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In Check Issue 82 | March 201929 March, 2019
Table of contents
- Launch of new cyber insurance policy by Marsh/Chubb
- Free webinar for LPLC insureds about the Marsh/Chubb cyber policy
- Retrospective sunset provisions back in parliament
- Common econveyancing concerns
- Back to basics with real property caveats
- Drafting pleadings reminder
- New Oaths and Affirmations Act for Victoria
- GST withholding further examples
- Insurance renewal
- What’s new on LPLC’s website?
- Risk management seminars redesigned
- Changing your email address?
Launch of new cyber insurance policy by Marsh/Chubb
Cyber threats are becoming more pervasive and protecting your firm against cyber risk is good risk management.
Professional indemnity insurance covers some cyber risks but it does not cover the firm for its own business losses arising from a cyber incident, such as legal and regulatory costs associated with a data breach, remediation of the firm’s own systems, or loss of firm profits due business interruption.
Increasingly, firms are looking to obtain some protection from these losses through the purchase of cyber insurance.
Marsh (insurance brokers) and Chubb Insurance Company of Australia have launched a new cyber insurance policy only for LPLC insured firms. LPLC has worked with Marsh and Chubb on the development of this product. Go to our website for more information, FAQs and links to the Marsh website.
Free webinar for LPLC insureds about the Marsh/Chubb cyber policy
Those interested in this optional cover through Marsh/Chubb can find out more and have any questions answered at a FREE, 1 hour webinar exclusive to legal practitioners with professional indemnity cover through LPLC.
The session will discuss recent cyber insurance claims handled in the legal practitioners space, a review of best practices in effectively managing these events, and an overview of this new and bespoke insurance offering for LPLC members.
When: Thursday 4 April 2019
Time: 11am-12pm EST
Retrospective sunset provisions back in parliament
The Sale of Land Amendment Bill 2018 (Vic) which proposed significant changes to off the plan contract sunset provisions lapsed last year before the Victorian election. The bill, now called the Sale of Land Amendment Bill 2019, was reintroduced into parliament for its second reading on 21 March 2019.
The retrospective date for the sunset provisions is still 23 August 2018. In essence, the bill prevents vendors of residential property sold off the plan from rescinding a contract under any sunset clause, without first giving the purchaser 28 days’ notice and obtaining the purchaser’s consent, regardless of the wording of the clause.
We have updated and republished our bulletin Retrospective changes proposed for residential ‘off the plan’ sunset clauses from last year in relation to this new bill. The new bill has an additional section 10D which deems a purported rescission of a sunset clause in breach of the bill to be a breach of the contract, giving the purchaser more options.
Common econveyancing concerns
Most firms using the electronic lodgement network for conveyancing transactions are adjusting to the system and developing new processes and procedures. When considering their processes, some firms have expressed a belief that LPLC requires firms to only have one principal sign off on the ELNO (PEXA, Sympli) workspace. This is not the case. LPLC’s policy of insurance doesn’t have any such restriction.
Who signs the various components in an ELNO workspace is for the most part a question of the individual firm’s risk management polices as well as compliance obligations.
Land registry documents such as the transfer, should only be signed on the workspace by a lawyer in a law practice in accordance with the direction given by ARNECC.
If trust money is being transferred as part of the transaction, then the trust account authorisation on the workspace should only be signed by those in the firm who have trust account authorisation. Non-principals of firms can have trust account authorisation if approved by the Legal Services Board and Commissioner.
A financial settlement schedule can be signed on the workspace by anyone in the firm who is a user and has a digital certificate. It is a matter for the firm and how their workflow and procedures are set up as to who they allow to do that. Signing anything on an ELNO workspace is a significant responsibility and should only be given to a staff member who has sufficient experience, training and knowledge to do it responsibly. Firms should have clear written policy and guidelines on what staff members can and can’t do in this space. For more information on the use of digital certificates see our blog: No PEXA digital certificate policy? You’re at risk
Back to basics with real property caveats
Based on claims notified to LPLC, some practitioners appear to not understand what constitutes a caveatable interest. Section 89 of the Transfer of Land Act 1958 (Vic) allows anyone claiming an estate or interest in land under:
- any unregistered instrument or dealing
- devolution in law
to lodge a caveat.
