Merry Christmas and Happy New Year

We wish all our clients and friends a Merry Christmas and Happy New Year.

We thank you for all your assistance and support throughout the year. We look forward to working with you once again in 2015. From all at Etienne Lawyers

HO HO HO and A Merry Christmas to All

HO HO HO and A Merry Christmas to All

BEST WISHES TO DAVID & IRENA BROOKS

David and Irena BW

Etienne Lawyers are excited that the 2014 World Senior II Standard Championships commence today. They Hyatt Regency Hotel, Vancouver, Canada is the elegant venue for such a prestigious event.

David and Irena Brooks – Australian Senior II Standard Champions are tanning and stretching in anticipation of competing later today.

They have trained long and hard for this opportunity and are anxious to hear the music start and walk onto the floor.

Many years of time, money, sweat and injuries have brought them to this point. It is most deserved.

David and Irena commenced dancing when their children were young and taking lessons themselves. At first they seemed like an ‘odd couple’. Irena – tiny and an ex-ballerina, David – tall and an ex-rugby player. Not the makings of a champion couple. However, they have worked hard, perfected their craft and now take to the world stage representing Australia. They are a force to be reckoned with.

No detail is too small for their attention and no hurdle to high for them to overcome.

David and Irena are passionate about both their dancing and representing Australia.

Etienne Lawyers wishes them good luck and hope that they enjoy the experience of competing with the best in the world.

2014 WSABE Etienne Lawyers Excellence in Work Health and Safety Winners – Australian Work Health and Safety Pty Ltd

Congratulations to Australian Work Health and Safety Pty Ltd for winning the 2014 WSABE Etienne Lawyers Excellence in Work Health and Safety Award

Steven Brown from Etienne Lawyers congratulating Carl Albrecht from AWHS on winning the  2014 WSABE Etienne Lawyers Excellence in Work Health and Safety

Steven Brown from Etienne Lawyers congratulating Carl Albrecht from AWHS on winning the 2014 WSABE Etienne Lawyers Excellence in Work Health and Safety

It was a great achievement being amongst other fine finalists to win this prestigious award. Australian Work Health and Safety Pty Ltd will now go forward to the 2014 NSW Business Chamber Business State Awards

Australian Work Health and Safety Pty Ltd (AWHS)

Profile courtesy of Western Sydney Business Access

AWHS protects business by protecting their most valuable assets, people! AWHS provide WHS solutions and assistance with WorkCover compliance. AWHS specialises in WHS building inspections, WHSMS audits, risk management, policies, procedures and training. The organisation performs comprehensive WHS needs analysis discovering requirements and providing practical WHS solutions facilitating productivity and workplace safety. AWHS aids compliance with WHS law that commenced in 2012. Persons conducting businesses or undertakings and their directors and senior management can be prosecuted as individuals if they do not do everything reasonably practicable to prevent their companies from breaking WHS legislation.

Whilst the team at Etienne Lawyers do ensure their clients receive the best in legal advice when it comes to all aspects of work health and safety, we would rather see businesses focussing on prevention, rather than cleaning up afterwards. Etienne Lawyers wish AWHS the best of luck in the 2014 NSW Business Chamber Business State Awards

Excellence in Work Health and Safety 2014 WSABE Winner thanks his supporters

Carl Albrecht Director AWHS Pty Ltd

Carl Albrecht, Director of Work Health and Safety Pty Ltd today thanked the sponsors of the 2014 WSABE awards and his supporters.

In his speech, he thanked Steve Brown and Etienne Lawyers for being a principal sponsor of the WSABEs. They were the sole sponsor of the Excellence in Work Health and Safety Award that his business succeeded in overcoming the competition to win.

He went on to acknowledge the support of the Parramatta Chamber of Commerce and his wife.

Work Health and Safety permeates every level of a business. From the levels of productivity and days lost to incidents, to the set up of operational equipment. Training and development are critical pathways for work health and safety to be inculcated into the fabric of any organisation.

Legally, WHS affects human resources, customer interactions, logistics and infrastructure and is one of the main causes of conflict between employers and employee bodies.

