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Preparation is key – tips on avoiding business litigation

Litigation is quite rightly regarded as a last resort in business relationships. There are few small to medium sized businesses that can afford to regularly engage in legal proceedings. The loss of productivity as key staff are diverted from their usual responsibilities adds to the direct financial impact.

At Pearce Webster Dugdales we have found that good preparation can assist in avoiding business litigation entirely or result in an efficient resolution before legal proceedings are issued. Our top preparation tips are –

1. Seal the deal in writing from the start

It is sometimes said that a verbal agreement is not worth the paper it is written on. A clearly drafted contract that specifies what is required of each party and their entitlements can bring a quick end to misunderstandings. The written contract can be used as an agreed reference point so that your employees can do the right thing from the start when dealing with the other party.

2. Clear, effective communications and strong relationships

Establishing clear lines of effective communication is a key foundation of a strong business relationship. A strong relationship results in mutual trust and respect and reduces the chance of a dispute occurring in the first place.

3. Fix the little problems before they become big ones

If the other party is regularly referring to performing some aspect of their end of the bargain as a “challenge” it can be a sign of trouble ahead. Acting promptly to find out what the underlying problem is and resolve it before it develops into something bigger. If the solution involves varying the contract, the changes should be put in writing.

4. Good organisation and record keeping

One of the first tasks to attend to in when signs of a dispute emerge is to work out exactly what has happened. A properly organised system of storing and retrieving relevant documentation that records your interactions from the commencement of negotiations will help you make an informed assessment of your position. It also assists when seeking external advice because your adviser can gain an understanding of the relevant facts more promptly.

5. Get a second opinion

An independent person can offer a new insight or even a solution that you might not have considered. Early advice about the legal issues arising from your situation is invaluable in deciding on a pathway to negotiating an acceptable commercial resolution. If litigation is unavoidable, legal advice about your rights and relevant procedures can assist in identifying a way to best manage what is to come.

Please feel free to contact one of our experienced litigation lawyers to discuss how to avoid disputes or resolve those that have already commenced.

Ian Isaacs joins Pearce Webster Dugdales

We would like to welcome Ian Isaacs to our team. Ian is a graduate of Monash University and The College of Law and has been involved in many complex pieces of civil litigation and has advised and appeared on behalf of clients in all jurisdictions from VCAT to the Court of Appeal.

He advises commercial clients on a broad range of issues, including contractual disputes, leasing, employment law and the buying and selling of businesses.

Meet with us electronically…

Here is a photo of some of the PWD team at a recent zoom meeting. We are happy to meet with you using this technology if you do not wish to attend our office. Please do not hesitate to contact us if we can be of assistance.

Vale Malcolm Hastings

It is with great sadness we advise the passing of Malcolm Hastings. Malcolm was the former Managing Partner of Pearce Webster Dugdales. He was a man of great intellect & compassion, & shaped the firm into the practice it remains today.

Malcolm was admitted to practice as a Barrister and Solicitor of the Supreme Court of Victoria and the High Court of Australia in 1964. In 1985 he completed a Master of Laws at Melbourne University which concentrated on international trade, trade practices and commercial issues.

He was accredited by the Law Institute of Victoria as a Specialist mediator. He always had a particular interest in alternative dispute resolution and his expertise was well known. Malcolm had been a Sessional Member of the Victorian Civil and Administrative Tribunal (VCAT) and was appointed to various panels and bodies including the Panel of Mediators at the Federal Court and the Magistrates’ Courts, the Produce and Grocery Industry Ombudsman and Horticultural Mediation Panels, the Law Institute’s Mediation Advisory Committee of the Specialization Board, the Mediation Panel of the Office of Mediation and the Panel of Dispute Resolution for the Small Business Commission.

We were honoured to have worked with Malcolm and we farewell him with the fondest memories Vale MJH.