An estate or interest in land will include an equitable estate in fee simple, a life tenancy, an interest as lessee, a mortgagee’s interest, an interest as purchaser and an interest as chargee.
One of the least understood interests seem to be the interest as a chargee.
A debt owed by a property owner to your client, or a court order against the owner to pay money to your client does not, without more, constitute a charge on the land or provide grounds to lodge a caveat.
To understand whether your client has an equitable charge over a property you should refer to the relevant documents evidencing the charge.
In the decision of Sim Development Pty Ltd v Greenvale Property Group Pty Ltd  VSC 335 Sifris J, at paragraph 119, referred to Evans v Advertising Department Pty Ltd  VSC 587 and noted that there is no required form for an equitable charge. He quoted Romer J in Cradock v Scottish Provident Institution (1893) 69 LT 380, 382 —
To constitute a charge in equity by deed or writing it is not necessary that any general words of charge should be used. It is sufficient if the Court can fairly gather from the instrument an intention by the parties that the property therein referred to should constitute a security.
As the quote above suggests the loan document should indicate that the relevant property is charged as security for the debt owed. This is what you must be satisfied about before you lodge a caveat for your client. For a recent decision on what is a caveatable interest see Kuipers v Harrington (No 2) VSC 190.
Drafting pleadings reminder
A recent court of appeal decision in Yang v Finder Earth Pty Ltd  VSCA 22 is a good reminder of the importance of drafting pleadings correctly. The defence in an earlier proceeding was struck out under a self-executing order and the plaintiffs, Finders Earth Pty Ltd and Luo, obtained a default judgement against one of the defendants, Yang. The judgement was given pursuant to rule 21.03 of the Supreme Court Rules on the basis that the claim was for recovery of a debt. The defendant brought an application to set aside the judgement, claiming it was irregular because the pleadings revealed a claim for damages, and an interlocutory judgement should have been ordered.
The court of appeal agreed that the pleadings were in fact a claim for damages not a debt. The court said that the matter could have been pleaded as a claim for recovery of a debt but in fact was not. They said:
the sums which Luo sought to recover were those referred to in paragraph 30 as the ‘loss and damage’ she had suffered by reason of the misapplication of the loan funds. It was, of course, alleged that those sums included the $700,000 but, as counsel for Yang correctly pointed out, it would be a matter for assessment to determine whether she had in fact lost that amount, or some other amount, as a result of the misapplication of the funds.
If you anticipate that a judgement in default is ever likely, you need to carefully plead a claim for recovery of a debt. Drafting pleadings requires specialist knowledge and expertise to get the detail right.
New Oaths and Affirmations Act for Victoria
The Oaths and Affirmations Act 2018 (Vic) (the Act) came into operation on 1 March 2019. It brings together the obligations and requirements for administering oaths and affirmations, affidavits and statutory declarations and establishes a scheme for certifying copies of documents.
It sets out clearly what is expected of practitioners, and notably reaffirms that oaths and affirmations should be said out loud when deposing an affidavit, or making a statutory declaration. A new requirement to be aware of when taking affidavits, is that the deponent as well as the affidavit taker should sign every page and any exhibit cover sheets.
The Act provides a scheme for certifying documents, but doesn’t seek to overrule schemes specifically set out in other legislation. The prescribed wording for a stamp for certifying copies of documents can be found in the new regulations, and is ‘Certified to be a true copy of the original seen by me.’
