings against a debtor will temporarily increase from $5,000 to $20,000;
• the time a debtor has to respond to a bankruptcy notice is increased from 21 days to 6 months; and    
• the period of protection a debtor receives after making a declaration of intention to present a debtor’s petition is extended from 21 days to 6 months.  

These temporary measures will apply for 6 months from 25 March 2020 until 24 September 2020.

Temporary Powers given to the Treasurer

The COVID-19 Legislation enables the Treasurer to provide short term regulatory relief to classes of persons that are unable to meet their obligations under the Act or the Corporations Regulations 2001 (Cth) by:

• ordering that specified classes of persons are exempt from specified obligations;  or
• modifying specific obligations under the Act to enable specified classes or persons to comply with their obligations during the COVID-19 crisis.

The Treasurer can exercise this power if they are satisfied that it would not be reasonable to expect the persons in the class to comply with provisions because of the impact of COVID-19, or the exemption or modification is otherwise necessary or appropriate in order to facilitate continuation of business in circumstances relating to COVID-19, or to mitigate the economic impact of COVID-19.

This is a temporary provision to facilitate the continuation of business during the coronavirus.

For specific legal advice regarding the new safe harbour provisions, including regarding issuing or responding to a demand to or from your creditors or debtors, please contact Leanne Allison or Cameron Sutton. 

This article is general information only, at the date it is posted.  It is not, and should not be relied upon as, legal advice.  This article might not be updated over time and therefore may not reflect changes to the law.  Please feel free to contact us for legal advice that is specific to your situation.

Retail Shop Lease expenditure statements - It can be too late !

In a situation that is not unusual in the commercial retail shop leasing space; particularly with small scale commercial landlords, a tenant has paid the landlord’s operating expenses for many years but subsequently realised that perhaps they should have been provided by their landlord with prior estimates, and subsequent audited statements, of those expenses.  This might mean the tenant is entitled to a refund of the operating expenses they have paid, or that the landlord cannot sue for operating expenses that were invoiced but are unpaid.

To avoid this risk, it is critical that landlords of a retail shop lease ensure they have given an estimate of operating expenses before the end of the year in which those expenses are invoiced and paid.  

The landlord cannot subsequently give an “estimate” of operating expenses after the fact.  Once the quantum of those expenses is a known element, it would be artificial and there is no remaining room for a landlord to retrospectively give an estimate.   In the absence of a valid estimate of outgoings, the outgoings are not payable.

In the Western Australian Court of Appeal decision of Trimat Holdings Pty Ltd v Investment Club Pty Ltd delivered on 28 April 2020: 

• the tenant leased a retail shop for a term of 10 years commencing 1 November 2010;
• the tenant paid its share of the landlord’s operating expenses for 6 years before commencing court proceedings in June 2018 seeking to recover these payments; and
• the tenant claimed the lease was a retail shop lease under the Commercial Tenancies (Retails Shops) Agreements Act 1985 (WA), that section 12 of the Act required the landlord to give estimates of operating expenses and operating expenses statements, and that the landlord had never given compliant statements.

In very general terms, the effect of:

• section 12(1)(d)(i) of the Act is that operating expenses are not payable until one month after an estimate of the years’ (or part years’) expenditure has been given to the tenant; and 
• section 12(1)(d)(ii) of the Act is that the landlord must then give a statement of actual operating expenses within 3 months of the end of the landlord’s accounting period (for example, the end of the financial year), and if it does not do so, the tenant’s obligation to pay operating expenses is suspended during the period of non-compliance.

A defence raised by the landlord was that it could, prior to trial, belatedly comply with section 12 of the Act and thus nullify the tenant’s claim.  The District Court dealt with as a preliminary issue, finding in the landlord’s favour.

The Supreme Court of Appeal took a different view.

In essence, the Court of Appeal determined:

• a statement of expenditure for a year or part of a year in which all expenditure has been incurred and its amount is ascertained would not be an 'annual estimate of expenditure' for the purposes of the Act.  The reference to an 'annual estimate of expenditure' is to an assessment of the annual expenditure prospectively anticipated to be incurred in a year but which has not, at least fully, been incurred.  It is not a reference to a statement of expenditure in a year which has already been fully incurred and ascertained;  
• the landlord cannot neutralise the suspension of payment provided by section 12(1)(d)(i) of the Act by belatedly giving an estimate of expenditure after that expenditure has been fully incurred and ascertained; 
• an operating expenses statement can theoretically be given to a tenant more than after 3 months after the end of the accounting period to which it relates.  However, that does not help a landlord who has not provided a valid estimate of operating expenses beforehand – the tenant’s requirement to pay expenditure will not have arisen if the required estimate has not been given; and further 
• to the extent the operating expenses statement relates to expenditure that requires an auditor’s statement - as to whether or not the total amount of estimated operating expenses exceeded the total actual expenditure by the landlord – the landlord will not be able to give a compliant operating expenditure statement in the absence of a prior estimate.