How the new changes to the Guardianship and Administration Act 2019 will affect Guardians and Administrators appointed by VCAT

On 1 March 2020, new laws will change how VCAT appoints guardians and administrators with VCAT’s powers being expanded.

VCAT will be able to appoint a supportive guardian for personal matters or a supportive administrator for financial matters. VCAT can also recognises that the person may be able to make some types of decisions themselves with the right support and continue to appoint a guardian or an administrator.

When making decisions, VCAT must take into account:

  1. The preferences of the represented person.
  2. Whether the decisions could be made in a less formal way, or by an agreed resolution
  3. The wishes of any primary carer, relative or other person with a direct interest in the application: and
  4. Relationships that are important to the person.

VCAT expects the person who may have an order made about them to take part in a VCAT hearing (unless they cannot do so for personal reasons)

When any existing Order is reassessed by VCAT the new requirements under the new legislation will be considered. Otherwise there will not be any changes to existing orders and current guardians or administrators don’t need to do anything different.

Please contact our office if you require any assistance with any VCAT matters.

Estate Planning for Blended Families

We assist all types of families with our estate planning services. A blended family is a relationship that is formed with partners who have children from a current relationship and also children from a previous relationship.

Wills for blended families need to be carefully drawn to try to avoid any conflict and should include:

  1. Different Will structures suit different family structures. The type of Will that is suitable depends upon what assets will flow into the estate and what the Will maker is trying to achieve whilst minimising the risk of any future claims against an estate.
  2. The careful selection of a proper Executor/Trustee is a very important decision for a will maker in a blended family as consideration needs to be given to potential conflicts of interest that may arise between a new spouse and the biological and/or step-children of the relationship or marriage. If there isn’t a suitable person within the blended family then an independent trustee such as a friend or even professional trustee may need to be appointed in the Will
  3. Titles to the ownership of real property need to be properly investigated as there are major differences in how Estate Planning law deals with property held by joint proprietors and, tenants in common or a by a trust. This is particularly relevant in blended families or relationships where the parties bring different assets into the relationship.
  4. A proper review of how assets held in Discretionary Trusts and/or Companies are treated on death is essential. Trust deeds must be reviewed to ensure that upon death, any ownership and control issues are a reflection of the intentions of the deceased as well as the issue of who will assume control of a company on succession.
  5. Superannuation is often one of the largest assets that we have access to and there is often a life insurance policy within many industry superannuation funds. Beneficiary Nominations, especially Binding Death Benefit Nominations, need to be reviewed carefully to ensure that the funds pass to the intended beneficiary or beneficiaries.
  6. During the review process, all power of attorney documents are reviewed to ensure that the appointed attorney still has the capacity to run your financial affairs and remains diligent in dealing with your financial or health affairs if you were to lose capacity.

We recommend that everyone should regularly review all of their estate planning documents to ensure that their wills and power of attorney documents still meet their estate planning requirements.

Please do not hesitate to contact one of our Estate planning solicitors if you have any queries about a Will or Powers of Attorney.

It’s another new financial year – does your Will need reviewing or updating?

Having a Will that is up to date and legally valid is always important to avoid an Estate becoming subject to the new intestacy provisions, to avoid potential problems that can be costly to the estate following your death and to protect against future claims against your Estate.

Often Wills are made when we purchase our first property and are not reviewed for many years or until a certain “trigger event” occurs making us realise that we need to make certain changes to our testamentary documents.

We can help you by reviewing, and if necessary, updating your Will or Testamentary Trust.

Different structures in Wills suit different family wealth structures. The type of Will that is recommended will depend upon what assets will flow into your estate and what you, as a Will maker are trying to achieve such as setting up asset capital protection in your estate, beneficiary protection or tax minimisation structures for beneficiaries.