By creating a business solely focused on helping other businesses succeed through WHS, Carl Albrecht’s organisation is not only a creditable business, but is also encouraging good corporate citizenship. For all of these reasons, Etienne Lawyers applaud Carl and his team at Work Health and Safety Pty Ltd – a very worthy recipient of the 2014 WSABE Excellence in Work Health and Safety Award.

Highlights of Western Sydney Awards for Business Excellence 2014

Congratulations to all the winners of the WSABEs on Friday night.

Etienne Lawyers are proud to have been associated with the WSABEs and category sponsors for 2014 Excellence in Work Health and Safety.

As a legal firm with strong ties to Western Sydney, we applaud the work that each of the WSABE entrants put into their businesses day in day out.

Our commercial law focus encompasses most business legal issues. We have a special interest in Work Health and Safety, as it not only has legal implications when something goes wrong, but also impacts on individuals and businesses on such a personal level that prevention is always the aim.

Please watch the video to see the highlights of the WSABE gala event and we hope you too can gain from using the services of both winners and sponsors. Support your local businesses and they will support you- visit the WSABE website to see the winners and sponsors – Thank you from the team at Etienne Lawyers.

WSABE 2014 Highlights from Power Creative on Vimeo.

5 Elements of Promissory Estoppel in Contract Law and Legal Agreements

Don’t Make Promises in Business You Can’t Keep

The court may decide you must uphold your promises even though you don’t believe you have entered into a contract or legal agreement. Promissory Estoppel is one of the elements of contract law that must be considered when drafting or entering into a contract or agreement.

Promissory Estoppel

Broken egg shells - broken promises. You can't break a promise in a legal agreement

A promise must normally be in a deed (legal agreement or contract) or supported by consideration to be enforced.  The principle of estoppel however may allow a promise to be enforced even though these requirements are not satisfied.

The development of the concept of “promissory estoppel” in contract law has led to the proposition that a court may decide that a “contract” has come into being even though the traditional rules for contract formation have not been satisfied.

The 5 elements of Promissory Estoppel are:

1.     Some form of legal relationship either exists or is anticipated between the parties.

A contractual relationship is the most common type of “legal” relationship. Parties to pre-contractual negotiations also fall within this principle.

2.     A representation or promise by one party.

Traditionally, estoppel could only be used with respect to a representation about an existing fact.  The High Court decision in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, however, extended the doctrine to representations about future conduct.  This type of “promissory estoppel” arises where the promise is given in circumstances that lead the other party to assume the promise will be performed.

3.     Reliance by the other party on the promise or representation.

The party relying on the promise must suffer a detriment

4.     Detriment

The party relying on the promise must have suffered some sort of detriment.  In other words, the party must be in a worse position for having relied on the promise.

5.     Unconscionability

There is no general restriction, which prohibits a person from breaking his or her promise.  Accordingly, before an action for estoppel will succeed, it must be shown that, in the circumstances, it would be unfair or inequitable to allow them to do so.

Remedies

Quote from Olex Focas Pty Ltd v Skodaexpert Co Ltd 1997The remedies available to someone who has relied on a promise to their detriment are equitable.  This means that the court has a discretion in deciding what to do and it will do what it can to relieve the detriment suffered.  The courts will not necessarily force the party to honor its promise, unless this is the only way to do justice.

When and How to Use Estoppel

A party seeking to raise estoppel must make out a clear case and show that it would be unconscionable for the promisor to go back on their promise.  Unconscionability is really the backbone of estoppel.

It is important to realise that failing to fulfil a promise does not of itself amount to unconscionable conduct, nor does mere reliance on a promise to a person’s detriment.  Something more is really needed such as encouragement by the party that the promise will actually be performed.

The principles outlined above should always be the starting point if estoppel is to be used.  The nature of estoppel, however, is such that it cannot be defined into simple elements.  At best, the principles are a guide as to what the court will look for.