Landlords of retail shop leases should check their compliance with section 12 of the Act and, if they have not yet given the tenant an estimate of operating expenses for the year, make haste to now do so before that expenditure has all been incurred and finalised.  

For further information or for help in navigating the rights and obligations of your retail shop lease, please contact Dominique Engelter of our office.

This article is general information only, at the date it is posted.  It is not, and should not be relied upon as, legal advice.  This article might not be updated over time and therefore may not reflect changes to the law.  Please feel free to contact us for legal advice that is specific to your situation.

Covid-19 relief for commercial tenants in Western Australia

The State and Commonwealth Governments are in the process of enacting legislation to provide relief to commercial tenants affected by Covid-19. 

The West Australian State Government has recently passed legislation that limits the ability of a landlord to take certain action against tenants under a "small commercial lease" during the "emergency period" (the Commercial Tenancies (COVID-19 Responses) Act 2020).

The emergency period roughly aligns with the Commonwealth Government's Jobkeeper payment period, being 30 March – 29 September 2020, unless another end date is specified. This new State legislation is not yet in force, but it should be very soon.

The relief provided by the new Act operates in favour of tenants under "small commercial leases". A small commercial lease means:

• a retail shop lease as defined in the Commercial Tenancy (Retail Shops) Agreements Act 1985
• a lease where the tenant is a small business as defined in the Small Business Development Corporation Act 1983
• a lease where the tenant is an incorporated association as defined in the Associations Incorporation Act 2015
• another type of lease as prescribed in Regulations to the new Act (yet to be determined). 

During the emergency period protections in the new Act include:

• A six-month moratorium on evictions due to non-payment of rent
• A freeze on rent increases
• A restriction on penalties for tenants who do not trade or reduce their trading hours
• A prohibition on landlords making a claim on any form of security (e.g. a bank guarantee or security deposit) for the performance of the tenant’s obligations under the lease
• A prohibition on landlords progressing action against a tenant for a breach that occurred after 30 March 2020, but before commencement of the new Act
• A resolution mechanism for disputes arising out of, or in relation to, the operation of the legislation or a proposed new Code of Conduct (see below), including a mechanism to protect landlords where tenants are refusing to pay rent despite the capacity to do so.

The West Australian Government will soon pass Regulations to operate in conjunction with the new Act. These Regulations will deal with specific points not set out in the Act. For example, the Regulations might exclude certain small businesses from the protection that is given by the Act.  

The Regulations will also set out a new Code of Conduct equivalent to the National Cabinet Mandatory Code of Conduct  – Small to Medium (SME) Commercial Leasing Principles during COVID. This is the Code of Conduct developed by the Commonwealth Government and released on 7 April 2020 to regulate how a landlord must negotiate with tenants who have suffered Covid-19 related downturns. 

Of note, the Code of Conduct requires that landlords must offer tenants proportionate reductions in rent payable in the form of waivers (i.e. a reduction in rent that will not be recovered by the landlord) and deferrals (i.e. a delay in payment of part of the rent which will be recovered) of up to 100% of the amount ordinarily payable, on a case-by-case basis, based on the reduction in the tenant’s trade during the Covid-19 pandemic period and a subsequent reasonable recovery period. 

So, if a tenant's turnover is affected by Covid-19, it may be able to rely on the new Act and the Code of Conduct to negotiate a rent reduction and waiver with their landlord. 

The Regulations may impact on the matters outlined above. Specific advice is needed on a case by case basis. However, many small businesses should take some comfort that if they suffer a Covid-19 related decline in turnover, protection from adverse action by their landlord may be available. 

Other legislation is also currently before the West Australian Parliament which, if passed, is expected to allow tenants to request a termination of their lease if their business will not recover from a Covid-19 related decline in turnover. If passed, this legislation may limit a tenant's liability if they have to terminate their lease early for that reason. 

Please contact Amy Knight for further advice.

This article is general information only, at the date it is posted.  It is not, and should not be relied upon as, legal advice.  This article might not be updated over time and therefore may not reflect changes to the law.  Please feel free to contact us for legal advice that is specific to your situation.