We recommend that everyone should regularly review all of their estate planning documents just like a health check:

  1. Every two to three years or if your financial circumstances change.
  2. If a nominated beneficiary dies.
  3. If a nominated Executor dies or become unfit to act due to failing health.
  4. If assets no longer exist that have been specifically gifted under a previous Will.
  5. If you are experiencing a marriage separation or contemplating a new marriage (remembering that Wills are revoked by marriage)
  6. If you have made loans to children or assets have been purchased for certain children during your lifetime which may need to be equalised through a Will to ensure equality.
  7. If you need asset protection advice for children with a disability (mental or physical), requiring the protection of capital in an Estate: or
  8. If you have any queries or concerns about your current Will.

If you would like to have your Will reviewed or you need to make any changes to your existing Will, please contact us to arrange an obligation free call with one of our Estate Planning Lawyers.

Powers of Attorney for Estate Planning

A Power of Attorney is a legal document appointing one or more people to manage your financial, personal or medical matters during your lifetime. These documents are powerful tools in Estate planning and are critical if you ever lose capacity and cannot manage your own affairs through illness or injury.

You need to consider that if you lose mental capacity through either an accident or through illness, who would be legally be able to make legal, financial and health decisions on your behalf. The documents can also be put in place for a certain timeframe (for example if you are overseas).

There are currently two types of Powers of Attorney available in Victoria namely: –

  1. Enduring Financial Power of Attorney: and
  2. Supportive Power of Attorney

We also prepare Appointment of Medical Treatment Decision Maker documents and advanced Health Care Directives which is are legal documents setting out your preferences for any medical treatment in the future

When drawing Powers of Attorney in we advise upon:

  1. The proper selection of attorneys and alternate attorneys for personal, financial and medical matters
  2. Attorney Succession (the appointment of alternate or joint attorneys): and
  3. Any directions to be given to attorneys to avoid conflicts in the future

We recommend that everyone should regularly review all of their estate planning documents just like a health check. Power of attorney documents should be reviewed to ensure that the appointed attorney is a person who still has the capacity to run your financial, personal or medical matters and who would be diligent in dealing with your affairs if you were to lose capacity.

What happens if you die without leaving a Will? The new Intestacy Laws in Victoria

If you die without leaving a valid Will your Estate will more than likely come under the new Intestacy provisions in Victoria. Intestacy places a large responsibility on your surviving family as they will need to rely upon a legislative formula that guides how your Estate will be distributed. This will mean that you have no control over who distributes your estate and whether your Estate will be distributed according to your intentions.

This means that a family member will need to apply to the Supreme Court for Letters of Administration and this may result in your estate being distributed in a way that you had not intended. In turn, disputes may arise within your remaining family which can result in unnecessary and expensive litigation.

On 1 November, 2017 significant new laws came into effect in Victoria affecting intestate estates through the commencement of the Administration and Probate and Other Acts Amendment (Succession and Related Matters) Act 2017.

It is important that you are aware of these changes and the options that they create for you. The majority of the changes affecting the Intestacy provisions will only affect anyone who dies after the amending Act and include:

  1. Where the intestate leaves a partner and no children that belong to the intestate and the partner – the partner receives the whole estate.
  2. Where the intestate leaves a partner and there are children that belong to the intestate and the partner – the partner receives the whole estate (this is a significant change).
  3. Where the intestate leaves a partner and there are children that belong to the intestate but not the partner, then the partner will receive a defined amount (a partner’s statutory legacy which is indexed each year), the personal chattels, interest on the partner’s statutory legacy and half of the balance of the deceased estate. The remaining half of the balance of the estate will be divided equally between the children.
  4. If there is more than one partner the estate must be dealt with in accordance with a complex statutory formula.
  5. If there are no partners and only children then the Estate passes to the children, however there is an additional formula to be applied if one of your children has predeceased you.
  6. If there is no surviving partner or any surviving children, the hierarchy of distribution is in accordance with the statutory “line” of remaining family members.