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Top 5 Franchising Tips

Starting any new business takes hard work. This applies equally when starting a franchise business. To successfully market a franchise system, it is necessary for the franchisor to gain the trust of prospective franchisees. To gain that trust, it is essential that the franchisor is completely prepared 5 Top Tips for Franchisingbefore going to market with the business to potential franchisees. What preparations should be done by the franchisor to be seen as a quality franchisor?

  1. Create a business concept that can attract interest from prospective franchisees. This can be done by having a very developed vision that is described fully in a disclosure document. Look for a concept that is filling an existing gap in the market and one that can be monetised easily. The business concept is the foundation stone upon which a franchise can be built.
  2. Form a team that can help in building this business. Surround yourself with sound professionals who have expertise in business strategy, legal skills and knowledge of the industry and market the franchise system operates in. This is also the team that will establish the format of the support that can be provided to the franchisee. The quality of this team is a selling point in itself; a great team means a potential franchisee is also purchasing a stake in this team, thus increasing the value of the franchise.
  3. According to the science of marketing, look for the uniqueness of the goods or services, because this uniqueness determines whether our goods or services would be accepted by the market. Find your point of difference or your unique selling proposition (USP). The one special thing which sets you apart and allows you to compete levelly with similar businesses and be competitive.
  4. Consult the experts – you may be the best accountant, or sales person, but when you franchise your business, you need those professionals supporting you with the best possible experience. It is crucial you use people such as Etienne Lawyers who are experienced in the field of franchise to ensure the success of your franchise venture.
  5. Finally, follow through. Follow your strategy plan; prepare you marketing and promotion focusing on your USP and your successful systems.

If you would like to find out how to successfully franchise your business call us on 02 8845 2400 or contact me at sujono@etiennelaw.com

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What’s in a Name – Hog’s Breath Cafe – trademarks, logos, names and branding

Trademarks, Logos, Names & Marketing a Brand

Highlighting corporate trademarks, logos, names and marketing branding, the recent dispute between a NSW Central Coast takeaway café and the national franchise Hog’s Breath Café chain has again shone a light.

Importance of a trademark

Source: Daily Telegraph New Limited http://www.dailytelegraph.com.au/newslocal/inner-west/hoggys-takeaway-in-gosford-hopes-facebook-campaign-will-end-naming-rights-dispute-with-hogs-breath-cafe/story-fngr8h4f-1226888133765

Sam and Sarah Hogg opened a takeaway around February 2014, in Gosford. Having the name Hogg they not surprisingly came up with the name “HOGGY’s” with a caricature of pig’s head.

Seven weeks after opening, in April 2014, Sam and Sarah received a cease and desist demand from Hog’s Breath Café demanding they stop using the name on the grounds it infringed the trademark of Hog’s Breath Café and was misleading and deceptive.

The news from the Daily Telegraph newspaper and radio 2GB report that Sam and Sarah have agreed to change the name as the cost of attempting to resist the challenge is far too expensive for them to take on.

The Courts View

The situation is not novel. It has arisen at least twice in the recent past. The costs of meeting the challenge in those instances was either not beyond the parties or was to them, worth the expense.

The two decided cases were Taco Bell Pty Ltd & Anor v Taco Co of Australia Inc & Ors [1982] FCA 170 (23 August 1982) (Franki J.Deane J.Fitzgerald J.) and Anakin Pty Ltd v Chatswood BBQ King Pty Ltd [2008] FCA 1467 (30 September 2008) (BRANSON J)

The facts of each case are as follows:

Taco Bell

An Australian business had traded in Sydney since the 1970s, in two locations under the name of Taco Bell Casa (Taco Co of Australia), selling Mexican style food.

Taco Bell Pty Ltd and Taco Bell Inc were US based franchise organizations that commenced trading in Australia in 1981 also selling Mexican style food.

The US based Taco Bell organizations relied upon s.52 of the Trade Practices Act, 1974 (Cth) (“Trade Practices Act”) (now s.18 of the Australian Consumer Law but in similar terms), and sought, amongst other orders, that Taco Co of Australia cease using the name “Taco Bell Pty. Ltd.” or any name deceptively similar to the name “Taco Bell” in operating its Mexican food restaurants in Australia (albeit only in two Sydney locations).

