Legal updates

The introduction of legislation creating a stay on enforcement of ipso facto clauses was reported in our September 2017 article. However, the devil was always going to be in the detail, and in particular the type of rights and contracts excluded from the operation of the new law.

On 16 April 2018 Treasury released exposure drafts of the Corporations Amendment (Stay on Enforcing Certain Rights) Regulations 2018 (Regulations) and the Corporations (Stay on Enforcing Certain Rights) Declaration 2018 (Declaration). The Regulations relate to contracts, agreements or arrangements. The Declaration relates to kinds of rights. Each of the Regulations and Declaration set out significant and wide ranging exclusions from the stay.

The Full Court of the Federal Court of Australia has held that the Commissioner of Taxation’s (Commissioner) formal information gathering powers override the obligation imposed on a party to litigation not to use information or documents disclosed by another party for any other purpose outside the proceedings in which they were disclosed (commonly known as the ‘Harman obligation’). The decision, Deputy Commissioner of Taxation v Rennie Produce (Aust) Pty Ltd (in liq) [2018] FCAFC 38, demonstrates the extremely broad scope of the Commissioner’s information gathering powers. However, whilst broad, these powers do not abrogate client legal privilege (CLP). It is therefore incumbent upon taxpayers (including liquidators), to carefully consider whether valid CLP claims could and should be made over any documents proposed to be disclosed to another party or other parties.

A recent decision of a single judge of the Federal Court of Australia in Resource Capital Fund IV LP v Commissioner of Taxation [2018] FCA 41 (RCF IV Decision) has excited debate about the application of Australia’s income tax law to limited partnerships, particularly private equity and venture capital funds.

While the RCF IV Decision is now on appeal to the Full Court, there are important points from the decision that private equity and venture capital funds, and their advisers, should already be taking into account when structuring investments into Australia.

A more fulsome analysis of the RCF IV Decision from our experts is anticipated to be published in a forthcoming edition of Tax Notes International

Any potential foreign investor must consider the implications of the Foreign Investment Review Board (FIRB) regime, as it may relate to any proposed transaction involving companies in the mining and energy sector. FIRB should be notified before any action takes place where the acquisition may be regulated by the FIRB regime.

Recent decisions by the Treasurer of Australia indicate a growing trend towards the imposition of data control conditions in connection with foreign investment approvals. Investors should allow for the possibility of delays at various stages in the approval process, including due to the consultation process between FIRB and CIC and negotiations between the investor and FIRB regarding the appropriateness of any conditions imposed.

Following in the footsteps of the Victorian Supreme Court in the Amerind appeal, the Full Federal Court has now delivered its decision Re Killarnee Civil & Concrete Contractors Pty Ltd1, providing further clarification as to how the assets of an insolvent corporate trustee are to be dealt with.

The NSW Government has recently released a draft Aboriginal Cultural Heritage Bill 2018 (ACH Bill) for consultation. The ACH Bill underpins a new framework for the management and conservation of Aboriginal cultural heritage (ACH) in NSW. In September 2017 the Government released a proposal paper which outlined a new system for ACH and invited the public to make submissions on the proposed new scheme. The ACH Bill, the major piece of legislation which will set out the new scheme, has now also been released for public comment. 

The Australian competition regulator (the ACCC) has succeeded in a case against Valve Corporation (Valve), a global digital distribution company, regarding its failure to provide refunds to certain gaming customers who used its digital gaming subscription service, Steam. This case is particularly instructive for foreign businesses operating in Australia and businesses providing digital content to consumers online. It makes clear foreign corporations supplying goods or services to Australian consumers have strict obligations under Australia’s consumer protection legislation.

Several features of Australian corporate law have implications where a company seeks to be able to claw back scrip consideration. In this article, we detail how novel structuring and proper care can achieve security for payment in scrip transactions.

Legislation has been introduced into Parliament to implement the goods and services tax (GST) withholding regime for property transactions (Bill) announced in the 2017/2018 Budget. If passed, from 1 July 2018, purchasers of new residential premises or a new subdivision of potential residential land will be required to withhold and remit a portion of the contract price for the supply directly to the Australian Taxation Office (ATO) or by way of payment of a bank cheque as part of the settlement process.

JWS has achieved an excellent result for the liquidators of the Gunns Group, with success in the Federal Court’s judgment in Bryant (Liquidator) v L.V. Dohnt & Co Pty Ltd, In the Matter of Gunns Limited (In Liq.) (Receivers and Managers Appointed) [2018] FCA 238.

JWS has achieved a significant win on the Linc Energy appeal, in which we acted for Linc’s liquidators, PPB, against the Queensland State Government. The matter relates to the obligation of the liquidators to cause the company to comply with its statutory environmental liabilities, in priority to other unsecured creditors, despite the relevant contaminated land and licences the subject of those liabilities previously being disclaimed by the liquidators.