Having a current valid Will is always important to avoid your Estate becoming subject to the new intestacy provisions. We can help you by reviewing or updating your Will and recommend that you should review your Will:

  1. Every two to three years or if your financial circumstances should change;
  2. If a nominated beneficiary dies;
  3. If your nominated Executor dies or become unfit to act due to failing health;
  4. If you separate from your partner or re-marry: or
  5. If you have any queries or concerns about your current Will.

How is an inheritance treated at separation?

A common question in a family law dispute is whether an inheritance received by one party will be excluded from the property pool to be divided between the parties. To understand how the courts are likely to treat inheritances, previous cases provide guidance on what may happen.

When there is a question on inheritances, a relevant factor is whether the inheritance was received during the relationship or late in the relationship, possibly even post-separation.

Inheritance Received During Relationship

An inheritance is ordinarily seen as a financial contribution to be attributed to the party who received it. It is not protected or excluded from the pool merely for being an inheritance.

Additional weight may be given to the contributions of the party who received the inheritance if the capital received significantly aided the parties in acquiring their current assets. This “springboard factor” was relevant in H v H (1981) FLC 91-083, where the Husband inherited capital and applied a portion of his inheritance to purchase the matrimonial home and build extensions. The home could not have been purchased without the inheritance.

In the matter of Kessey v Kessey (1994) FLC 92-495 it was held that absent evidence which establishes the donor’s intention to benefit both parties, a contribution by a parent to the property of the marriage will be taken to be a contribution made by that party.

Express evidence is required to illustrate an intention to benefit both parties and without such evidence the Court has found that gifts and inheritances are made for the benefit of the recipient due to the personal relationship between the donor and recipient (Essex v Essex (No 2) [2007] FamCA 639).

Therefore while an early inheritance will likely form part of the property pool, the recipient of the inheritance will be acknowledged to have contributed the funds and an adjustment can be made in their favour.

Inheritance Received Late in Relationship or Post-Separation

When an inheritance is received by a party during the late stages of a relationship or post-separation there is little possibility for the other spouse to have contributed to the inheritance received. Therefore the Court may take a two-pool approach and treat the inheritance separately.

This was endorsed in Bonnici v Bonnici [1992] FLC 92-272 which dealt with a 21 year relationship where the Husband received an inheritance two and a half years prior to separation and a second inheritance one year prior to separation. The Full Court stated that the inheritance was part of the property pool to be divided. However, the Court also decided that if there are sufficient funds in the property pool to reach a just and equitable settlement, then an inheritance received late in a relationship could be treated as an entitlement of the recipient. The Court in Bonnici held that the inheritance monies received by the Husband were not to be taken into account as part as the Wife had made no contribution to the receipt of those monies.

The Courts will always have the discretion on how to treat an inheritance and may still use a global property pool. In the recent decision of Calvin v McTier [2017] FamCAFC 125 the Husband received a large inheritance 4 years post-separation. At the time of the trial the inheritance made up 32% of the parties’ assets. Therefore the trial magistrate included the inheritance in the asset pool and found the Husband’s contributions to be 75%. Based on the future needs of the Wife, he then made a 10% adjustment to her so that she received 35% of the total asset pools, including the inheritance.

The Full Court confirmed the trial magistrate’s decision and held that the treatment of “after-acquired property” could have been dealt with in a global pool with the proper weight given to the Husband in recognition of his contribution or it could have been dealt with separately with acknowledgement that the Husband had a separate financial resource to draw on.

Inheritances and other gifts or winnings will be taken into account by the Family Court during family law proceedings. It may be part of a global pool or a two-pool approach may be taken. The weight the Court will give to “windfalls” such as these depends on:

  • Was the inheritance received during the relationship or post-separation?
  • Was the inheritance intended to benefit both parties or only the recipient?
  • Does the inheritance form a major percentage of the property pool?
  • What were the contributions made during the relationship?
  • What are the future needs of each party?

If you have received, or may receive, an inheritance it is important to get Family Law advice based on your specific circumstances in order to protect your assets.

 

For further information on this topic, please contact our Family Law department on 03 9614 5122