At the time of making their claims seeking orders against the Australian operators, the American Franchisors had:

  1. not carried on business in Australia;
  2. not used the mark “Taco Bell”;
  3. not used the name “Taco Bell”

in relation to restaurants or goods or services supplied in any restaurants in the Sydney metropolitan area.

Whilst the Courts accepted that a number of people in the relevant area knew of restaurants operated in America by the American Franchisors, the Court acknowledged there was absolutely no evidence that Taco Bell (USA Franchisors) had sold in the area “a class of goods to which the particular trade name applies” (paraphrased judgment)

Lord Diplock decision Taco BellThe plain fact was that the American Franchisors did not at the time of making their claim have any relevant goodwill or business in the Sydney metropolitan area.

In the initial judgment, the Australian operators were able to continue trading as they always had. The US Franchisors appealed the decision, and on appeal the Australian operators sought and obtained, amongst other orders that, the US Franchisors in all its guises, be restrained from operating any restaurants in the Sydney metropolitan area under the name “Taco Bell” or under any name similar which is deceptive or misleading or which is likely to deceive or mislead.

The case was decided on the facts that the Australian operators had established business years before the American Franchisors tried to commence operations in Australia and as such the goodwill and reputation of the name “Taco Bell”, at least in the Sydney metropolitan area was connected with the Australian operators, not the American Franchisors.

BBQ King

The other case occurred 26 years later.

BBQ King was the name of a well-known restaurant in Golburn Street, Haymarket, in Sydney. Anakin owned the trademark:/

BBQ King Logo

Anakin was a director of two companies that operated the BBQ King restaurant.

The restaurant opened around 1982 and has been in Goulburn Street (albeit in two adjacent premises) since then.

In 2005, Chatswood BBQ King Pty Ltd opened the Chatswood BBQ King restaurant in Victoria Avenue, Chatswood, NSW. The restaurant used the sign or logo:

BBQ King Chatswood

In the case, Anakin claimed that the Chatswood operator:

  • infringed Anakin’s registered trade mark,
  • engaged in misleading and deceptive conduct in contravention of s 52 and s 53 of the Trade Practices Act; (now s.18 and s.29 respectively of the Australian Consumer Law) and
  • tortiously passed off its restaurant in Chatswood as a restaurant associated with the BBQ King restaurant in Goulburn Street, Sydney.

His Honour Justice Branson found that:

  1. The use of different fonts and, in the one case, upper case lettering, did not avoid the likelihood of deception.  The differences are not marked and the words convey the same message.  That message is not to be determined by giving separate consideration to “BBQ” and “King” but rather by giving consideration to them as a composite phrase.
  2. The logo used by Chatswood’s operator was deceptively similar to the Trademark of Anakin.
  3. The evidence supported a finding that there was a real chance of customers being misled or deceived by the name of the Chatswood restaurant.  As, he found that, it was more likely than not that the name of the Chatswood BBQ King was selected because the Chatswood operator appreciated the possibility that customers might be led to believe that the restaurant was associated with the BBQ King restaurant in Goulburn Street, Sydney.

The lessons from the cases are that when many people identify the name under which a restaurant operates belongs to an existing operator, if another choses to use a similar name, the new operator is obligated to ensure that the new restaurant is adequately distinguished from the existing.

If the new operator does not fulfill this obligation, they will be restrained from using an infringing trademark where the name is registered as a trademark, and or will be restrained from engaging in misleading or deceptive conduct by using a deceptively similar or a name that displays a sponsorship, affiliation or association with the existing restaurant through the name chosen.

These cases, and in particular, Sam and Sarah Hogg’s unfortunate situation, illustrate that the obtaining of a business name, does not carry with it any goodwill or proprietary rights. It is merely a record of who is trading under a name not being just their own legal name. Also it is not sufficient to prevent the owner of a trademark from forcing them to cease and desist in using such business name when the business name infringes an existing registered trademark and or amounts to the owners of the business name engaging in misleading and deceptive conduct.