This is different to the wording required by section 16 (2) of the Powers of Attorney Act 2014 (Vic) which says: ‘Each page, other than the last page, of the copy must be certified to the effect that the copy of that page is a true and complete copy of the corresponding page of the original instrument.’ This is also different to the procedure set out in section 43 of the Act as it says multiple page documents can be signed and numbered on each page but not have the prescribed words on each page. Attention to how you certify copies of documents is needed, as is multiple stamps if you certify a range of documents.
GST withholding further examples
Our GST withholding practical examples bulletin from September 2018 helped answer some of the tricky questions in dealing with the GST withholding requirements. Below we set out some supplementary questions and answers.
What should I do where I am acting for a purchaser buying a new townhouse and the vendor is not registered but I suspect they are required to be registered?
If the supply is a taxable supply of new residential premises and you have a notice saying you do not have to withhold, then the Australian Taxation Office has told us you can rely on that notice providing nothing makes it unreasonable to believe the notice. The mere fact that the property is newly built without any further information is, according to the ATO, not enough to make it unreasonable to believe the notice.
Should I withhold where a vendor has not provided a withholding notice, but the property is existing residential property/input taxed and I cannot find a GST registration for the vendor on the ABN lookup portal?
The purchaser does not need to withhold GST where the sale is an input taxed supply (see para 14 (c) pf LCR 2018/4) even where they don’t receive a withholding notice, because the vendor would not have had to pay GST.
The ATO has said a purchaser may notify them of the vendor’s failure to provide the notice but do not have to.
What are the notice and/or GST withholding requirements for retirement village units?
Retirement villages will be subject to the withholding requirements but only if there is a supply of residential premises by way of sale or long-term lease. A long-term lease is defined as one of at least 50 years. A lease of less than 50 years, and a lease for at least 50 years but which is not reasonably expected to continue for at least 50 years, will not, according to the ATO, be long-term leases as defined in section 195-1 of the GST Act.
We will be sending insurance renewal letters in the post to firms in mid-April. If you have not received them by the end of April please email Bernie Mallia at firstname.lastname@example.org . Your insurance payment is due by 31 May.
When you receive your renewal documentation, please read it carefully as it contains important information about how to renew online and your firm’s 2019 renewal code to complete your renewal online. You can renew your practising certificate before paying your insurance. The practising certificate application will sit ‘pending’ at the Legal Services Board and Commissioner until your insurance premium is paid to us.
What’s new on LPLC’s website?
Practice risk guides
Claim free conveyancing (revised February 2019)
Law Institute Journal articles
High risk lending alert (February 2019)
How to avoid an off-the-plan claim (March 2019)
Risk video bites
Inadequate advice (February 2019)
Buying or selling a small business (March 2019)
Risk management seminars redesigned
Risk Management Intensive – on the road
This year we have redesigned our flagship half day and full day risk management seminars to make them uniform for all practitioners around the state. We will be bringing the same content to our risk management half day seminars in the regional and suburban areas as will be presented in half of our full -day day program held in the Melbourne CBD in July and August.
Everyone will receive the same essential risk management messages. The city event will have a second half day of different content to complement the half day presented everywhere.
To signify this change we have renamed the half day regional and suburban events Risk Management Intensive – on the road to align with the city Risk Management Intensive event.
Regional Risk Management Intensive – on the road events will be held throughout May and the Suburban Risk Management Intensive – on the road events will be held throughout November.
LPLC’s 2019 Calendar of events is published on our website to help you plan your CPD year.
Our spotlight on conveyancing claims continues with the stand-alone Conveyancing Series presented by Phil Nolan. The topics covered so far have been:
- Building a better section 32 statement
- Contract of sale tune up
If you missed either of these topics we will be running them again. The next date scheduled is 12 April for Building a better section 32 statement. If it fills up before you get to register you can put your name on the waiting list to receive first notification of the next date.
Changing your email address?
If you change your email address don’t forget to tell us so you will continue to receive our newsletters, emergency bulletins, seminar launches and blogs