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Norman Waterhouse is proud to announce the appointment of Johanna Churchill as Partner heading the Corporate and Business Services Team.
Johanna, who has been with the firm since 1993, is an integral part of the corporate and commercial practices at Norman Waterhouse. While she advises on a wide range of commercial issues, she has specific interest and expertise in the areas of corporate governance and securities regulation.
Johanna assists significant and international enterprises by providing advice and documentation on Corporations law and securities regulation, business structures and restructures, sale and purchase of business assets, directors and officers' indemnities and insurances, shareholder agreements, business succession, general commercial agreements and intellectual property and technology.
Johanna can be contacted on her direct line + 61 8 8210 1236 or by email jchurchill@normans.com.au.
In our November 2001 edition of Business Briefly, we reported on the commencement of new privacy laws which came into operation on 21 December 2001. These new laws regulate the way that private sector organisations collect, use, keep, secure and disclose personal information.
On March 12 this year, Professor Allan Fels, the Australian Competition and Consumer Commission ("ACCC") Chairman, issued a media release concerning the entry into a Memorandum of Understanding by the ACCC and the Office of the Federal Privacy Commissioner ("FPC"). Under this Agreement, the ACCC and the FPC have committed to assist each other with, amongst other things, investigations and enforcement within the privacy area.
Mr Fels warns: "Our organiszations [the ACCC and the FPC] will work together to ensure that privacy statements issued by companies to comply with the Privacy Act are not misleading or deceptive." Any business which merely gives lip service to the new privacy laws by adopting a privacy policy without ensuring the policy is implemented in practice may face an action by the ACCC for misleading and deceptive conduct under the Trade Practices Act (Cth).
This media release serves as a warning that all businesses currently regulated by the new rules should immediately take steps to fully comply with these laws and if necessary, change their behaviour in respect of the collection, storage and use of personal information.
The new privacy laws currently apply to businesses (including non-profit organisations) with an annual turn over of more than $3 million and health service providers. Businesses with an annual turn over of $3 million or less, although currently exempt from the new laws, will be subject to the new laws as from 21 December 2002 if one or more of the following statements are true for the business:
For further information about issues covered in this article, please contact Shannon Adams on +61 8 8210 1260 or E-mail sadams@normans.com.au.
Landlords become liable to pay GST on pre-GST leases once a 'review opportunity' has occurred. The most common review opportunity is a market review. The recent NSW case of Orti-Tullo v Sadek looked at the question of how valuers should treat GST, and showed that there are difficulties in challenging a valuer's determination.
In Orti-Tullo v Sadek, the pre-GST lease contained an option for a second five-year term commencing in August 2000. The rent was to be reviewed to market value at the beginning of that second term but the lease did not contain any GST clause.
The valuer determined that the current market rental value was $60,000 per annum but did not give details of how he arrived at that amount, nor whether it included GST. The valuer later confirmed in correspondence that he had not considered GST.
The market review was a 'review opportunity' under the GST law, meaning that from the start of the new term, the landlord was required to remit GST to the ATO in the amount of 1/11th of the rent. The landlord who sought to have the valuation set aside in the NSW Supreme Court, argued that the valuer had failed to correctly determine the rental value in accordance with the lease as he had carried out the valuation in a pre-GST setting.
Traditionally, Courts are reluctant to overturn the determination of an expert valuer. A valuation will only be set aside if it is clearly contrary to the terms of the lease (eg, over the wrong premises). A valuation will generally not be set aside where the valuer has merely made a mistake in applying the principles of valuation. The valuation stands, but there is a potential negligence action against the valuer.
The landlord suggested to the Court that a valuer must take into account the GST status of the lease and the liability of the lessee for GST. That is, the landlord asked the Court to find that where the lease provides that the lessee is liable to pay GST, the valuation should be made on a GST-exclusive basis.
The Court rejected this view, finding that the market will not always allow landlords to pass on the full amount of GST to tenants. The extent to which landlords can pass on the GST is a matter for the valuer to determine as part of his determination of market rent. It would be wrong to simply determine the current market rent and then adjust it upwards so as to return that amount, net of GST, to the landlord.
The case clearly demonstrates that a landlord involved in a market rent review of a lease without a GST gross-up clause should make detailed representations to the valuer including advice about the GST status of the lease, the ability of the tenant to receive input tax credits, and comparable GST-inclusive rentals being paid by other tenants to establish that the market generally has accepted the full incidence of GST.
For further information about issues covered in this article, please contact Kim Evans on +61 8 8210 1287 or E-mail kevans@normans.com.au.
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