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Enforcing Restraint of Trade

Enforcing Restraint of TradeEmployers and employees need to carefully consider restraint of trade clauses in before and after entering into employment contracts after a recent decision in the Supreme Court of New South Wales ordered former business owners to pay damages in excess of $500,000 for breaching restraint of trade clauses.

The Plaintiff in the proceedings offered media and advertising services to large-scale clients, in particular in had two major clients. The business was effectively run as a family enterprise until it was acquired by a large corporation – Adorp Australia for $4 million. (‘the Company’).

As part of the transaction, David Andrews and his son Dean  (‘the Employees’) retained employment contracts, which were categorised as ‘Executive Service Agreements’. The Agreements contained inter alia, restraint of trade and non-compete clauses (‘the Employment Agreements’).

Both Employees ended their employment with the Company in July 2010, conveniently at a time when the Company had just lost the two major clients. The dire effect of losing these clients meant that the Company ceased to trade in August 2010.

The Company instituted proceedings seeking relief including but not limited to; account for profits and damages on the basis that the Employees had breached their Employment Agreements and their fiduciary duties owed to the Company.

The Company also sought relief against one the Employee’s Wife and three other companies for accessorial liability.

Whilst some of the Defendants settled with the Company, proceedings against Dean and his Wife, Danielle and Smart Retail Pty Limited (“Smart Retail”) continued.

Ultimately, the Court found that between period of employment and the period of cessation, Dean was in breach of not only his contractual duties to the Company, but to his Statutory and fiduciary duties owed to the Company as an employee under sections 182 and 183 of the Corporations Act 2001 (Cth) as a result of diverting client work to a related entity.

Further, the Court found that post employment; he had breached his non-compete and restraint provisions by undertaking work for one client.

The Court held that where an employee maintains a relationship with a significant client, then it is open for a company to protect its interests. It common practice for businesses to include restraint of trade clauses and non-compete clauses in employment contracts so as to protect their interests, provided that it complies with the Restraints of Trade Act 1976 (NSW).

What you should do?

This decision reiterates the importance of implementing and maintaining policies and procedures to protect your business and its clients. Businesses should constantly review strategies that they have adopted in order to mitigate such risks.

When approaching these issues, businesses should be minded to examining the situation from a commercial and legal perspective.

Fundamentally businesses should be aware that an employee should:

  • not to act in his or her own personal interests where there is a real conflict between the pursuit of those interests and performance of duties owed to the employer;
  • not to undertake engagements which involve duties which are in conflict with duties owed to the employer; and
  • not to misuse the position of employment to pursue a personal gain.

Where a business owner observes fundamental breaches they are entitled to take reasonable steps to protect and enforce its interest before and after cessation of employment. This may include reducing contact with key clients and playing a more active role in the business and ultimately enforcing restraint of trade and non-compete clauses.

Find out how we can assist your business in protecting and or enforcing its rights in situations like this by contacting Steve Brown 1300 882 032 email sbrown@etiennelaw.com.

 

Beware Director Penalty Notices

Beware Director Penalty NoticesIN 1993 the Taxation Administration Act 1953 introduced Director Penalty Notices (DPN). DPN’s were introduced in to assist the Commissioner of Taxation to recover certain company tax liabilities.

The idea behind DPN’s is to act as the big stick to hit directors so that directors cause their company to meet certain tax obligations or promptly place the company into liquidation or voluntary administration.

The law requires companies to withhold amounts from payments they make, such as wages to employees, and to pay those withheld amounts to the Commissioner (and to pay estimates of those amounts where applicable).

The regime of DPN’s makes directors of companies who fail to comply with their obligation to pay amounts withheld under the PAYG withholding regime to the Commissioner, personally liable for the amount that the company should have paid, through the imposition of a penalty.

Where the company fails to pay such amounts the directors become automatically personally liable to a penalty equal to the amount the company should have paid at the end of the day on which the company is due to meet its obligation.

However, the Commissioner must not commence proceedings to recover a director penalty until 21 days after he gives the director a written penalty notice.

A director can extinguish their personal liability by paying the debt or appointing an administrator or liquidator to the company within that 21 day notice period.

