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Long Term Lease Deemed Subdivision?

If you have thought about leasing part of your commercial, industrial or agricultural land to increase the returns on your investment, there are a few hidden pitfalls of which you should be aware.

When you lease part of existing commercial, industrial or agricultural land, and that lease is for more than 10 years (including any option periods), that lease is deemed a subdivision of your land and there is a legislative requirement for you to obtain subdivisional approval from the local Council.

This can be very costly in both time and money.

On a positive note, this does not apply to all leases that are over 10 years, it only to those leases that are leases for part of the land. If a lease of any length is of a building on your land and the whole of the leased premises are contained within that building, subdivisional approval will not be required.

If there are open areas such as outdoor dining areas, storage areas, access ways/ drive-thru’s etc and they are included as leased areas, there will be a requirement for you to obtain subdivisional approval from the Council.

If you are intending the tenant to have the use of such areas as part of the lease, it may be more appropriate to licence the use and occupation of those areas to the tenant rather than leasing them.

In order to try and get around the requirement to subdivisional approval from Council, landlords have in the past registered a number of consecutive leases of 10 years or less over part of the land to stay under the ‘10 year’ threshold.

For example, if a landlord and tenant agreed on a 20-year lease for part of the land (which, even if it was a 10-year lease with a 10 year option would require subdivisional approval) the landlord and tenant would enter into and register a 10 year lease and then enter into and register another 10 year lease simultaneously.

The commencement date of the second 10-year lease will start when the first lease ends. Although this may have worked ...

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The Value of a Shareholders’ Agreement

Why is a shareholders’ agreement valuable? How can it protect you and the future of your company?

A shareholders’ agreement is a contract between the shareholders of a company that addresses the management of the company and sets out the rights and obligations between the shareholders.  

However, it's not a one size fits all document.  A shareholders’ agreement should be tailored to the specific needs of the company, its buiness and the shareholders. 

A shareholders’ agreement addresses several important matters that can arise during the life of a company.

Some of the matters that a shareholders’ agreement should cover include:

  • Exit
    strategies for the shareholders, such as the agreement to sell
    shares on particular occurrences like the death of a founder or an
    offer to acquire trhe company
  • Expectations
    of working owners.

  • How
    company directors are appointed and removed.
  • Voting
    rights of both the directors and shareholders. Generally, the
    directors control the day to day operations of the company. However,
    there may be certain critical business matters that requires all
    shareholders (or shareholders who together hold a particular
    percentage of the company’s share capital) to decide on that
    matter.

  • The
    dividend distribution policy for profits of the company.
  • The
    requirement and conditions of any shareholder loans.  
  • The
    restrictions on competition with the company.
  • A
    dispute resolution procedure in the event that a dispute arises
    between the shareholders.

Some specific matters that should be considered:

  • What
    occurs in the event of a voting deadlock? For example, a particular
    director having a casting vote in addition to their deliberate vote,
    or a third party referee (such as the company’s accountant) who
    may make recommendations on decisions.

  • Do
    the key roles of each individual key person need to be ...

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The ACCC & Negative Online Reviews

A representative of the Australian Competition and Consumer Commission (ACCC) recently noted that consumers engage with online reviews to make decisions on whether to purchase a product or use a service (‘Wisdom to remove unfair contract terms’, ACCC Media Release 104/18, (located at: https://www.accc.gov.au/media-release/wisdom-to-remove-unfair-contract-terms)).

Two recent ACCC actions indicate that attempts by businesses to control online reviews may not go unnoticed. ...

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I’ve Received an Unfair Preference Claim, Now What?

So, you’ve recently received payment from one of your customers for goods or services provided by your business, only to receive a letter from a liquidator demanding you to pay it back on the basis it was a ‘preferential’ or ‘unfair preference’ payment?

You may be wondering how you respond to the demand, and most importantly, will you have to pay the money back. ...

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Unfair Contract Terms for Small Businesses: ACCC v JJ Richards

This time last year, the protections against unfair contract terms were extended under the Australian Consumer Law (ACL) to include standard form contracts involving small businesses.

A ‘standard form contract’ is generally a pre-prepared contract which offers the same or similar terms to all consumers, and is often utilised by larger businesses to improve efficiency.

In conjunction with the new laws surrounding standard form contracts, the ACCC has ramped up its efforts to investigate businesses relying upon unfair contract terms. This recently culminated in the commencement of proceedings against JJ Richards & Sons Pty Ltd (JJ Richards), in which the ACCC sought to enforce the extended provisions. In the proceedings, the ACCC alleged that many of JJ Richards’ clauses:

  • created a “significant imbalance” in the rights and obligations of JJ Richards and small businesses;
  • were not reasonably necessary to protect JJ Richards’ legitimate interests; and
  • would, if relied upon, cause significant financial detriment to small businesses.

The Federal Court of Australia recently delivered its judgment[1] and found that, of the eighteen terms contained within JJ Richards’ standard form contracts, the following eight terms were “unfair” and subsequently declared void:

1. Automatic renewal: this clause bound customers to subsequent contracts unless they called the contract within 30 days before the end of the term.

2. Price variation: allowing JJ Richards to unilaterally increase its prices.

3. Agreed Terms: removing any liability for JJ Richards where its performance is “prevented or hindered in any way”.

4. No credit without notification: allowing JJ Richards to charge customers for services not rendered for reasons that are beyond the customer’s control.

5. Exclusivity: granting JJ Richards ...

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Business Lawyer Brisbane With Rouse Lawyers

Selling A Business in Queensland - What your Brisbane Business Lawyer Does
When selling your business there are many legal factors to consider, and if you are considering selling your business you should seek advice and guidance from a business lawyer well in advance. A Brisbane based business lawyer will have intimate knowledge of how businesses are valued, and the skillset and expertise to prepare the necessary documentation. ...

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