If the director does not take the appropriate steps within the 21 day period, the Commissioner may commence proceedings to recover the penalty. Certain defences are available to a director in such proceedings including:

  1. If the director had an illness that prevented him or her from participating in the management of the company, or
  2. If the director took all reasonable steps to ensure compliance within the notice period.

The Action Against Fraudulent Phoenix Activity proposal paper, which was released by the government for public consultation on November 14, 2009, set out a number of taxation law and corporations law options addressing fraudulent phoenix activity.

The paper concluded that the director’s ability to put-off payment of the penalty until they receive a notice, and then to avoid liability absolutely by liquidating the company, was a significant limitation on the effectiveness of the Director Penalty Notice Regime.

As a result it was considered that the law required amendment to toughen the regime.

Changes in the DPN Regime

Recently the DPN regime has been strengthened. Directors’ are now required to cause their company to comply with its liability to pay company liabilities, for PAYG payments and to pay superannuation guarantee amounts.

The amendments removed the ability for directors to extinguish their personal liability to pay penalties where the penalty has remained unpaid and unreported for more than 3 months.

Over two years’ of industry debate on the issue, came to a head on 29 June 2012, when the Tax Laws Amendment (2012 Measures no. 2) Act 2012 received Royal Assent. This new legislation amends the Taxation Administration Act 1953 by:

  •  Extending the Director Penalty Notice Regime to make directors personally liable for their company’s unpaid superannuation guarantee amounts;
  • Ensuring that directors can not discharge their director penalties by placing their company into administration or liquidation when PAYG withholding or superannuation guarantee remain unpaid and unreported for 3 months after the due date; and
  •  In some instances, making directors and their associates liable to pay PAYG withholding non-compliance tax (effectively reducing credit entitlements) where the company has failed to pay amounts withheld to the Commissioner.

Accordingly, if a payment that a director should have caused their company to pay has been outstanding for three months when a director is served with a director penalty notice, the director will no longer be able to remit that penalty by placing the company into administration or liquidation.

The director will remain personally liable to pay the amount of the penalty. The amendments also change the way the Commissioner collects tax using DPN’s. For instance, where a company fails to pay PAYG withholding amounts, the Commissioner has discretion to reduce a director’s entitlement to PAYG withholding credits which can effectively increase the amount of tax that a director will have to pay when they complete their personal tax return.

New directors will be liable to a director penalty only where they become a director after the company has failed to meet its obligation by the due date and 30 days after becoming a director, the obligation has not been met. This is an increase in the grace period for new directors from 14 days under the old regime.

The amendments allow the Commissioner to serve DPN’s by leaving a copy or posting it to the address of the director’s registered tax agent.  Consequently, the DPN does not have to come to the attention of the director before it is valid.
It is valid whether the director is aware of it or not. Similar to the service of statutory demands under section 459E of the Corporations Act, 2001.

Directors still have the same defences available and therefore will be able to avoid personal liability if they can prove that due to illness they were not involved in the management of the company or they took all reasonable steps to ensure that the company complied with its obligations in respect of PAYG withholding and superannuation guarantee amounts.

Any one who is a director must now more than ever be vigilant in ensuring that PAYG withholding and superannuation contributions are paid by the company on time.

If directors believe that the amount cannot be paid then in order to avoid any personal liability for those debts the director must place the company into administration or liquidation within three months of the due date.

New directors appointed to companies will need to quickly become familiar with the company’s accounts and take appropriate action within 30 days of their appointment if the company has outstanding PAYG withholding or superannuation contribution amounts.

The rationale of the amendments is to ensure that directors are proactive in ensuring that PAYG and superannuation payments are made rather than reactive to the receipt of a DPN by which time it could and often is too late for the Commissioner to get paid.

The penalty for inaction is for the amount that should have been paid by the company to become a personal debt of each director jointly and severally.

Directors no longer have the luxury of waiting until a director penalty notice is served on them before taking appropriate action to extinguish their personal liability in respect of the penalties.

Don’t become personally liable for your companies debt contact Steve Brown 1300 882 032 email sbrown@etiennelaw.com to get updated on the latest directors duties.